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| 8-K - FINANCIAL RESULTS FOR THE QUARTER ENDED JUNE 30, 2014. - NUTRI SYSTEM INC /DE/ | rrd413696.htm |
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Exhibit 99.1 |
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Contact: John Mills, Partner ICR, Inc. 646-277-1254 ir@nutrisystem.com John.Mills@Icrinc.com |
NUTRISYSTEM ANNOUNCES SECOND QUARTER 2014 FINANCIAL RESULTS
Second Quarter Revenue Increased 14% to $111.1 Million, Meeting High End of Guidance Range
GAAP Earnings per Share and Adjusted EBITDA Exceed Company Second Quarter Guidance
Fort Washington, PA—July 29, 2014—Nutrisystem, Inc. (NASDAQ: NTRI), a leading provider of weight management products and services, today reported financial results for the quarter ended June 30, 2014. The following are key financial highlights for the period and reconciliations of certain GAAP to non-GAAP measures are provided later in this press release.
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Second Quarter 2014 |
| · | Revenue for the quarter was $111.1 million, an increase of 14% as compared to $97.5 million in the second quarter of 2013; |
| · | Gross profit increased 14% versus prior year to $56.9 million; |
| · | Adjusted EBITDA was $17.0 million, an increase of 25% from adjusted EBITDA of $13.5 million in the second quarter of 2013; |
| · | GAAP earnings per share increased 36% to $0.30 from $0.22 the prior year; and |
| · | Cash, cash equivalents, and short term investments increased $10.0 million during the quarter to $39.5 million at June 30, 2014 from $29.5 million at March 31, 2014. The Company had no outstanding bank debt at quarter-end under its existing bank facility. |
Dawn Zier, President and Chief Executive Officer, said, “We are pleased with our strong performance in the second quarter of fiscal 2014, as we exceeded our earnings per share and adjusted EBITDA expectations. Our continued efforts around our four-point plan have enabled us to deliver our third consecutive quarter of year-over-year double-digit revenue increases fueled by our growing direct and retail channels.”
Ms. Zier added, “We continue to enhance our brand with leading product and program innovations that add to the customer experience. In addition to a double-digit increase in new customer growth, we are making progress on our e-commerce, pricing and retail initiatives. Looking ahead, we remain focused on the successful execution of our strategic initiatives and expanding the breadth of our brand.”
Mike Monahan, Chief Financial Officer, commented, “We are committed to enhancing stockholder value through increased revenue and cash flow. Based on improved customer growth and
profitability, we are increasing both our adjusted EBITDA and earnings per share guidance ranges for the year.”
The Company announced that the Board of Directors has declared a quarterly dividend of $0.175 per share, payable August 18, 2014 to stockholders of record as of August 8, 2014.
Third Quarter and Updated Full Year 2014 Guidance
For the third quarter of 2014, the Company expects revenue to be in the range of $85.0 million to $90.0 million. The Company expects third quarter adjusted EBITDA to be in the range of $8.75 million to $10.75 million. The Company also expects third quarter 2014 GAAP earnings per share to be in the range of $0.12 to $0.17.
For the full year of 2014, the Company is updating its revenue guidance from a previous range of $392.0 million to $407.0 million to now be in the range of $397.0 million to $407.0 million. The Company is increasing its annual adjusted EBITDA from a previous range of $40.0 million to $44.0 million to be in the range of $41.0 million to $44.2 million. In addition, the Company is raising its GAAP earnings per share guidance from a previous range of $0.57 to $0.67 to now be in the range of $0.60 to $0.68 for the full year of 2014.
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Conference Call and Webcast |
Management will host a webcast to discuss second quarter 2014 financial results today at 5:00 PM Eastern time. The webcast will include remarks from President and Chief Executive Officer Dawn Zier, Chief Financial Officer Mike Monahan, and Chief Marketing Officer Keira Krausz. A webcast of the conference call will be available live on the Investor Relations section of the Nutrisystem website (www.nutrisystem.com) and a replay will be available for 30 days. Interested parties unable to access the conference call via the webcast may dial 877-407-3982, and reference conference ID 13584869.
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Non-GAAP Financial Measures |
Within this announcement, the Company makes reference to certain adjusted financial measures, which have directly comparable GAAP financial measures as identified in this press release. These adjusted measures are provided so that investors have the same financial data that management uses with the belief that it will assist the investment community in properly assessing the performance of the Company for the periods being reported and future periods. The presentation of this additional information is not meant to be considered a substitute for measures prepared in accordance with GAAP.
