All right, great. I think we'll get started with our next session. Thank you everyone for taking the time to join us today. We are excited to welcome to the Communacopia + Technology Conference this year, Ynon Kreiz and Anthony DiSilvestro, the CEO and CFO of Mattel. Thank you both for being with us today. Thank you. Thank you for having us. Absolutely. So, Ynon, maybe starting off with you, five years ago, you came in to the CEO seat at Mattel and put in place a strategy to transform the company from an asset into an asset-light toy maker, with the ability to capture value of your IP through content and storytelling. So maybe to start off, for those who are newer to the Mattel story, could you talk about that asset-light strategy and the content-focused strategy that you put in place to monetize IP? Sure. The opportunity that we saw is to grow our IP-driven toy business and expand our entertainment offering, leveraging the strength of the portfolio of brands that we own. That is one of the strongest in the world in children and family entertainment. We were very focused on growing our top line through scaling our portfolio, growing our franchise brands, and advancing our D2C and e-commerce business. We continued to increase profitability, and we focused on capturing the full value of our intellectual properties. What has happened over these five years, we transformed the toy business dramatically. We grew it from $125 million Adjusted EBITDA in 2017 all the way to $1 billion in 2022, 2021 rather, in four years. Went slightly down to $967 million EBITDA in 2022, and positioned the company for long-term growth. In the process, we also became investment-grade, and very meaningfully strengthened our financial position and balance sheet. And while we worked and focused on the toy business and positioned ourselves for long-term growth, we made significant progress on our IP strategy. And we took a capital-light approach that enabled us to pursue multiple opportunities in across many categories. Think film, television, live events, consumer product and merchandise, digital experiences, all driven by big brands, big franchises. And we've achieved consistent progress across every vertical, culminating and peaking with the recent release of the Barbie movie, which was not on its own, it's part of a holistic strategy, a multi-year strategy to capture value from our intellectual properties. That's a great overview. I wanna dive into a lot of those topics there. But maybe starting first on the entertainment strategy. You mentioned Barbie. It was a big milestone on your roadmap. First-ever theatrical release for a global audience. It's obviously done incredibly well. I'm curious, maybe as you, as you look back over the last few years, what lessons you've learned from the Barbie movie production, marketing, it playing and being such a, such an incredible success? What lessons did you learn? What institutional muscles do you feel like Mattel has built through that process? Yeah, thank you. Yes, it has been a tremendous success. Barbie movie is at around, just about to hit $1.4 billion of worldwide box office receipt. It's the number one movie in gross, in box office for Warner Bros. in 100 years of incredible history of the studio. And it's already the biggest movie for the year in 2023, and still going. So we could not be more proud of the success of the movie and the execution of Greta Gerwig, Gerwig's vision of the Barbie picture. The main takeaways and the learnings for us out of this experience is, number one, is the strength of our brands and the cultural resonance of our portfolio. Barbie is clearly a flagship for that, but it's not just Barbie. It's really about the emotional connection that people have with our brands. And this goes back to the origin of our strategy, where we realized that people who buy our product are not just consumers, they are fans. And in the aggregate, a lot of fans become an audience, and once you realize that you have an audience, it changes the relationship between you and your fans, and how you engage, and what is that you're trying to achieve. And so recognizing that our brands have that level of resonance, not just in the core consumer segment that buys toys, it's much beyond that. Then it was about our ability to attract, partner, collaborate, and amplify top creative talent. Because if the movie was not as good as it is, it would not have been as successful. It... You have to have a great execution, great creative execution, and attract and collaborate with top creative talent. And the third part is our ability to market and promote and create demand for, for film. We do that day in and day out for our toy business, but our ability, in combination and coordination, with Warner Bros., who did an incredible job on marketing the movie through their channels. We also activated our demand creation capabilities in thousands of storefronts, collaborating with retail partners all over the world at the ground level, that amplified and promoted the movie. And together, bringing all of this together, it became a cultural phenomenon, which was the original vision, really, is how to create a societal event, a cultural moment. It was not about just making a movie or, for