Iconix Brand Group Reports Revenue And Earnings For The Third Quarter 2012

NEW YORK, Nov. 1, 2012 /PRNewswire/ -- 

  • Q3 revenue of $86.6 million and Q3 non-GAAP diluted EPS of $0.41
  • Q3 Free Cash Flow of $43.2 million and $142.6 million for the nine month period
  • 2013 revenue guidance of $395-$405 million
  • 2013 non-GAAP diluted EPS guidance of $1.85-$1.95

Iconix Brand Group, Inc. (NASDAQ: ICON) ("Iconix" or the "Company"), today announced financial results for the third quarter ended September 30, 2012.

Q3 2012 results for Iconix Brand Group, Inc.: 

Total revenue for the third quarter of 2012 was approximately $86.6 million, as compared to approximately $92.7 million in the third quarter of 2011. EBITDA attributable to Iconix for the third quarter was approximately $51.8 million, as compared to approximately $55.3 million in the prior year quarter. Free cash flow attributable to Iconix for the third quarter was approximately $43.2 million, as compared to approximately $44.6 million in the prior year quarter. On a non-GAAP basis, as defined in the tables below, net income attributable to Iconix for the third quarter was approximately $28.7 million, as compared to approximately $30.1 million in the prior year quarter. Non-GAAP diluted EPS for the third quarter was $0.41 compared to $0.40 in the prior year quarter. GAAP net income attributable to Iconix for the third quarter was approximately $27.1 million, a 4% increase as compared to approximately $26.0 million in the prior year quarter and GAAP diluted EPS was $0.38 compared to $0.34 in the prior year quarter.  

Nine months ended September 30, 2012:

Total revenue for the nine months ended September 30, 2012 was approximately $268.7 million, as compared to approximately $274.3 million for the prior year period. EBITDA attributable to Iconix for the nine month period was approximately $167.0 million as compared to approximately $172.2 million in the prior year period. Free cash flow attributable to Iconix for the nine month period was approximately $142.6 million, a 4% increase over the prior year period. On a non-GAAP basis, as defined in the tables below, net income attributable to Iconix for the nine month period was approximately $93.1 million as compared to approximately $96.2 million in the prior year period, and non-GAAP diluted earnings per share was approximately $1.28 for the nine month period versus $1.27 for the prior year period. On a GAAP basis, net income attributable to Iconix for the nine month period was approximately $83.3 million as compared to $98.9 million in the prior year period and GAAP diluted earnings per share was $1.15 versus $1.31 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 to the respective GAAP measures are attached to this press release.

Neil Cole, Chairman and CEO of Iconix Brand Group, Inc. commented, "Over the past few weeks we have announced several exciting initiatives including the acquisition of Umbro and the launch of a new Peanuts movie that we believe position our Company for long term growth. We also remain focused on international expansion, which we now believe can grow to approximately 40% of our business. In addition, we have a strong acquisition pipeline and continue to evaluate a number of opportunities that could be actionable in the near-term.  With 29 brands in our portfolio, inclusive of Umbro, that represent over $13 billion in annual retail sales, we believe our Company is stronger than ever and we look forward to continuing to grow our business and deliver value to our shareholders."

2012 Guidance for Iconix Brand Group, Inc.:

The Company is reaffirming its full year 2012 guidance and expects to achieve the higher end of its revenue guidance of $340-$350 million. However, the Company expects its non-GAAP diluted EPS and GAAP diluted EPS to be at the low end of its guidance of $1.65 to $1.74 and $1.48-$1.57, respectively, based primarily on certain financing and acquisition related costs anticipated in the fourth quarter.  The Company is also reaffirming its 2012 free cash flow guidance of $174-$181 million.

2013 Guidance for Iconix Brand Group, Inc.:

The Company is providing the following guidance for 2013:

  • Revenue guidance of $395-$405 million
  • 2013 non-GAAP diluted EPS guidance of $1.85-$1.95
  • 2013 GAAP diluted EPS guidance of $1.75-$1.85
  • 2013 free cash flow guidance of $196-$203 million

This guidance includes the Company's planned financing and relates to the Company's existing portfolio of brands, including Umbro, and does not include any additional acquisitions.

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), 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), and SHARPER IMAGE (R).  In addition, Iconix owns interests in the ARTFUL DODGER (R), ECKO (R), MARC ECKO (R), ED HARDY (R) MATERIAL GIRL (R), PEANUTS (R), and TRUTH OR DARE 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 and market 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", "provides", "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

Unaudited Condensed Consolidated Income Statements
(in thousands, except earnings per share data)



Three Months Ended Sept. 30,


Nine Months Ended Sept. 30,


2012

2011


2012


2011








Licensing and other revenue

$ 86,590

$ 92,683


$ 268,687


$ 274,332








Selling, general and administrative expenses

33,026

33,729


98,566


97,396

Expenses related to specific litigation

-

-


-


92








Operating income

53,564

58,954


170,121


176,844








Interest and other expense, net

7,305

12,816


32,747


13,768








Equity earnings on joint ventures

(1,451)

(98)


(4,209)


(3,236)








Other expenses – net

5,854

12,718


28,538


10,532








Income before income taxes

47,710

46,236


141,583


166,312








Provision for income taxes

16,073

15,209


47,094


55,313








Net income

$ 31,637

$ 31,027


$ 94,489


$ 110,999








Less: Net income attributable to non-controlling interest

4,506

5,059


11,174


12,056








Net income attributable to Iconix Brand Group, Inc.

