ICONIX BRAND GROUP INC 
By 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: 12/31/2012
(in thousands) 12/31/2013
------------- ----------
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
Dec. 31,
2013
Net income reconciliation Dec. 31, Dec. 31, Dec. 31,
2013 2012 2012
--- ---- ---- ----
$142,173
Non-GAAP net income (1) $30,215 $28,884 $121,990
======= ======= ========
GAAP net income $26,146 $26,093 $128,048 $109,408
Adjustments: 6,358 2,627 22,071 17,952
Non-cash interest related to ASC Topic 470
Write-off of deferred financing fees (including - 1,411 - 1,411
original issue discount)
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) (Unaudited)
Three months ended Year ended
------------------ ----------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2013 2012 2013 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) (Unaudited)
Three months ended Year ended
Diluted EPS reconciliation Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2013 2012 2013 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 $0.10 $0.04 $0.28 $0.18
470, net of tax, and incremental dilutive shares
covered by hedges
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 $0.31 $0.31
non-cash non-recurring gains and charges, net of tax, and
incremental dilutive shares covered by hedges
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, Dec. 31, Dec. 31, Dec. 31,
2013 2012 2013 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 2,171 1,748 8,825 6,766
intangibles
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) (Unaudited)
Three months ended 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 2,171 1,748 8,825 6,766
intangibles
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.
