ICON - Earnings call transcript Q4 2018 | Iconix Brand Group, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Iconix Brand Group Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct the Q&A session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Ms. of Director Senior Cosentino, Financial Reporting. Cristina may you begin. Ma'am,

Cristina Cosentino

Executive Iconix Good On quarter fourth Officer. welcome our today's Chief McClain, the morning to Brand Chief Galvin, XXXX Bob we with Group's and Financial have John our and call, us, Officer; earnings conference call.

place meaning that conference and call, uncertainties today's or performance risks, the achievements expressions from believe, are reliance that This these of factors, would facts and in to all of difficult to this the number a not are be statement. Federal actual forward-looking beyond was Securities as are involve cautioned forward-looking achievements the forward-looking or Company. of statements making historical performance like as undue statement or by different similar or Galvin. on During words the some Listeners laws. Bob call are statements statements. The which which will over be within and to other of impossible results, many results identify turn forward-looking to materially expressed speak of may confident the we cause the implied made. now such date of forward-looking The predict to the expect, Company I statements anticipate, of contained only call the which are to not statements control

Bob Galvin

year saw impact experienced Cannon XXXX for We Danskin Thank determination our We bankruptcy, Royal Mossimo, challenging the a transitional businesses. Joe Sears Boxer an Iconix. DTRs and you, Cristina. the including number of and Bongo, wrap-up was and a of a to of Velvet.

February historical October at joined in focused of planned XXXX. for on of issues task and departure With executives, of our the the in have all John and future. Company number of optimistic its mid unplanned. building and hand the I this, remained the We XXXX, CFO, cleaning joined people and new also that McLean, experienced the Company and of a

business we During restructuring the months, past number a five the areas practices. have progress of critically model and analyzing made and

into business foundation coming XXXX XXXX for goals Our to create stabilize and and beyond. growth a were in the

While Iconix the focus that foreseeable our future. for the not acquisitions, grown will be in via past has

We that of of keep being the almost XX their portfolio have still maximize us in potential. a and are while brands harvested we process busy will

to report happy are a developments of positive We for number on XXXX.

XXXX We receiving the clean audit. opinion auditors be will from a our for

agreements December We XXXX, are in debt compliance through and XXXX. various our XX, as of continued compliance with forecast

significantly reductions our and extensive have management. SG&A cost reduced We expense with

new brands categories ongoing signing are deals DTR for We former and brands. certain these having negotiations are for for

are our towards working progress delisting NASDAQ that X-for-XX their we issues reverse made recent stock with outstanding resolve split. have resolution to significant the believe including and We

emphasis with fiscal we approximately on bigger our reduce to we to that SG&A expect internationally. have are and grow the by How We for million but that against XXXX. compared changes territories and reducing categories XXXX multinational for to cost the strategy expenses will that internal organizations utilize and on look focus into strategy agents, and we all revenues, arrangement continuing adjust align licensing to managing on Our resources our strategy? brands $XX instituted SG&A opportunities in go-to-market be for by to utilizing our a continuing will licensing supported executing with with focus enter larger have XXXX expected

reduced costs approximately by this million. write-off, expect we will Excluding be $XX year's SG&A

in will reductions cover fees, related expense this of achieved in the more management. John management professional personnel receivables these We later. detail and have other and areas costs,

XX on In day-to-day interacting has the to all the their of are reduced The managers now this been increased global U.S., the they reduced and reports by from stay increase of during me segments business time, in an across We world. headcount as result XX direct operations. and to with collaboration from brand have to My year-over-year territories more in allows in peers to have involved various which the XX from to parts VPs XXX XX. about have and headcount total employees we top XXX. be other

go-to-market As well of mentioned, we utilizing this the have on across shared agents basis. licensing setting also pay-for-performance up revised was brands strategy. our Part services, as strategy as a

expertise relationships. number deals are consideration. We We who been X engaged on believe getting generated have believe approach categories. and would we these traction October agents specific $XX expect million the a brands, them across or deals with and renewed have for of globe. GMRs during required We entered have of agreements. we have potential and the XX not agents or into channels this aggregate over over under deals life that These deals focus as the Since represent have up the XXXX, of tied an their been licensing

Himatsingka a Himatsingka. new multiyear Velvet We retail in elevate Royal pleased license already long that with brands. first of including a have recently to DTR and deals help number announced were We the has history deal. the our industry former their announce is to secured brands

PONY apparel for for agreement. multiyear They a USA, We in children's men's, have already beginning Foot Locker, Champs, to Kixx One this began spring. and Step to orders XXXX have Up licensed shipping placed women's also footwear and and

which end executed Retro an of products and announce team Key to back launch, footwear to quarter likely XXXX. by Starter We new been will transition the at during at be in service the and to school launch colors, in expect also under the partner footwear period the materials running the mid-April XXXX, expected Iconix has website and for One include launching categories excited we of its are will GX has are the include to expanded and a Classics Step apparel for expect various timeframe. Starter third we pony.com Up. outstanding deal by for up

