ICON

Iconix Brand Group, Inc. (ICON)

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Industry: Consumer Non-Durables
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Iconix Brand Group, Inc. (ICON)

Barclays Retail and Restaurants Conference Call

April 30, 2013 14:35 ET

Executives

Neil Cole - President and Chief Executive Officer

Warren Clamen - Executive Vice President and Chief Financial Officer

Analysts

Bob Drbul - Barclays Capital

Presentation

Unidentified Analyst

Alright, we’re going to begin. Good afternoon. It is my pleasure to introduce our next presenting company Iconix Brand Group. With over $350 million revenue in 2012, Iconix have one of the most unique business models in our coverage and now maintains a diverse portfolio with over 30 Iconix Brand that’s been across retails and consumer electronic to fashion and apparel.

The company expanded into new categories with its acquisition with Sharper Image and Peanuts and its remained focused on expanding internationally as evidenced by a three most recent acquisitions including Buffalo David Bitton, Lee Cooper and Umbro, which have all closed within the last five months. Here with us today are Neil Cole, company’s President and CEO, as well as Warren Clamen, EVP and CFO.

And with that, I will pass it on to Neil.

Neil Cole - President and Chief Executive Officer

Thank you. So, we’re going to play the Barclays response game in a little while. But a little bit maybe elaborate, I have done a lot of the other presentations. But first I am going to just play a quick 3.5 minute video, just updating our brands, showing what they look like these days and a little quick overview of the company then we’ll elaborate and play our games.

(Video Presentation)

So that’s just a quick overview showing you the brands we own what we do for living, we are a licensing company, we market our brands world wide. We’ve been very busy the last six to 12 months we’ve acquired three iconic brands out of them two of them focused outside the United States which was a big growth part of our company. And we’ve been working really hard this year, our most sustained analyst Bob Drbul specific projections but we are projected to grow our company about 20 million top-line working really hard we believe obviously in our security we purchase that over 20 some odd percent of the company. And we continue to believe in both top and bottom and with that I know we have a format that we are excited about.

So, Bob I’ll turn it over to you take us through it.

Bob Drbul - Barclays Capital

So some of the, as we’ve introduced as Neil said the video game format. The audio respond the audience respond system Iconix is fully embraced what we are trying to do today and thus we have seven questions that we are going to walk you through and we use this as the format for the presentation and ask the question show the response and then we are going to address each topic as the presentation continues. So the first one do you currently own the stock. One yes, Two no.

Neil Cole - President and Chief Executive Officer

Got a little over signs here.

Bob Drbul - Barclays Capital

And we’ll end it’s like a lot of potential shareholders.

Neil Cole - President and Chief Executive Officer

No idea we get a lot of now we got to go a little deeper.

Bob Drbul - Barclays Capital

The second question. What is the best use of cash. One, acquisition, Two share repurchase, Three, dividends. 54% acquisitions, 26% share repurchase and 20% dividends.

Neil Cole - President and Chief Executive Officer

Yeah. This is something we struggle with in the good way because our company this year is going to generate well over $200 million of free cash flow. And we have a lot of access to the capital markets. We did we securitize a lot of trade marks and the facility that raised gives us the access of $1.1 billion and we’ve also accessed and we convert market some big opportunity. So we have a roughly between $1.5 billion to $2 billion of capital that we’ve been looking at and working on to improve our company. So far we deployed about $400 million in acquisitions over the last 12 months buying these three iconic brands then bring in about $85 million top-line about 70% EBITDA.

We’ve also believed that share buyback was such a great opportunity for us and we brought back we started when it was $76 million shares outstanding. Today I think we are averaged the street has his averaging through 62 and 63 but we’ve really have about in the 50s of what we bought when you don’t do that average stuff that people do.

So very aggressive and we are fighting every time we’re looking at acquisition we weigh it against buying our stock and we look at what’s the better deals do we want to buy Umbro, do we want to buy Iconix, do we want to buy Buffalo etcetera, etcetera and we are presently looking at a lot of acquisition. Dividend is always discussed every needing especially when the stocks a billion where we need a new investor base, we need this, we need that. So what have you considered dividend so we talk a lot about it and we, it’s really tough to analyze the benefits of dividends but we always come back at the end being a growth company and we've been only doing this seven, eight years ago we started in ‘05 and we've $13 billion of sales as we were projecting over $430 million of income that if we start that we’re a growth company and we truly believe we can more than double our business over the next few years what we've built and I think we continue to prove it. So, the combination of acquisition and repurchase is where we always win out but we do discuss it pretty much ever Board Meeting when someone says why aren’t we giving the dividend we have so much capital and etcetera, etcetera but as anyone disagree and think we should – just interactive video game or is this a one and you want to raise your hand and fight for dividend I guess no one else is talking doesn’t matter, next.

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