ICONIX BRAND GROUP INC NEW YORK, Oct. 28, 2014 /PRNewswire/ --
-- Record Q3 diluted non-GAAP EPS of $0.73, a 23% increase over prior year
quarter
-- Record Q3 revenue of $113.8 million, a 6% increase over prior year
quarter
-- Raising 2014 diluted non-GAAP EPS guidance to $2.72-$2.77
-- Providing 2015 revenue guidance of $485-$500 million
-- Providing 2015 diluted non GAAP EPS guidance of $2.90-$3.10
Iconix Brand Group, Inc. (NASDAQ: ICON) ("Iconix" or the "Company"), today announced financial results for the third quarter ended September 30, 2014.
Q3 2014 Results for Iconix Brand Group, Inc.:
Total revenue for the third quarter of 2014 was approximately $113.8 million, a 6% increase as compared to approximately $107.2 million in the third quarter of 2013. On a non-GAAP basis, as described in the tables below, net income attributable to Iconix was $38.3 million, a 16% increase as compared to the prior year quarter of approximately $33.1 million. Non-GAAP diluted EPS for the third quarter of 2014 increased 23% to $0.73 compared to $0.59 in the prior year quarter. GAAP net income attributable to Iconix for the third quarter of 2014 was approximately $33.8 million, a 16% increase as compared to $29.0 million in the prior year quarter, and GAAP diluted EPS for the third quarter of 2014 was $0.58, a 15% increase compared to $0.50 in the prior year quarter. Free cash flow attributable to Iconix for the third quarter was approximately $61.8 million, a 14% increase as compared to the prior year quarter of approximately $54.3 million. EBITDA attributable to Iconix for the third quarter was approximately $65.5 million, as compared to approximately $65.6 million in the prior year quarter.
Nine months ended September 30, 2014:
Total revenue for the nine months ended September 30, 2014 was approximately $348.8 million, a 7% increase as compared to approximately $327.4 million for 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 $117.2 million, a 5% increase as compared to approximately $112.0 million in the prior year period, and non-GAAP diluted earnings per share was approximately $2.22 for the nine month period, a 20% increase versus $1.85 for the prior year period. GAAP net income attributable to Iconix for the nine month period of 2014 was approximately $128.9 million, a 26% increase as compared to $101.9 million in the prior year period, and GAAP diluted EPS for the nine month period of 2014 increased 33% to $2.21 compared to $1.67 in the prior year period. Free cash flow attributable to Iconix for the nine month period was approximately $179.8 million, an 8% increase over the prior year period of approximately $167.0 million. EBITDA attributable to Iconix for the nine month period was approximately $213.4 million, a 5% increase as compared to approximately $202.8 million in the prior year period.
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, "Our strong third quarter and year to date results reflect the continued strength of our overall portfolio and the power of our business model. With solid brand performance domestically supported by large direct-to-retail licenses, and double digit growth around the world driven by our global brands and joint ventures, we continue to execute in line with our successful track record. As we look to 2015, we expect to continue to drive positive organic growth, and with our strong balance sheet we plan to deliver additional value as we execute on our acquisition strategy and continue to opportunistically repurchase stock."
2014 Guidance for Iconix Brand Group, Inc.:
-- Maintaining 2014 revenue guidance of $455-$465 million
-- Raising 2014 non-GAAP diluted EPS guidance to $2.72-$2.77 from
$2.60-$2.70
-- Raising 2014 GAAP diluted EPS guidance to $2.61-$2.65 from $2.50-$2.60
-- Maintaining 2014 free cash flow guidance of $215-$222 million
This guidance relates to the Company's existing portfolio of brands and does not include any additional acquisitions.
2015 Guidance for Iconix Brand Group, Inc.:
The Company is initiating the following guidance for 2015
-- 2015 revenue guidance of $485-$500 million
-- 2015 non-GAAP diluted EPS guidance of $2.90-$3.10
-- 2015 GAAP diluted EPS guidance of $2.82-$3.00
-- 2015 free cash flow guidance of $220-230 million
This guidance relates to the Company's existing portfolio of brands 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.
