ICON - Earnings call transcript Q2 2019 | Iconix Brand Group, Inc.

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Operator

Hello, and welcome to Iconix Brand Group Q2 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, today’s conference is being recorded.

I’d now like to introduce your host for today's conference, Cristina Cosentino, you may begin.

Cristina Cosentino

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

all a today's and conference the of which that predict call statements within of are are During forward-looking historical other facts The involve Securities meaning we forward-looking control making the which will or some number call, of difficult contained uncertainties statements impossible laws. many not Company. and Federal factors, are of statements risks, be the in beyond are that the this to of

or results, different forward-looking statements. implied This actual performance may materially achievements to from of cause performance the results, be expressed by Company the such or achievements or

anticipate, only similar on date undue of place as words expressions not are speak expect, reliance the Listeners was The and which identify as cautioned statements, confident statements. forward-looking made. to statement the these forward-looking believe,

now like I over Galvin. to Bob call would turn the to

Bob Galvin

Thank you, everyone. Good afternoon, Cristina.

weeks around deliver to to results and you, been last reported since continue It's our we plan. on we XX

guidance. are report pleased second and our results in We line expectations our that are with quarter to

$XX end Our the second we quarter put place cost in or of or the the details in John later expenses compared through million dividends million XX% will We in XX% six savings months. call. by pay when XXXX last reduced remain at that to business. the continue the on and year, provide we and focused first approximately to $XX

on of and and DTRs Boxer, as loss the Cannon Bongo. was expected, compared for due to the bankruptcy XXXX, the second and Joe the the of revenue Mossimo, that quarter XXXX was for with second when Sears of Velvet, Danskin decline While more impact Royal than half of quarter down

contracts levels are than favorably signed are impact in On the And the Cannon. Sears which GMR opportunity the these results new new at of agreements while and back Joe agreements Cannon. these non-exclusive the us begun distribution will agreements, the half have front, These new with in we Boxer already expand new lower positive give has the contracts year. recently for to and prior

also U.S. we footwear in Eastern Mudd European major Lee for Cooper renewals quarter, agreements several the for Rampage and Ireland, in Fog the women's significant footwear the in finalized for new in U.S. for London and During in U.S., U.K. and the Umbro countries, the for

added Korea apparel of agreements the or roster we to have York have Overall, We total aggregate million. $XX FILA for signed categories. and footwear brand approximately a product GMRs which fiscal the XXXX, renewed with also of total in of license Zoo addition new XXX

in international the year, saw were that Cup. also business years. to We of for pleased of business outstanding during number slightly We're our year-over-year related the when the lawsuits of several last we first have Iconix $XXX,XXX plagued a have we XXXX that resolved nearly up the excluding half World of

the to I call will turn now over John.

John McClain

Bob. Thanks

Cannon previously the first the of of total women's and as impact the our bankruptcy DTRs transition our Mossimo Joe Company Velvet announced in quarter revenue Royal XX%, down Sears our a basis, principally our On was a and segment, Bongo in of on home result Danskin brands. Boxer, segment, and

than year. quarter, last Additionally, brand lower our in sales the had Buffalo

as we an earnings today operating charges loss Mossimo related release year operating including last Our $XX prior one-time items million quarter The included was $XX.X items. versus to the brand. in reconciliations filed a to year, details of income million related impairment the few such this quarter

XX% improved as while revenue decrease XX% adjusted from our XX% to margin Total EBITDA decline. outpaced decreased Company quarter adjusted expense for our the EBITDA our

the for expected, basis, as segment women's segment three revenue was XX% the down a months. in On

decline the of Bongo. transition revenue As DTRs previously result the The on segment principally down for which Sears In discussed, Boxer XX% the Danskin was Cannon Royal bankruptcy lower of men's of principally the down Umbro. Pony impact of home with for Sears Joe the due in the brand, the and XX% and quarter, was the transition Mossimo our and quarter. was and Buffalo, decline to The segment, impact DTR. principally the Velvet and of bankruptcy was our the the our is sales

that the we down softness China. decline being XXXX of and World Cup X% international was with the segment, in had revenue In absence the in business

