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8-K - FORM 8-K - ICONIX BRAND GROUP, INC.d573593d8k.htm

Exhibit 99.1

ICONIX BRAND GROUP REPORTS RECORD REVENUE AND EARNINGS FOR THE SECOND QUARTER 2013

 

   

Record Q2 revenue of $115.1 million vs. $93.6 million in prior year quarter, a 23% increase

 

   

Record Q2 non-GAAP diluted EPS of $0.72 vs. $0.45 in prior year quarter, a 60% increase

 

   

Further expanding international footprint with formation of Canada JV

 

   

Announcing new $300 million share repurchase program

 

   

Raising 2013 non-GAAP diluted EPS guidance to $2.20-$2.30

NEW YORK, New York—July 24, 2013 – Iconix Brand Group, Inc. (NASDAQ: ICON) (“Iconix” or the “Company”), today announced financial results for the second quarter ended June 30, 2013.

Q2 2013 Results for Iconix Brand Group, Inc.:

Total revenue for the second quarter of 2013 was approximately $115.1 million, a 23% increase as compared to approximately $93.6 million in the second quarter of 2012. EBITDA attributable to Iconix for the second quarter was approximately $72.7 million, a 24% increase as compared to $58.4 million in the prior year quarter. Free cash flow attributable to Iconix for the second quarter was approximately $60.8 million, a 17% increase as compared to the prior year quarter of approximately $51.9 million. On a non-GAAP basis, as defined in the tables below, net income attributable to Iconix was $42.7 million, a 32% increase as compared to the prior year quarter of approximately $32.4 million. Non-GAAP diluted EPS for the second quarter of 2013 increased 60% to $0.72 compared to $0.45 in the prior year quarter. GAAP net income attributable to Iconix for the second quarter of 2013 was approximately $38.7 million, a 35% increase as compared to $28.6 million in the prior year quarter and GAAP diluted EPS for the second quarter of 2013 increased 65% to $0.66 compared to $0.40 in the prior year quarter.

Six months ended June 30, 2013:

Total revenue for the six months ended June 30, 2013 was approximately $220.2 million, a 21% increase as compared to approximately $182.1 million for the prior year period. EBITDA attributable to Iconix for the six month period was approximately $137.2 million, a 19% increase as compared to approximately $115.2 million in the prior year period. Free cash flow attributable to Iconix for the six month period was approximately $112.7 million, a 13% increase over the prior year period of approximately $99.4 million. On a non-GAAP basis, as defined in the tables below, net income attributable to Iconix for the six month period was approximately $78.9 million, a 23% increase as compared to approximately $64.4 million in the prior year period, and non-GAAP diluted earnings per share was approximately $1.25 for the six month period, a 42% increase versus $0.88 for the prior year period. GAAP net income attributable to Iconix for the six month period of 2013 was approximately $72.9 million, a 30% increase as compared to $56.2 million in the prior year period and GAAP diluted EPS for the six month period of 2013 increased 53% to $1.16 compared to $0.76 in the prior year period.

Included in the second quarter and year-to-date results ended June 30, 2013, is the formation of a new joint venture in Canada, which contributed approximately $9.8 million to revenue. Similarly, the second quarter of 2012 included the formation of a joint venture in India, which contributed approximately $5.6 million to revenue in the prior year quarter. In addition, in the second quarter of 2013, the Company received $5.4 million in cash related to its previously written-off auction rate securities, which is included in interest and other expenses, net. On a full year basis, this will be offset by incremental interest expense of approximately $7 million related to the $275 million securitization transaction the Company completed in the second quarter of 2013.

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, “With record performance in the second quarter, we made progress on our growth initiatives driving over 20% revenue growth and 60% EPS growth. We believe the performance we have achieved year-to-date and over the past several years demonstrates the power of our business model, and over the next few years we expect to see additional growth as we continue to build our existing brands around the world and further leverage our strong balance sheet and free cash flow to add iconic brands to our portfolio and continue to enhance shareholder value through opportunistic share repurchases.”

2013 Guidance for Iconix Brand Group, Inc.:

 

   

The Company is maintaining its 2013 revenue guidance of $425-$435 million

 

   

The Company is raising its 2013 non-GAAP diluted EPS guidance to $2.20-$2.30 from $2.10-$2.20

 

   

The Company is raising its 2013 GAAP diluted EPS guidance to $1.97-$2.07 from $1.87-$1.97

 

   

The Company is maintaining its free cash flow guidance of $203-$210 million.

This guidance relates to the Company’s existing portfolio of brands and does not include any additional acquisitions.


Other Company News:

The Company announced today that its Board of Directors has authorized a new program to repurchase up to $300 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.

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), ECKO (R), MARC ECKO (R), UMBRO (R) and LEE COOPER (R). In addition, Iconix owns interests in the ED HARDY (R), 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


Unaudited Condensed Consolidated Income Statements

(in thousands, except earnings per share data)

 

     Three Months Ended June 30,     Six Months Ended June 30,  
     2013     2012     2013     2012  

Licensing and other revenue

   $ 115,125      $ 93,646      $ 220,187      $ 182,097   

Selling, general and administrative expenses

     43,611        34,641        82,437        65,540   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     71,514        59,005        137,750        116,557   

Interest and other expenses, net

     13,102        12,314        26,969        25,442   

Equity earnings on joint ventures

     (2,264     (1,460     (4,200     (2,758
  

 

 

   

 

 

   

 

 

   

 

 

 

Other expenses – net

     10,838        10,854        22,769        22,684   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     60,676        48,151        114,981        93,873   

Provision for income taxes

     18,661        16,178        33,692        31,021   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 42,015      $ 31,973      $ 81,289      $ 62,852   
  

 

 

   

 

 

   

 

 

   

 

 

 

Less: Net income attributable to non-controlling interest

     3,299        3,388        8,384        6,668   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Iconix Brand Group, Inc.

