EX-99.1 2 v130761_ex99-1.htm
 
Iconix Brand Group, Inc. Reports Earnings for the Third Quarter 2008
 
- Q3 revenue increased 29% to $55.1m and EBITDA increased 23% to $37.9m 
 
- Q3 diluted EPS of $0.30 versus $0.28 in the prior year 
 
- Q3 free cash flow of $31.5m and $91.0m for year to date 2008 
 
- 2009 Guidance: Revenue growth of approximately 7% and EPS growth of approximately 8% 
 
NEW YORK, Nov. 3 -- Iconix Brand Group, Inc. (Nasdaq: ICON - News; "Iconix" or the "Company"), today announced financial results for the third quarter ended September 30, 2008.
 
Q3 2008 results:
 
Revenue for the third quarter of 2008 increased 29% to approximately $55.1 million, as compared to approximately $42.7 million in the third quarter of 2007. EBITDA for the third quarter increased 23% to approximately $37.9 million as compared to approximately $30.8 million in the prior year quarter, and free cash flow for the quarter increased 13% to approximately $31.5 million as compared to approximately $27.9 million in the prior year quarter. Net income for the third quarter increased 8% to approximately $18.3 million, as compared to $17.0 million in the prior year quarter and GAAP diluted earnings per share increased to $0.30 versus $0.28 in the prior year quarter. EBITDA and free cash flow are non-GAAP metrics and reconciliation tables for both are attached to this press release.
 
Nine months ended September 30, 2008 results:
 
Revenue for the nine months ended September 30, 2008 increased 44% to approximately $162.5 million as compared to approximately $112.6 million in the prior year nine month period. EBITDA for the nine month period increased 31% to approximately $111.8 million as compared to approximately $85.4 million in the prior year period, and free cash flow increased 22% to approximately $91.0 million as compared to approximately $74.8 million in the prior year period. Net income for the nine month period increased 19% to approximately $53.0 million as compared to approximately $44.5 million in the prior year period and GAAP diluted earnings per share increased to $0.87 versus $0.73 in the prior year period.
 
Neil Cole, Chairman and CEO of Iconix Brand Group, Inc. commented, "Our strong performance in the third quarter demonstrates, more than ever, that our business model is extremely well suited to thrive in the current economic environment. Having a diversified portfolio of 17 iconic brands and partnerships with best in class retailers enables us to continue to deliver great results. In issuing 2009 guidance today, we are confident in our ability to grow sales and earnings next year and we are energized about our organic growth plans."
 
2008 Guidance:
 
The Company expects to achieve its 2008 guidance for revenue of $215-220 million and diluted earnings per share of $1.15-$1.20, but is now guiding towards the low-end of the ranges. Free cash flow is projected to be in excess of $120 million.
 
2009 Guidance:
 
The Company is issuing guidance for the full year 2009 of revenue in a range of $225-$235 million. The Company estimates non-GAAP diluted earnings per share to be in a range of $1.20-$1.30, excluding any non-cash interest related to the convertible debt. Free cash flow is estimated to be in a range of $114-$118 million. This guidance relates to the existing portfolio of brands only and includes no revenue assumption from acquisitions.
 
 
 
 
 
Beginning in 2009, GAAP will require the Company to record incremental non-cash interest related to our convertible debt for 2009 and 2008 for comparability purposes. The Company expects the impact of this change in accounting policy to be $0.14 for 2009 and $0.13 for 2008. See reconciliation tables below for non-GAAP metrics.
 
Other News:
 
In a separate press release, the Company announced that its Board of Directors has authorized a program to repurchase up to $75 million of its common stock.
 
Iconix Brand Group Inc. (Nasdaq: ICON - News) owns, licenses and markets a growing portfolio of consumer brands including CANDIE'S®, BONGO®, BADGLEY MISCHKA®, JOE BOXER® RAMPAGE®, MUDD®, LONDON FOG®, MOSSIMO®, OCEAN PACIFIC®, DANSKIN®, ROCAWEAR®, CANNON ®, ROYAL VELVET®, FIELDCREST®, CHARISMA®, STARTER®, and WAVERLY®. 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.
 
Contact Information:
Jaime Sheinheit
Director of Strategic Development
Iconix Brand Group
212.730.0030

Joseph Teklits
Integrated Corporate Relations
203.682.8200
 
 
 
 
 
Iconix Brand Group, Inc. and Subsidiaries
Condensed Consolidated Income Statements - (Unaudited)
(in thousands, except earnings per share data)
 
   
Three Months Ended Sept. 30,
 
Nine Months Ended Sept. 30,
 
 
 
2008
 
2007
 
 2008
 
2007
  
                   
Licensing and other
                   
revenue
  
$
55,135
  
$
42,681
  
$
162,502
  
$
112,593
  
                           
Selling, general and
                          
Administrative
                          
expenses
    
18,558
    
13,400
    
55,589
    
30,130
  
Expenses related to
                          
specific litigation
    
279
    
(39
)
  
665
    
1,055
  
                           
Operating income
    
36,298
    
29,320
    
106,248
    
81,408
  
                           
Other expenses -
                          
 net
    
8,007
    
4,719
    
24,178
    
14,254
  
                           
Income before income
                          
taxes
    
28,291
    
24,601
    
82,070
    
67,154
  
                           
Provision for income
                          
taxes
    
9,974
    
7,608
    
29,053
    
22,625
  
                           
Net income
  
$
18,317
  
$
16,993
  
$
53,017
  
$
44,529
  
                           
Earnings per share:
                          
Basic
  
$
0.32
  
$
0.30
  
$
0.92
  
$
0.79
  
                           
Diluted
  
$
0.30
  
$
0.28
  
$
0.87
  
$
0.73
  
                           
Weighted average number
                          
of common shares
                          
outstanding:
                          