In this release, EBITDA is defined as net income excluding interest, income taxes and depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding non-cash employee compensation and severance and related charges.
Forward-Looking Statements
Information provided and statements contained in this press release that are not purely historical, such as third quarter and full year 2014 guidance, and the Company’s financial and operational outlook, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements only speak as of the date of this press release and the Company assumes no obligation to update the information included in this press release. Statements made in this press release that are forward-looking in nature may involve risks and uncertainties. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees and are subject to certain risks, uncertainties and assumptions that are difficult to predict, including, without limitation, specific factors discussed herein and in other press releases and public filings made by the Company (including filings by the Company with the Securities and Exchange Commission). Although the Company believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements. Unless otherwise required by law, the Company also disclaims any obligation to update its view of any such risks or uncertainties or to announce publicly the result of any revisions to the forward-looking statements made in this press release.
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About Nutrisystem, Inc. |
Nutrisystem, Inc. (NASDAQ: NTRI) is a leading provider of weight loss solutions and weight-related products and services including its structured food delivery program Nutrisystem® My Way® and its new digital platform NuMi™ by Nutrisystem. Nutrisystem has helped consumers lose weight for more than 40 years by providing quality foods and a nutritionally balanced meal program. Nutrisystem® meal plans feature more than 150 menu options, along with counseling options from trained weight-loss coaches, registered dietitians and certified diabetes educators. Customers are provided further support from the online community, tools, trackers, mobile apps and more. Nutrisystem® plans are consistent with national guidelines for dietary intake meeting targets for fat, sodium, sugar, cholesterol, fiber and physical activity. Additionally, plans can be customized to specific dietary needs and preferences including the Nutrisystem® D® program for people with diabetes or those at risk for type 2 diabetes. Healthcare professionals may learn more about the programs by visiting www.nutrisystem.com/hcp. Nutrisystem® weight loss plans are available directly to consumers through www.nutrisystem.com, by phone (1-800-435-4074) and at select retailers. The NuMi multi-platform system and downloadable App can be found at http://www.numi.com.
| NUTRISYSTEM, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
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| (Unaudited, in thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
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| REVENUE | $ | 111,052 | $ | 97,469 | $ | 233,280 | $ | 202,853 | ||||||||
| COSTS AND EXPENSES: | ||||||||||||||||
| Cost of revenue | 54,141 | 47,716 | 116,562 | 100,069 | ||||||||||||
| Marketing | 25,990 | 24,250 | 67,734 | 60,566 | ||||||||||||
| General and administrative | 15,768 | 13,350 | 31,686 | 28,601 | ||||||||||||
| Depreciation and amortization | 1,913 | 2,342 | 3,671 | 4,891 | ||||||||||||
| Total costs and expenses | 97,812 | 87,658 | 219,653 | 194,127 | ||||||||||||
| Operating income | 13,240 | 9,811 | 13,627 | 8,726 | ||||||||||||
| INTEREST EXPENSE, net | 47 | 29 | 92 | 82 | ||||||||||||
| Income before income taxes | 13,193 | 9,782 | 13,535 | 8,644 | ||||||||||||
| INCOME TAX EXPENSE | 4,490 | 3,423 | 4,608 | 2,925 | ||||||||||||
| Net income | $ | 8,703 | $ | 6,359 | $ | 8,927 | $ | 5,719 | ||||||||
| BASIC INCOME PER COMMON SHARE | $ | 0.30 | $ | 0.22 | $ | 0.31 | $ | 0.20 | ||||||||
| DILUTED INCOME PER COMMON SHARE | $ | 0.30 | $ | 0.22 | $ | 0.31 | $ | 0.20 | ||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||||||||||||||
| Basic | 28,208 | 27,895 | 28,226 | 27,905 | ||||||||||||
| Diluted | 28,600 | 28,001 | 28,634 | 28,046 | ||||||||||||
| DIVIDENDS DECLARED PER COMMON SHARE | $ | 0.175 | $ | 0.175 | $ | 0.35 | $ | 0.35 | ||||||||
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| NUTRISYSTEM, INC. AND SUBSIDIARIES | ||||||||
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| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited, in thousands, except par value amounts) | ||||||||
| June 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
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| ASSETS | ||||||||
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| CURRENT ASSETS: | ||||||||
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| Cash and cash equivalents | $ | 22,979 | $ | 9,772 | ||||
