Mattel Inc.
11/06/2026 | Press release | Distributed by Public on 11/06/2026 05:01
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations.
In the discussion that follows, "Mattel" refers to Mattel, Inc. and/or one or more of its subsidiaries.
The following discussion should be read in conjunction with the consolidated financial statements and the related notes that appear in Part I, Item 1 "Financial Statements" of this Quarterly Report on Form 10-Q. Mattel's business is seasonal with consumers making a large percentage of all toy purchases during the traditional holiday season; therefore, results of operations are most comparable to corresponding periods.
The following discussion includes currency exchange rate impact, a non-GAAP financial measure within the meaning of Regulation G promulgated by the SEC ("Regulation G"), to supplement the financial results as reported in accordance with GAAP. The currency exchange rate impact reflects the portion (expressed as a percentage) of changes in Mattel's reported results that are attributable to fluctuations in currency exchange rates. Mattel uses this non-GAAP financial measure to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. Management believes that the disclosure of this non-GAAP financial measure provides useful supplemental information to investors to allow them to better evaluate ongoing business performance and certain components of Mattel's results. This measure is not, and should not be viewed as, a substitute for GAAP financial measures.
The following discussion also includes the use of gross billings, a key performance indicator. Gross billings represent amounts invoiced to customers. It does not include the impact of sales adjustments, such as trade discounts and other allowances. Mattel presents changes in gross billings as a metric for comparing its aggregate, categorical, brand, and geographic results to highlight significant trends in Mattel's business. Changes in gross billings are discussed because, while Mattel records the details of sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally recorded by customer and not associated with categories, brands, or individual products.
Amounts shown in millions or billions within this Item 2 may not sum due to rounding.
Overview
Mattel is a leading global play and family entertainment company and owner of one of the most iconic brand portfolios in the world. Mattel's mission is to create innovative products and experiences that inspire fans, entertain audiences, and develop children through play, and its purpose is to empower generations to explore the wonder of childhood and reach their full potential.
Mattel is focused on the following brand-centric strategy to grow its intellectual property ("IP") driven play and family entertainment business:
•Grow its toy brands with more breakthrough innovation and adult fans and collectors, as well as evolved demand creation;
•Expand its direct-to-consumer and commercial reach through first party data, retail development, and new channels;
•Broaden content offering in film, television, and short-form content, accelerate licensing in consumer products, location-based entertainment, and publishing, and expand with new business models;
•Scale digital play through mobile games self-publishing, Mattel163 mobile games studio, licensing, and creator platforms; and
•Optimize operations and leverage artificial intelligence across its systems and supply chain.
Mattel is the owner of a portfolio of iconic brands and partners with global entertainment companies to license other IP. Mattel's portfolio of owned and partner brands and products are organized into the following categories:
Dolls-including owned brands such as Barbie, American Girl, Monster High, and Polly Pocket, and partner brands such as Disney Princess, Disney Frozen, and KPop Demon Hunters (Netflix). Mattel's Dolls portfolio is driven by the flagship Barbie brand and a collection of complementary brands offered globally. Empowering girls since 1959, Barbie has inspired the limitless potential in every girl, sparking imaginations and shaping futures through play. Monster High, a character-driven franchise, engages fans of all ages, encouraging them to be their authentic selves and celebrate what makes them unique. American Girl, with an extensive portfolio of dolls and accessories, content, and lifestyle products, is best known for imparting valuable life lessons that instill confidence through its inspiring dolls and books, featuring characters from past and present.
Vehicles-including owned brands such as Hot Wheels (including Hot Wheels Monster Trucks and Hot Wheels RC) and Matchbox, and partner brands such as Cars (Disney Pixar). Hot Wheels has continued to push the limits of performance and design since 1968, and ignites and nurtures the challenger spirit in kids, adults, and collectors. From die-cast vehicles to tracks, playsets, and accessories, the Mattel Vehicles portfolio has broad appeal that engages and excites fans of all ages.
Infant, Toddler, and Preschool-including brands such as Fisher-Price (including Little People) and Thomas & Friends, is organized into three subcategories: Fisher-Price, Preschool Entertainment, and Baby Gear and Power Wheels. The first subcategory is Fisher-Price, the power brand, which includes core Infant and Toddler product lines. As a leader in play and child development, Fisher-Price is dedicated to giving families the best possible start to life by making the most fun, enriching products for infants, toddlers, and preschoolers. The second subcategory is Preschool Entertainment, which includes owned IP such as Thomas & Friends and partner entertainment brands. Thomas & Friends is an award-winning preschool train brand franchise that lays the tracks to inspire, entertain, and develop young train fans through toys, content, live events, and other consumer products. The third subcategory is Baby Gear and Power Wheels, in which Mattel has strategically out-licensed or exited certain product lines.
Action Figures, Building Sets, Games, and Other-including owned brands such as Masters of the Universe, Mattel Brick Shop, MEGA, UNO, and partner brands such as Jurassic World (NBCUniversal), Minecraft (Microsoft), WWE, Toy Story (Disney Pixar), and Star Wars (Disney's Lucasfilm). Mattel's Action Figures portfolio is comprised of product lines associated with licensed entertainment franchises, such as Jurassic World and WWE, as well as product lines from Mattel-owned IP, such as Masters of the Universe. Introduced in 2025 as a new challenger brand in Building Sets, Mattel Brick Shop is designed to introduce differentiated building experiences through innovative features, materials, and techniques intended to expand traditional building play. Within Games, UNO is the classic matching card game that is easy to learn and fast fun for everyone, while the rest of the portfolio includes beloved heritage games such as Pictionary, Skip-Bo, Phase 10, and Blokus. Games also includes digital games, including games developed and published by Mattel163, Mattel's wholly owned mobile games studio. Other includes Plush, which contains products associated with movie releases from licensed entertainment franchises such as Minecraft, as well as Mattel-owned IP.
Recent Developments
On September 30, 2026, Mattel announced the appointment of Roger Lynch as Chairman of the Board and Chief Executive Officer. Mr. Lynch became Chairman of the Board effective October 2, 2026 and Chief Executive Officer effective October 12, 2026. Mr. Lynch has served as a member of Mattel's Board of Directors since 2018 and previously served as Mattel's Independent Lead Director. On October 19, 2026, Mattel announced the appointment of Peter Griffith as Chief Financial Officer and a member of the Board of Directors, effective October 20, 2026. On October 21, 2026, Mattel entered into a cooperation agreement with EdgePoint Investment Group Inc. and appointed Lee Matheson, a Partner at EdgePoint, to the Board of Directors.
In the third quarter of 2026, net sales increased 4% compared to the third quarter of 2025, gross margin increased to 54.8% from 50.0%, and operating income increased approximately $96 million to $476.3 million. The increase in gross margin and operating income benefited from approximately $88 million of refunds related to tariffs previously paid under the International Emergency Economic Powers Act ("IEEPA"), which Mattel received and recognized during the third quarter of 2026.
Global trade policy continues to evolve, and the ultimate impact of recent developments with respect to U.S. tariffs remains uncertain. In February 2026, the U.S. Supreme Court ruled that tariffs imposed under IEEPA on goods imported into the United States were unauthorized and subsequently a phased refund process was implemented, including the launch of Phase 3 on October 6, 2026 for certain eligible importers. The U.S. Court of International Trade's refund order has been appealed and the IEEPA tariffs and related refund framework remain subject to ongoing legal proceedings, further guidance from U.S. Customs and Border Protection, as well as other refund process developments. Following the U.S. Supreme Court's decision on IEEPA tariffs, temporary global tariffs were imposed on imports under Section 122 of the Trade Act of 1974 ("Section 122"), which expired on July 24, 2026. These Section 122 tariffs are currently subject to legal challenge and in May 2026, the CIT issued a ruling that the Section 122 tariffs are unauthorized by the statute, although this ruling is currently stayed pending appeal. Following the expiration of the Section 122 tariffs, additional tariffs have been imposed under Section 301 of the Trade Act of 1974 and other statutory authorities. Accordingly, the ultimate availability, timing, and amount of any additional tariff refunds remain uncertain, but if recognized, could be material. As of September 30, 2026, Mattel had not recognized a receivable for additional IEEPA tariff refunds because they were not realized or realizable.
