UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 15, 2016
XCEL BRANDS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 0-0031553 | 76-0307819 | ||
|
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 475 Tenth Avenue, New York, New York | 10014 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code (347) 727-2474
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Conditions. |
On March 15, 2016, Xcel Brands, Inc., a Delaware corporation, (the “Registrant”) issued a press release announcing its financial results for the fiscal quarter and year ended December 31, 2015. As noted in the press release, the Registrant has provided certain non–U.S. generally accepted accounting principles (“GAAP”) financial measures, the reasons it provided such measures and a reconciliation of the non-GAAP measures to U.S. GAAP measures. Readers should consider non–GAAP measures in addition to, and not as a substitute for, measures of financial performance prepared in accordance with U.S. GAAP. A copy of the Registrant’s press release is being furnished hereto as Exhibit 99.1 and is incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| 99.1 | Press Release of Xcel Brands, Inc. dated March 15, 2016. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
XCEL BRANDS, INC.
(Registrant)
| By: | /s/ Robert D’Loren | |
| Name: | Robert D’Loren | |
| Title: | Chief Executive Officer and President |
Date: March 15, 2016
Exhibit 99.1
FOR IMMEDIATE RELEASE
XCEL BRANDS ANNOUNCES FOURTH QUARTER AND FULL YEAR 2015 FINANCIAL RESULTS
Company Reports Double-Digit Year-over-Year Revenue Growth of 34% to $27.7 Million
2015 Adjusted EBITDA Increased 33% to $9.3 Million
Full Year Non-GAAP Earnings per Diluted Share of $0.36
NEW YORK, NY (March 15, 2016) – Xcel Brands, Inc. (NASDAQ: XELB) (“Xcel” or the “Company”), a brand development and media company, today announced its financial results for the fourth quarter and full year ended December 31, 2015.
“Fiscal 2015 was a year marked with significant milestones and strong business performance fueling robust growth to our top and bottom line,” said Robert W. D'Loren, Xcel's Chairman and Chief Executive Officer. “These milestones include our successful up-listing to the NASDAQ Global Market, a completed public equity offering, the strategic acquisition of the C. Wonder brand, the launch of H by Halston brand on QVC and the creation of a quick-time-response or short lead time supply chain to improve and maximize full price sell-through for our retail partners. Additionally, we recently announced the refinancing of our senior credit facility providing us with increased financial flexibility. We are entering 2016 with powerful momentum and are confident that our recent results and achievements, coupled with the on-going execution of our key initiatives, leave us well positioned to achieve continued revenue expansion, increased profitability and sustainable long-term growth across our portfolio of brands.”
Fourth Quarter 2015 Results
Total revenue for the fourth quarter of fiscal 2015 increased 31% to $7.5 million, compared with $5.7 million for the fourth quarter of fiscal 2014.
Net income was $0.8 million for the quarter ended December 31, 2015, or $0.04 per diluted share, compared with a net loss of ($0.6) million, or ($0.05) per diluted share, in the prior year quarter. After adjusting for certain cash and non-cash items, non-GAAP net income for the quarter ended December 31, 2015 was $2.1 million, or $0.10 per diluted share, compared with $1.0 million, or $0.07 per diluted share in the prior year quarter.
Adjusted EBITDA for the quarter ended December 31, 2015 increased approximately $1.7 million to $3.0 million, compared with $1.3 million for the quarter ended December 31, 2014.
Full Year 2015 Results
Total revenue for the year ended December 31, 2015 increased 34% to $27.7 million, compared with $20.7 million in the prior year.
Net income was $2.6 million for the year ended December 31, 2015, or $0.15 per diluted share, compared with a net loss of ($1.0) million, or ($0.08) per diluted share, in the prior year. After adjusting for certain cash and non-cash items, non-GAAP net income for the year ended December 31, 2015 was $6.3 million, or non-GAAP earnings per diluted share of $0.36, compared with $5.2 million, or non-GAAP earnings per diluted share of $0.40, compared with the prior year.
