NEW YORK, Dec. 22, 2017 /PRNewswire/ --
- 3Q 2017 revenue of $53.2
million, a 12% decline from prior year quarter
- 3Q 2017 revenue excluding divested brands and deconsolidated
territories down 7%
- Managing expenses, SG&A down 28%
- Trademark and goodwill impairment charge of $625.5 million
- 3Q 2017 operating loss of $595.9
million
- 3Q 2017 adjusted operating income of $31.6 million, a 10% increase from prior year
quarter
Iconix Brand Group, Inc. (Nasdaq: ICON) ("Iconix" or the
"Company") today reported financial results for the third quarter
ended September 30, 2017.
John Haugh, CEO of Iconix
commented, "While our revenue was down in the quarter, we are still
tracking to be within our previously issued guidance, and have been
able to successfully manage expenses. We firmly believe that in
today's environment brands are more important than ever. We remain
keenly focused on actively managing our brands in an effort to
expand our market reach with both our existing distribution
partners and into new partners. The balance sheet also remains a
top priority, and we are working towards a solution."
Third Quarter 2017 Financial Results
Licensing Revenue:
For the third quarter of 2017, licensing revenue was
$53.2 million, a 12% decline as
compared to $60.5 million in the
prior year quarter. Revenue in the prior year's third quarter
included approximately $2.3 million
of licensing revenue from the Sharper Image brand which was sold in
the fourth quarter of 2016 and approximately $1.3 million of revenue from the Company's
Southeast Asia joint venture which
was deconsolidated in the second quarter of 2017. As a result,
there was no comparable revenue for these items in the third
quarter of 2017. Excluding Sharper Image and Southeast Asia, revenue declined approximately
7% in the third quarter of 2017.
Segment Data (non-GAAP for exclusion of divested brands and
deconsolidated territories):
($, 000's)
|
|
Three Months Ended
Sept 30,
|
|
Nine Months Ended
Sept 30,
|
|
2017
|
2016
|
%
Change
|
|
2017
|
2016
|
%
Change
|
Licensing Revenue by
Segment:*
|
|
|
|
|
|
|
|
Women's
|
21,043
|
24,193
|
-13%
|
|
76,820
|
87,536
|
-12%
|
Men's
|
11,393
|
11,983
|
-5%
|
|
31,568
|
36,828
|
-14%
|
Home
|
7,515
|
7,972
|
-6%
|
|
22,676
|
22,549
|
1%
|
International
|
13,214
|
12,764
|
4%
|
|
42,471
|
42,677
|
0%
|
Total Licensing
Revenue
|
53,165
|
56,913
|
-7%
|
|
173,535
|
189,590
|
-8%
|
*Note: Licensing revenue in the table above excludes
approximately $2.3 million of revenue
from divested brands and $1.3 million
of revenue from deconsolidated territories in the third quarter of
2016 and $5.5 million of revenue from
divested brands and $1.3 million of
revenue from deconsolidated territories in the nine month period
ended September 30, 2016.
SG&A Expenses:
Total SG&A expenses in the third quarter of 2017 were
$21.5 million, a 28% decrease as
compared to approximately $29.9
million in the third quarter of 2016. The decline was
primarily related to lower compensation expense and lower
advertising expense some of which will shift into the fourth
quarter.
Trademark and Goodwill Impairment:
In the third quarter of 2017, the Company recorded a non-cash
trademark impairment charge of approximately $521.8 million,
which is comprised of $227.6 million
in the women's segment, $135.9
million in the men's segment, $69.5
million in the home segment and $88.7
million in the international segment to reduce various
trademarks in those segments to fair value. The Company also
recorded a non-cash goodwill impairment charge of $103.9 million due to impairment of goodwill in
the women's segment, men's segment and home segment of $73.9 million, $1.5
million and $28.4 million
respectively.
Operating Income:
Operating Income for the third quarter of 2017 was a loss of
approximately $595.9 million, as compared to earnings
of $31.1 million in the third quarter of 2016.
Operating Income in the third quarter of 2017 included a
trademark and goodwill impairment of $625.5
million, a loss on termination of licenses of $2.8 million and a gain on sale of trademarks of
$0.9 million. Excluding these items
Adjusted Operating Income for the third quarter of 2017 was
approximately $31.6 million.
