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| 8-K - 8-K - Vitamin Shoppe, Inc. | d814754d8k.htm |
Exhibit 99.1
| VITAMIN SHOPPE, INC. 2101 91st Street North Bergen, NJ 07047 (201) 624-3000 www.vitaminshoppe.com |
NEWS RELEASE |
Vitamin Shoppe, Inc. Announces Third Quarter 2014 Results
| • | Announces $50 Million Accelerated Share Repurchase Program |
Third Quarter 2014 Highlights:
| • | Total revenue increased 13.4% |
| • | E-commerce revenues increased 10.5% |
| • | Total comparable sales grew 3.8% |
| • | Fully diluted GAAP Earnings per Share of $0.40, or $0.47 per share excluding acquisition related costs |
NORTH BERGEN, N.J., November 4, 2014 — Vitamin Shoppe, Inc. (NYSE: VSI), a multi-channel specialty retailer and manufacturer of nutritional products, today announced preliminary results for the three months ended September 27, 2014. Total net sales in the third quarter increased 13.4% to $308.9 million compared to $272.5 million in the same period of the prior year. Reported fully-diluted earnings per share in third quarter 2014 were $0.40, compared with $0.53 in third quarter 2013. Excluding non-operating items in both periods, adjusted earnings per share was $0.47 in third quarter 2014 and $0.53 in third quarter 2013.
Commenting on the quarter’s results, Tony Truesdale, Chief Executive Officer of the Company stated, “On the sales front, the supplements industry continues to cycle the impact from negative media and our comparable sales were at the low end of our expectations. Nevertheless, we once again delivered positive comparable sales growth for the quarter.”
Mr. Truesdale added, “We are pleased that our recent acquisition of Nutri-Force is performing as expected. By the second half of 2015 we will have anniversaried through the impacts of opening a new distribution center and the acquisition of Nutri-Force. These strategic initiatives were significant undertakings for the company and have positioned the Vitamin Shoppe to deliver long-term growth and provide value for our shareholders.”
Third Quarter 2014 Results
Sales growth in the quarter was driven by: 1) a 3.1% increase in comparable retail store sales, 2) growth from non-comp stores, 3) a 10.5% increase in e-commerce sales, and 4) manufacturing revenue of $17.2 million. Total comparable sales, which includes ecommerce sales, were 3.8%.
Cost of goods sold, which includes product, warehouse, distribution, manufacturing and store occupancy costs, increased $32.2 million, or 17.9%, to $211.6 million for the three months ended September 27, 2014, compared with $179.4 million for the three months ended September 28, 2013. The quarter included a $3.3 million charge from adjusting Nutri-Force inventory to fair value as part of purchase accounting.
Gross profit increased $4.2 million, or 4.6%, to $97.3 million for 2014 third quarter, compared with $93.1 million for third quarter 2013. Gross profit as a percentage of net sales was 31.5% for the quarter ended September 27, 2014, compared to 34.2% in third quarter 2013. The decrease was attributable to the impact of the Nutri-Force acquisition, shifts in product category sales mix, higher penetration of e-commerce sales and costs associated with the new distribution center.
Selling, general and administrative expenses (SG&A), including operating payroll and related benefits, advertising expense, depreciation and amortization, and other SG&A, increased $9.8 million, or 14.6%, to $76.7 million for the quarter ended September 27,
2014, compared with $67.0 million for the quarter ended September 28, 2013. SG&A reflects higher advertising, legal and payroll costs and includes approximately $0.3 million of acquisition-related integration costs. SG&A for third quarter 2013 included integration related expenses for Super Supplements of approximately $0.9 million. Reported SG&A as a percentage of net sales was 24.8% for third quarter 2014 compared with 24.6% in third quarter 2013. Excluding non-operating items for both periods, SG&A as a percent of revenue was 24.8% in third quarter 2014 and 24.3% in third quarter 2013.
Income from operations in third quarter 2014 of $20.5 million compared to $26.1 million in the same period of the prior year. As a percentage of net sales, income from operations was 6.7% for third quarter 2014 compared with 9.6% for third quarter 2013. Adjusted for non-operating costs of goods sold and SG&A items in both periods, income from operations as a percentage of sales was 7.8% in third quarter 2014 and 9.9% in third quarter 2013.
Net income was $12.2 million for third quarter 2014 compared to $16.3 million in the same period of the prior year. Reported earnings per diluted share were $0.40 in third quarter 2014 compared with $0.53 in third quarter 2013. Third quarter 2014 includes an estimated $0.07 per share of acquisition-related items. The third quarter 2013 included an estimated $0.02 per share impact related to the Super Supplements acquisition offset by a benefit from a lower effective tax rate of $0.02 per share, which primarily reflects the reversal of charges previously recorded related to uncertain tax positions due to the expiration of applicable statutes of limitation.
