- Q2 revenue of $4.3 million vs. $1.0 million in prior
year quarter
- Q2 adjusted EBITDA of $2.5 million, representing a 57%
adjusted EBITDA margin
- Company projects revenue of $23-25 million over the
next twelve months
- Company completes capital raise of $44 million to
bolster acquisition strategy
Sequential Brands Group, Inc. (OTC:SQBG) ("Sequential" or the
"Company") today announced financial results for the second quarter
ended June 30, 2013.
Second Quarter 2013 Results:
Total revenue from continuing operations for the second quarter
ended June 30, 2013 increased to approximately $4.3 million,
compared to approximately $1.0 million in the prior year quarter.
Adjusted EBITDA for the second quarter was approximately $2.5
million, compared to approximately $0.2 million in the prior year
quarter. On a non-GAAP basis, net income for the quarter was
approximately $0.8 million, or $0.05 per share, compared to
approximately $0.1 million, or $0.04 per share, the prior year
quarter and on a GAAP basis, net income for the quarter was
approximately $0.7 million, or $0.04 per share, compared to a net
loss of approximately $0.9 million, or ($0.37) per share, the prior
year quarter. See tables below for reconciliation of GAAP to
non-GAAP measures.
Yehuda Shmidman, Sequential's Chief Executive Officer, stated,
"We are pleased with our second quarter results and encouraged by
the overall progress that we have made since we converted to a
licensing model last year. Year to date, we have doubled our brand
portfolio from three brands to six brands, assembled a team of
best-in-class brand management professionals to drive organic
growth, and we have positioned our company with a powerful balance
sheet to execute on our brand acquisition strategy. It is an
exciting time for Sequential Brands Group."
Gary Klein, Sequential's Chief Financial Officer, added, "Our
financial results for the second quarter were in line with
management's expectations and are more reflective than prior
quarters of the new business model we began last year. In addition,
with the completion of our recent $44 million private placement of
our common stock, we have over $57 million of cash on our balance
sheet to help fuel our growth strategy. "
June Year-to-Date 2013 Results:
Total revenue from continuing operations for the six months
ended June 30, 2013 increased to approximately $6.0 million,
compared to approximately $2.1 million for the prior year period.
The Company's adjusted EBITDA was approximately $1.3 million,
compared to approximately $0.3 million for the six months ended the
prior year and the Company's non-GAAP net loss was approximately
$0.6 million, or ($0.05) per share, for the six months ended June
30, 2013, compared to net income of approximately $0.1 million, or
$0.04 per share, in the prior year. Net loss on a GAAP basis was
approximately $20.8 million for the six months ended June 30, 2013,
or ($1.76) per share, compared to a net loss of approximately $1.3
million, or ($0.54) per share, in the prior year quarter, as the
Company incurred certain costs in the first quarter of 2013, both
cash and non-cash, that were either not representative of the
Company's ongoing business or were unusual in nature. See tables
below for reconciliation of GAAP to non-GAAP measures.
Financial Update:
The Company projects revenue of $23-25 million over the next
four quarters. As previously stated, the Company expects revenue
for 2013 to be weighted to the fourth quarter due to seasonality in
the businesses of many of the Company's licensees.
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 the 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.
Notes:
Management will provide further commentary today, July 31, 2013,
on the Company's financial results via a pre-recorded call. These
remarks will be available via telephone and webcast replay
beginning at approximately 4:30 p.m. ET. To access the pre-recorded
comments, please dial 973-409-9606. Webcast replay will be
accessible via the Company's investor relations page at
www.sequentialbrandsgroup.com.
About Sequential Brands Group, Inc.
Sequential Brands Group, Inc. (SQBG) owns, promotes, markets,
and licenses a portfolio of consumer brands that presently include
William Rast®, People's Liberation®, DVS®, Heelys®, Caribbean Joe®
and Ellen Tracy®. 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 ("forward-looking statements") that
involve risks and uncertainties. For this purpose, any statements
contained in this press release that are not statements of
historical fact may be deemed to be forward-looking statements.
