- Q4 Revenue of $10.6 million vs. $1.8 million in the
prior year quarter
- Q4 Adjusted EBITDA of $7.1 million vs. $(0.7) million
in the prior year quarter
- Q4 non-GAAP Net Income of $5.2 million vs. ($0.9)
million in the prior year quarter
- Full Year Revenue of $22.7 million vs. $5.3 million in
prior year
- Full Year Adjusted EBITDA of $12.3 million,
representing a 54% Adjusted EBITDA margin
- Full Year non-GAAP Net Income of $6.6 million vs.
($0.6) million in the prior year
Sequential Brands Group, Inc. (Nasdaq:SQBG) ("Sequential" or the
"Company") today announced financial results for the fourth quarter
and full year ended December 31, 2013.
Fourth Quarter 2013 Results:
Total revenue for the fourth quarter ended December 31, 2013
increased to approximately $10.6 million, compared to approximately
$1.8 million in the prior year quarter. Adjusted EBITDA for the
fourth quarter was approximately $7.1 million, compared to
approximately ($0.7) million in the prior year quarter. On a
non-GAAP basis, net income for the quarter was approximately $5.2
million, or $0.20 per diluted share, compared to a net loss of
approximately $0.9 million, or ($0.37) per share, in the prior year
quarter. On a GAAP basis, net income for the quarter was
approximately $4.1 million, or $0.15 per diluted share, compared to
a net loss of approximately $7.3 million, or ($3.00) per share, in
the prior year quarter. See tables below for a reconciliation of
GAAP to non-GAAP measures. Yehuda Shmidman, Sequential's Chief
Executive Officer, commented, "2013 was another transformational
year for Sequential Brands Group. Our portfolio grew from 3 brands
and a small grouping of licensees to 8 brands with over 50
licensees that generate approximately $1 billion of retail sales.
Our revenue and profitability metrics increased significantly, and
most importantly, we invested in building a strong platform which
we will be able to leverage in the years ahead to achieve our
organic growth targets and our acquisition goals."
Full Year 2013 Results:
Total revenue for the full year ended December 31, 2013
increased to approximately $22.7 million, compared to approximately
$5.3 million for the prior year period. The Company's adjusted
EBITDA was approximately $12.3 million, compared to approximately
$0.0 million for the full year ended December 31, 2012 and the
Company's non-GAAP net income was approximately $6.6 million, or
$0.35 per diluted share, for the full year ended December 31, 2013,
compared to ($0.6) million, or ($0.26) per share, in the prior
year. Net loss on a GAAP basis was approximately $18.0 million for
the year ended December 31, 2013, or ($1.01) per share, compared to
a net loss of approximately $9.1 million, or ($3.78) per share, in
the prior year, as the Company incurred certain costs during 2013,
both cash and non-cash, that were not representative of the
Company's ongoing business. See tables below for a reconciliation
of GAAP to non-GAAP measures.
Financial Update:
The Company projects revenue of $28-30 million for the existing
portfolio of brands for the year ending December 31, 2014,
operating at a 55% adjusted EBITDA margin. The Company expects
margin expansion to continue as the Company acquires additional
brands that are expected to operate individually at approximately
75% margins on a stand-alone basis.
Similar to the Company's 2013 quarterly results, the Company
expects revenue for 2014 to be weighted to the fourth quarter due
to seasonality in the businesses of many of the Company's
licensees.
Investor Call and Webcast:
Management will provide further commentary today, February 27,
2014, on the Company's financial results via a conference call and
webcast beginning at approximately 10:00am ET. To join the
conference call, please dial (760) 666-3775 or visit the investor
relations page on the Company's website
www.sequentialbrandsgroup.com.
See reconciliation tables below for non-GAAP metrics. These
non-GAAP metrics may be inconsistent with similar measures
presented by other companies and should only be used in conjunction
with our results reported according to U.S. GAAP. Any financial
measure other than those prepared in accordance with U.S. GAAP
should not be considered a substitute for, or superior to, measures
of financial performance prepared in accordance with U.S. GAAP.
About Sequential Brands Group, Inc.