Operating Income in the third quarter of 2016 included
approximately $2.1 million of income
related to the Sharper Image brand, which the Company sold in the
fourth quarter of 2016, as a result there is no comparable income
in the current period. Adjusting for the items above, Operating
Income in the third quarter of 2017 increased approximately
10%.
Adjusted Operating
Income by Segment*
|
Three Months Ended
Sept. 30,
|
|
Nine Months Ended
Sept. 30,
|
($, 000's)
|
2017
|
2016
|
%
Change
|
|
2017
|
2016
|
%
Change
|
Women's
|
19,020
|
21,115
|
-10%
|
|
71,261
|
79,317
|
-10%
|
Men's
|
8,628
|
7,443
|
16%
|
|
20,000
|
22,956
|
-13%
|
Home
|
6,675
|
6,333
|
5%
|
|
20,256
|
18,516
|
9%
|
International
|
6,183
|
6,937
|
-11%
|
|
21,667
|
22,686
|
-4%
|
Corporate
|
(8,953)
|
(13,021)
|
31%
|
|
(32,577)
|
(42,634)
|
24%
|
Adjusted Operating
Income
|
31,553
|
28,807
|
10%
|
|
100,607
|
100,840
|
0%
|
|
*Excludes trademark
& goodwill impairment, loss on termination of licensees,
divested brands, gain on deconsolidation of joint ventures and gain
related to sale of trademarks. A reconciliation table can be found
at the end of this press release.
|
|
|
|
|
|
|
|
|
Adjusted Operating
Margin:
|
Three Months Ended
Sept. 30,
|
|
Nine Months Ended
Sept. 30,
|
|
2017
|
2016
|
percentage
point change
|
|
2017
|
2016
|
percentage
point change
|
Women's
|
90%
|
87%
|
3%
|
|
93%
|
91%
|
2%
|
Men's
|
76%
|
62%
|
14%
|
|
63%
|
62%
|
1%
|
Home
|
89%
|
79%
|
10%
|
|
89%
|
82%
|
7%
|
International
|
47%
|
54%
|
-7%
|
|
51%
|
53%
|
-2%
|
Corporate
|
-17%
|
-23%
|
6%
|
|
-19%
|
-22%
|
3%
|
Adjusted Operating
Margin
|
59%
|
51%
|
8%
|
|
58%
|
53%
|
5%
|
Interest Expense:
Interest expense in the third quarter of 2017 was $16.9 million, an 8% decline as compared to
interest expense of $18.3 million in
the third quarter of 2016. The Company's reported interest expense
includes non-cash interest related to its outstanding convertible
notes of $4.0 million in the third
quarter of 2017 and $4.2 million in
the third quarter of 2016. Excluding the non-cash interest related
to the company's outstanding convertible notes, interest expense
was $12.9 million in the third
quarter of 2017, as compared to $14.1
million in the third quarter of 2016.
Other Income:
In the third quarter of 2017, the Company recognized a
$2.7 million gain related to a
payment received from the sale of its minority interest in Complex
Media last year. This compares to a gain of $10.2 million in the third quarter of 2016 at the
time of sale. In the third quarter of 2017, the Company recognized
a loss of $1.5 million related to the
repurchase of a portion of the Company's 2018 convertible notes, as
compared to a gain of $4.2 million in
third quarter of 2016. The Company has excluded these items from
its non-GAAP results.
Provision for Income Taxes:
The effective income tax rate for the third quarter of 2017 is
approximately 4.9% which resulted in a $29.6 million income tax benefit, as
compared to an effective income tax rate of 35.6% in the prior year
quarter which resulted in the $9.4
million income tax expense. The decrease in the
effective tax rate is primarily a result of the establishment of a
$170 million valuation allowance on
the Company's deferred tax assets, which had the effect of reducing
the tax benefit on the pretax loss which lowers the effective tax
rate.
GAAP Net Income and GAAP Diluted EPS:
GAAP net income from continuing operations for the third quarter
of 2017 was a loss of $550.6 million
as compared to earnings of $14.2
million in the third quarter of 2016. GAAP diluted EPS
from continuing operations for the third quarter of 2017 was a loss
of $9.64 as compared to diluted
earnings per share of approximately $0.25 in the third quarter of 2016.
Non-GAAP Net Income and Non-GAAP Diluted EPS:
Non-GAAP net income from continuing operations for the third
quarter of 2017 was $13.9 million, a
35% increase as compared to $10.3
million in the third quarter of 2016.
