NEW YORK, Oct. 27, 2011 /PRNewswire/ -- Iconix Brand Group,
Inc. (NASDAQ: ICON) ("Iconix" or the "Company"), today announced
financial results for the third quarter ended September 30, 2011.
Q3 2011 results for Iconix Brand Group, Inc.:
Total revenue for the third quarter of 2011 was approximately
$92.7 million compared to
approximately $96.9 million in the
third quarter of 2010. Third quarter 2010 revenue included
approximately $12.5 million related
to a contract the Company signed with ABC Network for the Peanuts
holiday television specials. EBITDA attributable to Iconix for the
third quarter was approximately $55.3
million, a 6% increase over the prior year quarter. Free
cash flow attributable to Iconix for the third quarter was
approximately $44.9 million, a 9%
increase over the prior year quarter. On a non-GAAP basis, which
excludes non-cash interest related to the Company's two convertible
notes, net income attributable to Iconix was $30.1 million, a 1% increase over the prior year
quarter. Non-GAAP diluted EPS for the third quarter was
$0.40 compared to $0.40 in the prior year quarter. GAAP net income
attributable to Iconix for the third quarter was approximately
$26.0 million compared to
$27.4 million in the prior year
quarter and GAAP diluted EPS was $0.34 compared to $0.37 in the prior year quarter.
Nine months ended September 30,
2011:
Total revenue for the nine months ended September 30, 2011 was approximately $274.3 million, a 12% increase as compared to
approximately $244.6 million for the
prior year period. EBITDA attributable to Iconix for the nine month
period increased 14% from the prior year period to approximately
$172.2 million. Free cash flow for
the nine month period was approximately $134.3 million, a 14% increase over the prior
year period. On a non-GAAP basis, which excludes non-cash interest
related to the Company's two convertible notes and two
non-recurring items recorded in the second quarter (see
reconciliation tables below), net income attributable to Iconix for
the nine month period increased 15% to approximately $96.2 million as compared to the prior year
period and non-GAAP diluted earnings per share increased to
$1.27 versus $1.12 for the prior year period. On a GAAP basis,
net income attributable to Iconix for the nine month period
increased 29% to approximately $98.9
million as compared to the prior year period and GAAP
diluted earnings per share was $1.31
versus $1.03 for the prior year
period.
EBITDA, free cash flow, non-GAAP net income and non-GAAP EPS are
all non-GAAP metrics and reconciliation tables for each are
attached to this press release.
Neil Cole, Chairman and CEO of
Iconix Brand Group, Inc. commented, "We are pleased to report
another strong quarter for our Company and believe our results
further demonstrate the power of our business model and the
strength of our brands. As we look to 2012, we are excited about
the many opportunities ahead as we continue to grow our platform
through new retail partners, new categories and new geographies.
This week we announced two new exciting initiatives including our
first DTR with JC Penney for our Royal Velvet brand and our first
entry into the consumer electronics market with our acquisition of
Sharper Image. With now 28 diverse consumer brands in our portfolio
that represent approximately $12
billion in annual retail sales we have come a long way, and
looking ahead we are very focused on delivering continued value to
our shareholders."
2011 Guidance for Iconix Brand Group, Inc.:
The Company is reaffirming its full year 2011 revenue guidance
of $355-$365 million, its full year
2011 non-GAAP diluted EPS guidance of $1.63-$1.68, its full year 2011 GAAP diluted EPS
guidance of $1.61-$1.66 and its full
year 2011 free cash flow guidance of $167-$172 million. The Company expects Sharper
Image to be earnings neutral in 2011 due to timing of the close and
transaction costs.
2012 Guidance for Iconix Brand Group, Inc.:
The Company is providing 2012 revenue guidance of $370-$385 million, 2012 non-GAAP diluted EPS
guidance of $1.77-$1.84, 2012 GAAP
diluted EPS guidance of $1.62-$1.69
and 2012 free cash flow guidance of $187-$194 million. This guidance relates to the
existing portfolio of brands including Sharper Image and does not
include any additional acquisitions.
Other Company News:
The Company announced today that it signed a definitive
agreement to acquire The Sharper Image brand. This acquisition will
be the Company's first entry into the consumer electronics sector.
See separate press release for additional details.
The Company also announced today that its Board of Directors has
authorized a program to repurchase up to $200 million of its common stock. See separate
press release for additional details.
See reconciliation tables below for non-GAAP metrics. These
non-GAAP metrics may be inconsistent with similar measures
presented by other companies and should only be used in conjunction
with our results reported according to U.S. GAAP. Any
financial measure other than those prepared in accordance with U.S.
