Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| Statement |
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| We will pursue our previously communicated plan which centers around, focusing on our fans and unmatched brand; running the business with financial discipline and focusing on fewer products done extremely well; investing in areas we can control, measure and grow profitably; and keeping the flywheel turning where each action we take builds on the previous one, propelling positive momentum |
| That is, through our direct-to-consumer channels, both in the stores and online, we'll continue to see good growth there |
| But, overall, when you look at the bottom line margin, it is improving, and I think that, as we kind of round the corner, past Q1, we start comping up later in the year, and then we're not providing guidance just yet for the years to come, but I think as we are able to grow that top line again, you'll see really good flow through to the bottom line |
| And the last thing I'll point to, and Mike commented in the call, is that we've really seen tremendous progress in inventory in the channel |
| In summary, we reported a solid overall financial performance in Q4 |
| We have more control over our D2C business and believe we can grow it profitably |
| So we were pleased to see D2C sales in Q4 comprise 26% of our mix and increased nearly 30% over the same quarter last year |
| We expect our financial results to improve in the second half of 2024 due to the natural seasonality of our business, as well as an expected easing of the impact of the Hollywood strikes and the recent shipping disruptions in the Red Sea, and the actions we are taking to grow our direct-to-consumer channel, Pop! Yourself, and other areas of our business |
| Both products have been very well received by customers and were key contributors to our business in 2023 |
| I'm proud of what we've accomplished this past year and I look forward to watching Funko's continued success |
| Our growth in sales, improved gross margins, and the rightsizing of our cost structure culminated in a successful Q4 |
| Yves is incredibly capable, and I'm sure over time he'll prove to you that he's a better CFO than I could ever be |
| Linda Bolton Weiser On the cost side or on the margin side, I mean, congratulations, Steve and everybody, but gross margin improvement is really impressive and you're back to normal historical levels |
| Taken together, this is a good time for me to exit and I take great comfort in knowing that the company is in significantly better financial shape today than this time last year |
| We believe we now have in place a strong, lean, aligned senior leadership team to support the arrival of a new CEO and the growth of Funko |
| Second, I believe Yves is a strong financial executive and is highly qualified to take over the CFO role |
| Over the course of 2023, we grew our D2C business, which in turn helped us achieve consecutive quarterly increases in our gross margin |
| So I didn't specifically say we'd comp up in every quarter, but we do think that throughout the year, we will be able to have easier comps compared to last year |
| So, the gross margin is great |
| He led our efforts to address our excess inventory and improve our Buckeye distribution center, negotiate lower shipping costs, rightsize our cost structure, and manage our liquidity and improve our free cash flow |
| Importantly, we expect 2024 full-year adjusted EBITDA to be considerably higher than our 2023 full-year adjusted EBITDA |
| We believe that by focusing on these areas, we will gain operating leverage and a greater percentage of our sales will flow to the bottom line |
| First, we largely completed and accomplished the job I was brought in for, which included fixing operational issues, improving our financial profile, rightsizing inventory, managing liquidity, and improving our free cash flow |
| The higher profitability we expect in 2024 compared with 2023 is based on the actions we are taking to, among other things, further expand our D2C business and increase sales of Pop! Yourself and limited edition products, areas of our business where we have more control and that we believe we can grow profitably |
| Operations is going to be in good shape |
| I think it's resulting in a healthier mix of business for us |
| He is obviously incredibly capable |
| The increase in gross margin was driven in part by growth in our higher margin direct-to-consumer sales and lower freight costs |
| So I think that's a good indicator of a healthy business out there |
| The increase over last year's adjusted EBITDA is expected to be driven by growth in our higher margin product lines and our direct-to-consumer business, as well as the annualization of cost reduction measures implemented last year |
| Statement |
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| Gross margin down slightly from Q4, primarily due to higher freight costs |
| Second, we are experiencing a softer content schedule primarily due to the recent Hollywood strikes |
| And for our larger retail partners who provide us with POS data, in in the channel at the end of 2023 was 32% lower than at the end of 2022 and at healthy levels relative to POS sales |
| but for Q1 net sales to be lower than net sales in Q1 of last year |
| I think what you're seeing is, yes, POS sales are still down |
| Michael Lunsford The only thing I would add is we have – not calling out names, but we do have one particular wholesaler who's significantly down year-over-year |
| So both our owned inventory has come down 50% and we kind of quoted inventory in the channel for those customers that report that information to us was down 30% throughout the year |
| And third, we face uncertainty around shipping costs primarily due to current hostilities in the Red Sea |
| And inventory was $119.5 million, which is less than half of the inventory we had at the end of last year and more than $40 million lower than our balance at the end of Q3 |
| And then that led to the inventory overstocking for the rest of the |
| But I guess I'm assuming POS is kind of trending down year-over-year |
| So Q1 is just a tough comp |
| And also, it seems like there would just be a delay, not that you're not getting the product from Asia to Europe |
| First, we took deliberate action to manage down our inventory levels and we eliminated a significant number of unprofitable product lines and SKUs |
| As Mike mentioned, while we expect net sales in Q1 of 2024 to be lower than net sales in Q1 of last year, we expect to achieve positive comps later in the year |
| Turning now to 2024, we expect 2024 full-year net sales to be comparable to down slightly from 2023 |
| We've added some other elements in like that that will be actually very high revenue drops because they're just – they're a much higher price point than you're used to seeing from us |
| At year-end, inventory was $119 million, which was down more than 50% from $246 million at the end of 2022 |
| We'll be down versus last year |
| SG&A expenses in the second half of 2023 declined to 32% of net sales from 38% first half |
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