Listen to Jim Cramer’s personal guide through the confusing jungle of Wall Street investing, navigating through opportunities and pitfalls with one goal in mind - to help you make money.
Mad Money w/ Jim Cramer
Mad Money w/ Jim Cramer 4/23/24
Small business owners are always passionate about their work, and they have a lot on the line. Let Verizon help champion your small business dream. Whether you own a small business or scaling one or starting one from scratch, you need Verizon Small Business Days. From April 22nd through April 28th, you can partner with Verizon Business Experts for small business support. During Verizon Small Business Days, you can receive a free tech check with a one-on-one meeting with a Verizon Business Expert. Plus, Verizon Business Experts will provide you with personalized advice and solutions that are tailored to your specific small business needs. Take advantage of special offers and deals during Verizon Small Business Days and get more for your business. Verizon has your back. Don't miss out. Book an appointment today. Just call 1-800-483-4428 or go to verizon.com/smallbusiness. The market doesn't joke around, so why would you get serious? Choose tasty trade. Tasty trade gives you the tools you need to make smarter moves. Dig into data with advanced charting, track profit accurately with order chain trackers, see risks clearly with curve analysis, and trade with low-cap commissions, stocks, options, futures, and more. All-on-one platform. No wonder serious traders choose tasty trade. Join the club genius. Tasty trading is a registered broker dealer and member of FINRA and SIPC. My mission is simple. To make you money. I'm here to level the playing field for all investors. There's always a more market summer, and I promise to help you find it. Man money starts now. Hey, I'm Kramer. Welcome to Man Money. Welcome to Kramer America. I'm just trying to make you a little money. My job is not just to entertain, but to educate you. So call me at 1-800-743, or tweet me at some Kramer. Suddenly, we have brown shoots everywhere, and that's a good thing. Remember, we wouldn't look at first slowdown that would justify the Fed's position, that we don't need any more rate hikes. When we get brown shoots, the opposite of green shoots, Wall Street lapsed it up, because it means the Fed might win the fight against inflation. And that's why the Dow gained 264 points today. Well, there's a big jump 1.2%, and then as I pulled on a 1.59%. That was easy. It's been hard to parse this economy. When we got to the February employment numbers on March 8th, they were so steaming hot that it felt like the Fed was blindsided, because they've been talking about multiple rate cuts this year. And you don't do that when the job market's booming. Anything that makes the Fed looks stupid hurts this ability to maintain price stability. What was the Fed really wrong? Just when Wall Street gave up on the possibility of rate cuts anytime soon in the Fed to join them, we start getting actual signs of a weaker economy. It makes sense, interest rates have soared. They're doing their job since that smoking hot February labor report, which was followed by another hot set of numbers from March. The benchmark US 10 years has gone up by more than 50 basis points since the February report, making it more expensive to borrow money, which tends to slow down the most of the economy, except parts of tech that have what we call secular growth, not bound by little Fed rate hikes, or cuts for that matter. Yep, when they have the weakness, what do we do when you have weakness in the economy? You buy the Magnificent Seven and friends, and that's exactly what we sold today. So how do you know if there really is a slowdown? It is not easy, but we've had some very big tells of late, Jay B. Hunt. Let's see, the fourth largest trucking company, had a solid, yeah, fourth largest commerce company that's called that transport company, had a solid January and even stronger February, but the business shrunk in March, and the company's total operating revenue dropped 9%. Jay B. Hunt seemed almost mortified that it performed so badly. Prologist, world leading owner of logistics, real estate, like warehouses, was a lot less apologetic, even though they lowered their guidance dramatically, just a month after coming on the show, where we heard a much more bullish story. In that interview, we were told that there was only weakness in Southern California. A month later, this weakness in Seattle, New Jersey and Savannah. Why these markets? Well, Seattle's maybe where Amazon is. I don't know, Jersey's where I'll space for the whole New York area. Savannah, Georgia, that's supposed to be where the toughest, the best region is. Put it all together and vacancy rates for these warehouses are going higher because even e-commerce isn't safe and that is a big deal. Then we heard about a slow down story from CarMax, the used car dealer. They blame the economy and cut prices of used vehicles, but they're still got hurt by financing charges. That's the bomb market taking care of business. Remember, the bomb market controls long rates and bond yields are now upused, which makes oil loans a lot more expensive because fewer people buy cars. Snap-on helps small business owners with fresh new tools and it got wobb with some really weak numbers. That's a genuine surprise from what's usually a very reliable company. Selling a decently capitalized mom and pop companies. We had more weak numbers from our ratio, Restoration Harper too. The reason Tyler talked about a big game, a really big game about how things are going to get better. I think one day they will, but higher rates and a lack of new homes for sale have hurt the business and the stock's been clocked. Hey, you know what? Today was Sherwin Williams' turn. The paint maker said there was demand choppiness. That took a lot of people by surprise because anything home-related had been quite strong. So the stock, it got clobbered. Then there's new cord, the fabulous steel maker, which saw some of its grades go