Non-GAAP diluted EPS from continuing operations for the third
quarter of 2017 was $0.24, a 35%
increase as compared to $0.18 in the
third quarter of 2016.
Balance Sheet and Liquidity:
The Company ended the third quarter of 2017 with approximately
$28.9 million of unrestricted
domestic cash, $12.4 million of
unrestricted domestic cash in consolidated JV's, $9.7 million of unrestricted international cash,
$280 million of restricted cash, and
$1.0 billion of debt.
Subsequent to the end of the third quarter, the Company amended
its senior secured term loan and reduced the size of the credit
facility by $75 million to
$225 million. Prior to the amendment,
the Company already used $59 million
of the escrow proceeds made available under the original term loan
facility to repay a portion of the 2018 convertible notes. As part
of the amendment, the remaining term loan balance of $165.7 million was restructured as a delayed draw
term loan to be utilized to refinance the Company's 2018
convertible notes when they come due in March 2018, subject to satisfaction of certain
conditions precedent.
Currently the Company has approximately $44.7 million of unrestricted domestic cash,
$16.6 million of unrestricted
domestic cash in consolidated JV's, $12.7
million of unrestricted international cash and $47.7 million of restricted cash, and
$827 million of debt.
At this time, management does not believe that cash from future
operations and our currently available cash and capacity for
additional financings under our Senior Secured Notes facility (to
the extent available) will be sufficient to allow for the repayment
of our 1.50% Convertible Notes' upon maturity in March of 2018.
While the First Amendment provided for the availability of the
Delayed Draw Term Loan Facility, due to various conditions
prerequisite (many of which are related to our financial
performance) to our being able to draw down on amounts available,
we may not be able to utilize the Delayed Draw Term Loan in order
to repay the 1.50% Convertible Notes when they become due.
In order to seek to satisfy these requirements, we continue to
actively evaluate various capital raising options to repay debt and
add additional liquidity to the company's balance sheet as well as
strategic alternatives, which could include the sale of certain
assets or of the entire company.
($, 000's)
|
Sept. 30,
2017
|
Current
|
Cash
Summary:
|
|
|
Unrestricted Domestic
Cash (wholly owned)
|
28,864
|
44,694
|
Unrestricted Domestic
Cash (in consolidated JV's)
|
12,411
|
16,583
|
Unrestricted
International Cash
|
9,690
|
12,664
|
Restricted
Cash
|
279,758
|
47,737
|
|
|
|
Total Cash
|
$330,724
|
$121,678
|
|
|
|
Debt
Summary:
|
|
|
Senior Secured
Notes
|
418,847
|
408,174
|
1.50% Convertible
Notes due 2018
|
236,183
|
236,183
|
Variable Funding
Note
|
100,000
|
100,000
|
Senior Secured Term
Loan
|
300,000
|
82,837
|
|
|
|
Total Debt (Face
Value)
|
$1,055,030
|
$827,194
|
Free Cash Flow
The Company generated approximately $1.4
million of free cash flow in the third quarter of 2017, as
compared to approximately $27.9
million in the third quarter of 2016. The decline in
free cash flow is partially related to a $7
million state and local income tax audit assessment that the
Company paid in the third quarter of 2017. The Company's reported
free cash flow, is adjusted to deduct expenses associated with the
sale of the entertainment segment, including a US federal income
tax payment of $15 million paid in
the third quarter resulting from the tax related to the gain on the
sale of the entertainment business.
