Mattel — Third Quarter 2026 Earnings Summary

Financial Performance

• Net Sales reached $1,807 million for the quarter, a 4% increase as reported and 3% in constant currency versus the prior year.
• Gross Margin was 54.8% (up 480 basis points year-over-year), and Adjusted Gross Margin was 55.0% (up 480 basis points), primarily driven by $88 million in tariff refunds.
• Operating Income was $476 million, an increase of $96 million; Adjusted Operating Income was $502 million, an increase of $106 million.
• Net Income was $354 million, up $75 million from the prior year.
• Earnings Per Share (Diluted) were $1.23 compared to $0.88; Adjusted EPS was $1.30 compared to $0.91.
• For the nine months ended September 30, 2026, Cash Flows Used for Operating Activities were $114 million, compared to a use of $203 million in the prior year.
• Cash Flows Used for Investing Activities were $250 million for the nine months, compared to $98 million, driven by the acquisition of Mattel163 and higher capital expenditures.
• Cash Flows Used for Financing Activities were $338 million for the nine months, compared to $395 million.
• Mattel repurchased $308 million of shares in the first nine months of 2026, compared to $412 million in the prior year.
• As of September 30, 2026, approximately $1.2 billion remained available under the $1.5 billion share repurchase authorization.
• Net Debt was $1,793.6 million as of September 30, 2026, compared to $1,645.7 million in the prior year.
• The Leverage Ratio (Total Debt / Adjusted EBITDA) was 2.7x for the trailing twelve months ended September 30, 2026, compared to 2.5x in the prior year.

Guidance and Future Outlook

• Full-year 2026 Net Sales growth is expected to be 1% to 4% in constant currency.
• Full-year 2026 Adjusted Gross Margin is expected to be roughly 48%.
• Full-year 2026 Adjusted Operating Income is expected to be between $500 million and $570 million.
• Full-year 2026 Adjusted EPS is expected to be between $1.05 and $1.20.
• Foreign Exchange is expected to provide a roughly 1% benefit on full-year Net Sales based on current spot rates.
• The Adjusted Effective Tax Rate is expected to be roughly 23% for the full year.
• Guidance excludes the benefits of tariff refunds recognized year-to-date and any additional refunds that may be recognized in the remainder of 2026.
• Guidance remains subject to market volatility, unexpected disruptions, macro-economic risks, developments in the Middle East, and regulatory actions impacting global trade.

Business Segments and Product Lines

• Hot Wheels Gross Billings were up 7% as reported and 6% in constant currency.
• Dolls Gross Billings were $703 million, up 4% as reported and in constant currency, driven by partner brands including KPop Demon Hunters, partially offset by a decline in Barbie.
• Vehicles Gross Billings were $680 million, up 9% as reported and 7% in constant currency, driven by Hot Wheels growth.
• Infant, Toddler, and Preschool Gross Billings were $221 million, down 16% as reported and 17% in constant currency, primarily due to a decline in Fisher-Price.
• Action Figures, Building Sets, Games, and Other Gross Billings were $451 million, up 12% as reported and 11% in constant currency, driven by growth in Games (including Mattel163 contribution) and Action Figures.
• Barbie Gross Billings declined 9% as reported and 10% in constant currency for the quarter.
• Fisher-Price Gross Billings declined 14% as reported and 15% in constant currency for the quarter.
• North America Net Sales increased 4% as reported and 4% in constant currency.
• International Net Sales increased 5% as reported and 3% in constant currency.

Market and Competitive Landscape

• The company noted inflation and higher royalties offset other benefits, including the contribution of Mattel163, cost savings, and favorable foreign exchange.
• Advertising expenses increased, partially offsetting the benefits of higher Gross Profit in the Operating Income calculation.
• The company operates in a market subject to consumer discretionary spending fluctuations, economic downturns, and competitive product choices.

Risks and Challenges

• Risks include supply chain disruptions, cost inflation, currency fluctuations, and potential difficulties in product design, development, and distribution.
• Risks include economic downturns affecting consumer disposable income and spending on toys.
• Risks include potential difficulties implementing cost savings initiatives and regulatory changes in major markets.
• Risks include the impact of tariffs, trade restrictions, and geopolitical instability, including the conflict in the Middle East.
• Risks include the ability to secure and renew popular entertainment licenses and successfully commercialize digital games.
• Risks include the potential impact of artificial intelligence and machine learning technologies and the ability to maintain effective internal controls over financial reporting.

Management Commentary and Tone

• Roger Lynch, Chairman and CEO, stated that his first few weeks leading the company reinforced his belief in its potential and identified areas for improvement.
• Management priorities include strengthening brands, winning in toys, driving innovation and creativity, and investing with discipline to drive profitable growth.
• The company aims to translate the strength of its portfolio and capabilities into more consistent financial performance.

Other Key Points

• Steve Totzke was announced as the new President and Chief Operating Officer.
• The company acquired Mattel163, with acquisition-related expenses including professional fees, integration expenses, and a $7.0 million charge for the settlement of a pre-existing relationship.
• A gain of $147.9 million was recognized in other non-operating income, net, upon remeasuring the previously held 50% equity interest in Mattel163 to fair value upon obtaining control.
• In fiscal 2026, Mattel began excluding the impact of amortization of acquired intangible assets from non-GAAP financial measures and recast prior periods for comparability.
• The company disclosed a material weakness in internal control over financial reporting that it is working to remediate.
• A conference call and live webcast were hosted on November 5, 2026, to discuss the results.