We deal renewed Umbro America have extended our us. also South with with in and

global are who a support As can we larger categories basis. mentioned, on and territories brands, on focusing partners multiple

alliances find regional strategic to looking also on basis. are a We

everyone's various smarter better, primarily through can We sourcing. how licensees cost overall working with are to reduce we determine

if licensees global a We of cross-selling partners current are basis. local also with are not Internationally, suppliers our we only on on can the be for needs categories some for also our partners. focused market, but evaluating, our

partners returned brands have expanding We and Korea. I London countries and these reception Our was XXXX XXXX our their increased my new brand and consumers abroad. needs those the Jeremy to to place amazing. recently in Danskin and has focused in with in and collaboration to were to opportunities. done Follow-up for in expect meetings to Jenna markets. pretty potential reviews. We that XXXX. categories similar opportunities most Japan getting and know our with was Scott meet great taking recent have both This business saw trip The territories. Dewan expect been generate we significant in is awareness Fog in brands

earlier very Rampage, We creative to announced which as was beginning Savannah brand director featured this Best, week. also are show will Chrisley have from later excited Knows cable be on for top-rated The Chrisley the show this year. cable their

into Star believe deal for brand a Vanilla will we has help license Finally, which Hardy, Ed entered the with reconnect influencers.

that our a current number debt. we Finally, misunderstood facts of regarding believe

anticipated with full now, we is of agreements business we XXXX. financial in with through as requirement based a and debt January detail our Therefore, facilities our taken expectations John we cost-cutting January we a legal more date for to expect to opportunities been covenants XXXX. result date in to has to not facility restructure mandatory we of well XXXX. in debt a securitization our forecasts, are debt, into do on compliance Moreover, new our and debt our have and of be revenue the direct XXXX, the alternatives. explore all current have of to evaluating under Our John? repayment pay-off go maturity securitization pipeline. budgets This our as strategic actions and actively will continue

John McClain

Thanks and Bob. first This to here. be my earnings pleased is I'm call

basis, basis, a revenue Danskin, and XX% months right quarter XX% brands. and three as it Women's Cannon in as down a XX% our DTRs previously the company dig the of and of was bankruptcy a segment woman year. the the segment Joe impact both a the and adjusted the segment Total quarter on expected on now Sears announced EBITDA for Mossimo Bongo to the in year. the and for as of transition in, principally On OP XX% XX% decreased our our on So for expected, for was company and Boxer, year result revenue total

In by As previously down Mossimo the and discussed, result of our of revenue to the the X% strong impacted Starter and Ecko and the DTRs performance the revenue Bongo. and Umbro. year. decline the Amazon, multiyear The The Sears was was largely from Umbro and the which coming with of a offset Danskin, the strong our Joe distribution from principally quarter quarter Buffalo year by segment, the Target. Buffalo, was XX% for Walmart men agreement success from transition & brand transition Boxer OP showed impact bankruptcy the for performance was on the up of negatively in

was segment down and home down the XX% the year. XX% for for Our quarter

of full-year at Sears impacted both Waverly the on was renewal the impacted quarter, Walmart. the principally contract negatively the terms the decline bankruptcy Inspirations the brand. Cannon the Sears was For our of The by bankruptcy by and

XX% and Our to Umbro, Lee international saw X% continues grew business. increase. QX, where on of to full-year In strong division the the Cooper our be contributor strength to revenue contributing a primarily its the Umbro, Starter

XX% a quarter compared in costs, related more spend. Our XX.X lower fourth the how fourth targeted decrease com the stock on XXXX. million invest was costs, was advertising lower had million, to to reductions performance tied XX for marketing of Company's a focus SG&A the we on and in The we as in were principally expense quarter which

the X% to with the quarter increase the which Sears takes For up bankruptcy. X this was expansion overall and of million year, related lot bad essentially had gives represent SG&A debt

to the costs under on with test XX the items Boxer brands. the The settlement, one-time details venture related and release Company part full-year reconciliation number filed litigation XXXX reported including and as fourth impairment gains of Cannon normal for Mudd, of investment. such we related charges, today for Joe and trademarks In quarter, income to and million impairments, Our the licensees, gain earnings charges impairment severance, has consolidation non-cash items. quarter and XXXX approximately terminating quarter sales our the all included joint primarily Massimo, statements the of associated

hand million million at balance XX.X the the quarter, end which we had on cash XX.X to of Turning the unrestricted. U.S. of and was of in sheet,

at from million convertible notes at value unless end year. XXXX million face XX debt otherwise balances approximately X.XX% million the have XXX million this the compared the of XXX XXX notes Our XXXX. growth million of XXX converted to represent These approximately in August decline million will exception. balance as outstanding of of with XXX the end the at Of mature

facility then is at not XXXX anticipated The has interest total on securitization and interest of coverage ratio XXX an senior refinance plus year-end. matures under facility. to Our date bears the Balance top coverage of LIBOR with financial on the our current until payable maturity XXXX which weighted as legal and loan, which XXX a interest ratio secured We're our well compliance currently additional our of is as date rate the under of rate approximately average in isn’t XXXX. approximately million credit January is the covenants debt course August X% repayment asset term relates our by of goes and in facility, the XXXX. debt interest interest has service and interest which a agreement up. leverage ratio If of compounded. XXXX, not million, This an X.XX% in securitization

