ICONIX BRAND GROUP INC NEW YORK, Feb. 26, 2015 /PRNewswire/ --
-- 2014 revenue of $461.2 million, a 7% increase over prior year
-- 2014 diluted non GAAP EPS of $2.78, a 16% increase over prior year
-- Q4 total revenue of $112.4 million, a 7% increase over prior year
quarter
-- Q4 diluted non GAAP EPS of $0.56, a 4% increase over prior year
-- 2014 share repurchases of approximately $193 million or 5.0 million
shares
Iconix Brand Group, Inc. (NASDAQ: ICON) ("Iconix" or the "Company"), today announced financial results for the fourth quarter and year ended December 31, 2014.
In connection with the Company's evolving business model, financial reporting includes a more detailed breakdown of revenue and a new presentation of free cash flow.
Full Year 2014 Results for Iconix Brand Group, Inc.:
Total revenue for the full year 2014 was approximately $461.2 million, a 7% increase as compared to approximately $432.6 million for the prior year. Licensing revenue for 2014 was approximately $406.9 million, a 2% increase as compared to approximately $398.0 million in the prior year. Other revenue for 2014 was approximately $54.3 million, a 57% increase as compared to approximately $34.6 million in the prior year. On a non-GAAP basis, as defined in the tables below, net income attributable to Iconix for 2014 was approximately $145.5 million, a 2% increase as compared to approximately $142.2 million in the prior year, and non-GAAP diluted earnings per share was approximately $2.78 for 2014, a 16% increase versus $2.39 for the prior year. GAAP net income attributable to Iconix for 2014 was approximately $152.7 million, a 19% increase as compared to $128.0 million in the prior year, and GAAP diluted EPS for 2014 increased 26% to $2.66 as compared to $2.11 in the prior year. EBITDA attributable to Iconix for 2014 was approximately $263.8 million, as compared to approximately $262.9 million in the prior year. Free cash flow attributable to Iconix, as redefined in the tables below, was approximately $174.3 million for 2014, a 26% decrease as compared to approximately $235.5 million in the prior year. In connection with the formation of joint ventures and sale of certain trademarks the Company generated approximately $51.2 million of notes receivable in 2014 as compared to approximately $15.8 million in 2013.
Q4 2014 Results for Iconix Brand Group, Inc.:
Total revenue for the fourth quarter of 2014 was approximately $112.4 million, a 7% increase as compared to approximately $105.3 million in the fourth quarter of 2013. Licensing revenue increased 16% to approximately $102.2 million as compared to approximately $88.3 million in the prior year quarter. Other revenue was $10.3 million in the fourth quarter compared to $17.0 million in the prior year quarter. On a non-GAAP basis, as described in the tables below, net income attributable to Iconix was $28.3 million, a 6% decrease as compared to the prior year quarter of approximately $30.2 million. Non-GAAP diluted EPS for the fourth quarter of 2014 increased 4% to $0.56 as compared to $0.54 in the prior year quarter. GAAP net income attributable to Iconix for the fourth quarter of 2014 was approximately $23.9 million, a 9% decrease as compared to $26.1 million in the prior year quarter, and GAAP diluted EPS for the fourth quarter of 2014 was $0.44, as compared to $0.44 in the prior year quarter. EBITDA attributable to Iconix for the fourth quarter was approximately $50.4 million, a 16% decrease as compared to approximately $60.1 million in the prior year quarter. Free cash flow attributable to Iconix, as redefined in the tables below, for the fourth quarter was approximately $46.3 million, a 19% decrease as compared to the prior year quarter of approximately $57.4 million.
EBITDA, free cash flow, non-GAAP net income and non-GAAP diluted EPS are all non-GAAP metrics. Definitions along with reconciliation tables for, each are attached to this press release.
Neil Cole, Chairman and CEO of Iconix Brand Group, Inc. commented, "We are pleased with our performance in 2014 and are enthusiastic about our growing global brand management platform, which today includes a diversified portfolio of over 35 brands across women's, men's, home and entertainment. In 2015, we expect to achieve strong top and bottom line growth driven by steady expansion in our domestic licensing business, rapid growth in our international business both inside our joint ventures and across the territories that we control, the excitement surrounding our upcoming Peanuts movie and the benefits of our recently announced Strawberry Shortcake and PONY transactions."
2015 Guidance for Iconix Brand Group, Inc.:
-- Raising 2015 revenue guidance to $490-$510 million from $485-$500
million
-- Raising 2015 non-GAAP diluted EPS guidance to $3.00-$3.15 from
$2.90-$3.10
-- Raising 2015 GAAP diluted EPS guidance to $3.06-$3.20 from $2.82-$3.00
-- Establishing new 2015 free cash flow calculation and guidance of
$208-$218 million
This guidance relates to the Company's existing portfolio of brands, and includes the Company's recently announced PONY and Strawberry Shortcake transactions, but does not include any additional acquisitions.
