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Iconix Brand Group Reports Record Revenue and Earnings for the Second Quarter 2010

- Q2 total revenue of $76.0 million, a 35% increase over the prior year quarter
- Q2 non-GAAP Iconix net income of $26.7 million, a 25% increase over the prior year
- Q2 diluted non-GAAP Iconix EPS of $0.36 compared to $0.33 in the prior year quarter
- Q2 free cash flow of $44.3 million, a 26% increase over the prior year quarter

NEW YORK, July 27, 2010 /PRNewswire via COMTEX/ --

Iconix Brand Group, Inc. (Nasdaq: ICON) ("Iconix" or the "Company"), today announced financial results for the second quarter ended June 30, 2010.

Q2 2010 results for Iconix Brand Group, Inc:

Total revenue for the second quarter of 2010 was approximately $76.0 million, a 35% increase as compared to approximately $56.4 million in the second quarter of 2009. EBITDA attributable to Iconix for the second quarter was approximately $49.4 million, an 18% increase as compared to approximately $41.8 million in the prior year quarter. Free cash flow for the quarter was $44.3 million, a 26% increase as compared to approximately $35.1 million in the prior year quarter. On a non-GAAP basis, which excludes non-cash interest related to the Company's convertible debt, net income attributable to Iconix increased 25% to approximately $26.7 million, as compared to $21.3 million in the prior year quarter and diluted earnings per share, or EPS, for the second quarter of 2010 was $0.36 versus $0.33 in the prior year quarter. On a GAAP basis, net income attributable to Iconix increased 27% to approximately $24.5 million, as compared to approximately $19.3 million in the prior year quarter and GAAP diluted earnings per share for the second quarter of 2010 was $0.33 versus $0.30 in the prior year quarter.

Six months ended June 30, 2010

Total revenue for the six months ended June 30, 2010 was approximately $147.7 million, a 38% increase as compared to approximately $106.9 million in the prior year period. EBITDA attributable to Iconix for the six month period was approximately $98.9 million, a 26% increase as compared to approximately $78.2 million in the prior year period, and free cash flow was approximately $84.4 million, a 30% increase as compared to approximately $64.9 million in the prior year period. On a non-GAAP basis, as defined above, net income attributable to Iconix for the six month period increased 38% to approximately $53.7 million, as compared to $38.9 million in the prior year and non-GAAP diluted earnings per share increased to $0.72 versus $0.62 in the prior year. On a GAAP basis, net income attributable to Iconix increased 41% to approximately $49.3 million, as compared to approximately $34.9 million in the prior year period and GAAP diluted earnings per share was $0.66 versus $0.56 in the prior year period.

EBITDA, free cash flow, non-GAAP net income and non-GAAP 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, "As we deliver a record second quarter for our Company, we believe the advantages of our business model and strength of our brands are evident. Our direct-to-retail model has proven to be very powerful and was a key driver of our organic growth this quarter with the majority of DTR brands posting double digit retail sales gains. We are excited about our new Peanuts platform and the worldwide access it gives us in over 40 countries. As we leverage our global platform, expand into new categories, launch new programs with major retailers, and continue to add iconic global lifestyle brands to our portfolio we believe our Company is well positioned to continue to deliver strong profitable growth."

2010 Guidance for Iconix Brand Group, Inc:

The Company is reiterating its full year 2010 revenue guidance of $305-$315 million, its 2010 non-GAAP diluted EPS guidance of $1.35-$1.40, and its GAAP diluted EPS guidance of $1.23-$1.28. The Company expects to continue to generate strong free cash flow for 2010 of approximately $150- $155 million. This guidance relates to the existing portfolio of brands only 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. (Nasdaq: ICON) 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), LONDON FOG(R), MOSSIMO(R), OCEAN PACIFIC(R), DANSKIN(R), ROCAWEAR(R), CANNON(R), ROYAL VELVET(R), FIELDCREST(R), CHARISMA(R), STARTER(R) and WAVERLY(R). In addition, Iconix owns an interest in the ARTFUL DODGER(R), ED HARDY(R), ECKO(R), MARC ECKO(R), ZOO YORK(R), MATERIAL GIRL(TM), and PEANUTS(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 around the world. Iconix, through its in-house advertising, promotion and public relations agency, markets its brands to continually 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", "expect", "confident", "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.