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| Short term investments | 16,501 | 16,551 | ||||||
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| Receivables | 11,117 | 7,738 | ||||||
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| Inventories | 19,748 | 26,088 | ||||||
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| Prepaid income taxes | 0 | 2,167 | ||||||
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| Deferred income taxes | 1,342 | 931 | ||||||
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| Other current assets | 4,462 | 6,034 | ||||||
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| Total current assets | 76,149 | 69,281 | ||||||
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| FIXED ASSETS, net | 26,102 | 26,029 | ||||||
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| DEFERRED INCOME TAXES | 7,032 | 5,924 | ||||||
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| OTHER ASSETS | 1,151 | 1,211 | ||||||
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| Total assets | $ 110,434 | $ 102,445 | ||||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
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| CURRENT LIABILITIES: | ||||||||
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| Accounts payable | $ | 32,705 | $ | 29,117 | ||||
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| Accrued payroll and related benefits | 4,776 | 6,723 | ||||||
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| Income taxes payable | 3,724 | 0 | ||||||
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| Deferred revenue | 5,579 | 4,228 | ||||||
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| Other accrued expenses and current liabilities | 7,530 | 7,441 | ||||||
| Total current liabilities | 54,314 | 47,509 | ||||||
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| NON-CURRENT LIABILITIES | 2,716 | 2,779 | ||||||
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| Total liabilities | 57,030 | 50,288 | ||||||
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| STOCKHOLDERS’ EQUITY: | ||||||||
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| Preferred stock, $.001 par value (5,000 shares authorized, no shares issued and | ||||||||
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| outstanding) | 0 | 0 | ||||||
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| Common stock, $.001 par value (100,000 shares authorized; shares | ||||||||
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| issued – 29,010 at June 30, 2014 and 28,866 at December 31, 2013) | 29 | 29 | ||||||
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| Additional paid-in capital | 27,575 | 24,095 | ||||||
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| Treasury stock, at cost, 222 shares at June 30, 2014 and 158 shares at | ||||||||
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| December 31, 2013 | (2,575) | (1,586) | ||||||
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| Retained earnings | 28,351 | 29,611 | ||||||
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| Accumulated other comprehensive income | 24 | 8 | ||||||
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| (92) | (92) | |||||||
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| Total stockholders’ equity | 53,404 | 52,157 | ||||||
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| Total liabilities and stockholders’ equity | $ | 110,434 | $ | 102,445 | ||||
| NUTRISYSTEM, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
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| Six Months Ended June 30, | ||||||||
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| 2014 | 2013 | |||||||
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| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 8,927 | $ | 5,719 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 3,671 | 4,891 | ||||||
| Loss on disposal of fixed assets | 5 | 48 | ||||||
| Share–based compensation expense | 2,910 | 2,890 | ||||||
| Deferred income tax benefit | (1,272) | (788) | ||||||
| Other non-cash charges | 13 | 30 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | (3,379) | 867 | ||||||
| Inventories | 6,340 | 826 | ||||||
| Other assets | 1,632 | 2,153 | ||||||
| Accounts payable | 3,049 | 6,642 | ||||||
| Accrued payroll and related benefits | (1,947) | 2,027 | ||||||
| Deferred revenue | 1,351 | 67 | ||||||
| Income taxes | 5,549 | 3,658 | ||||||
| Other accrued expenses and liabilities | 10 | 1,006 | ||||||
| Net cash provided by operating activities | 26,859 | 30,036 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of short term investments | (4,402) | (18,458) | ||||||
| Proceeds from sales of short term investments | 4,464 | 3,594 | ||||||
| Capital additions | (3,194) | (3,984) | ||||||
| Proceeds from the sale of fixed assets | 0 | 28 | ||||||
