Iconix Brands hits "record" revenues and earnings in Q3
Richard Gottlieb -- Gifts & Dec, October 28, 2010
Total revenue for the third quarter soared 63% to approximately $96.9 million versus approximately $59.4 million for the year-ago period.
Net income on a non-GAAP basis, which excludes non-cash interest related to the company's convertible debt, also grew significantly but less so -- 32% -- to approximately $29.8 million, and diluted earnings per share for the quarter was 40 cents compared to 31 cents last year.
On a GAAP basis, net income increased 34% to approximately $27.4 million and GAAP diluted EPS was 37 cents versus 28 cents in last year's third quarter.
Iconix noted that its third quarter 2010 financials include $12.5 million of revenue, or approximately 2 cents of diluted EPS, related to the new five-year contract it signed with the ABC network for the Peanuts holiday program specials.
Year-to-date results were also strong for Iconix.
Total revenue for the nine-month period grew 47% to $244.6 million compared to $166.3 million last year.
Net income on a non-GAAP basis increased 36% to $83.3 million and non-GAAP diluted earnings per share increased to $1.12 versus 93 cents for the prior year period.
On a GAAP basis, net income increased 39% to $76.7 million and GAAP diluted earnings per share was $1.03 versus 83 cents.
Neil Cole, chairman and ceo, said during Iconix's quarterly conference call this morning that the "driving factor for the increases were a full quarter with the Peanuts revenue...a full quarter with the Echo brand, as well as the healthy performance across our overall portfolio."
Iconix's domestic business "remains strong and growing," said Yehuda Shmidman, evp, operations, with the company's more than 1,400 licensees.
A large contributor to this segment is Iconix's direct business, which achieved double-digit growth in the third quarter.
While the company did not offer many details on the recent progress of its home business, it did note that the Fieldcrest brand "is doing well," Cole said," having recently signed a five-year contract renewal with Target, and Waverly launched in the third quarter a new disposable tablewear collection that is being sold throughout the mass market, including Walmart and Kroger stores.
Shmidman said Iconix has high expectations for its recently acquired Peanuts brand. As the company continues to restructure it, there are many efforts in the works to build the brand nationally and internationally.
The company is currently "exiting unprofitable businesses, such a certain third-party representation contracts, and therefore we expect the revenue for Peanuts worldwide to reach approximately $70 million by 2011. This number does not include any additional [direct to retailer] or other initiatives in the works."
Iconix's international business - which represents close to 20% of the company's pro forma revenue -- remains a focus for Iconix. Among its many growth plans for this segment is a new office in Tokyo set to open its doors shortly.
Also coming soon is a second brand for an international audience with Madonna, through MG Icon, "that we believe can be as big and exciting as Material Girl," Cole said.
"With 27 brands today that represent approximately $12 billion in annual global retail sales, we are the second largest consumer products licensing company in the world, and we remain committed to expanding and growing our portfolio of iconic brands through new categories, geographies and distributions," Cole said. "As we look ahead to 2011, we feel confident about the overall strength of our existing brand portfolio and our ability to acquire world class brands."
Encouraged by its recent successes, Iconix is raising its full-year 2010 revenue guidance to $323million to $328 million from $305 million to $315 million as well as its 2010 non-GAAP diluted EPS guidance to $1.38 to $1.42 from $1.35 to $1.40 and its GAAP diluted EPS guidance to $1.26 to $1.30 from $1.23 to $1.28.
The company also said it expects to continue to generate strong free cash flow for 2010 of approximately $150 million to $155 million. This guidance relates to the existing portfolio of brands only and does not include any additional acquisitions.
Looking to 2011, Iconix offered revenue guidance of $340 million to $350 million, 2011 non-GAAP diluted EPS guidance of $1.53 to $1.58 and GAAP diluted EPS guidance of $1.40 to $1.45. The company estimates that free cash flow for 2011 will be approximately $160 million to $165 million.
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