Sequential Brands Inc., the parent of Heelys, Avia, And1 and several fashion brands, reported revenues, largely royalties from licensing deals, jumped 75.5 percent in the fourth quarter, to $18.6 million.
The net loss in the quarter was $3.8 million, or 10 cents a share, compared to net income of $4.1 million, or 15 cents, a year ago. The loss was caused by an extraordinary tax charge. On an adjusted non-GAAP basis, earnings were $4.5 million, or 11 cents a share, down slightly from $5.2 million, or 20 cents, in the prior year quarter. Adjusted EBITDA grew 56.3 percent to $11.1 million.
On a conference call with analysts, Yehuda Shmidman, CEO, said the sales gains were driven by organic growth by its largest brands: Avia, AND1, Ellen Tracy, and Revo.
Both Avia and AND1, acquired last year, continue to perform well at Walmart, with each brand showing strong year-over-year sales growth. Said Shmidman, “We expect to see further growth in these brands through new category expansions beyond core apparel and footwear, which we plan to announce once they arrive in store.”
Additionally, both Avia and AND1 successfully expanded distribution to the sporting goods and specialty channels and are working on international expansion.
Revo, the sunglass brand acquired last year, saw sales increases driven mostly by new product launches with its core eyewear licensee. Distribution for the brand continues to grow at Sunglass Hut in the U.S. and with the addition of several new retailers in international markets open during the year.
Shmidman noted that near the close of 2014, Sequential acquired Ful, a backpack and travel gear brand distributed widely at retailers, including Target and Costco. It acquired a majority of the brand, with the other stake control by Justin Timberlake. In tandem with the investment, a long-term license for the core categories was signed with Concept One Accessories.
Sequential’s other brands include William Rast, Caribbean Joe, DVS, The Franklin Mint, Nevados, People's Liberation and Linens 'N Things.
Looking to 2015, Shmidman said the company is seeing a “robust M&A pipeline” and continues to focus on acquiring brands with global awareness and lifestyle appeal. Said Shmidman, “In total, our goal for this year is to acquire two to three new brands.”
For the full year, sales increased to $41.8 million from $22.7 million in the prior year. Adjusted EBITDA was $24.0 million, compared to $12.3 million. For the current year, the company reiterated revenue guidance of $61 to $64 million with adjusted EBITDA of $38 to $40 million.
