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

Jul 25, 2019 • 05:00 pm ET

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

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Q & A
Operator
Operator

Thank you. [Operator Instructions] Our first question comes from Mike Ng with Goldman Sachs.

Analyst
Michael Ng

Great. Thank you for the questions. I was just wondering if you could talk about some of your updated expectations for Fisher-Price. I think there was a point where you expected Fisher-Price to be flat on the year prior to the recall with the improving trends that you're seeing there and the new fall line yet to come, should we expect Fisher-Price to return to growth in the second half? And I have a quick follow-up.

Executive
Richard Dickson

Michael, it's Richard. We are on track, the stabilization of Fisher-Price and we are starting to see some real positive signs for the brand globally despite the category decline for the quarter. We expect our trend to continue to improve into the back half.

We're launching great innovation that we shared with you at Toy Fair, both with existing categories like LINKIMALS, which is in our infant segment. We've got those three new categories, Wonder Makers, Role-Play and actually the relaunch of Rescue Heroes. So all-in-all, we really feel very strongly about the continued improvement in Fisher-Price.

Analyst
Michael Ng

Great, thanks. And just one for Joe, if I could. It's encouraging to hear about the cost saving improvements coming in better-than-expected. Could you just provide a few more details and examples about where these cost savings are coming from and where you see the opportunities for the additional $100 million you used to have and also when you talk about the progress you made in Capital Light, does that mean you guys have sold the factories or decided what you're going to do with your own factories? Thank you.

Executive
Joseph J. Euteneuer

So, let me work backwards for you. In regards to Capital Light, we did announce the consolidation of Mexico. So we're shutting down our Tijuana plant and consolidating it into our other plant that we have in Mexico, so that's been announced. You see reflected in the numbers the severance and restructuring costs along with our estimate of $30 million for savings in 2020 as associated with those actions.

In regards to things that we are doing to achieve savings in Structural Simplification, they're all over the board. I'll give you a couple. In the design area, we're moving to a CAD system that will give us worldwide transferability of all of the designs rather than doing things on pen and paper.

It will create big efficiency in regards to model building, in regards to costing our product, etc. We are putting in a global system for procure to pay so that we have better visibility of our spend and how to leverage our spend across different commodities. We are working on our obsolescence as far as inventory management. So whether it's a cost of goods sold or SG&A, there are a number of projects going on, and I can go on for hours but I'll stop there.

Analyst
Michael Ng

Great. Thank you very much.

Operator
Operator

Thank you. Our next question comes from Arpine Kocharyan with UBS.