See reconciliation tables below for non-GAAP metrics. Please note that, for comparative purposes, the definition of free cash flow has been updated. Please see the free cash flow reconciliation table and accompanying discussion below regarding this change. 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), 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), ED HARDY (R), TRUTH OR DARE (R), BILLIONAIRE BOYS CLUB (R), ICE CREAM (R), MODERN AMUSEMENT (R), BUFFALO (R), NICK GRAHAM (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 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
Unaudited Condensed Consolidated Income Statements
(in thousands, except earnings per share data)
Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2014 2013 2014 2013
---- ---- ---- ----
Licensing revenue $102,161 $88,265 $406,940 $398,047
Other revenue 10,251 16,999 54,303 34,579
------ ------ ------ ------
Total revenue 112,412 105,264 461,243 432,626
Selling, general and administrative expenses 62,725 47,073 205,410 175,215
------ ------ ------- -------
Operating income 49,687 58,191 255,833 257,411
Other (income)/expenses
Interest expense, net 19,745 21,295 81,590 68,878
Other income - - (37,893) -
Equity earnings on joint ventures (4,149) (4,541) (17,030) (12,129)
------ ------ ------- -------
Other expenses - net 15,596 16,754 26,667 56,749
Income before income taxes 34,091 41,437 229,166 200,662
Provision for income taxes 5,498 10,643 61,737 58,075
----- ------ ------ ------
Net income $28,593 $30,794 $167,429 $142,587
======= ======= ======== ========
Less: Net income attributable to non-controlling interest $4,723 $4,648 $14,693 $14,539
====== ====== ======= =======
Net income attributable to Iconix Brand Group, Inc. $23,870 $26,146 $152,736 $128,048
======= ======= ======== ========
Earnings per share:
Basic $0.50 $0.51 $3.15 $2.28
===== ===== ===== =====
Diluted $0.44 $0.44 $2.66 $2.11
===== ===== ===== =====
Weighted average number of common shares outstanding:
Basic 47,685 51,288 48,431 56,281
====== ====== ====== ======
Diluted 54,552 59,540 57,366 60,734
====== ====== ====== ======
Revenue by
Division
(in thousands)
Three Months Ended Dec. 31, Year Ended Dec. 31,
--------------------------- -------------------
2014 2013 2014 2013
---- ---- ---- ----
Womens $34,048 $30,080 $148,482 $138,262
Mens $32,696 $30,188 $111,693 $143,916
Home $10,504 $9,147 $43,694 $40,920
Entertainment $24,913 $18,850 $103,071 $74,949
Other $10,251 $16,999 $54,303 $34,579
------- ------- ------- -------
Total $112,412 $105,264 $461,243 $432,626
Selected Balance Sheet Items: (Unaudited)
----------
(in thousands) 12/31/2014 12/31/2013
---------- ----------
Total Assets $2,873,391 $2,864,158
Total Liabilities $1,804,630 $1,762,216
Total Stockholders' Equity and $1,068,761 $1,101,942
Mezzanine Equity
The following tables detail unaudited reconciliations from non-GAAP amounts to U.S. GAAP and include reconciliations related to ASC Topic 470 as it relates to accounting for convertible debt, incremental dilutive shares related to our convertible debt that are covered by our existing convertible note hedges, and non-cash gains related to the re-measurement of investments.
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
Dec. 31,
2014
Net income reconciliation Dec. 31, Dec. 31, Dec. 31,
2014 2013 2013
---- ---- ----
Non-GAAP net income (1) $28,337 $30,215 $145,528 $142,173
======= ======= ======== ========
GAAP net income $23,870 $26,146 $152,736 $128,048
Adjustments:
Non-cash interest related to ASC Topic 470 6,872 6,358 26,804 22,071
Non-cash gain related to investment in Iconix Latin - - (37,893) -
America
Taxes related to above items (2,405) (2,289) 3,881 (7,946)
------ ------ ----- ------
Net 4,467 4,069 (7,208) 14,125
Non-GAAP net income $28,337 $30,215 $145,528 $142,173
======= ======= ======== ========
Non-GAAP weighted average diluted shares reconciliation
-------------------------------------------------------
(Unaudited) (Unaudited)
Three months ended Year ended
------------------ ----------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2014 2013 2014 (3) 2013
---- ---- ------- ----
Non-GAAP weighted average diluted shares 50,352 55,819 52,257 59,390
====== ====== ====== ======
GAAP weighted average diluted shares 54,552 59,540 57,366 60,734
Less: additional incremental dilutive shares
covered by hedges for: (2)
2.50% Convertible Notes (1,819) (2,199) (2,209) (732)
1.50% Convertible Notes (2,381) (1,522) (2,900) (612)
------ ------ ------ ----
Subtotal (4,200) (3,721) (5,109) (1,344)
Non-GAAP weighted average diluted shares 50,352 55,819 52,257 59,390
====== ====== ====== ======
(Unaudited) (Unaudited)
Three months ended Year ended
Diluted EPS reconciliation Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2014 2013 2014 (3) 2013
--- ---- ---- ------- ----
Non-GAAP diluted EPS (1) $0.56 $0.54 $2.78 $2.39
===== ===== ===== =====
GAAP diluted EPS $0.44 $0.44 $2.66 $2.11
Adjustments for non-cash interest related to ASC $0.12 $0.10 $0.54 $0.28
470, net of tax
Non-cash gain related to investment in Iconix Latin - - ($0.42) -
America, net of tax
Non-GAAP diluted EPS $0.56 $0.54 $2.78 $2.39
===== ===== ===== =====
Forecasted Diluted EPS Year Ending
Dec. 31, 2015
--- -------------
High Low
---- ---
Forecasted Non-GAAP diluted EPS (1) $3.15 $3.00
===== =====
Forecasted GAAP diluted EPS $3.20 $3.06
Non-cash gain related to re-measurement of investment, net of tax ($0.53) ($0.53)
Adjustments for non-cash interest related to ASC 470, net of tax,
and incremental dilutive shares covered by hedges $0.48 $0.47
----- -----
Forecasted Non-GAAP Diluted EPS $3.15 $3.00
===== =====
(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 average closing stock
price for the three month and year
ended December 31, 2014 there were
potential dilutive shares related
to our convertible notes for GAAP
purposes; however, the Company
will not be responsible for
issuing a portion of these shares
as they are covered by our
convertible notes hedges.
