Sales Increased 26% to $223.3 Million
Net Income Grew to $15.5 million from $7.6 million
Adjusted EBITDA Rose 20%
Funko, Inc. ("Funko,” or the “Company”) (Nasdaq: FNKO), a
leading pop culture consumer products company, today reported its
consolidated financial results for the third quarter ended
September 30, 2019.
Third Quarter 2019 Highlights1
- Net sales increased 26% to $223.3 million
- Gross profit2 increased 26% to $85.5 million
- Gross margin2 decreased 10 basis points to 38.3%
- Income from operations increased 36% to $22.6 million
- Net income increased to $15.5 million from $7.6 million
- Earnings per diluted share increased to $0.25
- Adjusted Net Income3 was $19.9 million compared to $13.6
million in the third quarter of 2018, and Adjusted Earnings per
Diluted Share3 was $0.38, compared to $0.27 in the third quarter of
2018
- Adjusted EBITDA3 increased 20% to $40.6 million
“Funko once again delivered another quarter of strong growth and
financial performance,” said Brian Mariotti, Funko’s CEO. “We are
driving results by executing against our strategic initiatives and
investing in the long-term success of Funko.
“More and more people are choosing Funko to be the platform in
which they engage with pop culture. We are focused on finding new
and innovative ways to connect people to their favorite
entertainment through fan experiences as well as digital and
physical goods.”
“There continues to be strong global demand for our products as
the proliferation of content persists around the world. We are
continuing to make the investments needed to capitalize on our
expanding growth opportunities in both new and existing
markets.”
Third Quarter 2019 Financial Results
Net sales increased 26% to $223.3 million in the third quarter
of 2019 from $176.9 million in the third quarter of 2018. The
growth was driven primarily by an increase in the number of active
properties and strong sales demand in the United States and
Europe.
In the third quarter of 2019, the number of active properties
increased 13% to 627 from 553 in the third quarter of 2018 and net
sales per active property increased 11%. On a geographical basis,
net sales in the United States increased 21% to $147.3 million and
net sales internationally increased 37% to $76 million with strong
growth in Europe. On a product category basis, net sales of figures
increased 24% to $176.5 million and net sales of other products
increased 33% to $46.8 million versus the third quarter of 2018,
driven primarily by continued growth of our Loungefly and other
softline products and the introduction of our games product
line.
The tables below show the breakdown of net sales on a
geographical and product category basis (in thousands):
Three Months Ended September
30,
Period Over Period
Change
2019
2018
Dollar
Percentage
Net sales by geography: United States
$
147,308
$
121,316
$
25,992
21.4
%
International
75,999
55,599
20,400
36.7
%
Total net sales
$
223,307
$
176,915
$
46,392
26.2
%
Three Months Ended September
30,
Period Over Period
Change
2019
2018
Dollar
Percentage
Net sales by product: Figures
$
176,480
$
141,762
$
34,718
24.5
%
Other
46,827
35,153
11,674
33.2
%
Total net sales
$
223,307
$
176,915
$
46,392
26.2
%
Gross margin2 in the third quarter of 2019 decreased 10 basis
points to 38.3% compared to 38.4% in the third quarter of 2018. The
decrease in gross margin2 in the third quarter of 2019 compared to
the third quarter of 2018 was driven primarily by higher duties
related to our Loungefly products, partially offset by lower
license and royalty costs as a percentage of net sales and lower
shipping and freight costs as a percentage of net sales.
SG&A expenses increased 27% to $52.4 million in the third
quarter of 2019 from $41.3 million in the third quarter of 2018,
primarily driven by growth and investment in the business and the
continued expansion of our office, retail and warehouse facilities,
reflecting an increase of $5.0 million in personnel and related
costs (including salary and related taxes/benefits, commissions and
stock compensation expense), an increase of $2.1 million in
administrative and other costs, an increase of $1.3 million in
warehouse and office support and an increase of $1.1 million in
rent and related facilities costs. In addition, SG&A expenses
included $2.9 million of legal, accounting and other related costs
incurred in connection with the Company’s investigation of the
underpayment of customs duties at Loungefly. SG&A expenses
increased 20 basis points as a percentage of net sales.
