Despite rise in Q3 earnings, Iconix Brand Group lowers outlook

Licensing revenue at Iconix Brand Group stood at 90.9 million dollars in the third quarter ended September 30, 2016, with GAAP diluted EPS of 0.27 dollar and non-GAAP diluted EPS of 0.19 dollar. While GAAP diluted EPS was approximately 0.27 dollar as compared to a loss of 0.11 dollar in the third quarter of 2015, Non-GAAP diluted EPS was approximately 0.19 dollar as compared to 0.11 dollar in the third quarter of 2015.

Commenting on the financial development, John Haugh, CEO of Iconix said, "I am pleased to report that Iconix delivered another solid quarter. Performance across the brands was mixed, but with our balanced portfolio of brands and the company's attractive margins, we were able to achieve stable revenue, increased profits and healthy free cash flow."

Third quarter financial highlights

Licensing revenue flat to the prior year quarter. The company said, the prior year's third quarter included approximately 1.2 million dollars of licensing revenue from the Badgley Mischka brand, for which there was no comparable revenue in the third quarter of 2016, due to its sale in the first quarter of 2016. The third quarter benefitted from a 1.6 million dollars favourable impact from foreign currency exchange rates primarily related to the yen.

Operating income was approximately 40.7 million dollars, a 46 percent increase as compared to 27.8 million dollars in the third quarter of 2015. The company said that the increase was largely related to the men's segment, which had a large write-off of bad debt in the prior year quarter.

GAAP net income was approximately 15.2 million dollars as compared to a loss of approximately 5.4 million dollars in the third quarter of 2015. Non-GAAP net income was approximately 11.1 million dollars, a 114 percent increase as compared to 5.2 million dollars in the third quarter of 2015.

Lowers outlook for FY16

The company expects full year 2016 revenue to be 3 million dollars to 5 million dollars below its previously expected estimate, which was at the low end of its 370 million dollars to 390 million guidance dollars. This, the company said, reflects delayed timing for some new men's programs, macro conditions in Europe, and some retail resets.

The company continues to expect to achieve 2016 non-GAAP EPS in the range of 1.06 dollars to 1.21 dollars, but is trending toward the low-end of the range. The company expects GAAP EPS to be approximately 0.04 dollar below its previous guidance range of 0.93 dollar to 1.08 dollars.

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