FNKO - Earnings call transcript Q4 2019

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Operator

Good afternoon and welcome to Funko's Conference Call to discuss Financial Results for the 2019 Fourth Quarter and Full Year. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization from the company.

As a reminder, this call is being recorded.

the to to get turn of Harless, now Relations Investor started. will call Andrew over Manager I Please proceed.

Andrew Harless

Thank you Executive and this from Financial fourth management Investor President; and quarter call our Jennifer is Officer. are the good and website, results covering Relations Brian available afternoon. A With XXXX press on Mariotti, the Jung, financial afternoon Chief Fall Officer; release Perlmutter, us Andrew investor.funko.com. Chief on company's today issued was

discussed remarks to the those Form views the need of of results SEC. call XXXX to remind Reform in we fiscal I year on Any begin, as section Factors this them. management's undertake XX-K within our no only of this materially indicated on contain that meaning our Act made we statements the call forward-looking Private those a other statements with forward-looking our from Before and these may Risk represent differ forward-looking as Actual factors, may filings of you the result important Litigation and update by of for the including XXXX. Securities various today obligation statements

reconciliation margin, earnings at as in our can We've believe referring investor.funko.com. accessed along to financial investors measures We and today's net this such financial adjusted follow important certain to it EBITDA, release. the most are directly earnings be may non-GAAP per our with adjusted adjusted EBITDA can included financial prepared of presentation performance, adjusted to assess GAAP a comparable also measures consult to that visual be discussion call, measures income, operating diluted share, EBITDA, we on non-GAAP will be which to investors

to I'll Brian. over call now turn the

Brian Mariotti

beyond. then my drive front we're thanks the share I and for in I'll opportunities positioning, in of afternoon, remarks our of And XXXX. joining growth with how planning us, us. Good with to of perspective competitive a everyone Funko's review today XXXX begin will and and

to would coronavirus. like to comment briefly turning on formal Before my remarks, I the

world being Our employees, thoughts are this our with by impacted communities around crisis. the partners and

We are due believe an walk delayed there monitoring to disruption the manufacturing first our Jen XXXX call. shipments of disruptions this in situation be developing tracking which impact the and you through closely supply to half time, to At chain. the we will and later will

logistics We are our as working appropriate. provide partners mitigate closely we'll with disruption retail manufacturing, and to and updates

to quarter. tough XXXX. a turning fourth strong line XXXX, the finish of Now, In delivered XX% we top in growth despite

due the from same As tempo of our expectations holiday retail the softness QX below season. top orders surrounding At shopping came unfolded, releases to many the underperformed. in customers key time,

market. will new addressable we products of on that our forward, as revenue allow well us streams diversity strategic new and through leveraging model expand Going our as the partnerships generate categories, and focused to be

organization a We have a and Funko, winning the has whole culture a of as strong sense at accountability.

Our into teams and XXXX. putting the the at in challenges the to are floor QX leaning pedal

are for about, planning to that by new also dozens building market excited year to tremendously we're future our enhancing products this and the We of bring we're infrastructure.

underlying growth strength model and for remains over us positions the and of that confidence our continued every long-term. have We the business expansion intact

studio, we from which initial our We is which for discuss first to to acquisition for are in strategic future. value design of shortly. we more Games, expanded goals and set billion will seeing $X success, new and to the games have There sector, the increasing a our We This Funko XXXX launched up fourth We we are in XXXX shareholders. the us operational Pruzan. nearly great number market our game Forrest with create completed for Funkoverse committed world-class successfully delivering division. our our and addressable release strategic board game and much the of store include believe enabled of quarter achievements XXXX us that the

lines innovative demographic expand entered several within Next, toy Funko toy aisle, development and further the us addressable alongside traditional the this our opens footprint younger the into allowing with retailers of market non-licensed we Animation our with our to Funko a total market existing Studios, market. up expands new to new and

enhance Third, we continue with upon new platform to and our build partnerships. Pop strategic

as further and by We continued through of XX%, We against in their driven our Europe, licenses increased a in a sales We front figures international of grew and games digital [ph] over apparel, opportunity produced broad-based distribution. videos the which entertainment XX% as we have accessories, number significant physical primarily board to the of expanded XX%. products [ph] us success games. by they establish encompassing sales platform allowance mobile grew Pop grew short-form an