down in price. First time I've seen that in a while and missed their quarter. Sure volumes were up quarter over quarter, but the price of the clients were starting. Siggling the maybe broad weakness in construction and heavy machinery, we're going to talk to the CEO later, but a miss here is a miss, even as there were many good things about it. Cleveland Cliffs had a miss too, but there's a steel company called Auto-related. On top of that, we've had the collapse of Express, the formerly trending wall-based apparel chain with 600 stores. It's agreed to close 95, a group of investors led by Simon Proprich by the rest. If only so, their moles don't have a lot of empty storefronts. We even got two restaurant chain bankruptcy filings. There's Tijuana Flats as a Southern 90-store text mix chain, along with the 40-store over-wised dairy in the Midwest. Red Lobster, within 650 locations, is also financial trouble. If it's disastrous, all you can eat shrimp promotion for 20 bucks. It took a beating. Well, it's fair for them. They just hired a restructuring expert, probably contemplating bankruptcy. I don't know. Of course, you could say this is all anecdotal. The brown chutes are really all one-off situations. Real estate, small business, high-end furniture, paint, freight, steel, electric vehicles, restaurants. There's almost no pattern here, so it's easy to argue that the economy is still humming. But that's a pretty big mosaic. Said today we got something different. We got empirical brown chutes in the form of the S&P Global Flash U.S. Composite Purchasing Managed Index at average at number, and it was so weak that I think it actually put a near-term Fed rate cut back in the table. Spurred huge buying today in a two-year government auction, but those people weren't anticipating it could be a rate cut. I'm going to quote extensively from the poor because it's just so on point. Listen to this, quote, "U.S. business activity continued to increase in April, but the rate of expansion slowed amid signs of weaker demand. The latest rise in output was the smallest in the year-to-date, reflecting reduced rates of growth in falling orders in both manufacturing and services, and quote, "Wow, that'd be a forest of brown chutes." But could we now be seeing stagflation where business slows down, but prices keep climbing? No, listen to this bit of positive, just quote, rates of inflation generally eased at the start of the second quarter, with both input costs and output prices rising less quickly as the composite level, unquote. Hey, that's exactly what we wanted to see if we're going to get a Fed rate cut. This PMI report showed for the first time a reluctance in hiring. Get this, quote, a number of survey respondents indicated that they had held off them backfilling positions, following the departure of staff. As a result, employment decreased for the first time since June 2020, and quote, "Look, we never want to be written for job losses, right? But if you want to beat inflation, you need to have the pace of hiring to slow. We saw job cuts tonight at Tesla, the company had a declining number for earnings per share, but it was still better than expected. That's in keeping with the brown chutes that I am talking about, although there was no brown chute from Nvidia, because there's a slide in the Tesla deck, which shows a massive increase in the number of Nvidia chips used, presumably for their cars. I have been worried about services being too hot, okay? That's something to obviously a problem, because most of the weakness I've seen came down to manufacturing. But the PMI report says, quote, "The overall reduction in workforce numbers was centered on services where employment decreased solid to the largest extent since mid 2020," end quote. Now, it gets one. This is it. Get this. The report goes on to say, quote, "Excluding the opening wave of the COVID-19 pandemic through decline in services staffing levels in April was the most pronounced since the end of 2009." Holy cow, that's the great recession. For the bomb market, they really haven't at this point home. Listen, the more challenging business environment prompted companies to cut payroll numbers at a rate not seen since the global financial crisis. Wow, real bad news for the economy. But remember, we need bad news for the economy, because that's what cools off inflation, something that's also noted in this PMI report. That's what brings us rate cuts. So let's think this week. We have a host of companies that we know are doing well, G.E.R. Space, American Space, General Motors, SAP, Texas Instruments tonight, which is, by the way, SAP is on later to show you'll love it. But earnings have become spotty. Oh, a spot if I was good too. But we know there's no let up in travel or housing, pulty put up some very strong numbers today, pulty being a big home builder. But the bottom line, when you combine the anecdotal evidence with the empirical PMI report, you can see that right now, at this moment, the brown shoots are infecting the green. And that's exactly what we need for the Fed to justify cut and race. So, of course, it happens right as everybody's given up on the possibility of a rate cut. Ryan in Washington, Ryan. Oh, yeah, Jim, this is Ryan from Gig Harbor, Washington. Good, fabulous show. What's going on? What's happening? Jim, Jim, do you still think there's more upside for Amazon? Yeah, absolutely went on. I mean, Amazon is the great equalizer. I think it's got the Amazon Web Services going to be incredibly strong. And by the way, just, you know, Amazon advertising is on fire. I want to go to my name, say Jim, in Georgia, Jim. Hey, good afternoon, Jim. Oh, yeah. Boo, yeah, back. Hope you're doing well. Hey, you got this one. Great, great. Glad to hear that. What are your thoughts about this acquisition between Kroger and Albert? I think the government's going to block it because they're still reeling from the day that they let that Safeway deal go through. The one where they bought cable and stores to Hagen, and then it became a Haggway. He actually called