NEW YORK, Aug. 08, 2018 (GLOBE NEWSWIRE) Sequential Brands Group, Inc. (“Sequential” or the “Company”) (Nasdaq:SQBG) today announced the completion of its debt refinancing and the financial results for the quarter and six months ended June 30, 2018.

“We’re pleased with our second quarter results and the solid performance of our core brands," said Karen Murray, CEO of Sequential Brands Group. “The completion of our refinance strengthens our capital structure as we focus on executing on our growth strategy. We thank our lenders for their ongoing support.”

Completion of Debt Refinancing:

On August 7, 2018, the Company entered into amended credit agreements with its existing lenders, led by Bank of America and certain funds managed by FS/KKR Advisor, LLC. This refinancing extends the first lien debt maturities to 2023 and the second lien to 2024, and improves our capital structure by shifting over $100 million of debt into the first lien credit facility, thereby, meaningfully reducing our weighted average interest rate.

Second Quarter 2018 Results:

As previously disclosed, effective January 1, 2018, the Company adopted a new revenue recognition standard ("ASC 606"), which impacted the Company’s reported revenue. The Company adopted ASC 606 using the modified retrospective method, which means that the total amount of revenue reported for the 2017 periods has not been restated in the current financial statements. In the interest of comparability during the transition year to ASC 606, the Company will provide revenue, net income and earnings per share information in accordance with both ASC 606 and revenue recognition rules in effect prior to the adoption of ASC 606 (“ASC 605”).

• Revenue for the second quarter 2018 was $42.2 million.  Under ASC 605, revenue for the second quarter 2018 would have been $43.0 million, compared to $42.1 million in the second quarter 2017.
• On a GAAP basis, net income for the second quarter 2018 was $3.6 million or $0.06 per diluted share. Under ASC 605, GAAP net income for the second quarter 2018 would have been $4.0 million or $0.06 per diluted share, compared to $2.5 million or $0.04 per diluted share in the second quarter 2017.
• On a non-GAAP basis, net income for the second quarter 2018 was $7.2 million, or $0.11 per diluted share.  Under ASC 605, non-GAAP net income for the second quarter 2018 would have been $7.8 million or $0.12 per diluted share, flat compared to second quarter 2017.  See Non-GAAP Financial Measure Reconciliation tables below for a reconciliation of GAAP to non-GAAP measures.
• Adjusted EBITDA (defined under “Non-GAAP Financial Measures” below) for the second quarter 2018 was $24.7 million. Under ASC 605, Adjusted EBITDA for the second quarter 2018 would have been $25.3 million, compared to $24.7 million in the second quarter 2017.

Year-to-Date 2018 Results:

• Revenue for the six months ended June 30, 2018 was $80.3 million.  Under ASC 605, revenue for the six months ended June 30, 2018 would have been $82.4 million, compared to $81.5 million in the prior year period.
• On a GAAP basis, net income for the six months ended June 30, 2018 was $1.3 million or $0.02 per diluted share. Under ASC 605, GAAP net income for the six months ended June 30, 2018 would have been $2.8 million or $0.04 per diluted share, compared to $1.4 million or $0.02 per diluted share in the prior year period.
• On a non-GAAP basis, net income for the six months ended June 30, 2018 was $10.8 million, or $0.17 per diluted share.  Under ASC 605, non-GAAP net income for the six months ended June 30, 2018 would have been $12.7 million, or $0.20 per diluted share, compared to $13.6 million, or $0.21 per diluted share, in the prior year period.  See Non-GAAP Financial Measure Reconciliation tables below for a reconciliation of GAAP to non-GAAP measures.
• Adjusted EBITDA for the six months ended June 30, 2018 was $45.9 million. Under ASC 605, Adjusted EBITDA for the six months ended June 30, 2018 would have been $47.8 million, compared to $47.7 million in the prior year period.

Investor Call and Webcast:

Management will provide further commentary today, August 8, 2018, on the Company’s financial results and financial update 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. A replay of the conference call is available on the Company’s website.

Non-GAAP Financial Measures:

This press release contains historical and projected measures of Adjusted EBITDA, non-GAAP net income and non-GAAP earnings per diluted share. The Company defines Adjusted EBITDA as net income attributable to Sequential Brands Group, Inc. and Subsidiaries, excluding interest income or expense, provision for income taxes, depreciation and amortization, deal advisory costs, non-cash compensation, costs incurred in connection with CEO transition, Martha Stewart Living Omnimedia (MSLO) shareholder and pre- acquisition litigation costs, realized loss on the sale of available-for-sale securities, other non-cash items, loss on sale of assets, net of non-controlling interest, debt refinancing costs, and severance. Non-GAAP net income and non-GAAP earnings per share are non-GAAP financial measures which represent net income (loss) attributable to Sequential Brands Group, Inc. and Subsidiaries, excluding deal advisory costs, non-cash mark-to-market adjustments to stock-based compensation provided to non-employees, costs incurred in connection with CEO transition, MSLO shareholder and pre-acquisition litigation costs, realized loss on the sale of available-for-sale securities, other non-cash items, loss on sale of assets, net of non-controlling interest, debt refinancing 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 core licensing 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: newbusiness@sbg-ny.com.

Forward-Looking Statements

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 potential refinancing, estimates of GAAP net income, non-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.