excess facility, projection available received the followed service to the our as debt by our amortization, our will securitization current forecasted were April, of through in and if collections principal. of in secured go these be if and generally fee service. fees and in date expenses works. will in into so. go just continue our back Iconix. by a be portion the to normal When loss spend sit will have we cash coverage collections Under of quarterly to debt ratio to mentioned, as brands towards cash from comes if receipts on receive any of these to status. facility, I'll any of shows brands the reserve immediately XXXX we're Facility how of it the decrease the residual, our significant This account collections operations, basis management fees the directly to Additionally, a principal. Iconix that payment and a in all within insufficient will three-year due be trap, our operations. rapid management certain not would interest in securitization will do is amortization compliance the in fee, certain means on pay in In impact we be as then a certain Maybe to to next a residual and securitization believe down another Bob the on management minute licensing others facility rapid our interest future, the pay we there's its and from the pay used residual residual, of do principle this

dollar. a the they reminder, a of As financial pricing per look Shareholders reverse in stock affected back weeks split to reverse numbers. reported split maintaining meet completed of trading listing statements, in a people share for September stock that requirements split the ago NASDAQ over split our a our as at X-for-XX we reported regarding we and reflected few and approved

revenue XXXX, This and EBITDA to as reflects better reviewed eliminated efforts $XXX of claims mentioned. rationalization in non-productive million and of be EBITDA from be -- work settle investments. other savings come XX we from look cost again spending. other lower use to lower between ahead outside the anticipating sponsorships are $XXX we non-essential between on million. and and we resources, fees, primarily process, the XX lower and currently better reduced managing legal manage fees we all have professional all less adjusted finally, as the And to spend These areas where we to as the As workforce, advertising cost full-year to previously we Bob million, benefits adjusted

we to expresses With methods. and a cash back improve over relationships our on expect we call the I review the to partner front lower and turn then Additionally, much debt bad Bob. critically end see monitoring collection that,

Bob Galvin

our and John. made he I've me already on We New intend I'm meeting that has revenues. you, the John to to of has Thank a annual joined attention in my Company allows for Iconix in the May Xth at impact more John here in City hold focus global and drive positive the Iconix. to known having He thrilled over shareholder a decade York short-time offices.

receive now other revised to investors sign-up also our allow the order in homepage line to our opportunity parties to to will releases. have the interested We questions. open press and Operator

Operator

Our first Instructions] Beder Research. question with from [Operator comes Eric SCC

Your line is now open.

Eric Beder

the as of other you will When the and in are thinking you in you about be new terms kind for expect and Do licensing seen driver the of look what agreements the over bottom XXXX? seeing as XXXX a XXXX kind of revenue at last terms here few especially licensing that pieces. that we've be agreement a of we should weeks

Bob Galvin

uptick. a negotiating joined get take Yes, we're the the in deals and we're to start we of Eric, going Company deals I beyond. think the see of having these year, in will We're the as really building pipeline, in lot place, and XXXX into late to entering that currently

XXXX and realize this fueling those in at beyond. will point we're the and So, pipeline

Eric Beder

need And you -- and that at these asking leverageable infrastructure deals infrastructure is see new XXXX for guess beyond, have when here? the Company I I'm you as remaining do look kick-in at in the how you the

Bob Galvin

we Yes, manage I don’t more have to revenues cost Eric. additional add think and deals, to

think the new adequate of have we structure and those deals. all more place I manage cost in than is to businesses

move we else further our cost I think so, is, anything as forward be reduced can increased. not structure if And and

Eric Beder

it licensing we at DTR today, Or look obviously be business it And that what of DTRs? going you kind to significantly looks decline. for the coming of new there of terms going When is forward should method? in future expect agreements a the really licensing that? Is more traditional are is like

Bob Galvin

don’t on and don’t manufacturing are call we much to us relationships think going move larger as focusing help deals wholesaling who large we would more I with Yes, what norm I players go-to-market I the that's DTRs, eliminate with can I that easier. think forward. be but

Eric Beder

And question. last

talked You've about M&A.

growing on And terms your repayment flipside thought process business. divesting how thinking debt What's you're are as You you businesses? focused that? and about the are said, you What of about not, there? in

Bob Galvin

businesses owned. be of is don’t any if someone would we always interested, divesting entertain on but shingle a opportunistic discussions. have the the for We sale top We will brands, of that out in we Sure.

Operator

Thank [Operator you. Instructions]

Bob Galvin

other productive look support, for participation, we we everyone thank much no to their XXXX. their Thank With questions, more forward a like and would to you.

Operator

and Ladies participating in conclude you This gentlemen, thank does today's disconnect. you for wonderful a today's program day. and conference. all have Everyone may

Iconix Brand (ICON) 27 Mar 192018 Q4 Earnings call transcript