Company Announces New Multi-Year Agreement with QVC for Martha Stewart Brand
- Q1 Revenue increased 16% to $39.4 million
- Q1 GAAP diluted EPS of $(0.02); Q1 non-GAAP diluted EPS of $0.09
- Q1 GAAP net loss of $(1.2) million; Q1 non-GAAP net income of $5.9 million
- Q1 Adjusted EBITDA increased 38% to $23.0 million
NEW YORK, 2017-May-08 — /EPR Retail News/ — Sequential Brands Group, Inc. (“Sequential” or the “Company”) (Nasdaq:SQBG) today (May 04, 2017) announced financial results for the first quarter ended March 31, 2017.
First Quarter 2017 Results:
Total revenue for the first quarter ended March 31, 2017 increased 16% to $39.4 million, compared to $34.0 million in the prior year quarter. On a GAAP basis, net loss for the first quarter 2017 was $(1.2) million or $(0.02) per diluted share compared to a net loss for the first quarter 2016 of $(1.1) million or $(0.02) per diluted share. Included in the first quarter 2017 was a charge of $(0.11) or $6.7 million related to costs associated with the departure of our former CEO. The charge included $3.2 million in severance expense and $3.5 million in non-cash stock-based compensation expense, which represents the accelerated vesting of previously granted stock awards, and was calculated based on the fair value on the stock’s grant date in April 2015 of $14.33 per share in accordance with GAAP. The fair value of the shares on the termination date was $3.95 per share, or approximately $1.1 million total. Taking this and other small items into consideration, Non-GAAP income for the first quarter 2017 was $5.9 million, or $0.09 per diluted share, compared to $2.5 million, or $0.04 per diluted share, in the prior year period. Adjusted EBITDA (defined in the accompanying Non-GAAP Financial Measures) for the first quarter of 2017 was $23.0 million, compared to $16.7 million in the prior year quarter. See Non-GAAP Financial Measure Reconciliation tables below for a reconciliation of GAAP to non-GAAP measures.
“We started the year off strong with solid results in the first quarter and several new organic growth initiatives underway,” said Karen Murray, CEO of Sequential Brands Group. “Going forward, our top priority is implementing new revenue initiatives across all of our brands, while maintaining a disciplined approach to expense management. At the same time, we are focused on taking the steps needed to improve our balance sheet.”
For the year ending December 31, 2017, the Company is reiterating guidance of $170 million to $175 million in revenue and $98 million to $102 million of Adjusted EBITDA. The Company’s GAAP net income is now expected to be $15.5 million to $18.1 million due to costs associated with the departure of the Company’s CEO as mentioned above. The Company’s contractual guaranteed minimum royalties for 2017 are approximately $120 million. Consistent with the Company’s historical quarterly results, the Company expects revenue for 2017 to be weighted to the third and fourth quarters due to seasonality in the businesses of many of the Company’s licensees.
This morning the Company announced a new multi-year agreement with QVC for the Martha Stewart brand. The partnership is expected to launch in the second half of this year and will include categories such as fashion apparel, skincare and food and beverage. The collaboration will also feature appearances on QVC by Martha Stewart and a select team of Martha’s lifestyle experts.
Investor Call and Webcast:
Management will provide further commentary today, May 4, 2017, on the Company’s financial results via a conference call and webcast beginning at approximately 8:30 am ET. To join the conference call, please dial (877) 407-0789 or visit the investor relations page on the Company’s website www.sequentialbrandsgroup.com.
Non-GAAP Financial Measures:
This press release contains historical and projected measures of Adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share. The Company defines Adjusted EBITDA as net loss attributable to Sequential Brands Group, Inc. and Subsidiaries, excluding interest income or expense, income taxes, depreciation and amortization, acquisition-related costs, non-cash compensation, MSLO Shareholder and pre-acquisition litigation costs, restructuring costs and costs incurred in connection with CEO transition. Non-GAAP net income and non-GAAP earnings per share are non-GAAP financial measures which represent net loss attributable to Sequential Brands Group, Inc. and Subsidiaries, excluding acquisition-related costs, non-cash mark-to-market adjustments to stock-based compensation provided to non-employees, restructuring costs, costs incurred in connection with CEO transition, MSLO Shareholder and pre-acquisition litigation costs and adjustment to taxes. These non-GAAP metrics are an alternative to the information calculated under U.S. generally accepted accounting principles (“GAAP”), as provided in the reports the Company files with the Securities and Exchange Commission, may be inconsistent with similar measures presented by other companies and should only be used in conjunction with the Company’s results reported according to GAAP. Any financial measure other than those prepared in accordance with GAAP should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. We consider these measures to be useful measures of our ongoing financial performance because they adjust for certain costs and other events that the Company believes are not representative of its ongoing business. See below for a reconciliation of these non-GAAP metrics from the most directly comparable GAAP measure.
