Funko Reports 2023 Fourth Quarter, Full Year Financial Results; Provides Full-Year Outlook for 2024
Q4 Net Sales, Gross Margin and Adjusted EBITDA at Upper End of Expectations, Driven by Strong DTC Growth and Continued Operational Improvement–
Evertt, WA — Funko reported its consolidated financial results for the fourth quarter and full year ended December 31, 2023. The company also provided financial guidance for the 2024 first quarter and full year.
Fourth-Quarter Financial Results Summary: 2023 vs 2022
- Net sales were $291.2 million versus $333.0 million
- Gross profit was $109.4 million, equal to gross margin of 37.6%, compared with $94.3 million, equal to gross margin of 28.3%
- SG&A expenses were $97.4 million, which included $8.0 million of non-recurring charges primarily related to fair market value adjustments for assets held for sale. This compares with $139.2 million, which included $32.5 million of non-recurring charges related to the write down of an enterprise resource planning system, for the fourth quarter of 2022
- Net loss was $10.8 million, or $0.21 per share, versus $42.2 million, or $0.89 per diluted share
- Adjusted net income* was $0.5 million, or $0.01 per diluted share, versus adjusted net loss of $17.9 million, or $0.35 per share
- Adjusted EBITDA* was $23.5 million versus negative adjusted EBITDA* of $6.3 million
Full-Year Financial Results Summary: 2023 vs 2022
- Net sales were $1.1 billion versus $1.3 billion
- Gross profit was $333.0 million, equal to gross margin of 30.4%, which included $39.0 million of non-recurring charges related to the disposal of excess inventory and finished and unfinished goods held at offshore factories. This compares with $434.0 million, equal to gross margin of 32.8%
- SG&A expenses were $377.1 million, which included $20.7 million of non-recurring charges primarily related to the termination of a lease agreement, fair market value adjustments for assets held for sale and severance and related charges. This compares with $398.3 million for the 2022 full year, which included $32.5 million of non-recurring charges related to the write-down of an enterprise resource planning system
- Net loss was $154.1 million, or $3.19 per share, compared with $8.0 million, or $0.18 per share
- Adjusted net loss* was $45.4 million, or $0.87 per share, versus adjusted net income* of $29.6 million, or $0.57 per diluted share
- Adjusted EBITDA* was $27.2 million compared with $97.4 million
“In 2023, we implemented a comprehensive plan to significantly reduce costs, improve operational efficiencies and focus on our core product offerings,” said Michael Lunsford, Funko’s Interim Chief Executive Officer. “The major elements of that plan, which addressed the company’s inventory issues, unprofitable product lines and SKUs, workforce size, and several other factors, were successfully completed, and we believe our company is now on a significantly more solid foundation upon which we intend to build and grow.
“For the 2023 fourth quarter, net sales and adjusted EBITDA were at the upper end of our guidance range, fueled in part by growth in our direct-to-consumer (DTC) business, which accounted for 26 percent of our revenue and increased nearly 30 percent compared with the same quarter of the prior year. Gross margin of 38 percent was the highest of any quarter in 2023.
“Turning to our balance sheet, we substantially lowered our inventory levels to $119 million at December 31, 2023 from $246 million at the end of last year and $162 million at September 30, 2023. We also paid down our debt by $26 million in the fourth quarter and used the proceeds from a transaction related to our Games business to further reduce our debt in the first quarter of 2024.
“Looking ahead, we face a softer content schedule following the recent Hollywood strikes and uncertainty around shipping costs caused by the Red Sea situation. Despite these headwinds, we expect our bottom line to significantly improve in 2024 compared with 2023. Our belief is based on the actions we are taking to, among other things, further expand our DTC business and increase sales of Pop! Yourself and limited-edition products – areas we control and can grow profitably.”
Leadership Update
The company also announced today that Steve Nave, Funko’s Chief Financial Officer (CFO) and Chief Operating Officer, is resigning effective March 15, 2024. Yves LePendeven, the company’s Deputy CFO, will serve as Acting CFO as of the same date.
“Steve joined us a year ago to help with our cost reduction and operational improvement plan,” said Lunsford. “We have made significant progress against that plan and thank Steve for his contributions. We wish Steve success in his future endeavors.
“I have worked with Yves for several years now, as both a board member and as the interim CEO. I have complete faith in Yves to lead our Finance and Accounting functions. 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.”