Basic
    
57,841
    
56,801
    
57,662
    
56,569
  
                           
Diluted
    
61,091
    
61,380
    
61,241
    
61,289
  
 
             
Selected Balance Sheet Items:
  
 9/30/2008
  
 12/31/2007
  
 
(Unaudited)
  
 (Audited)
  
Total Assets
  
$
1,384,778
  
$
1,336,130
  
Total Liabilities
  
$
787,336
  
$
808,210
  
Stockholders' Equity
  
$
597,442
  
$
527,920
  
 
 
 
 
 
The following tables detail unaudited reconciliations from non-GAAP amounts to U.S. GAAP and effects of these items: (in thousands)
 
   
Three months ended
 
Nine months ended
 
 
 
Sept. 30,
 
Sept. 30,
 
Sept. 30,
 
Sept 30,
 
 
 
2008
 
2007
 
2008
 
2007
  
                           
EBITDA(1)
  
$
37,875
  
$
30,840
  
$
111,816
  
$
85,394
  
                           
Reconciliation of EBITDA:
                          
Net Income
    
18,317
    
16,993
    
53,017
    
44,529
  
Add: Provision for income
                          
taxes
    
9,974
    
7,608
    
29,053
    
22,625
  
Net Income before taxes
    
28,291
    
24,601
    
82,070
    
67,154
  
                           
Add: Net interest expense
    
7,579
    
4,719
    
23,750
    
14,254
  
 
                          
Add: Depreciation and
                          
amortization of certain
                          
intangibles
    
2,005
    
1,520
    
5,996
    
3,986
  
                           
EBITDA
  
$
37,875
  
$
30,840
  
$
111,816
  
$
85,394
  

(1) EBITDA, a non-GAAP financial measure, represents GAAP net income plus 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.

Free Cash Flow(2)
  
$
31,488
  
$
27,948
  
$
91,003
  
$
74,837
  
                           
Reconciliation of Free Cash Flow:
                          
                           
Net Income
    
18,317
    
16,993
    
53,017
    
44,529
  
 
                          
Add: Depreciation,
    
3,320
    
3,375
    
13,272
    
7,751
  
amortization
                          
of trademarks and
                          
finance fees, non cash
                          
compensation expense, and
                          
bad debt expense, net of gain on
                          
sale of trademarks
                          
                           
Add: Non-cash income taxes
    
9,974
    
7,608
    
28,962
    
22,625
  
Less: Capital expenditures
    
(123
)
  
(28
)
  
(4,248
)
  
(68
)
Free Cash Flow
  
$
31,488
  
$
27,948
  
$
91,003
  
$
74,837
  
 
 
 
 
 
(in thousands)
  
Year Ended Dec
Year Ended Dec
 
31, 2009
31, 2008
   
High-end
 
 
Low-end
 
 
High-end
 
 
Low-end
  
                           
Forecasted Free Cash Flow(2)
  
$
118,000
  
$
114,000
  
$
125,000
  
$
120,000
  
                           
Reconciliation of Free Cash Flow:
                          
                           
Net Income(3)
    
79,000
    
73,000
    
74,000
    
71,000
  
                           
Add: Depreciation,
    
21,000
    
21,000
    
20,000
    
18,000
  
amortization of trademarks
                          
and finance fees, non cash
                          
compensation expense, and
                          
bad debt expense, net of
                          
gain on sale of trademarks
                          
                           
Add: Non-cash income taxes
    
25,000
    
25,000
    
38,000
    
38,000
  
                           
Less: Capital expenditures
     (7,000)    
(5,000)
     (7,000)     (7,000)  
                           
Forecasted Free Cash Flow
    
$118,000
    
$114,000
    
$125,000
    
$120,000
  
 
(2) Free Cash Flow, a non-GAAP financial measure, represents net income before depreciation, amortization, non cash compensation expense, bad debt expense, net of gain on sale of trademarks, and add back the non-cash income taxes and deduct 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.

(3) The following table details unaudited reconciliations from non-GAAP amounts to U.S. GAAP based on the FASB Staff Position APB 14-1 "Accounting for Convertible Debt Instruments That May Be Settled In Cash Upon Conversion (Including Partial Cash Settlements)", which is effective for the fiscal year beginning January 1, 2009.
 
 
Net Income:
                     
                   
   
Year Ended Dec 31, 2009
 
 Year Ended Dec 31, 2008
 
 
 
High-end
 
 Low-end
 
 High-end
 
 Low-end
  
                   
Non-GAAP Net Income
    
79,000
    
73,000
    
74,000
    
71,000
  
 effective January 1, 2009
                          
 Less: Non Cash
                          
 interest
    
(8,500
)
  
(8,500
)
  
(7,900
)
  
(7,900
)
(net of tax)
                          
U.S. GAAP Net Income
                          
effective January 1, 2009
      70,500    
64,500
    
66,100
    
63,100
  
 
 
Earnings Per Share:
                     
                   
 
 
Year Ended Dec 31, 2009
  
Year Ended Dec 31, 2008
  
   
High-end
  
Low-end
  
 High-end
  
 Low-end
  
Non-GAAP EPS -
                     
 effective January 1,
                     
 2009
  
$
1.30
  
$
1.20
  
$
1.20
  
$
1.15
  
Less: Non-cash interest
    
($0.14
)
  
($0.14
)
  
($0.13
)
  
($0.13
)
U.S. GAAP EPS -
                          
 effective January 1,
                          
 2009
  
$
1.16
  
$
1.06
  
$
1.07
  
$
1.02
  

CONTACT: Jaime Sheinheit, Director of Strategic Development, Iconix Brand Group, +1-212-730-0030, or Joseph Teklits, Integrated Corporate Relations, +1-203-682-8200