Funko(US:FNKO)2022-03-02 16:00Financial Performance - Net sales for the year ended December 31, 2021, were $1.03 billion, a 57.7% increase from $652.5 million in 2020[299]. - Net income for 2021 was $67.85 million, compared to $9.76 million in 2020, reflecting a significant growth in profitability[299]. - The company's EBITDA for 2021 was $133.28 million, up from $66.87 million in 2020, indicating improved operational efficiency[277]. - Net income for 2021 was $67.9 million, a significant increase from $9.8 million in 2020, attributed to higher net sales and lower interest expenses[311]. - Adjusted EBITDA for 2021 was $149.9 million, compared to $80.2 million in 2020, reflecting improved operational performance[318]. - Basic earnings per share for Class A common stock increased to $1.14 in 2021 from $0.11 in 2020, a growth of 936.4%[391]. - Total revenue for the year ended December 31, 2021, reached $396,558,000, compared to $322,445,000 in 2020, reflecting a year-over-year growth of approximately 23%[402]. - Net income for the year ended December 31, 2021, was $67,854,000, a significant increase from $9,763,000 in 2020 and $27,820,000 in 2019[402]. Sales and Customer Base - The Pop! brand accounted for approximately 74% of total sales in 2021, highlighting the brand's dominance in the product portfolio[278]. - The top ten customers represented about 45% of total sales in 2021, showing a slight decrease from 48% in 2020, indicating a diversification in customer base[281]. - Net sales in the United States rose by 52.2% to $743.8 million in 2021, while Europe saw a 91.7% increase to $214.7 million, and other international locations increased by 36.7% to $70.7 million[302]. Costs and Expenses - Selling, general, and administrative expenses rose to $244.33 million in 2021, a 34.8% increase from $181.23 million in 2020, reflecting increased operational costs[299]. - Cost of sales increased by 60.7% to $648.30 million in 2021, driven by higher sales volume and product costs[299]. - Gross margin (exclusive of depreciation and amortization) decreased to 37.0% in 2021 from 38.2% in 2020, primarily due to increased freight costs[304]. - Selling, general, and administrative expenses increased by 34.8% to $244.3 million in 2021, driven by higher personnel expenses and marketing costs[305]. - Royalty expenses for the years ended December 31, 2021, and 2020, were $162.0 million and $105.0 million, respectively, reflecting a significant increase[363]. - Advertising and marketing costs for the year ended December 31, 2021, were $17.1 million, significantly up from $7.7 million in 2020 and $11.3 million in 2019, indicating increased promotional activities[426]. Cash Flow and Liquidity - Net cash provided by operating activities was $87.4 million for the year ended December 31, 2021, a decrease of 19.6% compared to $108.7 million for 2020[330]. - Net cash used in investing activities was $27.4 million for the year ended December 31, 2021, primarily for the purchase of property and equipment related to product line expansion[332]. - Net cash used in financing activities was $28.6 million for the year ended December 31, 2021, including $1.7 million under the Tax Receivable Agreement and $9.3 million in distributions to Continuing Equity Owners[335]. - The company expects significant future liquidity needs, including payments under the Tax Receivable Agreement and general cash requirements for operations and capital expenditures[352]. Debt and Financing - The Company entered into a New Credit Agreement on September 17, 2021, providing a term loan facility of $180.0 million and a revolving credit facility of $100.0 million[323]. - The New Term Loan Facility matures on September 17, 2026, with quarterly amortization payments of 2.50% of the original principal amount[340]. - The maximum Net Leverage Ratio for the fiscal quarter ending December 31, 2021, was set at 2.50:1.00, with a minimum fixed charge coverage ratio of 1.25:1.00[343]. - The New Credit Agreement restricts the Company's ability to incur additional indebtedness, pay dividends, and make other distributions on equity interests[342]. - The estimated fair value of the company's debt instruments was approximately $175.5 million as of December 31, 2021, down from $193.9 million in 2020[449]. Inventory and Assets - The company had sales across 955 active properties in 2021, an increase from 854 in 2020, demonstrating growth in product offerings[284]. - Inventory levels rose to $166,428 in 2021, up from $59,773 in 2020, indicating a 177.5% increase[397]. - Total assets as of December 31, 2021, were $967,503, compared to $763,590 in 2020, marking a 26.7% increase[397]. - Accounts receivable, net, increased to $187.688 million as of December 31, 2021, compared to $131.837 million in 2020, reflecting a growth of approximately 42.4%[442]. Tax and Deferred Tax - Income tax expense increased to $17.1 million in 2021 from $2.0 million in 2020, driven by a rise in income before taxes[310]. - The Company's deferred tax assets increased to $89.6 million in 2021 from $67.6 million in 2020, with a net deferred tax asset of $73.8 million[473]. - The effective income tax rate for 2021 was 20.1%, compared to 17.2% in 2020[471]. Strategic Initiatives - Funko's strategy includes expanding its licensing relationships and product offerings to adapt to changing consumer preferences in pop culture[280]. - The Company acquired a majority of TokenWave LLC on March 26, 2021, to expand into digital NFTs, although the financial impact was not material[432]. - The Company’s two largest license agreements accounted for 26% of sales in 2021, up from 12% and 11% in 2020, indicating a growing reliance on key partnerships[413]. Risks and Management - The company is exposed to foreign currency risk, particularly with sales in British pounds and euros, but currently assesses this exposure as not significant[378]. - The company maintains reserves for excess and obsolete inventories, reflecting a proactive approach to inventory management[364]. - The company evaluates goodwill for impairment annually, with potential adverse effects on financial condition if impairment is identified[366].