Orion Group (ORN) 38th Annual Roth Conference summary

Major licensing deals and strategy

• Closed a $122 million, eight-year licensing deal in China with UTG, a partner with a strong track record in building lifestyle brands like Jeep and Dickies in the region.

• UTG will phase out existing licensees and become the sole operator, with guaranteed minimum distributions and a 50/50 profit split on overages after certain thresholds.

• Byborg, another major licensee, is paying $20 million annually for 15 years, with payments arriving early and successful transitions of digital properties.

• Consumer products, especially apparel and accessories, make up about 80% of remaining licensing revenue, with recent collaborations (e.g., Supreme, YSL, True Religion) aimed at brand relevance.

• Growth opportunities identified in APAC (outside China), Latin America, and EMEA, with a focus on finding strong local partners.

Honey Birdette business performance and outlook

• Honey Birdette has stabilized at $70 million+ revenue, with operating margins improving to around 10% after a strategic focus on brand health over discounting.

• U.S. stores are twice as productive as Australian ones, with 33% four-wall margins and significant expansion potential in high-end and outlet malls.

• E-commerce and brick-and-mortar are now roughly equal in revenue mix, with e-commerce offering higher profitability (around 50% margin).

• The brand is expected to grow further in the U.S., with the potential to reach $150 million in revenue.

• There is public interest in monetizing Honey Birdette, and divestiture is being considered as a lever to reduce company leverage.

Brand enforcement, marketing, and operational changes

• Significant investment is made in legal and brand enforcement, especially to combat piracy in regions like Southeast Asia.

• Collaborations with brands like Supreme are primarily for exposure and brand relevance, while some (e.g., True Religion) have also been financially successful.

• Recent hire David Miller, with experience from Disney and Nat Geo, is tasked with bringing structure, focusing on brand spend, and developing new licensing opportunities.

• U.S. licensing business is being restructured to reduce the number of licensees and create more exclusivity, encouraging partners to invest and develop the business.