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), BUFFALO (R) and NICK GRAHAM (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 Sept. 30, Nine Months Ended Sept. 30,
---------------------------- ---------------------------
2014 2013 2014 2013
---- ---- ---- ----
Licensing and other revenue $113,750 $107,175 $348,831 $327,362
Selling, general and administrative expenses 50,190 45,705 142,685 128,142
Operating income 63,560 61,470 206,146 199,220
Interest and other expenses, net 20,525 20,614 23,952 47,583
Equity earnings on joint ventures (4,084) (3,388) (12,881) (7,588)
Other expenses - net 16,441 17,226 11,071 39,995
------ ------ ------ ------
Income before income taxes 47,119 44,244 195,075 159,225
Provision for income taxes 9,907 13,740 56,239 47,432
----- ------ ------ ------
Net income $37,212 $30,504 $138,836 $111,793
======= ======= ======== ========
Less: Net income attributable to non-controlling
interest 3,433 1,507 9,970 9,891
===== ===== ===== =====
Net income attributable to Iconix Brand Group, Inc. $33,779 $28,997 $128,866 $101,902
======= ======= ======== ========
Earnings per share:
Basic $0.70 $0.54 $2.65 $1.76
===== ===== ===== =====
Diluted $0.58 $0.50 $2.21 $1.67
===== ===== ===== =====
Weighted average number of common shares
outstanding:
Basic 47,991 53,325 48,682 57,966
====== ====== ====== ======
Diluted 58,457 57,805 58,306 61,150
====== ====== ====== ======
Selected Balance Sheet Items: (Unaudited)
----------
(in thousands) 9/30/2014 12/31/2013
--------- ----------
Total Assets $2,848,233 $2,864,158
Total Liabilities $1,798,750 $1,762,216
Total Stockholders' Equity and Mezzanine Equity $1,049,483 $1,101,942
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 Nine months ended
Net income reconciliation Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2014 2013 2014 2013
--- ---- ---- ---- ----
Non-GAAP net income (1) $38,270 $33,089 $117,191 $111,959
======= ======= ======== ========
GAAP net income $33,779 $28,997 $128,866 $101,902
Adjustments: 6,910 6,393 19,932 15,713
Non-cash interest related to ASC Topic 470
Non-cash gain related to investment in Iconix Latin America - - (37,893) -
Taxes related to above item (2,419) (2,301) 6,286 (5,656)
------ ------ ----- ------
Net 4,491 4,092 (11,675) 10,057
Non-GAAP net income $38,270 $33,089 $117,191 $111,959
======= ======= ======== ========
Non-GAAP weighted average diluted shares reconciliation
-------------------------------------------------------
(Unaudited) (Unaudited)
Three months ended Nine months ended
------------------ -----------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2014 2013 2014 (3) 2013
---- ---- ------- ----
Non-GAAP weighted average diluted shares 52,704 56,153 52,895 60,599
====== ====== ====== ======
GAAP weighted average diluted shares 58,457 57,805 58,306 61,150
Less: additional incremental dilutive shares
covered by hedges for: (2)
2.50% Convertible Notes (2,485) (728) (2,338) (243)
1.50% Convertible Notes (3,268) (924) (3,073) (308)
------ ---- ------ ----
Subtotal (5,753) (1,652) (5,411) (551)
Non-GAAP weighted average diluted shares 52,704 56,153 52,895 60,599
====== ====== ====== ======
(Unaudited) (Unaudited)
Three months ended Nine months ended
Diluted EPS reconciliation Sept 30, Sept 30, Sept 30, Sept 30,
2014 2013 2014 (3) 2013
--- ---- ---- ------- ----
Non-GAAP diluted EPS (1) $0.73 $0.59 $2.22 $1.85
===== ===== ===== =====
GAAP diluted EPS $0.58 $0.50 $2.21 $1.67
Adjustments for non-cash interest related to ASC 470, net of tax $0.15 $0.09 $0.43 $0.18
Non-cash gain related to investment in Iconix Latin America, net of tax - - ($0.42) -
--- --- ------ ---
Non-GAAP diluted EPS $0.73 $0.59 $2.22 $1.85
===== ===== ===== =====
Forecasted Diluted EPS Year Ending Year Ending
Dec. 31, 2014 Dec. 31, 2015
--- ------------- -------------
High Low High Low
---- --- ---- ---
Forecasted Non-GAAP diluted EPS (1) $2.77 $2.72 $3.10 $2.90
===== ===== ===== =====
Forecasted GAAP diluted EPS $2.65 $2.61 $3.00 $2.82
Non-cash gain related to re-measurement of investment, net of tax ($0.43) ($0.43) ($0.52) ($0.52)
Adjustments for non-cash interest related to ASC 470, net of tax, and incremental dilutive shares covered by
hedges $0.55 $0.54 $0.62 $0.60
----- ----- ----- -----
Forecasted Non-GAAP Diluted EPS $2.77 $2.72 $3.10 $2.90
===== ===== ===== =====
(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 nine
month periods ended September 30,