There remains substantial uncertainty regarding the duration of existing and newly announced or planned tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, suspended, or invalidated, and the impacts of such actions on Mattel's business. Mattel continues to monitor and
evaluate these developments and assess their potential impact on Mattel's business, financial condition, and results of operations.
Mattel is operating in an uncertain geopolitical and macro-economic environment with significant volatility that may impact consumer demand. To the extent the geopolitical or macro-economic environment worsens, including due to further developments in the Middle East or regulatory actions impacting global trade, it may have a material effect on Mattel's results of operations and financial condition. Refer to Part I, Item 1A "Risk Factors" in the 2025 Annual Report on Form 10-K for further discussion regarding potential impacts on Mattel's business.
Results of Operations-Third Quarter
Consolidated Results
The following table presents Mattel's consolidated results for the third quarter of 2026 and 2025:
| For the Three Months Ended | Year/Year Change | ||||||||||||||||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | ||||||||||||||||||||||||||||||||||
| Amount |
% of Net Sales |
Amount |
% of Net Sales |
% |
Basis Points of Net Sales |
||||||||||||||||||||||||||||||
| (In millions, except percentage and basis point information) | |||||||||||||||||||||||||||||||||||
| Net sales | $ | 1,806.7 | $ | 1,736.0 | 4 | % | |||||||||||||||||||||||||||||
| Cost of sales | 817.1 | 45.2 | % | 867.7 | 50.0 | % | -6 | % | (480) | ||||||||||||||||||||||||||
| Gross profit | 989.6 | 54.8 | % | 868.3 | 50.0 | % | 14 | % | 480 | ||||||||||||||||||||||||||
| Advertising and promotion expenses | 143.3 | 7.9 | % | 118.1 | 6.8 | % | 21 | % | 110 | ||||||||||||||||||||||||||
| Other selling and administrative expenses | 370.0 | 20.5 | % | 370.3 | 21.3 | % | - | % | (80) | ||||||||||||||||||||||||||
| Operating income | 476.3 | 26.4 | % | 379.8 | 21.9 | % | 25 | % | 450 | ||||||||||||||||||||||||||
| Interest expense | 31.9 | 1.8 | % | 29.4 | 1.7 | % | 8 | % | 10 | ||||||||||||||||||||||||||
| Interest (income) | (8.9) | -0.5 | % | (9.0) | -0.5 | % | -1 | % | - | ||||||||||||||||||||||||||
| Other non-operating expense, net | 2.9 | 1.0 | |||||||||||||||||||||||||||||||||
| Income before income taxes | 450.4 | 24.9 | % | 358.5 | 20.7 | % | 26 | % | 420 | ||||||||||||||||||||||||||
| Provision for income taxes | 96.8 | 86.9 | |||||||||||||||||||||||||||||||||
| (Income) from equity method investments | - | (6.7) | |||||||||||||||||||||||||||||||||
| Net income | $ | 353.6 | 19.6 | % | $ | 278.4 | 16.0 | % | 27 | % | 360 | ||||||||||||||||||||||||
Sales
Net sales in the third quarter of 2026 were $1.81 billion, an increase of $70.7 million, or 4%, as compared to $1.74 billion in the third quarter of 2025. The increase in net sales was due to an increase in gross billings of $87.8 million, partially offset by an increase in sales adjustments of $17.1 million.
Gross billings represent amounts invoiced to a customer and do not include the impact of sales adjustments, such as trade discounts and other allowances. Changes in gross billings are discussed below because, while Mattel records the details of sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally recorded by customer and are not associated with categories, brands, or individual products. The following tables provide a summary of Mattel's consolidated gross billings by categories, along with supplemental information by brand, for the third quarter of 2026 and 2025:
| For the Three Months Ended |
% Change as Reported |
Currency Exchange Rate Impact |
|||||||||||||||||||||||||||
|
September 30, 2026 |
September 30, 2025 |
||||||||||||||||||||||||||||
| (In millions, except percentage information) | |||||||||||||||||||||||||||||
| Gross Billings by Categories | |||||||||||||||||||||||||||||
| Dolls | $ | 703.2 | $ | 674.1 | 4 | % | 1 | % | |||||||||||||||||||||
| Vehicles | 679.8 | 626.2 | 9 | % | 1 | % | |||||||||||||||||||||||
| Infant, Toddler, and Preschool | 220.8 | 262.5 | -16 | % | 1 | % | |||||||||||||||||||||||
| Action Figures, Building Sets, Games, and Other | 450.8 | 404.0 | 12 | % | - | % | |||||||||||||||||||||||
| Gross Billings | $ | 2,054.6 | $ | 1,966.8 | 4 | % | 1 | % | |||||||||||||||||||||
| Supplemental Gross Billings Disclosure | |||||||||||||||||||||||||||||
| Gross Billings by Top 3 Power Brands | |||||||||||||||||||||||||||||
| Barbie | $ | 374.6 | $ | 413.9 | -9 | % | 1 | % | |||||||||||||||||||||
| Hot Wheels | 585.5 | 547.2 | 7 | % | 1 | % | |||||||||||||||||||||||
| Fisher-Price | 186.2 | 215.4 | -14 | % | 1 | % | |||||||||||||||||||||||
| Other | 908.4 | 790.2 | 15 | % | - | % | |||||||||||||||||||||||
| Gross Billings | $ | 2,054.6 | $ | 1,966.8 | 4 | % | 1 | % | |||||||||||||||||||||
Gross billings were $2.05 billion in the third quarter of 2026, an increase of $87.8 million, or 4%, as compared to $1.97 billion in the third quarter of 2025, with a favorable impact from changes in currency exchange rates of one percentage point. The increase in gross billings was primarily due to higher billings of Vehicles, Action Figures, Building Sets, Games, and Other, and Dolls, partially offset by lower billings of Infant, Toddler, and Preschool.
Dolls gross billings increased 4%, of which 13% was due to higher billings of partner brands, including the benefit from KPop Demon Hunters (Netflix), partially offset by lower billings of Barbie of 6% and lower billings of Polly Pocket of 3%.
Vehicles gross billings increased 9%, of which 6% was due to higher billings of Hot Wheels and 2% was due to higher billings of Cars (Disney Pixar).
Infant, Toddler, and Preschool gross billings decreased 16%, of which 11% was due to lower billings of Fisher-Price and 4% was due to lower billings of Preschool Entertainment.
Action Figures, Building Sets, Games, and Other gross billings increased 12%, of which 9% was due to higher billings of Games, which benefited from Mattel163's contribution, and 5% was due to higher billings of Action Figures, partially offset by lower billings of Building Sets of 3%.
Sales adjustments generally represent arrangements with Mattel's customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise. Such programs are based primarily on customer purchases, customer performance of specified promotional activities, and other specified factors such as sales to consumers. Additionally, sales adjustments may include foreign currency transaction gains and losses from the remeasurement of accounts receivable denominated in currencies that are different from the relevant entity's functional currency. Sales adjustments increased to $247.9 million in the third quarter of 2026 from $230.8 million in the third quarter of 2025. Sales adjustments as a percentage of net sales were relatively consistent at 13.7% in the third quarter of 2026, as compared to 13.3% in the third quarter of 2025.
Cost of Sales
Cost of sales decreased by $50.6 million, or 6%, to $817.1 million in the third quarter of 2026 from $867.7 million in the third quarter of 2025. Within cost of sales, product and other costs decreased by $70.7 million, or 10%, to $617.3 million in the third quarter of 2026 from $688.0 million in the third quarter of 2025, which benefited from $88.4 million of IEEPA tariff refunds received in the third quarter of 2026. Royalty expense increased by $14.9 million, or 17%, to $103.3 million in the third quarter of 2026 from $88.5 million in the third quarter of 2025. Freight and logistics expenses increased by $5.2 million, or 6%, to $96.4 million in the third quarter of 2026, as compared to $91.3 million in the third quarter of 2025.
