Mattel, Inc.

Hello and thank you for standing by. My name is And good afternoon, everyone.

Joining me today are Enon Crise, Mattel's Chairman and Chief Executive Officer, and Paul Roux, Mattel's Chief Financial Officer. This afternoon, we reported Mattel's fourth quarter and full year 2025 financial results. We will begin today's call with Enon and Paul providing commentary on our results, after which we will provide some time for questions. Please note that during the question and answer session, we respectfully ask that you limit to one question and one follow-up so that we can get to as many analysts and questions as possible today. Today's discussion, earnings relief, and slide presentation may reference certain non-GAAP financial measures and key performance indicators, which are defined in the slide presentation and earnings relief appendices. Please note that gross billings figures referenced on this call will be stated in constant currency unless stated otherwise. Our earnings release, slide presentation, and supplemental non-GAAP information can be accessed through the investors section of our corporate website, corporate.matel.com, and the information required by Regulation G regarding non-GAAP financial measures, as well as information regarding our key performance indicators is included in those documents. The preliminary financial results included in the earnings release and slide presentation represent the most current information available to management. The company's actual results when disclosed in its Form 10-K may differ as a result of the completion of the company's financial closing procedures, final adjustments, completion of the review by the company's independent registered public accounting firm, and other developments that may arise between now and the disclosure of the final results. Before we begin, I'd like to remind you that certain statements made during the call may include forward-looking statements related to the future performance of our business, brands, categories and product lines. Any statements we make about the future are, by their nature, uncertain. These statements are based on currently available information and assumptions, and they are subject to a number of significant risks and uncertainties that could cause our actual results to differ from those projected in the forward-looking statements. We describe some of these uncertainties in the risk factors section of our latest Form 10-K annual report, our Form 10-Q quarterly reports, our most recent earnings release and slide presentation, 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 Enon.