new rolled items loyalty app a wish fan our our that million users has almost program collection to and catalog. allows their launched out We track lists browse downloads, Today, over X.X mobile a million XX create also in and million Funko in year, we're our physical presence We've collections of initial pleased store last to opening flagship really and the expanded with response. the second consumer over XXX late Funko's wish-list searches. added with and Hollywood retail app

growth. and people cash new flow strengthened the to talented we provide and company, innovative bolstered and partners, we our fortified great with help hires Lastly, is and the specifically chain has and to products, us planning our across Funko a drive make bench more business insights finance generator. teams supply profitable operations, our efficient, team strong

of ability market our afforded is reach building genres diversity and women, and addressable new against product content globe. our us One our programs the product products girls, fan by our across new model diversity and diversity; expanding of boys across licenses, cornerstones in four the categories. to has across the quadrants all of consumers, men and partners, the unique retail base, across our increase continually and This

the licenses and fan shown the have others to continue Anime reach expand genres two we business new same early believe our such successes as sports ripe disruption. music, example, For are bases. our as last to have for years tripled in add Anime and we new We that

continues happening the the Viacom trends in at $XXX proliferation will secular others estimated that billion industry The reinforced Amazon, driven by overall CBS, are Netflix content in worthy quality We to and investment content boom these alone be there of the across on of core durability obsession XXXX. Funko's business. carry Apple, Importantly, Disney, HBO, high behemoths likes continue in content that viewership. have Hulu, the fight to Comcast believe and spend to for

world. is becoming accessible isn't ever for around However, more consumers the content just proliferating than

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Funkos culture believe Priority leveraging penetrated to pop lead expand to the growth four focused on our Funko's of the tenants to number that all industry customer base, in profitability long-term. be global propel Broad we business and grow addressable increased believe properties genres. will over trends and licenses by upcoming with We that world-class and key evergreen core market and diverse will will powerful speed array to year, of it's in market offerings continue coupled one, Funko a In priorities beyond. continuing we XXXX distribution under product in

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and and and a implementing already support scale enhance processes are ability critical organization for approach retooling taking fulfill our efficiency inventory, component to the We We're manage purchase future. this across our expected growth sales operations. supply plan, are increasing forecasts, laser build our here our on measured focused of operational chain. to is that the to management begun have A and new

plans to all and to to turn I our of in over toys, We Toy from innovative new less across both for games launches ago. Andrew share product weeks partners Before reactions detail two off than excitement retail want initial board call I our and XXXX. Fair amazing about saw to talk coming more licensing our in our the tremendous figures.

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forward our to greatly shareholders support our throughout appreciate the year. also updating on look you progress We of and the

the Andrew. to I call will over turn now

Andrew Perlmutter

everyone. Brian, Thanks, afternoon and good

As highly have you heard, initiatives tremendous successful we had Toy Fair a lineup of XXXX. for a and

on me direct increasing expanding introducing driving business, mix to new provide products, international we'll core executing the be color areas, our some Let against growth top and how our consumer.

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business to leveraging that market. programs and centered tissue-targeting evergreen things. expand two and utilize penetrated addressable content Funko around building core our One, drive is genres nostalgic to creative under ability and Our content strength

line on on include beloved slated we're that expanding as such characters, We leveraging Disney unique the time content evergreen Potter. Harry Marvel for new successes, have such first program a such past our and number parks vendor theme of as as These takes for XXXX.

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under Z, Pokemon expanded Ball ability Dragon growth. and additional licenses drive rights existing to also our to We've our of leverage examples two

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fan will as cube be such artists and name to favorite In XXXX, few. Amego's, Park a we ice Two adding additional

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addition traditional options In for to merchandising Snapsies.

immerse also disruptive animation a offering that Funko able through could Snapsies using to studios. touchscreen utilizes in interactive own retailers shorts of the themselves created our by are world video will We machines experience retail a be display

traditional new launch for year. to our on expected in channels us is to potential and outside distribution deck of this Snapsies opens up retail QX also

top We a that only table, and one packed younger demographic. Funko battle known will in gameplay world-class partner for. to with is the brands of that cooperative the the are The micro can this to targeted ever be bring action our line world game entertainment first collectibles collaborating at storytelling launch that with inspired coupled features

release to year. more have in exciting the will this We later share on

rock. and the Our be games division back new as such Funkoverse time offerings non-licensed in releasing new back dozens will will Funko new as and last PanAm in yacht Games future XXXX. and branded to include defense games licensed This of such games