Gross Margin
Gross margin increased to 54.8% in the third quarter of 2026 from 50.0% in the third quarter of 2025. The increase in gross margin was primarily due to the benefit from IEEPA tariff refunds received of 490 basis points, Mattel163's contribution of 60 basis points, favorable foreign currency exchange impact of 60 basis points, and other factors totaling 150 basis points, partially offset by cost inflation of 200 basis points and higher royalty expense of 80 basis points.
Advertising and Promotion Expenses
Advertising and promotion expenses primarily consist of: (i) media costs, which include the media, planning, and buying fees for television, print, and online advertisements, (ii) non-media costs, which include commercial and website production, merchandising, and promotional costs, (iii) retail advertising costs, which include consumer direct catalogs, and (iv) general advertising costs, which include trade show costs. Advertising and promotion expenses as a percentage of net sales increased to 7.9% in the third quarter of 2026, as compared to 6.8% in the third quarter of 2025. The increase was primarily due to expenses associated with Mattel163, and investments in brand and marketing during the quarter.
Other Selling and Administrative Expenses
Other selling and administrative expenses were $370.0 million, or 20.5% of net sales, in the third quarter of 2026, relatively flat as compared to $370.3 million, or 21.3% of net sales, in the third quarter of 2025. The changes in other selling and administrative expenses included lower share-based compensation and incentive expense of $34.0 million, including forfeitures associated with the departure of Mattel's former Chief Executive Officer, offset by higher investments of $20.4 million, and higher Mattel163-related and other expenses of $13.3 million.
Interest Expense
Interest expense increased to $31.9 million in the third quarter of 2026, as compared to $29.4 million in the third quarter of 2025. The slight increase was primarily due to higher average interest rates on outstanding long-term debt in the third quarter of 2026.
Interest Income
Interest income was $8.9 million in the third quarter of 2026, relatively flat as compared to $9.0 million in the third quarter of 2025.
Provision for Income Taxes
Mattel's provision for income taxes was $96.8 million in the third quarter of 2026, as compared to $86.9 million in the third quarter of 2025. The increase in provision for income taxes was primarily due to discrete tax items. During the third quarter of 2026, Mattel recognized a net discrete income tax expense of $9.9 million primarily related to the income tax expense associated with IEEPA tariff refunds, partially offset by discrete tax benefits related to previously unrecognized tax benefits. During the third quarter of 2025, Mattel recognized a net discrete income tax benefit of $2.3 million.
Evaluating the need for and the amount of a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all available evidence to determine whether it is more-likely-than-not that these assets will be realizable. Mattel routinely assesses the positive and negative evidence for this realizability, including the evaluation of sustained profitability and three years of cumulative pretax income for each tax jurisdiction. For the third quarter of 2026 and 2025, there were no changes to Mattel's valuation allowance.
Segment Results
North America Segment
The following tables provide a summary of Mattel's net sales, segment income, and gross billings by categories, along with supplemental information by brand, for the North America segment for the third quarter of 2026 and 2025:
| For the Three Months Ended |
% Change as Reported |
Currency Exchange Rate Impact |
|||||||||||||||||||||
|
September 30, 2026 |
September 30, 2025 |
||||||||||||||||||||||
| (In millions, except percentage information) | |||||||||||||||||||||||
| Net Sales | $ | 1,014.0 | $ | 978.1 | 4 | % | - | % | |||||||||||||||
| Segment Income | 384.7 | 315.2 | 22 | % | |||||||||||||||||||
Net sales for the North America segment in the third quarter of 2026 were $1.01 billion, an increase of $35.9 million, or 4%, as compared to $978.1 million in the third quarter of 2025. The increase in net sales was primarily due to an increase in gross billings of $45.7 million.
| For the Three Months Ended |
% Change as Reported |
Currency Exchange Rate Impact |
|||||||||||||||||||||
|
September 30, 2026 |
September 30, 2025 |
||||||||||||||||||||||
| (In millions, except percentage information) | |||||||||||||||||||||||
| Gross Billings by Categories | |||||||||||||||||||||||
| Dolls | $ | 416.1 | $ | 393.8 | 6 | % | - | % | |||||||||||||||
| Vehicles | 304.8 | 276.5 | 10 | % | - | % | |||||||||||||||||
| Infant, Toddler, and Preschool | 124.4 | 157.1 | -21 | % | - | % | |||||||||||||||||
| Action Figures, Building Sets, Games, and Other | 260.3 | 232.5 | 12 | % | - | % | |||||||||||||||||
| Gross Billings | $ | 1,105.6 | $ | 1,059.9 | 4 | % | - | % | |||||||||||||||
| Supplemental Gross Billings Disclosure | |||||||||||||||||||||||
| Gross Billings by Top 3 Power Brands | |||||||||||||||||||||||
| Barbie | $ | 209.0 | $ | 234.2 | -11 | % | - | % | |||||||||||||||
| Hot Wheels | 252.2 | 235.7 | 7 | % | - | % | |||||||||||||||||
| Fisher-Price | 107.7 | 129.9 | -17 | % | - | % | |||||||||||||||||
| Other | 536.7 | 460.2 | 17 | % | - | % | |||||||||||||||||
| Gross Billings | $ | 1,105.6 | $ | 1,059.9 | 4 | % | - | % | |||||||||||||||
Gross billings for the North America segment were $1.11 billion in the third quarter of 2026, an increase of $45.7 million, or 4%, as compared to $1.06 billion in the third quarter of 2025. The increase in the North America segment gross billings was due to higher billings of Vehicles, Action Figures, Building Sets, Games, and Other, and Dolls, partially offset by lower billings of Infant, Toddler, and Preschool.
Dolls gross billings increased 6%, of which 11% was due to higher billings of partner brands, including the benefit from KPop Demon Hunters (Netflix), and 3% was due to higher billings of Monster High, partially offset by lower billings of Barbie of 6%.
Vehicles gross billings increased 10%, of which 6% was due to higher billings of Hot Wheels and 3% was due to higher billings of Cars (Disney Pixar).
Infant, Toddler, and Preschool gross billings decreased 21%, of which 14% was due to lower billings of Fisher-Price and 5% was due to lower billings of Preschool Entertainment.
Action Figures, Building Sets, Games, and Other gross billings increased 12%, of which 13% was due to higher billings of Games, which benefited from Mattel163's contribution, and 2% was due to higher billings of Action Figures, partially offset by lower billings of Building Sets of 3%.
Sales adjustments increased to $91.6 million in the third quarter of 2026 as compared to $81.8 million in the third quarter of 2025. Sales adjustments as a percentage of net sales were relatively consistent at 9.0% in the third quarter of 2026 as compared to 8.4% in the third quarter of 2025.
Cost of sales decreased by $57.1 million, or 12%, to $430.4 million in the third quarter of 2026 from $487.5 million in the third quarter of 2025, primarily due to a decrease in product and other costs of $71.1 million, which benefited from $88.4 million of IEEPA tariff refunds received in the third quarter of 2026, partially offset by an increase in royalty expense of $10.8 million.
North America segment income increased by $69.5 million to $384.7 million in the third quarter of 2026, as compared to $315.2 million in the third quarter of 2025, primarily due to lower cost of sales of $57.1 million and higher net sales of $35.9 million, partially offset by higher advertising and promotion expenses of $14.8 million.