that. So, they're not going to do that deal. I think they'll block that one. Anyway, right now, the brown shoots are indeed infecting the green shoots. Remember, we're favorite brown shoots because we want ray cuts. It's exactly what we need for the Fed, just by cutting rates, just when everyone had given up. Well, isn't that exactly the way it works? May have my time. SAP shot the lights out of the quarter with the stopped story in response. And I'm learning more about what's working for the software giant for the company's top brand, so nobody is interested about it except for me. But you ought to be interested because it's really good. Now, on the other side of the coin, Newport is melting down and reporting last night. So, we're investigating a buying opportunity to steal my career that was this a warning for what's gone. I've got this exclusive. And Mattel's trying to find if it's funny in this post-barbie movie world, and I'm hearing out of the company fair last quarter. So, stay with Kramer. Don't miss a second of Mad Money. Follow @ChimCramer on X. Have a question? Tweet Kramer. #MadMensions. Send Jim an email to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. Miss something, head to madmoney.cnbc.com. When you're hiring, the best way to search for a candidate isn't to search at all. Don't search, match. With Indeed, Indeed is your matching and hiring platform with over 350 million global monthly visitors, according to Indeed data, and a matching engine that helps you find quality candidates fast. Use Indeed for scheduling, screening, and messaging to connect with candidates faster. Plus, 93% of employers agree Indeed delivers the highest quality matches compared to other job sites, according to a recent Indeed survey. Leveraging over 140 million qualifications and preferences every day, Indeed's matching engine is constantly learning from your preferences. Join more than three and a half million businesses worldwide that use Indeed. listeners of this show will get a $75 sponsor job credit to get your jobs more visibility at indeed.com/madmoney. Just go to indeed.com/madmoney right now and support this show by saying you heard about Indeed on this podcast, indeed.com/madmoney. Terms and conditions apply. Need to hire? You need Indeed. Generally, all the newly hated tech stocks came back with a vengeance. And it was SAP, the German enterprise saw from Powerhouse that led the way. Last night, SAP reported a seemingly okay quarter, but the US listed shares shot up 5%. Why? Because SAP's cloud numbers were excellent. I think this company has a great story to tell about how they'll be a big winner from artificial intelligence, because they've infused AI into their whole product suite. Don't take it from me, though. Earlier today, we got a chance to speak with SAP CEO Christian Klein. I love what he said. Take a look. Christian, welcome back to Mayor Muddy. Yeah, it's great to be back. Hi, Jim. I got to tell you, you crushed it. And it's not just on cloud. You also crushed it on AI. And there's so much to talk about. But first, I just want you to tell me about new business, because the amount of new business you brought in is extraordinary in one quarter incredible. Yeah, absolutely, Jim. I mean, we counted 64% net new customers in our year P space. So we are gaining further market share. Our current cloud backlog is up 28%. Now, amounting to $42 billion. And that gives the company a lot of resiliency. And as I said, we're expanding market share. Now, at the same time, once you bring them in, they love your suite. I mean, it looks like you could bring in someone from finance, they're going to take you in human resources. It's terrific land and expanded strategy. It's working with pretty much with a huge number of customers. Yeah, absolutely, Jim. I mean, land and expand is at the core of our strategy. And when you, when we are talking about the core processes of our customers, I mean, when you want finance, finance needs to interact with payroll. If you do sourcing, sourcing needs to interact with finance. When you do, you're not demand and supply, it's actually good if it's connected to your commerce. So it's all needs to be tightly integrated in a modular suite. And this is what a SAP is delivering. But I think it wouldn't happen unless they loved SAP. I mean, I have this image of people coming in, your people come in, they love you. And then they mention these other things. They take you look, look, it wouldn't happen. I mean, let's say they didn't like it. You would, you'd be one, one piece of the puzzle, and that would be the end. Absolutely, Jim. And yes, customers are loving SAP. And I guess they, they love the new SAP even more. And we're actually offering a very flexible platform. There is no lock in. We are providing choice. No matter which hyperscaler you're running in, our platform, you know, it's enabling, you know, all of these hyperscaler infrastructures. If you have structured and unstructured data, SAP, non-SAP data, we are harmonizing the data layer of each company. And then on top, we are infusing AI into the business process of our customers, always taking the best technology, which is also out there in the market. Okay, well, you brought up AI. That was my next question. You talk about how every discussion is now AI, every discussion, including your own internal. Can you tell us about how you're repositioning people, you're actually keeping headcount the same. But you are making decisions that sounds like you're taking people who may not be as productive, and replacing them with AI, and then bringing in big strategies. So you're literally doing what Jensen Wong said could happen, which is you are not cutting back. You're just getting better. Yeah, absolutely, Jim. And I guess it also speaks to the credibility of SAP that we are not only sharing with our customers how business SAP business AI will help them to one more productive. We are doing it also internally at SAP. So no matter if you are developing, we can produce code at a highly automated way to increase productivity