• Total revenue of $23.6 million compared to $28.0 million in the prior year quarter.
• GAAP Operating Income $25.3 million as compared to a loss of $4.9 million in the prior year quarter.
• Adjusted EBITDA of $11.9 million, compared to $11.6 million in the prior year quarter.
• Continued to improve cost structure, decreasing SG&A expenses by 24% from prior year quarter.
• Signed 93 license agreements during 2021, representing $47 million of aggregate minimum royalties over the life of these contracts.

Iconix Brand Group, Inc. (Nasdaq: ICON) (“Iconix” or the “Company”) today reported financial results for the first quarter ended March 31, 2021.

Bob Galvin, CEO commented, “While we and our licensees continue to deal with many pandemic-related challenges, we have continued to focus on realizing the opportunity that exists for our brands through building our pipeline of future business. By doing so, we have had a very strong start to the year. Year to date, we have signed 93 license agreements representing $47 million of aggregate minimum royalties over the life of these contracts. This represents a 127% increase in the numbers of deals signed versus last year to date and a 98% increase in the amount of minimum royalties. This performance is due to the continued dedication and hard work of our team.”

First Quarter 2021 Financial Results (unaudited)

GAAP Revenue by Segment
(000’s)

For the first quarter of 2021, total revenue was $23.6 million, a 15% decline, compared to $28.0 million in the first quarter of 2020. The 41% decrease in revenue in our Women’s segment was principally as a result of a decrease in licensing revenue from our Mudd, Candies and Joe Boxer brands partially offset by an increase in our Danskin brand. Revenue from the Men’s segment decreased 17% mainly due to a decrease in licensing revenue from our Buffalo brand. Sales in our Home segment decreased by 22% principally due to a decrease in licensing revenue from our Fieldcrest brand. Our International segment revenue improved 2% mainly due to an increase in licensing revenue in Europe.

SG&A Expenses:
Total SG&A expenses in the first quarter of 2021 were $13.1 million, a 24% decline compared to $17.2 million in the first quarter of 2020. The decline for the quarter was primarily driven by a decrease in bad debt expense.

Gain on Sale of Trademarks:
The gain on sale of trademarks in the first quarter of 2021 was $15.0 million, compared to zero in the first quarter of 2020. The gain for the quarter was a result of the sale of the Lee Cooper trademark in China.

Trademark Impairment:
Trademark Impairment in the first quarter of 2021 was zero compared to $13.7 million in first quarter of 2020, which was primarily based on the impact of the COVID-19 pandemic on the current and estimated future cash flows on the fair value of the Rampage, Joe Boxer, Waverly, Fieldcrest and Umbro indefinite-lived trademarks.

Operating Income and Adjusted EBITDA (1):

Adjusted EBITDA is a non-GAAP metric, and a reconciliation table is included below.

Operating income for the first quarter of 2021 was $25.3 million, as compared to operating loss of $4.9 million for the first quarter of 2020. The first quarter 2020 results include $13.7 million of charges related to impairments. Adjusted EBITDA in the first quarter of 2021 was $11.9 million, which represents operating income of $25.3 million excluding net adjustments of $13.4 million. Adjusted EBITDA in the first quarter of 2020 was $11.6 million, which represents operating loss of $4.9 million excluding net charges of $16.5 million. The change period over period in Adjusted EBITDA was primarily as a result of reduced revenue largely driven by the impact of the COVID-19 pandemic on our business, offset by reduced expenses driven by the Company’s cost reduction initiative resulting in a higher Adjusted EBITDA margin. Refer to footnote 1 below for a full detailed reconciliation of operating income to Adjusted EBITDA.

Note: All items in the following tables are attributable to the Company’s interest in its subsidiaries and joint ventures, as applicable, and exclude the results related to any non-controlling interest in such entities. Certain numbers may not add due to rounding.

Interest Expense and Other Income (Loss), net:

Interest expense in the first quarter of 2021 was $14.7 million as compared to $17.1 million in the first quarter of 2020. The decrease in interest expense was primarily the result of the year over year reduction in debt as a result of repayments required upon the sale of certain trademarks of the Company. In the first quarter of 2021, Other income (loss) was s loss of $2.8 million as compared to income of $0.8 million in the first quarter of 2020. This result is primarily from the Company’s accounting for the 5.75% Convertible Notes, which requires recording the fair value of this debt at the end of each period with any change from the prior period accounted for as other income or loss in the respective period’s consolidated income statement.

Provision for Income Taxes:

The effective income tax rate for the first quarter of 2021 was 24.6%, which resulted in a $2.3 million income tax expense, as compared to an effective income tax rate of 0.0% in the first quarter of 2020, which resulted in a $0.0 million income tax benefit. The increase in income tax expense is a result of an increase in foreign taxes for the first quarter of 2021 and a tax benefit in the first quarter of 2020 related to the CARES Act.

GAAP Net Income (Loss) and GAAP Diluted EPS:

GAAP net (income)loss attributable to Iconix for the first quarter of 2021 reflected a net income of $4.2 million, compared to a net loss of $21.8 million for the first quarter of 2020. GAAP diluted EPS for the first quarter of 2021 reflected income of $0.26 per share, compared to a loss of $1.89 per share for the first quarter of 2020.

Adjusted EBITDA (1):

Adjusted EBITDA for the first quarter of 2021 was $11.9 million, compared to $11.6 million for the first quarter of 2020.

Balance Sheets and Liquidity: (unaudited)