Iconix Brand Group Reports Record Revenue And Earnings For The Fourth Quarter And Full Year 2013

NEW YORK, Feb. 20, 2014 /PRNewswire/ --

  • Record Q4 revenue of $105.3 million, a 24% increase over prior year quarter
  • Record Q4 non-GAAP diluted EPS of $0.54, a 32% increase over prior year quarter
  • Record Q4 free cash flow of $62.9 million, a 66% increase over prior year quarter
  • Record 2013 revenue of $432.6 million, a 22% increase over prior year
  • Record 2013 non-GAAP diluted EPS of $2.39, a 41% increase over prior year
  • Record 2013 free cash flow of $229.9 million, a 27% increase over prior year
  • 2013 share repurchases of $436 million, or 24% of shares outstanding
  • Announcing new $500 million share repurchase program

Iconix Brand Group, Inc. (NASDAQ: ICON) ("Iconix" or the "Company"), today announced financial results for the fourth quarter and year ended December 31, 2013.

Q4 2013 Results for Iconix Brand Group, Inc.: 

Total revenue for the fourth quarter of 2013 was approximately $105.3 million, a 24% increase as compared to approximately $85.1 million in the fourth quarter of 2012. EBITDA attributable to Iconix for the fourth quarter was approximately $60.1 million, a 20% increase as compared to $50.0 million in the prior year quarter. Free cash flow attributable to Iconix for the fourth quarter was approximately $62.9 million, a 66% increase as compared to the prior year quarter of approximately $37.9 million. On a non-GAAP basis, as defined in the tables below, net income attributable to Iconix was $30.2 million, a 5% increase as compared to the prior year quarter of approximately $28.9 million. Non-GAAP diluted EPS for the fourth quarter of 2013 increased 32% to $0.54 compared to $0.41 in the prior year quarter. GAAP net income attributable to Iconix for the fourth quarter of 2013 was approximately $26.1 million compared to $26.1 million in the prior year quarter and GAAP diluted EPS for the fourth quarter of 2013 increased 19% to $0.44 compared to $0.37 in the prior year quarter.

Full Year 2013 Results for Iconix Brand Group, Inc.:

Total revenue for the full year 2013 was approximately $432.6 million, a 22% increase as compared to approximately $353.8 million for the prior year. EBITDA attributable to Iconix for 2013 was approximately $262.9 million, a 21% increase as compared to approximately $217.0 million in the prior year. Free cash flow attributable to Iconix for 2013 was approximately $229.9 million, a 27% increase over the prior year of approximately $180.5 million. On a non-GAAP basis, as defined in the tables below, net income attributable to Iconix for 2013 was approximately $142.2 million, a 17% increase as compared to approximately $122.0 million in the prior year, and non-GAAP diluted earnings per share increased 41% to $2.39 versus $1.70 for the prior year. GAAP net income attributable to Iconix for 2013 was approximately $128.0 million, a 17% increase as compared to $109.4 million in the prior year and GAAP diluted EPS for 2013 increased 39% to $2.11 compared to $1.52 in the prior year.  

EBITDA, free cash flow, non-GAAP net income and non-GAAP diluted 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, "Since converting to a licensing model in 2005, we have built a powerful global platform, delivering compounded annual growth of around 40% for both revenue and EPS. In 2013, we had another record year and continued to drive growth through the expansion of our worldwide footprint, our acquisition strategy of asset light businesses and global brands, and our ongoing commitment to share repurchases. Looking ahead, as we continue to focus on international markets and additional acquisitions, I believe we can build on our success and continue to deliver increased value to our shareholders."

2014 Guidance for Iconix Brand Group, Inc.:

The Company is maintaining its full year 2014 guidance as follows:

  • Revenue of $440-$455 million
  • Non-GAAP diluted EPS of $2.50-$2.60
  • GAAP diluted EPS of $2.19-$2.29
  • Free cash flow of $210-$217 million

This guidance relates to the Company's existing portfolio of brands and does not include any additional acquisitions. In addition, this guidance does not assume any additional share repurchases or dilution from the Company's convertible notes above the current stock price.

Other Company News:

The Company announced today that its Board of Directors has authorized a program to repurchase up to $500 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.