Sequential Brands Group, Inc. (Nasdaq:SQBG) owns, promotes,
markets, and licenses a portfolio of consumer brands that presently
include William Rast®, People's Liberation®, DVS®, Heelys®,
Caribbean Joe®, Ellen Tracy® and Revo®, The Franklin Mint®.
Sequential seeks to ensure that its brands continue to thrive and
grow by employing strong brand management, design and marketing
teams. Sequential has licensed and intends to license its brands in
a variety of consumer categories to retailers, wholesalers and
distributors in the United States and in certain international
territories. For more information, please visit Sequential's
corporate website at: www.sequentialbrandsgroup.com. To inquire
about licensing opportunities, please email:
newbusiness@sbg-ny.com.
Forward-Looking Statements
Certain statements in this press release and oral statements
made from time to time by representatives of the Company are
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are made as of the date hereof and are based on current
expectations, estimates, forecasts and projections as well as the
beliefs and assumptions of management. Our actual results could
differ materially from those stated or implied in forward looking
statements. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, expectations,
intentions, projections, developments, future events, performance
or products, underlying assumptions and other statements that are
not historical in nature, including those that include the "subject
to," "believes," "anticipates," "plans," "expects," "intends,"
"estimates," "forecasts," "projects," "aims," "targets," "may,"
"will," "should," "can," the negatives thereof, variations thereon
and similar expressions. Such forward-looking statements reflect
the Company's current views with respect to future events, based on
what the Company believes are reasonable assumptions. Whether
actual results will conform to expectations and predictions is
subject to known and unknown risks and uncertainties, including
risks and uncertainties discussed in the reports that the Company
has filed with the Securities and Exchange Commission (the "SEC");
general economic, market, or business conditions; changes in the
Company's competitive position or competitive actions by other
companies; the Company's ability to maintain strong relationships
with its licensees; the Company's ability to retain key personnel;
the Company's ability to achieve and/or manage growth and to meet
target metrics associated with such growth; the Company's ability
to successfully attract new brands; the Company's ability to
identify suitable targets for acquisitions; the Company's ability
to obtain financing for the acquisitions on commercially reasonable
terms; the Company's ability to integrate successfully the new
acquisitions into its ongoing business; and the ability to achieve
the anticipated results of these and other potential acquisitions;
the Company's ability to comply with government regulations;
changes in laws or regulations or policies of federal and state
regulators and agencies; and other circumstances beyond the
Company's control. Refer to the section entitled "Risk Factors" set
forth in the Company's Annual Report on Form 10-K, Quarterly Report
on Form 10-Q and other Securities and Exchange Commission filings
for a discussion of important risks, uncertainties and other
factors that may affect our business, results of operations and
financial condition. The Company's stockholders are urged to
consider such risks, uncertainties and factors carefully in
evaluating the forward-looking statements and are cautioned not to
place undue reliance on such forward-looking statements.
Forward-looking statements are not, and should not be relied upon
as, a guarantee of future performance or results, nor will they
necessarily prove to be accurate indications of the times at or by
which any such performance or results will be achieved. As a
result, actual outcomes and results may differ materially from
those expressed in forward-looking statements. The Company is under
no obligation to, and expressly disclaims any such obligation to,
update or alter its forward-looking statements, whether as a result
of new information, future events or otherwise.
