Good day, ladies and gentlemen, and welcome to the Iconix Brand Group Third Quarter 2016 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference is being recorded. I would like to introduce your host for today's conference, Jaime Sheinheit, VP of Investor Relations. Ma'am, you may begin.

Good morning, and welcome to the Iconix Brand Group third quarter 2016 earnings conference call. On today's call, we have with us John Haugh, our President and Chief Executive Officer; and Dave Jones, our Chief Financial Officer. During today's call, we will be making some forward-looking statements within the meaning of the federal securities laws. The statements that are not historical facts contained in this conference call are forward-looking statements that involve a number of risks, uncertainties and other factors, all of which are difficult or impossible to predict and many of which are beyond the control of the company. This may cause actual results, performance, or achievements of the company to be materially different from the results, performance, or achievements expressed or implied by such forward-looking statements. The words believe, anticipate, expect, confident, and similar expressions identify forward-looking statements. Listeners are cautioned to not place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. I would now like to turn the call over to John Haugh.

Thank you, Jaime, and good morning, everyone. On today's call, we will review our third quarter results and provide an update on our outlook for the full year 2016. We look forward to sharing our three-year plan with you at our Investor Day next Tuesday, November 15. Before moving on to the results, I wanted to take this opportunity to announce that this past Friday we received a letter from the staff of the U.S. Securities and Exchange Commission, Division of Corporate Finance formally communicating that the staff has completed its review of the company's Forms 10-K for the years ending December 31, 2013 through 2015. After the tremendous amount of effort our finance and legal teams have expended during this process, we're very pleased to have this formal closure. I would like to thank our team for their tireless effort in getting this resolved. Turning now to our third quarter results. Overall, the third quarter was another solid quarter for our company, performance across the brands was mixed but with our balanced portfolio, combined with the company's attractive margins we were able to achieve stable revenue, increased profits and healthy free cash flow. Looking at our results by segment, our Entertainment and Health and Home businesses were strong and offset declines in certain Women's and Men's brands. Revenue in the Entertainment segment was up $5.4 million in the third quarter driven by continued strength in the PEANUTS brand. PEANUTS has maintained significant momentum following the movie year, which we believe speaks to the power of this global brand. The growth in the third quarter was primarily driven by the tremendous strength in Japan, the brand's largest international territory. Other PEANUTS news included in the last 60 days PEANUTS marketing garnered 1 billion media impressions via the partnership with Rock…

Thank you, John. Good morning, everybody. Reviewing results for the third quarter of 2016, the company generated $90.9 million of revenue, flat to the prior year third quarter included approximately $1.2 million of licensing revenue from the Badgley Mischka brand, for which there was no comparable revenue in the third quarter of 2016, due to its sale earlier this year. The third quarter of 2016 benefited from a $1.6 million favorable impact from foreign currency exchange rates, primarily related to the yen. Total SG&A expenses were $50.6 million in the third quarter of 2016, a 19% decline as compared to $62.8 million in the third quarter of 2015. The largest component of this decline is related to lower bad debt expense. In the third quarter of 2015, the company recognized approximately $12.2 million of accounts receivable reserves and write-offs related to a comprehensive review of our license agreements, as compared to $1.8 million in the third quarter of 2016. Operating income in the third quarter of 2016 was approximately $40.7 million, a 46% increase as compared to $27.8 million in the third quarter of 2015. Operating margin in the third quarter of 2016 was approximately 45% as compared to approximately 30% in the prior year quarter; 52%, though, without special charges in the third quarter of 2016 versus 53% in the prior year without special charges and the bad debt expense. For the full year, we expect operating margins to be approximately 48%. Interest expense in the third quarter was approximately $24.9 million, as compared to interest expense of approximately $22.3 million in the third quarter of 2015. The increase is related to the new $300 million senior secured term loan that the company consummated in April, which has a higher interest rate than the company's convertible notes that were…

Thanks, Dave. As many of you know, 2016 has been a transition year for Iconix. Since I joined the company, as Chief Executive Officer on April 1, a top priority of mine has been to identify our company's strengths and challenges and from that build a strategic plan to create sustainable value for the future. Iconix has a world-class portfolio brands, a strong global network of partners, and profitable business model. With this solid foundation, I believe there is significant opportunity for us to grow both here in the U.S. and Internationally. Next week, we will share with you our three-year strategic and financial plan, which will provide significant insight into the work we have been doing to develop a plan that fully capitalizes on our existing platform and evolves the business to create long-term shareholder value. I would like to thank you all for participating this morning. We would now like to open the call to questions-and-answers.