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stores. momentum retailers. [ph] strong of to international Now we XXXX retail the shop-&-shop flagship to growth, new in bring moving to we implementation as on see pop statements within expect retailers This expand include category and in within EMEA will and expansion continue existing

drive to in expect growth we also our refine and distribution in under markets. We strategies penetrated as regions key sales

capabilities another flash approach We In to selling is of from area robust includes a broad-based a consumer e-commerce XXXX, more critical strategy begin will more focus, our items. line website that to shifting Direct sale with main

Importantly, buzz on Funko app insights data leverage from our generate program ecosystem, we while and to can tapping our also and social new Loyalty fan media.

to innovation the this will Funko that to and We our while appropriately of growing approach ensure fulfillment employ later phased scale sales. lot market, year. has a coming capabilities excitement, we

staying Our teams are the highest focused invigorated executing and on level. at

will turn financials. you over the I take call now our Jen to to through

Jennifer Fall Jung

XXXX Andrew, on high was and successes We the disappointing, you our level, Thanks, had afternoon, we're key quarter to a XXXX beyond. and but number heard of four priorities a from in fourth good At drive everyone. and focused in growth as Brian.

of as repurchase decline was than Classic significantly in below a active at per technical and Fortnite, and the down of season as for million, active quarter fourth retail three XXX order partners, our Ball of Academia, year-over-year, driver in Harry and X, factors, initial properties were properties Comics, significant endgame, sales primary top the from Frozen our resulted performance. property XX% many which top last quarter orders which Two increased down Wars tough XXX,XXX, year-over-year one three, well Thrones. sales of difficult Turning quarterly underperformance a quarter, our to My key to Star number Potter, the comparisons Game DC XX% performing in sales came customers. indications In QX in The lower XX The Hero Episode year. performance reflecting expected XXX were and now IX, primarily Star Fortnite, net Wars Dragon to X%. week sales Z, net properties holiday reflects Avengers QX our

the properties. diversity evergreen underlying in of products including and the of continue We to strength see number category,

properties percentage mix of total XX% net of our As a for evergreen QX. in accounted sales

basis, sales performing US included DC Disney stronger which Comics, Australia the our evergreen X%. net programs international sales year-over-year, while In classic, classic fourth X% the in decrease quarter double-digit partially earlier. offset Within in Comics, and reflecting in by our QX growth is the million, the of Europe. in On category double-digit of XX international Marvel XXX Canada overall X%, loan were Some decline million, five retail discussed reflecting Other by a net brand. primarily in sales at sales to XX% StarWar and decreased product the partially Pokemon. Harry quarter offset decreased to down accessories, figures a Potter, increased growth softness plush

products platform. brand Sales mainly I as QX quarter, entertainment up of the down basis our were X% a Pop based described. in full Pop impact broad On reflecting brand to the attributable appeal an to products just were Pop XX% year the which is

operational points Turning At through made drive fourth the clear inventory XXX in initiatives goods ability and the capacity strategic write-down of now opportunities. forward. reset these QX basis the and XXXX, designed one-time margin enhance time to we of to to excluding In sales inventory improve planning around amortization XXXX. decision increased the XX.X%. which to as implementing order sourcing write-down improve gross charge chase are visibility reminder of going to slower-moving excludes management excluding order a efficiency and margin, a approximately and same our in demand to million depreciation related to quarter XX inventory gross We

and the higher non-licensed margins mix licensed cost will noncompliance We management as practices. increased by margin and goods strengthened resulting one, key to and And the products scale customer improvements year non-licensed operational to expect basis. toys. by such gross lower reduced full continued shift of from toward This driven inventory factors, a gains driven two be and strengthen on chargebacks

organizational the Selling, increased cost and SG&A UK and sales year and QX, of and million, marketing XX.X% Because have In spending plan in and domestic supporting XXXX, consolidation largely we deleverage severance XX.X% warehouse a base costs. new coming expenses streams, general administrative scale. as versus XX related fixed and revenue of building systems headcount, a reflecting on investments enhancing proving focus our in warehouse efficiency percentage to processes to primarily including at our ago. a we operations

our half first our personnel annualizing spend the support the year XXXX. We half, product by to third more deleverage Therefore, we XXXX marketing launches infrastructure and in expect initiatives quarters. the and also of to investments full fourth to improvement SG&A pressure made the and while in new increase in a followed DXC back basis in expect significant on with