Condensed Consolidated Income
Statements: |
|
|
|
|
|
|
|
|
|
(in thousands, except earnings
per share data) |
|
|
|
|
|
(Unaudited) |
|
|
Three Months
Ended December 31, |
Year Ended
December 31, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Licensing and other revenue |
$ 10,611 |
$ 1,834 |
$ 22,653 |
$ 5,274 |
Operating expenses |
4,700 |
7,947 |
16,845 |
11,812 |
Income (loss) from
operations |
5,911 |
(6,113) |
5,808 |
(6,538) |
Other income |
(49) |
0 |
(488) |
0 |
Interest expense, net |
1,327 |
269 |
15,589 |
829 |
Income (loss) before income
taxes |
4,633 |
(6,382) |
(9,293) |
(7,367) |
(Benefit) Provision for income
taxes |
(881) |
13 |
1,849 |
27 |
Income (loss) from continuing
operations |
5,514 |
(6,395) |
(11,142) |
(7,394) |
Loss from discontinued
operations |
(984) |
(965) |
(6,244) |
(1,780) |
Net income (loss) attributable
to common stockholders |
4,530 |
(7,360) |
(17,386) |
(9,174) |
Noncontrolling interest |
(477) |
14 |
(588) |
49 |
Net income (loss) attributable
to common stockholders |
$ 4,053 |
$ (7,346) |
$ (17,974) |
$ (9,125) |
|
|
|
|
|
Basic income (loss) per share: |
|
|
|
|
Continuing operations |
$ 0.20 |
$ (2.60) |
$ (0.66) |
$ (3.04) |
Discontinued operations |
(0.04) |
(0.40) |
(0.35) |
(0.74) |
Attributable to common
shareholders |
$ 0.16 |
$ (3.00) |
$ (1.01) |
$ (3.78) |
Basic weighted average common
shares outstanding |
24,658 |
2,452 |
17,713 |
2,413 |
|
|
|
|
|
Diluted income (loss) per share: |
|
|
|
|
Continuing operations |
$ 0.19 |
$ (2.60) |
$ (0.66) |
$ (3.04) |
Discontinued operations |
(0.04) |
(0.40) |
(0.35) |
(0.74) |
Attributable to common
shareholders |
$ 0.15 |
$ (3.00) |
$ (1.01) |
$ (3.78) |
Diluted weighted average common
shares outstanding |
25,887 |
2,452 |
17,713 |
2,413 |
|
|
|
Select Balance Sheet Items: |
|
|
|
|
|
(in thousands) |
|
|
|
Dec. 31, 2013 |
Dec. 31, 2012 |
|
|
|
|
|
|
Total Assets |
$ 153,605 |
$ 8,977 |
Total Liabilities |
$ 72,436 |
$ 9,025 |
Total Stockholders' Equity /
(Deficiency) |
$ 81,169 |
$ (48) |
|
|
|
|
|
Non-GAAP Financial Measure
Reconciliations |
|
|
|
|
|
|
|
|
|
(in thousands, except earnings
per share data) |
|
|
|
|
|
|
|
|
(Unaudited) Three
Months Ended December 31, |
(Unaudited) Year
Ended December 31, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss) |
$ 4,053 |
$ (7,346) |
$ (17,974) |
$ (9,125) |
|
|
|
|
|
Adjustments: |
|
|
|
|
Loss from discontinued
operations (a) |
984 |
965 |
6,244 |
1,780 |
Deal costs (b) |
1,032 |
1,748 |
4,856 |
2,669 |
Non-cash income tax related to
the amortization of intangibles (c) |
(881) |
0 |
1,849 |
0 |
Non-cash interest related to
beneficial conversion feature (d) |
0 |
192 |
11,614 |
534 |
Restructuring charges (e) |
0 |
2,854 |
0 |
2,854 |
Executive compensation related
to RSUs vesting upon employment commencement (f) |
0 |
669 |
0 |
669 |
Total non-GAAP adjustments |
1,135 |
6,428 |
24,563 |
8,506 |
|
|
|
|
|
Non-GAAP net income (loss)
(1) |
$ 5,188 |
$ (918) |
$ 6,589 |
$ (619) |
|
|
|
|
|
|
(Unaudited) Three
Months Ended December 31, |
(Unaudited) Year
Ended December 31, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
|
|
|
|
|
GAAP net income (loss) per share |
$ 0.15 |
$ (3.00) |
$ (1.01) |
$ (3.78) |
|
|
|
|
|
Adjustments: |
|
|
|
|
Loss from discontinued
operations (a) |
0.04 |
0.40 |
0.34 |
0.74 |
Deal costs (b) |
0.04 |
0.70 |
0.26 |
1.11 |
Non-cash income tax related to
the amortization of intangibles (c) |
(0.03) |
0.00 |
0.10 |
0.00 |
Non-cash interest related to
beneficial conversion feature (d) |
0.00 |
0.08 |
0.62 |
0.22 |
Restructuring charges (e) |
0.00 |
1.16 |
0.00 |
1.18 |
Executive compensation related
to RSUs vesting upon employment commencement (f) |
0.00 |
0.27 |
0.00 |
0.28 |
Adjustment related to different
share count GAAP vs non-GAAP (g) |
0.00 |
0.00 |
0.04 |
0.00 |
