Icon Energy Corp (ICON) 2019 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Q3 2019 Iconix Brand Group Earnings Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

女士們、先生們，感謝大家的支持，歡迎參加 2019 年第三季 Iconix 品牌集團收益電話會議。（操作員指示）請注意，今天的會議正在錄製中。（操作員說明）

I would now like to hand the conference over to your speaker today, Jim Michael, Iconix' newly hired Director of Financial Reporting. Please go ahead, sir.

現在我想將會議交給今天的發言人 Jim Michael，他是 Iconix 新聘任的財務報告總監。請繼續，先生。

Good afternoon, and warm welcome to the Iconix Brand Group's Third Quarter 2019 Earnings Conference Call.

下午好，熱烈歡迎 Iconix 品牌集團 2019 年第三季財報電話會議。

On today's call, we have with us Bob Galvin, our President and Chief Executive Officer; and John McClain, our Chief Financial Officer.

在今天的電話會議上，我們的總裁兼執行長鮑勃·加爾文 (Bob Galvin) 出席了會議。和我們的財務長約翰·麥克萊恩。

During today's call, we will be making some forward-looking statements within the meaning of the federal securities laws. 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 actual results, performance or achievement 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, expect, confident and similar expressions identify as forward-looking statements. Listeners are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date the statements was made.

在今天的電話會議中，我們將做出一些聯邦證券法意義內的前瞻性聲明。本次電話會議中包含的非歷史事實的陳述屬於前瞻性陳述，涉及許多風險、不確定性和其他因素，所有這些因素都很難或不可能預測，其中許多因素超出了公司的控制範圍。這可能導致本公司的實際結果、績效或成就與此類前瞻性陳述明示或暗示的結果、績效或成就有重大差異。「相信」、「預期」、「期待」、「自信」和類似的表達方式都被視為前瞻性陳述。請聽眾注意不要過度依賴這些前瞻性聲明，這些聲明僅代表截至聲明發布之日的情況。

I would like to turn the call over to Bob Galvin.

我想把電話轉給鮑伯·加爾文。

Good afternoon, everyone.

大家下午好。

First, I'd like to welcome Jim to the Iconix Group. Jim has a wide breadth of industry experience, including 13 years at Kate Spade, which was formerly Liz Claiborne. Welcome, Jim.

首先，我歡迎 Jim 加入 Iconix 集團。Jim 擁有廣泛的行業經驗，包括在 Kate Spade（前身為 Liz Claiborne）工作了 13 年。歡迎，吉姆。

It's been around 13 weeks since we last reported results to you, and we continued to deliver on our plan. We are pleased to report that our third quarter results are in line with our expectations and guidance. Our cost savings that we put in place at the end of 2018 continued to pay dividends and we remain focused on the business.

自從我們上次向您報告結果以來已經過去了大約 13 週，我們仍在繼續實施我們的計劃。我們很高興地報告，我們第三季的業績符合我們的預期和指導。我們在 2018 年底實施的成本節約繼續帶來紅利，我們仍然專注於業務。

Adjusted EBITDA margin for the quarter increased to 59% from 35% last year, while adjusted EBITDA margin for the 9 months increased to 56% this year from 44% last year. We have reduced expenses by approximately $32 million or 34% year-to-date. John will provide more detail later in the call.

本季調整後 EBITDA 利潤率從去年的 35% 增至 59%，而今年前 9 個月調整後 EBITDA 利潤率從去年的 44% 增至 56%。年初至今，我們已減少了約 3,200 萬美元的開支，即 34%。約翰將在稍後的電話會議中提供更多細節。

While third quarter revenue for 2019 was down when compared with third quarter of 2018, as expected, more than half of that decline was due to the loss of DTRs from Mossimo, Danskin and Royal Velvet and the impact of the Sears bankruptcy on Joe Boxer, Cannon and Bongo.