Fourth Quarter 2023 Net Sales by Category and Geography
The tables below show the breakdown of net sales on a brand category and geographical basis (in thousands):
|
|
|
Three Months Ended December 31, |
|
Period Over Period Change |
|||||||||||
|
|
|
|
2023 |
|
|
|
2022 |
|
|
Dollar |
|
Percentage |
|||
|
Net sales by product brand: |
|
|
|
|
|
|
|
|
|||||||
|
Core Collectibles |
|
$ |
212,776 |
|
$ |
243,340 |
|
$ |
(30,564 |
) |
|
(12.6 |
)% |
||
|
Loungefly Branded Products |
|
|
54,908 |
|
|
|
73,346 |
|
|
|
(18,438 |
) |
|
(25.1 |
)% |
|
Other |
|
|
23,552 |
|
|
|
16,354 |
|
|
|
7,198 |
|
|
44.0 |
% |
|
Total net sales |
|
$ |
291,236 |
|
|
$ |
333,040 |
|
|
$ |
(41,804 |
) |
|
(12.6 |
)% |
|
|
|
Three Months Ended December 31, |
|
Period Over Period Change |
|||||||||||
|
|
|
|
2023 |
|
|
|
2022 |
|
|
Dollar |
|
Percentage |
|||
|
Net sales by geography: |
|
|
|
|
|
|
|
|
|||||||
|
United States |
|
$ |
197,368 |
|
$ |
240,647 |
|
$ |
(43,279 |
) |
|
(18.0 |
)% |
||
|
Europe |
|
|
78,138 |
|
|
|
61,869 |
|
|
|
16,269 |
|
|
26.3 |
% |
|
Other International |
|
|
15,730 |
|
|
|
30,524 |
|
|
|
(14,794 |
) |
|
(48.5 |
)% |
|
Total net sales |
|
$ |
291,236 |
|
|
$ |
333,040 |
|
|
$ |
(41,804 |
) |
|
(12.6 |
)% |
Balance Sheet Highlights – At December 31, 2023 vs December 31, 2022
- Total cash and cash equivalents were $36.5 million at December 31, 2023 versus $19.2 million at December 31, 2022
- Inventories were $119.5 million at December 31, 2023 versus $246.4 million at December 31, 2022
- Total debt was $273.6 million at December 31, 2023 versus $245.8 million at December 31, 2022. Total debt includes the amount outstanding under the company’s term loan facility, net of unamortized discounts, revolving line of credit and the company’s equipment finance loan
Outlook for 2024
Based on its current outlook, the company provided its 2024 full-year outlook and 2024 first-quarter guidance, as follows:
|
|
Current Outlook |
|
2024 Full Year |
|
|
Net Sales |
$1.047 billion to $1.103 billion |
|
Adjusted EBITDA* |
$65 million to $85 million |
|
|
|
|
2024 First Quarter |
|
|
Net sales |
$214 million to $227 million |
|
Gross margin % |
~37% |
|
SG&A expense, in dollars |
$87 million to $88 million |
|
Adjusted net loss* |
$17 million to $13 million |
|
Adjusted net loss per share* |
$0.32 to $0.24 |
|
Adjusted EBITDA* |
$0 million to $5 million |
*
|
Funko, Inc. and Subsidiaries |
|||||||||||||||
|
Condensed Consolidated Statements of Operations |
|||||||||||||||
|
(Unaudited) |
|||||||||||||||
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(in thousands, except per share data) |
||||||||||||||
|
Net sales |
$ |
291,236 |
|
|
$ |
333,040 |
|
|
$ |
1,096,086 |
|
|
$ |
1,322,706 |
|
|
Cost of sales (exclusive of depreciation and amortization shown separately below) |
|
181,827 |
|
|
|
238,711 |
|
|
|
763,085 |
|
|
|
888,685 |
|
|
Selling, general, and administrative expenses |
|
97,380 |
|
|
|
139,229 |
|
|
|
377,065 |
|
|
|
398,272 |
|
|
Depreciation and amortization |
|
15,429 |
|
|
|
13,160 |
|
|
|
59,763 |
|
|
|
47,669 |
|
|
Total operating expenses |
|
294,636 |
|
|
|
391,100 |
|
|
|
1,199,913 |
|
|
|
1,334,626 |
|
|
(Loss) income from operations |
|
(3,400 |
) |
|
|
(58,060 |
) |
|
|
(103,827 |
) |
|
|
(11,920 |
