Sequential Brands Group Inc. reported total revenue for the first quarter ended March 31, 2017 increased 16 percent to $39.4 million, compared to $34.0 million in the prior year quarter.
On a GAAP basis, net loss for the first quarter 2017 was $1.2 million, or 2 cents a share, compared to a net loss for the first quarter 2016 of $1.1 million, or 2 cents.
Included in the first quarter 2017 was a charge of 11 cents a share, or $6.7 million related to costs associated with the departure of our former CEO. The charge included $3.2 million in severance expense and $3.5 million in non-cash stock-based compensation expense, which represents the accelerated vesting of previously granted stock awards, and was calculated based on the fair value on the stock’s grant date in April 2015 of $14.33 per share in accordance with GAAP. The fair value of the shares on the termination date was $3.95 per share, or approximately $1.1 million total. Taking this and other small items into consideration, Non-GAAP income for the first quarter 2017 was $5.9 million, or $0.09 per diluted share, compared to $2.5 million, or 4 cents per diluted share, in the prior year period. Adjusted EBITDA for the first quarter of 2017 was $23.0 million, compared to $16.7 million in the prior year quarter.
“We started the year off strong with solid results in the first quarter and several new organic growth initiatives underway,” said Karen Murray, CEO of Sequential Brands Group. “Going forward, our top priority is implementing new revenue initiatives across all of our brands, while maintaining a disciplined approach to expense management. At the same time, we are focused on taking the steps needed to improve our balance sheet.”
Financial Update
For the year ending December 31, 2017, the company is reiterating guidance of $170 million to $175 million in revenue and $98 million to $102 million of Adjusted EBITDA. The company’s GAAP net income is now expected to be $15.5 million to $18.1 million due to costs associated with the departure of the company’s CEO as mentioned above. 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.
Business Update
This morning the company announced a new multi-year agreement with QVC for the Martha Stewart brand. The partnership is expected to launch in the second half of this year and will include categories such as fashion apparel, skincare and food and beverage. The collaboration will also feature appearances on QVC by Martha Stewart and a select team of Martha’s lifestyle experts.
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.