Thank you. And our first question comes from Bob Drbul from Guggenheim. Your line is open.

Hi, guys. Good morning.

Good morning.

Just a couple questions first. On the Walmart business, with DANSKIN going to a tiered royalty rate, when did that occur, and is that how STARTER is as well currently?

Bob, it's John. Two things, first, welcome back. It's good to have you back. Second, in many if not all of our – I shouldn't say all, in many of our relationships in our DTRs, we have a tiered royalty program that starts higher for the first $100 million in sales and eventually tiers down. So that is consistent with our DANSKIN business with Walmart, it is consistent also with our STARTER and our Asia Pacific and it's consistent with many other large mass and mid-tier relationships, so, yes.

Okay. And on the changes in CANDIE'S, I think you said you took back Home and Kids, so what else is there? Is it the footwear remains at Kohl's is exclusive, like what's the – what else is going on in that business currently with Kohl's?

With Kohl's actually we have – you're right that CANDIE'S started with footwear, but now it is footwear, it is juniors, there is denim. Do we have an intimates, we played around with intimates, I don't think we have that now. But we are a big part of their juniors business, and frankly the management is very happy with how CANDIE'S is performing. So we have expanded dramatically from the original footwear business and now we are one of their core brands in many different categories.

Okay. And then, I guess, just the other question I have is, as you look at the cash position today, what's the plan going forward with the free cash that you have and sort of how will you prioritize it around either debt buyback or the loan pay down, et cetera?

Bob, it's John. I'll let Dave answer this, but what I'd like to do is encourage you, next week we're going to get much more into this, so happy to give you – have Dave give you a quick answer today, but I think next week is really where we talk about how we want to manage the business for the next several years.

Hey, Bob. How are you? I think we've said a few times, our strategy today is delevering is our most important priority. We've got the 2018 notes in our sights. As you know, we've got some restrictions on what we can use our cash for International cash In particular can be used for acquisitions, but obviously it would give us some tax problems if we brought it back over. But we've got some cash on the balance sheet today that we can use for the 2018. We will generate some more cash between now and their maturity, and then we will have a plan for the balance, and as John mentioned, we'll talk a lot more about that next week.

Great. Thank you very much.

And our next question comes from Dave King from ROTH Capital Partners. Your line is open.

Thanks. Good morning everyone. I guess, first off, in terms of the implied revenue guidance for the fourth quarter, it looks like it's declining a little bit from the current run rate. I guess, can you talk about the major drivers of that in terms of what you cited in the release and then in the prepared remarks? I mean, are you able to quantify the impact that came from DANSKIN, for example. And then, I guess, more importantly as we think about kind of the run rate, is this sort of a good level on revenue. It sounds like it might not be given sort of the high level comments you already made about 2017, but I guess kind of what gives you the confidence that we should move up off that level? Thanks.

So, Dave, I will take a shot at this and our Dave might jump in as well. I think that we need to think about it is, back in – at our Q2 call, Q1 call, it's my first time to talk, and we made some adjustment to guidance. There were a lot of moving parts. And if I could have – I'd probably go back and I would have just flicked it a little bit lower given how many moving parts we have. We've spent months really looking at where we can grow, and we're excited to talk about this next week. So I want to continue to focus everybody on our discussion next week because I think it will be more deep and more fruitful. We believe that as 2016 comes to a close and we've come down a little bit, we have spent a lot of time and believe that we can create organic growth. Now we have not done that historically, and so we have to – you know, the proof will be in the pudding, as they say, but when we look at our business and say why we think we will be able to move forward, we are clear on some new contracts that have been put in place. We have talked before about Men's turning a corner. We have several Women's initiatives, we feel pretty good about. International for us historically has been a strong growth market, often times (22:27) high-single digits. This year there have just been so many – what I call economic malaise, Brexit, other things going on over there that it affected us a little bit. We think we will – we've got the new supplies that will start to turn that for next year. So, we believe strongly that where we land this year will be our foundation from which we should be able to start growing. Again, we're going to have to prove this to you and to all of our shareholders and to all the individuals who track us, but I know the management team believes that we can start going north.

