Funko(US:FNKO)2024-05-09 20:33Financial Performance - Net sales for the three months ended March 31, 2024, were $215.7 million, a decrease of 14.4% compared to $251.9 million for the same period in 2023[93] - Net loss for the three months ended March 31, 2024, was $23.7 million, a 61.3% decrease from a net loss of $61.1 million in the same period in 2023[104] - Adjusted EBITDA for the three months ended March 31, 2024, was $9.6 million, compared to an adjusted EBITDA loss of $14.0 million in the same period in 2023[90] - For the three months ended March 31, 2024, the net loss attributable to Funko, Inc. was $22.7 million, a decrease from a net loss of $55.3 million in the same period of 2023, representing a 59% improvement[111] - Adjusted EBITDA for the three months ended March 31, 2024, was $9.6 million, compared to an Adjusted EBITDA of $(14.0) million for the same period in 2023, indicating a significant turnaround[111] - Adjusted loss per diluted share improved to $(0.17) for the three months ended March 31, 2024, compared to $(0.49) in the same period of 2023[111] Sales and Revenue - Net sales in the United States decreased by 17.4% to $146.4 million for the three months ended March 31, 2024, compared to $177.2 million in the same period in 2023[94] - Net sales in Europe decreased by 7.2% to $54.2 million for the three months ended March 31, 2024, compared to $58.5 million in the same period in 2023[94] Cost and Expenses - Gross margin for the three months ended March 31, 2024, was 40.0%, up from 19.7% in the same period in 2023, primarily due to a non-recurring inventory write-down charge of $30.1 million recorded in 2023[97] - Selling, general, and administrative expenses decreased by 14.5% to $85.6 million for the three months ended March 31, 2024, compared to $100.1 million in the same period in 2023[98] - Cost of sales for the three months ended March 31, 2024, was $129.4 million, a decrease of 36.0% from $202.3 million in the same period in 2023[96] Cash Flow and Liquidity - Net cash provided by operating activities was $14.5 million for the three months ended March 31, 2024, compared to net cash used of $30.3 million in the same period of 2023, reflecting a positive change of $44.8 million[116] - The company reported a decrease in inventory of $49.1 million, contributing to improved cash flow from operations[118] - Net cash used in financing activities was $27.4 million for the three months ended March 31, 2024, primarily due to payments on the Term Loan Facility and Equipment Finance Loan[121] - The company believes its sources of liquidity and capital will be sufficient to finance operations and growth strategy for at least the next 12 months[114] Debt and Financing - The company entered into a new credit agreement providing for a term loan facility of $180.0 million and a revolving credit facility of $100.0 million[123] - The revolving credit facility was increased to $215.0 million and later reduced to $150.0 million as of December 31, 2023[123] - As of March 31, 2024, the company had $125.2 million of indebtedness outstanding under the term loan facility and $107.0 million under the revolving credit facility, leaving $43.0 million available[130] - The maximum net leverage ratio and minimum fixed charge coverage ratio for the fiscal quarter ended March 31, 2024, are set at 2.50:1.00 and 1.25:1.00, respectively[127] - The term loan facility matures on September 17, 2026, with quarterly amortization payments of 2.50% of the original principal amount[125] Market and Operational Insights - The company strategically adjusted inventory buy-in to focus on core products to mitigate impacts from a challenging retail environment[88] - The company experienced a foreign currency transaction loss of $1.6 million in Q1 2024, compared to a loss of $0.8 million in Q1 2023[111] - The company filed a preliminary shelf registration statement allowing for the offering of up to $100.0 million of various securities[131] - The company has historically experienced moderate seasonality, with over 50% of net sales occurring in the third and fourth quarters[137] - The company is exposed to market risks from changes in interest rates, foreign currency, and inflation, with no material changes reported[141]