International Segment
The following tables provide a summary of Mattel's net sales, segment income, and gross billings by categories, along with supplemental information by brand, for the International segment for the third quarter of 2026 and 2025:
| For the Three Months Ended |
% Change as Reported |
Currency Exchange Rate Impact |
|||||||||||||||||||||
|
September 30, 2026 |
September 30, 2025 |
||||||||||||||||||||||
| (In millions, except percentage information) | |||||||||||||||||||||||
| Net Sales | $ | 792.7 | $ | 757.9 | 5 | % | 2 | % | |||||||||||||||
| Segment Income | 208.8 | 208.6 | - | % | |||||||||||||||||||
Net sales for the International segment in the third quarter of 2026 were $792.7 million, an increase of $34.8 million, or 5%, as compared to $757.9 million in the third quarter of 2025. The increase in net sales was primarily due to an increase in gross billings of $42.1 million.
| For the Three Months Ended |
% Change as Reported |
Currency Exchange Rate Impact |
|||||||||||||||||||||
|
September 30, 2026 |
September 30, 2025 |
||||||||||||||||||||||
| (In millions, except percentage information) | |||||||||||||||||||||||
| Gross Billings by Categories | |||||||||||||||||||||||
| Dolls | $ | 287.1 | $ | 280.2 | 2 | % | 2 | % | |||||||||||||||
| Vehicles | 375.0 | 349.8 | 7 | % | 2 | % | |||||||||||||||||
| Infant, Toddler, and Preschool | 96.4 | 105.3 | -9 | % | 3 | % | |||||||||||||||||
| Action Figures, Building Sets, Games, and Other | 190.5 | 171.6 | 11 | % | 1 | % | |||||||||||||||||
| Gross Billings | $ | 949.0 | $ | 906.9 | 5 | % | 2 | % | |||||||||||||||
| Supplemental Gross Billings Disclosure | |||||||||||||||||||||||
| Gross Billings by Top 3 Power Brands | |||||||||||||||||||||||
| Barbie | $ | 165.6 | $ | 179.8 | -8 | % | 2 | % | |||||||||||||||
| Hot Wheels | 333.3 | 311.6 | 7 | % | 2 | % | |||||||||||||||||
| Fisher-Price | 78.4 | 85.6 | -8 | % | 3 | % | |||||||||||||||||
| Other | 371.7 | 330.0 | 13 | % | 1 | % | |||||||||||||||||
| Gross Billings | $ | 949.0 | $ | 906.9 | 5 | % | 2 | % | |||||||||||||||
Gross billings for the International segment were $949.0 million in the third quarter of 2026, an increase of $42.1 million, or 5%, as compared to $906.9 million in the third quarter of 2025, with a favorable impact from changes in currency exchange rates of two percentage points. The increase in the International segment gross billings was due to higher billings of Vehicles, Action Figures, Building Sets, Games, and Other, and Dolls, partially offset by lower billings of Infant, Toddler, and Preschool.
Dolls gross billings increased 2%, of which 16% was due to higher billings of partner brands, including benefits from KPop Demon Hunters (Netflix), partially offset by lower billings of Barbie of 5%, lower billings of Polly Pocket of 5%, and lower billings of Monster High of 3%.
Vehicles gross billings increased 7%, of which 6% was due to higher billings of Hot Wheels.
Infant, Toddler, and Preschool gross billings decreased 9%, of which 7% was due to lower billings of Fisher-Price.
Action Figures, Building Sets, Games, and Other gross billings increased 11%, of which 10% was due to higher billings of Action Figures, and 5% was due to higher billings of Games, which benefited from Mattel163's contribution, partially offset by lower billings of Building Sets of 3%.
Sales adjustments increased to $156.3 million in the third quarter of 2026 from $149.0 million in the third quarter of 2025. Sales adjustments as a percentage of net sales remained consistent at 19.7% in the third quarter of 2026 and 2025.
Cost of sales increased by $9.3 million, or 2%, to $385.1 million in the third quarter of 2026 from $375.8 million in the third quarter of 2025, primarily due to an increase in royalty expense of $4.1 million and product and other costs of $3.3 million.
International segment income was $208.8 million in the third quarter of 2026, relatively flat compared to $208.6 million in the third quarter of 2025, due to higher net sales of $34.8 million, partially offset by higher other selling and administrative expenses of $14.9 million, higher advertising and promotion expenses of $10.3 million, and higher cost of sales of $9.3 million.
Results of Operations-First Nine Months
Consolidated Results
The following table presents Mattel's consolidated results for the first nine months of 2026 and 2025:
| For the Nine Months Ended | Year/Year Change | ||||||||||||||||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | ||||||||||||||||||||||||||||||||||
| Amount |
% of Net Sales |
Amount |
% of Net Sales |
% |
Basis Points of Net Sales |
||||||||||||||||||||||||||||||
| (In millions, except percentage and basis point information) | |||||||||||||||||||||||||||||||||||
| Net sales | $ | 3,794.2 | $ | 3,581.2 | 6 | % | |||||||||||||||||||||||||||||
| Cost of sales | 1,875.7 | 49.4 | % | 1,785.9 | 49.9 | % | 5 | % | (50) | ||||||||||||||||||||||||||
| Gross profit | 1,918.5 | 50.6 | % | 1,795.3 | 50.1 | % | 7 | % | 50 | ||||||||||||||||||||||||||
| Advertising and promotion expenses | 360.5 | 9.5 | % | 267.5 | 7.5 | % | 35 | % | 200 | ||||||||||||||||||||||||||
| Other selling and administrative expenses | 1,173.5 | 30.9 | % | 1,122.5 | 31.3 | % | 5 | % | (40) | ||||||||||||||||||||||||||
| Operating income | 384.5 | 10.1 | % | 405.4 | 11.3 | % | -5 | % | (120) | ||||||||||||||||||||||||||
| Interest expense | 94.7 | 2.5 | % | 88.0 | 2.5 | % | 8 | % | - | ||||||||||||||||||||||||||
| Interest (income) | (26.6) | -0.7 | % | (37.3) | -1.0 | % | -29 | % | 30 | ||||||||||||||||||||||||||
| Other non-operating (income) expense, net | (141.1) | 12.6 | |||||||||||||||||||||||||||||||||
| Income before income taxes | 457.4 | 12.1 | % | 342.1 | 9.6 | % | 34 | % | 250 | ||||||||||||||||||||||||||
| Provision for income taxes | 64.6 | 72.5 | |||||||||||||||||||||||||||||||||
| (Income) from equity method investments | (3.6) | (21.8) | |||||||||||||||||||||||||||||||||
| Net income | $ | 396.4 | 10.4 | % | $ | 291.4 | 8.1 | % | 36 | % | 230 | ||||||||||||||||||||||||
Sales
Net sales in the first nine months of 2026 were $3.79 billion, an increase of $213.0 million, or 6%, as compared to $3.58 billion in the first nine months of 2025. The increase in net sales was due to an increase in gross billings of $252.0 million, partially offset by an increase in sales adjustments of $38.9 million.
Gross billings represent amounts invoiced to a customer and do not include the impact of sales adjustments, such as trade discounts and other allowances. Changes in gross billings are discussed below because, while Mattel records the details of sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally recorded by customer and are not associated with categories, brands, or individual products. The following tables provide a summary of Mattel's consolidated gross billings by categories, along with supplemental information by brand, for the first nine months of 2026 and 2025:
| For the Nine Months Ended |
% Change as Reported |
Currency Exchange Rate Impact |
|||||||||||||||||||||
|
September 30, 2026 |
September 30, 2025 |
||||||||||||||||||||||
| (In millions, except percentage information) | |||||||||||||||||||||||
| Gross Billings by Categories | |||||||||||||||||||||||
| Dolls | $ | 1,292.7 | $ | 1,305.8 | -1 | % | 1 | % | |||||||||||||||
| Vehicles | 1,504.6 | 1,342.2 | 12 | % | 2 | % | |||||||||||||||||
| Infant, Toddler, and Preschool | 454.8 | 532.3 | -15 | % | 2 | % | |||||||||||||||||
| Action Figures, Building Sets, Games, and Other | 1,041.3 | 861.2 | 21 | % | 1 | % | |||||||||||||||||
| Gross Billings | $ | 4,293.4 | $ | 4,041.4 | 6 | % | 2 | % | |||||||||||||||
| Supplemental Gross Billings Disclosure | |||||||||||||||||||||||
| Gross Billings by Top 3 Power Brands | |||||||||||||||||||||||
| Barbie | $ | 689.8 | $ | 788.3 | -13 | % | 2 | % | |||||||||||||||
| Hot Wheels | 1,308.6 | 1,173.3 | 12 | % | 2 | % | |||||||||||||||||
| Fisher-Price | 365.6 | 413.4 | -12 | % | 2 | % | |||||||||||||||||
| Other | 1,929.4 | 1,666.3 | 16 | % | 1 | % | |||||||||||||||||
| Gross Billings | $ | 4,293.4 | $ | 4,041.4 | 6 | % | 2 | % | |||||||||||||||
Gross billings were $4.29 billion in the first nine months of 2026, an increase of $252.0 million, or 6%, as compared to $4.04 billion in the first nine months of 2025, with a favorable impact from changes in currency exchange rates of two percentage points. The increase in gross billings was primarily due to higher billings of Action Figures, Building Sets, Games, and Other and Vehicles, partially offset by lower billings of Infant, Toddler, and Preschool, and Dolls.
