Iconix Brand Group, Inc.
) posted third quarter 2013 adjusted earnings of 59 cents per
share, beating the Zacks Consensus Estimate of 51 cents by 15.7%
and the year-ago earnings of 41 cents by 44%. The upswing in
earnings can be attributed to solid revenues, strategic
acquisitions and lower share count owing to share buyback.
Quarter in Detail
Though revenues slightly missed the Zacks Consensus Estimate
of $108 million, total revenue in the quarter surged 24% year
over year to $107.2 million. The results were driven by the
company's strong brand portfolio, recent acquisitions (Umbro,
Buffalo and Lee Cooper) and continued focus on international
expansion, which includes the new joint venture in Australia.
The formation of this new joint venture in Australia
contributed approximately $5 million to the current quarter's
revenues. Similarly, in the prior quarter, the formation of the
company's joint venture in Canada had contributed approximately
$9.8 million to revenues.
On a year-over-year basis, earnings before interest, taxes,
depreciation, and amortization (EBITDA) increased 27% to $65.6
million in the third quarter.
Iconix exited the quarter with free cash flow of $54.3 million
compared with $60.8 million at the end of the second quarter of
In the third quarter, Iconix bought back 3.1 million shares at
an average price of $27.07. The company now has $250 million
remaining under the $300 million stock repurchase program. Since
the initiation of the share repurchase program in Oct 2011, the
company has repurchased approximately $551 million of its
Guidance for 2013
Following the solid third quarter 2013 earnings, Iconix raised
its 2013 adjusted earnings guidance to $2.30-$2.40 per share from
the previously announced range of $2.20-$2.30 per share. The
company has been raising its guidance since the last three
quarters, which thus reflects the company's growth potential.
Moreover, Iconix expects to deliver over 20% revenue and earnings
per share growth for 2013.
Iconix reaffirmed its revenue guidance in the range of
$425-$435 million. Free cash flow is expected in the range of
$203-$210 million for 2013.
Guidance for 2014
Iconix also provided earnings and revenue guidance for 2014.
The company expects revenues in the range of $440 million-$455
million. Adjusted earnings are expected in the range of
$2.50-2.60 per share for 2014. Free cash flow is expected in the
range of $210-$217 million.
Going forward, the company expects international expansion to
boost organic growth for its brands. The company expects revenues
from the non-consolidated joint ventures to be approximately $25
million for 2013 and $44 million for 2014.
Iconix's overall growth story looks compelling. This clothing
brand licensing company has been aggressively acquiring brands
and entering into joint ventures to expand its portfolio, having
added the rest of Ecko and Marc Ecko Cut & Sew under its
banner in May 2013.
In Feb 2013, Iconix acquired the renowned lifestyle brand Lee
Cooper and formed a joint venture with Buffalo International ULC
to acquire a 51% interest in the latter's Buffalo David Bitton
brand. The acquisition of the renowned football brand Umbro from
) in Dec 2012 added an iconic brand to its portfolio.
Iconix holds a Zacks Rank #3 (Hold). Other stocks in the
consumer discretionary sector that are performing well and are
therefore worth considering include
Brown Shoe Co Inc
Deckers Outdoor Corporation
). While Brown Shoe holds a Zacks Rank #1 (Strong Buy), Deckers
carries a Zacks Rank #2 (Buy).
BROWN SHOE CO (BWS): Free Stock Analysis
DECKERS OUTDOOR (DECK): Free Stock Analysis
ICONIX BRAND GP (ICON): Free Stock Analysis
NIKE INC-B (NKE): Free Stock Analysis Report
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