LeapFrog Announces Q3 Results
LeapFrog Enterprises, Inc., announced financial results for the third quarter ended September 30, 2013. Highlights of the third quarter 2013 results compared to third quarter 2012 results are as follows:
• Consolidated net sales were up 4 percent.
• U.S. segment net sales were up 1 percent, and international segment net sales were up 14 percent.
• Income from operations was up 16 percent.
• Income from operations as a percentage of net sales was 21.3 percent, up 2.2 percentage points.
• Net income per diluted share (GAAP) was $0.37 compared to $0.60 a year ago.
• Normalized net income per diluted share (non-GAAP), which includes an effective 37.5 percent tax rate, was $0.38, up $0.06, or 19 percent, compared to $0.32 a year ago.
• Adjusted EBITDA was up 14 percent.
“Despite a tough retail climate in most of the markets in which we operate, the LeapFrog team delivered another solid quarterly financial performance,” said John Barbour, CEO, in a statement. “We head into the all-important holiday season with the best product offering we have ever had. We have hundreds of new pieces of life-changing educational entertainment content; an expanded learning tablet line with LeapPad Ultra, LeapPad2 Power, LeapPad2, and our LeapPad exclusive holiday bundles; a new learn-to-read-and-write line with LeapReader; and new learning toys such as Read With Me Scout & Violet. Our LeapPad tablets have been featured on most of the top toy lists for the holidays, and our great learning products continue to be recognized with many consumer and independent expert awards,” said Barbour. “We are well-positioned for the holidays with improved in-stocks, stronger retail promotions, and greater marketing investment during the highest-volume shopping weeks. At the same time, we see a weak retail climate and growing concern surrounding this holiday season, especially in the U.S.”
Financial Overview for the Third Quarter 2013 Compared to the Third Quarter 2012:
Third quarter 2013 net sales were $201 million, up 4 percent compared to $193.1 million last year, and included a 1 percent negative impact from changes in currency exchange rates. Net sales growth was largely driven by shipments of multimedia learning platforms, including LeapPad Ultra, LeapPad2 Power, LeapPad 2 holiday bundles, and LeapReader, which launched in the summer of 2013. In the U.S. segment, net sales were $146.8 million, up 1 percent compared to $145.7 million last year. In the International segment, net sales were $54.2 million, up 14 percent compared to $47.4 million last year, and included a 3 percent negative impact from changes in currency exchange rates.
Income from operations for the third quarter was $42.9 million, an improvement of 16 percent compared to $36.9 million a year ago. Income from operations as a percentage of net sales was 21.3 percent, an improvement of 2.2 percentage points compared to 19.1 percent a year ago.
Net income (GAAP) for the third quarter was $26.4 million compared to $41.7 million a year ago. Net income for the third quarter of 2013 reflects a $16.6 million provision for income taxes, including $15.6 million of tax expense attributable to U.S. operations, which were excluded in the prior-year period due to the full valuation allowance recorded against domestic deferred tax assets. In addition, net income for the third quarter of 2012 reflects a $5.8 million benefit from income taxes, including non-recurring tax benefits of $6.4 million due to the expiration of statutes of limitations in foreign jurisdictions. Net income per diluted share (GAAP) was $0.37 compared to $0.60 a year ago.
Normalized net income (non-GAAP) for the third quarter, which reflects an effective 37.5 percent tax rate, was $26.8 million, up 19 percent compared to $22.5 million a year ago. Normalized net income per diluted share (non-GAAP) was $0.38, up 19 percent, compared to $0.32 a year ago. The company says it provides normalized net income measures, which are non-GAAP measures, to help investors review performance and performance trends excluding discrete tax items, which have historically been significant. Adjusted EBITDA for the third quarter was $50.9 million, up 14 percent compared to a year ago.
“We delivered strong net sales and income from operations growth in the first nine months of the year,” said Ray Arthur, CFO. “Year-to-date, net sales grew 9 percent and income from operations grew 60 percent, driven by sales of our innovative product line and good expense management. While our financial performance to date has met our expectations, we are concerned about the fourth quarter given economic headwinds and a weak retail environment. Additionally, the holiday season will be more challenged and trend later in the U.S. this year compared to last year with six fewer shopping days between Thanksgiving and Christmas, and two fewer weekend shopping days. We are, therefore, adjusting our outlook for the full year 2013.”
Guidance for the full year 2013, LeapFrog expects:
• Net sales to be in a range of $570 million to $590 million, which is up or down 2 percent compared to $581 million in 2012.
• Operating margin to be between 7 percent and 9 percent.
• Net income per diluted share (GAAP) and normalized net income per diluted share (non-GAAP) to both be in the range of $0.36 to $0.46. This assumes an effective 37.5 percent tax rate, which does not include one-time discrete tax items. The company may incur some discrete tax items in 2013, but is not able to estimate or anticipate those discrete tax items at this time, which primarily relate to any adjustment of remaining valuation allowance against our deferred tax assets. For the full year 2012, net income per diluted share (GAAP) was $1.24 and normalized net income per diluted share (non-GAAP) was $0.56.
• Capital expenditures to be in the range of $30 million to $35 million, compared to $25 million in 2012, as it makes long-term, strategic investments in its business. Capital expenditures include purchases of property and equipment and capitalization of product costs.