| Net cash used in investing activities | (3,132) | (18,820) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Exercise of stock options | 248 | 0 | ||||||
| Taxes related to equity compensation awards, net | (581) | (449) | ||||||
| Payment of dividends | (10,187) | (9,868) | ||||||
| Net cash used in financing activities | (10,520) | (10,317) | ||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 13,207 | 899 | ||||||
| CASH AND CASH EQUIVALENTS, beginning of period | 9,772 | 16,186 | ||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | 22,979 | $ | 17,085 | ||||
| NUTRISYSTEM, INC. AND SUBSIDIARIES | ||||||||||||
| ADJUSTED EBITDA RECONCILIATION TO GAAP RESULTS | ||||||||||||
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| Three Months Ended | Six Months Ended | |||||||||||
| June 30, | June 30, | |||||||||||
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| 2014 | 2013 | 2014 | 2013 | |||||||||
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| Net income | $ 8,703 | $ | 6,359 | $ 8,927 | $ | 5,719 | ||||||
| Interest expense, net | 47 | 29 | 92 | 82 | ||||||||
| Income tax expense | 4,490 | 3,423 | 4,608 | 2,925 | ||||||||
| Depreciation and amortization | 1,913 | 2,342 | 3,671 | 4,891 | ||||||||
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| EBITDA | 15,153 | 12,153 | 17,298 | 13,617 | ||||||||
| Non-cash employee compensation | ||||||||||||
| expense | 1,817 | 1,388 | 2,910 | 2,369 | ||||||||
| Severance and related charges | 0 | 0 | 0 | 1,441 | ||||||||
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| Adjusted EBITDA | $ 16,970 | $ | 13,541 | $ 20,208 | $ | 17,427 | ||||||
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| NUTRISYSTEM, INC. AND SUBSIDIARIES | ||||||||||||||||
| ADJUSTED EBITDA GUIDANCE RECONCILIATION TO GAAP MEASURES | ||||||||||||||||
| (Unaudited, in thousands) | ||||||||||||||||
| Three Months Ending | Twelve Months Ending | |||||||||||||||
| September 30, 2014 | December 31, 2014 | |||||||||||||||
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| Low | High | Low | High | |||||||||||||
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| Net income | $ | 3,502 | $ | 4,862 | $ | 17,750 | $ | 19,846 | ||||||||
| Interest expense, net | 100 | 100 | 200 | 200 | ||||||||||||
| Income tax expense | 1,648 | 2,288 | 9,350 | 10,454 | ||||||||||||
| Depreciation and amortization | 2,200 | 2,200 | 8,200 | 8,200 | ||||||||||||
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| EBITDA | 7,450 | 9,450 | 35,500 | 38,700 | ||||||||||||
| Non-cash employee | 1,300 | 1,300 | 5,500 | 5,500 | ||||||||||||
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| Adjusted EBITDA | $ | 8,750 | $ | 10,750 | $ | 41,000 | $ | 44,200 | ||||||||
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EBITDA is defined as net income excluding interest, income taxes and depreciation and amortization. Adjusted EBITDA is defined as EBITDA excluding non-cash employee compensation and severance and related charges.
| NUTRISYSTEM, INC. AND SUBSIDIARIES | ||||||||||||||||
| ADJUSTED NET INCOME RECONCILIATION TO GAAP RESULTS | ||||||||||||||||
| (Unaudited, in thousands, except per share amounts) | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
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| 2014 | 2013 | 2014 | 2013 | |||||||||||||
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| Net income as reported | $ | 8,703 | $ | 6,359 | $ | 8,927 | $ | 5,719 | ||||||||
| Income tax expense as reported | 4,490 | 3,423 | 4,608 | 2,925 | ||||||||||||
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| Income before income tax expense | 13,193 | 9,782 | 13,535 | 8,644 | ||||||||||||
| Adjustment for one-time charges | 0 | 0 | 0 | 1,441 | ||||||||||||
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| Adjusted income before income tax expense | 13,193 | 9,782 | 13,535 | 10,085 | ||||||||||||
| Adjusted income tax expense | 4,490 | 3,423 | 4,608 | 3,530 | ||||||||||||
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| Adjusted net income | $ | 8,703 | $ | 6,359 | $ | 8,927 | $ | 6,555 | ||||||||
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| Adjusted diluted income per common share | $ | 0.30 | $ | 0.22 | $ | 0.31 | $ | 0.23 | ||||||||
| Adjusted diluted weighted average shares | ||||||||||||||||
| outstanding | 28,600 | 28,001 | 28,634 | 28,046 | ||||||||||||
Adjusted income tax expense for the six months ended June 30, 2013 has been calculated using a tax rate of 35%.
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Statement Regarding Non-GAAP Financial Measures |
We believe EBITDA, adjusted EBITDA, adjusted EBITDA guidance and adjusted net income are useful performance metrics for management and investors because they are indicative of the ongoing operations of the Company. These non-GAAP measures exclude certain non-cash and non-operating items to facilitate comparisons and provide a meaningful measurement that is focused on the performance of the ongoing operations of the Company.