    Condensed Consolidated Income Statements
    (in thousands, except earnings per share data)


                               (Unaudited)                 (Unaudited)
                               -----------                 -----------
                          Three Months Ended June      Six Months Ended June
                                    30,                       30,
                        ------------------------    ----------------------
                            2010        2009          2010            2009
                            ----        ----          ----            ----



    Licensing and
     other revenue       $76,013     $56,408      $147,717        $106,909

    Selling, general
     and
     administrative
     expenses             26,369      17,368        48,687          33,638
    Expenses related
     to specific
     litigation              201          83           207             137
                             ---         ---           ---             ---

    Operating income      49,443      38,957        98,823          73,134

      Interest expense,
       net                 9,948       9,539        19,923          19,374

      Equity earnings
       on joint
       ventures           (1,104)       (770)       (2,217)           (807)
                          ------        ----        ------            ----

      Other expenses -
       net                 8,844       8,769        17,706          18,567

    Income before
     income taxes         40,599      30,188        81,117          54,567
                          ------      ------        ------          ------

    Provision for
     income taxes         14,480      10,897        28,544          19,627
                          ------      ------        ------          ------

    Net income           $26,119     $19,291       $52,573         $34,940
                         =======     =======       =======         =======

    Net income
     attributable to
     non-controlling
     interest              1,578           -         3,258               -

    Net income
     attributable to
     Iconix Brand
     Group, Inc.         $24,541     $19,291       $49,315         $34,940
                         =======     =======       =======         =======

    Earnings per
     share:
                Basic      $0.34       $0.31         $0.69           $0.58
                           =====       =====         =====           =====

                Diluted    $0.33       $0.30         $0.66           $0.56
                           =====       =====         =====           =====


    Weighted average
     number of common
     shares
     outstanding:
                Basic     72,169      62,467        71,855          60,044
                          ======      ======        ======          ======

                Diluted   74,749      65,060        74,589          62,765
                          ======      ======        ======          ======



    Selected Balance Sheet
     Items:                       (Unaudited)   12/31/2009
    (in thousands)                  6/30/2010   ----------
                                    ---------

    Total Assets                   $1,882,810   $1,802,613
    Total Liabilities                $811,819     $832,841
    Stockholders' Equity           $1,070,991     $969,772


The following tables detail unaudited reconciliations from non-GAAP amounts to U.S. GAAP relating to the adoption of FASB Staff Position No. APB 14-1 "Accounting for Convertible Debt Instruments That May Be Settled In Cash Upon Conversion (Including Partial Cash Settlements)" (ASC Topic 470) ("FSP APB 14-1"), which became effective retroactively for the fiscal years beginning after December 15, 2008.

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
                           ------------------          ----------------

    Net income
     reconciliation      June 30,     June 30,   June 30,     June 30,
    ---------------           2010         2009       2010         2009
                              ----         ----       ----         ----
    Non-GAAP Net Income
     (1)                   $26,692      $21,280    $53,657      $38,868
                           =======      =======    =======      =======

    GAAP Net income        $24,541      $19,291    $49,315      $34,940

    Add: Non-cash
     interest related to
     FSP APB 14-1            3,347        3,099      6,700        6,116
    Deduct: Income taxes
     related to non-cash
     interest               (1,196)      (1,110)    (2,358)      (2,188)
                            ------       ------     ------       ------
        Net                  2,151        1,989      4,342        3,928


    Non-GAAP Net Income    $26,692      $21,280    $53,657      $38,868
                           =======      =======    =======      =======



                                          (Unaudited)         (Unaudited)
                                      Three months ended   Six months ended
    Diluted EPS reconciliation        June 30, June 30, June 30,  June 30,
    --------------------------             2010       2009   2010      2009
                                           ----       ----   ----      ----
    Non-GAAP  Diluted EPS (1)             $0.36      $0.33  $0.72     $0.62
                                          =====      =====  =====     =====

    GAAP Diluted EPS                      $0.33      $0.30  $0.66     $0.56

    Add: Non-cash interest related to
     FSP APB 14-1, net of tax             $0.03      $0.03  $0.06     $0.06
                                          -----      -----  -----     -----

