SQBG - Earnings call transcript Q2 2018 | Sequential Brands Group, Inc.

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Operator

Thank you, and good morning.

Before we begin, I'd like to bring to your attention that statements that are not historical facts contained in this conference call are forward-looking statements that involve a number of risks, uncertainties, and other factors, all of which are difficult or impossible to predict, and many of which are beyond the company's control. This may cause the actual results, performance, or achievements of the company to materially differ from the results, performance, or achievements expressed or implied by such forward-looking statements. We refer you to our public filings and the press release we issued this morning for a summary of such factors. The words believe, anticipate, expect, may, will, should, estimate, project, plan, confident or similar expressions identify forward-looking statements. not speak reliance date only was to statements, these the cautioned made. may which as are place on undue forward-looking statement Listeners of the update we as a as information, otherwise. no by than or of these law, events, Other obligation statements, required result to or future whether revise forward-looking undertake

Investor On www.sequentialbrandsgroup.com. tables Karen Officer, and release be Lops; can found I'll the press adjusted website, Additionally, income of all are CEO, and each the over call Cooper. EBITDA our terms Brands Group's conference non-GAAP for today's Murray; are today Relations in Sequential the Andrew distributed net non-GAAP Mr. the metrics portion and reconciliation Chief Peter Lops. now to Financial turn President, in

You may begin when ready. are you

Peter Lops

for call. joining XXXX debt. second you quarter as as strong report our thank We're to results successful second earnings this quarter morning, a well our and morning, of pleased refinancing Good

has best months, Over with alternatives the achieve partners. term company the to six would explored past possible right multiple long we refinancing the the terms ensure

under its the flexibility This continue to interest into to extended debt additional second growth refinancing group support reducing runway long capital meaningfully $XXX Our their America credit to commitment by KKR to of institutions and the for led debt extends of and Bank term strategy. first million a lien This renewed great our shifting first by affirm maturity and XXXX rate. and company the these thereby weighted lenders average agreements junior credit This XXXX. lien the have the also pursue our company. for optimizes of the refinancing facility, over from provide leading the lien structure existing

each impacted straight In most recognized quarter, revenue XXXX, the on is minimum standard for revenue second in contract. us company's particular royalties The impact a a standard recognize under of our last line requires licensing of was period recognition to $XXX,XXX on varies the January if revenue which prior the revenue reported the from modified a based company outlined quarter are guaranteed our the it recognition we term adopted retrospective This revenue. where standard over basis XXXX, license ASCXXX. basis than effective new As ASCXXX agreements. on lower new X, revenue contractual the

to million in million to per prior or last comparative worth compared for in purposes second net For quarter. quarter. the is results be noting million $X.XX year's in XXXX quarter ended this Adjusted for months guidance, the XX, net for share million million XXXX of the Net the income June share direct prior the compared prior million On the the income legacy second $X.X impacted million EBITDA share quarterly period. under or you or per compared per income in basis, ASCXXX. or results for per year's was $XX.X year-to-date year income for non-GAAP revenue in Net $XX.X $XX.X was the the flat per diluted with $XX.X diluted ended months XXXX compared a was $XX months was that net to was months million prior $X.XX Stewart It's and year to under XXXX prior year's which six period. diluted year. income $XX.X share the $XX.X June $X.XX for or were $X.X was per million ASCXXX year in XXXX to six the quarter. compared and $X.XX diluted million income per to $XX.X six earnings $X.XX expired prior the company's million XXXX review $X.XX million XX, or XX, compared I'll share. diluted quarter licenses Total results. diluted consistent the Martha for $X.X the Non-GAAP to prior period. was June to for XXXX $X.X June $XX.X indicated in and share, the results compared net or to last quarter Total ended for XX, diluted revenue year's of to share compared $X $XX.X EBITDA release was by the million $X.XX the ended quarter Adjusted six

prior of excludes million interest, core $XX.X items for cash which not EBITDA adjusted cash capital to as such expenditures changes and free cash million quarter taxes are we're closed net. Our our restricted with of our half for business of second results and half million $XXX.X balance as cash that and XXXX We calculated is XXXX, the costs flow plus was $XX.X first cash adjusted and sheet including first of closing, acquisitions. the the to of the In related with year. pleased

year, pipeline and low on continue turn our be over call to of we against me As result focused high-single-digit new and to full second XXXX growth we the of mid-single-digit revenue the growth. adjusted business EBITDA let of the to that executing year into mid Karen. head to deals achieving half With

