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Iconix Brand Group, Inc. (ICON)

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Previous Close1.4300
Open1.4300
Bid1.4800 x 800
Ask1.5500 x 28000
Day's Range1.3954 - 1.5300
52 Week Range0.5100 - 1.9200
Volume193,813
Avg. Volume999,200
Market Cap20.157M
Beta (5Y Monthly)2.39
PE Ratio (TTM)N/A
EPS (TTM)-7.3830
Earnings DateMar 29, 2021 - Apr 02, 2021
Forward Dividend & YieldN/A (N/A)
Ex-Dividend DateN/A
1y Target EstN/A
  • GlobeNewswire

    Iconix Reports Financial Results for the Third Quarter 2020

    * Total revenue of $24.5 million compared to $35.5 million in the prior year quarter. * GAAP Operating Income $66.4 million as compared to a loss of $8.1 million in the prior year quarter. * Adjusted EBITDA of $13.7 million, compared to $20.9 million in the prior year quarter. * Continued to improve cost structure, decreasing SG&A expenses by $16.4 million from prior year quarter. * Completed Sale of Starter China in September 2020 with net proceeds of $15.6 million and in October repaid $11.7 million of Senior Secured Term Loan.NEW YORK, Nov. 16, 2020 (GLOBE NEWSWIRE) -- Iconix Brand Group, Inc. (Nasdaq: ICON) ("Iconix" or the "Company") today reported financial results for the third quarter ended September 30, 2020.Bob Galvin, CEO commented, “As we continue to navigate through the pandemic and the resulting economic conditions, the well-being of our employees, licensees and communities remains at the forefront. Despite COVID-19, we continued to expand our business, including a successful launch of Umbro products in Walmart. We have remained focused on building our pipeline of future business, as a result, we have signed 148 deals during 2020 for aggregate guaranteed minimum royalties of approximately $90 million. Moving forward, we will remain flexible to respond to changes in the economic and retail environments.”Third Quarter 2020 Financial ResultsGAAP Revenue by Segment (000’s)  For the Three Months Ended September 30, For the Nine Months Ended September 30,    2020  2019  2020  2019 Licensing revenue:         Women's $5,919 $10,317 $16,805 $26,855 Men's  5,705  7,942  15,419  25,491 Home  3,487  3,430  10,436  11,205 International  9,351  13,782  32,028  42,255   $24,462 $35,471 $74,688 $105,806 For the third quarter of 2020, total revenue was $24.5 million, a 31% decline, compared to $35.5 million in the third quarter of 2019. Revenue across all segments was primarily negatively impacted by the effects of the COVID-19 pandemic on the global economy. The 43% decrease in revenue in our Women’s segment was principally as a result of a decrease in licensing revenue from our Mudd and Joe Boxer brands. Revenue from the Men’s segment decreased 28% mainly due to a decrease in licensing revenue from our Buffalo and Umbro brands. Sales in our Home segment improved by 2% principally due to an increase in licensing revenue from our Charisma brand. Our International segment revenue declined 32% mainly due to decreases in Latin America and Europe.SG&A Expenses: Total SG&A expenses in the third quarter of 2020 were $9.9 million, a 62% decline compared to $26.3 million in the third quarter of 2019. The decline for the quarter was primarily driven by a decrease in professional fees, advertising costs and compensation expense.Gain on Sale of Trademarks Gain on sale of trademarks reflect the $59.6 million gain of the sale of 100% of our interest in Umbro China Ltd., and $14.5 million gain on sale of Starter China Ltd., each completed during the third quarter of 2020.Trademark and Investment Impairment: In the third quarter of 2020, the Company recorded a non-cash trademark impairment charge of $4.8 million. The charge for the third quarter of 2020 was based on the impact of the COVID-19 pandemic on current and estimated future cash flows on the fair value of the Pony and Hydraulic indefinite-lived trademarks. The Company recorded investment impairments of $17.1 million in the third quarter of 2020 as a result of from exiting our Ecko Mark/Ecko joint venture in China and a reduction in the fair value of our Candies joint venture in China. The Company recorded investment impairment in the third quarter of 2019 of $17.0 million related to the sale of its equity investment in Marcy Media.Operating Income and Adjusted EBITDA (1):Adjusted EBITDA is a non-GAAP metric, and a reconciliation table is included below.Operating income for the third quarter of 2020 was $66.4 million, as compared to operating loss of $8.1 million for the third quarter of 2019.  The third quarter 2020 results include $22.0 million of charges related to impairments and $74.1 million in gains on sale of trademarks. Adjusted EBITDA in the third quarter of 2020 was $13.7 million, which represents operating income of $66.4 million excluding net adjustments of $52.7 million. Adjusted EBITDA in the third quarter of 2019 was $20.9 million, which represents operating loss of $8.1 million excluding net charges of $29.0 million. The change period over period in Adjusted EBITDA is primarily as a result of reduced revenue largely driven by the impact of COVID-19 on our business, somewhat offset by reduced expenses driven by the Company’s cost reduction initiative. Refer to footnote 1 below for a full detailed reconciliation of operating income to Adjusted EBITDA.      