by up to 40 to 50%. If you are in sales and you're preparing for a customer meeting, there's automated content creation that's helping to configure the right deal at the right time. Or if you are in finance or in the commercial, you actually get help by screening contracts automatically with AI. So we are infusing AI everywhere throughout SAP. This helps us to grow the business in a significant way, while indeed to your point, we are keeping headcount flat. Okay, this is really important because there is this pervasive sense that's just come over, because this stocks have been bad. That AI is just something that's fanciful. That it smacks of fiction. I am listening to someone who is in a 700 billion cloud market. Many dominate so much of consulting in this country. I mean, in this world, and you are saying that AI is important, it is real and it's being put in right now. Yeah, I mean, we have 30,000 customers who are already using SAP business AI. We are embedding AI right into the business processes of our customers. So when you are doing travel and expand, we can automate the expense management by up to 70% like we did with Chobani, one of our key customers. Or we actually are putting our digital assistant tool on top. So this is our new user experience. So 80% of the most heavy use transactions in an SAP system are getting completely automated via our digital assistant tool. So AI is real and we have high adoption already amongst our customer base. Oh, I'm so glad you're saying this because I really got to put this, I got to put this thing in. I put pay to this notion that it's not helping. I mean, here you go. You say, if you work in travel, in finance, supply chain, procurement, it's going to happen and it's happening right now. Exactly. I mean, we have customers like, you know, Apple or Samsung or when you're taking Estella, when they do sourcing, they do sourcing with thousands of suppliers. How to pick the best supplier from a cost, from a quality, but also from a sustainability perspective. I mean, all of these companies want to want a more sustainable business going forward. And sourcing is key. And with AI, we can help them to source the wide suppliers. Again, to your point, when you are in finance and you want analytics, how can you do more smarter decisions on where to produce at the lowest cost? This is all what we are now empowering with AI to also help our customers to make smarter decisions. Now, I want to make sure, because SAP has a vision in the world, that you are not necessarily changing, taking out people and putting in machines. I want this point clear, you are getting more productive. You have the same headcount. It's not one of those things when people say, Oh my God, SAP comes in, they fire one third of the people. It's exactly the opposite. You upgrade the table, you take away the jobs that are repetitive and not that helpful, and you bring in big thinkers. Is that true? Absolutely, Jim. And look, I tell all our customers, just a technical move to the cloud will actually deliver no transformation for your company. So what we need is the world's best architects. We need the process experts. I mean, we have 400,000 customers. We know how the best businesses run in the world. And we need to share these best practices to infuse it into our software, so that we are not only migrating systems to the cloud, but we are changing the way how businesses run to transform them. And that's key. And these are the skills which are needed. And to your point, Jim, there are other repetitive tasks inside the company, which we now can completely automate. And of course, there we need less people. So and that's also the transformation, what we are driving internally at SAP. This is just what I wanted to hear. I knew you would tell it to a straight. And it's not like you're working for, I mean, look, NVIDIA obviously matters. It's not like you're working for one of these companies. You are working for your clients, and you are saving your clients money, and you're making them better, and you're using artificial intelligence. And that's how I am going to position SAP because I think it's the right way. That's how a stock goes up real good. You know, Christian, you are the light. You always are. That's Christian Klein, CEO of SAP. Thank you for choosing that money. It means a lot to me that you're on our show. Thanks for having me, Jim. Good to talk to you. That might be back here for the break. Coming up, calling all metalheads, Kramer sits down with a man of steel, fresh off earnings. Next. Take your business further with a smart and flexible American Express Business Gold Card. It offers flexible spending capacity that adapts to your business. You can also earn up to $395 in annual statement credits on eligible purchases at Select Business Merchants. That's the powerful backing of American Express. Terms apply. Learn more at americanexpress.com/businessgoldcard. Did the stock of New Gordon's server get crushed today with a stock plunging 9%? Let's take the best run steel maker in the world. Report is full first quarter results, and after issuing preliminary numbers back in March, New Gordon's earnings came in at $3.46 per share. Last month, they were thinking maybe $3.55 to $3.65. Very unusual. New course usually very conservative and preliminary guidance, and then it beats the numbers, not this time. I've been a fan of this stock forever, actually since before the show began, and I also see it as a winner from all the federal infrastructure spending, and the company's been a voracious buyer, but so on stock. Some of these helped them put up tremendous earnings per share numbers over the past year. So did the market over reactors or did something genuinely worrisome going on here? Let's take you with Leon to Pestopalian. Leon is the chairman, president, and CEO of Newport. Leon, welcome back to Mad Money. Thanks, Jim. Appreciate you having me. Okay, so Leon, you know I'm mystified like a lot of people, and mystified because one, you guys are rarely that much off in this short period of time, but