Free Cash Flow
Reconciliation (3):
|
|
|
|
|
|
|
|
($,
000's)
|
|
|
|
|
|
|
|
|
Three Months Ended
Sep. 30,
|
|
Nine Months Ended
Sep. 30,
|
|
2017
|
2016
|
%
Change
|
|
2017
|
2016
|
%
Change
|
Net cash provided by
continuing operating activities
|
($16,918)
|
$23,168
|
-173%
|
|
$3,097
|
$65,981
|
-95%
|
Plus:
Cash related to Disc Ops sale
|
15,000
|
-
|
|
|
36,272
|
-
|
|
Plus:
Cash from sale of trademarks and related notes
receivable
|
-
|
195
|
|
|
6,927
|
6,137
|
|
Plus:
Cash from notes receivable from licensees
|
-
|
1,250
|
|
|
1,250
|
7,850
|
|
Plus:
Cash from sale of Nick Graham
|
2,561
|
-
|
|
|
2,561
|
0
|
|
Plus:
Cash from sale of equity interest in BBC Ice Cream
|
-
|
-
|
|
|
-
|
3,500
|
|
Plus:
Cash from sale of Badgley Mischka
|
375
|
-
|
|
|
375
|
14,000
|
|
Plus:
Cash from sale of Sharper Image
|
500
|
-
|
|
|
500
|
-
|
|
Plus:
Cash from sale of equity interest in China
|
-
|
3,700
|
|
|
-
|
15,415
|
|
Less:
Capital Expenditures
|
(74)
|
(166)
|
|
|
(829)
|
(844)
|
|
Less:
Distributions to non-controlling interests
|
(7)
|
(269)
|
|
|
(3,850)
|
(9,321)
|
|
|
|
|
|
|
|
|
|
Free Cash Flow- from
continuing operations
|
$1,437
|
$27,878
|
-95%
|
|
$46,303
|
$102,718
|
-55%
|
2017 Guidance
The Company is updating its guidance for 2017 as follows;
- The Company expects revenue to be at the low end of its
guidance range of $225 million to
$235 million.
- The Company is adjusting it 2017 GAAP EPS guidance to reflect
the impairment charge and now expects 2017 GAAP EPS, to be in a
range of a loss of ($9.89) to
($9.79)
- The Company expects 2017 non-GAAP EPS to be slightly above its
guidance range of $0.65 to
$0.70.
- The Company expects full year 2017 free cash flow to be at
the low end of its guidance range of $65 million to $82
million.
Non-GAAP net income, non-GAAP diluted EPS and Free Cash Flow are
non-GAAP metrics, and reconciliation tables for each are included
in this press release.
About Iconix Brand Group, Inc.
Iconix Brand Group, Inc. owns, licenses and markets a portfolio
of consumer brands including: CANDIE'S (R), BONGO (R), JOE BOXER (R), RAMPAGE (R), MUDD (R), MOSSIMO
(R), LONDON FOG (R), OCEAN PACIFIC
(R), DANSKIN (R), ROCAWEAR (R), CANNON (R), ROYAL VELVET (R),
FIELDCREST (R), CHARISMA (R), STARTER (R), WAVERLY (R), ZOO YORK (R), UMBRO (R), LEE COOPER (R), ECKO UNLTD. (R), MARC ECKO (R), and ARTFUL DODGER. In addition,
Iconix owns interests in the MATERIAL GIRL (R), ED HARDY (R), TRUTH OR DARE (R), MODERN
AMUSEMENT (R), BUFFALO (R) and PONY (R) brands. The Company
licenses its brands to a network of leading retailers and
manufacturers that touch every major segment of retail distribution
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.
Forward-Looking Statements
In addition to historical information, this press release
contains forward-looking statements within the meaning of the
federal securities laws. Such forward-looking statements include
projections regarding the Company's beliefs and expectations about
future performance and, in some cases, may be identified by words
like "anticipate," "assume," "believe," "continue," "could,"
"estimate," "expect," "intend," "may," "plan," "potential,"
"predict," "project," "future," "will," "seek" and similar terms or
phrases. These statements are based on the Company's beliefs and
assumptions, which in turn are based on information available as of
the date of this press release. Forward-looking statements involve
known and unknown risks and uncertainties, which could cause actual
results to differ materially from those contained in any
forward-looking statement and could harm the Company's business,
prospects, results of operations, liquidity and financial condition
and cause its stock price to decline significantly. Many of these
factors are beyond the Company's ability to control or predict.
Important factors that could cause the Company's actual results to
differ materially from those indicated in the forward-looking
statements include, among others: the ability of the Company's
licensees to maintain their license agreements or to produce and
market products bearing the Company's brand names, the Company's
ability to retain and negotiate favorable licenses, the Company's
ability to meet its outstanding debt obligations and the events and
risks referenced in the sections titled "Risk Factors" in the
Company's Annual Report on Form 10-K for the year ended
December 31, 2016 and subsequent
Quarterly Reports on Form 10-Q and in other documents filed or
furnished with the Securities and Exchange Commission. These
forward-looking statements are made only as of the date hereof,
and, except as required by applicable law, the Company undertakes
no obligation to update or revise publicly any forward-looking
statements.