475 Tenth Avenue, 4th floor • new york, new york • 10018
Phone: 347-727-2474 • INFO@XCELBRANDS.COM
Page 2
Adjusted EBITDA for the year ended December 31, 2015 increased approximately $2.3 million to $9.3 million, compared with $7.0 million in the prior year.
See reconciliation tables below for non-GAAP metrics. These non-GAAP metrics may be inconsistent with similar measures presented by other companies and should only be used in conjunction with our results reported according to U.S. generally accepted accounting principles ("U.S. GAAP"). Any financial measure other than those prepared in accordance with U.S. GAAP should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP.
Balance Sheet
The Company's balance sheet remains strong with stockholders' equity of $100.1 million as of December 31, 2015, an increase of approximately $39.9 million compared with December 31, 2014, and adjusted working capital (which excludes obligations payable in stock) of approximately $16.0 million as of the end of the current fiscal year. Cash and cash equivalents increased approximately $8.3 million to $16.9 million, compared with $8.5 million at December 31, 2014.
Conference Call and Webcast
The Company will host a conference call with members of the executive management team to discuss these results with additional comments and details at 5:00 p.m. Eastern Time on Tuesday, March 15, 2016. A webcast of the conference call will be available live on the Investor Relations section of Xcel's website at www.xcelbrands.com. Interested parties unable to access the conference call via the webcast may dial 888-329-8893. A replay of the conference call will be available on the Company website for 30 days following the event and can be accessed at 877-870-5176 using replay pin number 4909666.
About Xcel Brands
Xcel Brands, Inc. (NASDAQ:XELB) is a brand development and media company engaged in the design, production, licensing, marketing and direct-to-consumer sales of branded apparel, footwear, accessories, jewelry, home goods, and other consumer products, and the acquisition of dynamic consumer lifestyle brands. Xcel was founded by Robert W. D’Loren in 2011 with a vision to reimagine shopping, entertainment and social as one. Xcel owns and manages the Isaac Mizrahi, Judith Ripka, H Halston, and C. Wonder brands, pioneering an omnichannel sales strategy which includes the promotion and sale of products under its brands through direct-response television, internet, brick and mortar retail, and e-commerce channels. Headquartered in New York City, Xcel Brands is led by an executive team with significant retailing, licensing, design, and marketing experience, and a proven track record of success in elevating branded consumer products companies. With a team of over 70 designers and social media focused marketing executives, Xcel maintains control of product quality and promotion across all of its product categories and distribution channels. Xcel differentiates by design. www.xcelbrands.com
475 Tenth Avenue, 4th floor • new york, new york • 10018
Phone: 347-727-2474 • INFO@XCELBRANDS.COM
Page 3
Forward Looking Statements
This press release contains forward-looking statements. All statements other than statements of historical fact contained in this press release, including statements regarding future events, our future financial performance, business strategy and plans and objectives of management for future operations, are forward-looking statements. We have attempted to identify forward-looking statements by terminology including "anticipates," "believes," "can," "continue," "ongoing," "could," "estimates," "expects," "intends," "may," "appears," "suggests," "future," "likely," "goal," "plans," "potential," "projects," "predicts," "seeks," "should," "would," "guidance," "confident" or "will" or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements regarding our anticipated revenue, expenses, profitability, strategic plans and capital needs. These statements are based on information available to us on the date hereof and our current expectations, estimates and projections and are not guarantees of future performance. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including, without limitation, the risks discussed in the "Risk Factors" section and elsewhere in the Company's Annual Report on form 10-K for the year ended December 31, 2014 and its other filings with the SEC, which may cause our or our industry's actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time and it is not possible for us to predict all risk factors, nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause our actual results to differ materially from those contained in any forward-looking statements. You should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
For further information please contact:
Hunter Wells / John Mills
ICR
646-277-1246
Hunter.wells@icrinc.com / John.mills@icrinc.com
475 Tenth Avenue, 4th floor • new york, new york • 10018
Phone: 347-727-2474 • INFO@XCELBRANDS.COM
Page 4
Xcel Brands, Inc. and Subsidiaries
Consolidated Balance Sheets
| December 31, 2015 | December 31, 2014 | |||||||
| (unaudited) | ||||||||
| Assets | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 16,860,000 | $ | 8,531,000 | ||||
| Accounts receivable, net | 7,594,000 | 3,641,000 | ||||||
| Prepaid expenses and other current assets | 647,000 | 532,000 | ||||||
| Current assets held for disposition from discontinued retail operations | 8,000 | 503,000 | ||||||
| Total current assets | 25,109,000 | 13,207,000 | ||||||
| Property and equipment, net | 871,000 | 833,000 | ||||||
| Trademarks and other intangibles, net | 112,323,000 | 97,679,000 | ||||||
| Goodwill | 12,371,000 | 12,371,000 | ||||||
| Restricted cash | 1,109,000 | - | ||||||
| Other assets | 343,000 | 271,000 | ||||||
| Long-term assets held for disposition from discontinued retail operations | - | 123,000 | ||||||
| Total non-current other assets | 126,146,000 | 110,444,000 | ||||||
| Total Assets | $ | 152,126,000 | $ | 124,484,000 | ||||
| Liabilities and Stockholders' Equity | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable, accrued expenses and other current liabilities | $ | 3,312,000 | $ | 3,529,000 | ||||
| Deferred revenue | 597,000 | 256,000 | ||||||
| Installment obligations in connection with the acquisition of the Ripka Brand | - | 2,190,000 | ||||||
| Current portion of long-term debt | 8,918,000 | 5,650,000 | ||||||
| Current portion of long-term debt, contingent obligations | 250,000 | 5,766,000 | ||||||
| Current liabilities held for disposition from discontinued retail operations | 60,000 | 218,000 | ||||||
| Total current liabilities | 13,137,000 | 17,609,000 | ||||||
| Long-Term Liabilities: | ||||||||
| Long-term debt, less current portion | 31,860,000 | 39,024,000 | ||||||
| Deferred tax liabilities, net | 6,749,000 | 7,449,000 | ||||||
| Other long-term liabilities | 297,000 | 178,000 | ||||||
| Total long-term liabilities | 38,906,000 | 46,651,000 | ||||||
| Total Liabilities | 52,043,000 | 64,260,000 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders' Equity: | ||||||||
| Preferred stock, $.001 par value, 1,000,000 shares authorized, none issued and outstanding | - | - | ||||||
| Common stock, $.001 par value, 35,000,000 shares authorized at December 31, 2015 and | ||||||||
| December 31, 2014 and 18,434,634 and 14,011,896 issued and outstanding at | ||||||||
| December 31, 2015 and December 31, 2014, respectively | 18,000 | 14,000 | ||||||
| Paid-in capital | 93,999,000 | 56,718,000 | ||||||