Note: All items in the following tables are attributable to the Company’s interest in its subsidiaries and joint ventures, as applicable, and exclude the results related to any non-controlling interest in such entities. Certain numbers may not add due to rounding.Adjusted EBITDA by Segment (1)For the Three Months Ended September 30,   For the Nine Months Ended September 30,  (000's)2020 2019 % Change   2020 2019 % Change                        Women's$6,777 $10,105  -33%  $16,451 $26,354  -38% Men's 1,522  3,303  -54%   5,857  10,847  -46% Home 3,588  2,999  20%   9,670  9,789  -1% International 6,593  9,022  -27%   17,669  26,321  -33% Corporate (4,766) (4,530) -5%   (12,897) (13,638) 5% Adjusted EBITDA$13,714 $20,899  -34%  $36,750 $59,673  -38%                       Adjusted EBITDA Margin (2) 56% 59%      49% 56%    Adjusted EBITDA margin in the third quarter of 2020 was 56% as compared to Adjusted EBITDA margin in the third quarter of 2019 of 59%. The change period over period in Adjusted EBITDA margin is primarily as a result of the Company’s decrease in revenue.Interest Expense and Other (Income) Loss, net:Interest expense in the third quarter of 2020 was $18.5 million as compared to $14.4 million in the third quarter of 2019. The legal final maturity date of the Securitization Notes is in January of 2043. The Company did not repay or refinance the Securitization Notes prior to the anticipated repayment date. Therefore, beginning January 2020, the Company accrues additional interest on the Securitization Notes that is not payable until 2043. The increase in interest expense period over period is primarily the result of the step up in interest for the securitization. In the third quarter of 2020, Other (income) loss was income of $0.3 million as compared to a loss of $12.0 million in the third quarter of 2019. This result is primarily from the Company's accounting for the 5.75% Convertible Notes, which requires recording the fair value of this debt at the end of each period with any change from the prior period accounted for as other income or loss in the respective period's consolidated income statement.Provision for Income Taxes:The effective income tax rate for the third quarter of 2020 is approximately 1.9%, which resulted in a $0.9 million income tax expense, as compared to an effective income tax rate of 1.7% in the third quarter of 2019, which resulted in a $0.6 million income tax benefit.  The increase in the tax expense is a result of expenses incurred for which no tax benefit was able to be recognized for the third quarter of 2020.GAAP Net Income and GAAP Diluted EPS:GAAP net income attributable to Iconix for the third quarter of 2020 reflected income of $45.7 million, compared to a net loss of $35.7 million for the third quarter of 2019. GAAP diluted EPS for the third quarter of 2020 reflected income of $1.51 per share, compared to loss of $3.07 per share for the third quarter of 2019.Adjusted EBITDA (1):Adjusted EBITDA for the third quarter of 2020 was $13.7 million, compared to $20.9 million for the third quarter of 2019.Adjusted EBITDA: (1)     (000's)      For the Three Months Ended September 30,    2020  2019 % Change        GAAP Operating Income (Loss)$66,351 $(8,115)   Add:     stock-based compensation expense 196  363    depreciation and amortization 315  421    contract asset write offs, net 581  3,634    impairment charges 21,959  17,000    gain on sale of trademarks and investments (74,105) -    special charges 460  9,084    non-controlling interest (976) (1,482)   non-controlling interest related to D&A and impairment (1,067) (7)     (52,637) 29,013          Adjusted EBITDA$13,714 $20,899 -34%  Adjusted EBITDA Margin (2) 56% 59%         Adjusted EBITDA: (1)     (000's)      For the Nine Months Ended September 30,    2020  2019 % Change        GAAP Operating Income (Loss)$65,047 $28,857    Add:     stock-based compensation expense 608  761    depreciation and amortization 894  1,393    gain on sale of trademarks and investments (75,705) -    contract asset write offs, net 700  3,634    impairment charges 40,954  17,000    special charges 9,303  15,063    non-controlling interest (3,555) (7,017)   non-controlling interest related to D&A and impairment (1,496) (19)     (28,297) 30,815          Adjusted EBITDA$36,750 $59,672 -38%  Adjusted EBITDA Margin (2) 49% 56%         Balance Sheet and Liquidity:(000's)September 30, 2020 December 31, 2019  Cash Summary:     Unrestricted Domestic, Canada and China (Wholly Owned)$48,370 $29,144  Unrestricted Luxembourg (Wholly Owned) 14,813     17,023  Unrestricted in consolidated JV's     7,347      9,298  Restricted Cash    12,760     15,946  Total Cash$83,290 $71,411        Debt Summary:     Senior Secured Notes due January 2043*$323,876 $338,130  Variable Funding Note due January 2043    100,000  100,000  5.75% Convertible Notes due August 2023     94,430      94,430  Senior Secured Term Loan due August 2022 ** 116,420  175,600  Payroll Protection Plan Loan      1,307  -  Total Debt (Face Value)$636,033 $708,160        *- The legal final maturity of the Securitization Notes is in January of 2043, as the Company did not repay or refinance the Securitization Notes prior to the anticipated repayment date. Therefore, beginning in January 2020, the Company is no longer required to make previously designated contractual principal payments. Future principal payments are formulaically based on a percentage of receipts of royalty revenue, and as such are subject to market factors outside of the Company’s control. There can be no assurance that all or any future principal payments projected for the Senior Secured Notes will be made in accordance with the projections provided.  **- As a result of the completion of the sale of Starter China, the Company received $15.6 million of net proceeds, and on October 4, 2020, repaid $11.7 million of Senior Secured Term Loan principal not reflected above.  Fiscal 2020 OutlookDue to the impact that COVID-19 is having across the globe, and the rapid and continuous economic developments, we are not providing guidance for fiscal year 2020 at this time. The impact of COVID-19 on our business could be material to our operating results, cash flows and financial condition. Due to the evolving and uncertain nature of this situation, we are not able to estimate the full extent of the impact on Iconix’s operating results, cash flows and financial condition. We will provide additional updates as the situation warrants.About Iconix Brand Group, Inc.Iconix Brand Group, Inc. owns, licenses and markets a portfolio of consumer brands including: CANDIE'S ®, BONGO ®, JOE BOXER ®, RAMPAGE ®, MUDD ®, MOSSIMO ®, LONDON FOG ®, OCEAN PACIFIC ®, DANSKIN ®, ROCAWEAR ®, CANNON ®, ROYAL VELVET ®, FIELDCREST ®, CHARISMA ®, STARTER ®, WAVERLY ®, ZOO YORK ®, UMBRO ®, LEE COOPER ®, ECKO UNLTD. ®, MARC ECKO ®, ARTFUL DODGER ®, and HYDRAULIC®. In addition, Iconix owns interests in the MATERIAL GIRL ®, ED HARDY ®, TRUTH OR DARE ®, MODERN AMUSEMENT ®, BUFFALO ® and PONY ® brands. The Company licenses its brands to a network of retailers and manufacturers. Through its in-house business development, merchandising, advertising and public relations departments, Iconix manages its brands to drive greater consumer awareness and brand loyalty.Forward-Looking StatementsIn addition to historical information, this press release contains forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements include projections regarding the Company's beliefs and expectations about future performance and, in some cases, may be identified by words like "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future," "will," "seek" and similar terms or phrases. These statements are based on the Company's beliefs and assumptions, which in turn are based on information available as of the date of this press release. Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement and could harm the Company's business, prospects, results of operations, liquidity and financial condition and cause its stock price to decline significantly. Many of these factors are beyond the Company's ability to control or predict. Important factors that could cause the Company's actual results to differ materially from those indicated in the forward-looking statements include, among others: the occurrence of any strategic transaction and the impact of any potential strategic transaction, including acquisitions or dispositions, the ability of the Company's licensees to maintain their license agreements or to produce and market products bearing the Company's brand names, the Company's ability to retain and negotiate favorable licenses, the Company's ability to meet its outstanding debt obligations, the impact of COVID-19 on our and our licensees’ business, results of operations, financial condition and liquidity and the impact of COVID-19 on global production, manufacturing, distribution and sales and the events and risks referenced in the sections titled "Risk Factors" in the Company's Annual Report on Form 10K for the year ended December 31, 2019 and subsequent Quarterly Reports on Form 10Q and in other documents filed or furnished with the Securities and Exchange Commission. Our forward-looking statements do not reflect the potential impact of any acquisitions, mergers, dispositions, business development transactions, joint ventures or investments we may enter into or make in the future. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements are made only as of the date hereof and the Company undertakes no obligation to update or revise publicly any forward-looking statements, except as required by law.Media contact: John T. McClain   Executive Vice President and Chief Financial Officer   Iconix Brand Group, Inc.   jmcclain@iconixbrand.com 212-730-0030Unaudited Consolidated Statement of Operations (000’s, except earnings per share data)  For the Three Months Ended September 30,  For the Nine Months Ended September 30,     2020  2019  2020  2019   Licensing revenue $24,462  $35,471  $74,688  $105,806   Selling, general and administrative expenses  9,915   26,318   42,043   60,846   Depreciation and amortization  315   421   894   1,393   Equity (earnings) loss on joint ventures  27   (153)  