Mattel Inc. Earnings: Falling Costs Help Margins Expand, Profit Rises

S&P 500 (NYSE:SPY) component Mattel Inc. (NASDAQ:MAT) reported net income above Wall Street’s expectations for the fourth quarter. Mattel designs and manufactures a variety of toys and games for customers and consumers worldwide.

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Mattel Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for the toys and games company rose to $370.6 million ($1.07 per share) vs. $325.2 million (89 cents per share) in the same quarter a year earlier. This marks a rise of 14% from the year earlier quarter.

Revenue: Rose 1.4% to $2.15 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: MAT beat the mean analyst estimate of $1.01 per share. It fell short of the average revenue estimate of $2.23 billion.

Quoting Management: “Mattel delivered another strong year, our third consecutive year of solid performance, which I am especially pleased about given the soft global economic backdrop and the highly promotional environment, particularly in the U.S.,” said Bryan G. Stockton, Mattel Chief Executive Officer. “Despite these challenges, for the year we delivered strong revenue growth and record operating income. Our portfolio of brands performed around the globe; our point-of-sale grew nicely; and we gained category share according to NPD’s most recent data. In fact, four of the top five properties for the 2011 holiday season were Mattel properties.”

Key Stats:

The company has now seen net income rise in three straight quarters. In the third quarter, net income rose 6.2% and in the second quarter, the figure rose 56.1%.

Revenue has risen the past four quarters. Revenue increased 9% to $2 billion in the third quarter. The figure rose 14.1% in the second quarter from the year earlier and climbed 8.2% in the first quarter from the year-ago quarter.

The company beat estimates last quarter after being in line with expectations in the third quarter with net income of 86 cents per share.

Gross margins expanded last quarter, rising 2.3 percentage points to 53.9% from the year earlier quarter. This snaps a streak of two consecutive quarters of shrinking margins.

Looking Forward: Over the past sixty days, the outlook for the company’s performance next quarter has become increasingly unfavorable. The average estimate for the first quarter of the next fiscal year is 9 cents per share, a drop from 10 cents. The average estimate hasn’t changed from $2.14 per share for the fiscal year.

Competitors to Watch: JAKKS Pacific, Inc. (NASDAQ:JAKK), Hasbro, Inc. (NYSE:HAS), Kid Brands Inc (NYSE:KID), LeapFrog Enterprises, Inc. (NYSE:LF), and Casdon plc (AMEX:CDY).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com