Karen Murray

Thank to drive to half us to call. as our our balance year underway to a improve execute growth, sheet activity our the comes and you, when it a continue organic lot against Peter, we strategy It's the good first been disciplined morning approach of everyone expenses. a of maintain joining on and with productive

the flexibility to support a by to average existing the and offering we're weighted maturities, As the more the interest a Peter and pleased vote overall It's our of have rate lenders. mentioned, the with refinance strong lower company. company confidence complete providing benefit of very extending will

to business Avia, in core Jessica Similar arises. to our and this our field the frequently brands that represent Revo, six We smaller We we largest drivers, our Stewart, are Joe's. divested the focus brand. portfolio continue quarter, of XX% brands interest consider and Simpson to when review divesting Martha on and not ANDX, our the growth certain business opportunity GAIAM, material our

portfolio material our one not priorities. key a consistent is on with priority number was existing our growth still and remains this to it transaction, our management's strategy of focus efforts While organization. Organic for brands

on levers outlined digital, business as during integrations. on we international, expansion progress quarter walk and category each prior key I strategic As We've four distribution across made in our to which through highlight the brand drive growth, and key divisions. calls, the I'll area, focused

category brand. division, quarter of broad which the strong brands, speaks Avia. active retail The and and the versatility range placement growth. GAIAM to a for First, includes expanded GAIAM, ANDX core with new of distribution GAIAM had the

launching end Bloomingdales, & Macy's actress in has GAIAM, a expanded brand's Taylor. core which be Bandier, Sporting and at CVS at sold a with such nicely apparel Goods line will cause of For higher Jessica The in collection is restore into brand for health launching retailers Lord wellness and GAIAM extends premium will The as hard instance, and apparel line September. carried we're new its be a line space Biel's which line the DICK's goods and Walgreens. capsule with

League in premium The such AX launch a showcase on sneakers. well. renderings is Garnett in stores track a and We excited opportunity look team marketing China later also NBA players great for to the of boutique in year. eight store Las specialty ANDX and to be ANDX ANDX fragrance in Vegas to capris, This fall. wearing partner the upcoming Chinese has the several also performing Walmart with and market. product the this by We're particularly announced and and brand at the creative collection to categories the stores performer business global been home in and was at launch continues The brand be a is incredible socks brand young director benefiting the brand a were ambassador will Summer in about shelf categories. new great July. the enacted from ANDX's top The Avia Kevin new recently way strong. key and ANDX our added increase Avia continues be out to leggings strong, to introduce brand space assortment. as our

to is year. with priority store this brand. the a authentic powerful awareness on China recently a and We and track later into grow We expanding key group campaign to there the is engagement to a that media social underway the we're of expansion have announced open International for influencers brand. drive first

new America. also in have Central partnerships Argentina and We

space. place of fashion years meeting fashion Tracy very brands our to We're drive to In to channels that of at excited retailers, the top XX expanding new Reese Since excited categories, key working growth Jessica hit Karen's with to well-known of the her ground about for and Burberry, made including across with brushes. international division. running new business her President festival, new makeup the the priority line Fashion, over opportunity Simpson Beautycon in the and worked the into our Claiborne. brands launch partners and in beauty Jessica A have beauty exists distribution joining, Turning experience We're has particularly markets. business. the Karen debut has Castellano. Hilfiger, July, she and Liz Tommy is of Karen

to line domestically on categories Joe's continues and are hair internationally. XXXX. We this fragrance cosmetics care to later in and The across stores the continue number and kids' Saks, the carried Japan premium denim brand for in well, Mexico. line. color strength skin key a in show especially track the year brand and as All department domestically the one perform best launch as to well brand is is

growth collaborating with key our international to our such in Middle the China as strengthening further for markets East, are and and partners We Europe, brand efforts Korea. position

