El Segundo-based Mattel Inc. reported third quarter earnings last month, and newly minted Chief Executive Ynon Kreiz said the company’s performance during the period was the “first time in eight quarters that we have posted year-over-year growth” for operating income.

The news was tempered in part by a Securities and Exchange Commission comment letter sent to Mattel regarding the Toys R Us Inc. bankruptcy, which prompted the company to alter its reported third quarter 2017 adjusted operating income to $117 million from $160 million.

That change allowed Mattel in its third quarter 2018 report to show a 31 percent jump year over year in adjusted operating income, with $153 million.

“This meant that third quarter profit saw a 31 percent increase (year over year) instead of a negative 4 percent using the original third quarter numbers from last year,” Linda Bolton Weiser, a senior analyst at Great Falls, Mont.-based D.A. Davidson Equity Capital Markets wrote in a research note.

“This enabled Mattel to tout its first (year-over-year) operating profit increase in many quarters.”

The company reported third-quarter 2018 net income of $6.3 million (.02 cents a share) compared to a loss of $603.3 million during the same period a year ago.

Global revenue saw a 4 percent decline year over year to $1.4 billion, but sales in North America were up by 4 percent, according to the quarterly report. The company’s iconic Barbie brand was a bright spot, with gross sales up 14 percent worldwide. Other Mattel brands, however, continued to show weakness. Fisher-Price sales fell 12 percent, Hot Wheels fell 6 percent and American Girl sales fell 31 percent.

Earlier this summer, Mattel said it would trim 2,200 workers from its payroll – almost a quarter of its staff – and sell off some of its manufacturing facilities abroad. Kreiz, who took over as chief executive from Margo Georgiadis in April, said during the third quarter earnings call with investors that Mattel was “actively exploring strategic alternatives for our manufacturing footprint.”

Legal Logistics

California Senate Bill 1402 was signed by Gov. Jerry Brown in September and authorizes the state to penalize retailers, shippers and other companies for labor violations made by trucking firms they

contract with.

Last month, truck drivers and warehouse workers launched a three-day strike at the ports of Long Beach and Los Angeles claiming unpaid back wages from logistics companies. This marked the 16th strike in the last five years from the local Teamsters union and specifically two targeted logistics companies: Greenwich, Conn.-based XPO Logistics Inc. and Cherry Hill, N.J-based NFI Industries Inc., two of the largest drayage and warehousing companies at the twin ports.

This was the most recent chapter in the on-going issue of alleged misclassification by truckers. Some truckers at the ports are fighting for employee status to relieve themselves of costs incurred while driving. Truckers, in particular, say their independent contractor status leaves them – and not the trucking companies – covering basic operational costs such as leases, fuel, repairs, maintenance and insurance.

The new bill goes into effect Jan. 1, 2019, and was introduced by Democratic state Sen. Ricardo Lara, of Bell Gardens.

“The new bill places retailers on the hook for certain California Labor Code violations committed by port trucking companies they contract with,” said Jehan Jayakumar, a partner at Newport Beach-based Carlson & Jayakumar. The firm specializes in representing employers in employment litigation, according to its website.

Retailers will have to confirm the identity of each trucking company utilized in its supply chain to ensure they are not on the state agency’s blacklist.

“To be on the blacklist, a port trucking company must have an unsatisfied final judgment for unpaid wages, unreimbursed expenses or penalties,” Jayakumar said. Besides putting the onus on retailers and shippers to ensure there is no alleged mistreatment of truckers working as independent contractors, “the retailer will be held liable for any unpaid wages, unlawful deductions, unreimbursed expenses, and penalties during the period it engages the (blacklisted) trucking company,” Jayakumar added.

Port Awards $500,000

The Port of Long Beach’s community sponsorship program awarded $463,750 in grants to 130 local organizations supporting the arts, environmental efforts, social justice and historic preservation, the port announced late last month.

The program aims to educate and engage with the surrounding community about the port.

“Supporting organizations that make our diverse city a great place to live and work is just one of the ways the Harbor Commission seeks to contribute to our community,” Board of Harbor Commissioners President Tracy Egoscue said in a statement. “We’re proud that we have the opportunity to interact with the public and bring awareness of the important role the Port plays in this region.”

The commission accepts requests for funding twice a year, in September and March, and the recent round benefits the Friends of the Los Angeles River and the Long Beach Public Library Foundation, among others.

Staff reporter Shwanika Narayan can be reached at snarayan@labusinessjournal.com or (323) 556-8351.

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