Dolls gross billings decreased 1%, of which 8% was due to lower billings of Barbie, partially offset by higher billings of partner brands of 7%, including the benefit from KPop Demon Hunters (Netflix).
Vehicles gross billings increased 12%, of which 10% was due to higher billings of Hot Wheels and 2% was due to higher billings of Cars (Disney Pixar).
Infant, Toddler, and Preschool gross billings decreased 15%, of which 9% was due to lower billings of Fisher-Price, 4% was due to lower billings of Preschool Entertainment, and 2% was due to lower billings of Baby Gear and Power Wheels, due to the continued strategic exit from certain product lines in Baby Gear and Power Wheels.
Action Figures, Building Sets, Games, and Other gross billings increased 21%, of which 14% was due to higher billings of Games, which benefited from Mattel163's contribution, and 8% was due to higher billings of Action Figures.
Sales adjustments generally represent arrangements with Mattel's customers to provide sales incentives, support customer promotions, and provide allowances for returns and defective merchandise. Such programs are based primarily on customer purchases, customer performance of specified promotional activities, and other specified factors such as sales to consumers. Additionally, sales adjustments may include foreign currency transaction gains and losses from the remeasurement of accounts receivable denominated in currencies that are different from the relevant entity's functional currency. Sales adjustments increased to $499.2 million in the first nine months of 2026 from $460.3 million in the first nine months of 2025. Sales adjustments as a percentage of net sales were relatively consistent at 13.2% in the first nine months of 2026, as compared to 12.9% in the first nine months of 2025.
Cost of Sales
Cost of sales increased by $89.8 million, or 5%, to $1.88 billion in the first nine months of 2026 from $1.79 billion in the first nine months of 2025. Within cost of sales, royalty expense increased by $38.4 million, or 21%, to $220.5 million in the first nine months of 2026 from $182.2 million in the first nine months of 2025. Product and other costs increased by $31.8 million, or 2%, to $1.41 billion in the first nine months of 2026, as compared to $1.38 billion in the first nine months of 2025. The increase in product and other costs was partially offset by the benefit from $90.1 million of IEEPA tariff refunds received in the first nine months of 2026. Freight and logistics expenses increased by $19.6 million, or 9%, to $248.1 million in the first nine months of 2026 from $228.5 million in the first nine months of 2025.
Gross Margin
Gross margin increased to 50.6% in the first nine months of 2026 from 50.1% in the first nine months of 2025. The increase in gross margin was primarily due to the benefit from IEEPA tariff refunds received of 240 basis points, Mattel163's contribution of 70 basis points, and the net benefit from other factors of 90 basis points, including mitigating actions to offset tariffs, and realized savings from the OPG program. The increase was partially offset by cost inflation of 150 basis points, gross incremental tariff costs of 110 basis points, and higher royalty expense of 90 basis points.
Advertising and Promotion Expenses
Advertising and promotion expenses primarily consist of: (i) media costs, which include the media, planning, and buying fees for television, print, and online advertisements, (ii) non-media costs, which include commercial and website production, merchandising, and promotional costs, (iii) retail advertising costs, which include consumer direct catalogs, and (iv) general advertising costs, which include trade show costs. Advertising and promotion expenses as a percentage of net sales increased to 9.5% in the first nine months of 2026 from 7.5% in the first nine months of 2025. The increase was primarily due to investments in brand, marketing, and promotional activities for theatrical releases, and expenses associated with Mattel163.
Other Selling and Administrative Expenses
Other selling and administrative expenses were $1.17 billion, or 30.9% of net sales, in the first nine months of 2026, an increase of $51.0 million, as compared to $1.12 billion, or 31.3% of net sales, in the first nine months of 2025. The increase in other selling and administrative expenses was primarily due to higher investments of $56.5 million, higher employee wages of $15.8 million, higher expenses associated with Mattel163, including acquisition-related expenses, and other expenses of $70.2 million. The increase was partially offset by lower share-based compensation and incentive expense of $41.2 million, including forfeitures associated with the departure of Mattel's former Chief Executive Officer, additional realized savings from the OPG program of $31.7 million, and lower expenses related to inclined sleeper product recalls and related litigation of $18.6 million.
Interest Expense
Interest expense was $94.7 million in the first nine months of 2026, as compared to $88.0 million in the first nine months of 2025. The increase was primarily due to higher average interest rates on outstanding long-term debt in the first nine months of 2026.
Interest Income
Interest income was $26.6 million in the first nine months of 2026, as compared to $37.3 million in the first nine months of 2025. The decrease was primarily due to lower average invested cash balances in the first nine months of 2026.
Other Non-Operating (Income)/Expense, Net
Other non-operating income increased by $153.6 million to $141.1 million in the first nine months of 2026 from an expense of $12.6 million in the first nine months of 2025, primarily due to the gain recognized on Mattel's previously held equity interest in Mattel163. On March 2, 2026, Mattel acquired the remaining 50% equity interest in Mattel163. Prior to the acquisition of the remaining 50% equity interest in Mattel163, Mattel accounted for its investment under the equity method. Upon obtaining control, Mattel remeasured its previously held 50% equity interest to its estimated fair value as of the Acquisition Date, resulting in a gain of $147.9 million recognized in the first nine months of 2026.
Provision for Income Taxes
Mattel's provision for income taxes was $64.6 million for the first nine months of 2026, as compared to $72.5 million for the first nine months of 2025. The decrease in the provision for income taxes was primarily due to lower operating income before the benefit from IEEPA tariff refunds, partially offset by higher net discrete income tax expense. During the first nine months of 2026, Mattel recognized a net discrete tax expense of $10.7 million, primarily related to the income tax expense on IEEPA tariff refunds and interest expense accrued on previously unrecognized tax benefits, partially offset by discrete tax benefits related to previously unrecognized tax benefits. During the first nine months of 2025, Mattel recognized a net discrete income tax benefit of $12.6 million, primarily related to a change in its indefinite reinvestment assertion relating to certain foreign subsidiary earnings.
Evaluating the need for and the amount of a valuation allowance for deferred tax assets often requires significant judgment and extensive analysis of all available evidence to determine whether it is more-likely-than-not that these assets will be realizable. Mattel routinely assesses the positive and negative evidence for this realizability, including the evaluation of sustained profitability and three years of cumulative pretax income for each tax jurisdiction. For the first nine months of 2026 and 2025, there were no changes to Mattel's valuation allowance.