| Retained earnings | 6,066,000 | 3,492,000 | ||||||
| Total Stockholders' Equity | 100,083,000 | 60,224,000 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 152,126,000 | $ | 124,484,000 | ||||
475 Tenth Avenue, 4th floor • new york, new york • 10018
Phone: 347-727-2474 • INFO@XCELBRANDS.COM
Page 5
Xcel Brands, Inc. and Subsidiaries
Consolidated Statements of Operations
| For the Quarter Ended December 31, | For the Year Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | ||||||||||||||
| Revenues | ||||||||||||||||
| Net licensing revenue | $ | 7,323,000 | $ | 5,598,000 | $ | 27,405,000 | $ | 20,580,000 | ||||||||
| Net e-commerce sales | 150,000 | 93,000 | 316,000 | 127,000 | ||||||||||||
| Total revenues | 7,473,000 | 5,691,000 | 27,721,000 | 20,707,000 | ||||||||||||
| Cost of goods sold | 136,000 | 51,000 | 267,000 | 73,000 | ||||||||||||
| Gross profit | 7,337,000 | 5,640,000 | 27,454,000 | 20,634,000 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Salaries, benefits and employment taxes | 2,601,000 | 2,752,000 | 12,240,000 | 9,523,000 | ||||||||||||
| Other design and marketing costs | 614,000 | 317,000 | 2,375,000 | 1,084,000 | ||||||||||||
| Other selling, general and administrative expenses | 1,161,000 | 1,250,000 | 3,643,000 | 3,106,000 | ||||||||||||
| Stock-based compensation | 1,227,000 | 832,000 | 4,640,000 | 5,151,000 | ||||||||||||
| Depreciation and amortization | 426,000 | 240,000 | 1,379,000 | 935,000 | ||||||||||||
| Total operating expenses | 6,029,000 | 5,391,000 | 24,277,000 | 19,799,000 | ||||||||||||
| Other expenses (income) | ||||||||||||||||
| Gain on reduction of contingent obligation | - | - | (3,000,000 | ) | (600,000 | ) | ||||||||||
| Loss on extinguishment of debt | - | - | 1,371,000 | - | ||||||||||||
| Total other income, net | - | - | (1,629,000 | ) | (600,000 | ) | ||||||||||
| Operating income | 1,308,000 | 249,000 | 4,806,000 | 1,435,000 | ||||||||||||
| Interest and finance expense | ||||||||||||||||
| Interest expense - term debt | 295,000 | 237,000 | 1,220,000 | 834,000 | ||||||||||||
| Other interest and finance charges | 133,000 | 190,000 | 584,000 | 654,000 | ||||||||||||
| Total interest and finance expense | 428,000 | 427,000 | 1,804,000 | 1,488,000 | ||||||||||||
| Income (loss) from continuing operations before income taxes | 880,000 | (178,000 | ) | 3,002,000 | (53,000 | ) | ||||||||||
| Income tax provision (benefit) | 121,000 | (165,000 | ) | 156,000 | (97,000 | ) | ||||||||||
| Income (loss) from continuing operations | 759,000 | (13,000 | ) | 2,846,000 | 44,000 | |||||||||||
| Income (loss) from discontinued operations, net | 9,000 | (539,000 | ) | (272,000 | ) | (1,076,000 | ) | |||||||||
| Net income (loss) | $ | 768,000 | $ | (552,000 | ) | $ | 2,574,000 | $ | (1,032,000 | ) | ||||||
| Basic net income (loss) per share: | ||||||||||||||||
| Continuing operations | $ | 0.04 | $ | - | $ | 0.18 | $ | - | ||||||||
| Discontinued operations, net | - | (0.05 | ) | (0.02 | ) | (0.09 | ) | |||||||||
| Net income (loss) | $ | 0.04 | $ | (0.05 | ) | $ | 0.16 | $ | (0.09 | ) | ||||||
| Diluted net income (loss) per share: | ||||||||||||||||
| Continuing operations | $ | 0.04 | $ | - | $ | 0.17 | $ | - | ||||||||
| Discontinued operations, net | - | (0.05 | ) | (0.02 | ) | (0.08 | ) | |||||||||
| Net income (loss) | $ | 0.04 | $ | (0.05 | ) | $ | 0.15 | $ | (0.08 | ) | ||||||
| Basic weighted average common shares outstanding | 18,438,585 | 12,211,059 | 16,151,163 | 11,698,880 | ||||||||||||
| Diluted weighted average common shares outstanding | 19,406,691 | 12,211,059 | 17,223,240 | 12,816,674 | ||||||||||||
475 Tenth Avenue, 4th floor • new york, new york • 10018
Phone: 347-727-2474 • INFO@XCELBRANDS.COM
Page 6
Xcel Brands, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