$27,131

$25,968


$ 83,315


$ 98,943








Earnings per share:







Basic        

$  0.40

$  0.35


$  1.19


$  1.36








Diluted

$  0.38

$  0.34


$  1.15


$  1.31















Weighted average number of common shares outstanding:







Basic

68,242

73,297


70,284


73,016








Diluted

70,517

75,746


72,521


75,520









 

Selected Balance Sheet Items:

(in thousands)

(Unaudited)

9/30/2012

12/31/2011




Total Assets

$2,028,648

$2,161,303

Total Liabilities

$727,098

$867,727

Total Stockholders' Equity

$1,301,550

$1,293,576

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.

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


Nine months ended

Net income reconciliation

Sept. 30,

2012

Sept. 30,

2011


Sept. 30,

2012

Sept. 30,

2011

Non-GAAP net income (1)

$28,741

$30,112


$93,106

$96,171







GAAP net income

$27,131

$25,968


$83,315

$98,943







Adjustments:

    Non-cash interest related to ASC Topic 470

2,628

6,396


15,325

14,493

    Non-cash gain related to investment in Ed Hardy

-

-


-

(21,465)

    Write-off of deferred financing fees (including
original issue discount)

-

-


-

2,651

    Taxes related to above items

(1,018)

(2,252)


(5,534)

1,549

    Net

1,610

4,144


9,791

(2,772)







Non-GAAP net income

$28,741

$30,112


$93,106

$96,171

 


(Unaudited)


(Unaudited)


Three months ended


Nine months ended

Diluted EPS reconciliation

Sept. 30,

2012

Sept. 30,

2011


Sept. 30,

 2012

Sept. 30,

2011

Non-GAAP  diluted EPS (1)

$0.41

$0.40


$1.28

$1.27







GAAP diluted EPS

$0.38

$0.34


$1.15

$1.31







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

$0.05


$0.14

$(0.04)







Non-GAAP  diluted EPS

$0.41*

$0.40*


$1.28*

$1.27

*May not add due to rounding.

Forecasted Diluted EPS

Year Ending
Dec. 31, 2012


Year Ending
Dec. 31, 2013


High

Low


High

Low







Non-GAAP  diluted EPS (1)

$1.74

$1.65


$1.95

$1.85







GAAP diluted EPS

$1.57

$1.48


$1.85

$1.75







Adjustments for non-cash interest related ASC 470, and

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

$0.16

$0.16


$0.10

$0.10

Non-GAAP  Diluted EPS

$1.74*

$1.65*


$1.95

$1.85

(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 and non-cash non-recurring gains and charges, 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.

*May not add due to rounding

(in thousands)


(Unaudited)


(Unaudited)


Three months ended


Nine months ended


Sept. 30,

2012

Sept. 30,  

2011


Sept. 30,

2012

Sept. 30,  

2011







EBITDA (2)

$51,791

$55,331


$166,993

$172,245







Reconciliation of EBITDA:












Net Income

27,131

25,968


83,315

98,943







Add: Income taxes

16,073

15,209


47,094

55,313







Add: Net interest expense and Ed Hardy gain

7,174

12,229


31,566

11,929







Add: Depreciation and amortization of certain
intangibles

1,413

1,925


5,018

6,060







EBITDA

$51,791

$55,331


$166,993

$172,245

(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.


(Unaudited)


(Unaudited)

(in thousands)

Three months ended


Nine months ended


Sept. 30, 2012

Sept. 30, 2011


Sept. 30, 2012   

Sept. 30, 2011







Free Cash Flow (3)

$43,240

$44,616


$142,616

$137,297







Reconciliation of Free Cash Flow:












  Net Income

27,131

25,968


83,315

98,943


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)

16,417

18,928


60,399

41,075







Less: Capital expenditures

(308)

(280)


(1,098)

(2,721)







Free Cash Flow

$43,240

$44,616


$142,616

$137,297

 



Year Ending


Year Ending

(in thousands)


Dec. 31, 2012


Dec. 31, 2013



High


Low


High


Low










Forecasted Free Cash Flow (3)


$181,000


$174,000


$203,000


$196,000










Reconciliation of Forecasted Free


















Cash Flow:










Net Income


$112,500


$105,500


$138,500


$131,000












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

non-recurring gains and

charges


71,000


71,000


68,000


68,000












Less: Capital expenditures


(2,500)


(2,500)


(3,500)


(3,000)











Forecasted Free Cash Flow


$181,000


$174,000


$203,000


$196,000

(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 non-recurring gains and charges, 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 2011 and has no impact on a full year basis.

SOURCE Iconix Brand Group, Inc.



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