Segment Results
North America Segment
The following tables provide a summary of Mattel's net sales, segment income, and gross billings by categories, along with supplemental information by brand, for the North America segment for the first nine months of 2026 and 2025:
| For the Nine Months Ended |
% Change as Reported |
Currency Exchange Rate Impact |
|||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | ||||||||||||||||||||||
| (In millions, except percentage information) | |||||||||||||||||||||||
| Net Sales | $ | 2,063.5 | $ | 1,980.3 | 4 | % | - | % | |||||||||||||||
| Segment Income | 511.2 | 492.1 | 4 | % | |||||||||||||||||||
Net sales for the North America segment in the first nine months of 2026 were $2.06 billion, an increase of $83.2 million, or 4%, as compared to $1.98 billion in the first nine months of 2025. The increase in net sales was primarily due to an increase in gross billings of $94.0 million.
| For the Nine Months Ended |
% Change as Reported |
Currency Exchange Rate Impact |
|||||||||||||||||||||
| September 30, 2026 | September 30, 2025 | ||||||||||||||||||||||
| (In millions, except percentage information) | |||||||||||||||||||||||
| Gross Billings by Categories | |||||||||||||||||||||||
| Dolls | $ | 744.7 | $ | 734.8 | 1 | % | - | % | |||||||||||||||
| Vehicles | 651.8 | 600.8 | 8 | % | - | % | |||||||||||||||||
| Infant, Toddler, and Preschool | 249.1 | 307.1 | -19 | % | - | % | |||||||||||||||||
| Action Figures, Building Sets, Games, and Other | 581.8 | 490.7 | 19 | % | - | % | |||||||||||||||||
| Gross Billings | $ | 2,227.4 | $ | 2,133.4 | 4 | % | - | % | |||||||||||||||
| Supplemental Gross Billings Disclosure | |||||||||||||||||||||||
| Gross Billings by Top 3 Power Brands | |||||||||||||||||||||||
| Barbie | $ | 360.9 | $ | 418.3 | -14 | % | - | % | |||||||||||||||
| Hot Wheels | 546.2 | 508.7 | 7 | % | - | % | |||||||||||||||||
| Fisher-Price | 206.6 | 240.3 | -14 | % | - | % | |||||||||||||||||
| Other | 1,113.7 | 966.1 | 15 | % | - | % | |||||||||||||||||
| Gross Billings | $ | 2,227.4 | $ | 2,133.4 | 4 | % | - | % | |||||||||||||||
Gross billings for the North America segment were $2.23 billion in the first nine months of 2026, an increase of $94.0 million, or 4%, as compared to $2.13 billion in the first nine months of 2025. The increase in the North America segment gross billings was primarily due to higher billings of Action Figures, Building Sets, Games, and Other, Vehicles, and Dolls, partially offset by lower billings of Infant, Toddler, and Preschool.
Dolls gross billings increased 1%, of which 8% was due to higher billings of partner brands, including the benefit from KPop Demon Hunters (Netflix), and 2% was due to higher billings of Monster High, partially offset by lower billings of Barbie of 8%.
Vehicles gross billings increased 8%, of which 6% was due to higher billings of Hot Wheels and 2% was due to higher billings of Cars (Disney Pixar).
Infant, Toddler, and Preschool gross billings decreased 19%, of which 11% was due to lower billings of Fisher-Price, 5% was due to lower billings of Preschool Entertainment, and 3% was due to lower billings of Baby Gear and Power Wheels, due to the continued strategic exit from certain product lines in Baby Gear and Power Wheels.
Action Figures, Building Sets, Games, and Other gross billings increased 19%, of which 16% was due to higher billings of Games, which benefited from Mattel163's contribution, and 4% was due to higher billings of Action Figures.
Sales adjustments increased to $163.9 million in the first nine months of 2026 from $153.1 million in the first nine months of 2025. Sales adjustments as a percentage of net sales were relatively consistent at 7.9% for the first nine months of 2026, as compared to 7.7% for the first nine months of 2025.
Cost of sales decreased by $7.9 million, or 1%, to $1.00 billion in the first nine months of 2026 from $1.01 billion in the first nine months of 2025, primarily due to a decrease in product and other costs of $34.3 million, which includes the benefit of IEEPA tariff refunds received of $88.4 million, partially offset by an increase in royalty expense of $19.4 million.
North America segment income increased by $19.1 million to $511.2 million in the first nine months of 2026, as compared to $492.1 million in the first nine months of 2025, primarily due to higher net sales of $83.2 million, partially offset by higher advertising and promotion expenses of $47.3 million and higher other selling and administrative expenses of $24.7 million.
International Segment
The following tables provide a summary of Mattel's net sales, segment income, and gross billings by categories, along with supplemental information by brand, for the International segment for the first nine months of 2026 and 2025:
| For the Nine Months Ended |
% Change as Reported |
Currency Exchange Rate Impact |
|||||||||||||||||||||
|
September 30, 2026 |
September 30, 2025 |
||||||||||||||||||||||
| (In millions, except percentage information) | |||||||||||||||||||||||
| Net Sales | $ | 1,730.7 | $ | 1,600.9 | 8 | % | 4 | % | |||||||||||||||
| Segment Income | 310.6 | 346.9 | -10 | % | |||||||||||||||||||
Net sales for the International segment in the first nine months of 2026 were $1.73 billion, an increase of $129.8 million, or 8%, as compared to $1.60 billion in the first nine months of 2025. The increase in net sales was due to an increase in gross billings of $158.0 million, partially offset by an increase in sales adjustments of $28.2 million.
| For the Nine Months Ended |
% Change as Reported |
Currency Exchange Rate Impact |
|||||||||||||||||||||
|
September 30, 2026 |
September 30, 2025 |
||||||||||||||||||||||
| (In millions, except percentage information) | |||||||||||||||||||||||
| Gross Billings by Categories | |||||||||||||||||||||||
| Dolls | $ | 548.0 | $ | 571.0 | -4 | % | 3 | % | |||||||||||||||
| Vehicles | 852.7 | 741.3 | 15 | % | 4 | % | |||||||||||||||||
| Infant, Toddler, and Preschool | 205.7 | 225.2 | -9 | % | 4 | % | |||||||||||||||||
| Action Figures, Building Sets, Games, and Other | 459.6 | 370.4 | 24 | % | 3 | % | |||||||||||||||||
| Gross Billings | $ | 2,066.0 | $ | 1,908.0 | 8 | % | 4 | % | |||||||||||||||
| Supplemental Gross Billings Disclosure | |||||||||||||||||||||||
| Gross Billings by Top 3 Power Brands | |||||||||||||||||||||||
| Barbie | $ | 328.9 | $ | 370.0 | -11 | % | 3 | % | |||||||||||||||
| Hot Wheels | 762.5 | 664.6 | 15 | % | 4 | % | |||||||||||||||||
| Fisher-Price | 158.9 | 173.2 | -8 | % | 4 | % | |||||||||||||||||
| Other | 815.7 | 700.3 | 16 | % | 3 | % | |||||||||||||||||
| Gross Billings | $ | 2,066.0 | $ | 1,908.0 | 8 | % | 4 | % | |||||||||||||||
Gross billings for the International segment were $2.07 billion in the first nine months of 2026, an increase of $158.0 million, or 8%, as compared to $1.91 billion in the first nine months of 2025, with a favorable impact from changes in currency exchange rates of four percentage points. The increase in gross billings was due to higher billings of Vehicles, Action Figures, Building Sets, Games, and Other, partially offset by lower billings of Dolls and Infant, Toddler, and Preschool.
Dolls gross billings decreased 4%, of which 8% was due to lower billings of Barbie, and 4% was due to lower billings of Polly Pocket, partially offset by higher billings of partner brands of 8%, including the benefit of KPop Demon Hunters (Netflix).
Vehicles gross billings increased 15%, of which 13% was due to higher billings of Hot Wheels and 2% was due to higher billings of Cars (Disney Pixar).
Infant, Toddler, and Preschool gross billings decreased 9%, of which 6% was due to lower billings of Fisher-Price, and 2% was due to lower billings of Preschool Entertainment.
Action Figures, Building Sets, Games, and Other gross billings increased 24%, of which 14% was due to higher billings of Action Figures and 11% was due to higher billings of Games, which benefited from Mattel163's contribution.
Sales adjustments increased to $335.3 million in the first nine months of 2026 from $307.1 million in the first nine months of 2025. Sales adjustments as a percentage of net sales were relatively consistent at 19.4% for the first nine months of 2026, as compared to 19.2% for the first nine months of 2025.
Cost of sales increased by $65.9 million, or 8%, to $862.3 million in the first nine months of 2026 from $796.4 million in the first nine months of 2025 due to an increase in product and other costs of $34.9 million, an increase in royalty expense of $18.9 million, and an increase in freight and logistics expenses of $12.1 million.