雖然2019 年第三季的收入與2018 年第三季相比有所下降，正如預期的那樣，但其中一半以上的下降是由於Mossimo、Danskin 和Royal Velvet 的DTR 損失以及西爾斯破產對Joe Boxer的影響，加農炮和邦戈。

During the quarter, we finalized significant new agreements for Fieldcrest home, OP swimwear and accessories in China, Buffalo underwear and small leather goods in Asia, and Lee Cooper for eyewear in Asia Pacific, apparel and bags in certain European countries, and bags and accessories in Israel. We also had major renewals for Umbro in Brazil, Cannon nightwear and underwear in the Middle East and for Rocawear watches in the U.S. and Canada. Overall, we have signed a total of 155 new or renewed license agreements in fiscal 2019, which total aggregate GMRs of approximately $126 million over the life of the agreements.

本季度，我們敲定了多項重要新協議：Fieldcrest home、中國的 OP 泳裝和配件、亞洲的 Buffalo 內衣和小皮具、亞太地區的 Lee Cooper 眼鏡、某些歐洲國家的服裝和箱包以及箱包和配件在以色列。我們也對巴西的 Umbro、中東的 Cannon 睡衣和內衣以及美國和加拿大的 Rocawear 手錶進行了重大更新。總體而言，我們在 2019 財年共簽署了 155 份新的或續約的授權協議，協議有效期內的 GMR 總額約為 1.26 億美元。

We are also pleased that since our last call, we have entered into a settlement in respect of our shareholder class action litigation, and we have reached an agreement in principle with the SEC staff regarding the ongoing SEC investigation. We have been working diligently over the last year to settle these matters and to put them behind us once and for all so we can focus and concentrate on the future.

我們也很高興地看到，自上次通話以來，我們已就股東集體訴訟達成和解，我們已與 SEC 工作人員就正在進行的 SEC 調查達成原則協議。去年我們一直在努力解決這些問題，並將其一勞永逸地拋在腦後，以便我們可以專注於未來。

On the shareholder litigation, we have reached an agreement for $6 million, all of which we believe will be reimbursed by our insurance carriers. On the SEC investigation, we have recorded a $5.5 million charge, representing the amount we believe will be paid on final settlement. As mentioned in prior calls, we have also resolved several other outstanding lawsuits during the first half of 2019, so to date, we have made great progress resolving long-running material legacy disputes and legal matters.

關於股東訴訟，我們已達成 600 萬美元的協議，我們相信所有這些費用將由我們的保險公司償還。在 SEC 調查中，我們記錄了 550 萬美元的費用，這代表我們認為最終和解時將支付的金額。正如先前電話中提到的，我們在 2019 年上半年也解決了其他幾起懸而未決的訴訟，因此迄今為止，我們在解決長期存在的重大遺產糾紛和法律事務方面取得了很大進展。

I will now turn the call over to John.

我現在將把電話轉給約翰。

Thanks, Bob. On a total company basis, third quarter revenue was down 23% from prior year principally as a result of the previously announced transition of our Danskin and Mossimo DTRs in our women's segment; Royal Velvet in our home segment; and the impact of the Sears bankruptcy on our Joe Boxer, Cannon and Bongo brands. Buffalo and Starter were our best performers in the quarter.

謝謝，鮑伯。就公司整體而言，第三季營收較去年同期下降 23%，主要是由於先前宣布的女裝細分市場 Danskin 和 Mossimo DTR 的過渡； Royal Velvet 在我們的家居領域；以及西爾斯破產對我們的 Joe Boxer、Cannon 和 Bongo 品牌的影響。Buffalo 和 Starter 是本季表現最好的公司。

We had an operating loss of $8 million this quarter versus a $12 million of operating income last year. This year's results include a $17 million impairment charge on our investment in Marcy Media, the anticipated settlement of $5.5 million with the SEC and $4.6 million of contract asset impairments related to assets that are recorded under the new revenue recognition standard, $3.6 million of which were recorded upon adoption of the new standard in 2018 and were not recorded through revenue. The earnings release we filed today has details and reconciliations related to such items.

