Iconix income jumps as company resolves debt obligations
The New York-based brand management company Iconix Brand Group published its results for the first quarter of 2018 on Friday, reporting net income of $32.7 million, up from $4.4 million in the prior year period, despite revenue slipping 17%.
Indeed, revenue was down to $48.5 million in the first quarter ended March 31, 2018, compared to $58.7 million in Q1 2017, a decline which, according to the company, was in line with its expectations. Operating income also fell to $20.5 million, as compared to $33.6 million in the same period in the previous year.
The increase in the company’s net income, which rose from $4.4 million in the first quarter of 2017, is thanks, in large part, to gains resulting from the extinguishment of the company’s debt and the elimination of non-cash interest expense related to its 5.75% convertible notes, which totaled $24.4 million.
“Following intense focus on our balance sheet resulting in the successful resolution of all near term debt obligations, we are excited to speak with the investor community to discuss progress on our growth initiatives,” said Iconix CEO John Haugh in a release.
“We have demonstrated our ability to successfully reposition some of our core brands and we continue to work closely with our best-in-class licensees to maintain the strength of our long-term partnerships, while evaluating opportunities to drive brand portfolio growth. We are thus maintaining our revenue and free cash flow guidance for the year.”
Accordingly, Iconix’s full year revenue guidance for 2018 is still between $190 million to $220 million. Income however, is now expected to be between $17 million to $27 million, rather than the previously reported $7 million to $17 million.
In other news, the company made headlines on Thursday after the U.S. Security and Exchange Commission (SEC) ordered rapper Shawn “Jay-Z” Carter to testify in relation to the sale of his Rocawear clothing label to Iconix in 2007, in order to ascertain whether the acquisition violated federal security laws.
A representative for Carter has denied knowledge of any wrongdoing, telling CNBC, “We are aware that the SEC is seeking information on Iconix’s financial reporting. Mr. Carter had no role in that reporting or Iconix’s other actions as a public company.”
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