Contact Information:
Jaime Sheinheit
VP, Investor Relations
Iconix Brand Group, Inc.
jsheinheit@iconixbrand.com
212.819.2096
Unaudited
Condensed Consolidated Income Statements
|
|
|
|
|
|
(in thousands,
except earnings per share data)
|
|
|
|
|
|
|
|
|
Three Months Ended
Sep. 30,
|
|
Nine Months Ended
Sep. 30
|
|
2017
|
2016
|
%
Change
|
|
2017
|
2016
|
%
Change
|
|
|
|
|
|
|
|
|
Licensing
revenue
|
53,165
|
60,457
|
-12%
|
|
173,535
|
196,342
|
-12%
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
expenses
|
21,509
|
29,870
|
-28%
|
|
73,702
|
91,976
|
-20%
|
Loss on termination
of licenses
|
2,750
|
-
|
NA
|
|
25,980
|
-
|
NA
|
Depreciation and
amortization
|
592
|
233
|
154%
|
|
1,814
|
2,093
|
-13%
|
Equity earnings on
joint ventures
|
(483)
|
(574)
|
-16%
|
|
(2,475)
|
(3,130)
|
-21%
|
Gain on
deconsolidation of joint venture
|
-
|
-
|
NA
|
|
(3,772)
|
-
|
NA
|
Gain on sale of
trademarks
|
(875)
|
(147)
|
495%
|
|
(875)
|
(9,991)
|
-91%
|
Trademark
Impairment
|
521,653
|
-
|
NA
|
|
521,653
|
-
|
NA
|
Goodwill
Impairment
|
103,877
|
-
|
NA
|
|
103,877
|
-
|
NA
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
(595,858)
|
31,075
|
-2017%
|
|
(546,369)
|
115,394
|
-573%
|
|
|
|
|
|
|
|
|
Other (income)
expenses
|
|
|
|
|
|
|
|
Interest expense
|
16,911
|
18,334
|
-8%
|
|
45,787
|
59,751
|
-23%
|
Interest income
|
(150)
|
(140)
|
7%
|
|
(417)
|
(687)
|
-39%
|
Other income, net
|
(2,648)
|
(10,164)
|
-74%
|
|
(2,649)
|
(10,180)
|
-74%
|
Loss on extinguishment of debt, net
|
1,539
|
(4,186)
|
NA
|
|
20,939
|
(8,473)
|
NA
|
Foreign currency translation loss (gain)
|
(1,091)
|
733
|
-249%
|
|
2,755
|
617
|
346%
|
Other expenses -
net
|
14,561
|
4,577
|
218%
|
|
66,415
|
41,028
|
62%
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
(610,419)
|
26,498
|
-2404%
|
|
(612,784)
|
74,366
|
-924%
|
|
|
|
|
|
|
|
|
Provision (benefit)
for income taxes
|
(29,606)
|
9,433
|
-414%
|
|
(29,220)
|
25,157
|
-216%
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
(580,813)
|
17,065
|
-3504%
|
|
(583,564)
|
49,209
|
-1286%
|
|
|
|
|
|
|
|
|
Less: Net income
(loss) attributable to non-
controlling interest
|
(30,242)
|
2,885
|
-1148%
|
|
(23,857)
|
9,802
|
-343%
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Iconix
Brand Group, Inc.
|
(550,571)
|
14,180
|
-3983%
|
|
(559,707)
|
39,407
|
-1520%
|
|
|
|
|
|
|
|
|
Income (loss) from
discontinued operations,
net of income taxes
|
(2,130)
|
2,734
|
-178%
|
|
49,312
|
10,783
|
357%
|
Less: Net income
attributable to non-
controlling interest from discontinued
operations
|
-
|
1,698
|
NA
|
|
2,943
|
4,778
|
NA
|
Net income (loss)
from discontinued
operations attributable to Iconix Brand
Group, Inc.
|
(2,130)
|
1,036
|
-306%
|
|
46,369
|
6,005
|
672%
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Iconix
Brand Group, Inc.