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), 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), ED HARDY (R), SHARPER IMAGE (R), UMBRO (R), LEE COOPER (R), ECKO UNLTD. (R), and MARC ECKO (R). In addition, Iconix owns interests in the ARTFUL DODGER (R), MATERIAL GIRL (R), PEANUTS (R), TRUTH OR DARE (R), BILLIONAIRE BOYS CLUB (R), ICE CREAM (R), MODERN AMUSEMENT (R), and BUFFALO (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: 
    Jaime Sheinheit 
    Investor Relations 
    Iconix Brand Group 
    212.730.0030

 

Condensed Consolidated Income Statements

(in thousands, except earnings per share data)



(Unaudited)




Three Months Ended Dec. 31,


Year Ended Dec. 31,


2013

2012


2013

2012







Licensing and other revenue

$ 105,264

$ 85,131


$ 432,626

$ 353,818







Selling, general and administrative expenses

47,073

39,802


175,215

138,368







Operating income

58,191

45,329


257,411

215,450







Interest and other expenses, net

21,295

11,118


68,878

43,865







Equity earnings on joint ventures

(4,541)

(6,678)


(12,129)

(10,887)







Other expenses – net

16,754

4,440


56,749

32,978







Income before income taxes

41,437

40,889


200,662

182,472







Provision for income taxes

10,643

11,869


58,075

58,963







Net income

$ 30,794

$ 29,020


$ 142,587

$ 123,509







Less: Net income attributable to non-controlling interest

4,648

2,927


14,539

14,101







Net income attributable to Iconix Brand Group, Inc.

$26,146

$26,093


$ 128,048

$ 109,408







Earnings per share:






Basic        

$  0.51

$  0.38


$  2.28

$  1.57







Diluted

$  0.44

$  0.37


$  2.11

$  1.52













Weighted average number of common shares outstanding:






Basic

51,288

67,894


56,281

69,689







Diluted

59,540

70,258


60,734

71,957

 

Selected Balance Sheet Items:

(in thousands)

 

12/31/2013

12/31/2012




Total Assets

$2,860,194

$2,481,738

Total Liabilities

$1,758,252

$1,181,898

Total Stockholders' Equity

$1,101,942

$1,299,840

 

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 and the additional incremental dilutive shares related to our convertible debt that are covered by our existing convertible note hedges.

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)






(Unaudited)


(Unaudited)


Three months ended


Year ended

Net income reconciliation

Dec. 31,

2013

Dec. 31,

2012


Dec. 31,

2013

Dec. 31,

2012

Non-GAAP net income (1)

$30,215

$28,884


$142,173

$121,990







GAAP net income

$26,146

$26,093


$128,048

$109,408







Adjustments:

    Non-cash interest related to ASC Topic 470

6,358

2,627


22,071

17,952

    Write-off of deferred financing fees (including

    original issue discount)

-

1,411


-

1,411

    Taxes related to above item

(2,289)

(1,247)


(7,946)

(6,781)

    Net

4,069

2,791


14,125

12,582







Non-GAAP net income

$30,215

$28,884


$142,173

$121,990




(Unaudited)

Three months ended


(Unaudited)

Year ended


Dec. 31,

2013

Dec. 31,

2012


Dec. 31,

2013

Dec. 31,

2012

Non-GAAP weighted average diluted shares

reconciliation






Non-GAAP weighted average diluted shares

55,819

70,258


59,390

71,957







GAAP weighted average diluted shares

59,540

70,258


60,734

71,957







Less: additional incremental dilutive shares covered by

hedges for: (2)






               2.50% Convertible Notes

(2,199)

-


(732)

-

               1.50% Convertible Notes

(1,522)

-


(612)

-

        subtotal

(3,721)

-


(1,344)

-







Non-GAAP weighted average diluted shares

55,819

70,258


59,390

71,957










(Unaudited)

Three months ended


(Unaudited)

Year ended

Diluted EPS reconciliation

Dec. 31,

2013

Dec. 31,

2012


Dec. 31,

 2013

Dec. 31,

2012

Non-GAAP  diluted EPS (1)

$0.54

$0.41


$2.39

$1.70







GAAP diluted EPS

$0.44

$0.37


$2.11

$1.52







Adjustments for non-cash interest related to ASC

470, net of tax, and incremental dilutive shares

covered by hedges

$0.10

$0.04


$0.28

$0.18







Non-GAAP  diluted EPS

$0.54

$0.41


$2.39

$1.70

 

Forecasted Diluted EPS


Year Ending

Dec. 31 2014



High

Low





Forecasted Non-GAAP  diluted EPS (1)


$2.60

$2.50





Forecasted GAAP diluted EPS


$2.29

$2.19





Adjustments for non-cash interest related to ASC 470 and

non-cash non-recurring gains and charges, net of tax, and

incremental dilutive shares covered by hedges


$0.31

$0.31

Forecasted Non-GAAP  Diluted EPS


$2.60

$2.50

 

(1)

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 and non-cash non-recurring gains and charges, 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 representative of only actual cash results.