| For the Year Ended December 31, | ||||||||
| 2015 | 2014 | |||||||
| (unaudited) | ||||||||
| Cash flows provided by operating activities | ||||||||
| Net income (loss) | $ | 2,574,000 | $ | (1,032,000 | ) | |||
| Adjustments to reconcile net income (loss) to net cash | ||||||||
| provided by operating activities: | ||||||||
| Loss from discontinued operations, net | 272,000 | 1,076,000 | ||||||
| Depreciation and amortization expense | 1,379,000 | 935,000 | ||||||
| Amortization of deferred finance costs | 141,000 | 80,000 | ||||||
| Stock-based compensation | 4,640,000 | 5,151,000 | ||||||
| Allowance for doubtful accounts | (21,000 | ) | 2,000 | |||||
| Amortization of note discount | 406,000 | 575,000 | ||||||
| Deferred income tax benefit | (394,000 | ) | (1,031,000 | ) | ||||
| Tax benefit from vested stock grants and exercised options | (306,000 | ) | (508,000 | ) | ||||
| Gain on reduction of contingent obligation | (3,000,000 | ) | (600,000 | ) | ||||
| Loss on extinguishment of debt | 1,371,000 | - | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (3,931,000 | ) | (103,000 | ) | ||||
| Prepaid expenses and other assets | (187,000 | ) | (46,000 | ) | ||||
| Accounts payable, accrued expenses and other current liabilities | (217,000 | ) | 2,342,000 | |||||
| Deferred revenue | 341,000 | (235,000 | ) | |||||
| Other liabilities | 119,000 | - | ||||||
| Net cash provided by operating activities from continuing operations | 3,187,000 | 6,606,000 | ||||||
| Net cash provided by (used in) operating activities from discontinued | ||||||||
| operations, net | 108,000 | (739,000 | ) | |||||
| Net cash provided by operating activities | 3,295,000 | 5,867,000 | ||||||
| Cash flows used in investing activities | ||||||||
| Cash consideration for asset acquisition of the Ripka Brand | - | (12,365,000 | ) | |||||
| Cash consideration for asset acquisition of the H Halston Brand | (14,000 | ) | (18,513,000 | ) | ||||
| Cash consideration for asset acquisition of the C Wonder Brand | (3,587,000 | ) | - | |||||
| Purchase of property and equipment | (530,000 | ) | (246,000 | ) | ||||
| Restricted cash for security deposit | (1,109,000 | ) | - | |||||
| Net cash used in investing activities from continuing operations | (5,240,000 | ) | (31,124,000 | ) | ||||
| Net cash used in investing activities from discontinued operations, net | - | (433,000 | ) | |||||
| Net cash used in investing activities | (5,240,000 | ) | (31,557,000 | ) | ||||
| Cash flows provided by financing activities | ||||||||
| Proceeds from issuance of Common Stock, net of direct costs | 16,107,000 | 9,294,000 | ||||||
| Proceeds from exercise of stock options | 65,000 | 6,000 | ||||||
| Tax benefit from vested stock grants and exercised options | 306,000 | 508,000 | ||||||
| Shares repurchased including vested restricted stock in exchange for | (748,000 | ) | (978,000 | ) | ||||
| withholding taxes | ||||||||
| Proceeds from term debt related to the Ripka Brand | - | 9,000,000 | ||||||
| Proceeds from term debt related to the H Brand | - | 10,000,000 | ||||||
| Payment of contingent obligation | - | (315,000 | ) | |||||
| Payment of deferred finance costs | (10,000 | ) | (505,000 | ) | ||||
| Payment of long-term debt | (3,256,000 | ) | (250,000 | ) | ||||
| Payment of installment obligations related to the acquisition of the Ripka Brand | (2,190,000 | ) | - | |||||
| Net cash provided by financing activities | 10,274,000 | 26,760,000 | ||||||
| Net increase in cash and cash equivalents | 8,329,000 | 1,070,000 | ||||||
| Cash and cash equivalents, beginning of year | 8,531,000 | 7,461,000 | ||||||
| Cash and cash equivalents, end of year | $ | 16,860,000 | $ | 8,531,000 | ||||
| Supplemental disclosure of non-cash activities: | ||||||||