|
(552,701)
|
15,216
|
-3732%
|
|
(513,338)
|
45,412
|
-1230%
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share - basic:
|
|
|
|
|
|
|
|
Continuing
operations
|
(9.64)
|
0.26
|
-3777%
|
|
(9.83)
|
0.77
|
-1274%
|
Discontinued
operations
|
(0.04)
|
0.02
|
-200%
|
|
0.81
|
0.12
|
691%
|
Earnings (loss) per
share - basic
|
(9.67)
|
0.27
|
-3634%
|
|
(9.02)
|
0.89
|
-1114%
|
|
|
|
|
|
|
|
|
Earnings (loss) per
share - diluted:
|
|
|
|
|
|
|
|
Continuing
operations
|
(9.64)
|
0.25
|
-3898%
|
|
(9.83)
|
0.75
|
-1318%
|
Discontinued
operations
|
(0.04)
|
0.02
|
-206%
|
|
0.81
|
0.11
|
714%
|
Earnings (loss) per
share - diluted
|
(9.67)
|
0.27
|
-3746%
|
|
(9.02)
|
0.86
|
-1149%
|
|
|
|
|
|
|
|
|
Weighted average
number of common
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
57,189
|
55,584
|
3%
|
|
57,081
|
51,060
|
12%
|
|
|
|
|
|
|
|
|
Diluted
|
57,189
|
57,355
|
0%
|
|
57,081
|
52,802
|
8%
|
The following is a reconciliation of the non-GAAP financial
measures used by the Company to describe the Company's financial
results determined in accordance with United States generally accepted accounting
principles (GAAP).
While management believes that these non-GAAP financial measures
provide useful supplemental information to investors regarding the
underlying performance of the Company's business operations,
investors are reminded to consider these non-GAAP financial
measures in addition to, and not as a substitute for, financial
performance measures prepared in accordance with GAAP. In addition,
it should be noted that these non-GAAP financial measures may be
different from non-GAAP financial measures used by other companies,
and management may utilize other measures to illustrate performance
in the future. Non-GAAP financial measures have limitations in that
they do not reflect all of the amounts associated with the
Company's results of operations as determined in accordance with
GAAP.
Note: All items in the following reconciliation tables are
attributable to Iconix Brand Group, Inc. and exclude results
related to non-controlling interests. Certain numbers may not add
due to rounding.
$, 000's, except per
share data
|
|
Adjusted Operating
Income Reconciliation (1):
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
Impairment
|
|
Loss on
Terminations
|
|
Gain on Sale
of Trademarks
|
|
Income from
Divested Brands
|
|
Adjusted
Operating Income
|
|
Three
Months
|
|
Three
Months
|
|
Three
Months
|
|
Three
Months
|
|
Three
Months
|
|
Three
Months
|
|
Ended Sept.
30
|
|
Ended Sept.
30
|
|
Ended Sept.
30
|
|
Ended Sept.
30
|
|
Ended Sept.
30
|
|
Ended Sept.
30
|
|
2017
|
2016
|
|
2017
|
2016
|
|
2017
|
2016
|
|
2017
|
2016
|
|
2017
|
2016
|
|
2017
|
2016
|
Women's
|
($281,889)
|
$21,074
|
|
$301,502
|
-
|
|
($600)
|
-
|
|
-
|
-
|
|
$7
|
$41
|
|
$19,020
|
$21,115
|
Men's
|
($132,183)
|
$7,443
|
|
$137,462
|
-
|
|
$3,350
|
-
|
|
-
|
-
|
|
-
|
-
|
|
$8,629
|
$7,443
|
Home
|
($91,203)
|
$8,495
|
|
$97,878
|
-
|
|
-
|
-
|
|
-
|
-
|
|
-
|
($2,162)
|
|
$6,675
|
$6,333
|
International
|
($82,505)
|
$6,937
|
|
$88,688
|
-
|
|
-
|
-
|
|
-
|
-
|
|
-
|
-
|
|
$6,183
|
$6,937
|
Corporate
|
($8,078)
|
($12,874)
|
|
-
|
-
|
|
-
|
-
|
|
($875)
|
($147)
|
|
-
|
-
|
|
($8,953)
|
($13,021)
|
Total Op.