) |
|
Interest expense, net |
|
7,419 |
|
|
|
4,480 |
|
|
|
27,970 |
|
|
|
10,334 |
|
|
Loss on extinguishment of debt |
|
— |
|
|
|
— |
|
|
|
494 |
|
|
|
— |
|
|
Gain on tax receivable agreement liability adjustment |
|
(603 |
) |
|
|
— |
|
|
|
(100,223 |
) |
|
|
— |
|
|
Other (income) expense, net |
|
(646 |
) |
|
|
(971 |
) |
|
|
(127 |
) |
|
|
787 |
|
|
(Loss) income before income taxes |
|
(9,570 |
) |
|
|
(61,569 |
) |
|
|
(31,941 |
) |
|
|
(23,041 |
) |
|
Income tax expense (benefit) |
|
1,638 |
|
|
|
(14,869 |
) |
|
|
132,497 |
|
|
|
(17,801 |
) |
|
Net (loss) income |
|
(11,208 |
) |
|
|
(46,700 |
) |
|
|
(164,438 |
) |
|
|
(5,240 |
) |
|
Less: net (loss) income attributable to non-controlling interests |
|
(447 |
) |
|
|
(4,481 |
) |
|
|
(10,359 |
) |
|
|
2,795 |
|
|
Net (loss) income attributable to Funko, Inc. |
$ |
(10,761 |
) |
|
$ |
(42,219 |
) |
|
$ |
(154,079 |
) |
|
$ |
(8,035 |
) |
|
|
|
|
|
|
|
|
|
||||||||
|
(Loss) earnings per share of Class A common stock: |
|
|
|
|
|
|
|
||||||||
|
Basic |
$ |
(0.21 |
) |
|
$ |
(0.89 |
) |
|
$ |
(3.19 |
) |
|
$ |
(0.18 |
) |
|
Diluted |
$ |
(0.21 |
) |
|
$ |
(0.89 |
) |
|
$ |
(3.19 |
) |
|
$ |
(0.18 |
) |
|
Weighted average shares of Class A common stock outstanding: |
|
|
|
|
|
|
|
||||||||
|
Basic |
|
50,384 |
|
|
|
47,179 |
|
|
|
48,332 |
|
|
|
44,555 |
|
|
Diluted |
|
50,384 |
|
|
|
47,179 |
|
|
|
48,332 |
|
|
|
44,555 |
|
|
Funko, Inc. and Subsidiaries |
|||||||
|
Condensed Consolidated Balance Sheets |
|||||||
|
|
December 31, |
||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(in thousands, except per share data) |
||||||
|
Assets |
|
|
|
||||
|
Current assets: |
|
|
|
||||
|
Cash and cash equivalents |
$ |
36,453 |
|
|
$ |
19,200 |
|
|
Accounts receivable, net |
|
130,831 |
|
|
|
167,895 |
|
|
Inventory, net |
|
119,458 |
|
|
|
246,429 |
|
|
Prepaid expenses and other current assets |
|
56,134 |
|
|
|
39,648 |
|
|
Total current assets |
|
342,876 |
|
|
|
473,172 |
|
|
Property and equipment, net |
|
91,335 |
|
|
|
102,232 |
|
|
Operating lease right-of-use assets |
|
61,499 |
|
|
|
71,072 |
|
|
Goodwill |
|
133,795 |
|
|
|
131,380 |
|
|
Intangible assets, net |
|
167,388 |
|
|
|
181,284 |
|
|
Deferred tax asset, net of valuation allowance |
|
— |
|
|
|
123,893 |
|
|
Other assets |
|
7,752 |
|
|
|
8,112 |
|
|
Total assets |
$ |
804,645 |
|
|
$ |
1,091,145 |
|
|
Liabilities and Stockholders’ Equity |
|
|
|
||||
|
Current liabilities: |
|
|
|
||||
|
Line of credit |
$ |
120,500 |
|
|
$ |
70,000 |
|
|
Current portion long-term debt, net of unamortized discount |
|
22,072 |
|
|
|
22,041 |
|
|
Current portion of operating lease liabilities |
|
17,486 |
|
|
|
18,904 |
|
|
Accounts payable |
|
52,919 |
|
|
|
67,651 |
|
|
Income taxes payable |
|
986 |
|
|
|
871 |
|
|
Accrued royalties |
|
54,375 |
|
|
|
69,098 |
|
|
Accrued expenses and other current liabilities |
|
90,494 |
|
|
|
112,832 |
|
|
Total current liabilities |
|
358,832 |
|
|
|
361,397 |
|
|
Long-term debt, net of unamortized discount |
|
130,986 |
|
|
|
153,778 |
|
|
Operating lease liabilities, net of current portion |
|
71,309 |
|
|
|
82,356 |
|
|
Deferred tax liability |
|
402 |
|
|
|
382 |
|
|
Liabilities under tax receivable agreement, net of current portion |
|
— |
|
|
|
99,620 |