本季我們的營業虧損為 800 萬美元，而去年的營業收入為 1,200 萬美元。今年的業績包括我們對 Marcy Media 投資的 1700 萬美元減值費用、預計與 SEC 和解的 550 萬美元以及與根據新收入確認標準記錄的資產相關的 460 萬美元合約資產減值，其中 360 萬美元是2018年採用新準則時計入，不再計入收入。我們今天提交的收益報告包含與此類項目相關的詳細資訊和調節表。

Total company adjusted EBITDA increased 30% for the quarter, while our adjusted EBITDA margin improved to 59% from 35% as our expense decrease outpaced our revenue decline.

本季公司調整後 EBITDA 總額成長了 30%，而我們調整後 EBITDA 利潤率從 35% 提高到 59%，因為我們的費用下降幅度超過了營收下降幅度。

On a segment basis, as expected, revenue in the women's segment was down 32% for the 3 months. As previously discussed, the decline was principally the result of the transition of our Danskin and Mossimo DTRs and the impact of the Sears bankruptcy on Joe Boxer and Bongo.

從細分市場來看，正如預期的那樣，女性細分市場的收入在過去 3 個月下降了 32%。如前所述，下降主要是由於 Danskin 和 Mossimo DTR 的過渡以及 Sears 破產對 Joe Boxer 和 Bongo 的影響。

In the men's segment, revenue was up 9% for the quarter, and the improvement was principally due to higher sales in Buffalo and Starter.

在男裝領域，本季營收成長了 9%，這一成長主要歸功於 Buffalo 和 Starter 銷售額的增加。

The home segment was down 51% for the quarter which was principally the impacts of the Sears bankruptcy on our Cannon brand, the transition of our Royal Velvet DTR and the impact of netting certain advertising costs against revenue at Charisma.

本季家居業務下降了 51%，這主要是由於 Sears 破產對 Cannon 品牌的影響、Royal Velvet DTR 的轉型以及 Charisma 淨收入中某些廣告成本的影響。

In the international segment, revenue was down 17%, with the decline being attributable to lower sales in Lee Cooper and Umbro. The decline in Umbro reflects our decision to terminate our licensing in China, and we are in the process of assessing options that are available to us in China for Umbro.

在國際市場，收入下降了 17%，下降的原因是 Lee Cooper 和 Umbro 的銷售額下降。茵寶的下滑反映出我們決定終止在中國的許可，我們正在評估茵寶在中國的可用選擇。

Our reported SG&A expense for the quarter was $26.3 million, a 13% decrease compared with $30.2 million in the third quarter of 2018. The expense reduction plan that began in the fourth quarter 2018 has continued to yield expense savings with the most significant reductions in advertising, professional fees, consulting and bad debts. On an adjusted EBITDA basis, SG&A expenses are down 56%.

我們報告的本季 SG&A 費用為 2,630 萬美元，與 2018 年第三季的 3,020 萬美元相比下降了 13%。2018 年第四季開始的費用削減計畫繼續帶來費用節省，其中廣告費、專業費用、諮詢費和壞帳的削減最為顯著。在調整後的 EBITDA 基礎上，SG&A 費用下降了 56%。

The 2018 adjusted EBITDA results include an approximate $8 million bad debt charge related to Sears and Kmart. And when excluding that from the 2018 results, SG&A is still down 39%. So any way we look at it, we've achieved significant reductions. These expense reductions drove the improvement in EBITDA margin for the quarter which went to 59% from 35% last year.

2018 年調整後 EBITDA 業績包括與西爾斯和凱馬特相關的約 800 萬美元壞帳費用。如果將其從 2018 年業績中剔除，SG&A 仍下降 39%。因此，無論從哪個角度來看，我們都實現了顯著的減少。這些費用的減少推動了本季 EBITDA 利潤率的改善，從去年的 35% 升至 59%。

Bob had mentioned that we signed 155 agreements this year for $126 million in GMRs. I wanted to add that the 155 represents a 29% increase in the number of deals signed versus last year at the same time. The number of renewals we have signed is up 13% year-over-year, although the number of new deals increased 42% as we continue to focus on finding new opportunities.

