Orion Group (ORN) 38th Annual Roth Conference summary

Major licensing deals and revenue streams

• Closed a $122 million, eight-year licensing deal in China with UTG, transitioning all operations to them and phasing out other licensees over time.

• UTG guarantees minimum annual distributions starting at $10 million, with a step-down structure and 50/50 profit split on overages after minimums are met.

• Byborg deal provides $20 million per year for 15 years, with payments arriving early and operational transitions completed smoothly.

• Consumer products, mainly apparel and accessories, make up about 80% of licensing revenue, with recent successful collaborations boosting brand relevance.

• APAC (outside China), Latin America, and EMEA identified as key regions for future licensing expansion.

Brand enforcement and marketing initiatives

• Significant investment in legal and brand enforcement to combat global piracy, especially on platforms like Amazon.

• Collaborations with brands like Supreme, YSL, AMIRI, and True Religion are primarily for exposure and brand relevance, though some have been highly profitable.

• New executive hire from Disney/Nat Geo to bring structure and focus on strategic brand investment and new licensing opportunities.

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

Honey Birdette business performance and outlook

• Honey Birdette has stabilized at $70 million+ revenue with a 10% operating margin, shifting from discounting to brand health.

• U.S. stores are twice as productive as Australian ones, with 33% four-wall margins; potential to expand to 30 more U.S. stores and 10 outlet locations.

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

• Monetization of Honey Birdette is under consideration, with interest from potential buyers.

• U.S. market seen as a major growth opportunity due to its size and current under-penetration.