SQBG - Earnings call transcript Q1 2019 | 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 control of the company. This may cause the actual results to differ materially 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 in 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 to we as as whether of or undertake by than events result revise law future Other no forward-looking required a obligation otherwise. update information, statements, or these will

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

begin you're whenever now ready. You may

Peter Lops

us you our conference joining morning. earnings XXXX thank quarter Good call. And first on for

last Martha the of provide track quarter. operations As active we of sale are is Stewart for our close close, and we At in announced fashion the on the brands, and financials the update second on which time to finalizing of divisions. continuing month, the an EmerilLagasse will

items the growth or net for X.X first year first of quarter the or prior quarter the non-cash $X.XX to costs loss XXXX to our was as for $X.XX the loss the for Potluck XX.X first loss to includes prior million the non-GAAP Martha of million for the Martha of net per non-recurring Stewart income a ANDXs the million in below was quarter, the compared compared by as basis, XX.X share per Dinner ended initiatives to anniversary. was compared was share, was of production quarter. Included of diluted first quarter division, for $XXX.X per share. Stewart and fashion its XXXX First the interactive a as of sale diluted for by or in a March GAAP expectations first XX.X division. diluted XXth due brands. first $X.XX $X.XX quarter performance, XXX.X Total share, Martha partially in impairment the to million, per or prior Emeril diluted quarter net in year's million million a net On related the XXXX the in first year EBITDA quarter Emeril X.X Party, prior Snoop's X.X million marketing investments, charge loss XXXX and offset brands which to Non-GAAP XXXX XX.X and of period. year's which million, came impacted in revenue was for Adjusted first compared million quarter such for well XXXX XX,

for turn year you quarter. second cash. do XXX.X guidance adjusted the Martha of after not cash cash, company of first net less adjusted million quarter debt therefore the expect Karen. that, initiatives to and XXXX expenditures the closed call of to with on we of free interest, the and cash look We sale, debt in With with forward balance following quarter the updating consider full the and the close and down million in million calculated of core pay closing. as first on capital Our cash strategic for evaluate to keep me our million X.X restricted the cash transaction remaining licensing for including Upon business. XX closing We the is EBITDA, we the to flow potential as the items which over excludes that XXXX, of we XXXX XXX approximately was taxes let sheet cash

Karen Murray

which the the the is Martha that a we agreement announced transition EmerilLagasse step to definitive signed I'm Today company. Last excited begin sell delivering. Peter. brands, a we you, sharing meaningful month, to across underway Stewart in Thank and

progress with achieve have to other that the While high we EBITDA divisions. the Stewart we margin unable made Martha our were we brand, growing

corporate of Martha to from headquarters. include close was the current plans the the of costs which cost these full expect sale, realized will XXXX. Following will headquarters, Stewart and we be savings, This in to year realize former the impact partial our the eliminate savings significant savings reductions including

in While untapped in excited as wellness on health, focus areas active expectations, and beauty. opportunities we our brands. significant first for came now quarter results are several are There efforts our below to fashion and of our brands such

let are next forward innovative generate go share ways that, to to licensing. more on me revenue jump the plan first Please into my and addition, In quarter active about home division there With we the our while on our focus call. believe that note some strategy I'll brands. I includes our new division. recurring of streams the remarks highlights beyond fashion by still

share space. division our Avia with First, are several across and with of ANDX, tiers GAIAM, brands, the category acid International huge American and brands the expansion. and includes in opportunities active opportunity market brands is well positioned which is multiple for largest these the a distribution strong SPRI for

shift the well from and plan trend benefit and presence focus As this strengthen abroad. to to health to continues their towards positioned population global our are wellness, we

boutiques are dynamic who ANDX performing goods XXth presence We gives that brand's community. quarter all across We a marketing to ANDXbrand well back on sportswear new establishing categories the Our team ANDX implemented the industry is including is niche at anniversary, chains foundation our recently across executives focused initiatives two sporting the the building and Walmart. to an in tied US. brand's added to

the from men's industry line, and driven Amazon retailers. and of area Our is received GAIAM products. an its wellness Target, We're and expansion. excited other for on new our an a yoga, has core reaction which lines health a category partnership believe we hard for the care signed line also activewear growing brand recently in We a the where well personal future we've opportunity for about brand performance is GAIAM performing at business by