Adjusted require are will expense $X.X million ERP our reflecting margin successful QX million of in last share implementation year facilities year of interest reflecting $X.X credit year. of decreased this of EBITDA the adjusted US planning earnings compared in refinancing came in XX%. an We per in last and $X.XX also SG&A in September which net we at generated from diluted to the initial QX XXXX. for some investment XXXX, EBITDA million $X.XX adjusted to an $XX

challenging the fourth adjusted we for margins margin $XXX the on generated strengthen and quarter of EBITDA and the full EBITDA XX% million gross adjusted year, of was XX.X%. growth While achieved our topline,

million cash Moving with ended of technology year were Investments and cash XX% is products build-out in million write-down net generate and million and strong $XX operations $XXX primarily $XX ago, balance Hollywood a We maintenance deployed up our UK down versus quarter. year capital. a toward flow. cash ongoing $XX spending to to and SKUs, change the bringing and $XX store and due attributable million. inventory new warehouse of to approximately end totaled of million, which warehouse fourth inventory which at XXXX, of cash the of total from molding $XX CapEx working flow sheet development the equipment. the Capital total related and QX in and is tooling equivalents debt the hardware the million We $XX in million, of expenditures for to substantially from decrease new to XXXX full-year and the the

XXXX Now turn to let's our Outlook.

today, largely we toward we weighted expect our sequential the in topline be remarks the through formal year. half we As as growth will the move outlined second with improvement

we Strange first strength can Game half challenging to including season Spider-Man properties quarters be X Avengers multiple Marvel, in Home. and of the first in of and comparisons against XXXX, of Captive second of Fortnite, are From the Story Far Thrones, the traced up First, Final particularly endgame, Things, Toy which

our Second market toys the coming including to to new quarters. introduction are many initiatives, of growth and games the expected of fourth and be third in

Lastly, the the of with release the is content Falcon Division Internals back slate in XXXX Mandalorian half One Marvel the new stronger the Winter of release season Soldier. second of and and

we Brian as it from operations are and as discussed, to virus. relates impact the chain our Corona Additionally, supply closely the monitoring

While the dynamic. situation is

today. have We the are updated full-year we assumptions current reflected providing our guidance in

net ranges manufacturing and QX and to that sales anticipate the delayed net in mid-single time be revised may decline digits. half decline will need At first will shipments the include disruptions We due and estimated mid-teens sales the crisis. impact this of to to the the future. in These in

to count stock adjusted share the a price year-over-year to and of impact the $XX diluted on the $XX as due per of an million treasury adjusted points to based average million. approximately to year of income the of This $XXX million and share the anticipated blended earnings of the two million and diluted Please $XXX Corona related XXXX, of may representing year to expect of on $X.XX count growth $XXX a $XX million XX% net we X% to For share million $XXX $X EBITDA fluctuate which of based translate net X%. range Adjusted progresses. sales method to the that weighted in note virus. tax share million rate full to includes

We appreciate your this afternoon. time

the Now to open we questions. will ask the call operator to up

Operator

Thank with you. Instructions] Your [Operator first Murphy Erinn comes question Sandler. from Piper

Your open. is line

Erinn Murphy

on with first first about how couple some and duplicative on afternoon. first I versus think at for UK good half, international relatedly, US DC should thanks, the questions help quarter. consolidation us guidance, Great, you're the Jen, P&L? side, A me, long Can see the just trends the guess you the looking how just into we costs on the guess SG&A then I in of

Jennifer Fall Jung

for well. have the Erinn, Excuse Yes. Thanks doing been question. me.

international the the as On relatively, -- And out two in SG&A then the QX, would first US. consistently just the for terms cost the regions, across about a of across for think in we question two the and I the report on duplication.

of are track on go looking budget to end and We the on live month. the at

to to will costs distribution feeling wind so good continue as we're down distribution center. QX into new come original incremental transition that really we that the And be there center, some about the

So first half I would look at as a event.