When used in this press release and in documents referenced herein,
forward-looking statements include, without limitation, statements
regarding our expectations, beliefs or intentions that are
signified by terminology such as "subject to," "believes,"
"anticipates," "plans," "expects," "intends," "estimates," "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; however, such
statements are subject to certain risks, uncertainties and other
factors. Our actual results may differ materially from those
anticipated in any forward-looking statements due to known and
unknown risks, uncertainties and other factors. The section
entitled "Risk Factors" set forth in Item 1A of Part I of our
Annual Report on Form 10-K for the year ended December 31, 2012, in
Item 1A of Part II of our Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2013 and in similar discussions in
our other Securities and Exchange Commission filings, discuss some
of the 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) |
(Unaudited) |
|
|
|
|
Three Months
Ended June 30, |
Six Months Ended
June 30, |
|
|
|
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
|
|
|
|
|
|
Licensing and other revenue |
$ 4,347 |
$ 1,045 |
$ 5,976 |
$ 2,100 |
|
|
|
Operating expenses |
2,294 |
1,650 |
7,659 |
2,610 |
|
|
|
Income (loss) from operations |
2,053 |
(605) |
(1,683) |
(510) |
|
|
|
Other income |
(106) |
0 |
(106) |
0 |
|
|
|
Interest expense, net |
1,336 |
191 |
12,953 |
334 |
|
|
|
Income (loss) before income taxes |
823 |
(796) |
(14,530) |
(844) |
|
|
|
Provision for (benefit from) income
taxes |
0 |
1 |
2,264 |
11 |
|
|
|
Income (loss) from continuing
operations |
823 |
(797) |
(16,794) |
(855) |
|
|
|
Loss from discontinued operations |
(102) |
(81) |
(3,966) |
(452) |
|
|
|
Net Income (Loss) |
721 |
(878) |
(20,760) |
(1,307) |
|
|
|
Noncontrolling interest |
(28) |
0 |
(54) |
0 |
|
|
|
Net income (loss) attributable to common
stockholders |
$ 693 |
$ (878) |
$ (20,814) |
$ (1,307) |
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per share: |
|
|
|
|
|
|
|
Continuing operations |
$ 0.05 |
$ (0.33) |
$ (1.43) |
$ (0.36) |
|
|
|
Discontinued operations |
(0.01) |
(0.04) |
(0.34) |
(0.18) |
|
|
|
Attributable to common shareholders |
$ 0.04 |
$ (0.37) |
$ (1.76) |
$ (0.54) |
|
|
|
Basic and weighted average common shares
outstanding |
16,317 |
2,400 |
11,818 |
2,400 |
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) per
share: |
|
|
|
|
|
|
Continuing operations |
$ 0.05 |
$ (0.33) |
$ (1.43) |
$ (0.36) |
|
|
|
Discontinued operations |
(0.01) |
(0.04) |
(0.34) |
(0.18) |
|
|
|
Attributable to common shareholders |
$ 0.04 |
$ (0.37) |
$ (1.76) |
$ (0.54) |
|
|
|
Diluted weighted average common shares
outstanding |
17,625 |
2,400 |
11,818 |
2,400 |
|
|
|
|
|
|
|
|
|
|
|
Select Balance Sheet Items: |
(in thousands) |
|
|
|
|
June 30, 2013 |
Dec. 31, 2012 |
|
|
|
Total Assets |
$ 116,081 |
$ 8,977 |
Total Liabilities |
$ 79,184 |
$ 9,025 |
Total Stockholders' Equity /
(Deficiency) |
$ 36,898 |
$ (48) |
|
(Loss)/Income and EPS
Reconciliations: |
(in thousands, except earnings
per share data) |
|
|
|
|
|
|
(Unaudited) |
(Unaudited) |
|
Three Months