鮑伯提到，我們今年簽署了 155 份協議，價值​​ 1.26 億美元的 GMR。我想補充一點，與去年同期相比，155 筆簽署的交易數量增加了 29%。儘管由於我們繼續專注於尋找新機會，新交易數量增加了 42%，但我們已簽署的續約數量比去年同期增加了 13%。

The $126 million in GMRs represents a 69% increase in the dollar amount of GMRs versus last year. And of the $126 million in new GMRs, 59% or $74.5 million are renewals. And of those renewals, over 66% benefits years 2022 and later. This is tremendous show of confidence in our brands and in Iconix.

1.26 億美元的 GMR 意味著 GMR 的美元金額比去年增加了 69%。在價值 1.26 億美元的新 GMR 中，59%（即 7,450 萬美元）用於續約。在這些續約中，超過 66% 的受益人將在 2022 年及以後受益。這是對我們品牌和 Iconix 的巨大信心。

Now turning to the balance sheet. We had a $59.2 million of cash on hand at the end of the quarter, $32.9 million of which was in wholly owned subsidiaries and is unrestricted. Also, subsequent to quarter end, we collected the $15.9 million receivable we had recorded related to a previously filed federal income tax refund. That is not included in the $59.2 million cash balance.

現在轉向資產負債表。截至本季末，我們手頭上有 5,920 萬美元現金，其中 3,290 萬美元屬於全資子公司，且不受限制。此外，在季度末之後，我們收回了與先前提交的聯邦所得稅退稅相關的 1,590 萬美元應收帳款。這不包括在 5920 萬美元的現金餘額中。

Face-value debt balances have declined approximately $12 million over the quarter from $735 million at the end of the second quarter to $723 million at the end of this quarter. Of the $723 million outstanding, our 5.75% convertible notes represent approximately $94 million of the balance as compared with $95 million at prior quarter end. These notes, unless otherwise converted, will mature in August 2023.

本季面額債務餘額減少了約 1,200 萬美元，從第二季末的 7.35 億美元減少到本季末的 7.23 億美元。在未償付的 7.23 億美元中，我們的 5.75% 可轉換票據約佔餘額的 9,400 萬美元，而上一季末為 9,500 萬美元。除非另有轉換，這些票據將於 2023 年 8 月到期。

Our senior secured term loan, which is approximately $183 million, bears lot -- bears interest at LIBOR plus 7% and matures in August 2022. The balance of $446 million relates to our securitization facility, which has a weighted average interest rate of approximately 4.61% at quarter end. This facility has a legal maturity date of 2043 and an anticipated repayment date of January 2020. And as we discussed during our prior calls, if the debt is not refinanced by 2020, then the interest rate goes up and the additional interest, which is on top of current interest, isn't payable until 2043 and is not compounded.

我們的優先擔保定期貸款約為 1.83 億美元，利息以 LIBOR 加 7% 計算，將於 2022 年 8 月到期。4.46 億美元的餘額與我們的證券化工具有關，該工具截至季末的加權平均利率約為 4.61%。該貸款的法定到期日為 2043 年，預計還款日為 2020 年 1 月。正如我們在之前的電話會議中討論的那樣，如果到 2020 年債務沒有再融資，那麼利率就會上升，並且在當前利息之上的額外利息要到 2043 年才會支付，並且不會複利。

We are currently in compliance with the total leverage ratio and asset coverage ratio financial covenants under our credit agreement as well as our interest-only debt service coverage ratio under our securitization facility. Additionally, our current projection shows to be in compliance through at least 2021.

目前，我們遵守信貸協議下的總槓桿率和資產覆蓋率財務契約以及證券化工具下的只付利息債務償還覆蓋率。此外，我們目前的預測顯示至少到 2021 年才會符合要求。

Due to a decrease in our debt service coverage ratio within the securitization facility, we are now in rapid amortization status. And again, as another reminder, rapid amortization status, Iconix will continue to receive its management fee and all collections in excess of management fees, and certain other fees and expenses will go directly towards debt service.