Income
|
($595,858)
|
$31,075
|
|
$625,530
|
$0
|
|
$2,750
|
$0
|
|
($875)
|
($147)
|
|
$7
|
($2,121)
|
|
$31,554
|
$28,807
|
Non-GAAP Net
Income & Diluted EPS Reconciliation: (2)
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
|
EPS
|
|
Three Months Ended
Sep. 30,
|
|
Three Months Ended
Sep. 30,
|
|
2017
|
2016
|
%
Change
|
|
2017
|
2016
|
%
Change
|
|
|
|
|
|
|
|
|
GAAP net income &
EPS from
continuing operations attributable to
Iconix (1)
|
($550,571)
|
$14,180
|
-3983%
|
|
($9.64)
|
$0.25
|
-3956%
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
non-cash interest related to ASC 470
|
3,997
|
4,246
|
|
|
$0.07
|
$0.07
|
|
gain on sale of Complex Media
|
(2,728)
|
(10,164)
|
|
|
($0.05)
|
($0.18)
|
|
loss on extinguishment of debt
|
1,539
|
(4,186)
|
|
|
$0.03
|
($0.07)
|
|
loss on termination of licenses
|
2,750
|
-
|
|
|
$0.05
|
-
|
|
trademark & goodwill impairment
|
625,530
|
-
|
|
|
$10.94
|
-
|
|
special charges
|
2,402
|
3,118
|
|
|
$0.04
|
$0.05
|
|
foreign currency translation
gain/(loss)
|
(1,091)
|
733
|
|
|
($0.02)
|
$0.01
|
|
Deduct: Income taxes
related to above
|
(205,882)
|
2,368
|
|
|
($3.60)
|
$0.04
|
|
Valuation
allowance
|
170,981
|
-
|
|
|
$2.99
|
-
|
|
non-controlling interest
|
(33,054)
|
(40)
|
|
|
($0.58)
|
$0.00
|
|
Accretion of
redeemable non-
controlling interest
|
-
|
-
|
|
|
$0.01
|
-
|
|
Net
|
564,444
|
(3,925)
|
|
|
$9.88
|
-$0.07
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
& EPS from
continuing operations attributable to
Iconix
|
$13,873
|
$10,255
|
35%
|
|
$0.24
|
$0.18
|
35%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME
|
|
EPS
|
|
Nine Months Ended
Sep. 30,
|
|
Nine Months Ended
Sep. 30,
|
|
2017
|
2016
|
%
Change
|
|
2017
|
2016
|
%
Change
|
|
|
|
|
|
|
|
|
GAAP net income &
EPS from
continuing operations attributable to
Iconix (1)
|
($559,707)
|
$39,407
|
-1520%
|
|
($9.83)
|
$0.75
|
-1417%
|
|
|
|
|
|
|
|
|
Add:
|
|
|
|
|
|
|
|
non-cash interest related to ASC 470
|
12,325
|
18,339
|
|
|
$0.22
|
$0.35
|
|
gain on sale of Complex Media
|
(2,728)
|
(10,164)
|
|
|
($0.05)
|
($0.19)
|
|
gain on deconsolidation of joint
venture
|
(3,772)
|
-
|
|
|
($0.07)
|
-
|
|
loss on extinguishment of debt
|
20,939
|
(8,473)
|
|
|
$0.37
|
($0.16)
|
|
loss on termination of licenses
|
25,980
|
-
|
|
|
$0.46
|
-
|
|
trademark impairment
|
625,530
|
-
|
|
|
$10.96
|
-
|
|
special charges
|
7,117
|
10,447
|
|
|
$0.12
|
$0.20
|
|
foreign currency translation
gain/(loss)
|
2,755
|
617
|
|
|
$0.05
|
$0.01
|
|
|
|
|
|
|
|
|
|
Deduct: Income taxes
related to above
|
(224,715)
|
(3,801)
|
|
|
($3.94)
|
($0.07)
|
|
Valuation
allowance
|
170,981
|
-
|
|
|
$3.00
|
-
|
|
non-controlling interest
|
(32,992)
|
113
|
|
|
($0.58)
|
$0.00
|
|
Accretion of
redeemable non-
controlling interest
|
-
|
-
|
|
|
$0.03
|
-
|
|
Net
|
601,421
|
7,078
|
|
|
$10.57
|
$0.13
|
|
|
|
|
|
|
|
|
|
Non-GAAP net income
& EPS from
continuing operations attributable to
Iconix
|
$41,714
|
$46,485
|
-10%
|
|
$0.73
|
$0.88
|
-17%
|
Forecasted
Non-GAAP Diluted EPS Reconciliation:
|
|
|
Year
Ending
|
|
Dec. 31,
2017
|
|
Low
|
High
|
|
|
|
Forecasted GAAP
diluted EPS
|
($9.89)
|
($9.79)
|
|
|
|
Trademark
impairment
|
$6.83
|
$6.83
|
Adjustments for
non-cash interest related to ASC 470, net of tax
|
$0.13
|
$0.13
|
Gain from Complex
Media
|
($0.03)
|
($0.03)
|
Special charges, net
of tax
|
$0.10
|
$0.10
|
Loss on
extinguishment of debt
|
$0.23
|
$0.23
|
Loss on termination
of licensees
|
$0.29
|
$0.29
|
Gain on
deconsolidation of JV
|
($0.04)
|
($0.04)
|
Foreign currency
translation loss (gain)
|
$0.05
|
$0.05
|
Valuation
allowance
|
$3.00
|
$3.00
|
Accretion of redeemable
non-controlling interest
|
$0.03
|
$0.03
|
Net
Adjustments
|
$10.59
|
$10.59
|
|
|
|
Forecasted Non-GAAP
Diluted EPS
|
$0.70
|
$0.80
|
|
|
|