| Issuance of common stock in connection with C Wonder Brand acquisition | $ | 9,000,000 | $ | - | ||||
| Contingent obligation related to acquisition of the C Wonder Brand | $ | 2,850,000 | $ | - | ||||
| Issuance of common stock as payment for a portion of the Ripka Seller Notes | $ | 5,400,000 | $ | - | ||||
| Issuance of common stock as payment for a portion of the QVC Earn-Out | $ | 2,515,000 | $ | - | ||||
| Issuance of Notes payable as partial consideration in the | ||||||||
| acquisition of the Ripka Brand (net of debt discount) | $ | - | $ | 4,165,000 | ||||
| Issuance of common stock in connection with Ripka Brand acquisition | $ | - | $ | 2,286,000 | ||||
| Issuance of common stock and warrants in connection with H Brand acquisition | $ | - | $ | 9,611,000 | ||||
| Installment obligations related to acquisition of the Ripka Brand | $ | - | $ | 2,190,000 | ||||
| Contingent obligations related to acquisition of the Ripka Brand | $ | - | $ | 3,784,000 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the year for income taxes | $ | 453,000 | $ | 109,000 | ||||
| Cash paid during the year for interest | $ | 1,157,000 | $ | 653,000 | ||||
475 Tenth Avenue, 4th floor • new york, new york • 10018
Phone: 347-727-2474 • INFO@XCELBRANDS.COM
Page 7
Xcel Brands, Inc. and Subsidiaries
Reconciliation of Non-GAAP measures
(unaudited)
| Non-GAAP net income: | ||||||||||||||||
| Quarter Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net income (loss) | $ | 768,000 | $ | (552,000 | ) | $ | 2,574,000 | $ | (1,032,000 | ) | ||||||
| Non-cash interest and finance expense | 85,000 | 167,000 | 415,000 | 575,000 | ||||||||||||
| Stock-based compensation | 1,227,000 | 832,000 | 4,640,000 | 5,151,000 | ||||||||||||
| Loss on extinguishment of debt | - | - | 1,371,000 | - | ||||||||||||
| Gain on reduction of contingent obligations | - | - | (3,000,000 | ) | (600,000 | ) | ||||||||||
| Income (loss) from discontinued operations, net | (9,000 | ) | 539,000 | 272,000 | 1,076,000 | |||||||||||
| Other non-cash adjustments | - | 1,000 | - | 14,000 | ||||||||||||
| Non-GAAP net income | $ | 2,071,000 | $ | 987,000 | $ | 6,272,000 | $ | 5,184,000 | ||||||||
| Non-GAAP diluted EPS: | ||||||||||||||||
| Quarter Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Diluted income (loss) per share | $ | 0.04 | $ | (0.04 | ) | $ | 0.15 | $ | (0.08 | ) | ||||||
| Non-cash interest and finance expense | - | 0.01 | 0.02 | 0.05 | ||||||||||||
| Stock-based compensation | 0.06 | 0.06 | 0.27 | 0.40 | ||||||||||||
| Loss on extinguishment of debt | - | - | 0.08 | - | ||||||||||||
| Gain on reduction of contingent obligations | - | - | (0.18 | ) | (0.05 | ) | ||||||||||
| Income (loss) from discontinued operations, net | - | 0.04 | 0.02 | 0.08 | ||||||||||||
| Non-GAAP diluted EPS | $ | 0.10 | $ | 0.07 | $ | 0.36 | $ | 0.40 | ||||||||
| Weighted average shares - Non-GAAP Dilituve: | ||||||||||||||||
| Quarter Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Basic weighted average shares | 18,438,585 | 12,211,059 | 16,151,163 | 11,698,880 | ||||||||||||
| Effect of exercising warrants | 872,339 | 971,873 | 946,903 | 971,873 | ||||||||||||
| Effect of exercising stock options | 95,767 | 145,922 | 125,174 | 145,921 | ||||||||||||
| Weighted average shares - Non-GAAP Dilituve | 19,406,691 | 13,328,854 | 17,223,240 | 12,816,674 | ||||||||||||
| Adjusted EBITDA: | ||||||||||||||||
| Quarter Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net income (loss) | $ | 768,000 | $ | (552,000 | ) | $ | 2,574,000 | $ | (1,032,000 | ) | ||||||
| Depreciation and amortization | 426,000 | 240,000 | 1,379,000 | 935,000 | ||||||||||||
| Interest and finance expense | 343,000 | 260,000 | 1,389,000 | 913,000 | ||||||||||||
| Non-cash interest expense from discounted debt related to asset acquisitions | 85,000 | 167,000 | 415,000 | 575,000 | ||||||||||||
