Iconix Brand Group Inc. (NASDAQ: ICON)
Iconix Brand Group Inc. (ICON) is a brand management company engaged in licensing, marketing and providing trend direction for a portfolio of owned consumer brands. The Company owns 17 brands, Candie’s, Bongo, Badgley Mischka, Joe Boxer, Rampage, Mudd, London Fog, Mossimo, Ocean Pacific/OP, Danskin, Rocawear, Cannon, Royal Velvet, Fieldcrest, Charisma, Starter and Waverly. In addition, Scion LLC, a joint venture in which the Company has a 50% investment, owns the Artful Dodger brand. The Company’s brands are sold across a range of distribution channels, from the mass tier to the luxury market. In October 2008, it acquired Waverly brand. It licenses its brands worldwide through approximately 200 direct-to-retail and wholesale licenses for use across a range of product categories, including footwear, fashion accessories, sportswear, home products and décor, and beauty and fragrance.
The company was formerly known as Candie’s Inc. and changed its name to Iconix Brand Group Inc. in July 2005. Iconix Brand Group Inc. was founded in 1978 and is based in New York, New York.
Source: www.scottrade.com , http://finance.yahoo.com/q/pr?s=ICON,
Financial Summary
The Company is revising its full year 2009 revenue guidance to a range of approximately $215-$220 million from prior guidance of a range of $223-$230 million. On a comparative basis, this revised revenue guidance for 2009 represents an increase of approximately 5% over the prior year’s adjusted revenue of $208.4 million. ICON expects to achieve an increase of approximately 25% in its 2009 non-GAAP net income to approximately $80-$83 million from adjusted non-GAAP net income of approximately $64.8 million in 2008. The Company is also revising its 2009 non-GAAP diluted EPS guidance to a range of $1.17-$1.22 from its previous range of $1.30-$1.35 and its 2009 GAAP diluted EPS guidance to a range of $1.06-$1.11 from its previous range of $1.16-$1.21. Both the projected 2009 non-GAAP net income and diluted EPS guidance would, if achieved, represent record earnings for the Company. ICON now expects 2009 free cash flow to be approximately $123-$126 million. This guidance relates to the existing portfolio of brands only and assumes no acquisitions.
The Company’s 2009 EPS estimate reflects approximately $0.12 of dilution related to the Company’s June equity offering in which the Company issued an additional 10.7 million shares, increasing the September 30, 2009 weighted average diluted share count from approximately 62.8 million to 73.5 million shares. Further, ICON anticipates an approximate $0.04 negative impact to its previous EPS guidance related to the transition of the Rocawear women’s license to a new licensee.
Adjusted revenues and non-GAAP net income amounts for 2008 referred to above exclude $8.4 million and $5.4 million, respectively, related to gains from the formation of Iconix Latin America and Iconix China joint ventures recorded in the second half of 2008. Non-GAAP net income amounts for 2008 and 2009 also give effect to the Company’s adoption of APB 14-1.
ICON announced the closing of the public offering of 11.5 million shares of its common stock at a price to the public of $15.00 per share, of which 800,000 shares were sold by certain selling stockholders named in the prospectus. The net proceeds to ICON, after payment of underwriting discounts and other estimated expenses of the offering, were approximately $152.9 million. The Company intends to use the net proceeds of the offering for general corporate purposes, which may include, among other things, funding acquisitions. ICON did not receive any proceeds from the shares sold by the selling stockholders. The total number of shares sold included 1.5 million shares of common stock sold in connection with the full exercise of the option to purchase additional shares granted to the underwriters. Barclays Capital Inc. and Lazard Capital Markets LLC acted as joint book-running managers for the offering, with Credit Suisse Securities (USA) LLC acting as the co-manager for the offering.
Source: http://www.iconixbrand.com/invest_SEC.html, http://www.reuters.com/article/pressRelease/idUS216706+25-Aug-2009+PRN20090825?symbol=ICON.W
Analyst Consensus
The 5 analysts offering 12-month price targets for ICON have a median target of 19.00, with a high estimate of 20.00 and a low estimate of 17.00. The median estimate represents a 52.37% increase from the last price of 12.47.
Source: Financial Times.com
Source: http://www.reuters.com/finance/stocks/estimates?symbol=ICON.W
Investment Highlights
The Company estimates third-quarter 2009 revenue to be approximately $53-$56 million. On a comparative basis, this represents an increase of approximately 4% over the prior year’s comparable quarter adjusted revenue of $52.5 million. The Company expects to achieve an increase of approximately 20% in its third-quarter 2009 non-GAAP net income to approximately $19-$21 million from adjusted non-GAAP net income of approximately $16.6 million in the prior year period. The Company expects third-quarter 2009 non-GAAP diluted EPS to be approximately $0.26-$0.28, which includes approximately $0.05 of dilution related to the Company’s June equity offering and an approximate $0.04 negative impact related to the transition of the Rocawear women’s license to a new licensee. The third quarter 2009 GAAP diluted EPS is expected to be approximately $0.23-$0.25.
Standard & Poor’s Ratings Services upgraded its outlook on ICON to stable from negative. According to Standard & Poor’s, the upgrade primarily relates to the Company’s ability to maintain its current operating performance amid a weak retail environment, reduce its debt level and improve credit protection measures, and sustain an adequate liquidity profile. The ratings on ICON also reflect the diversity and strong recognition of ICON’s brands, the Company’s high margins, high cash flow and royalty income based business model.
ICON reports record second quarter revenue:
Revenue for the second quarter of 2009 was approximately $56.4 million, a 9% increase as compared to approximately $51.7 million in the second quarter of 2008. EBITDA for the second quarter was approximately $41.8 million, a 19% increase as compared to approximately $35.2 million in the prior year quarter. Free cash flow for the quarter was $35.1 million a 34% increase as compared to approximately $26.3 million in the prior year quarter. On a non-GAAP basis, which excludes non-cash interest related to the adoption of the new accounting treatment for convertible debt, net income increased 29% to approximately $21.3 million, as compared to $16.5 million in the prior year quarter and diluted earnings per share for the second quarter of 2009 was $0.33 versus $0.27 in the prior year quarter. On a GAAP basis, net income increased 32% to approximately $19.3 million, as compared to $14.6 million in the prior year quarter and diluted earnings per share for the second quarter of 2009 was $0.30 versus $0.24 in the prior year quarter.
ICON’s PE ratio is below the Apparel/Accessories industry average and signals that investors are not willing to pay a premium for this stock. Additionally, during the past year, earnings growth has outpaced its historical five year growth rate.
Source: Scottrade.com, http://www.reuters.com/finance/stocks/pressReleases?symbol=ICON.W
Technical Analysis
Source: www.stockcharts.com
Moving Average Price Compare
ICON is below its 50-day moving average. This bearish sign is even more significant because the moving average is also trending lower.
MACD
The MACD for ICON currently indicates a strong bearish signal for two reasons. First, the MACD is below the signal line, a 9-day moving average. Second, the MACD is below the critical level of 0, which implies that the underlying moving averages are trending lower.
Comparative Analysis
Insider Trading Activity
Net Share Purchase Activity
Data provided by Thomson Financial
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