|
|
Other long-term liabilities |
|
5,076 |
|
|
|
3,923 |
|
|
Commitments and contingencies |
|
|
|
||||
|
Stockholders’ equity: |
|
|
|
||||
|
Class A common stock, par value $0.0001 per share, 200,000 shares authorized; 50,549 shares and 47,192 shares issued and outstanding as of December 31, 2023 and 2022, respectively |
|
5 |
|
|
|
5 |
|
|
Class B common stock, par value $0.0001 per share, 50,000 shares authorized; 2,277 shares and 3,293 shares issued and outstanding as of December 31, 2023 and 2022, respectively |
|
— |
|
|
|
— |
|
|
Additional paid-in-capital |
|
326,180 |
|
|
|
310,807 |
|
|
Accumulated other comprehensive loss |
|
(180 |
) |
|
|
(2,603 |
) |
|
(Accumulated deficit) retained earnings |
|
(94,064 |
) |
|
|
60,015 |
|
|
Total stockholders’ equity attributable to Funko, Inc. |
|
231,941 |
|
|
|
368,224 |
|
|
Non-controlling interests |
|
6,099 |
|
|
|
21,465 |
|
|
Total stockholders’ equity |
|
238,040 |
|
|
|
389,689 |
|
|
Total liabilities and stockholders’ equity |
$ |
804,645 |
|
|
$ |
1,091,145 |
|
|
Funko, Inc. and Subsidiaries |
|||||||||||
|
Condensed Consolidated Statements of Cash Flows |
|||||||||||
|
|
Year Ended December 31, |
||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
(in thousands) |
||||||||||
|
Operating Activities |
|
|
|
|
|
||||||
|
Net (loss) income |
$ |
(164,438 |
) |
|
$ |
(5,240 |
) |
|
$ |
67,854 |
|
|
Adjustments to reconcile net income to net cash (used in) provided by operating activities: |
|
|
|
|
|
||||||
|
Depreciation, amortization and other |
|
57,389 |
|
|
|
47,919 |
|
|
|
40,056 |
|
|
Equity-based compensation |
|
10,534 |
|
|
|
16,591 |
|
|
|
12,994 |
|
|
Amortization of debt issuance costs and debt discounts |
|
1,274 |
|
|
|
902 |
|
|
|
1,118 |
|
|
Loss on debt extinguishment |
|
494 |
|
|
|
— |
|
|
|
675 |
|
|
Gain on tax receivable agreement liability adjustment |
|
(100,223 |
) |
|
|
— |
|
|
|
— |
|
|
Deferred tax expense (benefit) |
|
123,124 |
|
|
|
(17,414 |
) |
|
|
(361 |
) |
|
Other |
|
4,090 |
|
|
|
5,244 |
|
|
|
1,403 |
|
|
Changes in operating assets and liabilities, net of amounts acquired: |
|
|
|
|
|
||||||
|
Accounts receivable, net |
|
40,513 |
|
|
|
19,075 |
|
|
|
(56,648 |
) |
|
Inventory |
|
122,479 |
|
|
|
(82,214 |
) |
|
|
(107,166 |
) |
|
Prepaid expenses and other assets |
|
3,242 |
|
|
|
(7,263 |
) |
|
|
3,700 |
|
|
Accounts payable |
|
(17,968 |
) |
|
|
11,043 |
|
|
|
26,933 |
|
|
Income taxes payable |
|
75 |
|
|
|
(15,018 |
) |
|
|
15,585 |
|
|
Accrued royalties |
|
(14,723 |
) |
|
|
9,082 |
|
|
|
17,633 |
|
|
Accrued expenses and other liabilities |
|
(34,927 |
) |
|
|
(22,841 |
) |
|
|
63,586 |
|
|
Net cash provided by (used in) operating activities |
|
30,935 |
|
|
|
(40,134 |
) |
|
|
87,362 |
|
|
|
|
|
|
|
|
||||||
|
Investing Activities |
|
|
|
|
|
||||||
|
Purchase of property and equipment |
$ |
(35,131 |
) |
|
$ |
(59,148 |
) |
|
$ |
(27,759 |
) |
|
Acquisitions of business and intangible assets, net of cash acquired |
|
(5,364 |
) |
|
|
(19,479 |
) |
|
|
199 |
|
|
Other |
|
699 |
|
|
|
562 |
|
|
|
179 |
|
|
Net cash used in investing activities |
|
(39,796 |
) |
|
|
(78,065 |
) |
|
|
(27,381 |
) |
|
|
|
|
|
|
|
||||||
|
Financing Activities |
|
|
|
|
|
||||||
|
Borrowings on line of credit |
$ |
71,000 |
|
