Iconix Secures New Credit Facility

In order to enhance liquidity and boost the capital structure, Iconix Brand Group, Inc. (ICON - Analyst Report) has agreed to a $150 million secured revolving credit facility of two years.

Iconix h with Barclays Capital, a unit of Barclays Plc (BCS - Snapshot Report), Goldman Sachs Bank USA, a wing of The Goldman Sachs Group, Inc. (GS - Analyst Report), and GE Capital Markets, a part of General Electric ((GE - Analyst Report)). The facility will thus offer capital at a low cost.

Iconix’s board has recently authorized a program to repurchase up to $200 million of its common stock over a four year period, replacing the current share repurchase program expiring October 30, 2011.

On the same day, Iconix planned to acquire The Sharper Image brand and intellectual property assets for approximately $65.6 million from Sharper Image Acquisition, LLC.

Iconix’s first steps in the consumer electronics sector will benefit the company as Sharper Image operates under a licensing business model. Further, the company expects the Sharper Image brand to bring in approximately $12-13 million in annual royalty revenue.

Iconix posted third quarter 2011 earnings in line with the Zacks Consensus Estimate and the prior-year estimate of 40 cents per share, on the back of steady organic strength across its portfolio of brands.

Iconix has also reaffirmed its fiscal 2011 reported earnings forecast at $1.61 - $1.66 per share. On an adjusted basis, Iconix reaffirmed its earnings of $1.63-$1.68.

For fiscal 2012, the company expects its reported earnings to lie in the range of $1.62-$1.69 and expects its adjusted earnings guidance to be $1.77-$1.84.

Further, the company expects Sharper Image to be earnings neutral in 2011 due to the timing of the close and transaction costs.

Iconix exited the year with free cash flow of $44.9 million, up 9% from the prior-year quarter. Capital expenditures for the quarter were $280 million.

For fiscal 2011, the company reiterates its free cash flow in the range of $167.0 million to $172.0 million, and provides a free cash flow guidance of $187.0 million to $194.0 million in 2012.

Currently, we maintain a long-term Neutral recommendation on the shares. Additionally, the quantitative Zacks Rank for Iconix is #3, which implies a short-term Hold rating.