that matter, just making a movie to sell toys. It was about creating a cultural event that will rise above competition and be an important moment, not just for Mattel, but for consumers and fans all over the world. So, maybe taking those learnings, one of the key questions we've been getting from investors over the last couple of months is: What's next for your entertainment strategy? You have over a dozen pieces of content sent for production over the next couple of years. Is there an appetite to further increase content production, particularly in theatrical? And how do you take really those key learnings, and apply it to what you have in the current pipe? Yeah. We're still at an early stage of executing our IP strategy. We have 14 other movies, live action movies in development, with some of the most acclaimed talent of this generation, from J.J. Abrams, who's producing Hot Wheels, Matchbox, which is being produced by Skydance, who made Mission: Impossible and Top Gun. We have a movie in development with Tom Hanks in Major Matt Mason. We have Polly Pocket that is being developed by Lena Dunham, and starring Lily Collins. We have another movie with Vin Diesel, Rock 'Em Sock 'Em Robots. The Barney in development with Daniel Kaluuya, and the list goes on and on. So we have very exciting projects in development in live action. We've also been developing our television slate, which is a thriving business and growing at pace for Mattel. This year, we'll premiere 13 new projects, where there's going to be a sequel, Monster High animated series sequel, and a live action musical. There'll be animated series for Thomas, for Polly Pocket, Barney, Masters of the Universe. We continue to see very strong engagement with Hot Wheels primetime show on NBC, where there's more shows that we develop. There's the Pictionary second season on Fox, and the list goes on and on. So you have a growing portfolio of brands that we are broadcasting now around the world. In the meantime, we continue to develop our location-based entertainment businesses, publishing, digital experiences, and this will continue to grow and expand and become an ever-growing part of the company. The opportunity or what you saw around the Barbie movie was, we believe, a template, a case study, an opportunity to truly understand the value and appeal that our brands have, the cultural resonance, and importantly, our ability to execute these projects, both creatively and commercially. We hope to, and expect to have more of those. We're not saying it will be as big or as successful as Barbie, but it will be the same approach, the same opportunity, and the same capital-light methodology that we believe served us very well in this case. Robust pipeline. I wanna maybe pivot for a moment and come back to Barbie and some of the IP. But maybe for Anthony, on inventories, on your last earnings call, you stated that retail inventory correction was mostly behind you. Can you update us on the inventory levels heading into the end of the summer? And what gives you confidence that retailers are indeed finished managing down inventories, and feel comfortable with where they're at heading into the holiday season? Sure, sure. You know, as we said on our Q2 call and can state again today, we believe the inventory correction at retail is mostly, you know, behind us, right? And for context, we came into 2023 with retail inventory levels elevated, and we've made progressive improvements in that position as we've gone through the year. At the end of the second quarter, retail inventory levels were down double digits, measured in dollars, and down high single digits in terms of, you know, weeks of supply. And what we do, we have continuous dialogue with our retailers and visibility into their inventory levels, their order patterns, their plans for the holiday season, and that's important as we move through our, you know, peak of production, which we have done. So we think we're in a real good spot. Now, in terms of phasing, you know, we expect our gross billings to go back and revert to historical patterns, which is about two-thirds happening in the second half, and that'll yield an accelerated growth rate, particularly in Q4, as we wrap an atypical decline in retail inventories, you know, last year. So again, we think we're in a, in a really good spot as we head into the holiday season. Also want to mention our own inventory levels. We've made great progress, right? That was one of our priorities coming into 2023. And at the half, our own inventory levels are down more than $200 million. So both retail and owned inventory levels are in a good position as we head into the back half of the year here. I think you mentioned that you expect normalized purchasing patterns to resume in the back half of the year. Your guidance certainly calls for an inflection in 3Q and 4Q. It's curious if you could elaborate a little bit more on what you're hearing from your retail partners. We've heard that it's been more of a bifurcated approach, where some retailers are leaning into the toy category, some others are maybe taking a more conservative approach, given what happened last year. What are you hearing? What are you looking out for, perhaps over the next couple of months, to