    Non-GAAP  Diluted EPS                 $0.36      $0.33  $0.72     $0.62
                                          =====      =====  =====     =====



    Forecasted Diluted EPS                  Year Ending   Year Ended
    ----------------------                     12/31/2010 12/31/2009
                                               ---------- ----------
                                           High     Low   Actual
                                           ----     ---   ------

    Non-GAAP  Diluted EPS (1)             $1.40   $1.35      $1.22
                                          =====   =====      =====


    GAAP Diluted EPS                      $1.28   $1.23      $1.10

    Add: Non-cash interest related to FSP
     APB 14-1, net of tax                 $0.12   $0.12      $0.12
                                          -----   -----      -----
    Non-GAAP Diluted EPS                  $1.40   $1.35      $1.22
                                          =====   =====      =====



    (1) Non-GAAP Net Income and EPS, are non-GAAP financial measures,
    which represent
    net income excluding any non-cash interest, net of tax, relating to
    the adoption of FSP
    APB 14-1.  The Company believes these are useful financial measures
    in evaluating its
    financial condition because they are representative of only actual
    cash interest paid on
    outstanding debt.

    (in thousands)

                          (Unaudited)         (Unaudited)
                              Three
                             months           Six months
                              ended              ended

                          June     June            June       June
                           30,      30,            30,         30,
                           2010      2009             2010      2009
                           ----       ---             ----      ----
    EBITDA  (2)         $49,403   $41,839          $98,850   $78,176


    Reconciliation of
     EBITDA:
    Net Income           24,541    19,291           49,315    34,940

    Add: Income taxes
     attributable to
     Iconix Brand
     Group, Inc.         13,631    10,897           26,790    19,627

    Add: Net interest
     expense              9,231     9,539           18,476    19,374

    Add: Depreciation
     and amortization
     of certain
     intangibles          2,000     2,112            4,269     4,235
                          -----     -----            -----     -----
    EBITDA              $49,403   $41,839          $98,850   $78,176
                        =======   =======          =======   =======



    (2) EBITDA, a non-GAAP financial measure, represents income from
    operations before income taxes,
    interest, 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            Six months
                                  ended               ended
                                 ------            -----------
                              June      June         June      June
                               30,       30,         30,        30,
    (in thousands)            2010      2009         2010      2009
                             -----     -----        -----     -----

    Free Cash Flow (3)      $44,321   $35,071      $84,381   $64,937
                            =======   =======      =======   =======

    Reconciliation of
     Free Cash Flow:
      Net Income             24,541    19,291       49,315    34,940
      Add: Non-cash
       income taxes, non-
       cash interest         20,405    15,789       35,715    30,017
      related to
       convertible debt,
       depreciation,

      amortization of
       trademarks and
       finance fees, non-
      cash compensation
       expense, bad debt
       expense,
      net equity earnings
       from certain joint
       ventures and
      non-cash gain/
       loss from sale of
       trademarks
      Less: Capital
       expenditures            (625)       (9)        (649)      (20)
                               ----       ---         ----       ---

    Free Cash Flow          $44,321   $35,071      $84,381   $64,937
                            =======   =======      =======   =======



    (in thousands)                                      Year Ending
                                                        Dec 31, 2010
                                                        ------------
                                                     High         Low
                                                     ----         ---
    Forecasted Free Cash Flow (3)                   $155,000    $150,000
                                                    ========    ========

    Reconciliation of Free Cash Flow:
      Net Income                                     $95,000     $90,000
    Add: Non-cash income taxes, non-cash interest     63,000      63,000
    related to convertible debt, depreciation,
     amortization
    of trademarks and finance fees, non-cash
    compensation expense, bad debt expense, net
    equity earnings from certain joint ventures and
     non-cash gain/loss from sale of trademarks
      Less: Capital expenditures                      (3,000)     (3,000)
                                                      ------      ------

    Forecasted Free Cash Flow                       $155,000    $150,000
                                                    ========    ========



    (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
    gains/loss from sale of trademarks, and 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.

SOURCE Iconix Brand Group, Inc.