Net income for the third quarter of 2019 increased to $15.5
million from $7.6 million in the third quarter of 2018, and
Adjusted Net Income3 increased $6.3 million to $19.9 million from
$13.6 million in the third quarter of 2018. Factors that led to net
income and Adjusted Net Income3 growing faster than net sales in
the third quarter of 2019 compared to the third quarter of 2018
include lower depreciation and amortization expense as a percentage
of net sales, a reduction in interest expense, net and the reduced
impact of foreign currency gains and losses relating to
transactions denominated in currencies other than the US dollar
compared to the third quarter of 2018.
Adjusted EBITDA3 in the third quarter of 2019 rose 20% to $40.6
million or 18.2% of net sales from $33.9 million, or 19.2%, of net
sales in the third quarter of 2018. The decrease in Adjusted
EBITDA3 as a percentage of net sales in the third quarter of 2019
compared to the third quarter of 2018 resulted primarily from
higher SG&A as a percentage of net sales reflecting investments
we made in the business.
2019 Outlook
The Company is reiterating its outlook for the full year 2019.
The Company expects net sales to be in a range of $840 million to
$850 million. Adjusted EBITDA3 is expected to be in a range of $140
million to $145 million. Adjusted Earnings per Diluted Share3 is
expected to be in a range of $1.15 per share to $1.22 per share and
is based on estimated adjusted average diluted shares outstanding
of 53.5 million for the full year 2019.
Adjusted EBITDA and Adjusted EPS are non-GAAP measures. A table
at the end of this release reconciles Funko’s outlook for the full
year 2019 Adjusted EBITDA and Adjusted Earnings per Diluted Share
guidance to the most directly comparable U.S. GAAP financial
measures. Please refer to the “Non-GAAP Financial Measures” section
of this press release.
1 The prior period amounts have been
revised to reflect the correction of immaterial errors related to
an underpayment of certain duties owed to U.S. Customs as well as
other previously identified immaterial errors. Please see Note 1 to
our Form 10-Q for the period ended September 30, 2019 for further
information.
2 Gross profit is calculated as net sales
less cost of sales (excluding depreciation and amortization). Gross
margin is calculated as net sales less cost of sales (excluding
depreciation and amortization) as a percentage of net sales.
3Adjusted Net Income, Adjusted Earnings
per Diluted Share, EBITDA and Adjusted EBITDA are non-GAAP
financial measures. For a reconciliation of Adjusted Net Income,
Adjusted Earnings per Diluted Share, EBITDA and Adjusted EBITDA to
the most directly comparable U.S. GAAP financial measures, please
refer to the “Non-GAAP Financial Measures” section of this press
release.
Conference Call and Webcast
The Company will host a conference call at 4:30 p.m. Eastern
Time (1:30 p.m. Pacific Time) today, October 31, 2019, to further
discuss its third quarter results. Investors and analysts can
participate on the conference call by dialing (877) 407-9039 or
(201) 689-8470. Interested parties can also listen to a live
webcast or replay of the conference call by logging on to the
Investor Relations section on the Company’s website at
https://investor.funko.com/. The replay of the webcast will be
available for one year.
About Funko
Headquartered in Everett, Washington, Funko is a leading pop
culture consumer products company. Funko designs, sources and
distributes licensed pop culture products across multiple
categories, including vinyl figures, action toys, plush, apparel,
housewares and accessories for consumers who seek tangible ways to
connect with their favorite pop culture brands and characters.
Learn more at https://funko.com/, and follow us on Twitter
(@OriginalFunko) and Instagram (@OriginalFunko).