| Income tax provision (benefit) | 121,000 | (165,000 | ) | 156,000 | (97,000 | ) | ||||||||||
| State and local franchise taxes | 24,000 | 3,000 | 108,000 | 77,000 | ||||||||||||
| Stock-based compensation | 1,227,000 | 832,000 | 4,640,000 | 5,151,000 | ||||||||||||
| Loss on extinguishment of debt | - | - | 1,371,000 | - | ||||||||||||
| Gain on reduction of contingent obligations | - | - | (3,000,000 | ) | (600,000 | ) | ||||||||||
| Income (loss) from discontinued operations, net | (9,000 | ) | 539,000 | 272,000 | 1,076,000 | |||||||||||
| Other non-cash adjustments | - | 1,000 | - | 14,000 | ||||||||||||
| Adjusted EBITDA | $ | 2,985,000 | $ | 1,325,000 | $ | 9,304,000 | $ | 7,012,000 | ||||||||
475 Tenth Avenue, 4th floor • new york, new york • 10018
Phone: 347-727-2474 • INFO@XCELBRANDS.COM
Page 8
Non-GAAP net income and non-GAAP diluted EPS are non-GAAP unaudited terms. We define non-GAAP net income as net income (loss), exclusive of stock-based compensation, non-cash interest and finance expense from discounted debt related to acquired assets, gain on the reduction of contingent obligations, loss on extinguishment of debt, other non-cash adjustments, and loss from discontinued operations, net. Non-GAAP net income and non-GAAP diluted EPS do not include the tax effect of the reconciling items.
Adjusted EBITDA is a non-GAAP unaudited measure, which we define as net income (loss) before stock-based compensation, interest expense and other financing costs (including gain (loss) on extinguishment of debt), income taxes, other state and local franchise taxes, depreciation and amortization, gain on the reduction of contingent obligations, other non-cash adjustments, and loss on discontinued operations of our retail business.
Management uses non-GAAP net income, non-GAAP diluted EPS and Adjusted EBITDA as measures of operating performance to assist in comparing performance from period to period on a consistent basis and to identify business trends relating to our results of operations. Management believes non-GAAP net income, non-GAAP diluted EPS and Adjusted EBITDA are also useful because they provide supplemental information to assist investors in evaluating our financial results. Non-GAAP net income, non-GAAP diluted EPS and Adjusted EBITDA should not be considered in isolation or as alternatives to net income (loss), earnings per share or any other measure of financial performance calculated and presented in accordance with GAAP. Given that non-GAAP net income, non-GAAP diluted EPS and Adjusted EBITDA are financial measures not deemed to be in accordance with GAAP and are susceptible to varying calculations, our non-GAAP net income, non-GAAP diluted EPS and Adjusted EBITDA may not be comparable to similarly titled measures of other companies, including companies in our industry, because other companies may calculate non-GAAP net income, non-GAAP diluted EPS and Adjusted EBITDA in a different manner than we calculate these measures. In evaluating non-GAAP net income, non-GAAP diluted EPS and Adjusted EBITDA, you should be aware that in the future we may or may not incur expenses similar to some of the adjustments in this presentation. Our presentation of non-GAAP net income, non-GAAP diluted EPS and Adjusted EBITDA does not imply that our future results will be unaffected by these expenses or any unusual or non-recurring items. When evaluating our performance, you should consider non-GAAP net income, non-GAAP diluted EPS and Adjusted EBITDA alongside other financial performance measures, including our net income (loss) and other GAAP results, and not rely on any single financial measure.
475 Tenth Avenue, 4th floor • new york, new york • 10018
Phone: 347-727-2474 • INFO@XCELBRANDS.COM