two, when I read through what went on, I really don't see a lot of weakness, and yet you decided to say that next quarter is going to be weak too. If you hadn't, I would have said that it's ridiculous that the stock's down. Well, I would tell you, I also agree it's ridiculous as stocks down. Given our long-term view, our long-term capital allocation plans, but Jim, as you mentioned, we don't take missing lightly. In fact, I would tell you over the last 10 years, or 40 quarters, there's only been three other times that we've not hit our guidance range or above, and so it's something our team takes seriously, we will continue to work through. But the miss wasn't from an operating performance standpoint. In fact, all three operating segments for New Corps came in at or above what we expected them to come in at. So it came in the form of corporate eliminations, which is one of our key springs, Jim. As you know, 20% of our overall products stay within New Corps. They're shipped to inside divisions across 40 states, hundreds of locations. You're talking about hundreds of millions of dollars transferring every day inside of New Corps. Well, you've got to eliminate those profits. So it's not a miss where that's not going to come back out, where it gets sold in the coming weeks and coming quarters. So we'll see that come back and rebound. It's estimating that, and we've got to get better at estimating what those hits are going to be, and again, framing that up for our shareholders. Okay, so then let's talk about the steel product segment. It's expected to have moderately decreased earnings in the second quarter of 2024 as compared to the first quarter of 2024. And that's because of average selling prices, which are lower, partially offset by increased fines. Will the volumes offset enough? And the answer is no. And it makes me feel like that perhaps something's wrong with the economy that you would have at the client. Yeah, look, fair question. What I would tell you is you're seeing a moderation, Jim off historic highs of 21, 22, 23. Our products group has made new court an incredible amount of money. And in fact, prior to the pandemic, a great year for them would be, man, maybe six, 700 million today. A good quarter is a billion dollars. So when we're coming in at five or 600 million for the quarter, man, they're still robust earnings out there. And again, the prices have stabilized. We've not seen a lot of movement over the last almost 90 days. So what I would tell you is I'm comfortable with where we're at. While prices have moderated some, we're seeing some strength as we look towards the back half of the year. We do think you too will be a little bit lower. But again, products has been one of our strongest, most resilient, robust performers. And again, if you look at the overall construction industry for which of new corps is 50% into that, it's flat year over year. So from a volume standpoint, again, pricing's a little softer, it's moderated. But again, this is not time to throw out the baby with the bathwater. We still think 2024 will be a very good year for new corps. Okay, but how much should we look at operating rates? Because to me, the company's still most increased to 82% first quarter, 24% to 74%. I mean, the old days, I used to look at operating rates to say they really defined how well new corps could be doing, how well any steel company you're doing. Those are very good operating rates. Yeah, they're great operating rates. And again, the other part of that, Jim, with our variable cost and our variable model, we can ramp up and down very, very quickly. And it's something you know well, but it provides an incredible opportunity for us to meet the market where it's at, to meet the man where it's at. And if it's not, we can scale back slightly. The other side is, you know, we get a lot of questions around this flattening of the cost curve. There are many of our product groups, like the longs products, for example, that generate incredibly robust returns, even at 60, 70, 75% utilization rates. So we're getting more refined as we think about how we operate our mills. And again, our customers and the connection there to supply is getting better, so that we're seeing a higher high, higher low, but that curve is coming together. And the variability is coming, is lessening. Okay, and I also, besides that one, I'm looking at data center infrastructure. I've loved the stock of furtive. And then Eaton went fairly big in the data center. I love the stock of Eaton. I mean, you acquired a manufacturer data center infrastructure. Are you able to flood the zone and be able to be much bigger? And that that's just a toehold, the Southwest data process. But that's case, that's another business that has no economic sensitivity. Yeah, look, I couldn't agree more. And it's been something, Jim, quite frankly, we've been in for a while now, you know, our Hannibal acquisition a couple years ago in racking services at end market. But today's announcement, we're a recent announcement with Southwest data products. And by the way, welcome to our 147 newest team members there that joined the new core family is a really exciting opportunity for new core to continue to leverage its strength. We're going to have a new data center processing group where we'll be able to provide a holistic solution to the hyperscalers and those co locators that new core has already got incredible strong and durable relations with. This is going to be another mega trend. You're going to see new core move into very heavily, Jim. Okay, so then the last question I've got asked, Leon, I'm going to go back to this. Is there any chance that the next quarter could be better than you think? And I asked that only because the miss was not a huge miss. It was just some things that kind of broke down in the end. I looked at it and say, listen, I'm not seeing a big, big decline in pricing. It's entirely positive. The volume is picked up. And I know if the economy gets very soft, everything goes kind of weak. But I just, if the economy stays the same, there's