Our categories we of expense with XXXX was a savings in The second $XX.X reductions the significant million, costs, major the to the has $XX.X quarter advertising. all related plan decrease in SG&A expense of quarter in second that yield most professional continued began the in fees reduction personnel million XXXX. in XX% compared quarter with and fourth expense

collection collected last we written also went savings been SG&A. the of the XX% debts which margin bad million, $X.X effect receivable from had lowering EBITDA improvement Additionally, totaling almost some I which the The expense have accounts XX% the year. previously for quarter, in mentioned which off, drove to of and the

deals year-over-year, compared of is of XXX $XX on Bob I flat focused that the an XX% last renewals represents add $XX GMRs year. in number new as number this we versus deals XXX XX% signed in to number of increase increase the dollar signed we opportunities. of for year and we've million while to mentioned agreements year wanted have increased new While that finding represents XX% last the been the signed those GMRs, million a The amount in

$XX.X the the Now, subsidiaries turning to hand million We and quarter unrestricted. of end balance had in $XX.X of which the wholly-owned sheet. at was with of million on cash

notes $XXX notes, as XXXX. approximately balance quarter at the million the $XX mature $XX with million declined represent convertible, in outstanding, our unless end $XXX the this at of prior the quarter of end. million million X.XX% first approximately quarter. August convertible compared to million Our balances of the quarter These the face-value of XXX from over end debt at million otherwise $XXX Of

facility, bears January average which and million, X% approximately a date $XXX a our facility relates which has legal loan, date rate balance of senior anticipated an X.X% interest of XXXX approximately and has interest of Our end. million of plus maturity LIBOR $XXX in at quarter This weighted term securitization repayment the matures at XXXX. The XXXX. August to secured is

As and the we interest, top during until interest current our is debt discussed the on XXXX, prior the interest, not refinanced not calls, by And if which payable compounded. of goes isn't XXXX is then up. is rate additional

total coverage securitization facility. ratio debt interest-only well in under asset currently are compliance our as agreement coverage ratio with our credit our ratio We as leverage the under financial covenants and of service

be current to XXXX. Additionally, projection in compliance shows through three-year our

Iconix towards continue decrease we coverage and in to directly certain other fee, are to debt go fees its collections management in status. rapid excess the receive will Due and rapid will within our ratio in of management fees service securitization In debt now all amortization status, our service. facility, amortization

believe securitization, back from if As by on management of These the operations, facility normal a into the will any, would will received on collections immediately it by principal. When residual, brands impact comes management from and a licensing its we're loss securitization, Iconix of reminder secured any go a is if Generally, continue fee and the these the our be principal. used Under facility. to followed there's the our status, in residual, the Iconix. pay have fee, then the to to our do receive is amortization this interest collections to residual significant rapid operations. not certain brands. down we pay

plan. on guidance our And remainder of XXXX, we at finally, as remain the for we look

be we between adjusted For lower million. of EBITDA, now have million end EBITDA $XX $XX and and our adjusted raised range, to the anticipate

revenue, a For little it’s more complicated.

costs estimates. $X this million. EBITDA the need accounting to an net impact. revenue to end SG&A new standard with making the estimate But we This costs. about EBITDA now guidance, represents and increase from than for as types adjusted costs refine to estimate revenue the revenue, our And XXX, those drop year. have the the it the no range account we certain for advertising SG&A beginning It's With not And very we by of do is brands those raised rather of did simply number of such recorded reclass, $X at adjusted against that difficult by an as expense obviously a we reclass million. impact lower

Our million million. range $XXX $XXX for revenue to is now new

with And turn that, I the over to call Bob? Bob. back

Bob Galvin

Thank you, John.

progress with we the remainder making, pleased continue hard are at that the we'll work plan are our We year. to of and throughout executing this

the I that, With question. line will for operator, now a open

Operator

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

open. line is Your

Eric Beder

Congratulations on afternoon. some Good solid EBITDA.