GAAP should not be considered a substitute for, or superior to,
measures of financial performance prepared in accordance with U.S.
GAAP.
About Iconix Brand Group, Inc.
Iconix Brand Group, Inc. owns, licenses and markets a growing
portfolio of consumer brands including CANDIE'S (R), BONGO (R),
BADGLEY MISCHKA (R), JOE BOXER (R), RAMPAGE (R), MUDD (R),
LONDON FOG (R), MOSSIMO (R), OCEAN
PACIFIC (R), DANSKIN (R) ROCA WEAR
(R), CANNON (R), ROYAL VELVET (R), FIELDCREST (R), CHARISMA (R),
STARTER (R), ZOO YORK (R) and
WAVERLY (R). In addition, Iconix
owns an interest in the ARTFUL DODGER (R), ED HARDY (R), ECKO (R), MARC ECKO (R), MATERIAL GIRL(TM) and PEANUTS (R)
brands. The Company licenses its brands to a network of leading
retailers and manufacturers that touch every major segment of
retail distribution from the luxury market to the mass market in
both the U.S. and worldwide. Through its in-house business
development, merchandising, advertising and public relations
departments Iconix manages its brands to drive greater consumer
awareness and equity.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995. The statements that are not historical facts
contained in this press release are forward-looking statements that
involve a number of known and unknown risks, uncertainties and
other factors, all of which are difficult or impossible to predict
and many of which are beyond the control of the Company, which may
cause the actual results, performance or achievements of the
Company to be materially different from any future results,
performance or achievements expressed or implied by such forward
looking statements. Such factors include, but are not limited to,
uncertainty regarding the results of the Company's acquisition of
additional licenses, continued market acceptance of current
products and the ability to successfully develop and market new
products particularly in light of rapidly changing fashion trends,
the impact of supply and manufacturing constraints or difficulties
relating to the Company's licensees' dependence on foreign
manufacturers and suppliers, uncertainties relating to customer
plans and commitments, the ability of licensees to successfully
market and sell branded products, competition, uncertainties
relating to economic conditions in the markets in which the Company
operates, the ability to hire and retain key personnel, the ability
to obtain capital if required, the risks of litigation and
regulatory proceedings, the risks of uncertainty of trademark
protection, the uncertainty of marketing and licensing acquired
trademarks and other risks detailed in the Company's SEC filings.
The words "believe", "anticipate", "estimate", "expect",
"confident", "continue", "will", "project", "provide" "guidance"
and similar expressions identify forward-looking statements.
Readers are cautioned not to place undue reliance on these forward
looking statements, which speak only as of the date the statement
was made. All forward-looking statements are qualified by these
cautionary statements and apply only as of the date they are made.
The Company undertakes no obligation to update any forward-looking
statement, whether as a result of new information, future events or
otherwise.
Contact Information:
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Jaime Sheinheit
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Investor Relations
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Iconix Brand Group
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212.730.0030
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Condensed
Consolidated Income Statements
(in
thousands, except earnings per share data)
|
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
Three Months
Ended Sept. 30,
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Nine Months
Ended Sept. 30,
|
|
|
2011
|
2010
|
|
2011
|
|
2010
|
|
|
|
|
|
|
|
|
|
Licensing and other
revenue
|
$ 92,683
|
$96,887
|
|
$ 274,332
|
|
$ 244,604
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
33,729
|
42,032
|
|
97,396
|
|
90,719
|
|
Expenses related to specific
litigation
|
-
|
33
|
|
92
|
|
240
|
|
|
|
|
|
|
|
|
|
Operating income
|
58,954
|
54,822
|
|
176,844
|
|
153,645
|
|
|
|
|
|
|
|
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|
Interest and other
expense, net
|
12,816
|
9,763
|
|
13,768
|
|
29,686
|
|
|
|
|
|
|
|
|
|
Equity earnings on joint
ventures
|
(98)
|
(25)
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(3,236)
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(2,242)
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|
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Other expenses –
net
|
12,718
|
9,738
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|
10,532
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|
27,444
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
46,236
|
45,084
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|
166,312
|
|
126,201
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
15,209
|
13,252
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|
55,313
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40,042
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|
|
|
|
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|
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Net income
|
$ 31,027
|
$ 31,832
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$ 110,999
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$ 86,159
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|
|
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Less: Net income attributable to
non-controlling interest
|
5,059
|
4,423
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|
12,056
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|
9,435
|
|
|
|
|
|
|
|
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|
Net income attributable to
Iconix Brand Group, Inc.