give you confidence that that demand will materialize into POS? ... Let me make some comments on that. Our guidance, you know, does imply strong growth in the second half, both in consumer takeaway and in our gross billings. As we plan with our retailers, you know, we expect strong support, right? Through top toys, holiday catalogs, higher promotional activity, all higher than, you know, the prior year. And as we look at our Q3 POS through August, total company POS is positive, and year to date, total company POS is now positive, right? So that's a changing trend since the end of the first half. We can't talk specifically on behalf of our retailers, but we can reiterate our guidance today. That calls for net sales and constant currency to be comparable to last year, and that includes a three to four point negative headwind from the retail inventory correction. Adjusted EPS in the range of $1.10-$1.20. Adjusted EBITDA in the range of $900 million-$950 million, and for free cash flow to exceed $400 million. In terms of the categories, we continue to expect growth in both dolls and vehicles, offset by declines in infant, toddler, preschool, and in our challenger categories, in aggregate. And with respect to our power brands, we do expect growth in Barbie and Hot Wheels, and a decline in Fisher-Price. Now, we are benefiting from the Barbie movie. It has exceeded our expectations, but this is being offset by industry softness, which we now expect to decline modestly in 2023. And look, with respect to the movie, we're very happy with the success now at, you know, $1.4 billion in box office, and we have a meaningful economic participation in that. Now, in our capital-light model, we bring our IP, and we also partner with studios and production companies to, you know, bring this all together in our capital-light approach, which we believe is the right profile for us. But we participate in a number of ways, as the rights owner through the IP, as well as, you know, in the production or producer deals. And our economics are a function of the revenues as well as the profit participation, and that scales with the success of the movie. With respect to the economics, if you look at the direct movie participation, the movie-related toys and the consumer products, we expect the 2023 benefit in terms of gross billings to exceed $125 million, and the blended OI margin to exceed 60%. So it's making a nice contribution to 2023. And as we look ahead, right, there will be benefits in 2024 and beyond. At 60% on the $125 million in incremental- That's blended. Related blended? OI. OI. Got it. Thank, thank you for all that, color. That's, that's incredibly helpful. And maybe building on, on Barbie, it's been a massive success. Could you talk a little bit more about, you know, beyond 2023, building on that momentum, capitalizing on the strategy, and, and maybe, you know, continuing to keep Barbie-related revenues incremental to, to what would have otherwise been, you know, the, the, run rate in that, that category, like at X or, or before the success of, of, of the movie? Yeah, what the movie did, it really solidified and continued to demonstrate the strength and success of the strategy. The, this is not just about the quarter or about the year, it's about long-term franchise management of the Barbie brand. It will continue... What the movie did, it did expand the aperture. It brought in new audience segments, it brought in, different demographics, broad audience, including male, and of course, was a global success. So it really played across every major market, and we saw the appeal of the movie, make Barbie much more, in demand and in very strong position to continue to expand. It will give us an opportunity to broaden the brand, and manage a franchise and continue to expand it outside of the toy aisle. This will play out not just in 2023, and not just in 2024, but in, we believe, in years to come. What it also does, and as I, as I mentioned earlier, it is a template, it is a showcase for how we intend to execute our IP strategy on other franchises, and how we intend to engage with partners, with creative partners, to execute different applications of the franchise across multiple categories, and in some cases, or multiple verticals. And in some cases, these verticals are actually bigger than the toy industry. So we are very excited to see how it will continue to play out. It is, what we saw is the reaction, the market's reaction to the success of the movie really opened up new opportunities for Mattel. It changed the conversation for us with other, partners, not just in the film business, but in other areas. And it really, serves as, to shine a light on the strategy and the strength of our portfolio. And in today's world, it is all about big brands, big franchises that are able to elevate about the rest of a very competitive and crowded marketplace. And we believe that with our portfolio, with the strength of our franchises, we can be a meaningful player- ... in multiple verticals that are driven by big franchises and, in a very good position to, capture full value from our IP. Let's talk about one of your other big franchises, which is Hot Wheels, and Mattel's, one of Mattel's strongest performing brands over