a chance that you guys could do better than what the current guidance. Look, here's what I would tell you is the demand picture out there is still strong. We're seeing a lot of segments with the data centers, the advanced manufacturing, cold storage, the digital economy, the hardening of the grid, the three infrastructure or the three pieces of legislation, IIJA chips and IRA is all still starting to flow through. So, look, I would tell you that new core investment strategies for the long term, your viewers and our shareholders have made a lot of money because we invest for the long term. We're not guiding to, you know, one quarter to the next results. We're looking for the long term performance. And I think our best days are still in front of us. And I look forward to the future of new core. Okay, I couldn't agree more. And I spent all day racking my brain and reached the same conclusion ahead of this interview, which is that you don't get a chance to buy new core unless there's a little bit of a discrepancy. And otherwise, it's just going to be straight up. It has been since 1980s, in the mid-80s. So, I am with you and I'm really giving, okay, you came on this show because I think you really clarified a lot of stuff. Thank you, Leon. Thanks, Jim. Appreciate you having me. Okay, that's Leon Tapalia and chair, president and CEO of new core. Like I said, you don't get a break. I spent most of the afternoon with Jeff Marx, you know, who works with me for the travel trust. Thinking maybe we just got our chance. I'm thinking maybe we did. Nick Bunnies back in for the break. What's going to take for Mattel to break out of his trading range in the high teens to the low 20s? He's been stuck there for over three years now. A blockbuster Barbie movie couldn't do it, although certainly in management. It's funny not. Overall sales continued their post-pandemic downturn while the toy maker had to deal with cost pressures. But maybe tonight things change. Tonight, Mattel reported what I call mixed quarter. Real question knows whether Mattel can return to growth mode. They're talking about sales this year being comparable to 2023. But meaningful earnings growth, is that enough? Let's check in with the non-crisis. He's the chairman and CEO of Mattel. He had a better read on the quarter and what's next. Special questions. Welcome back to Mad Money. Hello, Jim. Great to be here with you. Okay. So, you know, one of the things that is absolutely certain is that this was a quarter where you had significant gross margin expansion. You're making a ton of money. Now, can you make even more money? I don't put this right, but the sales don't have the growth, but maybe we shouldn't care for now. I mean, I don't know what to do. You're buying back all the shares. You're making a lot of money, but people love growth. So, what do we do? Well, Jim, we are off to a good start of the year with significant gross margin expansion and very strong improvement in free cash flow with positive consumer demand and improving trends. We're executing on our $1 billion share repurchase program and just bought $100 million of share in the quarter. Looking ahead, we expect to benefit from innovation across our toy portfolio, meaningful progress on our entertainment strategy and greater efficiencies and cost savings. Importantly, we expect to outpace the industry and gain share and reaffirm guidance for the year. And the plan for the year is to emphasize profitability, gross margin expansion, and strong cash generation and return to top line growth in 2025. Okay, so let's go over to top line growth in 2025. I would think that would have to come from Mattel's upcoming film slate. You can disabuse me of that, but I would think that that's a great miles way to look at milestones on the way to 2025. Absolutely, we have a very clear strategy to continue to grow our IP driven toy business and expand our right to the entertainment offering. We look to gain share this year. We have incredible drivers on the toys out of the company. And of course, we talked before about our entertainment strategy, where we currently have 15 movies in development, a thriving television business, a growing digital part of the company that is growing with more games that we're looking to produce and self-publish. And of course, consumer product and merchandise, location-based entertainment with the first park that we expect to launch at the end of this year, and another one that we announced that we were launching outside of Kansas City in 2026. So you're going to see more and more execution on our entertainment strategy in addition to very strong toy performance that is growing share. Okay, so I listened to that. I said to myself, why are you buying back stock then if you have all these great growth opportunities? That to me seems like you should put every dollar toward the growth. Well, our capital allocation priority is very much about driving organic growth, person foremost. We're also looking to find opportunities for acquisition, where we can accelerate our growth opportunities. And of course, share buyback program is another element of our capital management priorities, where we believe that where we are below, where we think we are worth, we may take advantage of that opportunity and buy our share. Okay, so let's talk about what's hot. I mean, I think it's absolutely clear that you're dividing the dollar's vehicles and infinite, but I want to talk vehicles. Now, vehicles to make your ton of money, huh? Hot Wheels is just an incredible, incredible brand. We just had our six consecutive record year last year, and we expect to grow again this year. We are growing the adult space through expanding our collector series, both at mass retail and at motel creation, our director consumer side. We brought in distribution globally, we're accelerating growth in RC and skate and have a very strong show, a great show on Netflix right now that is a top 10 program in 69 countries already. We expect Hot Wheels to continue to grow this year and drive another strong year for the