由於我們的證券化工具內的償債覆蓋率下降，我們現在處於快速攤銷狀態。再次提醒大家，快速攤銷狀態下，Iconix 將繼續收取管理費和所有超出管理費的收款，某些其他費用和支出將直接用於償債。

As a reminder on securitization, this facility is secured by certain brands, and generally, the collections from the licensing of these brands is received into the facility. These collections go to pay our management fee, followed by interest and then principal. And under normal operations, if there's any residual, it comes back to Iconix. When we're in a rapid amortization status, the residual would immediately be used to pay down principal.

關於證券化，該設施由某些品牌提供擔保，一般來說，這些品牌許可的藏品會被接收到該設施中。這些收款將用於支付我們的管理費，然後是利息，然後是本金。在正常操作下，如果有任何殘留，它會回到 Iconix。當我們處於快速攤銷狀態時，剩餘部分將立即用於償還本金。

Iconix will continue to receive its management fee from the securitization for as long as it is in compliance with the interest-only debt service coverage ratio, and we do not believe the loss of our residual, if any, will have a significant impact on our operations.

Iconix will continue to receive its management fee from the securitization for as long as it is in compliance with the interest-only debt service coverage ratio, and we do not believe the loss of our residual, if any, will have a significant impact on our營運.

And finally, as we look to guidance for the remainder of 2019, we remain on plan. For adjusted EBITDA, we maintain our previous guidance of between $74 million and $78 million for adjusted EBITDA. And for revenue, we have held the low end of the range and slightly reduced the high end of the range, so our new range for revenue is now $145 million to $149 million.

最後，當我們期待 2019 年剩餘時間的指導時，我們仍按計劃進行。對於調整後 EBITDA，我們維持先前 7,400 萬至 7,800 萬美元調整後 EBITDA 的指導。對於收入而言，我們保持了該範圍的低端，並略微降低了該範圍的高端，因此我們新的收入範圍現在為 1.45 億美元至 1.49 億美元。

With that, I'll turn the call back over to Bob.

這樣，我會將電話轉回給鮑伯。

Thank you, John. We believe that the actions and decisions taken to date this year are helping to put us in a better position for 2020 and beyond.

謝謝你，約翰。我們相信，今年迄今採取的行動和決定有助於我們在 2020 年及以後處於更好的位置。

With that, operator, we will now open the line up for question.

接線員，現在我們開始排隊提問。

(Operator Instructions)

（操作員說明）

Our first question comes from Desa Bowman with Iconix.

我們的第一個問題來自 Iconix 的 Desa Bowman。

Our next question comes from Eric Beder with SCC Research.

我們的下一個問題來自 SCC Research 的 Eric Beder。

Now in terms of the SG&A savings, you guys have done a really great job of tamping down the costs.

現在就SG&A節省而言，你們在降低成本方面做得非常出色。

Eric, we're having trouble hearing you here.

艾瑞克，我們在這裡聽不到你的聲音。

Sure.

當然。

Eric, we're having trouble hearing you. A little bit. A little bit.

艾瑞克，我們聽不清楚你的聲音。一點點。一點點。

Okay. So in terms of SG&A savings, you've gotten it down to about where you've got it here. Is there opportunity for further SG&A savings here from the levels you have? And where would that be if there was?

好的。因此，就 SG&A 節省而言，您已經將其歸結為您在這裡獲得的金額。與您目前的水平相比，是否有機會進一步節省 SG&A？如果有的話會在哪裡？

Yes. I think there are, Eric. We continue to look at our operations, both domestically as well as internationally, to make sure that we're delivering value, both to our partners, licensing partners and retail partners. So we continue to assess where there's value being added and where there's not. And that's an ongoing process, and we'll continue for the rest of this fourth quarter and into the first quarter of next year.

是的。我想是有的，艾瑞克。我們繼續關注我們的國內和國際業務，以確保我們為我們的合作夥伴、授權合作夥伴和零售合作夥伴提供價值。因此，我們繼續評估哪些地方可以增加價值，哪些地方沒有。這是一個持續的過程，我們將在第四季度剩餘時間和明年第一季繼續進行。

Okay. And when you look at the opportunities for replacing some of the DTRs, especially on larger ones in the U.S., how does that look in 2020? And what are you seeing out there in the market for the appetite to take on some of these brands like OP and Mossimo in the U.S.?

