Iconix Brand Group reported second-quarter revenues climbed 17 percent to $89.3 million with a slightly higher gain in earnings before special items. The company also said it increased its ownership in Zoo York to 100 percent.
On a non-GAAP basis, which excludes non-cash interest related to the company’s two convertible notes and two non-recurring items, net income was $32.3 million, a 21 percent increase over the prior year quarter. Non-GAAP diluted EPS for the second quarter was 43 cents a share compared to 36 cents in the prior year quarter.
EBITDA attributable to Iconix for the second quarter was approximately $58.1 million, an 18 percent increase over the prior year quarter. Free cash flow attributable to Iconix for the second quarter was approximately $43.4 million, an 18 percent increase over the prior year quarter. GAAP net income for the second quarter was approximately $41.5 million, up 69 percent from the prior year quarter and GAAP diluted EPS was 55 cents compared to 33 cents in the prior year quarter.
GAAP net income and GAAP diluted EPS for the second quarter and six month period ending June 30, 2011 include the following two non-recurring items; 1) a non-cash gain of approximately $21.5 million related to the company’s acquisition of the global master license of the Ed Hardy brand in which the company transitioned from a non-controlling interest to a controlling interest. This gain, which is driven by a re-measurement of the company’s initial investment in the brand, is included in interest and other (income) expense, net on the company’s unaudited condensed consolidated income statement; and 2) a $2.7 million write-off related to the unamortized financing fees and original issue discount (“OID”) associated with the company’s early repayment of the entire principal balance outstanding on its term loan facility of approximately $112.4 million. This charge also is recorded in interest and other (income) expense, net on the company’s unaudited condensed consolidated income statement.
Six months ended June 30, 2011:
Total revenue for the six months ended June 30, 2011 was approximately $181.6 million, a 23 percent increase as compared to approximately $147.7 million for the prior year period. EBITDA attributable to Iconix for the six month period increased 18 percent to approximately $116.9 million. Free cash flow for the six month period was approximately $89.4 million, a 16 percent increase over the prior year period. On a non-GAAP basis, as defined above, net income attributable to Iconix for the six month period increased 23 percent to approximately $66.1 million as compared to the prior year period and non-GAAP diluted earnings per share increased to 88 cents versus 72 cents for the prior year period. On a GAAP basis, net income attributable to Iconix increased 48 percent to approximately $73.0 million as compared to the prior year period and GAAP diluted earnings per share was 97 cents versus 66 cents for the prior year.
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, “We are pleased to report that our company achieved record results for the second quarter both on the top and bottom line. As our brands gain momentum both domestically and internationally, we continue to demonstrate the power of our business model. In addition to our strong performance in the first half of this year, we also strengthened our balance sheet and increased our ownership in two of our brands. Looking ahead, we see many growth opportunities for our portfolio and with our current capital structure we are well positioned to continue to execute on our acquisition strategy.”
2011 Guidance for Iconix Brand Group, Inc.:
The company is reaffirming its full year 2011 revenue guidance of $355-$365 million and full year 2011 non-GAAP diluted EPS guidance of $1.63-$1.68. The company is raising its GAAP diluted EPS guidance by 11 cents to a range of $1.61-$1.66 to reflect the Ed Hardy non-cash gain, write-off of unamortized financing fees and non-cash interest associated with the company’s recently issued convertible note. The company estimates that free cash flow for 2011 will be approximately $167-$172 million. This guidance relates to the existing portfolio of brands only and does not include any acquisitions.
Other company News:
The company announced today that it has entered into an agreement to increase its ownership interest in the Zoo York brand to 100 percent. The company currently owns a 51 percent controlling interest in the brand, and through the transaction will acquire the remaining 49 percent for $18 million. Since taking control of the brand in late 2009, the company partnered with Li & Fung for the core sportswear business and substantially expanded Zoo York’s distribution into large scale department stores including JC Penney and Kohl’s.
Iconix Brand Group’s stable of brands include: Candie’s , Bongo , Badgley Mischka , Joe Boxer Rampage Mudd , London Fog , Mossimo Ocean Pacific, Danskin Roca Wear, Cannon , Royal Velvet , Fieldcrest , Charisma , Starter , And Waverly . In addition, Iconix owns an interest in The Artful Dodger , Ed Hardy , Ecko , Marc Ecko , Zoo York , Material Girl And Peanuts brands.