Forward Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including statements regarding our
anticipated financial results, the underlying trends in our
business, growing demand for our products, our potential for
growth, plans for investments in our business and future
opportunities, including expanding into new product categories,
broadening our retailer network and increasing international sales.
These forward-looking statements are based on management’s current
expectations. These statements are neither promises nor guarantees,
but involve known and unknown risks, uncertainties and other
important factors that may cause our actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements, including, but not limited to, the
following: our ability to maintain and realize the full value of
our license agreements; the ongoing level of popularity of our
products with consumers; changes in the retail industry and markets
for our consumer products; our ability to maintain our
relationships with retail customers and distributors; our ability
to compete effectively; fluctuations in our gross margin; our
dependence on content development and creation by third parties;
our ability to develop and introduce products in a timely and
cost-effective manner; our ability to obtain, maintain and protect
our intellectual property rights or those of our licensors;
potential violations of the intellectual property rights of others;
risks associated with counterfeit versions of our products; our
ability to attract and retain qualified employees and maintain our
corporate culture; risks associated with our international
operations; changes in U.S. tax law; foreign currency exchange rate
exposure; the possibility or existence of global and regional
economic downturns; our dependence on vendors and outsourcers;
risks relating to government regulation; risks relating to
litigation, including products liability claims and securities
class action litigation; any failure to successfully integrate or
realize the anticipated benefits of acquisitions or investments;
reputational risk resulting from our e-commerce business and social
media presence; risks relating to our indebtedness and our ability
to secure additional financing; the potential for our electronic
data to be compromised; the influence of our significant
stockholder, ACON, and the possibility that ACON’s interests may
conflict with the interests of our other stockholders; risks
relating to our organizational structure; volatility in the price
of our Class A common stock; and the potential that we will fail to
establish and maintain effective internal control over financial
reporting. These and other important factors discussed under the
caption “Risk Factors” in our quarterly report on Form 10-Q for the
quarter ended September 30, 2019 and our other filings with the
Securities and Exchange Commission could cause actual results to
differ materially from those indicated by the forward-looking
statements made in this press release. Any such forward-looking
statements represent management’s estimates as of the date of this
press release. While we may elect to update such forward-looking
statements at some point in the future, we disclaim any obligation
to do so, even if subsequent events cause our views to change.
These forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date of
this press release.
Funko, Inc. and
Subsidiaries
Condensed Consolidated
Statements of Operations
(Unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018 (1)
2019 (1)
2018 (1)
(In thousands, except per share data) Net sales
$
223,307
$
176,915
$
581,571
$
452,849
Cost of sales (exclusive of depreciation and amortization shown
separately below)
137,801
109,046
361,455
281,574
Selling, general, and administrative expenses
52,424
41,267
136,539
110,306
Acquisition transaction costs — — —
28
Depreciation and amortization
10,472
9,961
31,127
28,912
Total operating expenses
200,697
160,274
529,121
420,820
Income from operations
22,610
16,641
52,450
32,029
Interest expense, net
3,620
5,750
11,455
17,230
Other expense, net
577
1,434
423
2,594
Income before income taxes
18,413
9,457
40,572
12,205
Income tax expense
2,865
1,906
6,464
2,661
Net income
15,548
7,551
34,108
9,544
Less: net income attributable to non-controlling interests
6,909
5,981
18,142
7,307
Net income attributable to Funko, Inc.
$
8,639
$
1,570
$
15,966
$
2,237
Earnings per share of Class A common stock: Basic
$
0.27
$
0.07
$
0.54
$
0.10
Diluted
$
0.25
$
0.06
$
0.50
$
0.09
Weighted average shares of Class A common stock outstanding: Basic
32,055
23,765
29,555
23,484
Diluted
34,503
26,286
31,712
25,124
- The prior period amounts have been revised to reflect the
correction of immaterial errors related to an underpayment of
certain duties owed to U.S. Customs as well as other previously
identified immaterial errors. Please see Note 1 to our Form 10-Q
for the period ended September 30, 2019 for further
information.