1,455   (2,290)  Gain on sale of investment  —   —   (1,600)  —   Gain on sale of trademarks  (74,105)  —   (74,105)  —   Investment impairment  17,145   17,000   17,245   17,000   Trademark impairment  4,814   —   23,709   —   Operating income (loss)  66,351   (8,115)  65,047   28,857   Other expenses (income):                  Interest expense  18,489   14,430   52,249   43,399   Interest (income)  (1)  (96)  (51)  (259)  Other (income) loss, net  (285)  11,971   1,851   (6,821)  Foreign currency translation loss  531   391   596   760   Other expenses – net  18,734   26,696   54,645   37,079   Income (loss) before income taxes  47,617   (34,811)  10,402   (8,222)  Provision (Benefit) for income taxes  915   (585)  39   1,253   Net income (loss)  46,702   (34,226)  10,363   (9,475)  Less: Net income attributable to non-controlling interest  976   1,482   3,555   7,017   Net income (loss) attributable to Iconix Brand Group, Inc. $45,726  $(35,708) $6,808  $(16,492)                     Earnings (loss) per share:                  Basic $3.66  $(3.07) $0.55  $(1.62)  Diluted $1.51  $(3.07) $0.37  $(1.62)  Weighted average number of common shares outstanding:                  Basic  12,517   11,631   12,051   10,169   Diluted  31,189   11,631   33,801   10,169   Footnotes(1)   Adjusted EBITDA is a non-GAAP financial measure, which represents operating income excluding stock-based compensation (benefit) expense, depreciation and amortization, impairment charges, special charges related to potential settlement and professional fees incurred as a result of cooperation with the Staff of the SEC, the SEC and related SDNY investigations, internal investigations, the previously disclosed class action and derivative litigations and costs related to the transition of Iconix management. The Company believes Adjusted EBITDA is a useful financial measure in evaluating its financial condition because it is more reflective of the Company's business purpose, operations and cash expenses. Uses of cash flows that are not reflected in Adjusted EBITDA include interest payments and debt principal repayments, which can be significant. As a result, Adjusted EBITDA should not be considered as a measure of our liquidity. Other companies that provide Adjusted EBITDA information may calculate EBITDA and Adjusted EBITDA differently than we do. The definition of Adjusted EBITDA may not be the same as the definitions used in any of our debt agreements. Adjusted EBITDA Reconciliation For the Three Months Ended September 30, (1):  GAAP Operating Income Impairment Charges Special Charges Gain on sale of Trademarks & Investments Depreciation & Amortization Stock Compensation Contract Asset Impairment Non-controlling Interest, net Adjusted EBITDA ($, 000s)2020 2019  20202019 20202019 2020 2019 20202019 20202019 20202019  2020 2019  2020 2019  Women's6,207 9,988  570- -- - - -- -- -117  - -  6,777 10,105  Men's(1,249)5,277  4,244- -- - - -13 -- -(144) (1,473)(1,843) 1,522 3,303  Home3,588 2,990  -- -- - - -  -1 -8  - -  3,588 2,999  International6,556 6,243  -- -- - - 6769 -4 5813,653  (611)(947) 6,593 9,022  Corporate51,249 (32,613) 17,14517,000 4609,084 (74,105)- 248339 196358 --  41 1,302  (4,766)(4,530) Total Income66,351 (8,115) 21,95917,000 4609,084 (74,105)- 315421 196363 5813,634  (2,043)(1,488) 13,714 20,899                                                                                      Adjusted EBITDA Reconciliation For the Nine Months Ended September 30, (1):                     GAAP Operating Income Impairment Charges Special Charges Gain on sale of Trademarks & Investments Depreciation & Amortization Stock Compensation Contract Asset Impairment Non-controlling Interest, net Adjusted EBITDA ($, 000s)2020 2019  20202019 20202019 2020 2019 20202019 20202019 20202019  2020 2019  2020 2019  Women's5,750 26,237  10,638- -- - - -- -- 63117  - -  16,451 26,354  Men's4,593 17,775  4,348- 637- - - 437 -- 16(144) (3,741)(6,821) 5,857 10,847  Home4,512 9,777  5,152- -- - - -- 14 58  - -  9,670 9,789  International14,569 25,432  3,548- -- - - 198230 210 6163,653  (1,264)(3,004) 17,669 26,321  Corporate35,623 (50,364) 17,26817,000 8,66615,063 (75,705)- 6921,126 605747 --  (46)2,789  (12,897)(13,639) Total Income65,047 28,857  40,95417,000 9,30315,063 (75,705)- 8941,393 608761 7003,634  (5,051)(7,036) 36,750 59,672                              (2) Adjusted EBITDA margin is a non-GAAP financial measure, which represents Adjusted EBITDA as a percentage of revenue. The Company believes Adjusted EBITDA margin is a useful financial measure in evaluating its financial condition because it is more reflective of the Company's business purpose, operations and cash expenses. Uses of cash flows that are not reflected in Adjusted EBITDA margin include interest payments and debt principal repayments, which can be significant. As a result, Adjusted EBITDA margin should not be considered as a measure of our liquidity. Other companies that provide Adjusted EBITDA margin information may calculate EBITDA margin and Adjusted EBITDA margin differently than we do. The definition of Adjusted EBITDA margin may not be the same as the definitions used in any of our debt agreements.

