Mattel's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Mattel (MAT)

Q1 2012 Earnings Call

April 16, 2012 8:30 am ET

Executives

Drew Vollero -

Bryan G. Stockton - Chief Executive Officer and Director

Kevin M. Farr - Chief Financial Officer

Analysts

Gregory R. Badishkanian - Citigroup Inc, Research Division

Sean P. McGowan - Needham & Company, LLC, Research Division

Felicia R. Hendrix - Barclays Capital, Research Division

James Hardiman - Longbow Research LLC

Robert W. Carroll - UBS Investment Bank, Research Division

James Andrew Chartier - Monness, Crespi, Hardt & Co., Inc., Research Division

Andrew E. Crum - Stifel, Nicolaus & Co., Inc., Research Division

Linda Bolton-Weiser - Caris & Company, Inc., Research Division

Michael Kelter - Goldman Sachs Group Inc., Research Division

Presentation

Operator

Good day, ladies and gentlemen, and welcome to Mattel's First Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I'd now like to turn the conference over to your host, Mr. Drew Vollero, Senior Vice President of Corporate Strategy and Investor Relations. Please go ahead, sir.

Drew Vollero

Thanks, operator. As you know, this morning, we reported Mattel's first quarter financial results. We've provided you with a slide presentation to help guide our discussion today. The slide presentation and the information required by Regulation G regarding non-GAAP financial measures is available on the Investors & Media section of our corporate website, corporate.mattel.com.

In a few minutes, Bryan Stockton, Mattel's CEO; and Kevin Farr, Mattel's CFO, will provide comments on the results, and then the call will be opened for your questions.

Certain statements made during the call may include forward-looking statements related to the future performance of our overall business. These statements are based on currently available information, and they are subject to a number of significant risks and uncertainties, which could cause our actual results to differ materially from those projected in the forward-looking statements.

We describe some of these uncertainties in the Risk Factors section of our 2011 annual report on Form 10-K and in our 2012 quarterly reports on Form 10-Q as well as in other filings we make with the SEC from time to time. Mattel does not update forward-looking statements and expressly disclaims any obligation to do so.

Now, I'd like to turn the call over to Bryan.

Bryan G. Stockton

Thank you, Drew, and good morning, everyone. Last week marked my 100th day as Mattel's Chief Executive Officer. During those first 100 days, I shared with you Mattel's plan to achieve consistent long-term growth and continued strong financial performance. We're aligning behind 4 key initiatives: plan for growth, structure for growth, nurture our talented and accelerate an already innovative culture. I'm pleased to say that after the first 100 days, we made some great progress towards achieving these goals.

Let me touch on some of these areas, starting with plan for growth. As we've told you before, Mattel will focus on 4 key growth strategies: growing core brands, building new franchises, optimizing our entertainment partnerships and expanding our international footprint. The big news with core brands is the addition of our newest core brand, Thomas & Friends. I'll discuss our plans for Thomas in a few minutes.

We're also continuing to extend our core brands. We recently announced 2 multi-year global licensing partnerships for Barbie and Hot Wheels-themed products, a license with MEGA Brands to develop construction toys and a license with Crayola to develop Barbie and Hot Wheels-themed arts and crafts products, including an app that turns the iPad into an interactive coloring book.

In our Entertainment business, we're very excited to have recently extended the Disney Princess license for North America and Latin America and have expanded the scope to include emerging markets such as Eastern Europe, Turkey, Greece as well as the Middle East and Africa. Disney Princess has been a strong performer for Mattel and is a solid fit within our Girls portfolio. And earlier this year, we announced the renewal of a multi-year global licensing partnership with Nickelodeon to develop toys based on Nickelodeon's preschool programs.

We're also growing internationally. We're driving our international growth by making disciplined, strategic investments in infrastructure and brand building. As you'll recall, we made a long-term strategic investment in Brazil, and it paid off in a big way. Brazil is now our second largest country in sales after the U.S. We’ve made great progress in both India and China. And earlier this year, in line with our emerging markets strategy, we transitioned from a distributor model to a wholly owned Mattel subsidiary with the opening of our office in Russia. We'll apply levels of investment and discipline into Russia consistent with the opportunity, and we believe we are well positioned for growth in this important BRIC country.

To support our plan for growth, we're also structuring for growth. The newly created North America division and global brand teams have been up and running since January 1. Our North America division now has a team of people fully dedicated to running the commercial part of our business. This brings decision making much closer to consumers and customers in this important geography.

Our global brand teams are now sharply focused on global brand building and product design to better meet the unique needs of consumers and customers by geographic region. Forming global brand teams and applying the international subsidiary-like approach to North America enables us to focus resources to grow the business more rapidly.

But even with the best plan and structure, it all comes down to people. Nurturing our talent is the key focus at Mattel. Earlier this year, I appointed Jean-Christophe Pean to lead our newly formed North America division. Jean-Christophe has been with Mattel since 1998 and has successfully served in a variety of key leadership roles, including Senior Vice President and General Manager of Asia Pacific and Vice President and General Manager of the U.K. I'm confident that Jean-Christophe will leverage his extensive global sales and marketing experience to lead and grow this important aspect of Mattel's business.

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