Mattel, Inc. (NASDAQ:MAT) Q2 2019 Earnings Conference Call - Final Transcript

Jul 25, 2019 • 05:00 pm ET


Mattel, Inc. (NASDAQ:MAT) Q2 2019 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen, and welcome to Mattel's Second Quarter 2019 Earnings Conference Call. [Operator Instructions]

I would now like to introduce your host for today's call, Mr. David Zbojniewicz, Vice President of Investor Relations. Mr. Zbojniewicz, you may begin.

David Zbojniewicz

Thank you, operator, and good afternoon, everyone. Joining me today are Ynon Kreiz, Mattel's Chairmain and Chief Executive Officer; Richard Dickson, Mattel's President and Chief Operating Officer; and Joe Euteneuer, Mattel's Chief Financial Officer.

As you know, this afternoon, we reported Mattel's 2019 second quarter financial results. We will begin today's call with Ynon and Joe providing commentary on our results, and then we will provide time for Ynon, Richard and Joe to take your questions.

To help guide our discussion today, we have provided you with a slide presentation. Our discussion, slide presentation and earnings release reference non-GAAP financial measures including gross sales, adjusted gross profit and adjusted gross margin; adjusted other selling and administrative expenses; adjusted operating income and loss; adjusted earnings and loss per share; earnings before interest, depreciation and amortization, or EBITDA; adjusted EBITDA; and constant currency.

Please note that the sales figures referenced on this call will be stated in constant currency. The information required by Regulation G regarding non-GAAP financial measures is included in our earnings release and slide presentation, and both documents are available in the Investor section of our corporate website

Before we begin, I'd like to remind you that certain statements made during the call may include forward-looking statements relating to the future performance of our business, brands and product lines. These statements are based on currently available information, and they are subject to a number of significant risks and uncertainties that could cause our actual results to differ materially from those projected in the forward-looking statements.

We describe some of these uncertainties in the Risk Factors section of our 2018 annual report on Form 10-K, our 2019 quarterly reports on Form 10-Q, our earnings release and the presentation accompanying this call and other filings we make with the SEC from time to time as well as in other public statements. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so, except as required by law.

Now I'd like to turn the call over to Ynon.

Ynon Kreiz

Thank you, everyone, for joining our second quarter earnings call. This was another strong quarter, demonstrating consistent progress in the execution of our strategy to transform Mattel into an IP-driven, high-performing toy company. We continue to gain traction and remain on track to achieve our goals to restore profitability and regain topline growth in the short-to-mid-term and to capture the full value of our IP in the mid-to-long-term.

Some of the more notable financial highlights compared to last year include the following. Gross sales were up 1% as reported and 4% in constant currency; net sales were up 2% as reported and 5% in constant currency; adjusted gross margin was up 950 basis points.

Adjusted operating income improved by $104