the last five years. Could you talk a little bit about how innovation and collaboration have played into the recent success at Hot Wheels, and the extent to which you think you can replicate that success over the next five years? And, and I know there's a movie coming and, and slated for 2025, how that plays into the strategy as well. Yeah. Hot Wheels is another incredible example for the strength of our brands and our continued growth momentum. Hot Wheels is on track to achieve its sixth record year in a row in top line, and continue to resonate at multiple levels. We expanded the franchise. We are growing into RC, into a skate category, and the RacerVerse line in partnership with the other big franchises, film franchises. And we continue to see the brand evolve and resonate on television with a prime-time show on NBC, and games, digital games and other digital applications. And we believe that Hot Wheels is in the position of Hot Wheels in the marketplace, being a category leader and continuing to gain share, positions the franchise for long-term growth. It is about innovation, it is, it is about authenticity and continued evolution of the franchise. There is a movie in development with J.J. Abrams at Warner Bros. We believe this will be another milestone moment and opportunity to grow the brand further. And Hot Wheels is at the head of the vehicles category, which in itself is in a very strong position to continue to expand with another movie, Matchbox movie, in development with Skydance, as I mentioned before. So the opportunity is there. We are very excited by the partnerships that we continue to formulate with car manufacturers and more brands that will be added to the portfolio, and see Hot Wheels continue to resonate, and the vehicles category as a whole, continuing to grow. Ynon, on Disney Princess, 2023 was the first year that you've gotten the Disney Princess IP back at Mattel after a few years with one of your competitors. Could you maybe talk a little bit more about the performance of Princess since it's come back under your umbrella? And then any plans or, or your plans for maximizing the potential of that IP, over the next, number of years while it's, while it's still with you? Yes, as an industry leader in the dolls category, with increased share and stronger performance by a large margin, relative to our competitors, we believe we are very well positioned to manage Princess and Frozen, Disney Princess and Frozen, and continue to expand that very important societal cultural franchise. We're off to a very good start in 2023, and believe we can create meaningful opportunities for growth and expansion of the franchise, in partnership with The Walt Disney Company. Mm. So this is part of our franchise management approach. It leverages our design and development capabilities, a very strong supply chain that is a competitive advantage for Mattel, and a commercial platform, where we sell product today in more than 500,000 stores globally. In addition to that, of course, have a very strong, online retail business in partnership with the omni-channel retailers. So, very well positioned to grow Disney Princess and Frozen franchises. Anthony, maybe a question for you. Back in 2014, 2015, when Mattel last had the Disney Princess IP, I think we had estimated that it generated somewhere around $400 million of revenue for the company. In the years since, it probably hasn't been quite as productive. I'm curious if you think Disney Princess could get back to 2014, 2015 levels of revenue under Mattel, or is there something about the IP or the upcoming content slate that might make that more difficult to achieve? Right. So we have not sized the potential for Disney Princess and Frozen, but as Ynon said, right, this is really in our wheelhouse, aligns with our capabilities, particularly around in the dolls category, right? Bringing our Mattel playbook to bear, and we're very confident that we'll be able to grow this franchise, over time and have it being a meaningful contributor, to our overall success. I want to talk Monster High. Ynon, it's been a franchise that was big for you about a decade ago. Since it's, it's been somewhat phased out, but there's a number of, content that's, that's coming down the pipe for, for the brand. It's, it's coming through somewhat of a revival at the moment. Could you talk about- Monster High is an incredible property. It was one of Mattel's most successful franchises that came and went, because this is back in the day. And part of the reason we were not able to maintain and continue the franchise success-Nickelodeon that has now been recommissioned for the second season. In both cases, there will be a Monster High traveling show and other applications that we will continue to develop around the franchise. The toy line itself is- Recently, and that being American Girl and, and Fisher-Price. Maybe starting first with Fisher-Price, could you talk a little bit about the challenges that brand is facing and, and perhaps the outlook as you look out over the next year or two? Fisher-Price is a market leader in the infant toddler preschool category, which is the second largest category in the toy industry. So it's a very important brand in a very important