|
$ |
120,000 |
|
|
$ |
— |
|
|
Payments on line of credit |
|
(20,500 |
) |
|
|
(50,000 |
) |
|
|
— |
|
|
Debt issuance costs |
|
(1,957 |
) |
|
|
(405 |
) |
|
|
(1,055 |
) |
|
Proceeds from long-term debt, net |
|
— |
|
|
|
20,000 |
|
|
|
180,000 |
|
|
Payment of long-term debt |
|
(22,581 |
) |
|
|
(18,000 |
) |
|
|
(198,375 |
) |
|
Contingent consideration |
|
— |
|
|
|
— |
|
|
|
(2,000 |
) |
|
Distributions to continuing equity owners |
|
(1,118 |
) |
|
|
(10,710 |
) |
|
|
(9,277 |
) |
|
Payments under tax receivable agreement |
|
(4 |
) |
|
|
(7,718 |
) |
|
|
(1,715 |
) |
|
Proceeds from exercise of equity-based options |
|
756 |
|
|
|
1,472 |
|
|
|
3,794 |
|
|
Net cash provided by (used in) financing activities |
|
25,596 |
|
|
|
54,639 |
|
|
|
(28,628 |
) |
|
|
|
|
|
|
|
||||||
|
Effect of exchange rates on cash and cash equivalents |
|
518 |
|
|
|
(797 |
) |
|
|
(51 |
) |
|
|
|
|
|
|
|
||||||
|
Net change in cash and cash equivalents |
|
17,253 |
|
|
|
(64,357 |
) |
|
|
31,302 |
|
|
Cash and cash equivalents at beginning of period |
|
19,200 |
|
|
|
83,557 |
|
|
|
52,255 |
|
|
Cash and cash equivalents at end of period |
$ |
36,453 |
|
|
$ |
19,200 |
|
|
$ |
83,557 |
|
|
|
|
|
|
|
|
||||||
|
Supplemental Cash Flow Information |
|
|
|
|
|
||||||
|
Cash paid for interest |
$ |
24,635 |
|
|
$ |
8,856 |
|
|
$ |
5,679 |
|
|
Income tax payments |
|
1,059 |
|
|
|
22,363 |
|
|
|
1,462 |
|
|
Establishment of liabilities under tax receivable agreement |
|
— |
|
|
|
30,034 |
|
|
|
20,691 |
|
|
Issuance of equity instruments for acquisitions |
|
— |
|
|
|
1,487 |
|
|
|
— |
|
|
Tenant allowance |
|
— |
|
|
|
17,236 |
|
|
|
— |
|
The following tables reconcile the Non-GAAP Financial Measures to the most directly comparable U.S. GAAP financial performance measure, which is net income (loss), for the periods presented:
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(in thousands, except per share data) |
||||||||||||||
|
Net (loss) income attributable to Funko, Inc. |
$ |
(10,761 |
) |
|
$ |
(42,219 |
) |
|
$ |
(154,079 |
) |
|
$ |
(8,035 |
) |
|
Reallocation of net (loss) income attributable to non-controlling interests from the assumed exchange of common units of FAH, LLC for Class A common stock (1) |
|
(447 |
) |
|
|
(4,481 |
) |
|
|
(10,359 |
) |
|
|
2,795 |
|
|
Equity-based compensation (2) |
|
3,013 |
|
|
|
4,592 |
|
|
|
10,534 |
|
|
|
16,591 |
|
|
Acquisition transaction costs and other expenses (3) |
|
7,320 |
|
|
|
— |
|
|
|
14,241 |
|
|
|
2,850 |
|
|
Certain severance, relocation and related costs (4) |
|
702 |
|
|
|
1,572 |
|
|
|
6,486 |
|
|
|
9,775 |
|
|
Loss on extinguishment of debt (5) |
|
— |
|
|
|
— |
|
|
|
494 |
|
|
|
— |
|
|
Foreign currency transaction (gain) loss (6) |
|
(641 |
) |
|
|
(4,990 |
) |
|
|
854 |
|
|
|
(3,232 |
) |
|
Tax receivable agreement liability adjustments (7) |
|
(603 |
) |
|
|
3,987 |
|
|
|
(100,223 |
) |
|
|
3,987 |
|
|
One-time cloud based computing arrangement abandonment (8) |
|
— |
|
|
|
32,492 |
|
|
|
— |
|
|
|
32,492 |
|
|
One-time disposal costs for finished inventory held at offshore factories (9) |
|
135 |
|
|
|
— |
|
|
|
6,283 |
|
|
|
— |
|
|
One-time disposal costs for unfinished inventory held at offshore factories (10) |
|
— |
|
|
|
— |
|
|
|
2,404 |
|
|
|
— |
