Sequential Brands Group sharply narrowed its fourth quarter while showing a 44 percent hike in revenues.

Fourth Quarter 2016 Results
Total revenue for the fourth quarter ended December 31, 2016 increased 44 percent to $45.4 million, compared to $31.4 million in the prior year quarter.  On a GAAP basis, Sequential reported a net loss of $1 million for the fourth quarter of 2016, or 2 cents per diluted share, compared to a loss of $5.7 million, or 12 cents, in the prior year quarter.  On a non-GAAP basis, Sequential reported net income for the quarter ending December 31, 2016 of $7.3 million, or 12 cents per share, compared to $11 million, or 23 cents, in the prior year quarter, which included a non cash benefit of $4.4 million or 9 cents per share related to taxes.

Adjusted EBITDA (defined in the accompanying Non-GAAP Financial Measures) for the fourth quarter of 2016 was $24.2 million, compared to $17.3 million in the prior year quarter.

“2016 was a productive year for Sequential led by positive organic growth, the completion of the integration of the Martha Stewart and Chef Emeril Lagasse brands and acquisition of the GAIAM yoga and wellness business,” said Sequential Brands Group CEO Yehuda Shmidman. “Looking ahead, despite a challenging macro retail environment, we will remain focused on growing our core business and maximizing operating efficiencies, inclusive of new revenue initiatives already underway.”

Full Year 2016 Results
Total revenue for the year ended December 31, 2016 increased 76 percent to $155.5 million, compared to $88.3 million in the prior year.  On a GAAP basis, net loss was $800,000 million for the year ended December 31, 2016, or (1 cent) per diluted share, compared to $(2.9) million, or (7 cents) per diluted share, in the prior year.  On a non-GAAP basis, net income for the year ended December 31, 2016 was $21 million, or 33 cents per diluted share, compared to $20.6 million, or 48 cents per diluted share, in the prior year.  Adjusted EBITDA for the year ended December 31, 2016 was $83.1 million, compared to $53.4 million in the prior year.  See Non-GAAP Financial Measure Reconciliation tables below for a reconciliation of GAAP to non-GAAP measures.

Financial Update
For the year ending December 31, 2017, the company is expecting $170 million to $175 million in revenue, GAAP net income of $19.3 million to $21.9 million and $98 million to $102 million of Adjusted EBITDA.  The company’s contractual guaranteed minimum royalties for 2017 are approximately $120 million.  Consistent with the company’s historical quarterly results, the company expects revenue for 2017 to be weighted to the third and fourth quarters due to seasonality in the businesses of many of the company’s licensees.

Previously, Sequential Brands expected between $175 million to $180 million in revenue, GAAP net income of $22.1 million to $25.4 million and $100 million to $105 million of Adjusted EBITDA.

Lease Update
The company signed a multi-year lease amendment for the company’s current corporate headquarters in New York City. Under the terms of the amendment, effective February 1, 2018, the company will occupy approximately 63,000 square feet. In addition, the company recently signed an agreement to sublease space in its corporate headquarters to its operating partner in the Martha & Marley Spoon meal-kit business. As a result, beginning in 2018, the company is expecting an annual cost savings of approximately $4 million in direct lease savings and related cost reductions.

Business Update
The company recently renewed the Martha Stewart brand’s multi-year agreement with Macy’s, the exclusive U.S. retailer for the Martha Stewart CollectionTM. As one of the largest home brands at Macy’s, the partnership, which launched in 2007, continues to be a success, with more than 1,000 SKUs across multiple categories.

In conjunction with this morning’s earnings release, the company also announced a new, multi-year partnership with The Michaels Companies, Inc., North America’s largest arts and crafts company. Under the new agreement, Martha Stewart Crafts will be conceived and designed by Martha Stewart and exclusively manufactured and distributed through Michaels’ premier wholesaler Darice.  The new Martha Stewart Crafts product assortment will be available at all Michaels stores and on Michaels.com beginning late 2017 with broader category distribution planned for 2018.

The company’s brands include Jessica Simpson, William Rast, Heelys, Joe’s Jeans, Martha Stewart, Chef Emeril,  Gaiam, And1, Avia, Revo, DVS and Ellen Tracy.