Funko, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(Unaudited)
September 30,
December 31,
2019
2018 (1)
(In thousands, except per
share amounts)
Assets Current assets: Cash and cash equivalents
$
13,492
$
13,486
Accounts receivable, net
163,088
148,627
Inventory
94,347
86,622
Prepaid expenses and other current assets
14,039
11,904
Total current assets
284,966
260,639
Property and equipment, net
53,954
44,296
Operating lease right-of-use assets
61,847
— Goodwill
124,282
116,078
Intangible assets, net
225,165
233,645
Deferred tax asset
55,232
7,407
Other assets
4,859
4,275
Total assets
$
810,305
$
666,340
Liabilities and Stockholders' Equity Current
liabilities: Line of credit
$
18,542
$
20,000
Current portion long-term debt, net of unamortized discount
10,722
10,593
Current portion of operating lease liability
9,525
— Accounts payable
61,415
36,130
Income taxes payable
937
4,492
Accrued royalties
37,767
39,020
Accrued expenses and other current liabilities
26,932
33,015
Total current liabilities
165,840
143,250
Long-term debt, net of unamortized discount
208,460
216,704
Operating lease liabilities, net of current portion
61,093
— Deferred tax liability
38
5
Liabilities under tax receivable agreement, net of current portion
61,061
6,504
Deferred rent and other long-term liabilities
7,225
6,623
Commitments and contingencies
Stockholders'
equity: Class A common stock, par value $0.0001 per share,
200,000 shares authorized; 34,658 shares and 24,960 shares issued
and outstanding as of September 30, 2019 and December 31, 2018,
respectively
3
2
Class B common stock, par value $0.0001 per share, 50,000 shares
authorized; 14,567 shares and 23,584 shares issued and outstanding
as of September 30, 2019 and December 31, 2018, respectively
1
2
Additional paid-in-capital
200,365
146,154
Accumulated other comprehensive loss
(874
)
(167
)
Retained earnings
24,683
8,717
Total stockholders' equity attributable to Funko, Inc.
224,178
154,708
Non-controlling interests
82,410
138,546
Total stockholders' equity
306,588
293,254
Total liabilities and stockholders' equity
$
810,305
$
666,340
- The prior period amounts have been revised to reflect the
correction of immaterial errors related to an underpayment of
certain duties owed to U.S. Customs as well as other previously
identified immaterial errors. Please see Note 1 to our Form 10-Q
for the period ended September 30, 2019 for further
information.
Funko, Inc. and Subsidiaries Non-GAAP
Financial Measures
Adjusted Net Income, Adjusted Earnings per Diluted Share, EBITDA
and Adjusted EBITDA are supplemental measures of our performance
that are not required by, or presented in accordance with, U.S.
GAAP. Adjusted Net Income, Adjusted Earnings per Diluted Share,
EBITDA and Adjusted EBITDA are not measurements of our financial
performance under U.S. GAAP and should not be considered as an
alternative to net income (loss), earnings per share or any other
performance measure derived in accordance with U.S. GAAP. We define
Adjusted Net Income as net income attributable to Funko, Inc.
adjusted for the reallocation of income attributable to
non-controlling interests from the assumed exchange of all
outstanding common units and options in FAH, LLC for newly
issued-shares of Class A common stock of Funko, Inc. and further
adjusted for the impact of certain non-cash charges and other items
that we do not consider in our evaluation of ongoing operating
performance. These items include, among other things, reallocation
of net income attributable to non-controlling interests, non-cash
charges related to equity-based compensation programs, acquisition
transaction costs and other expenses, foreign currency transaction
gains and losses, the Loungefly customs investigation and related
costs, certain severance, relocation and related costs, and other
unusual or one-time items, and the income tax expense (benefit)
effect of these adjustments. We define Adjusted Earnings per
Diluted Share as Adjusted Net Income divided by the
weighted-average shares of Class A common stock outstanding,
assuming (1) the full exchange of all outstanding common units and
options in FAH, LLC for newly issued-shares of Class A common stock
of Funko, Inc. and (2) the dilutive effect of stock options and
unvested common units, if any. We define EBITDA as net income
(loss) before interest expense, net, income tax expense (benefit),
depreciation and amortization. We define Adjusted EBITDA as EBITDA
further adjusted for non-cash charges related to equity-based
compensation programs, acquisition transaction costs and other
expenses, the Loungefly customs investigation and related costs,
certain severance, relocation and related costs, foreign currency
transaction gains and losses and other unusual or one-time items.