Erinn Murphy

and what you supply Corona more maybe little and Like, Okay, about just outbreak. average share seeing control. see what If with what any curious from you now kind a source, on stop half. then, actually a are first you given global just long travel of got that. then And delays you're seeing stepping perspective, type detail kind to some it. of sustained right any, on contingency of the we just the you're outbreak dual Can bit can of the back plans. more through your Can things of what chain just how kind continue virus this

Brian Mariotti

affect from of of the some even China, we're But and of with to than with shipments. Vietnam produce weeks can at we do we're produced some sliding question, do that about obviously XX% now, behind not getting we're being China fact and main better mean goods do like shape Brian. are outside in XX% that producer it's of the -- three XX% they production Yes, components Vietnam some about numbers doesn't our capacity Great sometimes our as the tooling primarily of that of factories. Chinese at come right

a do in capacity If move this to into problem were China. we be you continuing Vietnam. we that can have Now, do

produce reduce mainly China an with products and even ability up our Vietnam to load dramatically exposure toy were there in companies is can't. So that more traditional

and obviously people we think and and stuff, the we're what out for all whether economy, good can't QX. they're does we and speak really to this stuff that have I shopping Obviously, going in some from slide shape. So

much I do think goes But on, in point. protect levers we pretty good ourselves. and pull this we're the shape really I to that's year have to at the obvious believe as

Jennifer Fall Jung

in were same the Yes. That we keep mind in being said, place.

coming as there's people most I there think a out. information still is of lot

to will situation; monitor continue the we So

Erinn Murphy

just Okay. the Brian, guess, more question. for also little consumer. see I direct talk bit to you last Can this would And then, you be opportunity that about you. in a

Just could you how big Thank is today you. that to focus it go really is start and of kind business there. really on where price clean that opportunity up channel full the

Brian Mariotti

we it. Yes, make

one that we're the we've fan and consumer. base users push engage done great years We to to last over of to to to being a start have of of with beta information able and when investments be just The pulling years couple a comes investment self able bunch to the is turn levers where them couple our to app on getting over DXC. last position our direct it into eventually

a offered of first saw primarily just amount our the the website. A we is going pop of SKUs onto think I strategy increasing up. items be cell-based. new we're to next on minutes Flash week. They couple go in week now and the Right

X,XXX of idea maybe upwards SKUs. the carrying to So

it and adding with that For to think and to program place. It's exciting on by for a loyalty releases people Funko.com. year us of the make exciting content new we for time end year going shop can to that and the exclusive the put is I in

think obviously as narrative margins taking and it our company. comes are for just better marketing, about it's when excited we own evolution own that continue the we control business, some in a our own to us, a mature we're to our products that So just of natural

Erinn Murphy

go ahead. Great, thank someone you. you. let else I'll Thank

Operator

with comes Wissink question from Jefferies. Stephanie next Your

Your line open. is

Unidentified Analyst

Hi, half, questions. degree Ashley a our the have this pretty in visibility other that half. do corresponding for In big Thanks taking or of you the what second is on into today Seth. for bookings [indiscernible]? first step-up [ph] guys assumes

Jennifer Fall Jung

you -- so are sales? about are And talking

Unidentified Analyst

Yes.

Jennifer Fall Jung

Yes.

a you progression that we throughout by the we've will that year the do indicated throughout see. just as we our within in keep obviously, inherent business the So is see mind, year, at there quarter, seasonality look

content We in the have also factored slate.

do we the the have mind we coming out too new the some I think in overall, remarks, our slate half see we do content back As on in you of of heavier the prepared towards mentioned year. that a new properties. keep programs But

the new year our products as well. -- towards the of sorry, out coming half And back

the So, XXXX there's going we've if completely been not was on from an think of differentiated historically couple I though, bit historically. you seasonality, look how things a that it's a looking of anomaly

Unidentified Analyst

I vice great. in come Okay, How more, we if [indiscernible] Then cost below kind squeeze in you of sales what have just one about versa. or over. could opened should think leverage

Jennifer Fall Jung

Yes, we fairly is cost fixed. as base said, -- our we've

we but are investing we Of our this course at we really could do have point, investing focused levers that on in pull infrastructure and for growth.

were see obviously for always the we back. down significantly would but deleverage look areas for would to turn So that's whatnot economy this things if cut to we we will continue or year, obviously why to

Unidentified Analyst

great, so someone to thank pass you much. off else. Okay, it I'll

Operator

with Drew from Crum comes question Stifel. next Your

Your line is open.