   $ 38,716      $ 28,585      $ 72,905      $ 56,184   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

        

Basic

   $ 0.69      $ 0.41      $ 1.21      $ 0.79   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.66      $ 0.40      $ 1.16      $ 0.76   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding:

        

Basic

     56,405        70,085        60,316        71,317   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     58,994        72,216        62,853        73,534   
  

 

 

   

 

 

   

 

 

   

 

 

 

Selected Balance Sheet Items:

 

      (Unaudited)         
(in thousands)    6/30/2013      12/31/2012  

Total Assets

   $ 2,896,325       $ 2,481,738   

Total Liabilities

   $ 1,743,742       $ 1,181,898   

Total Stockholders’ Equity

   $ 1,152,583       $ 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.

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     Six months ended  
      June 30,
2013
    June 30,
2012
    June 30,
2013
    June 30,
2012
 

Net income reconciliation

        

Non-GAAP net income (1)

   $ 42,651      $ 32,427      $ 78,870      $ 64,364   
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP net income

   $ 38,716      $ 28,585      $ 72,905      $ 56,184   

Adjustments:

        

Non-cash interest related to ASC Topic 470

     6,148        6,025        9,320        12,697   

Taxes related to above item

     (2,213     (2,183     (3,355     (4,517
  

 

 

   

 

 

   

 

 

   

 

 

 

Net

     3,935        3,842        5,965        8,180   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 42,651      $ 32,427      $ 78,870      $ 64,364   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

     (Unaudited)      (Unaudited)  
     Three months ended      Six months ended  
     June 30,
2013
     June 30,
2012
     June 30,
2013
     June 30,
2012
 

Diluted EPS reconciliation

           

Non-GAAP diluted EPS (1)

   $ 0.72       $ 0.45       $ 1.25       $ 0.88   
  

 

 

    

 

 

    

 

 

    

 

 

 

GAAP diluted EPS

   $ 0.66       $ 0.40       $ 1.16       $ 0.76   

Adjustments for non-cash interest related to ASC 470, net of tax

   $ 0.06       $ 0.05       $ 0.09       $ 0.11   
  

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP diluted EPS

   $ 0.72       $ 0.45       $ 1.25       $ 0.88
  

 

 

    

 

 

    

 

 

    

 

 

 

 

* May not add due to rounding

 

     Year Ending
Dec. 31 2013
 
     High      Low  

Forecasted Diluted EPS

     

Forecasted Non-GAAP diluted EPS (1)

   $ 2.30       $ 2.20   
  

 

 

    

 

 

 

Forecasted GAAP diluted EPS

   $ 2.07       $ 1.97   

Adjustments for non-cash interest related to ASC 470 and non-cash non-recurring gains and charges, net of tax

   $ 0.23       $ 0.23   
  

 

 

    

 

 

 

Forecasted Non-GAAP Diluted EPS

   $ 2.30       $ 2.20   
  

 

 

    

 

 

 

 

(1) Non-GAAP net income and non-GAAP diluted EPS 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. The Company believes these are useful financial measures in evaluating its financial condition because they are representative of only actual cash results.


(in thousands)

 

     (Unaudited)      (Unaudited)  
     Three months ended      Six months ended  
     June 30,
2013
     June 30,
2012
     June 30,
2013
     June 30,
2012
 

EBITDA (2)

   $ 72,651       $ 58,430       $ 137,249       $ 115,202   
  

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliation of EBITDA:

           

Net Income

     38,716         28,585         72,905         56,184   

Add: Income taxes

     18,661         16,178         33,692         31,021   

Add: Net interest and other expense

     13,043         11,797         26,336         24,392   

Add: Depreciation and amortization of certain intangibles

     2,231         1,870         4,316         3,605   
  

 

 

    

 

 

    

 

 

    

 

 

 

EBITDA

   $ 72,651       $ 58,430       $ 137,249       $ 115,202   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(2) 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.

 

     (Unaudited)     (Unaudited)  
     Three months ended     Six months ended  
(in thousands)    June 30,
2013
    June 30,
2012
    June 30,
2013
    June 30,
2012
 

Free Cash Flow (3)

   $ 60,849      $ 51,929      $ 112,669      $ 99,376   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Free Cash Flow:

        

Net Income

     38,716        28,585        72,905        56,184   

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 and net equity earnings from certain joint ventures.

     22,684        23,897        40,432        43,982   

Less: Capital expenditures

     (551     (553     (668     (790
  

 

 

   

 

 

   

 

 

   

 

 

 

Free Cash Flow

   $ 60,849      $ 51,929      $ 112,669      $ 99,376   
  

 

 

   

 

 

   

 

 

   

 

 

 


(in thousands)    Year Ending
Dec. 31, 2013
 
   High     Low  

Forecasted Free Cash Flow (3)

   $ 210,000      $ 203,000   
  

 

 

   

 

 

 

Reconciliation of Forecasted Free

    

Cash Flow:

    

Net Income

   $ 125,000      $ 118,000   

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

     88,000        88,000   

Less: Capital expenditures

     (3,000     (3,000
  

 

 

   

 

 

 

Forecasted Free Cash Flow

   $ 210,000      $ 203,000   
  

 

 

   

 

 

 

 

(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.