vehicle category overall. And it really is a great execution of our playbook, driving brand purpose, consumer-centric innovation, cultural relevance, and franchise mindset. Now, in front of me, I don't have the usual array of Barbie dolls. Is that just because there are other areas that are doing better, or am I just got the wrong things ahead in front of me? Barbie is such an incredible brand. It's an incredible canvas. It's still the number one doll globally. It gained over 550 basis points of market share in the category and was the number one property in dolls and continue to expand. We couldn't be more excited about Barbie's trajectory, more segments that we are launching this year. We expect more shelf space in the second quarter. There are more offering for adult collector. We're engaging the core kid audience with new content on Netflix. There's another partnership that we announced earlier this year. We take to publish a new mobile game that we will release later this year. And all in all, a great brand celebrating its 65th anniversary this year with multiple activations and an incredible opportunity down the road to grow. Okay, so I hear on that you've got, obviously, you have great cross margins. The free cash flow is extraordinary. You're taking share from everybody. So the logical question would be, someone would ask me, Jim, you like all those things, but you don't have good sales growth. So why don't you wake me when you have good sales growth? What do I say to someone like that, a critic? Well, our plans for this year is to have comparable sales for 2024. This is in the context of our expectation for the industry to decline, albeit less than last year. And in an industry will return to growth in 2025 with improving trends. But in that context, we do expect to continue to gain share, outperform the industry, and focus on incredible brands and very innovative product. And at the same time, continue to position the company for long term growth, both top line and profitability. Okay, so if I go out to Kansas City next year, what am I going to see? Well, the parks that we're launching now have an incredible offering of motel brands, different executions, different rides and attractions. The park that we're launching in Arizona this year will have 11 attractions based on 10 brands of motel. It's another form of engagement where we continue to look to touch and reach and engage fans of all ages all over the world. But you've not invited us? What is that about? Of course, and this is really, and we talked about it before, is how we as a company evolve, and we now think of people who buy our product, not just as consumers, but as fans that have an emotional relationship with our brand. And in that regard, we stand out in a market that is looking for big franchises, big brands. And we own one of the strongest portfolios in the world, in children and family entertainment. And that really opens up opportunities for the company to expand outside of the toy aisle. We love the toy business, and we see significant opportunities for growth in the toy category. But the opportunity for motel is to take our incredible brands and extend our business outside of the toy island, participate in highly accredited business verticals that are all driven by big franchises and big brands, which is what we bring to the table. Well, it makes a ton of sense to me. What can I say? I got to see with my own eyes though. That would be the trigger for me to think under 20, you got to buy it. I want to thank you not in crisis. Chairman, CEO of Mattel, it's always great to see you, buddy. Thank you. Thank you. Okay, man. Money's back into the break. [Music] Hold it. Before we get to tonight's lighting round, I'll remind that you are not going to want to miss the next investing club monthly meeting. And it's happening tomorrow at noon. I want you to join for me so much that we have a limited time off for happening right now. You can take advantage of it and get the exclusive member benefits at cmuc.com/flashclo. And now it is time to start with the light round. We're going round for another 10 minutes. I'll just head on to the bottom. I probably do need to play this out. And then the lighting round is over. Are you ready? Skate, daddy, cover the light round, clear to me. I'm going to start with Frank in Ohio. Frank! Hi, Jim. I bought this stock over a year and a half ago only because I like high yield paying dividends. I've been reinvesting them. And now I want to add some more cash to my position. What do you think of PBR, Jim? I like PBR the beer more than I like PBR the oil company. I'm going to hit the cell phone. Let's go to Ann in Maryland. Ann! Jim, tell me something good about enterprise product. I will tell you it's got the best network of fractionators in the country. It's also the best run of the next limited part. So I can't say enough positive things. Let's go to Eric and Georgia. Eric. Good evening, Mr. Kramer. Thank you for all you do. Of course. My stock is winning. Nvidia has invested in the $50 million in capital and equipment. What are your thoughts on recursion pharmaceuticals? I have been waiting for someone to bring this stock up. Why? Because when I was at Nvidia for the great GTC conference, they talked about this company endlessly. I think you have a real winner. The stock went up after around the conference and has come right back down. Recursion is for me. In fact, I may have to do a segment about it before I can tell it's a segment idea. Okay, sometimes that happens. Anthony in West Virginia, Anthony. By way of temperature, the Jim Gopher, I need your blessing. I'll give you my blessing. I think LNG is terrific. I do believe that because the president has decided to let, let's just say, put things on hold for others. This guy's a winner. So let's buy it. Okay. Now, I'll just seek your pizza. I'm going to throw it to Hoover. Let's go to Stafford. Stafford. Oh my god. The guy from the, the guy who didn't, I don't know if his options are going to be picked up. Stafford in California, Stafford. Hey, Jim, how