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Iconix Brand Group, Inc. (ICON - Analyst Report) posted third quarter 2012 results with adjusted earnings of 41 cents per share. The results were ahead of the prior-year earnings and the Zacks Consensus Estimate by a penny.

Quarter in Detail

Total revenue in the quarter declined 6.6% year-over-year to $86.6 million, due to year-over-year decline in Men’s businesses and transition of Royal Velvet license. However, revenue surpassed the Zacks Consensus Estimate of $81 million.

On a year-over-year basis, earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased 6.3% to $51.8 million in the third quarter. EBITDA margin was flat at 60%.

Iconix exited the quarter with free cash flow of $43.2 million, compared with $51.9 million at the end of the second quarter of 2012. Under the $200 million share repurchase program, which was authorized in October 2011, Iconix has already repurchased shares worth $107 million till date. The company has approximately $93 million remaining under the share repurchase program.

Recent Acquisition

Very recently, Iconix acquired the renowned football brand Umbro for $225 million in cash from Nike, Inc. (NKE - Analyst Report) in order to strengthen its brand portfolio, which now comprises 29 consumer brands in the fashion, athletics, electronics, entertainment and home industries. The acquisition is expected to close by the end of the year 2012.

Iconix intends to launch a new $1.1 billion securitization program during the quarter in order to finance the deal.


For 2012, Iconix expects its adjusted earnings to come in at the lower end of the previously announced range of $1.65 –$1.74 per share. Iconix expects its revenue for this year toward the higher end of the range of $340–$350 million. For fiscal 2012, the company reiterated its free cash flow guidance in the range of $174–$181 million.

For fiscal 2013, Iconix expects its adjusted earnings in the range of $1.85 –$1.95 per share. Iconix expects revenue in the range of $395–$405 million. For fiscal 2013, the company forecasts its free cash flow to be in the range of $196–$203 million.

The stock carries a Zacks #4 Rank (short-term Sell rating).

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