ICONIX BRAND GROUP INC 
By 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: (Unaudited) 12/31/2011
(in thousands) 9/30/2012
---------
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, Sept. 30, Sept. 30, Sept. 30,
2012 2011 2012 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: 2,628 6,396 15,325 14,493
Non-cash interest related to ASC Topic 470
Non-cash gain related to investment in Ed Hardy - - - (21,465)
Write-off of deferred financing fees (including - - - 2,651
original issue discount)
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, Sept. 30, Sept. 30, Sept. 30,
2012 2011 2012 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, $0.02 $0.05 $0.14 $(0.04)
non-cash gain related to investment in Ed Hardy, and
write-off of deferred financing fees and original issue
discount, net of tax
Non-GAAP diluted EPS $0.41* $0.40* $1.28* $1.27
===== ===== ===== =====
*May not add due to rounding.
Forecasted Diluted EPS Year Ending Year Ending
Dec. 31, 2012 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 $0.16 $0.16 $0.10 $0.10
non-cash non-recurring gains and charges,
net of tax
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, Sept. 30, Sept. 30, Sept. 30,
2012 2011 2012 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 1,413 1,925 5,018 6,060
intangibles
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 16,417 18,928 60,399 41,075
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)
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, 71,000 71,000 68,000 68,000
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
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.
