Why Is Toy Maker Funko's Stock Gaining Today?

Funko Inc FNKO shares are trading higher after the company reported better-than-expected first-quarter adjusted EPS.

The company reported a first-quarter FY24 sales decline of 14.4% year-on-year to $215.699 million, missing the analyst consensus estimate of $220.267 million.

Sales in the U.S. fell 17.4% to $146.4 million, and Europe dropped 7.2% to $54.2 million.

Adjusted gross margin for the quarter expanded from 31.6% to 40%. The operating loss for the quarter narrowed to $(14.9) million from a loss of $(64.4) million last year.

Adjusted EBITDA for the quarter was $9.6 million compared to an adjusted EBITDA loss of $(14) million last year.

Adjusted EPS of $(0.17) beat the consensus of $(0.30).

Total debt was $246.4 million at March-end versus $273.6 million at December-end. The company held $26.1 million in cash and equivalents as of March-end.

“As a result of better inventory management, we achieved higher than anticipated margins on sales into the value channel, which along with better-than-expected freight costs contributed to our Q1 gross margin of 40%,” said interim CEO Michael Lunsford.

Funko’s board of directors appointed Cynthia Williams as Chief Executive Officer (CEO), effective May 20, 2024.

Outlook: Funko reiterated its FY24 sales forecast of $1.047 billion – $1.103 billion against an estimate of $1.077 billion and Adjusted EBITDA of $65 million – $85 million.

Funko sees second-quarter FY24 adjusted EPS of $(0.15) – $(0.08) versus an estimate of $(0.21).

The company expects second-quarter net sales of $225 million – $240 million versus an estimate of $230.147 million. The company sees second-quarter adjusted net loss per share of $(0.15) to $(0.08) against the consensus of $(0.21).

Price Action: FNKO shares are trading higher by 4.99% at $7.16 in premarket at the last check Friday.