|
|
Inventory write-down (11) |
|
254 |
|
|
|
— |
|
|
|
30,338 |
|
|
|
— |
|
|
Income tax expense (9) |
|
1,486 |
|
|
|
(8,890 |
) |
|
|
147,630 |
|
|
|
(27,657 |
) |
|
Adjusted net income (loss) |
$ |
458 |
|
|
$ |
(17,937 |
) |
|
$ |
(45,397 |
) |
|
$ |
29,566 |
|
|
Adjusted net income (loss) margin (13) |
|
0.2 |
% |
|
|
(5.4 |
)% |
|
|
(4.1 |
)% |
|
|
2.2 |
% |
|
Weighted-average shares of Class A common stock outstanding-basic |
|
50,384 |
|
|
|
47,179 |
|
|
|
48,332 |
|
|
|
44,555 |
|
|
Equity-based compensation awards and common units of FAH, LLC that are convertible into Class A common stock |
|
2,808 |
|
|
|
4,335 |
|
|
|
4,021 |
|
|
|
6,967 |
|
|
Adjusted weighted-average shares of Class A stock outstanding – diluted |
|
53,192 |
|
|
|
51,514 |
|
|
|
52,353 |
|
|
|
51,522 |
|
|
Adjusted earnings (loss) per diluted share |
$ |
0.01 |
|
|
$ |
(0.35 |
) |
|
$ |
(0.87 |
) |
|
$ |
0.57 |
|
|
|
Three Months Ended December 31, |
|
Twelve Months Ended December 31, |
||||||||||||
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
(in thousands) |
||||||||||||||
|
Net (loss) income |
$ |
(11,208 |
) |
|
$ |
(46,700 |
) |
|
$ |
(164,438 |
) |
|
$ |
(5,240 |
) |
|
Interest expense, net |
|
7,419 |
|
|
|
4,480 |
|
|
|
27,970 |
|
|
|
10,334 |
|
|
Income tax expense |
|
1,638 |
|
|
|
(14,869 |
) |
|
|
132,497 |
|
|
|
(17,801 |
) |
|
Depreciation and amortization |
|
15,429 |
|
|
|
13,160 |
|
|
|
59,763 |
|
|
|
47,669 |
|
|
EBITDA |
$ |
13,278 |
|
|
$ |
(43,929 |
) |
|
$ |
55,792 |
|
|
$ |
34,962 |
|
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
|
Equity-based compensation (2) |
|
3,013 |
|
|
|
4,592 |
|
|
|
10,534 |
|
|
|
16,591 |
|
|
Acquisition transaction costs and other expenses (3) |
|
7,320 |
|
|
|
— |
|
|
|
14,241 |
|
|
|
2,850 |
|
|
Certain severance, relocation and related costs (4) |
|
702 |
|
|
|
1,572 |
|
|
|
6,486 |
|
|
|
9,775 |
|
|
Loss on extinguishment of debt (5) |
|
— |
|
|
|
— |
|
|
|
494 |
|
|
|
— |
|
|
Foreign currency transaction (gain) loss (6) |
|
(641 |
) |
|
|
(4,990 |
) |
|
|
854 |
|
|
|
(3,232 |
) |
|
Tax receivable agreement liability adjustments (7) |
|
(603 |
) |
|
|
3,987 |
|
|
|
(100,223 |
) |
|
|
3,987 |
|
|
One-time cloud based computing arrangement abandonment (8) |
|
— |
|
|
|
32,492 |
|
|
|
— |
|
|
|
32,492 |
|
|
One-time disposal costs for finished inventory held at offshore factories (9) |
|
135 |
|
|
|
— |
|
|
|
6,283 |
|
|
|
— |
|
|
One-time disposal costs for unfinished inventory held at offshore factories (10) |
|
— |
|
|
|
— |
|
|
|
2,404 |
|
|
|
— |
|
|
Inventory write-down (11) |
|
254 |
|
|
|
— |
|
|
|
30,338 |
|
|
|
— |
|
|
Adjusted EBITDA |
$ |
23,458 |
|
|
$ |
(6,276 |
) |
|
$ |
27,203 |
|
|
$ |
97,425 |
|
|
Adjusted EBITDA margin (14) |
|
8.1 |
% |
|
|
(1.9 |
)% |
|
|
2.5 |
% |
|
|
7.4 |
% |
|
(1) |
Represents the reallocation of net income attributable to non-controlling interests from the assumed exchange of common units of FAH, LLC 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) |
For the three months ended December 31, 2023, includes fair market value adjustments for assets held for sale. For the year ended December 31, 2023, includes costs related to the termination of a lease agreement and related expenses, fair market value adjustments for assets held for sale, partially offset by acquisition-related benefits. For the year ended December 31, 2022, includes acquisition-related costs related to investment banking and due diligence fees. |