|
$25,968
|
$ 27,409
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$ 98,943
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$ 76,724
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|
|
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Earnings per share:
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Basic
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$ 0.35
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$ 0.38
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$ 1.36
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$ 1.07
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Diluted
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$ 0.34
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$ 0.37
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$ 1.31
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$ 1.03
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|
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|
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|
|
|
|
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Weighted average number of
common shares outstanding:
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Basic
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73,297
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72,326
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73,016
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72,013
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Diluted
|
75,746
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74,920
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|
75,520
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|
74,632
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|
|
|
|
|
|
|
|
|
|
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Selected Balance Sheet
Items:
(in thousands)
|
(Unaudited)
9/30/2011
|
12/31/2010
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Total Assets
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$2,147,041
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$1,951,470
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Total Liabilities
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$874,835
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$812,556
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Stockholders' Equity
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$1,272,206
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$1,138,914
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The following tables detail unaudited reconciliations from
non-GAAP amounts to U.S. GAAP and include reconciliations related
to the adoption of ASC Topic 470 as it relates to accounting for
convertible debt, which became effective retroactively for the
fiscal years beginning after December 15,
2008.
Note: All items in the following reconciliation tables are
attributable to Iconix Brand Group, Inc. and exclude results
related to non-controlling interests.
(in thousands, except per share
data)
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(Unaudited)
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(Unaudited)
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Three months
ended
|
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Nine months
ended
|
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Net income
reconciliation
|
Sept.
30,
2011
|
Sept.
30,
2010
|
|
Sept.
30,
2011
|
Sept.
30,
2010
|
|
Non-GAAP net income
(1)
|
$30,112
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$29,827
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|
$96,171
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$83,328
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|
|
|
|
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GAAP net income
|
$25,968
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$27,409
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$98,943
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$76,724
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|
|
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Adjustments:
Non-cash interest
related to ASC Topic 470
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6,396
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3,506
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14,493
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10,050
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Non-cash gain
related to investment in Ed Hardy
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-
|
-
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(21,465)
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-
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Write-off of
deferred financing fees and OID
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-
|
-
|
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2,651
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-
|
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Taxes related to
above items
|
(2,252)
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(1,088)
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1,549
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(3,446)
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Net
|
4,144
|
2,418
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(2,772)
|
6,604
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|
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|
|
|
|
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Non-GAAP net income
|
$30,112
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$29,827
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$96,171
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$83,328
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|
|
|
|
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(Unaudited)
Three months
ended
|
|
(Unaudited)
Nine months
ended
|
|
Diluted EPS
reconciliation
|
Sept.
30,
2011
|
Sept.
30,
2010
|
|
Sept.
30,
2011
|
Sept.
30,
2010
|
|
Non-GAAP diluted EPS
(1)
|
$0.40
|
$0.40
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$1.27
|
$1.12
|
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|
|
|
|
|
|
|
GAAP diluted EPS
|
$0.34
|
$0.37
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|
$1.31
|
$1.03
|
|
|
|
|
|
|
|
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Adjustments for non-cash
interest related ASC 470,
non-cash gain related to
investment in Ed Hardy,
and write-off of deferred
financing fees and
original issue discount, net of
tax
|
$0.05
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$0.03
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$(0.04)
|
$0.09
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|
|
|
|
|
|
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Non-GAAP diluted
EPS
|
$0.40*
|
$0.40
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|
$1.27
|
$1.12
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*May not add due to
rounding
|
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|
|
|
|
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Forecasted Diluted
EPS
|
Year
Ending
Dec. 31, 2011
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Year
Ending
Dec. 31, 2012
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High
|
Low
|
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High
|
Low
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP diluted EPS
(1)
|
$1.68
|
$1.63
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|
$1.84
|
$1.77
|
|
|
|
|
|
|
|
|
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|
GAAP diluted EPS
|
$1.66
|
$1.61
|
|
$1.69
|
$1.62
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|
|
|
|
|
|
|
|
|
|
Adjustments for non-cash
interest related ASC 470,
non-cash gain related to
investment in Ed Hardy,
and write-off of deferred
financing fees and original issue
discount, net of tax
|
$0.02
|
$0.02
|
|
$0.15
|
$0.15
|
|
|
Non-GAAP Diluted
EPS
|
$1.68
|
$1.63
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|
$1.84
|
$1.77
|
|
|
|
|
(1) Non-GAAP net income and
non-GAAP EPS are non-GAAP financial measures which represent net
income
excluding any non-cash interest
related to the adoption of ASC Topic 470, non-cash gains and
non-recurring
charges related to the early
extinguishment of debt, net of tax. The Company believes these are
useful financial
measures in evaluating its
financial condition because they are representative of only actual
cash results.