  • GlobeNewswire

    Iconix Reports Financial Results for the Second Quarter 2020

    * Total revenue of $22.3 million compared to $34.4 million in the prior year quarter. * GAAP Operating Income $3.5 million as compared to $18.6 million in the prior year quarter. * Adjusted EBITDA of $11.4 million, compared to $20.3 million in the prior year quarter. * Continued to improve cost structure, decreasing SG&A expenses 9% from prior year quarter. * Completed Sale of Umbro China in July 2020 with net proceeds of $59.6 million and repaid $44.7 million of Senior Secured Term Loan.NEW YORK, Aug. 12, 2020 (GLOBE NEWSWIRE) -- Iconix Brand Group, Inc. (Nasdaq: ICON) ("Iconix" or the "Company") today reported financial results for the second quarter ended June 30, 2020.Bob Galvin, CEO commented, “With the onset of COVID-19 during the first quarter, we quickly responded to remove costs and preserve liquidity.  During the second quarter while we continued those efforts, we also continued to develop our pipeline of future business, as we have signed 92 deals during 2020 for aggregate guaranteed minimum royalties of approximately $69 million.  As we move forward, if we experience a slower recovery, or if further disruptions occur later in the year, we will be vigilant in an attempt to identify additional areas for cost savings.”Galvin continued, “In late July, we closed the previously announced sale of Umbro China and realized net proceeds of over $59 million.  Seventy five percent of the net proceeds were used to repay our Senior Secured Term Loan.  We continue to look for other opportunities within our portfolio of brands to realize value.”As previously disclosed, on July 10, 2020, the Company’s Board of Directors determined to commence a process to broaden its exploration of strategic alternatives available to the Company to enhance shareholder value.  The Board has authorized management and its external advisors to consider a broader range of strategic alternatives, including a potential sale of the Company, merger or other business combination, a recapitalization of its existing capital structure, financings or re-financings of its existing indebtedness, sales of equity and equity-linked securities, dispositions of discrete brands and related assets, licensing or other strategic transactions involving the Company, or any combination of the foregoing. This is in addition to the Company’s previously announced executed definitive agreements to sell the rights to the UMBRO and STARTER brands in China. In connection with such strategic review, the Company retained Ducera Partners LLC as a financial advisor, together with Dechert LLP, its existing legal counsel, to assist in this effort.  There can be no assurance that the exploration of strategic alternatives will result in any transaction or specific course of action. The Company does not intend to disclose developments with respect to the exploration of strategic alternatives unless and until its Board of Directors has approved a specific transaction or course of action or the Company has otherwise determined that further disclosure is appropriate or required by lawsecond Quarter 2020Financial ResultsGAAP Revenue by Segment (000’s)  For the Three Months For the Six Months Ended June 30,Ended June 30,    2020  2019  2020  2019 Licensing revenue:         Women's $4,409 $8,171 $10,887 $16,538 Men's  2,957  6,614  9,713  17,550 Home  3,787  4,285  6,949  7,775 International  11,124  15,324  22,677  28,473   $22,277 $34,394 $50,226 $70,336           For the second quarter of 2020, total revenue was $22.3 million, a 35% decline, compared to $34.4 million in the second quarter of 2019. Revenue across all segments was primarily negatively impacted by the effects of the COVID-19 pandemic on the global economy. The 46% decrease in revenue in our Women’s segment was principally as a result of a decrease in licensing revenue from our Mudd and Candies brands. Revenue from the Men’s segment decreased 55% in the Current Quarter mainly due to a decrease in licensing revenue from our Buffalo and Umbro brands. Sales in our Home segment declined 12% principally due to a decrease in licensing revenue from our Cannon brand. Our International segment revenue declined 27% in the current quarter mainly due to decreases in Latin America and Europe.SG&A Expenses: Total SG&A expenses in the second quarter of 2020 were $15.0 million, a 9% decline compared to $16.4 million in the second quarter of 2019. The decline for the quarter was primarily driven by a decrease in advertising and compensation expense somewhat offset by an increase in bad debt expense.Trademark and Investment Impairment: In the second quarter of 2020, the Company recorded a non-cash trademark impairment charge of $5.2 million. The charge for the second quarter of 2020 was based on the impact of the COVID-19 pandemic and related Sears/Kmart store closures on current and estimated future cash flows primarily on the fair value of the Joe Boxer and Cannon indefinite-lived trademarks.Operating Income and Adjusted EBITDA (1):Adjusted EBITDA is a non-GAAP metric, and a reconciliation table is included below. Operating income for the second quarter of 2020 was $3.5 million, as compared to operating income of $18.6 million for the second quarter of 2019.  