the currently and us home including Martha QVC Now platform be an part and dressing is brand. scarves, of new new of extended perform bottoms. We're QVC continues Stewart well. fall introduce test for Martha accessory planning Martha a product by top holiday launches apparel to on great assortment the which anchored QVC to a in brand's business. to the Apparel the to outerwear, division, and categories. is growing handbags, continues and

years garden been furniture, channels. the then successful ability QVC find and and including partnership with we products our are new offerings on The July. for product Martha's which extension categories of a We're mix and on long QVC, actively at lighting, in channels multiple out accent and distribution. to to of expanding building curated key currently this spring. to for for extended of lawn, We strength window also home more. retail partnership. success Martha those decor, plan completed decor partnership home Safavieh. the treatments business beyond speaks As categories time in extend partnership meal-kit successful with to IPO Spoon renewed other Marley carefully launching the We've decor several Martha's We've new food the have rugs this recently business market We

new closely marketing efforts. our to continue acquisition customer and on We work partner with

the be also the feature In Stewart on from will in opportunity conjunction Amazon.com the book, year. of Martha example, have to shop at and engagement area reach selling and her the front Pressure additional to of retail the the has Everything its customers. food Martha half Amazon continues to Stewart's recipes locations add For categories ninety launched of terrific The the a We online Cooker. to pages September, rug, select Cooker store some plan Martha first directly brand's second provide platforms. media in and with books and incredible book, categories with and showcase pets, we to The brand online. Martha we plans Stewart's across

magazine, followers is addition year. social last across and platforms, close to the six from MarthaStewart.com, Living has million which XX% media Stewart In to brand Martha up its

and remains in Snoop's In television currently Chopped. of guest on addition, Dinner continuation also Martha X its strong of season the is which Martha Stewart & Party. Potluck the is a Martha on with judge presence season Bakes XXth brand's

refinance of our several we new progress As reflect business the multiple about a we've great provides half the renewed and robust we partnerships profile year, of focused executing. the that strengthens on activity completed Most we made. financial the additional have and we're that first on have with we We've flexibility. important, us deals, completed feel pipeline which

acquisitions We be evaluating are potential fit good could currently company. a several also that our for

you updating be call. transactions now a only could both the the We us and our will forward Thank basis. call continue operator disciplined to and we I'll consider de-levering believe to today. that We on on look accretive joining next you back for Q&A. for over turn debt-to-EBITDA to be

Operator

Thank you.

your [Operator We of Instructions] comes will Partners. proceed the from with Capital King question. Roth Please a with line now session. question-and-answer question first be Our Dave conducting

Dave King

morning, everyone. Good Thanks.

Peter Lops

morning. Good

Karen Murray

Good morning.

Dave King

quarter it. of Karen? on characterize flattish to I mid-teens guess the half line is of then launches you or And negative year first seems of top revenue how revenue the half. growth much second guidance, you imply first in it have, or on a the mentioned it from second prefer you ago of drivers impact sort second sort the overages some it first about a kicking did guess is Thanks. first, the on the on existing in license of have, versus transitions the either the growth since mainly mainly however half to new business if think that these the I

Peter Lops

you. Thank Okay.

is know, As this comp issue. legacy you our last I with think quarter the

So in having and remarks the And pick-up the you her in. things of in brand, in other about will Martha some with that that see bit is Karen half success talked year Marley the brand the QVC, second opening a business. with the Martha involved we're Stewart the the success Spoon growth some of a

the mix of talked There's about. year. happening As a half we've back things of the in

of leading key couple and existing both are some have away business larger a have there. new We driving and our brands, brands business we our that

Dave King

Okay.

