Sequential Brands Group Inc. (SQBG, Financial) is a brand management organization with a portfolio of consumer brands generating $2 billion in global retail sales. Through its in-house licensing platform, it partners with retailers and manufacturers to maximize long-term brand equity.
It owns a diversified global portfolio of prominent brands across all consumer sectors. Sequential Brands owns, promotes, markets and licenses a portfolio of consumer brands that presently includes Avia, Ellen Tracy, William Rast, Revo, Caribbean Joe, Heelys, DVS, The Franklin Mint, Nevados, People's Liberation and Linens 'N Things. 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 U.S. and in certain international territories.
Sequential Brands is a good growth stock, and investors should consider adding it to their portfolios. This company is going to create shareholder returns. It reported strong third-quarter results and may garner investors’ attention in the long run.
The company expects to exceed its organic growth this year. It has good growth potential as it is activating owned brands into new geographies and categories with the help of accretive acquisitions. It has to offer plenty of opportunities to its valued investors.
Strong third quarter
Total revenue for the third quarter ended Sept. 30, 2015, increased to $23 million ($10 million in the prior year quarter).
Adjusted EBITDA for the third quarter increased to $15.7 million ($6.1 million in the prior year quarter).
On a non-GAAP basis, net income for the third quarter was $5 million, or 12 cents per diluted share ($2 million, or 6 cents per diluted share, in the prior year quarter). On a GAAP basis, net income for the third quarter was $2.7 million, or 6 cents per diluted share ($2.6 million, or 8 cents per diluted share, in the prior year quarter).
Year-to-date 2015 results
Total revenue for the nine months ended Sept. 30, 2015, increased to $56.8 million ($23.3 million in the prior year period).
Adjusted EBITDA for the nine months ended Sept. 30, 2015, was $36.1 million ($12.9 million in the prior year period).
On a non-GAAP basis, net income for the nine months ended Sept. 30, 2015, was $9.6 million, or 23 cents per share ($3.9 million, or 13 cents per share, in the prior year period). On a GAAP basis, net income for the nine months ended Sept. 30, 2015, was $2.8 million, or 7 cents per share ($2.8 million, or 10 cents per share, in the prior year period).
Recent acquisition
On Dec. 4, 2015, Sequential Brands announced that it closed the acquisition of Martha Stewart Living Omnimedia Inc. (MSO, Financial) for $6.15 per share, in a combination of cash and stock. The transformative merger adds a new vertical to Sequential's platform, which is expected to generate approximately $4 billion in annual global retail sales from a combined portfolio of consumer brands in the Home, Fashion and Lifestyle & Active categories.
In connection with the transaction, Martha Stewart will continue to serve as chief creative officer of the brand she founded. Additionally, Stewart has become a significant shareholder in Sequential and a member of the board of directors.
(Source: Company’s Website)
Plans
The company is focused on ecommerce and international expansion. Its business model is acutely focused on identifying and licensing brands to the top retailers, wholesalers and manufacturers worldwide. Through acquisitions, the company earned around $30 million in 2015. It bought stakes in the Jessica Simpson brand.
With this partnership, the company wants to expand beyond the U.S. market. Available globally, the growing brand offers footwear, apparel, fragrance, fashion accessories, maternity apparel, girls’ clothing and accessories and a home line.
On a concluding note
It is currently focused on promoting and protecting a solid portfolio of consumer brands through partnerships with best-in-class licensees. The company embarked on a bright 2015 by reporting strong second-quarter results. It is in a good position, and investors should consider adding this company to their portfolios. The company is positioned for continued growth, with a winning business model and a strong activation platform.
Disclosure: I do not hold any position in the company.