Ended June 30, |
Six Months Ended
June 30, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Non-GAAP net income / (loss) (1) |
$ 808 |
$ 88 |
$ (600) |
$ 111 |
|
|
|
|
|
GAAP net income / (loss) |
$ 693 |
$ (878) |
$ (20,814) |
$ (1,307) |
|
|
|
|
|
Adjustments: |
|
|
|
|
Loss from discontinued operations
(a) |
102 |
81 |
3,966 |
452 |
Deal costs (b) |
13 |
772 |
2,370 |
772 |
Non-cash income tax related to the
amortization of intangibles (c) |
0 |
0 |
2,264 |
0 |
Non-cash interest related to beneficial
conversion feature (d) |
0 |
113 |
11,614 |
194 |
Total non-GAAP adjustments |
115 |
966 |
20,214 |
1,418 |
|
|
|
|
|
Non-GAAP net income / (loss) (1) |
$ 808 |
$ 88 |
$ (600) |
$ 111 |
|
|
|
|
|
|
(Unaudited) |
(Unaudited) |
|
Three Months
Ended June 30, |
Six Months Ended
June 30, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Non-GAAP net income / (loss) per share
(1) |
$ 0.05 |
$ 0.04 |
$ (0.05) |
$ 0.04 |
|
|
|
|
|
GAAP net income / (loss) per share |
$ 0.04 |
$ (0.37) |
$ (1.76) |
$ (0.54) |
|
|
|
|
|
Adjustments: |
|
|
|
|
Loss from discontinued operations
(a) |
0.01 |
0.04 |
0.34 |
0.18 |
Deal costs (b) |
0.00 |
0.32 |
0.20 |
0.32 |
Non-cash income tax related to the
amortization of intangibles (c) |
0.00 |
0.00 |
0.19 |
0.00 |
Non-cash interest related to beneficial
conversion feature (d) |
0.00 |
0.05 |
0.98 |
0.08 |
Total non-GAAP adjustments |
0.01 |
0.41 |
1.71 |
0.58 |
|
|
|
|
|
Non-GAAP net income / (loss) per share
(1) |
$ 0.05 |
$ 0.04 |
$ (0.05) |
$ 0.04 |
|
|
|
|
|
|
(Unaudited) |
(Unaudited) |
|
Three Months
Ended June 30, |
Six Months Ended
June 30, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
GAAP net income / (loss) |
$ 693 |
$ (878) |
$ (20,814) |
$ (1,307) |
|
|
|
|
|
Adjustments: |
|
|
|
|
Interest expense, net |
1,336 |
191 |
12,953 |
334 |
Depreciation and amortization |
147 |
40 |
223 |
85 |
Taxes |
0 |
1 |
2,264 |
11 |
Deal costs |
13 |
772 |
2,370 |
772 |
Discontinued operations |
102 |
81 |
3,966 |
452 |
Non-cash compensation |
193 |
1 |
364 |
2 |
|
1,791 |
1,086 |
22,140 |
1,656 |
|
|
|
|
|
Adjusted EBITDA (2) |
$ 2,484 |
$ 208 |
$ 1,326 |
$ 349 |
|
|
|
|
|
|
|
|
|
|
(1) Non-GAAP net income / (loss)
and non-GAAP net income / (loss) per share are non-GAAP financial
measures which represent net income / (loss) excluding discontinued
operations, deal costs, and non-cash and/or certain items. The
Company believes non-GAAP financial measures are useful in
evaluating its financial condition and results of operations. |
(2) Adjusted EBITDA is defined as
net income / (loss), excluding interest income or expense, income
taxes, depreciation and amortization, and excluding discontinued
operations, deal costs, and non-cash compensation. The Company
believes adjusted EBITDA measures are useful in evaluating its
financial condition and results of operations. |
(a) Represents the wind down of
legacy wholesale and operating businesses |
(b) Represents deal related costs
related to the DVS, Heelys, Ellen Tracy and Caribbean Joe
acquisitions |
(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 |
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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