Icon Energy Corp (ICON) 2005 Q1 法說會逐字稿

Good morning, my name is Tina and I will be your conference facilitator today. At this time I would like to welcome everyone to the Candie's Inc. first quarter 2005 earnings call. (OPERATOR INSTRUCTIONS). I would like to introduce Mr. Warren Clamen, Chief Financial Officer. Sir, go ahead.

I will begin with a Safe Harbor statement under the Private Securities Litigation Reform Act of 1995. The statements that are not historical facts contained in this conference call are forward-looking statements that involve a number of risks, uncertainties and other factors, all of which are difficult or impossible to predict and many of which are beyond the control of the Company. This may cause the actual results, performance or achievements of the Company to be materially different from the results, performance or achievements expressed or implied by such forward-looking statements. The words believe, anticipate, expects, confident and similar expressions identify forward-looking statements. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as to date the statement was made.

Candie's Inc. today announced its results for the first quarter and 3 months ended March 31, 2005. The Company reported consolidated net income of $787,000, or $0.03 per diluted share for the quarter, as compared to a net income of $33,000 or $0.00 per share for the comparable quarter in the prior year.

Licensing and commission income for the quarter increased 78% to $4.3 million, up from 2.4 million in the comparable quarter for the prior year. Selling, general and administrative expenses for the first quarter decreased by $1.4 million or 35% to $2.7 million, down from 4.1 million in the comparable quarter in the prior year, primarily as a result of the transition to a licensing business. The Company's interest expense totaled $445,000 in the current quarter, down $251,000 or 36% from $696,000 in the comparable quarter for the prior year.

At this time, I would like to turn the call over to Neil Cole, President and CEO of Candie's.

Good morning everybody. The first quarter was the beginning of a pure licensing and brand management business. We are excited about the potential of our three powerful brands -- Candie's, Bongo, Badgley Mischka, and also about the future of our Company. Our Candie's brand will launch in over 650 Kohl's Department Stores on July 18 of this fall in 18 different product categories. That will be the focal point of a multimillion dollar TV, magazine and newspaper campaign for back to school by Kohl's.

The Candie's products are being manufactured by some of the largest and most well-known apparel companies in America, including Kellwood, Warnaco and others, and have been very well received by the fashion press. We are excited about the way Kohl's has embraced this initiative and are optimistic that this partnership will well exceed expectations.

We are presently evaluating numerous international opportunities for the Candie's brand into new markets, and are optimistic that we will begin this expansion later this year.

Our Bongo royalties continued to grow, and our jeanswear business has completed transition to a license. Bongo's 15 wholesale licensees are adding new doors and we're starting to see an increased royalty stream that is being generated by products outside our core categories of jeanswear, kids jeanswear and footwear.

Our current advertising campaign with Nicole Ritchie generated enthusiastic reviews by both the trade and consumers, and will be expanded for fall 2005 to include our new men's jeanswear line which will be worn by Nicole's fiancée and L.A.'s hottest DJ, DJ-Am.

Badgley Mischka is off to a great start with six new licensees on board. The fall 2005 couture collection was launched with much fanfare and with much -- and with a major fashion event at Bergdorf Goodman in New York City and Neiman Marcus in Miami. We have recently announced two new licensees, for eyewear with Sama and handbags with Franchi, to complement our existing categories of couture, bridal, and fur. And we will have other additional licensees to announce in the next 60 days.

We're working on an exciting new launch and runway show for fashion week in September. And longer-term, we're looking forward to a major spring expansion involving the bridge collection being introduced by several of our licensees, and the expansion of the brand to a broader set of consumer and a bigger market.

Our Bright Star footwear business remains on track to bring in roughly $2 million of sales commissions in 2005. Although the first quarter Bright Star was off $200,000 as compared to last year, we believe this is attributable to the shift in our fiscal year back to a calendar year that does not include April sales in the first quarter, and it is our expectation that the $200,000 difference will be made up in the second quarter.

With the addition of Badgley Mischka and the Kohl's license, we have made our portfolio of intellectual property more diversified with brands that serve different segments of the marketplace, and utilize both retail direct and wholesale licensing models.

It is a very interesting time in the retail industry, in which we are seeing the consolidation of major retailers as well as a number of well-known brands that are up for sale. We believe that we are well-positioned as a brand management Company with already established lines of access to both retail and wholesale licensing partners to take on additional properties. As a result, we are currently evaluating many different opportunities to add brand and further expand and diversify our portfolio.

In '05 we are re-affirming our outlook for the remainder of year with royalty income growing each quarter, and confirm our guidance of $0.25 to $0.30, which includes the tax benefit resulting from our NOLs. Once again, thank you for your continued support.

And one last reminder, for those of us that are New York City, we're having a benefit on May 3. And information can be gotten through the Company, but we still have a few tickets left. We're having a great night Tuesday night where we are honoring Jane Fonda and Katie Couric, and Jewel is performing. And it is for the Candie's Foundation, which benefits the prevention of teen pregnancy. You can also find information about that at CandiesFoundation.Org. But enough with that commercial. With that, I would like to open up for a question and answer about our business at Candie's Inc.

