Iconix Revises Down 2017 Guidance; Deconsolidates Southeast Asia JV

(RTTNews) - Iconix Brand Group, Inc. (ICON) announced the company now expects 2017 non-GAAP EPS to be in a range of $0.65 to $0.70 as compared to its previous guidance of $0.70 to $0.85 to reflect revenue revision. In 2017, the company expects to realize $29 million or $0.51 of earnings per share of tax savings related to the amortization of the wholly owned U.S. intangible assets. Adjusting for the tax benefit, the company expects non-GAAP EPS for 2017 to be in a range of $1.16 to $1.21 as compared to previous guidance of $1.21 to $1.36.

The company expects full year 2017 revenue to be in a range of approximately $225 million to $235 million as compared to its previous guidance of $235 million to $245 million. The revision is related to the timing of certain new initiatives, the transition of certain licensees, and the deconsolidation of the Southeast Asia joint venture.

The company expects full year 2017 free cash flow to be in a range of $65 million to $82 million, as compared to previous guidance of $105 million to $125 million. The revision is primarily related to the $23.3 million charge the company incurred in the second quarter as a result of terminating licensees, the downward revenue revision and a $10 million state tax audit settlement.

The company also reported preliminary financial results for its second quarter ended June 30, 2017. Non-GAAP EPS from continuing operations for the second quarter of 2017 was $0.26 as compared to $0.25 in the second quarter of 2016. For the second quarter of 2017, licensing revenue was $61.6 million, a 10% decline as compared to $68.2 million in the prior year quarter. Excluding revenue from the Sharper Image brand, revenue declined approximately 7% in the second quarter of 2017.

In the course of finalizing the results for the second quarter of 2017, the company determined that its Southeast Asia joint venture should be deconsolidated. This deconsolidation was triggered by its joint venture partner's payment of the final purchase price installment in respect of its interest in the Southeast Asia joint venture, which the company received in late June. The company said, flowing such deconsolidation through its financial statements is a time intensive process and as a result, the company is reporting its preliminary results, excluding the effect of the deconsolidation. The company will file its 10-Q by August 14, 2017.