International segment income decreased by $36.3 million to $310.6 million in the first nine months of 2026, as compared to $346.9 million in the first nine months of 2025, primarily due to higher cost of sales of $65.9 million, higher other selling and administrative expenses of $54.5 million, and higher advertising and promotion expenses of $45.7 million, partially offset by higher net sales of $129.8 million.
Cost Savings Program
Optimizing for Profitable Growth
On February 7, 2024, Mattel announced the OPG program, a multi-year cost savings program that follows the OFG program, which concluded in the fourth quarter of 2023. The OPG program is designed to achieve further efficiency and cost savings opportunities, primarily within Mattel's global supply chain, including its manufacturing footprint. The OPG program includes cost savings actions in connection with discontinuing production at a plant in China, as previously announced in the third quarter of 2023, as well as savings from other previous actions taken in 2023 that were not recognized in the OFG program. The targeted annual gross cost savings from actions associated with the OPG program were increased from $200 million to $225 million in the fourth quarter of 2025. Annual gross cost savings from the OPG program are now expected at or above the $225 million target, and the program is expected to be completed by the end of 2026. Of the expected annual gross cost savings, approximately 55% is expected to benefit cost of sales and 45% is expected to benefit other selling and administrative expenses. Total cash expenditures under the OPG program are expected to be up to approximately $140 million, and total non-cash charges are expected to be approximately $5 million.
The costs associated with the OPG program are expected to include the following:
| Optimizing for Profitable Growth - Actions | Estimate of Cost | ||||
| Employee severance | $120 to $125 million | ||||
| Other restructuring costs | Approximately $10 million | ||||
| Non-cash charges | Approximately $5 million | ||||
| Total estimated severance and other restructuring costs | $135 to $140 million | ||||
| Investments | Up to $5 million | ||||
| Total estimated actions | $135 to $145 million | ||||
In connection with the OPG program, Mattel recorded severance and other restructuring costs in the following cost and expense categories within operating income in the consolidated statements of operations:
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
|
September 30, 2026 |
September 30, 2025 |
September 30, 2026 |
September 30, 2025 |
||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| Cost of sales (a) | $ | 0.2 | $ | 2.4 | $ | 1.0 | $ | 6.1 | |||||||||||||||
| Other selling and administrative expenses (b) | 2.1 | 0.3 | 19.7 | 19.8 | |||||||||||||||||||
| $ | 2.3 | $ | 2.7 | $ | 20.7 | $ | 25.9 | ||||||||||||||||
(a)Severance and other restructuring costs recorded within cost of sales in the consolidated statements of operations are included in segment income in "Note 22 to the Consolidated Financial Statements-Segment Information."
(b)Severance and other restructuring costs recorded within other selling and administrative expenses in the consolidated statements of operations are included in unallocated corporate and other operating expenses in "Note 22 to the Consolidated Financial Statements-Segment Information."
As of September 30, 2026, in connection with the OPG program, Mattel recorded cumulative severance and other restructuring charges of approximately $136 million, which included approximately $5 million of non-cash charges. Mattel realized cumulative cost savings (before severance, restructuring costs, and cost inflation) of approximately $225 million, which represents approximately 55% benefit to cost of sales, and approximately 45% benefit to other selling and administrative expenses, as of September 30, 2026, in connection with the OPG program.
Liquidity and Capital Resources
Mattel's primary sources of liquidity are its domestic and foreign cash and equivalents balances, cash flows from operating activities, short-term borrowing facilities, including its $1.40 billion in aggregate principal amount of senior unsecured revolving credit facilities (the "Credit Facility"), and access to capital markets to fund its operations and obligations. Such obligations may include capital expenditures, debt service, future royalty payments pursuant to licensing agreements, future inventory and service purchases, and required cash contributions and payments related to benefit plans. Of Mattel's $541.4 million in cash and equivalents at September 30, 2026, $380.4 million was held by foreign subsidiaries, including $71.3 million held in Russia. Mattel's cash held in Russia can be used within the country; however, its movement out of Russia is currently limited. In 2022, Mattel paused all shipments into Russia.
Cash flows from operating activities could be negatively impacted by decreased demand for Mattel's products, which could result from factors such as, but not limited to, adverse economic conditions and changes in public and consumer preferences, or by increased costs associated with manufacturing and distribution of products, such as tariffs, or shortages in raw materials or component parts. Additionally, Mattel's ability to issue long-term debt and obtain seasonal financing could be adversely affected by factors such as, but not limited to, global economic crises and tight credit environments, inability to comply with its debt covenants and its Credit Facility covenants, or deterioration of Mattel's credit ratings. However, based on Mattel's current business plan and factors known to date, it is expected that existing cash and equivalents, cash flows from operations, availability under the Credit Facility, and access to capital markets will be sufficient to meet working capital, operating expenditure, and other contractual requirements for the next twelve months and in the long-term.
Current Market Conditions
Mattel is exposed to financial market risk resulting from changes in interest and foreign currency exchange rates.
Mattel intends to utilize its existing cash and cash equivalents, cash flow from operations, and borrowings under the Credit Facility to meet its short-term liquidity needs. At September 30, 2026, Mattel had no outstanding borrowings under the Credit Facility and approximately $13 million in outstanding letters of credit under the Credit Facility.
Market conditions could affect certain terms of other debt instruments that Mattel enters into from time to time.
Mattel monitors the third-party depository institutions that hold Mattel's cash and equivalents. Mattel's emphasis is primarily on safety and liquidity of principal, and secondarily on maximizing the yield on those funds. Mattel diversifies its cash and equivalents among counterparties and securities to minimize risks.
Mattel is subject to credit risks relating to the ability of its counterparties in hedging transactions to meet their contractual payment obligations. The risks related to creditworthiness and nonperformance have been considered in the fair value measurements of Mattel's foreign currency forward exchange contracts. Mattel closely monitors its counterparties and takes action, as necessary, to manage its counterparty credit risk.
Mattel expects that some of its customers and vendors may experience difficulty in obtaining the liquidity required to buy inventory or raw materials. Mattel monitors its customers' financial condition and their liquidity in order to mitigate accounts receivable collectability risks, and customer terms and credit limits are adjusted, if necessary. Additionally, Mattel uses a variety of financial arrangements to support the collectability of accounts receivable of customers deemed to be a credit risk, including requiring letters of credit, purchasing various forms of credit insurance with unrelated third parties, or requiring cash in advance of shipment.
Mattel sponsors defined benefit pension plans and postretirement benefit plans for its employees. Actual returns below the expected rate of return, along with changes in interest rates that affect the measurement of the liability, would impact the amount and timing of Mattel's future contributions to these plans.
Cash Flow Activities
Cash flows used for operating activities were $113.5 million in the first nine months of 2026, as compared to $203.3 million in the first nine months of 2025. The decrease in cash flows used for operating activities was primarily due to a decrease in cash used for working capital of $186.4 million, partially offset by a decrease in net income, excluding the impact of non-cash items.
Cash flows used for investing activities were $249.9 million in the first nine months of 2026, as compared to $97.5 million in the first nine months of 2025. The increase in cash flows used for investing activities was primarily due to $74.8 million of cash paid for the remaining 50% equity interest in Mattel163, net of cash acquired, and an increase in capital expenditures of $61.4 million.
Cash flows used for financing activities were $333.8 million in the first nine months of 2026, as compared to $426.3 million in the first nine months of 2025. The decrease in cash flows used for financing activities was primarily due to $308.4 million of cash paid for share repurchases in the first nine months of 2026 as compared to $412.5 million in the first nine months of 2025.
Seasonal Financing
See Part I, Item 1 "Financial Statements-Note 9 to the Consolidated Financial Statements-Seasonal Financing" of this Quarterly Report on Form 10-Q.