you doing today? All right, Stafford. How you doing? Good thing. Hey, I wanted to know your thoughts on Casey's general store. Oh man, hitting jam, hitting jam. Love the pizza there. I think you got it. That is a winner, and it should be bought. It's not that expensive. Given its growth prospects, I wish they'd split the stock there. Okay, now we're going to Gregory in California. Gregory. Hey, Jim. I'm looking forward to the meeting, the monthly meeting tomorrow. Oh, we're going to smoke it. I met you at the, at the annual, you were terrific. Oh, you did. You did. Yes, I did. This is a warm up member question on a substock that's dropped over 160 bucks in the past couple of weeks before covering some of that in the last two, two sessions. But no worries. After paying my annual club membership and buying a couple bottles of Bosco, I'm still up over 40%. So thanks, Club. Well, no, but what's that? Question. Huh? Broadcom. Oh my god. Broadcom. It's ridiculous that it's going down. By me, Jesus. It's almost as good as false, false, right? I said that because my wife sometimes listens like she did in 2007. She brought a show and that ladies and gentlemen's inclusion of the lightning round. The lightning round is sponsored by Charles Schwab. Believe it or not, I agree with the FTC for once. They're right when they say the tapestries $8.5 billion acquisition of Capri is anti-competitive. When the parent company of coach and Kate Spade merges with the parent company of Versace and Jimmy Chiu and Michael Kors, I'm sold in the idea that it is indeed banned for the consumer. Now, I know I've been a major critic of the FTC in recent years because it feels like third ambition to block nearly every deal, especially if it involves a big company, even if a company like Amazon that sent everything in its power to give consumers lower prices. But you know what? Some deals do deserve to be blocked and I've come around to the idea that the tapestry Capri tie up is one of them. The FTC uses some pretty hyperbolic language in its release that proposed merger threatens to deprive millions of American consumers of the benefits of tapestry and Capri's head-to-head competition, which includes competition on price, discounts, and promotion, innovation, design, marketing, and advertising. The agency also adds that the deal "threatens to eliminate the incentive for the two companies to compete for employees and could negatively affect employees' wages and workplace benefits." Now, they go into great detail in the lawsuit about how tapestry and Capri's attempts to dominate the so-called "accessible luxury" category are for real. Now, look, I'm not enough of a fashionista to truly understand this business. I mean, this stuff, frankly, I'm not calling it my style, but people do buy these snakes. And I hate to see them having to pay more than they should for these things. I mean, personally, I say it's a travesty to buy this stuff at any price. Although, I'm not exactly the key demographic. Why am I siding with the FTC on this one? Because they're finally going after a merger that's actually trying to do something anti-competitive. Let me put it this way. Why does tapestry want to buy Capri? Three reasons to cut labor costs by laying people off to hold the line on pricing and to take out a rival that competes with it for shelf space. And that's why this transaction would be fantastic for shareholders. I like the deal precisely because it would, quote, "eliminate fears head-to-head competition on many important attributes, including price," end quote, like the FTC says in its release. I mean, come on. I mean, we're talking about stuff that I guess it's kind of exactly alike, kind of in a subtle way. Now, what am I supposed to do here? Arguing that it won't have an impact to the lawyers, why I argue that it will have an impact to potential shareholders? I may be the most sincerely insincere man in North America. But even for me, that's what I call pretzel logic. Who would, oh, that one's from a member of my staff. Who would ever buy this? Not only that, I was hoping that tapestry would create this bill, whatever. This colossus by continuing to buy up additional brands. Sure enough, the commission says that tapestry has no plans to stop acquiring companies. According to the FTC, this deal isn't likely to be tapestries last, as the acquisition of Capine will give tapestry additional leverage to make even more accessible in the future. To which I say, you betcha! We'll come out in favor of monopolies, okay? I'm in favor of higher stock prices for you, the shareholders. That can often put me at odds with the FTC. But sometimes, by motor, for liking a deal, is exactly why it should be blocked. And you know what? I accept the verdict. The prosecution doesn't rest. And for once, I think they're right. Like you said, there's always more market somewhere. I promise I'll find it just for you right here with me, buddy. I'm Jim Kramer. See you tomorrow. Last call starts now. All opinions expressed by Jim Kramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC, NBC, Universal, or their parent company or affiliates, and may have been previously disseminated by Kramer on television, radio, internet, or another medium. You should not treat any opinion expressed by Jim Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable, but neither CNBC nor its affiliates and/or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such. To view the full Mad Bunny disclaimer, please visit CNBC.com/MadBunnyDisclaimer. Norman, we need to pause this surgery. What, doctor? Because Xfinity Mobile just got even better. Now you're automatically connected to Wi-Fi speeds up to a gig while you're on the go. Plus, existing Xfinity customers can buy one unlimited line and get one free for a year. Visit XfinityMobile.com to learn more. Offer N621. Restrictions apply. Existing Xfinity internet service and two new unlimited lines require. Reduce speeds after 30 gigabytes of usage per line. Data thresholds may vary. Actual Wi-Fi speeds vary not guaranteed. [BLANK_AUDIO]