I And kind that that's of it's overages these mean so might out, versus new with take really growth then driving on sort then of those it existing? then initiatives

Peter Lops

of a It's both. blend

We in the strong both have we our team focused in of There also business business year. half of new development half second some very the the back both year. we've the have that, got we've but our a is pipeline, on existing got business,

Dave King

please that $XXX the of model what's what's ended expense debt. then correct if a of helps. rate And with correctly, refinance and and the you interest I new those quarter your Okay, interest where then along result as like sounded I amortization, lines? if then wrong. the million you will I'm the heard like go that level to Curious, me net

Peter Lops

So, yeah outcome. we're very the refinance, with the happy on

$XXX I We're our our by able at several excited from debt improved as very you structure extend and mentioned and options maturities. receive existing capital debt this to we with we saving cheaper and over of think basis. As us and first LIBOR know we're looked We we're our amount shifting of, up to on an $X.X support lenders. going you each million significant scenario, other about so annual On interest. a respect lien, when an sort into to the it basis, that apples winds of apples save to to commitment million

at was So, savings terms our pleased commitment looked an for us. option pleased the if what there. we're We're existing we very, And several was very one as terms shirt that the including public best and outcome significant and very we've with very a options from was had lenders. it the this one it received of

Dave King

do have than amortization then lower on the or you is it was And previous Great. requirement the it similar?

Peter Lops

previous It's previous very situation, capital similar structure. to the

Dave King

rest Thanks for with taking of my good the year. questions. And luck

Peter Lops

Thank you.

Karen Murray

Thank you.

Operator

you. Thank

comes Our Please question. with next line the of Camilo question Lyon from with proceed your Canaccord Genuity.

Unidentified Analyst

those doing of plan? brands other are of are and of to brands, This you them and can about, plan Thanks. Karen, your core Thanks relative some to that talked [indiscernible] Camilo. get question. your morning. provide more you the what on taking color behalf the exceeding for you is know back how the brands some on Good on first are all expectation if side, of some if our brands on underperforming you

Karen Murray

Okay.

for is but performing in performers the is the business fabulous for the specifically the first is the top second business in fashion of a business, area internationally. category quarter new very And year and performing So also a Joe's launch which in growing was and specifically well, Joe's kids' us. half

the of category health and a as business, trending situated the you perfectly in With marketplace. GAIAM which know is we're in wellness

And are year, business home addition, strong in growing also Our it's the looking as at quarter, strong. but I also is as is active well Kohl's, and categories and last area in mentioned very as such in Amazon business also new launching ANDX later is the Walmart. strong, in at also GAIAM business China as via very strong now at the we're very And we one in fragrance. this beyond

as And business very So all that Martha is on And you up. QVC. is parts when with be active brand our you the fashion. business, exclude Joe's business know strong, actually in Martha, would legacy of strong the

to a big additional of And been Macy's, has also continuing home the at Martha is brand a categories. new new but core business nice performing there but sign are for performing got the we've well. business categories well brand. QVC lot We It's the strong

garden doing and categories, apparel as I handbags, mentioned flameless year. then apparel, for fall half decor, performing wine, launching the second the opening my are food well well We candles, be on remarks, in is outerwear, the scarves in season fall will of

very So but Amazon well Martha just business for GAIAM. stronger also is is doing QVC. not

in board verticals, we have some all strong So across the businesses. three

Unidentified Analyst

the viewing retail are and looking Great, thank to future negatively? on when two color. in any now how your you you is call, say three positively months or business seeing you know change planning are ago they're how for their you last discussion the they their shift to you the your any let's in with business versus spoke And in know partners, there

Karen Murray

brick You the been know mortar and - business I don't has strong.

I the it's only But mortar. the it's to you'll the with stores we conversation conversation. I an how what's doing and the business, online second and anything brick going the planning on but think to the bringing not know hear quarter nothing continuing in well is experiences they're shift if in are way that you different the more is retailers traffic, also drive constant then business, that about think online just really report ongoing

businesses conversation business So focused their on market to that their aggressively we about those and to online. way planning know do build constant and you is businesses and the trying retailers are part still the driving online bring a business and a big could experiential what of into

driving all for brands retailers digital and and to new important really component looking an think is Social awareness. in invest digital I social that all are

of now but drive marketing also it's traffic us and and authentic in-store, besides online as want marketing ways social on business in relying traditional know brands, you and So not well. we drive how to

Unidentified Analyst

thanks for thanks all That's I luck. Great, the good color. and have,

Karen Murray

this session concludes thus Thank you. and Thank participation our the gentlemen, your interest. and call and for you. your for Ladies Q&A concludes Thank you today.

have You your may lines disconnect day. a wonderful and

Sequential Brands (SQBG) 8 Aug 182018 Q2 Earnings call transcript