We caution investors that amounts presented in accordance with our
definitions of Adjusted Net Income, Adjusted Earnings per Diluted
Share, EBITDA and Adjusted EBITDA may not be comparable to similar
measures disclosed by our competitors, because not all companies
and analysts calculate these measures in the same manner. We
present Adjusted Net Income, Adjusted Earnings per Diluted Share,
EBITDA and Adjusted EBITDA because we consider them to be important
supplemental measures of our performance and believe they are
frequently used by securities analysts, investors, and other
interested parties in the evaluation of companies in our industry.
Management believes that investors’ understanding of our
performance is enhanced by including these non-GAAP financial
measures as a reasonable basis for comparing our ongoing results of
operations. Management uses Adjusted Net Income, Adjusted Earnings
per Diluted Share, EBITDA and Adjusted EBITDA as a measurement of
operating performance because they assist us in comparing the
operating performance of our business on a consistent basis, as
they remove the impact of items not directly resulting from our
core operations; for planning purposes, including the preparation
of our internal annual operating budget and financial projections;
as a consideration to assess incentive compensation for our
employees; to evaluate the performance and effectiveness of our
operational strategies; and to evaluate our capacity to expand our
business.
By providing these non-GAAP financial measures, together with
reconciliations, we believe we are enhancing investors’
understanding of our business and our results of operations, as
well as assisting investors in evaluating how well we are executing
our strategic initiatives. In addition, our senior secured credit
facilities use Adjusted EBITDA to measure our compliance with
covenants such as senior leverage ratio. Adjusted Net Income,
Adjusted Earnings per Diluted Share, EBITDA and Adjusted EBITDA
have limitations as analytical tools, and should not be considered
in isolation, or as an alternative to, or a substitute for net
income (loss) or other financial statement data presented in this
press release as indicators of financial performance. Some of the
limitations are:
- such measures do not reflect our cash expenditures, or future
requirements for capital expenditures or contractual
commitments;
- such measures do not reflect changes in, or cash requirements
for, our working capital needs;
- such measures do not reflect the interest expense, or the cash
requirements necessary to service interest or principal payments on
our debt;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future and such measures do not reflect any cash
requirements for such replacements; and
- other companies in our industry may calculate such measures
differently than we do, limiting their usefulness as comparative
measures.
Due to these limitations, Adjusted Net Income, Adjusted Earnings
per Diluted Share, EBITDA and Adjusted EBITDA should not be
considered as measures of discretionary cash available to us to
invest in the growth of our business. We compensate for these
limitations by relying primarily on our GAAP results and using
these non-GAAP measures only supplementally. As noted in the table
below, Adjusted Net Income, Adjusted Earnings per Diluted Share and
Adjusted EBITDA include adjustments for non-cash charges related to
equity-based compensation programs, acquisition transaction costs
and other expenses, foreign currency transaction gains and losses,
and other unusual or one-time items. It is reasonable to expect
that these items will occur in future periods. However, we believe
these adjustments are appropriate because the amounts recognized
can vary significantly from period to period, do not directly
relate to the ongoing operations of our business and complicate
comparisons of our internal operating results and operating results
of other companies over time. Each of the normal recurring
adjustments and other adjustments described herein and in the
reconciliation table below help management with a measure of our
core operating performance over time by removing items that are not
related to day-to-day operations.