Drew Crum

in what you're some the should from Brian, $XXX if percentage second we specifically roll about million of $XXX range. because Non-licensed IP revenue product Okay, thanks guys, good sales afternoon. new and think to out that you guidance half, total. non-licensed as product How million a of came percentage

Brian Mariotti

on excited. in significantly sort producing We're is with impact to the all top some least Small in is compared into original foray going we've work have first that line. obviously our of previous think years, we at we're but the excited. been IP the This main growing to

we along are the In about And margins so go with excited to that. it.

some in going is some in Analyst and the early then the potential disrupt We growth of specifically saw XXXX and a that XX, technology the studio. in otherwise, reports more hopefully original launch I how outlook displayed have IP what Girls we're that of first better been very, of the very with Toy with on a white that to evaluate that wise to what successful what that time a is for Fair, conservative in we the in but reaction do and in going coupling think to we as proud the positive second and half space out spaces very very, what animation to year guess the of Toys, you the we're and real for

the disrupted We're going basis, continue world-class excited, a that I in mean that we to what collectible is this. read. can do can you get licensed -- about this that same will the and we guidance XXXX we pop year-on-year a can We're think we want on artists just super to culture something merchandise. is XXX we better We is think do to be specifically We've toys. voice, entertainment have we be conservative until

Drew Crum

it. did with then market. I guys you any that restricted Japan, point other agreement with you got clarification, a did Okay, anime generate sell Japan can respect XXXX. hear out just correctly or to of only Bandai, in the And I to products of you're sales distribution And guess into

Brian Mariotti

question. got in Japan; none. it a we've what there felt and anime Obviously, as should a fact, from It's to like wonderful strategic territory We've of partner they five were within into matter the a over Bandai lot be of get numbers properties the we the or inability years. last type great four a came toys over positioning but hot our had

over weren't -- back we giving one-hand our there. at are so tied the behind playing we And

carry small to -- territory 'XX been So see with about the more has in how -- chance think grow means really growth but is influential we Bandai the we positive in very moderate titled. outlook excited to obviously be distribute and start very a they going much relationship what get but the anime to goods giving and to wet to important distribution Again, there a is, us, the will potentially for new their big a feet them Funko we're the win in market. will our partner, Japan products, of 'XX all it are

Drew Crum

And then... Okay.

Jennifer Fall Jung

Sorry just play keep -- there. Drew, it's mind, QX really in a

Drew Crum

CapEx million then, should that step And one in last from just XXXX Okay. Jen, in one me. down 'XX? $XX

Jennifer Fall Jung

Hollywood have XXXX, Yes. In a included CapEx. store did we that in

we'll where we piece are but change tooling expect current what more normally throughout so to if that's molding, year at would I our is is So say, would that the this spend biggest levels. to and the today, anything we given there normalized The initiatives what new. and update retain time, on of it we

Drew Crum

guys. thanks Okay,

Operator

question Your next SunTrust Robinson. Michael with Swartz comes from

is line open. Your

Michael Swartz

to e-commerce said in I start your going with conflict I building the doing Good afternoon, guess, SKUs think that? end the of of around to guys. some and just your you, XXXX potential some you of wanted retail manage partners with by out direct-to-consumer your platform, Brian, the you're commentary do you how year.

Brian Mariotti

and this now very one are business, this growing think very probably number a us in guys retail maybe We've of not no our been are retail they reason careful to retail partners. people, we're last start some the we've replacing of that but you brick-and-mortar point of aren't to the And smaller work is in or environment put place their not I there right that company as years, out our this go those Look, as over a and a the we've where only with companies used partners longer far be, as partners there e-commerce hard as -- at have some right long. reason is waited got people very -- also business as to are there business. strong and aware great four three

find them fan their to with which their base we partners continue that matches do demographic. or will content we do what and So best, is retail impair

narrative and and SKU we seemed had the And on And things had do when back-end a right need push development-wise, take up to to now doubt the little then open bit we affect our do a and would we I give don't we our great and to this some operational-wise that but forward. to we up, business rise, and do right ourselves to get end, it right processes in position we and experience. the continue count really like way it maturity-wise don't more wise, of our we just mess to app time the we think about customers that won't a grow -- control

of So, I kind the think processes thought behind that's what it.