Total non-GAAP adjustments |
0.05 |
2.62 |
1.36 |
3.52 |
|
|
|
|
|
Non-GAAP net income (loss) per share
(1) |
$ 0.20 |
$ (0.37) |
$ 0.35 |
$ (0.26) |
|
|
|
|
|
Non-GAAP weighted average diluted
shares (g) |
25,887 |
2,452 |
18,636 |
2,413 |
|
|
|
|
|
|
(Unaudited) Three
Months Ended December 31, |
(Unaudited) Year
Ended December 31, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
GAAP net income (loss) |
$ 4,053 |
$ (7,346) |
$ (17,974) |
$ (9,125) |
|
|
|
|
|
Adjustments: |
|
|
|
|
Interest expense, net |
1,327 |
269 |
15,589 |
829 |
Depreciation and
amortization |
203 |
105 |
598 |
296 |
Non-Cash Taxes |
(881) |
13 |
1,849 |
27 |
Deal costs |
1,032 |
1,748 |
4,856 |
2,669 |
Restructuring charges |
0 |
2,854 |
0 |
2,854 |
Discontinued operations |
984 |
965 |
6,244 |
1,780 |
Non-cash compensation |
425 |
671 |
1,118 |
674 |
|
3,090 |
6,625 |
30,254 |
9,129 |
|
|
|
|
|
Adjusted EBITDA (2) |
$ 7,143 |
$ (721) |
$ 12,280 |
$ 4 |
|
|
|
|
|
|
|
|
|
|
(1) Non-GAAP net income / (loss)
and non-GAAP net income / (loss) per share (along with non-GAAP
weighted average diluted shares) are non-GAAP financial measures
which represent net income / (loss) excluding discontinued
operations, deal costs, non-cash income tax, non-cash interest,
restructuring charges and executive compensation related to RSUs
vesting upon employment commencement. Management uses this
information to measure performance over time on a consistent basis
and to identify business trends relating to the Company's financial
condition and results of operations. Management believes that these
non-GAAP measures provide investors with information regarding the
underlying performance of the Company's core business operating
results on a cash basis. Amounts may not foot due to
rounding. |
(2) Adjusted EBITDA is defined as
net income / (loss), excluding interest income, income taxes,
depreciation and amortization, and excluding discontinued
operations, deal costs, restructuring charges, and non-cash
compensation. Management uses Adjusted EBITDA as a measure of
operating performance to assist in comparing performance from
period to period on a consistent basis and to identify business
trends relating to the Company's financial condition and results of
operations. The Company believes EBITDA provides additional
information for determining its ability to meet future debt service
requirements and capital expenditures. |
(a) Represents the wind down of
legacy wholesale and retail businesses. |
|
|
|
|
(b) Represents deal related costs
related to the 2012 acquisition of DVS, and the 2013 acquisitions
of Heelys, Ellen Tracy, Caribbean Joe, Revo and The Franklin
Mint. |
(c) Represents the non-cash
deferred tax liability the Company recognizes as it amortizes
certain trademarks for tax, but not book purposes. |
(d) Represents one-time non-cash
interest charges related to the conversion of the Tengram
convertible notes to equity. |
|
(e) Represents costs related to
the severance of our former CEO and the transition of the Company's
licensing operations from Los Angeles to New York. |
(f) Represents compensation
related to the restricted stock granted to the new management team
which vested upon commencement of their employment with the
Company. |
(g) Diluted share count to used
by the Company in its calculation of non-GAAP net income / (loss)
per share; this may differ from the diluted sharecount (which is
the same as common) used for GAAP if income is positive for
non-GAAP but negative for GAAP as for income as the company uses
the higher amount for positive income. |
CONTACT: Sequential Brands Group, Inc.
Gary Klein, Chief Financial Officer
646-564-2577
gklein@sbg-ny.com
ICR
Rachel Schacter / John Rouleau
203-682-8200
rachel.schacter@icrinc.com
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