Funko Inc (FNKO) Q2 2024 Earnings Call Highlights: Strong Sales Growth and Improved Liquidity ...

GuruFocus News
4 min read

In This Article:

  • Net Sales: $247.7 million, up 3% year-over-year.

  • Gross Margin: 42%.

  • Adjusted EBITDA: $27.9 million.

  • Adjusted Net Income: $5.6 million or $0.10 per diluted share.

  • Direct-to-Consumer Sales Mix: 23% of gross sales, up from 18% in the previous year's Q2.

  • SG&A Expenses: $77.9 million.

  • Cash and Cash Equivalents: $41.6 million.

  • Total Debt: $223.9 million, down from $246.4 million at the end of the first quarter.

  • Total Company Liquidity: $101.6 million, up from $69.1 million last quarter.

  • Net Inventory: $109 million, down from $112.3 million at March 31, 2024.

  • Full Year 2024 Guidance: Net sales between $1.047 billion and $1.103 billion; Adjusted EBITDA between $65 million and $85 million.

  • Q3 2024 Guidance: Net sales between $282 million and $297 million; Gross margin between 38% and 39%; SG&A expense of $90 million to $95 million; Adjusted net income between $0.5 million and $3 million; Adjusted EBITDA between $21 million and $25 million.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Funko Inc (NASDAQ:FNKO) reported better-than-expected financial results for the second quarter, with net sales of $248 million, marking a 3% increase over the same quarter last year.

  • The company achieved its first profitable quarter since Q3 2022, with a gross margin of 42% and adjusted EBITDA of $28 million, both exceeding guidance ranges.

  • Sales of Bitty Pop, a new entry in the miniature collectible space, more than doubled compared to the same quarter last year, showcasing strong product momentum.

  • The direct-to-consumer sales mix increased to 23% of gross sales in Q2, up from 18% in the previous year, representing a 33% growth in this channel.

  • Funko Inc (NASDAQ:FNKO) successfully reduced its total debt from $246.4 million at the end of Q1 to $223.9 million by the end of Q2, improving its liquidity position to $101.6 million.

Negative Points

  • The company faced challenges due to a weaker content slate, partly attributed to Hollywood strikes, impacting new entertainment releases.

  • Approximately $9 million in net sales were pulled forward from Q3 into Q2 due to rising freight costs and container availability issues, which may affect future quarters.

  • Despite strong performance, the company remains cautious about the uncertain economic environment, including interest rates, labor market, and consumer spending.

  • Funko Inc (NASDAQ:FNKO) anticipates lower gross margins in Q3 due to higher freight costs, which could impact profitability.

  • The company is still in the process of strategically pulling back from the mass channel in the US, which may affect sales growth in the short term.

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