The second quarter 2020 results include $5.2 million of charges related to trademark impairments. Adjusted EBITDA in the second quarter of 2020 was $11.4 million, which represents operating income of $3.5 million excluding net charges of $7.9 million.  Adjusted EBITDA in the second quarter of 2019 was $20.3 million, which represents operating income of $18.6 million excluding net charges of $1.8 million.  The change period over period in Adjusted EBITDA is primarily as a result of reduced revenue largely driven by the impact of COVID-19 on our business, somewhat offset by reduced expenses driven by the Company’s cost reduction initiative. Refer to footnote 1 below for a full detailed reconciliation of operating income to Adjusted EBITDA.     Note: All items in the following tables are attributable to the Company’s interest in its subsidiaries and joint ventures, as applicable, and exclude the results related to any non-controlling interest in such entities. Certain numbers may not add due to rounding.Adjusted EBITDA by Segment (1)For the Three Months Ended June 30,   For the Six Months Ended June 30,  (000's)2020 2019 % Change   2020 2019 % Change                        Women's$4,126 $8,622  -52%  $9,675 $16,249  -40% Men's 2,016  3,478  -42%   4,429  7,545  -41% Home 3,517  3,783  -7%   6,081  6,789  -10% International 5,165  9,306  -44%   11,075  17,299  -36% Corporate (3,398) (4,858) 30%   (8,224) (9,109) 10% Adjusted EBITDA$11,426 $20,331  -44%  $23,036 $38,773  -41%                       Adjusted EBITDA Margin (2) 51% 59%      46% 55%                          Adjusted EBITDA margin in the second quarter of 2020 was 51% as compared to Adjusted EBITDA margin in the second quarter of 2019 of 59%.  The change period over period in Adjusted EBITDA margin is primarily as a result of the Company’s decrease in revenue.  Interest Expense and Other (Income) Loss, net:Interest expense in the second quarter of 2020 was $17.0 million as compared to $14.5 million in the second quarter of 2019. The legal final maturity date of the Securitization Notes is in January of 2043. The Company did not repay or refinance the Securitization Notes prior to the anticipated repayment date. Therefore, beginning January 2020, the Company accrues additional interest on the Securitization Notes that is not payable until 2043. The increase in interest expense period over period is primarily the result of the step up in interest for the securitization. In the second quarter of 2020, Other (income) loss was a loss of $2.9 million as compared to $1.1 million in the second quarter of 2019.  This loss results primarily from the Company's accounting for the 5.75% Convertible Notes, which requires recording the fair value of this debt at the end of each period with any change from the prior period accounted for as other income or loss in the respective period's consolidated income statement.Provision for Income Taxes:The effective income tax rate for the second quarter of 2020 is approximately 5.3%, which resulted in a $0.9 million income tax benefit, as compared to an effective income tax rate of -3.9% in the second quarter of 2019, which resulted in a $0.1 million income tax benefit.  The increase in the tax benefit is a result of a decrease in foreign withholding tax for the second quarter of 2020.GAAP Net Income and GAAP Diluted EPS:GAAP net income attributable to Iconix for the second quarter of 2020 reflected a loss of $17.4 million, compared to net income of $1.3 million for the second quarter of 2019. GAAP diluted EPS for the second quarter of 2020 reflected a loss of $1.46 per share, compared to income of $0.12 per share for the second quarter of 2019.Adjusted EBITDA (1):Adjusted EBITDA for the second quarter of 2020 was $11.4 million, compared to $20.3 million for the second quarter of 2019. Adjusted EBITDA: (1)     (000's)      For the Three Months Ended June 30,    2020  2019 % Change        GAAP Operating Income (Loss)$3,549 $18,572    Add:     stock-based compensation expense 240  259    depreciation and amortization 306  482    contract asset write offs, net 117  -    impairment charges 5,262  -    Gain on Sale of Investments (1,600)  -    special charges 5,307  3,198    non-controlling interest (1,755) (2,174)    non-controlling interest related to D&A and impairment -  (7)      7,877  1,758          Adjusted EBITDA$11,426 $20,331 -44%  Adjusted EBITDA Margin (2) 51% 59%         Adjusted EBITDA: (1)     (000's)      For the Six Months Ended June 30,    2020  2019 % Change        GAAP Operating Income (Loss)$(1,303)$36,971    Add:     stock-based compensation expense 412  398    depreciation and amortization 579  974    gain on sale of investments (1,600) -    contract asset write offs, net 119  -    impairment charges 18,995  -    special charges 8,843  5,978    non-controlling interest (2,579) (5,535)   non-controlling interest related to D&A and impairment (430) (14)      24,339  1,801          Adjusted EBITDA$23,036 $38,773 -41%  Adjusted EBITDA Margin (2) 46% 55%         Balance Sheet and Liquidity:(000's)June 30, 2020 December 31, 2019  Cash Summary:     Unrestricted Domestic, Canada and China (Wholly Owned)$28,924 $29,144  Unrestricted Luxembourg (Wholly Owned) 14,287  17,023  Unrestricted in consolidated JV's 7,440  9,298  Restricted Cash 11,666  15,946  Total Cash$62,317 $71,411        Debt Summary:     Senior Secured Notes due January 2043*$328,818 $338,130  Variable Funding Note due January 2043 100,000  100,000  