Thanks, Greg. Good afternoon and thank you for joining Mattel's fourth quarter and full year 2025 earnings call. In addition to discussing our financial results, we have several strategic updates to cover, including our agreement to acquire full ownership of Mattel 163 announced today, details on the evolution of our strategy, guidance for 2026, as well as mid-term expectations and an update on our capital allocation priorities. In the fourth quarter, we achieved 6% growth in gross billings, including 7% in North America and 4% internationally. However, the growth in the U.S. was less than anticipated, which impacted our fully results relative to expectations. 2025 was marked by uncertainty in U.S. trade dynamics that affected retailer ordering patterns for much of the year. After two challenging quarters where U.S. retailers delayed orders, there was a significant acceleration in orders through most of the fourth quarter. December, however, ended up growing less than anticipated in the U.S. and our full year results finished below expectations. The challenge was specific to the U.S. while our international business performed in line with expectations. with growth in every region in a quarter. POS was positive in all regions, including the U.S., and grew approximately 3% overall for both the quarter and full year. Our supply chain excelled in a volatile environment, adjusting for the shift in shipping patterns from direct import to domestic fulfillment, and our teams effectively managed our own inventory to finish the year well-positioned for 2026. As it relates to our full-year portfolio performance, vehicles continued to grow strongly. Challenger categories combined grew, driven by outstanding performance and action figures, while dolls and infant, toddler, and preschool declined. Hot wheels and Uno continued to perform strongly, and we saw improving trends in Barbie, which was flat for the quarter, although it declined for the year. Mattel Brick Shop had a very successful launch and is on its way to becoming an important growth driver for us. We gained market share in 2025 in key categories, including vehicles, dolls, action figures, and traditional games. We ended the year with over $1.2 billion of cash, after repurchasing $600 million of shares. With that, we have acquired more than $1.2 billion of shares in the last three years, representing approximately 18% of shares outstanding. Given the strength of our balance sheet and cash conversion and confidence in our strategic plan, our board has authorized a new program to acquire another $1.5 billion of shares, which we expect to complete by the end of 2028. Today, we announced that we have reached an agreement with our joint venture partner, NetEase, to acquire full ownership of the Mattel 163 mobile games studio. Since its inception in 2018, Mattel 163 has released four games based on Mattel IP with approximately 20 million monthly active users and over 550 million downloads worldwide. The acquisition values Mattel 163 at $380 million with a purchase price of $159 million for net users 50% interest. More than half of the purchase cost is expected to be funded from Mattel's share of the JV's cash, which is not consolidated on Mattel's balance sheet. The transaction is expected to be completed by the end of the first quarter subject to customary closing conditions and will be immediately accretive for the company both strategically and financially. The Mattel 163 team has done remarkably well building this business from the ground up and we look forward to welcoming them on board. Our vision is to extend physical play to the virtual world by creating digital experiences and games based on Mattel IP that drives sustained engagement for fans of all ages. Acquiring full control of Mattel 163 meaningfully advances our digital games business and will add significant development, publishing, and digital customer acquisition expertise. Mattel will leverage Mattel 163 capabilities to increase our mobile games output and enhance alignment with the broader Mattel product roadmap. Integrating Mattel 163 with Mattel's digital business will create scale benefits in performance marketing and cross-promotion, as well as greater synergy with Mattel brand marketing. Our portfolio of iconic brands lends itself perfectly to the digital world. The acquisition is in line with our strategy to capture the full value of our IP in high margin, highly accretive entertainment verticals. We also announced that Mattel has been awarded global multi-year rights to develop and market a full range of Teenage Mutant Ninja Turtles products starting in 2027 ahead of Paramount's two worldwide theatrical releases in 2027 and 2028. Teenage Mutant Ninja Turtles has been a global phenomenon for more than 40 years. and we're excited to add this franchise to our portfolio. This significantly expands our action figures category and further reinforces our leadership position as a partner of choice to major entertainment companies and IP owners. Recent additions include K-pop Demon Hunters with Netflix, DC with Warner Brothers, and the renewal of Disney Princess and Frozen as well as ongoing partnerships for Jurassic with Universal, Minecraft with Microsoft, and WWE. Our company's mission is to create innovative products and experiences that inspire fans, entertain audiences, and develop children through play. Our purpose is to empower generations to explore the wonder of childhood and reach the full potential. Over the last few years, we have successfully broadened our reach outside of toys into a creative entertainment verticals and expanded to new audiences and fans, including adults. We're evolving our strategy to grow our IP driven play and family entertainment business. This brings together two important and fundamental concepts. The first, is the continued expansion beyond physical product. We see content, licensing, and digital games as key high margin growth drivers, and the acquisition of Mattel 163 is an important building block of the strategy. The second is an increased orientation around brand management, which will allow us to capture full value of our IP across both toys and entertainment. It is important to note that toys are foundational to Mattel, and there is significant upside in this industry. We believe success in our toy business will drive success in entertainment, and success in entertainment will drive greater success in toys. We are looking to fully capitalize on this virtuous cycle. Going forward, the five key priorities of our strategy are To grow toy brands with more breakthrough innovation, adult fans and collectors, and evolve demand creation. To expand D2C and commercial reach to first-party data, retail development, and new channels. To broaden content offering in film, television, and short form. Accelerate licensing in consumer products, location-based entertainment, and publishing. and expand with new business models, to scale digital play through mobile game self-publishing, Mattel 163, licensing, and creative platforms, and to optimize operations and leverage AI across our systems and supply chain. Our new brand-centric organization and integrated operating model, supported by the Mattel Playbook, will allow us to manage our brands more holistically and drive the success of our strategy. 2026 will be an important year for Mattel as we implement our new brand-centric strategy to grow our IP-driven play and family entertainment business. We expect growth to be driven by innovation in toys, major partnerships with leading IP owners, and an acceleration of our entertainment offering. Vehicles, as well as challenging categories combined, are expected to grow strongly, DARS to be comparable, and ITPS to decline. Hot Wheels, Uno, and Mattel Brick Shop are expected to have another strong growth year. For Barbie, we expect improving trends for the year, driven by new line architecture and product innovation. We are very confident in Barbie's strength as one of the most recognized and beloved brands in modern culture, and that it will return to growth in 2027. We will benefit from strong partnerships with major entertainment companies and IP owners, including new launches for Netflix, K-pop, Demon Hunters, Disney, and Pixar's Toy Story 5, and This Is Supergirl. Mattel Creations, Our D2C platform serving adult fans and collectors with premium products is expected to continue to perform strongly in line with our strategy to further expand consumer demographics. 2026 marks an inflection year in our entertainment offering with two movie releases based on Mattel IP, Masters of the Universe on June 5th and Matchbox on October 9th. The worldwide theatrical release of Masters of the Universe with Amazon MGM Studios will bring to the big screen one of the most iconic superhero franchises in the industry. The Matchbox movie with Skydance Media will be distributed globally on Apple TV, introducing this heritage brand to a new generation of fans. And we expect to benefit from exciting momentum in digital play. including the release of our first two self-published digital games and the addition of Mattel 163 to our growing digital portfolio. As it relates to the toy industry, following mid single digit growth in 2025, we expect it to grow in 2026 with the benefit of a more poetic theatrical slate and continued growth in adult consumers. Consistent with our capital allocation priority to drive organic growth, we plan to make several targeted strategic investments in new capabilities and technology to scale business opportunities of approximately $110 million in 2026. These include digital games, which will be the largest area of investment, first-party data, D2C, and breakthrough toy innovation as well as AI and infrastructure. In addition, we are planning to invest approximately $40 million primarily in digital performance marketing and user acquisition for our two self-published mobile games launches where the ROI is measurable and can be adjusted up or down based on specific targets and results. These investment decisions follow a rigorous assessment that identified opportunities for capital deployment within our capitalized framework in scalable, highly accretive growth areas to create long-term value. In aggregate, these investments will impact our bottom line in 2026 and then are expected to be high ROI and sell funding in 2027 and beyond and drive accelerated growth and profitability. In 2027, we expect to achieve growth of mid to high single digits in constant currency in revenue and double digits in adjusted operating income. This growth will be driven by the benefits of our brand-centric strategy and organization, new partnerships, and the 2026 strategic investments. I will now turn it over to Paul to cover our financial results and outlook in more detail.