category. Fisher-Price, within the Mattel portfolio, was impacted more than other brands by the elevated inventory situation we had exiting 2022. So that's been one of the brands that indexes higher on, in relation to that impact. And there was also further impact in the baby gear category as we continue to rationalize that segment within the portfolio to optimize profitability. That said, Fisher-Price has important growth drivers in Little People with a new NFL partnership that is actually launching this week, and Imaginext, which is a great part of the portfolio overall. We believe that with the new innovation, new product line, and new offerings that we're infusing into the franchise as a whole, Fisher-Price will return to growth and will continue to be an important driver in our portfolio, in our portfolio overall. What about American Girl? I wanna touch on that as well. Yeah, American Girl, also one of the most cherished brands in the industry. Huge awareness and very positive brand perception. American Girl was impacted by retail closure when you compare it to last year, as we rationalized the retail footprint. But there will be important drivers this year in terms of growth in our retail footprint, specifically the opening of the new LA store. That is actually happening formally this weekend, coming up this weekend. There will be actually a soft opening, but nevertheless, the store will be open, and it looks just amazing. We are moving the Girl of the Year from January of next year into the holiday season this year, to really leverage the, obviously, the shopping period and the excitement around the brand. We continue to broaden product line and consumer engagement with new innovation. So we're very positive, very confident about the long-term growth prospects of American Girl being such an important property within the toy industry and the dolls category specifically. All right. I wanna pivot and discuss margins for a moment. Anthony, you're targeting gross margin of 47% for 2023, which is about 100 basis points better than last year, and that's on essentially flat revenues year-over-year. Could you walk us through some of the puts and takes on the margin line this year? And maybe looking ahead, how you're thinking about operating leverage in the business beyond 2023. Sure. Let me start, as you said, with gross margin. Our guidance is to achieve a 47% adjusted gross margin, compared to 45.9% last year. And the key drivers are pricing, this is primarily a carryover benefit of actions we took in 2022, and cost savings, and I'll come back to cost savings in a second. And these are partly offset by incremental fixed cost absorption as we take down our own inventory levels with lower production volumes. In terms of cost inflation, we don't expect cost inflation to have a meaningful impact either way on gross margin in 2023. We have successfully delivered significant cost savings under our Optimizing for Growth program. This is a program we launched in 2021, initially targeting $250 million in savings, benefiting cost of goods sold, marketing, as well as SG&A. We increased the target recently to $300 million, and we are certainly on track. Through the first half, program to date, we're $257 million of savings and expect to, you know, hit the target by the end of 2023. And although the program will end, our focus on efficiency and productivity and cost savings really is part of our DNA, and that will continue. In terms of operating margin, we don't guide specifically to operating margin. We'll have some pressure this year with an increase in SG&A as our incentive compensation returns to target levels. You know, looking ahead, we believe we can continue to expand, you know, margins through a combination of the scale benefit of top-line growth, our efforts on gross margin. It is our expectation that the combination of pricing and cost savings will exceed cost inflation over time. As we employ our strategy to expand into highly accretive, you know, verticals such as content, you know, consumer products, and digital experiences, they'll be margin accretive as well. Got it. I wanna touch on leveraging capital allocation next. Anthony, Mattel is on track to end the year at approximately 2.5x gross leverage, which is a rather significant improvement from where the business was a few years ago. I think you mentioned you recently called it an Investment Grade credit rating upgrade last year, and you're being considered by two more. How are you thinking about managing Mattel's balance sheet going forward? What do you see as the right level of leverage that the business can support over the long term? Sure. So we have been guided by a consistent set of capital allocation priorities, which are really designed to give us flexibility to manage our capital structure, invest in growth opportunities, and really create value for our, our shareholders. The first one is to continue to make investments to drive organic growth. The second is to maintain a leverage ratio, debt to Adjusted EBITDA, in the range of 2-2.5x, and to maintain an investment-grade rating. Now, this year, we're happy to see, you know, both Moody's and S&P have us at investment grade, and I think that's a recognition of the significant turnaround