Mattel CEO on Tariffs, Supply Chain Diversification, and Toy Manufacturing

First Quarter Performance and Financial Guidance

• 📊 Mattel reported a strong first quarter with topline growth, gross margin expansion, and operational excellence.
• 📈 Consumer demand is up double digits in the second quarter, supported by a strong brand portfolio, flexible supply chain, and balance sheet.
• ⚠️ The company is withdrawing its financial guidance due to uncertainty, including the impact of tariffs.

Mitigating Tariff Costs

• 💡 Mattel is implementing three key actions to offset potential incremental costs from tariffs: accelerating supply chain diversification, optimizing product sourcing and mix, and taking pricing actions in the US where necessary.
• 🌍 The company has been diversifying its manufacturing footprint for seven years, sourcing from seven countries.
• 🇨🇳 By the end of the year, China will represent below 40% of production, with a goal to have no single country exceed 25% within two years.
• 🇺🇸 China currently represents less than 20% of global production for US imports, with plans to reduce this to under 10% by 2027.

Manufacturing Location and Pricing

• 🇺🇸 Mattel believes that manufacturing outside the US is more efficient and productive, allowing for quality products at affordable price points.
• 💡 Design, development, product engineering, and brand management for toys largely occur in America.
• 🚫 The company does not foresee toy manufacturing moving back to the United States due to cost efficiencies abroad.

Impact of Tariffs on the Toy Industry

• 🇨🇳 Approximately 80% of global toy production occurs in China, exposing many companies to significant disruption.
• 🤝 Mattel supports the Toy Association's advocacy for zero tariffs on toys to ensure safe and affordable products remain accessible.
• 🎁 The company is committed to the uninterrupted supply of quality products for children and families, including during the Christmas season.