5.75% Convertible Notes due August 2023 94,430  94,430  Senior Secured Term Loan due August 2022 ** 165,959  175,600  Payroll Protection Plan Loan 1,307  -  Total Debt (Face Value)$690,514 $708,160        *- The legal final maturity of the Securitization Notes is in January of 2043, as the Company did not repay or refinance the Securitization Notes prior to the anticipated repayment date. Therefore, beginning in January 2020, the Company is no longer required to make previously designated contractual principal payments. Future principal payments are formulaically based on a percentage of receipts of royalty revenue, and as such are subject to market factors outside of the Company’s control. There can be no assurance that all or any future principal payments projected for the Senior Secured Notes will be made in accordance with the projections provided.  **- As a result of the completion of the sale of Umbro China, the Company received $59.6 million of net proceeds, and on August 7, 2020, repaid $44.7 million of loan principal.     Fiscal 2020 Outlook Due to the impact that COVID-19 is having across the globe, and the rapid and continuous economic developments, we are not providing guidance for fiscal year 2020 at this time. The impact of COVID-19 on our business could be material to our operating results, cash flows and financial condition. Due to the evolving and uncertain nature of this situation, we are not able to estimate the full extent of the impact on Iconix’s operating results, cash flows and financial condition. We will provide additional updates as the situation warrants.About Iconix Brand Group, Inc.Iconix Brand Group, Inc. owns, licenses and markets a portfolio of consumer brands including: CANDIE'S ®, BONGO ®, JOE BOXER ®, RAMPAGE ®, MUDD ®, MOSSIMO ®, LONDON FOG ®, OCEAN PACIFIC ®, DANSKIN ®, ROCAWEAR ®, CANNON ®, ROYAL VELVET ®, FIELDCREST ®, CHARISMA ®, STARTER ®, WAVERLY ®, ZOO YORK ®, UMBRO ®, LEE COOPER ®, ECKO UNLTD. ®, MARC ECKO ®, ARTFUL DODGER ®, and HYDRAULIC®. In addition, Iconix owns interests in the MATERIAL GIRL ®, ED HARDY ®, TRUTH OR DARE ®, MODERN AMUSEMENT ®, BUFFALO ® and PONY ® brands. The Company licenses its brands to a network of retailers and manufacturers. Through its in-house business development, merchandising, advertising and public relations departments, Iconix manages its brands to drive greater consumer awareness and brand loyalty.Forward-Looking StatementsIn addition to historical information, this press release contains forward-looking statements within the meaning of the federal securities laws. Such forward-looking statements include projections regarding the Company's beliefs and expectations about future performance and, in some cases, may be identified by words like "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "future," "will," "seek" and similar terms or phrases. These statements are based on the Company's beliefs and assumptions, which in turn are based on information available as of the date of this press release. Forward-looking statements involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement and could harm the Company's business, prospects, results of operations, liquidity and financial condition and cause its stock price to decline significantly. Many of these factors are beyond the Company's ability to control or predict. Important factors that could cause the Company's actual results to differ materially from those indicated in the forward-looking statements include, among others: the occurrence of any strategic transaction and the impact of any potential strategic transaction, including acquisitions or dispositions, the ability of the Company's licensees to maintain their license agreements or to produce and market products bearing the Company's brand names, the Company's ability to retain and negotiate favorable licenses, the Company's ability to meet its outstanding debt obligations, the impact of COVID-19 on our and our licensees’ business, results of operations, financial condition and liquidity and the impact of COVID-19 on global production, manufacturing, distribution and sales and the events and risks referenced in the sections titled "Risk Factors" in the Company's Annual Report on Form 10‑K for the year ended December 31, 2019 and subsequent Quarterly Reports on Form 10‑Q and in other documents filed or furnished with the Securities and Exchange Commission. Our forward-looking statements do not reflect the potential impact of any acquisitions, mergers, dispositions, business development transactions, joint ventures or investments we may enter into or make in the future. Given these uncertainties, you should not place undue reliance on these forward-looking statements. These forward-looking statements are made only as of the date hereof and the Company undertakes no obligation to update or revise publicly any forward-looking statements, except as required by law.Media contact: John T. McClain   Executive Vice President and Chief Financial Officer   Iconix Brand Group, Inc.   jmcclain@iconixbrand.com 212-730-0030 Unaudited Consolidated Statement of Operations (000’s, except earnings per share data)  For the Three Months Ended June 30,  For the Six Months Ended June 30,    2020  2019  2020  2019  Licensing revenue $22,277  $34,394  $50,226  $70,336  Selling, general and administrative expenses  14,978   16,435   32,128   34,528  