(OPERATOR INSTRUCTIONS). Dennis Rosenberg, DSR Consulting.

I cannot hear Dennis.

George Corinth (ph) with Corinth Capital.

Nice results. The special charge of 379,000, was that the litigation?

Yes, that is our Unzipped litigation, which we believe that number is high. We have made a fixed deal with our attorneys going forward for the next three quarters, so that number will be coming down.

In the quarter was there any licensing revenue from Kohl's, or that won't begin until later? And I know you have it smoothed out. It does not all come in bulk.

How much, Warren, was the Kohl's in the quarter?

Roughly $1 million.

Roughly $1 million. Okay. That is like part of the guarantee and then it will be every quarter like that?

Yes, until we get actual sales and we true up sales versus the guarantee. Over the first '05 and '06, we take the minimum and smooth it out over the eight quarters, and then actual sales we true up.

Okay. And what is happening with the Bongo jeans in South America? Has that begun?

The first shipments will be happening within 60 days. And we're excited. We think (technical difficulty) big opportunity there, but we're going to be -- first seeing shipments starting in June.

Then what about a line of clothing or whatever for a celebrity or something? You have mentioned that in the past -- are you still working in that direction?

We're looking -- we have seen some incredible opportunities and we're hoping -- not hoping, but we see some good opportunities that could happen in the near future.

Ben Solar (ph) with HS Capital.

Great quarter. I am looking forward to seeing the additional licensing agreements. Can you talk to -- a little bit about the Steve Madden relationship and the Kohl's relationship, how that interacts?

Yes. Steve Madden is the exclusive supplier of Candie's footwear for Kohl's for the next couple of years. And Steve Madden also has the opportunity to sell other people besides for Kohl's in '05 and '06. We have a flat fee agreement with Steve Madden in '05 and '06 where they contribute $1.5 million of royalty to us in '05 and '06. And starting in '07, Kohl's takes over and pays us royalties directly going forward.

Was Steve Madden, the founder, being released from federal prison, does not impact us at all in terms of any positives for his company?

Hopefully there will be better styling. Steve is a great designer, and hopefully we will be able to work closely with the company. But the company does great product, and with or without Steve, hopefully Steve could only make it better.

Right. Very good, great quarter. Thank you.

Michael Needleman (ph) with Ridgecrest Investments.

I had to hop off for a second. Did you give your guidance for the year, Neil?

Yes, Michael, we reaffirmed the prior guidance of $0.25 to $0.30.

And the second question is when do you expect the advertising, because you basically said that Kohl's was going to start in July, when should we expect to start to see some form of advertising start to hit?

We're going to -- you're going to start seeing it probably July 1st, because we're going to be in all the August fashion books. But we're going to be going on television July 18. It is going to be a pretty high-profile campaign on all major stations.

Have the ads actually been done already?

We are in the process of doing them as we speak.

And have you actually picked and announced who your new spokesperson is going to be for Candie's?

It is a very hush-hush confidential -- we will be announcing our girl when we announce the campaign.

Dennis Rosenberg with DSR Consulting.

(inaudible) I have $0.25 to $0.30 guidance, is that based on your guarantees or based on what you really expect?

I could barely hear, Dennis. I just heard on the end about -- most of it is based on our guarantees on the guidance, except there is a couple of licensees that have far exceeded their licensees for the last couple of years, and that are very mature. And we utilize them based on the previous year.

What percent would you say is based on guarantees versus those other licenses?

I think there is two licensees out of our 16 or 17 deals.

(OPERATOR INSTRUCTIONS). Mark Kaufman with Lazard.

That is Mark Kaufman with Lazard. Anyway, my question is this, I imagine you have seen the small (ph) growth on the fall line (inaudible).

I'm sorry, you are breaking up. Can you speak a little louder and --.

Have you seen the fall line that Kohl's is rolling out?

Have I seen it, yes. We saw it -- last month we presented it to the fashion press and it was absolutely phenomenal. It is a little more fashion than you would normally find in a Kohl's. And we're excited about that, because we think it is a new dimension for Kohl's and we think is going to be incredibly well received.

At this time there are no further questions.

Once again I would like to thank everybody. Hopefully, we're starting to show everybody where this business is going and we're excited about our new model. Hopefully the lack of questions and the shortness of the speech will show how simple our business is. And we believe that we're really on track to build something very exciting. We think we have a great platform, as far as a branded business, to add other brands that could be accretive.

Just for those of you that normally call me after the call, I'm not going to be around. I had the benefit of having a baby girl yesterday, so I'm going to go see my baby. But David Conn is around and Warren is around, and I will be back in the office tomorrow. Once again, thanks everybody and hopefully I will see you Tuesday night at our benefit. Thank you. Bye.

This concludes today's Candie's conference call. You may now disconnect.