Iconix Brand Group Q4 and FY15 licensing revenues decline

Iconix Brand Group said that in the fourth quarter licensing revenue was approximately 94.7 million dollars, a 1 percent decline as compared to approximately 96 million dollars in the same quarter of 2014. Full year licensing revenues were approximately 379.2 million dollars, a 3 percent decline as compared to approximately 391.5 million dollars for 2014.

“Despite a challenging year in 2015, I believe our ability to continue to generate significant free cash flow speaks to the overall resilience of our business model and the ongoing strength of a diversified portfolio of global brands," said Peter Cuneo, Chairman and Interim CEO of Iconix, adding, "Looking forward, 2016 will be a year of restaging the business, but I believe with the right investments in our brands and our organization, as well as increased support to our licensing partners, we can strengthen our revenue and continue to generate strong free cash flow in the future, driving long term value for our company and our shareholders."

Q4 and FY15 result highlights

The company said that licensing revenue included approximately 2 million dollars of revenue related to acquisitions made in 2015 including the Strawberry Shortcake and Pony brands, and was negatively impacted by approximately 1.4 million dollars due to foreign currency exchange rates. Excluding the effect of acquisitions and foreign currency exchange rates, licensing revenue declined approximately 2 percent in the fourth quarter.

For the full year, licensing revenue included approximately 11.9 million dollars of revenue from acquisitions mentioned above and was negatively impacted by approximately 10.1 million dollars due to foreign currency exchange rates. In addition, licensing revenue in the comparable 2014 period included 17.1 million dollars of revenue related to the five-year renewal of the Peanuts specials with ABC. Excluding the effect of acquisitions, foreign currency exchange rates and the ABC renewal, licensing revenue increased approximately 1 percent for the year.

Adjusted EBITDA attributable to Iconix for the fourth quarter was approximately 38 million dollars, a 14 percent. On a non-GAAP basis, net income attributable to Iconix was approximately 12.3 million dollars, a 46 percent decrease as compared to the prior year quarter. Non-GAAP diluted EPS was 0.25 dollar, a 45 percent decrease. GAAP net income reflects a loss of approximately 263 million dollars, as compared to income of 17.5 million dollars in the prior year quarter, and GAAP diluted EPS reflects a loss of 5.44 dollars as compared to earnings of 0.32 dollars in the prior year quarter.

Adjusted EBITDA for the full year was approximately 172.7 million dollars, an 18 percent decline as compared to the prior year. On a non-GAAP basis, net income was approximately 66.4 million dollars, a 36 percent decline and non-GAAP diluted earnings per share was approximately 1.33 dollars, a 33 percent decline versus the prior year. GAAP net income reflects a loss of approximately 189.3 million dollars, as compared to income of 103.7 million dollars in 2014, and GAAP diluted EPS reflects a loss of 3.92 dollars, as compared to earnings of 1.81 dollars in 2014.

2016 guidance for Iconix Brand Group

The company is updating its 2016 guidance to reflect higher expenses associated with the new term loan, the impact of the sale of the Badgley Mischka brand, adjustments related to the financial restatement, transition costs relating to the hiring of the company's new Chief Executive Officer, and current trends in its portfolio.

The company expects licensing revenues to range between 370 to 390 million dollars, same as the previous year. Non-GAAP diluted EPS is expected to be between 1.15 dollars to 1.30 dollars against 1.35 dollars to 1.50 dollars and GAAP diluted EPS to range from 0.75 dollar to 0.90 dollar against 1.08 dollars to 1.23 dollars last year.