Iconix Brand Group, fourth quarter licensing revenue more than doubled to approximately $26.9 million compared to approximately $12.4 million in the prior year quarter. Net income and fully diluted earnings per share as reported on the Company's income statement was approximately $8.9 million in 2006 net income versus approximately $7.5 million in 2005 and 18 cents per fully diluted share in 2006 versus 19 cents per fully diluted share in 2005.
However, in comparing net income and fully diluted earnings per share year-over-year it is important to note that in 2005 the Company was recognizing non-cash tax benefits through its income statement as compared to the fourth quarter of 2006 when the Company was fully taxed at a rate of approximately 34.5%. Therefore, comparing net income and fully diluted EPS on a tax affected basis for both periods the Company earned approximately $8.9 million in Q4 2006 versus approximately $3.7 million in Q4 2005, while fully diluted EPS for Q4 2006 was approximately 18 cents versus approximately nine cents in Q4 2005.
EBITDA for the quarter was approximately $20.2 million compared to approximately $7.9 million in the prior year quarter. Free Cash Flow for the quarter was approximately $15.0 million compared to approximately $6.3 million in the prior year quarter. EBITDA margins for the quarter increased to approximately 75% compared to approximately 64% in the prior year quarter. Reconciliation tables for non-GAAP metrics and taxes are attached to this press release.
Full Year 2006:
Licensing revenue for the full year 2006 increased to approximately $80.7 million, as compared to approximately $30.2 million in 2005. The Company reported net income of approximately $32.5 million compared to approximately $15.9 million in the prior year. The Company reported fully diluted earnings per share of $0.72 for the full year 2006 compared to $0.46 in 2005. EBITDA for 2006 was approximately $56.1 million compared to approximately $16.7 million in 2005. Free Cash Flow for 2006 was approximately $44.3 million compared to approximately $13.0 million in 2005. EBITDA margins for the full year 2006 increased to approximately 69% from approximately 55% for the full year 2005.
In a separate press release this morning the Company announced that it has entered into a definitive agreement to purchase the brand Rocawear for $204 million in cash with contingent payments of an additional $35 million of Iconix stock based on achieving certain performance thresholds over the next three to five years.
Neil Cole, Chairman and CEO of Iconix Brand Group commented, “I am pleased with our 2006 results and believe they continue to demonstrate the significant growth potential and profitability of our business model and strategy. The incremental profitability of our growth plan continues to be strong as we increased EBITDA margins year-over-year by approximately 1,400 basis points while almost tripling our revenue during the same period. Upon closing our two latest acquisitions, Danskin and Rocawear, the Company will own eleven powerful lifestyle brands and have 143 strong licensees around the world including leading retailers like Kohl's, Target, Sears Holding Corporation and Wal-Mart. I am also pleased with the way that we strengthened our balance sheet in 2006 increasing total shareholder equity from approximately $101 million at the end of 2005 to approximately $465 million and the end of 2006. Looking ahead, we are committed to realizing the full organic growth potential for all of our brands and we will continue to be acquisitive.”
Updated 2007 Guidance:
The Company is giving revenue guidance for the full year 2007 of between $150 and $160 million. The Company is updating its previously stated earnings per share guidance of 87 cents – 92 cents per fully diluted share to a new range of 96 cents – $1.00 per fully diluted share. The revised guidance assumes there will be no further acquisitions in 2007.