well with apparel, at more medicine growing well exercise Bandier the and health line and select to for our is strength but brand on women's and locations The new leading on retail and including The plans moving in year. quarter, areas into stores various brands accessories. more Macy's underway footwear retailers at through Vanessa are it products co-designed ambassador brand's brand to plans the well apparel at Walmart the global Additionally, selection, expand expand Avia continues new Jessica this to includes specialty distributed balls, line brand by of a launched industry other underway categories capsule the ambassador, as at actress later and avia.com, Biel distribution bands are of we gyms to global as the a SPRI, smaller, our this is children's and actress into hotels We're nationwide. focused and by Avia forward. and of Hudgens, In co-designed collection, performing one exercise fitness fall. and active growing found products. stores perform

to fashion items, division, primarily we're non-recurring the For last in the due year's business. expecting declines

consumers start. certain we're work our partnerships fashion can Simpson having September, continues purchase Jessica Jessica our and HSN to XXXX. for a brands fall products the brand's to to transitioning and we the best beauty off X% strategies, as and the been on of distribution same underway traffic significant jessicasimpson.com the online access launch this Shopify denim while the launched brand some footwear, position adjusting Jessica be The beauty site track and which world her handbags Starting in denim, launched week. such to of fragrance and be about this the now stores and with is experience the will quarter more. business on feel the luggage, of swimwear. to was results to opportunity have progress growth for category launch top marketing Also with and brand. of making great showcasing in will good line the impacted and a year. throughout According their footwear, that We're We the We to continue

We of licenses the have brands. renewals robust underway key business Jessica a new for pipeline and of

the debut on overwhelming Bernstein. the brand social out success launched in we quarter line Danielle was with for a Joe's the joesjeans.com. collaboration with selling The media to influencer brand, Moving

to to the today. addition look special on including forward We're you rolling fragrance core meaningful a Thank the categories the is for continues balance sheet close the I'll performer be well to and you category Saks. also REVOLVE, updating Denim collection Martha improved cash deliver of In out to Emeril a shareholders. new on turn brands. performing have brand. Bloomingdale's online, the the to and margin to at line work sale underway the and a value our for business over of in and plan the opportunities focused exploring with strong call net closing, transition International then currently for hosiery our we're pleased After fashion to Dubai remains for fall. operator and joining Q&A. to we us the Joe's we're on expect high this profile, company. Australia. portfolio our now we I leverage an active and and additional brands, In

Operator

you. Thank

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

Andrew Mali

with Good guess Andrew Hi This on is morning. first I start to there. Martha. just off stepping Dave. for

leverage was since when kind post-sale Martha expect alternatively, in of thinking do it. that be leverage you call the that then, there. bought EBITDA down then on roughly about contributing we it about and have million Are X.X XX% supposedly in you businesses about often times is We ballpark where XX to

Peter Lops

its some after Peter, regarding going Andrew, in give Karen her the to remarks, I more the So close. we're information to think sale alluded

some off will bit, provide a And when we numbers get answers think but that you'll by you to I though close. questions. shortly I information So your your tell we'll

Andrew Mali

maybe debt think have - year. quarter? the further, And ended guys XQ plans that the end Great, they if you to of do Would any the about just any that's were XXX then at if you the to then guys also I talk GMRs about have you further 'XX what million. reduce happen number? have could And you throughout in helpful.

Peter Lops

part ratio going I forward thirds Yeah, changed moment, not pretty after XXX, but the the includes hold so missed? about adjusted ebbs GMRs they're continue they and a that course two has up question revenue of flows, their about natural first the and our are where to of Martha true the to be we'll GMRs. have same which consistent transaction, was will from there so at And much make

Andrew Mali

if potential throughout there's further reduce just any plans the year. to debt Yeah,

Peter Lops

so about XXX certainly we in we're remaining the remarks. continuing We'll right down opening board our with now. closely Yeah, The pay XXX working the had that we're evaluate. to approximately what We're in money the best sorting evaluating and couple out the middle options. of one the is certainly use paying a that of down of of is debt talked and process, that options