Financial Position
Mattel's cash and equivalents decreased by $701.5 million to $541.4 million at September 30, 2026 from $1.24 billion at December 31, 2025. The decrease during the nine months ended September 30, 2026 was primarily due to cash paid for share repurchases of $308.4 million, capital expenditures of $186.3 million, cash flows used for operating activities of $113.5 million, and $74.8 million of cash paid for the remaining 50% equity interest in Mattel163, net of cash acquired. Mattel's cash and equivalents decreased by $150.5 million to $541.4 million at September 30, 2026 from $691.9 million at September 30, 2025. The decrease during the trailing twelve months was primarily due to cash paid for share repurchases of $495.9 million, capital expenditures of $243.4 million, and $74.8 million of cash paid for the remaining 50% equity interest in Mattel163, net of cash acquired, partially offset by cash flows provided by operating activities of $683.0 million.
Accounts receivable increased by $302.5 million to $1.40 billion at September 30, 2026 from $1.10 billion at December 31, 2025, primarily due to the seasonality of Mattel's business. Accounts receivable were $1.40 billion at September 30, 2026, relatively flat as compared to $1.39 billion at September 30, 2025, as a result of higher sales offset by the timing of collections.
Inventories increased by $264.8 million to $828.0 million at September 30, 2026 from $563.1 million at December 31, 2025, primarily due to seasonal inventory build-up. Inventories were $828.0 million at September 30, 2026, relatively flat as compared to $826.6 million at September 30, 2025.
Prepaid expenses and other current assets were $218.6 million at September 30, 2026, relatively flat as compared to $227.1 million at December 31, 2025. Prepaid expenses and other current assets decreased by $28.3 million to $218.6 million at September 30, 2026 from $246.9 million at September 30, 2025, primarily due to decreases in prepaid royalties of $25.6 million.
Accounts payable and accrued liabilities increased by $26.4 million to $1.45 billion at September 30, 2026 from $1.43 billion at December 31, 2025, primarily due to an increase in deferred income of $49.7 million, an increase in accrued wages of $35.3 million, an increase in accrued interest of $29.9 million, and an increase in accrued royalties of $15.1 million. The increase was partially offset by a decrease in other accrued liabilities of $47.4 million, a decrease in accounts payable of $37.9 million, and a decrease in accrued incentive compensation of $36.9 million. Accounts payable and accrued liabilities increased by $132.1 million to $1.45 billion at September 30, 2026 from $1.32 billion at September 30, 2025, primarily due to an increase in deferred income of $53.7 million, an increase in accrued wages of $32.5 million, an increase in accounts payable of $24.7 million, and an increase in accrued advertising of $21.9 million.
A summary of Mattel's capitalization is as follows:
| September 30, 2026 | September 30, 2025 | December 31, 2025 | |||||||||||||||||||||||||||||||||
| (In millions, except percentage information) | |||||||||||||||||||||||||||||||||||
| Cash and equivalents | $ | 541.4 | $ | 691.9 | $ | 1,242.9 | |||||||||||||||||||||||||||||
| 2010 Senior Notes due October 2040 | 250.0 | 250.0 | 250.0 | ||||||||||||||||||||||||||||||||
| 2011 Senior Notes due November 2041 | 300.0 | 300.0 | 300.0 | ||||||||||||||||||||||||||||||||
| 2019 Senior Notes due December 2027 | 600.0 | 600.0 | 600.0 | ||||||||||||||||||||||||||||||||
| 2021 Senior Notes due April 2026 | - | 600.0 | - | ||||||||||||||||||||||||||||||||
| 2021 Senior Notes due April 2029 | 600.0 | 600.0 | 600.0 | ||||||||||||||||||||||||||||||||
| 2025 Senior Notes due November 2030 | 600.0 | - | 600.0 | ||||||||||||||||||||||||||||||||
| Debt issuance costs and debt discount | (15.0) | (12.4) | (18.3) | ||||||||||||||||||||||||||||||||
| Total debt | 2,335.0 | 50 | % | 2,337.6 | 51 | % | 2,331.7 | 51 | % | ||||||||||||||||||||||||||
| Stockholders' equity | 2,340.6 | 50 | 2,261.2 | 49 | 2,233.0 | 49 | |||||||||||||||||||||||||||||
| Total capitalization (total debt plus stockholders' equity) | $ | 4,675.6 | 100 | % | $ | 4,598.8 | 100 | % | $ | 4,564.7 | 100 | % | |||||||||||||||||||||||
Total debt was $2.33 billion at both September 30, 2026 and December 31, 2025, and $2.34 billion at September 30, 2025. During November 2025, Mattel issued $600.0 million of 2025 Senior Notes due November 2030 and used the net proceeds plus cash on hand to repay $600.0 million of 2021 Senior Notes due April 2026.
Stockholders' equity increased by $107.6 million to $2.34 billion at September 30, 2026 from $2.23 billion at December 31, 2025, primarily due to net income of $396.4 million, partially offset by share repurchases of $311.0 million during the nine months ended September 30, 2026. Stockholders' equity increased by $79.4 million to $2.34 billion at September 30, 2026 from $2.26 billion at September 30, 2025, primarily due to net income of $502.6 million, other comprehensive income of $42.0 million, and the net effect of share-based compensation and the related issuance of treasury stock of $33.6 million, partially offset by share repurchases of $500.2 million during that twelve-month period.
Litigation
See Part I, Item 1 "Financial Statements-Note 21 to the Consolidated Financial Statements-Contingencies" of this Quarterly Report on Form 10-Q.
Application of Critical Accounting Policies and Estimates
Mattel's critical accounting policies and estimates are included in the 2025 Annual Report on Form 10-K and did not materially change during the first nine months of 2026.
New Accounting Pronouncements
See Part I, Item 1 "Financial Statements-Note 23 to the Consolidated Financial Statements-New Accounting Pronouncements" of this Quarterly Report on Form 10-Q.
Non-GAAP Financial Measure
To supplement the financial results presented in accordance with GAAP, Mattel presents a non-GAAP financial measure within the meaning of Regulation G promulgated by the SEC. The non-GAAP financial measure that Mattel presents is currency exchange rate impact. Mattel uses this measure to analyze its continuing operations and to monitor, assess, and identify meaningful trends in its operating and financial performance. Mattel believes that the disclosure of this non-GAAP financial measure provides useful supplemental information to investors to allow them to better evaluate ongoing business performance and certain components of Mattel's results. This measure is not, and should not be viewed as, a substitute for GAAP financial measures and may not be comparable to similarly-titled measures used by other companies.
Currency Exchange Rate Impact
The currency exchange rate impact reflects the portion (expressed as a percentage) of changes in Mattel's reported results that are attributable to fluctuations in currency exchange rates.
For entities reporting in currencies other than the U.S. dollar, Mattel calculates the percentage change of period-over-period results at constant currency exchange rates (established as described below) by translating current period and prior period results using these rates and then determines the currency exchange rate impact percentage by calculating the difference between the percentage change at such constant currency exchange rates and the percentage change at actual exchange rates.
The constant currency exchange rates are determined by Mattel at the beginning of each year and are applied consistently during the year. They are generally different from the actual exchange rates in effect during the current or prior period due to volatility in actual currency exchange rates. Mattel considers whether any changes to the constant currency rates are appropriate at the beginning of each year. The exchange rates used for these constant currency calculations are generally based on prior year actual exchange rates.
Mattel believes that the disclosure of the percentage impact of currency changes is useful supplemental information for investors to be able to gauge Mattel's current business performance and the longer-term strength of its overall business since currency changes could potentially mask underlying sales trends. The disclosure of the percentage impact of currency exchange allows investors to calculate the impact on a constant currency basis and enhances their ability to compare financial results from one period to another.
Key Performance Indicator
Gross billings represent amounts invoiced to customers. It does not include the impact of sales adjustments, such as trade discounts and other allowances. Mattel presents changes in gross billings as a metric for comparing its aggregate, categorical, brand, and geographic results to highlight significant trends in Mattel's business. Changes in gross billings are discussed because, while Mattel records the details of sales adjustments in its financial accounting systems at the time of sale, such sales adjustments are generally recorded by customer and not associated with categories, brands, or individual products.
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