Iconix Reports Q3
Iconix Brand Group, Inc., announced financial results for the third quarter ended September 30, 2013. Total revenue for the third quarter of 2013 was approximately $107.2 million, a 24 percent increase as compared to approximately $86.6 million in the third quarter of 2012. EBITDA attributable to Iconix for the third quarter was approximately $65.6 million, a 27 percent increase as compared to $51.8 million in the prior-year quarter. Free cash flow attributable to Iconix for the third quarter was approximately $54.3 million, a 26 percent increase as compared to the prior-year quarter of approximately $43.2 million. On a non-GAAP basis, net income attributable to Iconix was $33.1 million, a 15 percent increase as compared to the prior-year quarter of approximately $28.7 million. Non-GAAP diluted EPS for the third quarter of 2013 increased approximately 44 percent to $0.59 compared to $0.41 in the prior-year quarter. GAAP net income attributable to Iconix for the third quarter of 2013 was approximately $29 million, a 7 percent increase as compared to $27.1 million in the prior-year quarter and GAAP diluted EPS for the third quarter of 2013 increased 32 percent to $0.50 compared to $0.38 in the prior-year quarter.
Nine months ended September 30, 2013:
Total revenue for the nine months ended September 30, 2013, was approximately $327.4 million, a 22 percent increase as compared to approximately $268.7 million for the prior-year period. EBITDA attributable to Iconix for the nine-month period was approximately $202.8 million, a 21 percent increase as compared to approximately $167 million in the prior-year period. Free cash flow attributable to Iconix for the nine-month period was approximately $167 million, a 17 percent increase over the prior-year period of approximately $142.6 million. On a non-GAAP basis, net income attributable to Iconix for the nine-month period was approximately $112 million, a 20 percent increase as compared to approximately $93.1 million in the prior year period, and non-GAAP diluted earnings per share increased approximately 45 percent to $1.85 versus $1.28 for the prior-year period. GAAP net income attributable to Iconix for the nine-month period of 2013 was approximately $101.9 million, a 22 percent increase as compared to $83.3 million in the prior-year period and GAAP diluted EPS for the nine-month period of 2013 increased 45 percent to $1.67 compared to $1.15 in the prior-year period. Included in the third quarter and year-to-date results, is the formation of a new joint venture in Australia, which contributed approximately $5 million to revenue.
Neil Cole, chairman and CEO of Iconix Brand Group, Inc., said in a statement, “We believe the performance we have achieved year to date, with over 20 percent revenue growth and over 40 percent EPS growth, demonstrates the power of our business model and the strength of our portfolio. Looking ahead into 2014 and beyond, we expect to continue to deliver strong growth through both organic initiatives as well as acquisitions, as we continue to build our global footprint and further leverage our strong balance sheet. In addition, we plan to continue to balance acquisitions with share repurchases, as we have successfully done over the past two years, in which we bought back 32 percent of our shares outstanding.”
2013 Guidance for Iconix Brand Group, Inc.:
• The company is maintaining its 2013 revenue guidance of $425–$435 million.
• The company is raising its 2013 non-GAAP diluted EPS guidance to $2.30–$2.40 from $2.20–$2.30.
• The company is raising its 2013 GAAP diluted EPS guidance to $2.06–$2.16 from $1.97–$2.07.
• The company is maintaining its free cash flow guidance of $203–$210 million.
• This guidance relates to the company’s existing portfolio of brands and does not include any additional acquisitions. In addition, this guidance does not assume any dilution from the company’s convertible notes.
2014 Guidance for Iconix Brand Group, Inc.:
• 2014 revenue guidance of $440–$455 million
• 2014 non-GAAP diluted EPS guidance of $2.50–$2.60
• 2014 GAAP diluted EPS guidance of $2.19–$2.29
• 2014 free cash flow guidance of $210–$217 million
Target Announces Holiday Toy List
Target announced its annual list of what the retailer says will be its hot sellers, many of which are exclusive to Target.
9 Months to 3 Years
Disney Sofia The First 10-inch Doll (Target Exclusive)
Fisher-Price Little People Disney Princess Klip Klop Stable
Furreal Friends Cuddles My Giggle Monkey
Sesame Street Big Hugs Elmo
4 Years to 6 Years
4-pk. Disney Planes Die-Cast Gift Set (Target Exclusive)
LeapFrog LeapPad2 Disney Princess Enchanted Bundle (Target Exclusive)
Imaginext Justice League Javelin (Target Exclusive)
Disney Frozen Anna Doll and Toddler Dress Gift Set (Target Exclusive)
Angry Birds Go Pirate Ship
Fisher-Price Octonauts Octopod Play Set
Kidtrax SRT Viper 6-Volt Ride-On Car
Lalaloopsy Loopy Hair Doll
LEGO Friends Downtown Bakery
Barbie Dream House
MEGA Bloks Hot Wheels Super Stunt Test Facility
Teenage Mutant Ninja Turtles R/C Shellraiser
7 Years to 9 Years
Monster High Power Ghouls Doll (Target Exclusive)
6-pk. Marvel Titan Heroes (Target Exclusive)
Razor Lighted-Wheel A Scooter (Target Exclusive)
2-pk. Skylanders Swap Force (Target Exclusive)
LEGO Chima Equilas Ultra Striker (Target Exclusive)
Transformers Predacons Rising Electronic Predaking Dragon (Target Exclusive)
NERF Elite RapidStrike CS-18 Blaster
Hot Wheels Triple Track Twister
Flutterbye Flying Fairy
Kids’ 10 Years and Up
Air Hogs Atmosphere
Beats Solo On-Ear Headphones
Samsung Galaxy S4
Spy Gear Panosphere 360 Spy Cam
The Passing of Roger Richman
Roger Richman, the pioneer of the legends licensing category, passed away on October 9 at age 69. Read about how he championed deceased-celebrity licensing from this piece in the Los Angeles Times.