About Sequential Brands Group, Inc.
Sequential Brands Group, Inc. (Nasdaq:SQBG) owns, promotes, markets, and licenses a portfolio of consumer brands in the home, active and fashion categories. Sequential seeks to ensure that its brands continue to thrive and grow by employing strong brand management, design and marketing teams. Sequential has licensed and intends to license its brands in a variety of consumer categories to retailers, wholesalers and distributors in the United States and around the world. For more information, please visit Sequential’s website at: www.sequentialbrandsgroup.com. To inquire about licensing opportunities, please email: email@example.com.
Certain statements in this press release and oral statements made from time to time by representatives of the Company are forward-looking statements (“forward-looking statements”) within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are made as of the date hereof and are based on current expectations, estimates, forecasts and projections as well as the beliefs and assumptions of management. The Company’s actual results could differ materially from those stated or implied in forward-looking statements. Forward-looking statements include statements concerning estimates of GAAP net income, Adjusted EBITDA, revenue (including guaranteed minimum royalties), and margins, guidance, plans, objectives, goals, strategies, expectations, intentions, projections, developments, future events, performance or products, underlying assumptions and other statements that are not historical in nature, including those that include the words “subject to,” “believes,” “anticipates,” “plans,” “expects,” “intends,” “estimates,” “forecasts,” “projects,” “aims,” “targets,” “may,” “will,” “should,” “can,” “future,” “seek,” “could,” “predict,” the negatives thereof, variations thereon and similar expressions. Such forward-looking statements reflect the Company’s current views with respect to future events, based on what the Company believes are reasonable assumptions. Whether actual results will conform to expectations and predictions is subject to known and unknown risks and uncertainties, including: (i) risks and uncertainties discussed in the reports that the Company has filed with the Securities and Exchange Commission (the “SEC”); (ii) general economic, market or business conditions; (iii) the Company’s ability to identify suitable targets for acquisitions and to obtain financing for such acquisitions on commercially reasonable terms; (iv) the Company’s ability to timely achieve the anticipated results of recent acquisitions and any potential future acquisitions; (v) the Company’s ability to successfully integrate acquisitions into its ongoing business; (vi) the potential impact of the consummation of recent acquisitions or any potential future acquisitions on the Company’s relationships, including with employees, licensees, customers and competitors; (vii) the Company’s ability to achieve and/or manage growth and to meet target metrics associated with such growth; (viii) the Company’s ability to successfully attract new brands and to identify suitable licensees for its existing and newly acquired brands; (ix) the Company’s substantial level of indebtedness, including the possibility that such indebtedness and related restrictive covenants may adversely affect the Company’s future cash flows, results of operations and financial condition and decrease its operating flexibility; (x) the Company’s ability to achieve its guidance; (xi) continued market acceptance of the Company’s brands; (xii) changes in the Company’s competitive position or competitive actions by other companies; (xiii) licensees’ ability to fulfill their financial obligations to the Company; (xiv) concentrations of the Company’s licensing revenues with a limited number of licensees and retail partners; and (xv) other circumstances beyond the Company’s control. Refer to the section entitled “Risk Factors” set forth in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q for a discussion of important risks, uncertainties and other factors that may affect the Company’s business, results of operations and financial condition. The Company’s stockholders are urged to consider such risks, uncertainties and factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Forward-looking statements are not, and should not be relied upon as, a guarantee of future performance or results, nor will they necessarily prove to be accurate indications of the times at or by which any such performance or results will be achieved. As a result, actual outcomes and results may differ materially from those expressed in forward-looking statements. The Company is not under any obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. Readers should understand that it is not possible to predict or identify all risks and uncertainties to which the Company may be subject. Consequently, readers should not consider such disclosures to be a complete discussion of all potential risks or uncertainties.
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Source: Sequential Brands Group, Inc. /globenewswire