|
|
(4)
|
Represents certain severance, relocation and related costs. For the three months ended December 31, 2023, includes residual charges for severance and benefit costs for reductions-in-force. For the year ended December 31, 2023, includes charges to remove leasehold improvements and return multiple Washington-based warehouses, and charges related to severance and benefit costs for reductions-in-force. For the three months ended December 31, 2022, includes charges related to severance for the transition of management personnel. For the year ended December 31, 2022, includes charges related to residual one-time relocation and severance costs for U.S. warehouse personnel in connection with the opening of a warehouse and distribution facility in Buckeye, Arizona. |
|
|
(5) |
Represents write-off of unamortized debt financing fees for the year ended December 31, 2023. |
|
|
(6) |
Represents both unrealized and realized foreign currency losses (gains) on transactions other than in U.S. dollars. |
|
|
(7) |
Represents recognized adjustments to the tax receivable agreement liability. For the year ended December 31, 2023, reduction of the tax receivable agreement liability as a result of recognizing a full valuation allowance of the Company’s deferred tax assets and anticipated inability to realize future tax benefits. |
|
|
(8) |
Represents abandoned cloud computing arrangement charge related to the enterprise resource planning project for the three months and year ended December 31, 2022. |
|
|
(9) |
Represents one-time disposal costs related to unfinished goods held at offshore factories for the year ended December 31, 2023. |
|
|
(10) |
Represents one-time disposal costs related to finished goods held at offshore factories primarily due to customer order cancellations for the year ended December 31, 2023. Incremental charge during the three months ended December 31, 2023 were related to a true-up of original estimate of third-party destruction costs. |
|
|
(11) |
Represents an inventory write-down, outside of normal business operations, to improve U.S. warehouse operational efficiency for the year ended December 31, 2023. Incremental charge during the three months ended December 31, 2023 were related to a true-up of original estimate of third-party destruction costs. |
|
|
(12) |
Represents the income tax expense effect of the above adjustments. This adjustment uses an effective tax rate of 25% for the years ended December 31, 2023 and 2022. For the year ended December 31, 2023, this also includes $123.2 million recognized valuation allowance on the Company’s deferred tax assets. For the year ended December 31, 2022, this also includes the $11.0 million discrete benefit from the release of a valuation allowance on the outside basis deferred tax asset. |
|
|
(13) |
Adjusted net income (loss) margin is calculated as Adjusted net income (loss) as a percentage of net sales. |
|
|
(14) |
Adjusted EBITDA margin is calculated as Adjusted EBITDA as a percentage of net sales. |
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