Michael Swartz

maybe coronavirus on a the just thank little And impact. Jen, right, All you. on clarification

long it March, or how is, the of on? of are -- you're what of to be impact the And till are EBITDA? till What assuming, end part I embedding what your the $XX impact that so goes it think -- topline. April? like end question I maybe this second you to guess, looks would the disruption million Is

Jennifer Fall Jung

we're we've our is the it's point, a fully is SG&A -- mentioned relatively is then majority fixed. we here at first in of included now, earlier Right first considering as yes, this the And QX. impact that a mainly impact with half happening it -- in

will way line. that margin the to gross through flow the all those bottom be the as down impact So

Michael Swartz

thank you. Okay,

Operator

with from comes question Sachs. Goldman next Your Ng Michael

Your open. line is

Michael Ng

that It to and for thank outperformed Great, Pop you products both, quarter in and themselves encouraging see the the year. company was the figures the question. the

well you. a then you're not resilience And little or could within the be So talk you performing some hoping the side that about as of may on coin, of is that the I Minis could that Mystery bit you of figures the seeing. was other about Dorbz? talk Pop Thank brands

Brian Mariotti

right; thanks, we're Mick. in XX I from. the has Yes, grown years of year grow territory, has to I appreciate question. have ecstatic. And Great a gotten it. straight unchartered every that try pretty we're mean, and bigger platform to we and number kind Yes,

do pretty culture created, of and basis and through. platform believe the we're consider proud we've view global brand, a the that So, pop people what platform we we is that on --

it's been that to worldwide of of filter So basis culture. view kind has our on how accepted pop a

Minis into We leads retailer, at always pop, a excited with Loungefly and and look any that then gets as any business. territory we're things. other Trojan of Mystery Horse new always falls that about in the it us So, health pop with and

quickly. take that Minis pop. delivery letting the we really retail and we're going your Most comparative, on the obviously, our are is some them; very the right selling lot out it's been the Mystery When different something second enough and probably about scale their also and Pop's of by [ph], it's want the in and partners most is really inception formats getting of of a we're focus of that the initial through part been is question, of that soda, a soda. line probably behemoth heard the now support we selling retailers in in value getting non-licensed response to always PDQs the to content we years of ones That's too of we've system machine But -- small and both. fans haven't last distributors XXXX. So fund enough, about all gorilla of [indiscernible] since vinyl you're the excited excited out and one exception. IP without to that couple to they're have And big very them XXX-pound not try that sort purchased the allocation that in to isn't yelled machine,

a on and you're been the lot Vinly us are [indiscernible] and to line, this see of at do vinyl successful to us Mini it's bag a So for continuing with those going always pop; line very big and obviously Mystery soda, initiatives obviously, then, our focus with point.

Michael Ng

you very Great, much. thank

Operator

comes Instructions] [Operator Morgan. Zacharia JP Your next from with question Tami

Your line open. is

Tami Zakaria

other to retail rollout Snapsies into the year? non-licensed some taking doors of how and Hi, get toys? for of the my this you cadence thanks expect question. you talk And many about initially Could

Andrew Perlmutter

it all licensed will -- toy Perlmutter. rollout back for Sure, I really be initial your second year what was IP will Most It's fall. in of in the and can retailers sets plan August, be their the rollouts. both, now when those We our that's Andrew part and of take that. question? And do half we would towards of the fall be the timing

Tami Zakaria

to you doors expect get into? Retail

Andrew Harless

of coming very we've strategic Fair, got partners So know couple a off we multi-door that lined just up. of Toy

our are very item saw I solidifying Toy one feedback, a the execute. Fair rest time of the the now we're the to think of as customers got off who so It that following they it good is and going see first the which to Target was we're them are. we And coming mentioned distribution. up was of majority

Tami Zakaria

Got it.

fourth And follow-up could partners? selling or so the inventory? question the write-down you my through took; DTC retail your comment through down inventory in it you're this regular Is you channel is, on quarter that how

Jennifer Fall Jung

Hey, Yes. Tami.

most it we foundations actually right now, likely inventory, be environmentally-friendly the we're actually the are written in are it. of have -- dispose of most to to we looking we down We talking we'll donate couple will a way,

Tami Zakaria

Got you it. so Thank much.

Brian Mariotti

Thank you.

Operator

further at time. no this There questions are

Brian Mariotti

thank call you Great, everyone today. for you for We'll soon. joining Thanks. update

Andrew Perlmutter

you. Thank

Operator

today's concludes conference This call.

may now disconnect. You

Funko (FNKO) 5 Mar 202019 Q4 Earnings call transcript