Sequential Brands Group Inc., the parent of Avia, And1 and Gaiam, reported a loss in the fourth quarter as revenues slumped 31.3 percent.
Other brands owned by Sequential Brands include Joe’s, Ellen Tracy, Jessica Simpson, William Rast, Heely’s, Caribbean Joe, DVS, The Franklin Mint, and SPRI.
“A transformation is underway at Sequential Brands Group. We successfully simplified our business with the divestiture of our home division, significantly reduced our overhead to drive meaningful margin improvement, and amended our lending agreements to improve our liquidity and cash flow. As we look ahead, we are focused on completing the previously announced strategic review process and best positioning our portfolio of brands for long-term growth,” said Sequential’s CEO David Conn.
Fourth Quarter 2019 Results from Continuing Operations
Total revenue from continuing operations for the fourth quarter ended December 31, 2019 was $24.2 million, compared to $35.2 million in the prior-year quarter. On a GAAP basis, loss from continuing operations for the fourth quarter 2019 was $7.9 million or 12 cents a share per diluted share compared to a loss from continuing operations for the fourth quarter 2018 of $(5.7) million or $(0.09) per diluted share. Non-GAAP net loss from continuing operations for the fourth quarter 2019 was $8.9 million, or 14 cents per diluted share, compared to non-GAAP net income from continuing operations of $2.6 million, or 5 cents per diluted share, in the fourth quarter 2018.
Adjusted EBITDA from continuing operations for the fourth quarter of 2019 was $8.0 million, compared to $17.8 million in the prior-year quarter.
Full-Year 2019 Results from Continuing Operations
Total revenue from continuing operations for the year ended December 31, 2019 was $101.6 million, compared to $127.3 million in the prior year. On a GAAP basis, loss from continuing operations for the year ended December 31, 2019 was $34.3 million or 53 cents per diluted share compared to a loss from continuing operations for the year ended December 31, 2018 of $17.5 million or 27 cents per diluted share. Included in the GAAP loss from continuing operations for the full year 2019 were non-cash impairment charges of $33.1 million for indefinite-lived intangible assets related to the trademarks for certain brands. Non-GAAP net loss from continuing operations for the year ended December 31, 2019 was $16.0 million, or 25 cents per diluted share, compared to non-GAAP net income from continuing operations of $8.1 million, or $0.13 per diluted share, in the prior year. Adjusted EBITDA from continuing operations for the year ended December 31, 2019 was $45.8 million, compared to $69.9 million in the prior year.
Discontinued Operations
On June 10, 2019, Sequential completed its previously announced sale of 100% of the issued and outstanding equity interests of Martha Stewart Living Omnimedia, Inc. (“MSLO”), a Delaware corporation and a wholly-owned subsidiary of Sequential, for approximately $166 million in cash consideration at closing, plus additional amounts in respect of pre-closing accounts receivable that are received after the closing, subject to certain adjustments, to Marquee Brands LLC. In addition, the Sequential is entitled to an earnout of up to $40 million if certain performance targets are achieved by MSLO during each of the three calendar years ending December 31, 2020, December 31, 2021 and December 31, 2022.
Sequential’s after-tax net loss from discontinued operations was $(2.9) million and $(125.1) million for the fourth quarter and year ended December 31, 2019, respectively.
Photo courtesy Sequential Brands/SPRI