The following tables reconcile Adjusted Net Income, Adjusted
Earnings per Diluted Share, EBITDA and Adjusted EBITDA to the most
directly comparable U.S. GAAP financial performance measure:
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018 (10)
2019 (10)
2018 (10)
(In thousands, except per share data) Net income
attributable to Funko, Inc.
$
8,639
$
1,570
$
15,966
$
2,237
Reallocation of net income attributable to non-controlling
interests from the assumed exchange of common units of FAH, LLC for
Class A common stock (1)
6,909
5,981
18,142
7,307
Equity-based compensation (2)
3,715
3,607
9,830
5,750
Acquisition transaction costs and other expenses (3)
733
2,663
383
2,691
Customs investigation and related costs (4)
2,907
—
3,357
— Certain severance, relocation and related costs (5)
180
1,031
180
1,031
Foreign currency transaction loss (6)
577
1,434
423
2,594
Income tax expense (7)
(3,766
)
(2,642
)
(7,222
)
(3,407
)
Adjusted net income
19,894
13,644
41,059
18,203
Adjusted net income margin (8)
8.9
%
7.7
%
7.1
%
4.0
%
Weighted-average shares of Class A common stock outstanding
- basic
32,055
23,765
29,555
23,484
Equity-based compensation awards and
common units of FAH, LLC that are convertible into Class A common
stock
20,510
27,682
22,556
27,046
Adjusted weighted-average shares of Class A stock
outstanding - diluted
52,565
51,447
52,111
50,530
Adjusted earnings per diluted share
$
0.38
$
0.27
$
0.79
$
0.36
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018 (10)
2019 (10)
2018 (10)
(amounts in thousands)
Net income
$
15,548
$
7,551
$
34,108
$
9,544
Interest expense, net
3,620
5,750
11,455
17,230
Income tax expense
2,865
1,906
6,464
2,661
Depreciation and amortization
10,472
9,961
31,127
28,912
EBITDA
$
32,505
$
25,168
$
83,154
$
58,347
Adjustments: Equity-based compensation (2)
3,715
3,607
9,830
5,750
Acquisition transaction costs and other expenses (3)
733
2,663
383
2,691
Customs investigation and related costs (4)
2,907
—
3,357
—
Certain severance, relocation and related costs (5)
180
1,031
180
1,031
Foreign currency transaction loss (6)
577
1,434
423
2,594
Adjusted EBITDA
$
40,617
$
33,903
$
97,327
$
70,413
Adjusted EBITDA margin (9)
18.2
%
19.2
%
16.7
%
15.5
%
(1)
Represents the reallocation of net income
attributable to non-controlling interests from the assumed exchange
of common units of FAH, LLC for Class A common stock in periods in
which income was attributable to non-controlling interests.
(2)
Represents non-cash charges related to
equity-based compensation programs, which vary from period to
period depending on timing of awards.
(3)
Represents legal, accounting, and other
related costs incurred in connection with acquisitions and other
potential transactions.
(4)
Represents legal, accounting and other
related costs incurred in connection with the Company's
investigation of the underpayment of customs duties at Loungefly.
For the nine months ended September 30, 2019, includes the accrual
of a contingent liability of $0.5 million related to potential
penalties that may be assessed by U.S. Customs in connection with
the underpayment of customs duties at Loungefly.
(5)
For the three and nine months ended
September 30, 2019, represents severance, relocation and related
costs associated with the consolidation of our warehouse facilities
in the United Kingdom. For the three and nine months ended
September 30, 2018, represents severance costs incurred in
connection with the departure of certain executives, including the
founders of Loungefly.
(6)
Represents both unrealized and realized
foreign currency losses on transactions other than in U.S.
dollars.
(7)
Represents the income tax expense effect
of the above adjustments. This adjustment uses an effective tax
rate of 25% for all periods presented.
(8)
Adjusted net income margin is calculated
as Adjusted net income as a percentage of net sales.
