Q3 2019 Earnings Call

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Other than as required by law, we undertake no obligation to update or revise these forward looking statements, whether as a result of information future events or otherwise.

Additionally, the terms adjusted EBITDA and non-GAAP net income are all non-GAAP metrics and reconciliation tables for each can be found in the press release distributed today in the Investor Relations portion of our website Www Dot sequential brands group dock.

On today's call our sequential brands groups, Chairman, Bill Sweedler, and Chief Financial Officer, Peter a lot.

I'll now turn the conference over to Mr. Suite Blair you may begin when you're ready.

Good morning.

Well, we're in the final stages of our CEO search I'm pleased to fill in enjoying todays call with Peter.

The executive team has been hard at work executing on the plan to best position sequential for long term success and I have a few updates to share. This morning on the progress.

First the management team remains focused on driving revenue growth across the portfolio. There are four broad initiatives for which we continue to seek opportunity to drive growth for all brands in the sequential portfolio.

These include signing new strategic licensing partnerships, both domestically and abroad, securing partnership renewals expanding into new categories, and lastly, broadening geographic distribution.

Recent examples in the quarter include signing new licenses and multiple categories for Jessica Simpson, securing new kids footwear deals for Joe's William Rast, and Caribbean, Joe and executing new partnerships to expand a via and Ellen Tracy and select Scandinavian territories.

Second we are well underway to rightsizing the cost structure of the business post the sale of Martha Stewart, which includes a significant reduction of our expenses.

As management previously outlined we expect an operating expense base of approximately $30 million before minority interest starting next year.

This new optimized operating expense base reflects a significant reduction to the company's corporate overhead, including corporate headcount S DNA and headquarter related expenses.

So that in we've made significant progress on the sublease broad.

We have completed negotiations with a sub tenant for 62% of our current corporate headquarters and continue to actively market the balance of the space. We expect these savings to drive a significant and a media margin improvement as we head into 2020.

Third we recently amended our lending agreement with KKR, which further improves our liquidity and cash flow and demonstrates the continued support of our lenders with no upcoming debt maturities. We believed that the company has ample runway to focus on driving the business forward.

Finally, we're working diligently with our financial advisor Stifel on the strategic review process, which we announced last month.

We have received significant inbound interest and the strategic process is moving forward at the same time as previously stated we continue to evaluate potential acquisition targets that fit well in our existing brand verticals and would be both de levering and accretive.

In closing, we're excited by our CEO search and the progress we've made to lay the groundwork for 2020 as we transition to a leaner more nimble operation we have a collection of strong brands across the lifestyle and active categories best in class wholesale and retail partners the financial flexibility now.

Needed to execute against our growth strategy and a core talented team.

With that let me turn the call over to Peter who will take you through third quarter financials.

Thank you Bill total revenue from continuing operations for third quarter, 2019 was 25.4 million compared to 29.5 million in the prior year quarter.

As mentioned on our last call for the third quarter and the remainder of 2019 results continued to be impacted by one time items included in last year's results and not included in this year's results.

On a GAAP basis net loss from continuing operations for the third quarter of 29 team was 18.4 million or 28 cents per diluted share compared to net loss from continuing operations for the third quarter of 28 team of 10.5 million or 16 cents per diluted share.

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Included in the net loss from continuing operations for the third quarter of 29 team, where non cash impairment charges of approximately 33 million Brent indefinite life intangible assets related to the trademark for the Jessica Simpson and Joe's brands.

non-GAAP net loss from continuing operations for the third quarter 2019 was <unk> point 9 million or two cents per diluted share compared to non-GAAP net loss from continuing operations <unk> point, threemillion or zero cents per diluted share in the third quarter 2018.

Adjusted EBITDA from continuing operations for the third quarter of 2019 was 13.2 million compared to 15.1 million in the prior year quarter.

2019 year to date revenue from continuing operations was 77.3 million compared to 92 million in the prior year period.

GAAP basis year to date 2019 net loss from continuing operations was 26.4 million were 41 cents per diluted share compared to a net loss from continuing operations for the prior year period of 11.8 million or 19 cents per diluted share.

2019 year to date non-GAAP net loss from continuing operations was 7.7 million or 11 cents per diluted share compared to non-GAAP net income from continuing operations, a 5.7 million or nine cents per diluted share in the prior year period.

2019 year to date adjusted EBITDA from continuing operations was 37.7 million compared to 52.1 million in the prior year period.

With regards to the balance sheet, we closed the third quarter of 2019 was 5.1 million of cash, including restricted cash and 456.6 million of debt net of cash.

For the full year of 29 team. The company continues to expect revenues to be in the range of 104 to one of <unk> million.

In closing we are encouraged by the activity underway and look forward to the benefits as we enter 2020.

Thank you for joining us on our call today I will now turn the call back over to the operator for you in <unk>.

At this time, we will be conducting a question answer session. If he would like to ask your question. Please press star one of your telephone keypad, Hey, confirmation Toland King. Your line is in the question Q You May press Star too if you like to remove request from the Q4 participants using spear equipment, and maybe not sort of pick up a heads up before passing the start to you all know that leaves while we pull for questions.

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Thank you ladies and gentlemen, this concludes PQ and I session and that concludes our call for today. Thank you for your participation and interest you may disconnect your lines and have a wonderful day.