Iconix Brand Group, Inc. reported that revenue for the third quarter was approximately $59.4 million, an 8% increase as compared to approximately $55.1 million in the third quarter of 2008. Third quarter 2009 revenue includes a gain of $3.7 million related to a transaction involving the sale of the Joe Boxer trademark in Canada. Excluding this gain, our third quarter 2009 revenue was $55.7 million or 6% higher than the third quarter 2008 revenue of $52.5 million, which excludes the $2.6 million gain related to the Iconix China joint venture transaction.
EBITDA for the third quarter was approximately $43.0 million, a 14% increase as compared to approximately $37.9 million in the prior year quarter. Free cash flow for the quarter was $35.4 million a 15% increase as compared to approximately $30.9 million in the prior year quarter.
On a non-GAAP basis, which excludes non-cash interest related to the adoption of the new accounting treatment for convertible debt, net income increased 23% to approximately $22.6 million, as compared to $18.3 million in the prior year quarter and diluted earnings per share for the third quarter of 2009 was $0.31 versus $0.30 in the prior year quarter. On a GAAP basis, net income increased 25% to approximately $20.5 million, as compared to $16.4 million in the prior year quarter and diluted earnings per share for the third quarter of 2009 was $0.28 versus $0.27 in the prior year quarter.
Neil Cole, Chairman and CEO of Iconix Brand Group, Inc. commented, “I believe our ability to achieve positive organic growth and record earnings despite facing some unforeseen challenges within the quarter speaks to the strength of our business model. Assuming the closing of the Ecko acquisition that we announced this morning, we will have a portfolio of 21 powerful iconic lifestyle brands that together represent close to $10 billion in annual retail sales. As I look ahead to 2010, I believe that we are as well positioned as ever and have a strong foundation from which to grow. Our model continues to generate strong cash flows and even after our latest acquisition we will still have a significant cash balance to execute acquisitions and create additional value for our shareholders.”
2009 Guidance:
The company is reiterating its recently revised revenue guidance of $215-$220 million and full year 2009 non-GAAP diluted EPS of $1.17-$1.22 and GAAP diluted EPS of $1.06-$1.11. The company estimates that free cash flow for 2009 will be approximately $123- $126 million. This guidance relates to the existing portfolio of brands only and does not include the Ecko acquisition, as the timing of the close is uncertain, nor any additional acquisitions. In addition, while the company expects to close the Ecko acquisition in the fourth quarter of 2009, any accretion related to the acquisition will be offset by the deal costs which are now expensed as incurred and not capitalized as a component of the purchase price.
2010 Guidance:
The company is issuing 2010 revenue guidance of $260-$270 million. This includes the assumption that the Ecko acquisition will close in the fourth quarter of 2009. Therefore, the 2010 royalty revenue guidance includes $42-$44 million in anticipated net royalty revenue from the consolidation of the newly formed joint venture related to the Ecko acquisition. Based on a pre-defined revenue and profit sharing calculation in the agreement the Iconix share of the gross royalties will be approximately $26 million. The company projects its 2010 non-GAAP diluted EPS to be $1.25-$1.30 and GAAP diluted EPS to be $1.13-$1.18. The company estimates that free cash flow for 2010 will be approximately $140- $145 million. This guidance relates to the existing portfolio of brands inclusive of the Ecko acquisition and assumes no additional acquisitions.
