For Iconix Brand Group, the focus is international — whether acquisitions or initial public offerings.
International comprises about 40 percent of the firm’s revenues.
In a conference call to Wall Street analysts following the company’s report of second-quarter results on Tuesday, chairman and chief executive officer Neil Cole said, “I see [international] continuing to grow.”
Cole noted the firm’s Peanuts franchise around the world, including its upcoming 2015 computer-animated 3-D film, contributing to revenues. He also cautioned that the growth could depend too on the “types of acquisitions we have going forward. The last three acquisitions were international brands in Umbro, Lee Cooper and Buffalo,” adding that there’s no way to predict the types of deals going forward.
Cole emphasized that the pipeline remains strong and that the company has a strong balance sheet. “We have over $500 million available to us between cash and our current facilities. That’s without even using the securitization warehouse vehicle we have as we continue to buy more properties.”
He also said that while the company is hoping for the initial public offering of a brand under the Iconix China joint venture to occur in the third quarter, “we’re not sure we’re definitely going to be a seller and we’re considering possibly that monetization might happen in early 2015 because it’s based on a multiple of how we perform this year. And our performance is pretty strong this year.”
There was speculation earlier this year that the brand headed for a Chinese IPO is Iconix’s Candie’s operation. Other brand investments under the Iconix China umbrella include Rampage, Badgley Mischka, Royal Velvet, Ed Hardy and Material Girl. China Outfitters Holdings Ltd., a men’s wear retailer that was the London Fog partner in China, was the first of the brands to go public in December 2011. The IPO saw private equity firm KKR & Co. take a $60 million stake in the offering. Iconix elected to cash out half of its investment in the business and leave half in the public firm.
For the second quarter ended June 30, Iconix saw a slide in profits despite record revenue gains.
For the three months, net income fell 8.8 percent to $35.3 million, or 60 cents a diluted share, from $38.7 million, or 66 cents, a year ago. Earnings before interest, taxes, depreciation and amortization rose 8 percent to $78.2 million from $72.7 million last year. Free cash flow was $60 million, compared with $60.8 million last year. Total revenues rose 3.3 percent to $118.9 million from $115.1 million.
For the six months, net income shot up 30.4 percent to $95.1 million, or $1.63 a diluted share, on a 6.8 percent revenue gain to $235.1 million.
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