that we've had, you know, at Mattel. And now with an improved balance sheet, it opens up additional opportunities. One is M&A. When we think about M&A, we would take a very disciplined approach, focused on, you know, transactions that would accelerate our strategy, you know, drive incremental growth, and create value, again, for our shareholders. And then the fourth is share repurchases. So we've been in the market this year. This is the first time since 2014. In the first half, we repurchased $50 million of shares, and we have about $150 million remaining under our current authorization, and look to do more repurchases in the second half. We really view share repurchases as a very flexible, effective tool to manage our capital structure. And given our confidence in our ability for our strategy to create value over time, we think it's the right approach for us. Got it. Ynon, I was wondering on the topic of capital allocation, if any of the success that you've seen in the Barbie movie and in your entertainment strategy more broadly, has changed the way you think about potentially allocating capital towards things like content production, more partnering with studios in a financial way to a greater degree? We look to maintain our capital light approach and deploy our resources where we have, an advantage, a built-in advantage. Our currency, our unique contribution, is the IP that we own, our ability to partner with creative talent, and to amplify and market, create demand for these executions, not just in film, but in all other categories. And so we believe that we are best positioned and best suited to continue on this capital light approach. That said, we always remain, open and on the lookout for ways to optimize return for our shareholders. Mm. - and use our capital and our financial resources to amplify, accelerate, and optimize return on investment, adjusted for risk. Mm. So this is the approach we're taking. We look to continue to drive organic growth and be very methodical, disciplined, and strategic about how we deploy capital. And Anthony, a quick follow-up on capital returns. You mentioned that the authorization. What would we need to see in order to see the pace of share repurchases increase, perhaps over the next couple of quarters? Is there anything you're looking out for or bringing leverage down to a certain degree? And I'm curious on the dividend, if there's any thought or desire to bring that back. Right. So, as I said, you know, our near-term capital allocation priorities do not, you know, include a dividend. They're the four, you know, that are mentioned, and we believe in the near term, right, that share repurchases are a more effective tool- Mm ... you know, for us. Certainly over time, we can, you know, consider a dividend, but we think we've got the right set of priorities for us now. We are focused on improving our free cash flow, right? TTM at the end of the second quarter was just over $360 million, so we have, you know, generated... We're, we are generating significant, you know, free cash flow. As we look at our debt portfolio, we don't believe we need to pay down any more debt than we already have. Mm. Our portfolio is well positioned. We don't have any maturities until 2026, and an average coupon of 4.7%. So that comes back to, okay, we've got this free cash flow, and again, we'll follow those capital allocation priorities and consider M&A, as well as share repurchases, going forward. Got it. And then maybe with a minute left, Ynon, I'm curious, there's been a lot of momentum at Mattel this past year. At the same time, it still seems like the retail environment's a little uncertain going into the back half of the year. What are the one or two things you're most focused on executing against over the next 12 months to create shareholder value for Mattel? We are very focused on executing our strategy. We are on a strong momentum on the toy side of the company in terms of gaining market share and continue to position the company for long-term growth. The industry is soft, as we said, so we are managing through it, but competitively and also on a standalone basis, the company is very well positioned within the toy category. In addition to that, this is not instead, but in addition, and on top of everything we do within the toy aisle, we are seeing very strong momentum and traction on our IP strategy. The Barbie movie is a big flag, a big success, so a positive flag for success of the strategy. But it's not the only one, and you have multiple executions and proof points and real wins that we put on the board to demonstrate the progress that we're making in capturing full value, or towards capturing full value from our IP, and that remains a priority. You will see more of this happening as we continue to evolve the company from what it used to be, a toy manufacturing company that was making items, to now what it is, which is an IP company that is managing franchises. On the base of a strong and robust toy business, which is where we develop and strengthen the relationship with our fans, all the way to capturing full value from our intellectual properties. Great. Ynon, Anthony, thank you so much for joining us today. Thanks for having us. Thank you. Thanks a lot.