Okay. That's good color. I'll save my follow up on that one for next week then. And then, maybe switching gears, in terms of the 48% operating margin guidance, Dave, is that a core number, or a GAAP number. I guess, what I'm getting at is, in terms of the operating margin for fourth quarter that baked in the guidance, is that – what's the fourth quarter operating margin we should be thinking about? And then it looks like there might be higher expenses there than the current run rate, at least, is there anything driving that?

Yeah. I think, the 48% is a GAAP number. If we look at the fourth quarter just doing the math, I think, we'd expect a 40% to low 40% GAAP operating margin in Q4. Most of that is driven by the timing of the spending on marketing. If you look at that GAAP number of 48% for the year, as I mentioned earlier, if you exclude the special charges, it's about 52%. So we've always talked about being in that 50% range. So we feel pretty comfortable there.

Okay. That helps. And then, I guess, lastly for me, if I think about sustainable levels of free cash flow going forward, how much of the, call it, $170 million-plus is sort of achievable? I think there're a lot of gains this year, I think, that $17.7 million in JV installment payments, how much of that should continue, how much of the $12.3 million in notes receivable payments do you expect to be able to replace? Any color around how we should think about it in out years sort of from a high-level basis would be appreciated. Thank you.

Yeah. No problem. So, as I'm sure you've seen in our earnings release, we have a table in the back on the free cash flow. So you can pretty easily pick out the one-time items. There are some notes that will continue to be repaid in 2017, and I think they were about $10 million, if I'm not mistaken. We've talked about a sustainable free cash flow of $160 million. I think that's still a reasonable number. We've obviously got some growth built into that. And there are certain expectations for some of the trademark activity and notes repayment and things like that will continue. And then as we get further out, we would expect to look at it kind of exit those one-time items and really focused on the core. And again, to John's point, I think we will next week we will have a lot of good color on that.

Perfect. Thanks for the color. John and Dave, I will see you next week.

And our next question comes from John Kernan from Cowen. Your line is open. And John, your phone may be on mute. John Kernan - Cowen & Co. LLC: Good morning, guys. Thanks for taking my question. Just wondering if you could address kind of where the portfolio stands and where you see it going. Obviously, your number one priority is debt pay down, which can be assisted through asset sales but does that inhibit your ability to do M&A? How are you viewing the M&A environment? And as a portfolio manager, how are you looking for additional asset sales in the future?

John, it's John. Two things, sorry to sound a little bit like a broken record but we've got everyone next week for two hours. And in that we will talk in very exact detail as to how we see the portfolio brand-by-brand our entire business. We will talk where the cash sits today and where we would like to use it, where we can and can't use it but what you will get next week and what everyone will get next week is a growth story. And so we'll talk about which brands we think are strong, which brands we think have big opportunity, which ones have frankly more modest opportunity and how we plan to use our dollars. So I think instead of trying to give it a quick answer here, we have a chance to give everyone kind of a good two hours on it next week, and I think that might be a better comprehensive answer for you and for everybody else. John Kernan - Cowen & Co. LLC: Understood. You talked about growth, can you help us understand the international business what's going on there and how you expect to use your IP internationally to drive some of this growth and some of the corporate structures that you're going to use to do that? I know in the past there was a focus on JV, so I'm just wondering how you expect to drive the International business going forward?

Again, we're going to spend a fair amount of time on this next week. I think the short answer is John, we really look at Europe as a market, China is a market, the rest of Asia is the market, LatAm is a market, and Middle East is a market. Those are kind of a big opportunities. And the answer is a little bit different as you go through the different markets. We're going to talk about that next week. I think in some cases JV is entirely appropriate, in some cases we would want our own people on the ground driving the business. In some cases we will have strong international brands that can play across all of those regions, in some cases there will be what I call a U.S. brand that plays while outside of the U.S., in some cases not. But, I think one thing is that we are really looking at is, it's not enough for us to say – I will call it, kind of, U.S./North America and International, it's U.S./North America and then some core areas, again, Europe and China and Asia and LatAm and we're trying to drive strategies by those respective markets because we don't always find that the same answer kind of transcend boundaries. So that's what we'll talk about little bit next week. We feel confident in International. Couple of bumps this year should give us a flat business versus the growth we were anticipating. But we feel strongly in the leadership; we feel strongly in the structure that exists and that we are putting in place that will help us have a good business 2017, 2018, 2019 and going forward. John Kernan - Cowen & Co. LLC: Okay, that's helpful. We are definitely looking forward to next week. And just finally, obviously the environment out there is choppy. Just wondering how you feel about your accounts receivable and the credit that you have extended within those receivables with some of your licensing partners?