Bob Galvin

Eric. Thanks,

Eric Beder

some of pieces seeing, your terms When there the gone of What out disruptions are at of of seen you for you we've you? like and that and and kind affecting brands, are the the other look have a dormant. for you some with of landscape politically some internationally what seeing little bit ones of some in the OP brands

Bob Galvin

that question. didn't part we last get the Eric, of

Eric Beder

Internationally, in about U.S. what occurring the of internationally? are given been terms and you of demand other talking seeing some Brexit the licenses, intermediation have people of some for

Bob Galvin

China. the the over at since four And been and question. of that we're and all demand trips meetings I've seeing take part to I'll approximately waned second discussions any those our the Korea Thanksgiving. presenting of we're Sure. as not interest demand Eric, has portfolio. Japan, and continued to made I've in Europe;

present structure that on overseas brands we're growth brand So, positive themselves. and the optimistic and the our

Eric Beder

at... When you look

Bob Galvin

DTR fuel part of the striking the interest and again. success Eric. across in channels continue If ‘XX. scale positive the categories in could of deals back haven't some pipeline categories DTRs, ‘XX of multiple we for that we It's had doing What number first With but there. meetings question anything a to in basis, and those continue other on the and we of on large product to different is now have is circle distribution, OP a

Eric Beder

next I’d just my And Great. ask question.

we signed, and we how deals now, in you for deal, should does for some these in year. But should impacts deal have basically, any have -- them thinking the impact and about how that impact some shoe XXXX? a we about should Danskin which them of So, does just XXXX be saw this thinking you think all how I impact did about

Bob Galvin

Yes. right, six but around the year. current second as deals Eric, revenue Right? end years, maybe of at instance, months three we generally, the deals have on three bit deal, that sign, years. we’d the signed the recorded So, in for average we little years, three of quarter, that more than a

of you'd be you call, it in the as obviously, it of months. XX look out year, than X less back So, at part talking the

positive worth full there of sign ‘XX while revenue. But, a of for benefit now is these a deals will is So, impact, ‘XX. and after year's all it in ‘XX majority that the we

Eric Beder

Housekeeping question.

on believe convertible, So, month. you or I due cash Do the this in interest in the it's on that plan stock? paying

Bob Galvin

think I needs paid within think announced, We are but XX, before to had it that cash paying paying -- in I in and we we're the next be cash.

Eric Beder

Okay. incredible Final And Are price you've side at SG&A can cutting, leverage the an look excuse up -- much how cleaning statement. excuse question. SG&A? me, much cut the and for you now job When you your - the the end the we you of sheet balance me, cost near in base income reestablished this -- the on of pretty that? do done

John McClain

to to we at Again, we optimize organization costs out don't continue And those. continue will to look I that take the of add think value. opportunities that

got I a again, time. for on do, percentage look what are we there that. to in that And good we to us continue look this will that to the think, continue of of at at streamline to point improve as continuously we revenue we that business. EBITDA focus is leverage. we And rate a and take something to we've opportunities if run But, advantage

some to But, the and Some to quarters, strive see we had some of flow, and how can to and ups downs. see this we’ll the of that revenues we continue improvement quarter, have with based for upon look to the continue type way some spending of that. that want we

Bob Galvin

where without And have will say And lot this look costs. if the platform we ability we're significant at the we Eric, greatly I continue to top-line add We having to would lever incrementally in as to awful could that. sits amount add you structured, that at an platform. do and the now,

will the do to So, hard it and at it. there to looking continue agreements opportunity work there we're and out for is new these

Eric Beder

And Sears gone -- now And they've post Sears are Are just properties. Okay. that know parts me in you non-exclusive. vehicle? the the The secondly, two one properties I now places? the let Sears take How here. the more now think to are those potentially so I with new, bankruptcy to about you excited -- other potential properties said

John McClain

gone who do only I those people traction already have a of having little first used be we is the meaningful non-exclusive, Because to us. been in looking them that for but outside. having we're with Again, way. after we've brand has And for things Boxer couple Yes. do important think to one a the not creatively Sears, want customer a Cannon Joe a announced. seeing to in we're who's bit

Bob Galvin

And was, deal to which question yes, we continuing new the that signed Sears and stores does your continuing with the first this part the TransformCo, of is pertain new stores? Yes, the the they have. the is

Eric Beder

Again, congratulations Great. rest the good luck of year. for and the

Bob Galvin

Thanks, Eric.

Operator

I'm you. concludes for queue. today's the you in Thank and no that showing Thank participating. further questions call. gentlemen, Ladies

You have may Everyone, disconnect. a now day. wonderful

Bob Galvin

you. Thank

Iconix Brand (ICON) 8 Aug 192019 Q2 Earnings call transcript