Sequential Brands Group, the parent of And1, Avia and Gaiam, reported a loss of $2.2 million in the fourth quarter ended December 31. Adjusted for a change in accounting methods, sales were up 6.4 percent.

“2018 was a productive year for Sequential with strength across our portfolio of brands both with new and existing business,” said Karen Murray, CEO of Sequential Brands Group. “Moving ahead, we continue to execute against our strategy of driving organic growth, improving our cost structure and strengthening our balance sheet.”

As previously disclosed, effective January 1, 2018, the company adopted a new revenue recognition standard (“ASC 606”), which impacted the company’s reported revenue. The company adopted ASC 606 using the modified retrospective method, which means that the total amount of revenue reported for the 2017 periods has not been restated in the current financial statements. In the interest of comparability during the transition year to ASC 606, the company is providing 2018 revenue, net income and earnings per share information in accordance with both ASC 606 and the prior year’s revenue recognition rules, ASC 605.

Fourth Quarter 2018 Results:

Revenue for the fourth quarter 2018 was $48.9 million. Under ASC 605, revenue for the fourth quarter 2018 would have been $49.9 million, compared to $46.9 million in the fourth quarter 2017, a gain of 6.4 percent.

On a GAAP basis, net loss for the fourth quarter 2018 was $2.2 million or 3 cents per diluted share. Under ASC 605, GAAP net loss for the fourth quarter 2018 would have been $1.2 million or 2 cent per diluted share, compared to the net loss of $162.9 million or $2.58 per diluted share in the fourth quarter 2017. Included in the net loss for the fourth quarter 2018 was a $3.2 million expense related to a legacy litigation matter.

On a non-GAAP basis, net income for the fourth quarter 2018 was $7.8 million, or 12 cents per diluted share. Under ASC 605, non-GAAP net income for the fourth quarter 2018 would have been $9.0 million or 14 cents per diluted share, compared to $7.8 million, or 12 cents per diluted share, in the prior year period.

Adjusted EBITDA (defined under “Non-GAAP Financial Measures” below) for the fourth quarter 2018 was $25.0 million. Under ASC 605, Adjusted EBITDA for the fourth quarter 2018 would have been $26.3 million, compared to $27.4 million in the prior year quarter.

Year-to-Date 2018 Results:

Revenue for the year ended December 31, 2018 was $170.0 million. Under ASC 605, revenue for the year ended December 31, 2018 would have been $173.5 million, compared to $167.5 million in the prior year.

On a GAAP basis, net loss for the year ended December 31, 2018 was $10.5 million or 16 cents per diluted share. Under ASC 605, GAAP net loss for the year ended December 31, 2018 would have been $7.8 million or 12 cents per diluted share, compared to the net loss of $185.7 million or $2.95 per diluted share in the prior year. Included in the net loss for the year ended December 31, 2018 was a $3.2 million expense related to a legacy litigation matter, a $4.2 million expense related to a settlement with a licensee as part of a strategic shift to a direct-to-retail license with Walmart for the Avia brand and non-cash impairment charges of $17.9 million related to trademarks of two of the company’s brands.

On a non-GAAP basis, net income for the year ended December 31, 2018 was $21.2 million, or $0.33 per diluted share. Under ASC 605, non-GAAP net income for the year ended December 31, 2018 would have been $24.8 million, or $0.38 per diluted share, compared to $27.9 million, or $0.44 per diluted share, in the prior year. Non-GAAP net income for the year ended December 31, 2018 includes a $4.2 million expense as indicated above.

Adjusted EBITDA for the year ended December 31, 2018 was $91.5 million. Under ASC 605, Adjusted EBITDA for the year ended December 31, 2018 would have been $95.1 million, compared to $98.4 million in the prior year. Adjusted EBITDA for the year ended December 31, 2018 includes a $4.2 million expense as mentioned above. Excluding this expense, Adjusted EBITDA would have been $99.3 million.

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