Forecasted
Reconciliation of Free Cash Flow: (3)
|
|
|
|
Year
Ending
|
|
Dec. 31,
2017
|
|
Low
|
High
|
|
|
|
Net cash provided by
operating activities
|
$21,443
|
$26,443
|
Plus:
Cash related to Disc Ops sale
|
36,272
|
36,272
|
Plus:
Cash from sale of trademarks and related notes
receivable
|
8,849
|
8,849
|
Plus:
Cash from notes receivable from licensees
|
1,250
|
1,250
|
Plus:
Cash from sale of Nick Graham
|
2,561
|
2,561
|
Plus:
Cash from sale of Badgley Mischka
|
375
|
375
|
Plus:
Cash from sale of Sharper Image
|
500
|
500
|
Less:
Capital Expenditures
|
(1,250)
|
(1,250)
|
Less:
Distributions to non-controlling interests
|
(5,000)
|
(5,000)
|
|
|
|
Free Cash
Flow
|
$65,000
|
$70,000
|
Footnotes
(1) Adjusted operating income, a non-GAAP financial measure
represents operating income, less trademark and goodwill impairment
charges, loss on termination of licensees, gains on sales of
trademarks and income from divested brands. The Company believes
this is a useful financial measure in evaluating its financial
condition because it is more reflective of the Company's business
purpose, operations and cash expenses.
(2) Non-GAAP net income and non-GAAP diluted EPS (along with
non-GAAP weighted average diluted shares) are non-GAAP financial
measures which represent net income excluding any non-cash interest
related to ASC Topic 470, non-cash, non-recurring gains and
charges, foreign currency translation gains and losses, and charges
related to professional fees incurred as a result of the
correspondence with the Staff of the SEC, the SEC investigation,
internal investigations, the previously disclosed class action and
derivative litigations, and costs related to the transition of
Iconix management, all net of tax, and any incremental dilutive
shares related to our convertible notes that are covered by their
respective hedges. The Company believes these are useful financial
measures in evaluating its financial condition because they are
more reflective of the Company's business purpose, operations and
cash expenses.
Based on the average closing stock price for the quarters ended
March 31, 2017 and March 31, 2016, there were no potential dilutive
shares related to our convertible notes for GAAP
purposes.
(3) Free Cash Flow, a non-GAAP financial measure, represents net
cash provided by operating activities, plus cash received from the
sale of trademarks and formation of joint ventures, less
distributions to non-controlling interests and capital
expenditures. Free Cash Flow excludes notes receivable from
sale of trademarks and the formation of joint ventures, cash used
to acquire the membership interests of our joint venture partners,
mandatory debt service requirements, and other non-discretionary
expenditures. Free Cash Flow should not be considered in isolation,
as a measure of residual cash flow available for discretionary
purposes, or as an alternative to operating results presented in
accordance with GAAP. The Company believes Free Cash Flow is useful
because it provides information regarding actual cash received in a
specific period from the Company's comprehensive business strategy
of maximizing the value of its brands through traditional
licensing, international joint ventures and other arrangements. We
have excluded the cash used to buy back our joint venture
membership interests from the above definition because we believe
that, like other acquisitions, such actions are capital
transactions. It also provides supplemental information to assist
investors in evaluating the Company's financial condition and
ability to pursue opportunities that enhance shareholder value.
View original
content:http://www.prnewswire.com/news-releases/iconix-reports-third-quarter-2017-results-300575099.html
SOURCE Iconix Brand Group, Inc.