John, it's Dave. I think we feel pretty good now. Obviously the bigger risks are we found to be International where in particular in countries where there is not as mature of the system for helping you collect receivables, we look at those pretty hard. We did a very comprehensive review kind of soon after I got here last year and as we mentioned in the call, we had some pretty significant write-offs at that point. The bad debt expense was pretty normal in this quarter and we have a pretty comprehensive process for reviewing it every month that we wouldn't expect to have any surprises.

And John, it's John. Let me jump back in (30:52). I think Dave is 100% right. I think one of the things that we're managing closely is we are fortunate. We have relationships with the top retailers frankly throughout the world. And as you know, in some cases some of these guys are struggling a little bit. We have three amazing brand with Sears, Kmart (31:11) Kohl's we have JOE BOXER, we have CANNON and we have BONGO. We pay very close attention to the business. We spend a lot of time with our management team and make sure that the brand is hitting or exceeding minimums, wherever possible and understanding exactly how that brand is going to be supported. So we do pay attention to what's going on around the world and keeping an eye on some of the licensees that are frankly not so easy to supply and meet with, but also we pay attention to the rest of the retail community because our success is wedded to their success. So we also pay a lot of attention to that and we will talk about that a little bit next week as well. John Kernan - Cowen & Co. LLC: Okay. Thanks. Looking forward to next week.

And our next question comes from Steve Marotta from C.L. King & Associates. Your line is open. Steven L. Marotta - C.L. King & Associates, Inc.: Good morning everybody. Thank you for taking my question. As it pertains to MetLife, do you intent to replace and release them before the end of the contract? In other words, if you had lined up additional licensees, do you have the flexibility to do that and is that your intent?

Steve, I would love to give you a good answer, but my Chief Counsel is sitting right next to me, so he won't let me. Listen, MetLife has been a great partner for I think 31 years. They gave us a heads up. We had a sense that this might be happening. So we have been thinking about what our future looks like. I'll leave it at this. We have an excellent relationship with MetLife and they're very honorable, so we don't see any risk in the contract and they've been clear with that. I will also tell you that we could not be going out into the market at a better time with the PEANUTS brand. It is stronger today than it's ever been. Its revenue is probably 30% plus higher today than it was when we acquired the brand in terms of licensing revenue around the world. We're disappointed. We enjoyed the relationship. But frankly, our team has been thinking about this, and we see this as an opportunity as we've said earlier in the comments. Steven L. Marotta - C.L. King & Associates, Inc.: That's helpful. Thank you. Given the Entertainment Division's movie release comparison coming up in the fourth quarter, is it reasonable to assume that revenue will be down for the Entertainment Division say to mid-to-high single-digits for the fourth quarter?

Reasonable. Steven L. Marotta - C.L. King & Associates, Inc.: And lastly, you alluded to this earlier, but I'm wondering if you could get into just a little bit of specifics, when you look out to 2017, you mentioned that low single-digit organic growth is possible and even targeted. Can you talk about which categories are most right for that growth and which you expect continue to be challenged?

Absolutely. But then, Steve, you want to listen next week when we presented in more detail, so... Steven L. Marotta - C.L. King & Associates, Inc.: I'll still listen. I promise.

I just can't. If I can, I'm going to ask you to just wait one week because, again, I think you're going to get – we can say things right now, next week we're going to give you deeper into our thinking and I think it's going to be a better answer. So if I could, I try to beg off (34:20) for one week. Steven L. Marotta - C.L. King & Associates, Inc.: Fair enough. Thank you very much.

But I appreciate your persistence.

And our next question comes from Patrick Marshall from Cowen & Company. Your line is open. Patrick Marshall - Cowen & Co. LLC: Good morning, guys.

Good morning. Patrick Marshall - Cowen & Co. LLC: So I was just hoping to sharpen my pencil on a couple of points with your cash. You delineate between your unrestricted domestic cash versus your unrestricted domestic JV cash. What is the distinction there?