(3) Non-GAAP diluted shares for the
year ended December 31, 2014
includes a correction to the first
quarter 2014 non-GAAP diluted
share count by 1.2 million fewer
shares related to the anti-
dilutive impact of the Company's
convertible notes hedges.
EBITDA Reconciliation from Net Income
-------------------------------------
(Unaudited) (Unaudited)
Three months ended Year ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2014 2013 2014 2013
---- ---- ---- ----
EBITDA (4) $50,358 $60,130 $263,783 $262,943
======= ======= ======== ========
Reconciliation of EBITDA:
Net Income $23,870 $26,146 $152,736 $128,048
Add: Income taxes 5,498 10,643 61,737 58,075
Add: Net interest expense and non-cash gain 19,630 21,170 43,234 67,995
related to investment in Iconix Latin America
Add: Depreciation and amortization of certain 1,360 2,171 6,076 8,825
intangibles
---
EBITDA $50,358 $60,130 $263,783 $262,943
======= ======= ======== ========
EBITDA Reconciliation from Cash Flow from Operations (Unaudited)
Year ended
--- ----------
Dec. 31, 2014 Dec. 31, 2013
------------- -------------
EBITDA (4) $263,783 $262,943
======== ========
Reconciliation of EBITDA:
Net cash provided by operating activities $162,520 $203,152
Add / (Less):
Gain from sale of trademarks and formation of joint ventures 54,303 34,579
Cash interest expense, net 46,713 39,224
Cash taxes 16,163 26,659
Other 8,705 2,220
Net income attributable to non-controlling interest (14,693) (14,539)
Stock compensation expense (18,492) (20,018)
Provision for doubtful accounts (11,127) (9,718)
Net change in balance sheet items 19,691 1,384
EBITDA $263,783 $262,943
======== ========
(4) 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 the Company's
financial condition.
Free Cash Flow Reconciliation
With respect to the redefined presentation of free cash flow, the Company's historic reported free cash flow did not account for the timing of payments. It reflected both cash from operations plus any notes the Company received in year from business initiatives such as the formation of joint ventures. The increased number of joint venture transactions in 2014 has led to an increase in the receivable component of the Company's previous free cash flow calculation. The revised free cash flow calculation includes only cash received in the period.
The tables below reflect our new presentation of free cash flow.
(Unaudited) (Unaudited)
Three months ended Year ended
------------------ ----------
(in thousands) Dec. 31, 2014 Dec. 31, 2013 Dec. 31, 2014 Dec. 31, 2013
------------- ------------- ------------- -------------
Free Cash Flow (5) $46,302 $57,426 $174,282 $235,519
======= ======= ======== ========
Reconciliation of Free Cash Flow:
Net cash provided by operating activity $38,074 $42,934 $162,520 $203,152
Less: Capital expenditures (419) (163) (1,505) (1,209)
Add: Cash received from sale of 10,185 18,505 24,915 41,866
trademarks and formation of joint ventures
Less: Distributions to non-controlling (1,538) (3,850) (11,648) (8,290)
interests
---
Free Cash Flow $46,302 $57,426 $174,282 $235,519
======= ======= ======== ========
Forecasted Free Cash Flow Year Ending
Dec. 31, 2015
-------------
High Low
---- ---
Free Cash Flow (5) $218,000 $208,000
======== ========
Reconciliation of Free Cash Flow:
Net cash provided by operating
activity $195,000 $190,000
Less: Capital expenditures (2,000) (2,000)
Add: Cash received from sale of 43,000 38,000
trademarks and formation of joint
ventures
Less: Distributions to non- (18,000) (18,000)
controlling interests
Free Cash Flow $218,000 $208,000
======== ========
(5) 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, 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. It
also provides supplemental
information to assist investors in
evaluating the Company's financial
condition and ability to pursue
opportunities that enhance
shareholder value.
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SOURCE Iconix Brand Group, Inc.