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
nine month period ended September
30, 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
(in thousands)
-------------
(Unaudited) (Unaudited)
Three months ended Nine months ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2014 2014
2013 2013
---- ----
EBITDA (4) $65,497 $65,564 $213,424 $202,813
======= ======= ======== ========
Reconciliation of EBITDA:
Net Income 33,779 28,997 128,866 101,902
Add: Income taxes 9,907 13,740 56,239 47,432
Add: Net interest expense and non-cash
gain related to investment in Iconix
Latin America 20,410 20,489 23,604 46,825
Add: Depreciation and amortization of
certain intangibles 1,401 2,338 4,715 6,654
----- ----- ----- -----
EBITDA $65,497 $65,564 $213,424 $202,813
======= ======= ======== ========
EBITDA Reconciliation from Cash Flow from Operations (Unaudited)
Nine months ended
--- -----------------
Sept. 30, 2014 Sept. 30, 2013
-------------- --------------
EBITDA (4) $213,424 $202,813
======== ========
Reconciliation of EBITDA:
Net cash provided by operating activities 124,446 160,218
Add / (Less):
Cash interest expense, net 35,807 26,980
Cash taxes 24,027 32,186
Other 5,516 6,756
Net income attributable to non-controlling interest (9,970) (9,891)
Stock compensation expense (14,726) (12,528)
Provision for doubtful accounts (5,522) (4,724)
Net change in balance sheet items 53,846 3,816
EBITDA $213,424 $202,813
======== ========
(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 and
EBITDA margin provide additional
information for determining its
ability to meet future debt
service requirements, investing
Free Cash Flow Reconciliation from Net Income
---------------------------------------------
(Unaudited) (Unaudited)
Three months ended Nine months ended
------------------ -----------------
(in thousands) Sept. 30, 2014 Sept. 30, 2013 Sept. 30, 2014 Sept. 30, 2013
-------------- -------------- -------------- --------------
Free Cash Flow (5) $61,784 $54,312 $179,781 $166,982
======= ======= ======== ========
Reconciliation of Free Cash Flow:
Net Income 33,779 28,997 128,866 101,902
Add/(Less):
Depreciation and amortization of intangibles 1,401 2,338 4,715 6,654
Amortization of convertible note 7,613 7,168 22,041 17,705
Amortization of finance fees 1,286 1,171 3,997 2,898
Non-cash compensation expense 6,379 4,597 14,552 12,528
Provision for doubtful accounts 3,577 2,618 5,522 4,724
Non-cash income taxes 7,834 7,817 38,682 21,183
Non-cash gain related to investment in Iconix Latin America - - (37,893) -
Other 150 - 385 450
--- --- ---
Subtotal 28,240 25,709 52,001 66,142
Less: Capital expenditures (235) (394) (1,086) (1,062)
---- ---- ------ ------
Free Cash Flow $61,784 $54,312 $179,781 $166,982
======= ======= ======== ========
Free Cash Flow Reconciliation from Cash Flow from Operations (Unaudited)
Nine months ended
--- -----------------
Sept. 30, 2014 Sept. 30, 2013
-------------- --------------
Free Cash Flow (5) $179,781 $166,982
======== ========
Reconciliation of Free Cash Flow:
Net cash provided by operating activities 124,446 160,218
Add / (Less):
Non-cash deferred tax items 6,469 5,937
Net income attributable to non-controlling interest (9,970) (9,891)
Gain on sale of securities 125 5,395
Capital expenditures (1,086) (1,046)
Other 5,951 2,553
Net change in balance sheet items 53,846 3,816
Free Cash Flow $179,781 $166,982
======== ========
Year Ending Year Ending
----------- -----------
Forecasted Free Cash Flow Dec. 31, 2014 Dec. 31, 2015
------------------------- ------------- -------------
High Low High Low
---- --- ---- ---
Free Cash Flow $220,000 $215,000 $220,000
$230,000
========
Reconciliation of Free Cash Flow:
Net income 154,000 148,000 156,000
166,000
Add:
Depreciation and amortization of intangibles 5,000 5,000 5,800
5,800
Amortization of convertible note 29,500 29,500 31,500
31,500
Amortization of finance fees 5,000 5,000 4,700
4,700
Non-cash compensation expense 18,500 18,500 16,000
20,000
Bad debt expense 4,000 3,500 4,000
2,000
Non-cash income taxes 45,000 45,000 47,000
46,000
Non-cash non-recurring gain (38,000) (38,000) (44,000)
(44,000)
Other 1,000 1,000 - -
----- ----- --- ---
subtotal 68,000 67,000 67,000 66,000
Less: Capital expenditures (2,000) (2,000) (2,000) (1,000)
------ ------ ------ ------
Free Cash Flow $222,000 $215,000 $230,000 $220,000
======== ======== ======== ========
(5) 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.