Andrew Mali

any at me, so? do potential acquisitions then of going from proceeds on positive on for may just and sale, kind in opportunities that's you And lastly get some they've you're any been the to about area helpful. be looking that how the feel and the space Great, you of are that activewear

Peter Lops

still we're for on It's performing well us. bullish very active. Yeah,

think very I category the is well. doing

In disciplined, to be the allow right something as going be part our one also be terms of at of for would smart is sure to acquisitions constantly as acquisitions that accretive. we're going patient board part and what that company, and it us we and we're continues delever do, does, to very looking very a we're to make the

constantly future success. we're up trying for and to looking So sequential at set acquisitions

Andrew Mali

Great, it's my you. for questions. Thank helpful. That's it

Peter Lops

You're welcome.

Operator

you. Thank

from Steve & Associates. proceed with with Steve comes question next Our C.L. King question. Marotta of your - Please Marotta line the

Steve Marotta

'XX alluded you negative that those to bit for Good fashion Can moves a Karen, morning, are you little fiscal talk queuing comparison? year in a were up what about Karen specifically? year-over-year Peter. this and

Karen Murray

mentioned are Steve, they fashion and to we but my quarter. in in partner looking we year. a script the - transitions transitioned in at it we're not items it's that we year. against partner impacting that had Initially Sure. for prior and a from out the strong until it's a re-launching, we that later example, would year, a moved Tracy this non-recurring thought footwear the few are was licensee but a in earlier new and fashion, be quarter and Ellen year were I We

the we that having call that terminated We alluded partner also issues some that have we to a last during Jessica. partner in I with were and

not included quarter. If at you remember And that's this we there's continued and sold Fuel Heelys. in softness Revo

we we we on So And and brands. that some continue again executing year, fashion. of advertising for - Revo quarter, we they're the our the commitments in had the partner expenditures back against. were home, that commitments and commitments But in continued quarter marketing, still areas with all made additional commitments. our there marketing active partners, softness, which Heelys we marketing Throughout cutting between three first the terminated, we're all in for not the had feel we Fuel of are in important and could transitions to marketing

Steve Marotta

you with the and be this a quarter a a about And the to there immediately is going to talk you Would bit Okay, bit or magnitude? two? is magnitude? timing moving. Can again, the little after can lag regards little or headquarters divested, about it a of occur Martha talk and the

Peter Lops

Yeah. Sure, Steve.

middle began been and So to certainly now. yet, the with interest. We the a traffic in one of plenty space. right of broker. found no There's we're something sublet specifically We're looking there's working

So immediate. it's not

much we in expect to become rent. So on based predict that persons of hard sort company lower space. will a and that right a have take when And time that have it's the as find significant we come the you smaller impact and the

Karen Murray

this We had significant next year. much a but more of year, benefit a there's a little benefit bit

Peter Lops

completed? When is the sublease

Karen Murray

Yeah.

Steve Marotta

And brands Stewart, Martha have organic And the in the portfolio aggregate going forward? extension, a within of exhibited by growth. you question last expect similar consistent is the the balance excluding the would

Karen Murray

some strength. partnered at strength as are know, ANDX, with good ambassadors just helping GAIAM but we very about our But the active and that well. Activewear business. grow. we global really, feel we to into health, brand Again, beauty. active Avia, bullish to We're And is about brands, we to not about has Sure. brands and propel going doing as wellness but international said, Walmart, Peter expand is brand that really continues spoke and the Avia feel, you

mentioned the brands which of balance of almost doing site think traction on and towards I the that start see these that's in partners And we launched but fashion jessicasimpson.com, every active initial is well. are transition on has believe that year small, we and partner and growing. a is we'll business upgraded as to strong. well, in as newness So very that I SPRI, site indications including that I again really lot are sales coming the the that

into a about So on the back marketplace stronger good feel fall. we that this coming HSN be her and way. She'll in

of feel in with marketing, on with So partners new and there's brands. good all our the new focus fashion about very movement active and

in fashion So we're that's we the feel and margin, active. just high efforts areas you that that and refocusing good our we both told and really were about

Steve Marotta

of balance Very offline. helpful, I'll questions Thanks. take the my

Peter Lops

Thanks, Steve.

Operator

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

You lines may a disconnect and have your day. wonderful

Sequential Brands (SQBG) 8 May 192019 Q1 Earnings call transcript