Iconix Brand Group reports 2 percent decline in Q2 revenue

For the second quarter of 2016, licensing revenue at Iconix Brand Group was approximately 95.7 million dollars, a 2 percent decline as compared to approximately 97.4 million dollars in the second quarter of 2015.

"Over the past few months, we have conducted a broad strategic review of our company, our brands and the overall market. We have identified a number of opportunities that we believe will drive long-term growth that we look forward to sharing with you this fall. In addition, today our balance sheet is in a better position than it was a few months ago, following the refinancing of our 2016 convertible notes and the opportunistic repurchase of a portion of our 2018 convertible notes," said John Haugh, CEO of Iconix.

Second quarter financial results

In the second quarter, revenue included approximately 1.5 million dollars of licensing revenue from the Badgley Mischka brand, for which there was no comparable revenue in the second quarter due to its sale in the first quarter. The second quarter benefitted from a 0.9 million dollars favorable impact from foreign currency exchange rates primarily related to the Yen. Excluding Badgley Mischka licensing revenue and the currency impact, revenue for the second quarter was down approximately 1 percent.

The company recognized a net pre-tax loss of approximately 1.1 million dollars, primarily related to the sale of the company's equity stake in the Ed Hardy brand in China, which was sold for 11.4 million dollars in cash. Operating income was approximately 47.8 million dollars, an 8 percent decline as compared to 51.8 million dollars in the second quarter of 2015.

GAAP net income was approximately 11.6 million dollars, a 16 percent decline and GAAP diluted EPS was approximately 0.23 dollar. Non-GAAP net income was approximately 13.9 million dollars and non-GAAP diluted EPS was approximately 0.27 dollar.

Updates guidance for 2016

The Company is updating its 2016 guidance to reflect certain recent transactions that were not included in previously provided guidance. The company is increasing its 2016 free cash flow guidance by 14 million dollars primarily to reflect the sale of the Company's stake in the Ed Hardy brand in China. GAAP diluted EPS guidance has been raised by 0.22 dollar to reflect an 8.5 million dollars gain related to the repurchase of a portion of its 2018 convertible notes at a discount, and a 10 million dollars gain related to the sale of the company's interest in Complex Media in the third quarter of 2016.

Licensing revenues are expected to be between 370 to 390 million dollars, non-GAAP diluted EPS in the range of 1.06 to 1.21 dollars and GAAP EPS in the range of 0.93 to 1.08 dollars.

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