Good day, ladies and gentlemen, and welcome to the First Quarter 2019 Iconix Brand Group Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, today’s conference is being recorded. I’d now like to introduce your host for today's conference, Ms. Cristina Cosentino, Senior Director of Financial Reporting. Ma'am, please go ahead.

Good morning and welcome to the Iconix Brand Group's first quarter 2019 earnings conference call. On today's call, we have with us, Bob Galvin, our President and Chief Executive Officer; and John McClain, 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 as forward-looking statement. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date statement was made. I would now like to turn the call over to Bob Galvin.

Thank you, Cristina. Good morning, everyone. It's only been around six weeks since we reported results for the fourth quarter of 2018, and not a lot of things have changed since then. We continue to deliver on our plan and are pleased to report that our first quarter results are in line with our expectations and guidance. Our cost savings that we put in place at the end of 2018 began to pay dividends at the start of this year. We’ve reduced expenses by approximately $15 million or 46% over the first quarter last year. John will provide more detail later in the call. The first quarter revenue for 2019 as compared to the first quarter of 2018 was negatively impacted by the residual of DTRs for Mossimo, Danskin and Royal Velvet. The first quarter of 2018 also included revenues at Sears for the core brands Cannon, Joe Boxer and Bongo, which were not replaced during the first quarter of 2019. As previously reported, we have signed a new licensing deal with Himatsingka for Royal Velvet. We have had success in place in Danskin outside of Walmart and have recently signed a footwear deal for the brand. We are also in late stage of discussions with Sears for new agreements for Joe Boxer and Cannon. We have also signed the original founders of Zoo York to support, promote and market the brand on a global basis. Skateboarding will be a non-medal Olympic sport during the summer games in Tokyo in 2020. We believe this presents an excellent opportunity for the brand. We have signed a total of 65 new or renewed license agreements in fiscal 2019 with total GMRs of approximately $40 million. We are roughly flat year-over-year in our international business when excluding the nearly $2 million of business we saw last year related to the World Cup. We are also pleased to announce our new license with a division of FILA Korea for Starter and Starter Black label footwear in Korea. This is an example of signing a license with a company capable of sourcing footwear on a global basis to support the footwear needs in other regions. We are holding discussions with several other potential partners with similar opportunities. We are pleased to announce that we resolved the NASDAQ listing requirement of maintaining a minimum $1 per share closing bid price. We continue to work with NASDAQ's staff to resolve the minimum market value for publicly held shares listing requirement. We are also pleased that we have resolved several of the outstanding lawsuits during the first quarter of 2019 that have plagued Iconix for a number of years. I will now turn the call over to John.

Thanks, Bob. On a total company basis, first quarter revenue was down 26% principally as a result of the previously announced transition of our Danskin and Mossimo DTRs in our women's segment, Royal Velvet in our home segment and the impact of the Sears bankruptcy on our Joe Boxer, Cannon and Bongo brands. Total company adjusted EBITDA decreased 18% for the quarter. On a segment basis, as expected, revenue in the women's segment was down 50% for the three months. As previously discussed, the decline was principally the result of the transition of our Danskin and Mossimo DTRs and the impact of the Sears bankruptcy on Joe Boxer and Bongo. In the men's segment, revenue was up 10% for the quarter. We saw a strong performance from Buffalo, Starter, Umbro and Rocawear. The home segment was down 46% for the quarter, which was principally the impact of the Sears bankruptcy on our Cannon brand and the transition of our Royal Velvet DTR. Bob had mentioned our international segment's results for 2018 include approximately $2 million of revenue related to the World Cup. Including this, the segment was down slightly year-over-year, but we did see strong performance at Lee Cooper. Our SG&A expense in the first quarter was $18.1 million, a 46% decrease compared with 33.6 in the first quarter of 2018. The expense reduction plan that we began in the fourth quarter of 2018 has yielded expense savings in all major categories, with the most significant reductions in personnel-related costs, professional fees and advertising. Our 2018 income statement for the quarter included a few onetime items, including a gain on the sale of a trademark and a gain on the extinguishment of debt. The earnings release we filed today has details related to such items. Turning to the balance sheet.…

Thank you, John. We are pleased with the progress that we are making, and we will continue to work hard at executing our plan throughout the remainder of this year. With that, operator, we'll now open up the line for a question or two.

Our first question comes from the line of Eric Beder with SCC Research. Your line is now open.

Good morning.

Good morning, Eric.

You’ve done an incredible job of handling the expenses side of the business. How much is there left to be done there? And strategically, what have you been trying to do on the expense side?

Again, I think, Eric, we will continue to rationalize expenses in relationship to revenues as we move forward. There are still opportunities as we move into the second half of this year and we're focusing on what we would consider to be non-value-added expenses that are nice to have today, but we can always pick them up in the future when the business warrants it. So there is still some more upside for us, but we're going to rationalize it in relationship to the revenues.

And Eric, remember that the – at year-end call, right, we said we expected to see $40 million out year-over-year, and about $30 million of that was kind of ongoing run rate expenses. So that the $10 million was kind of special onetime stuff from last year, and that's where we still feel we are now.

Right. When you look at some of the key DTRs, OP and things like Danskin, what is the response you've been seeing from people in terms of their desire to take that on and move it from the DTR to the traditional level?

Danskin first, we've been able to place Danskin with a number of different retailers and retail channels in addition to just picking up a footwear license. So I think Danskin, we've had good momentum outside of what had been just a traditional DTR because it was outside of Walmart during that period of time. With OP, we're getting a lot of interest in the brand. We've been talking to the founder's son about helping on the West Coast. So there has been real good interest both in apparel and in footwear and accessories for OP. More to come.

And last question. When you look at a piece of the agreements, I'm assuming that most of these agreements are not going to impact this year. They're going to impact more 2020. When should we be thinking about kind of apples-to-apples business here, where we should be looking at the numbers and kind of saying, okay, there's not a lot of noise here in between?

Again, we're still going to – during 2019, there's still residuals for DTRs. We still have the Sears bankruptcy. That will affect us as we move through the year. Hopefully, there'll be less noise in 2019 so that 2020 becomes a better comparative.

Okay. Okay, thank you.

Great.

And that will conclude today's question-and-answer session. I'd like to turn the call back to Mr. Galvin for closing remarks.

We thank everybody for your continued support. We'll keep you updated as we do make progress, and we look forward to continued improvement as the year goes on. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, and you may now disconnect. Everyone have a great day.