好的。當您考慮更換部分 DTR 的機會時，尤其是美國較大的 DTR 的機會時，您認為 2020 年如何？您認為市場上有什麼興趣去挑戰美國的 OP 和 Mossimo 等品牌？

Again, we're -- we've gotten less traction than I would have liked with the Mossimo. It frankly is one that was very significant in the past, and it has had more success outside the U.S. than it has in the U.S. With OP, I think we're getting some traction that we'll see, I think, some improvement going into 2021 because obviously any of the deals that we're signing today, there may be some second half of 2020 benefit, but the lion's share will come in, in 2021.

再說一遍，我們對 Mossimo 的吸引力比我希望的要小。坦白說，這是一個在過去非常重要的項目，而且它在美國以外的地方比在美國取得了更多的成功。 。

And in terms of the Sears/Kmart brands, I know that those went to nonexclusive basis. What opportunity does that give you to expand those outside of your Kmart?

就西爾斯/凱馬特品牌而言，我知道這些品牌屬於非獨家品牌。這為您提供了哪些機會將業務擴展到凱馬特之外？

Sure. We're having -- again, with Joe Boxer, we did bring back Nick Graham and -- as Creative Director. And I think we're putting together a pretty compelling offering that will be taken to the market probably in the next 60 days. The nice thing with that is it's establishing us for 2021 which happens to be the 35th anniversary for Joe Boxer. So a lot of what we're doing is moving towards that for a big marketing push, and we want to have people in place during 2020 in order to gain the benefit of that. And Cannon, we've been very fortunate in signing a number of deals outside of Sears, where Cannon and its legacy has not been an issue whatsoever.

當然。我們再次邀請了喬·博克瑟 (Joe Boxer)，並邀請尼克·格雷厄姆 (Nick Graham) 擔任創意總監。我認為我們正在打造一款非常引人注目的產品，可能會在未來 60 天內推向市場。這樣做的好處是，我們的目標是 2021 年，正好是 Joe Boxer 的 35 週年紀念日。因此，我們正在做的很多事情都是為了大力推動行銷，我們希望在 2020 年讓人員就位，以便從中受益。還有 Cannon，我們非常幸運地在西爾斯之外簽署了許多協議，在那裡 Cannon 及其遺產並沒有成為任何問題。

And finally, China, so you seem to have signed some new licenses and shifted some new licenses. How important do you see that going forward?

最後，中國，所以你們似乎已經簽署了一些新的許可證並轉移了一些新的許可證。您認為這對未來有多重要？

I think China is continuing to be an important market for us. We think that we have had the wrong partner for Umbro. We've terminated that, and we're assessing other options in order to expand that. The Starter business, I was there for the first store opening in Beijing in May, and I think we're up to -- close to 20 stores already for Starter. Lee Cooper has been a very nice launch for us there. So we're experiencing, I think, pretty good momentum, but with a lot of runway left for us in China.

我認為中國仍然是我們的重要市場。我們認為茵寶找錯了合作夥伴。我們已經終止了該計劃，並且正在評估其他選項以擴展該計劃。Starter 業務，我五月在北京參加了第一家商店的開業，我認為我們已經準備好 - 已經有近 20 家 Starter 商店。李庫柏 (Lee Cooper) 為我們帶來了一個非常好的開局。因此，我認為我們正在經歷相當好的勢頭，但我們在中國還有很多跑道。

And I'm not showing any further questions at this time. I would now like to turn the call back over to John McClain for any further remarks.

目前我不會提出任何進一步的問題。我現在想將電話轉回約翰·麥克萊恩以徵求進一步意見。

Thank you, operator. This concludes the Q&A part of the call.

謝謝你，接線生。電話問答部分到此結束。

Ladies and gentlemen, thank you for participating today. Concludes our program. Everyone, have a wonderful evening.

女士們、先生們，感謝你們今天的參與。結束我們的計劃。祝大家有個美好的夜晚。

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

謝謝。女士們、先生們，今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。