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(in thousands)
|
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(Unaudited)
|
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(Unaudited)
|
|
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Three months
ended
|
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Nine months
ended
|
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|
Sept.
30,
2011
|
Sept.
30,
2010
|
|
Sept.
30,
2011
|
Sept.
30,
2010
|
|
EBITDA (2)
|
$55,331
|
$52,070
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|
$172,245
|
$150,920
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|
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Reconciliation of
EBITDA:
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|
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Net Income
|
25,968
|
27,409
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|
98,943
|
76,724
|
|
|
|
|
|
|
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Add: Income taxes
|
15,209
|
13,252
|
|
55,313
|
40,042
|
|
|
|
|
|
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|
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Add: Net interest expense and Ed
Hardy gain
|
12,229
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9,112
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|
11,929
|
27,588
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|
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|
|
|
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Add: Depreciation and
amortization of certain intangibles
|
1,925
|
2,297
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|
6,060
|
6,566
|
|
EBITDA
|
$55,331
|
$52,070
|
|
$172,245
|
$150,920
|
|
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(2) EBITDA, a non-GAAP financial
measure, represents net income before income taxes, interest, Ed
Hardy gain, depreciation and
amortization expenses. The
Company believes EBITDA provides additional information for
determining its ability to meet future debt
service requirements, investing
and capital expenditures.
|
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|
|
|
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(in thousands)
|
(Unaudited)
Three months
ended
|
|
(Unaudited)
Nine months
ended
|
|
|
Sept.
30,
2011
|
Sept.
30,
2010
|
|
Sept.
30,
2011
|
Sept.
30,
2010
|
|
Free Cash Flow (3)
|
$44,943
|
$41,272
|
|
$134,305
|
$118,193
|
|
|
|
|
|
|
|
|
|
Reconciliation of Free Cash
Flow:
|
|
|
|
|
|
|
Net Income
|
25,968
|
27,409
|
|
98,943
|
76,724
|
|
|
Add: Non-cash income taxes,
non-cash interest
related to convertible debt,
depreciation,
amortization of certain
intangibles and finance
fees, non-cash compensation
expense, bad debt
expense, net equity earnings
from certain joint
ventures, non-cash gain/loss
from sale of
trademarks and re-measurement
of
investments.(4)
|
19,255
|
13,905
|
|
38,083
|
42,160
|
|
Less: Capital
expenditures
|
(280)
|
(42)
|
|
(2,721)
|
(691)
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
$44,943
|
$41,272
|
|
$134,305
|
$118,193
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
Year
Ending
|
|
Year
Ending
|
|
|
Dec. 31,
2011
|
|
Dec. 31,
2012
|
|
|
|
|
|
|
|
|
|
High
|
Low
|
|
High
|
Low
|
|
|
|
|
|
|
|
|
Forecasted Free Cash Flow
(3)
|
$172,000
|
$167,000
|
|
$194,000
|
$187,000
|
|
Reconciliation of Free Cash
Flow:
|
|
|
|
|
|
|
Net
Income
|
$126,000
|
$122,000
|
|
$129,000
|
$123,000
|
|
Add: Non-cash income taxes,
non-cash interest related to
convertible debt, depreciation,
amortization of certain
intangibles and finance
fees, non-cash compensation expense,
bad debt expense, net equity
earnings from certain joint
ventures and non-cash gain/loss
from sale of trademarks and
re-measurement of
investments
|
49,000
|
49,000
|
|
68,000
|
67,000
|
|
|
|
|
|
|
|
|
Less: Capital
expenditures
|
(3,000)
|
(4,000)
|
|
(3,000)
|
(3,000)
|
|
|
|
|
|
|
|
|
Forecasted Free Cash
Flow
|
$172,000
|
$167,000
|
|
$194,000
|
$187,000
|
|
|
|
|
|
|
|
|
|
(3) Free Cash Flow, a
non-GAAP financial measure, represents net income before
depreciation, amortization, non-cash compensation expense, bad debt
expense, net equity earnings from certain joint ventures, non-cash
income taxes, non-cash interest related to convertible debt,
non-cash gains/loss from sale of trademarks and re-measurement of
investments, less capital expenditures. The Free Cash Flow also
excludes any changes in Balance Sheet items. The Company believes
Free Cash Flow is useful in evaluating its financial condition
because it is representative of cash flow from operations that is
available for repaying debt, investing and capital
expenditures.
(4) Reflects adjustment to
previously reported amounts for quarterly flow of non-cash taxes
for 2010 and has no impact on a full year basis.
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SOURCE Iconix Brand Group, Inc.