- Q3 revenue of $6.1 million vs. $1.3 million in prior
year quarter
- Q3 adjusted EBITDA of $3.8 million, representing a 63%
adjusted EBITDA margin
- Q3 non-GAAP Net Income of $2.0 million vs. $0.2 million
in the prior year quarter
- Earlier today, Company announced acquisition of The
Franklin Mint® brand
- Increasing forward looking twelve month projected
revenue to $28-30 million, operating at 55% adjusted EBITDA
margin
Sequential Brands Group, Inc. (Nasdaq:SQBG) ("Sequential" or the
"Company") today announced financial results for the third quarter
ended September 30, 2013.
Third Quarter 2013 Results:
Total revenue for the third quarter ended September 30, 2013
increased to approximately $6.1 million, compared to approximately
$1.3 million in the prior year quarter. Adjusted EBITDA for the
third quarter was approximately $3.8 million, compared to
approximately $0.4 million in the prior year quarter. On a non-GAAP
basis, net income for the quarter was approximately $2.0 million,
or $0.08 per share, compared to approximately $0.2 million, or
$0.07 per share, the prior year quarter. On a GAAP basis, net loss
for the quarter was approximately $1.2 million, or ($0.05) per
share, compared to a net loss of approximately $0.5 million, or
($0.20) 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,
"It was a busy quarter for Sequential. We raised over $44 million
in capital through a private placement, completed the acquisition
of the REVO brand and up-listed to NASDAQ. The revenue generated
this past quarter from our portfolio of brands represents record
levels for us as a pure-play brand management company,
demonstrating the type of growth trajectory we set out to achieve
when we began to transform our business model last
year. Looking ahead, we believe we are well positioned to both
achieve our organic growth targets and to continue to expand our
portfolio with the acquisition of new brands, as we aim to be a
leading global brand management firm."
September Year-to-Date 2013 Results:
Total revenue for the nine months ended September 30, 2013
increased to approximately $12.0 million, compared to approximately
$3.4 million for the prior year period. The Company's adjusted
EBITDA was approximately $5.1 million, compared to approximately
$0.7 million for the nine months ended the prior year and the
Company's non-GAAP net income was approximately $1.4 million, or
$0.09 per share, for the nine months ended September 30, 2013,
compared to net income of approximately $0.3 million, or $0.12 per
share, in the prior year. Net loss on a GAAP basis was
approximately $22.0 million for the nine months ended September 30,
2013, or ($1.43) per share, compared to a net loss of approximately
$1.8 million, or ($0.74) 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 reconciliation of GAAP to non-GAAP measures.
Financial Update:
The Company projects revenue of $28-30 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.
Other Company News:
In a separate press release issued this morning, the Company
announced that it acquired The Franklin Mint® brand.
Notes:
Management will provide further commentary today, November 4,
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 10:00 a.m. ET. To access the
pre-recorded comments, please dial (866) 501-1525. Webcast
replay will be accessible via the Company's investor relations page
at 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 The Franklin Mint®, William Rast®, People's Liberation®,
DVS®, Heelys®, Caribbean Joe®, Ellen Tracy® and Revo®. 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 June 30, 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 September 30, |
Nine Months Ended
September 30, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Licensing and other revenue |
$ 6,066 |
$ 1,341 |
$ 12,042 |
$ 3,440 |
Operating expenses |
4,487 |
1,256 |
12,146 |
3,865 |
Income (loss) from operations |
1,579 |
85 |
(104) |
(425) |
Other income |
(332) |
0 |
(439) |
0 |
Interest expense, net |
1,309 |
226 |