(2)

Based on the closing stock price on December 31, 2013, and September 30, 2013, there were potential dilutive shares related to our convertible notes for GAAP purposes; however, the Company will not be responsible for issuing these shares as they are covered our convertible notes hedges.

                                                                                                                                         

EBITDA Reconciliation from Net Income





(Unaudited)


(Unaudited)


Three months ended


Year ended


Dec. 31,

2013

Dec. 31,

 2012


Dec. 31,

2013

Dec. 31,

 2012

EBITDA  (3)

$60,130

$49,970


$262,943

$216,963







Reconciliation of EBITDA:






Net Income

26,146

26,093


128,048

109,408







Add: Income taxes

10,643

11,869


58,075

58,963







Add: Net interest and other expense

21,170

10,260


67,995

41,826







Add: Depreciation and amortization of certain

intangibles

2,171

1,748


8,825

6,766

EBITDA

$60,130

$49,970


$262,943

$216,963

 

EBITDA Reconciliation from Cash Flow from Operations

(Unaudited)

Year ended


Dec. 31, 2013


Dec. 31, 2012





EBITDA (3)

$      262,943


$      216,963





Reconciliation of EBITDA:




Net cash provided by operating activities

232,789


204,434

Add / (Less):




   Cash interest expense, net

39,224


20,503

   Cash taxes

26,659


34,578

   Other

1,963


4,514

   Net income attributable to non-controlling interest

(14,539)


(14,101)

   Stock compensation expense

(20,018)


(11,491)

   Provision for doubtful accounts

(9,461)


(4,839)

   Net change in balance sheet items

6,326


(16,635)





EBITDA

$      262,943


$      216,963

 

(3)

EBITDA, a non-GAAP financial measure, represents net income before income taxes, interest, other non-operating gains and losses, 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 and is useful because it provides supplemental information to assist investors in evaluating Company's financial condition.

 

Free Cash Flow Reconciliation from Net Income


(Unaudited)

Three months ended


(Unaudited)

Year ended


Dec. 31, 2013


Dec. 31, 2012


Dec. 31, 2013


Dec. 31, 2012









Free Cash Flow (4)

$62,920


$37,869


$229,902


$180,485









Reconciliation of Free Cash Flow:








Net income

26,146


26,093


128,048


109,408

Add/(Less):








Depreciation and amortization of    

intangibles

2,171


1,748


8,825


6,766

Amortization of convertible note

7,133


3,002


24,838


20,098

Amortization of finance fees

1,918


1,796


4,816


3,263

Non-cash compensation expense

7,490


4,002


20,018


11,492

Provision for doubtful accounts

4,737


1,974


9,461


4,839

Non-cash income taxes

13,097


3,754


34,280


29,617

Other

375


(4,000)


825


(3,400)

      subtotal

36,921


12,276


103,063


72,675









Less: Capital expenditures

(147)


(500)


(1,209)


(1,598)









Free Cash Flow

$       62,920


$       37,869


$      229,902


$      180,485

 

Free Cash Flow Reconciliation from Cash Flow from Operations

(Unaudited)

Year ended


Dec. 31, 2013


Dec. 31, 2012





Free Cash Flow (4)

$      229,902


$      180,485





Reconciliation of Free Cash Flow:




Net cash provided by operating activities

232,789


204,434

Add / (Less)




   Gain on sale of securities

5,395


-

   Non-cash deferred tax items

2,864


5,232

   Net income attributable to non-controlling interest

(14,539)


(14,101)

   Capital expenditures

(1,209)


(1,598)

   Other

(1,724)


3,153

   Net change in balance sheet items

6,326


(16,635)





Free Cash Flow

$      229,902


$      180,485

 

Forecasted Free Cash Flow



Year Ending

Dec. 31, 2014



High


Low







Free Cash Flow (4)

$        217,000


$        210,000







Reconciliation of Free Cash Flow:





Net income

126,000


120,000


Add:





   Depreciation and amortization of intangibles

4,500


4,500


   Non-cash interest on convertible notes

29,500


29,500


   Amortization of finance fees

5,000


5,000


   Non-cash compensation expense

18,000


18,000


   Provision for doubtful accounts

4,500


3,500


   Non-cash income taxes

30,000


30,000


   Other

1,500


1,500


     subtotal

93,000


92,000







Less: Capital expenditures

(2,000)


(2,000)







Free Cash Flow

$        217,000


$        210,000

 

(4)

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 non-recurring gains and charges, less capital expenditures. Free Cash Flow excludes any changes in Balance Sheet items, 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 supplemental information to assist investors in evaluating the Company's financial condition.

 

 

SOURCE Iconix Brand Group, Inc.



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