Depreciation and amortization  306   482   579   974  Equity (earnings) loss on joint ventures  (218)  (1,095)  1,427   (2,137) Gain on sale of investment  (1,600)  —   (1,600)  —  Investment impairment  100   —   100   —  Trademark impairment  5,162   —   18,895   —  Operating income (loss)  3,549   18,572   (1,303)  36,971  Other expenses (income):                 Interest expense  17,047   14,465   33,760   28,970  Interest income  (10)  (90)  (50)  (162) Other (income) loss, net  2,933   1,140   2,136   (18,795) Foreign currency translation (gain) loss  130   (258)  66   369  Other expenses (income) – net  20,100   15,257   35,912   10,382  Income (loss) before income taxes  (16,551)  3,315   (37,215)  26,589  (Benefit) Provision for income taxes  (871)  (130)  (876)  1,838  Net income (loss)  (15,680)  3,445   (36,339)  24,751  Less: Net income attributable to non-controlling interest  1,755   2,174   2,579   5,535  Net income (loss) attributable to Iconix Brand Group, Inc. $(17,435) $1,271  $(38,918) $19,216                    Earnings (loss) per share:                 Basic $(1.46) $0.12  $(3.32) $2.04  Diluted $(1.46) $0.12  $(3.32) $0.08  Weighted average number of common shares outstanding:                 Basic  11,859   10,377   11,816   9,426  Diluted  11,859   10,377   11,816   44,779                    Footnotes (1) Adjusted EBITDA is a non-GAAP financial measure, which represents operating income excluding stock-based compensation (benefit) expense, depreciation and amortization, impairment charges, costs associated with financings, special charges related to potential settlement and professional fees incurred as a result of cooperation with the Staff of the SEC, the SEC and related SDNY investigations, internal investigations, the previously disclosed class action and derivative litigations, costs related to the transition of Iconix management, but including gains on sales of trademarks and non-controlling interest. The Company believes Adjusted EBITDA is a useful financial measure in evaluating its financial condition because it is more reflective of the Company's business purpose, operations and cash expenses.  Uses of cash flows that are not reflected in Adjusted EBITDA include interest payments and debt principal repayments, which can be significant.  As a result, Adjusted EBITDA should not be considered as a measure of our liquidity.  Other companies that provide Adjusted EBITDA information may calculate EBITDA and Adjusted EBITDA differently than we do. The definition of Adjusted EBITDA may not be the same as the definitions used in any of our debt agreements.Adjusted EBITDA Reconciliation For the Three Months Ended June 30, (1):  GAAP Operating Income Impairment Special Charges Gain on sale of Investments Depreciation & Amortization Stock Compensation Contract Asset Impairment Non-controlling Interest, net Adjusted EBITDA Charges ($, 000s)20202019 20202019 20202019 20202019 20202019 20202019 20202019 20202019 20202019 Women's6868,622 3,380- -- -- -- -- 60- -- 4,1268,622 Men's2,0364,952 -- 124- -- -13 -- 16- (160)(1,487) 2,0163,478 Home1,7353,782 1,782- -- -- -- -1 -- -- 3,5173,783 International6,17310,766 -- -- -- 6472 -3 41- -1,113-1,535 5,1659,306 Corporate(7,081)(9,550) 100- 5,1833,198 (1,600)- 242397 240255 -- -482842 (3,398)(4,858) Total Income3,54918,572 5,262- 5,3073,198 (1,600)- 306482 240259 117- (1,755)(2,180) 11,42620,331                                                                                     Adjusted EBITDA Reconciliation For the Six Months Ended June 30, (1):  GAAP Operating Income Impairment Charges Special Charges Gain on sale of Investments Depreciation & Amortization Stock Compensation Contract Asset Impairment Non-controlling Interest, net Adjusted EBITDA ($, 000s)20202019 20202019 20202019 20202019 20202019 20202019 20192019 20202019 20202019 Women's-45716,249 10,069- -- -- -- -- 63- -- 9,67516,249 Men's5,84212,498 104- 731- -- 426 -- 16- (2,268)(4,979) 4,4297,545 Home9246,787 5,151- -- -- -- 12 5- -- 6,0816,789 International8,01319,189 3,548- -- -- 131161 26 35- (654)(2,057) 11,07517,299 Corporate(15,625)(17,752) 123- 8,1125,978 (1,600)- 444787 409390 -- (87)1,488 (8,224)(9,109) Total Income(1,303)36,971 18,995- 8,8435,978 (1,600)- 579974 412398 119- (3,009)(5,548) 23,03638,773                             (2) Adjusted EBITDA margin is a non-GAAP financial measure, which represents Adjusted EBITDA as a percentage of revenue.  The Company believes Adjusted EBITDA margin is a useful financial measure in evaluating its financial condition because it is more reflective of the Company's business purpose, operations and cash expenses.  Uses of cash flows that are not reflected in Adjusted EBITDA margin include interest payments and debt principal repayments, which can be significant.  As a result, Adjusted EBITDA margin should not be considered as a measure of our liquidity.  Other companies that provide Adjusted EBITDA margin information may calculate EBITDA margin and Adjusted EBITDA margin differently than we do. The definition of Adjusted EBITDA margin may not be the same as the definitions used in any of our debt agreements.

  • Iconix Brand Group Is Open to Selling Itself as It Looks to Tidy Balance Sheet
    Footwear News

    Iconix Brand Group Is Open to Selling Itself as It Looks to Tidy Balance Sheet

    The company owns brands such as Rocawear, Danskin and Pony.