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Mattel earnings show the toy company ‘firmly in growth mode,’ CEO says

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Mattel CEO Ynon Kreiz joins Yahoo Finance Live to discuss earnings, growth for the toy company, pricing amid inflation, the Barbie movie, and more.

Video Transcript

BRIAN SOZZI: Mattel didn't play games in the first quarter, beating sales and profit estimates as demand for Barbies and Hot Wheels remained strong. Joining us now is Mattel CEO Ynon Kreiz. Ynon, always great to get some time with you. A lot more people are back out there going to the office. They're more mobile than they have been in some time, yet your sales continue to be strong. How do you explain that?

YNON KREIZ: Well, this was the highest first quarter we have on record, both top line and bottom line. Our momentum continued across the business with double-digit growth in Barbie, Hot Wheels, and Fisher-Price. We started the second quarter with strong consumer demand. The full-year outlook is also strong and we expect to grow market share. So overall, an excellent start of the year. And we are firmly in growth mode.

BRIAN SOZZI: How has the second quarter started, Ynon? Because you did talk a little bit about growth in point of sale in April.

YNON KREIZ: That's right. We expect to continue to grow our business, our brands, and growth that we see in our franchises will be further amplified by sales tied to the theatrical releases of "Jurassic World," "Minions," and "Lightyear," all of which we have great toy lines for. So this will further amplify what we do with our own franchises that also have very good, very strong momentum and consumer demand.

BRIAN SOZZI: Have you seen inflation peak in your business?

YNON KREIZ: Yes, we have seen inflation growing. We do expect inflation to be higher this year than last year. But we also expect it to moderate in 2023. We expect to offset most of the impact of inflation with pricing actions, scale benefit of our growing business, and the cost savings that we are implementing across the enterprise.

BRIAN SOZZI: There's a lot of inflation coming at consumers. And of course, toys are notoriously price-sensitive. What type of price increases are you talking about here, Ynon? And what categories have you taken them?

YNON KREIZ: Well, pricing is one of the options we consider in times of inflation. And this is, of course not unique to the toy industry. Given the anticipated inflation, we are implementing pricing actions in the second half of the year. And when we raise prices, we always keep consumers in mind. We are being very thoughtful and strategic about it and are committed to maintaining the right balance, the right equilibrium between quality and best value for consumers.

BRIAN SOZZI: In terms of content that you have coming down the pike, I know this has been a big focus area for you. How many movies or related content do you have hitting over the next 12 months?

YNON KREIZ: Well, we have some really exciting news in this area. This week, we announced that JJ Abrams will produce Hot Wheels that we're developing in partnership with Warner Brothers. JJ is one of the most prolific creators of our time, and having him as a partner is great for the franchise.

And then we also announced the release date for the "Barbie" movie-- July 21, 2023. The "Barbie" movie is now in principal photography in London, and we could not be more excited about Greta Gerwig's vision and creative execution of what is shaping up to be an iconic cultural event with an incredible cast led by Margot Robbie and Ryan Gosling, Simu Liu, Will Ferrell, America Ferrera, and more. So a lot of excitement there. And then, of course, we have 12 other projects that are currently in development on the film side.

BRIAN SOZZI: Ynon, it's been, I'm sure, a very interesting week for you and the team. There was a report in the "Wall Street Journal" that Mattel was approached regarding a take-private deal. Anything you can share on here?

YNON KREIZ: Well, Brian, as you'd expect, we don't comment on speculation and are very focused on executing our strategy. The numbers are strong. We continue to grow. We expect to grow in the second quarter and the full year and remain focused on execution.

BRIAN SOZZI: You've engineered quite the turnaround. You and I have talked numerous times here. You've cut a lot of expenses out of the business. You've brought back to life Barbie and Hot Wheels. Do you think the market is just not giving you enough love in terms of valuation that you deserve for the turnaround?

YNON KREIZ: Well, the only thing we can do is continue to execute and operate the company at the level we are. We've seen tremendous momentum and growth in the business, both top line and bottom line. Our profitability in terms of adjusted EBITDA went from $126 million in 2017 to over $1 billion in 2021. And we guided for further growth in 2022.

So there's a lot of momentum in the company. And the one thing we can continue to do, which is what we're doing, is focus on execution and continue to deliver the results.

BRIAN SOZZI: Fair to say that you think the stock is still undervalued?

YNON KREIZ: Well, we can only do what we can do and control what we control. We know how to run the company. We do it really well. Mattel is a high performing company, an IP-driven high performing toy company. And we remain focused on our role to run the company well. And that's what we are focused on doing.

BRIAN SOZZI: All right, we'll leave it there. I will say this, Ynon-- looking forward to that "Barbie" movie in 2023, taking my niece and nephew-- looking fun indeed. Mattel CEO Ynon Kreiz, always good to see you. We'll talk to you soon.

YNON KREIZ: Thank you.

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