Patrick, it's Dave Jones. So the domestic cash is about $19.5 million in consolidated joint ventures. So in joint ventures that we control, they are consolidated with our results, and then we pick out our minority partners share on one line. So, any of the cash that's in the joint ventures is in that number. And the way to think about that is, if we owned 50% of every single joint venture, then ultimately 50% of that cash would get distributed out to the partners, and so, half of it would then move in to our unrestricted domestic cash wholly-owned line. Patrick Marshall - Cowen & Co. LLC: Okay. So cash is – I think so, I guess, the point I was trying to get at was, is that cash potentially available for debt buybacks?

Well, ultimately, when it's distributed out of the partnerships, out of the joint ventures it will go into unrestricted which than would be available for debt buybacks, yes. Patrick Marshall - Cowen & Co. LLC: Right. Okay. And then just to clarify, the Complex Media sale proceeds all went to restricted cash, correct?

They did, yes. Patrick Marshall - Cowen & Co. LLC: Okay. And I think the rest of my questions are all probably better asked next week.

Great. Thank you.

Thank you. Patrick Marshall - Cowen & Co. LLC: Yeah. I will save us all the time.

And our next question comes from Jim Chartier from Monness Crespi Hardt. Your line is open. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: Thanks for taking my questions. First, could you quantify how much revenue of sharper image was pulled forward into third quarter and out of fourth quarter?

One second, Jim. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: Thanks.

I think we will give a little bit more color, sorry – give a little more color next week. We have – because the giftable has gotten stronger and as you know Q4 often orders into Q3, so we have (37:07) answer. We have to get specifically because we will – last year we had a strong hover board business that won't comp because of the hover boards situation. So. I think, best answer to get back to you on that one. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: Okay. And then, on the Men's business, do you expect reported men sales to be up in fourth quarter?

The answer I'll give you on that one is, Men's fashion versus Men's athletic, we feel like Men's fashion which is something, Jim, that we talked about for many quarters frankly, think ROCAWEAR, think ECKO, think ZOO YORK, we see that turning the corner for Q4 and we do see that positive year-over-year. Inside of Men's also is athletic. So we suspect that STARTER as we mentioned before with a couple category shifts that Walmart had done that will probably trend -- continue to trend down in Q4. When you net the whole thing together, still a little bit of down probably, but fashion we feel is turning and that's the thing we've been focused a lot on and obviously we are paying close attention to athletic. But with respect to fashion, yes, we do see that started to turn the corner in Q4 on a comp basis. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: And the athletic, when do you lap the change in the STARTER business at Walmart?

I'd suspect we don't lap that for another quarter or two. It's probably Q2 next year before we lap it. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: Okay. And then, you've talked in the last couple of calls about increasing some marketing spend to drive the business. Did you do any of that in third quarter. And if so, what's kind of the early read on that investment?

I think the short answer is – we did -- I'm going to give you the read on it so far. So Q2, Q3, advertising we were flat year-over-year in 2016, excuse me in Q4, we look to be up. I think the answer I'll give you a couple of anecdotes, so it is qualitative versus quantitative, which often is kind of the reads we get. We have a couple sports people that have been involved with the brand. Think of Sarah Hyland with Kohl's. When we lined up Sarah Hyland to be not only a sportsperson, but frankly, a Creative Director at Kohl's, we signed Sarah for one-year. The relationship is going very well. Milwaukee is very happy with it. We're very happy with it. And we're in discussions with Sarah and her team about continuing to stay in that relationship and drive more business for us. We have the same situation with several other of our spokespeople. So, I think that anecdotally, qualitatively says we're being effective. I think the other thing we're doing is we're spending more and more measured media, meaning in social and some of the areas that we can track better. We have recently brought on to our board, as we announced a couple weeks ago, Kristen O'Hara who brings very, very deep media and metadata experience from her world at Time Warner. So we qualitative believe we're moving in the right region. Quantitatively we still want to validate that. And we're putting in place measures that will help us make sure we're getting an increased return on investment from marketing overall. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: Great, thanks. And I look forward to seeing you next week.

Thank you.

And at this time, I am showing no further questions. I would like to turn the call back to John Haugh for any closing remarks.

Thank you. So, thanks to everyone for your continued support. We appreciate it, and we look forward to seeing all of you next Tuesday at our corporate headquarters for our Investor Day. Thank you and see you in a week.