(9)
Adjusted EBITDA margin is calculated as
Adjusted EBITDA as a percentage of net sales.
(10)
The prior period amounts have been revised
to reflect the correction of immaterial errors related to an
underpayment of certain duties owed to U.S. Customs as well as
other previously identified immaterial errors. Please see Note 1 to
our Form 10-Q for the period ended September 30, 2019 for further
information.
Guidance Reconciliation of Net Income
to EBITDA, Adjusted EBITDA, Adjusted Net Income and Adjusted
Earnings per Diluted Share
Estimated Range for the Year Ending December 31, 2019
(In millions, except per share amounts) Net income
$
54.0
$
58.3
Interest expense, net
15.8
15.6
Income tax expense
10.2
11.1
Depreciation and amortization
42.5
42.5
EBITDA
$
122.5
$
127.5
Adjustments: Equity-based compensation (1)
13.2
13.2
Acquisition transaction costs and other expenses (2)
0.4
0.4
Customs investigation and related costs (3)
3.4
3.4
Certain severance, relocation and related costs (4)
0.2
0.2
Foreign currency transaction gain (5)
0.4
0.4
Adjusted EBITDA
$
140.0
$
145.0
Net income
$
54.0
$
58.3
Equity-based compensation (1)
13.2
13.2
Acquisition transaction costs and other expenses (2)
0.4
0.4
Customs investigation and related costs (3)
3.4
3.4
Certain severance, relocation and related costs (4)
0.2
0.2
Foreign currency transaction gain (5)
0.4
0.4
Income tax expense (6)
(10.2
)
(10.6
)
Adjusted net income
$
61.3
$
65.2
Weighted-average shares of Class A common stock outstanding
25.5
25.5
Equity-based compensation awards and common units of FAH, LLC that
are convertible into Class A common stock
28.0
28.0
Adjusted weighted-average shares of Class A stock outstanding -
diluted
53.5
53.5
Adjusted earnings per diluted share
$
1.15
$
1.22
(1)
Represents non-cash charges
related to equity-based compensation programs, which vary from
period to period depending on timing of awards.
(2)
Represents legal, accounting, and
other related costs incurred in connection with potential and
completed acquisitions and other transactions.
(3)
Represents legal, accounting and other
related costs incurred through the nine months ended September 30,
2019 in connection with the Company's investigation of the
underpayment of customs duties at Loungefly and the accrual of a
contingent liability of $0.5 million related to potential penalties
that may be assessed by U.S. Customs in connection with the
underpayment of customs duties at Loungefly.
(4)
Represents severance, relocation and
related costs associated with the consolidation of our new
warehouse facilities in the United Kingdom through the nine months
ended September 30, 2019.
(5)
Represents both unrealized and realized
foreign currency gains and losses on transactions other than in
U.S. dollars through the nine months ended September 30, 2019.
(6)
Represents the income tax expense effect
of the above adjustments. This adjustment uses an effective tax
rate of 25% for the year ending December 31, 2019.
Note: The Company is not able to provide the expected impact of
unrealized and realized foreign currency gains and losses for the
three months ending December 31, 2019 on transactions without
unreasonable efforts because the calculation for that change is
primarily driven by changes in foreign currency exchange rates,
principally British pounds and euros. Additionally, the impacts are
also driven by fluctuations in product sales and operating expenses
in each of those local currencies, which can fluctuate month to
month. Therefore, the Company’s Adjusted EBITDA, Adjusted Net
Income and Adjusted Earnings per Diluted Share for the year ending
December 31, 2019, including the above adjustments, may differ
materially from that forecasted in the table above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191031005892/en/
Investor Relations: Sean McGowan Gateway Investor
Relations FNKO@gatewayir.com (949) 574-3860
Andrew Harless Funko Investor Relations andrewh@funko.com (425)
783-3616
Media: Jessica Piha-Grafstein, Funko jessicap@funko.com
425-783-3616
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