14,262 |
560 |
Income (loss) before income taxes |
602 |
(141) |
(13,927) |
(985) |
Provision for income taxes |
466 |
3 |
2,730 |
14 |
Income (loss) from continuing
operations |
602 |
(144) |
(16,657) |
(999) |
Loss from discontinued operations |
(1,295) |
(363) |
(5,261) |
(815) |
Net Loss |
(1,159) |
(507) |
(21,918) |
(1,814) |
Noncontrolling interest |
(57) |
35 |
(111) |
35 |
Net loss attributable to common
stockholders |
$ (1,216) |
$ (472) |
$ (22,029) |
$ (1,779) |
|
|
|
|
|
Basic income (loss) per share: |
|
|
|
|
Continuing operations |
$ 0.01 |
$ (0.05) |
$ (1.09) |
$ (0.40) |
Discontinued operations |
(0.06) |
(0.15) |
(0.34) |
(0.34) |
Attributable to common shareholders |
$ (0.05) |
$ (0.20) |
$ (1.43) |
$ (0.74) |
Basic weighted average common shares
outstanding |
22,411 |
2,400 |
15,388 |
2,400 |
|
|
|
|
|
Diluted income (loss) per share: |
|
|
|
|
Continuing operations |
$ 0.00 |
$ (0.05) |
$ (1.09) |
$ (0.40) |
Discontinued operations |
(0.05) |
(0.15) |
(0.34) |
(0.34) |
Attributable to common shareholders |
$ (0.05) |
$ (0.20) |
$ (1.43) |
$ (0.74) |
Diluted weighted average common shares
outstanding |
23,660 |
2,400 |
15,388 |
2,400 |
|
|
|
|
|
Select Balance Sheet Items: |
|
|
|
|
|
(in thousands) |
|
|
|
Sept. 30, 2013 |
Dec. 31, 2012 |
|
(Unaudited) |
|
|
|
|
Total Assets |
$ 156,142 |
$ 8,977 |
Total Liabilities |
$ 79,191 |
$ 9,025 |
Total Stockholders' Equity /
(Deficiency) |
$ 76,951 |
$ (48) |
|
|
|
(Loss)/Income and EPS Reconciliations: |
|
|
|
|
|
|
|
|
|
(in thousands, except earnings per share
data) |
|
|
|
|
|
(Unaudited) |
(Unaudited) |
|
Three Months
Ended September 30, |
Nine Months Ended
September 30, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Non-GAAP net income (1) |
$ 1,999 |
$ 189 |
$ 1,400 |
$ 301 |
|
|
|
|
|
GAAP net loss |
$ (1,216) |
$ (472) |
$ (22,029) |
$ (1,779) |
|
|
|
|
|
Adjustments: |
|
|
|
|
Loss from discontinued operations
(a) |
1,295 |
363 |
5,261 |
815 |
Deal costs (b) |
1,454 |
148 |
3,824 |
921 |
Non-cash income
tax related to the amortization of intangibles (c) |
466 |
0 |
2,730 |
0 |
Non-cash interest related to beneficial
conversion feature (d) |
0 |
150 |
11,614 |
344 |
Total non-GAAP adjustments |
3,215 |
661 |
23,429 |
2,080 |
|
|
|
|
|
Non-GAAP net loss (1) |
$ 1,999 |
$ 189 |
$ 1,400 |
$ 301 |
|
|
|
|
|
|
(Unaudited) |
(Unaudited) |
|
Three Months
Ended September 30, |
Nine Months Ended
September 30, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
Non-GAAP net income per share (1) |
$ 0.08 |
$ 0.07 |
$ 0.09 |
$ 0.12 |
|
|
|
|
|
GAAP net loss per share |
$ (0.05) |
$ (0.20) |
$ (1.43) |
$ (0.74) |
|
|
|
|
|
Adjustments: |
|
|
|
|
Loss from discontinued operations
(a) |
0.05 |
0.15 |
0.34 |
0.34 |
Deal costs (b) |
0.06 |
0.06 |
0.25 |
0.38 |
Non-cash income
tax related to the amortization of intangibles (c) |
0.02 |
0.00 |
0.18 |
0.00 |
Non-cash interest related to beneficial
conversion feature (d) |
0.00 |
0.06 |
0.75 |
0.14 |
Total non-GAAP adjustments |
0.13 |
0.27 |
1.52 |
0.86 |
|
|
|
|
|
Non-GAAP net income per share (1) |
$ 0.08 |
$ 0.07 |
$ 0.09 |
$ 0.12 |
|
|
|
|
|
|
(Unaudited) |
(Unaudited) |
|
Three Months
Ended September 30, |
Nine Months Ended
September 30, |
|
2013 |
2012 |
2013 |
2012 |
|
|
|
|
|
GAAP net loss |
$ (1,216) |
$ (472) |
$ (22,029) |
$ (1,779) |
|
|
|
|
|
Adjustments: |
|
|
|
|
Interest expense, net |
1,309 |
226 |
14,262 |
560 |
Depreciation and amortization |
171 |
106 |
394 |
191 |
Taxes |
466 |
3 |
2,730 |
14 |
Deal costs |
1,454 |
148 |
3,824 |
921 |
Discontinued operations |
1,295 |
363 |
5,261 |
815 |
Non-cash compensation |
329 |
1 |
693 |
3 |
|
5,024 |
847 |
27,164 |
2,504 |
|
|
|
|
|
Adjusted EBITDA (2) |
$ 3,808 |
$ 375 |
$ 5,135 |
$ 725 |
|
|
|
|
|
|
|
|
|
|
(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 retail businesses |
(b) Represents deal related costs
related to the DVS, Heelys, Ellen Tracy, Caribbean Joe and Revo
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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