Balance Sheet and Cash Flow
Cash and equivalents at September 27, 2014 were $32.2 million and the company has no debt. Capital expenditures were $11.8 million in the quarter. Funds were expended on new stores, remodels as well as computer equipment for new stores.
During the quarter, the company repurchased 201,000 shares of its common stock for a total purchase price of $7.8 million.
Subsequent Event
On November 4, 2014, the Company announced that it has entered into an agreement with JPMorgan Chase Bank, N.A. to repurchase $50 million of the Company’s common stock under an accelerated stock repurchase program (ASR). The ASR is part of the Vitamin Shoppe’s previously Board-approved $100 million share repurchase program announced on August 5, 2014. The company will fund the ASR with cash on hand and an existing credit facility.
Outlook
Management expects the following for 2014:
| • | Approximately 60 new stores |
| • | Total comparable sales growth, including e-commerce, of approximately 4% for the year |
| • | EBIT margin decline of approximately 100 basis points compared to 2013 |
| • | Capital expenditures of approximately $40 million |
Preliminary 2015 Outlook
Management expects the following for 2015:
| • | Approximately 60 new stores |
| • | Total comparable sales growth, including e-commerce, of 3% - 5% for the year |
| • | EBIT margin similar to 2014. The first half will be negatively impacted by the inclusion of NutriForce’s results, offset by improvement in the second half. |
Webcast
Management will host a conference call to discuss the third quarter 2014 results at 8:30 a.m. Eastern Time (ET) today. Interested investors and other parties may listen to the simultaneous webcast of the conference call by logging onto the Investor Relations section of the Company’s website at www.vitaminshoppe.com. A telephonic replay will be available beginning at 11:30 a.m. ET on November 4, 2014 and can be accessed by dialing 1-877-870-5176 or 1-858-384-5517 for international callers. The passcode for the replay is 6922679. The replay will be available until 11:59 p.m. ET on November 11, 2014. The webcast will also be archived on the company’s website at www.vitaminshoppe.com in the investor relations section.
About the Vitamin Shoppe, Inc. (NYSE:VSI)
Vitamin Shoppe is a multi-channel specialty retailer and contract manufacturer of nutritional products based in North Bergen, New Jersey. In its stores and on its website, the Company carries one of the most comprehensive retail assortments in the industry, including vitamins,
minerals, specialty supplements, herbs, sports nutrition, homeopathic remedies, green living products, and beauty aids. In addition to offering 900 national brand products, the Vitamin Shoppe also exclusively carries products under The Vitamin Shoppe®, BodyTech®, True Athlete®, MyTrition®, plntTM, ProBioCareTM , Next StepTM, Betancourt and Nutri-Force Sports® brands. The Vitamin Shoppe conducts business through more than 700 company-operated retail stores under The Vitamin Shoppe, Super Supplements and Vitapath retail banners, and primarily through its websites, www.VitaminShoppe.com and www.supersup.com. Follow The Vitamin Shoppe on Facebook at http://www.facebook.com/THEVITAMINSHOPPE and on Twitter at http://twitter.com/VitaminShoppe.
Forward Looking Statements
Certain statements in this press release are “forward-looking statements.” Such forward-looking statements reflect the Company’s current expectations or beliefs concerning future events and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including the strength of the economy, changes in the overall level of consumer spending, the performance of the Company’s products within the prevailing retail environment, trade restrictions, availability of suitable store locations at appropriate terms, the availability of raw materials, compliance with regulations, certifications and best practices with respect to the development, manufacture, sales and marketing of the company’s products and other factors which are further described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2013 and in all filings with the Securities and Exchange Commission made by the Company subsequent to the filing of the Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by law.
| Investor and Analyst Contact | Media Contact | |
| Kathleen Heaney | Meghan Biango | |
| 646-912-3844 | 201-552-6017 | |
| ir@vitaminshoppe.com | meghan.biango@vitaminshoppe.com |
TABLE 1
VITAMIN SHOPPE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 27, | September 28, | September 27, | September 28, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net sales |
$ | 308,910 | $ | 272,472 | $ | 922,964 | $ | 831,042 | ||||||||
| Cost of goods sold |
211,616 | 179,419 | 613,294 | 539,090 | ||||||||||||
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| Gross profit |
97,294 | 93,053 | 309,670 | 291,952 | ||||||||||||
| Selling, general and administrative expenses |
76,745 | 66,951 | 226,708 | 200,585 | ||||||||||||
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| Income from operations |
20,549 | 26,102 | 82,962 | 91,367 | ||||||||||||
| Interest expense, net |
140 | 164 | 325 | 375 | ||||||||||||
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| Income before provision for income taxes |
20,409 | 25,938 | 82,637 | 90,992 | ||||||||||||
| Provision for income taxes |
8,212 | 9,670 | 33,005 | 35,665 | ||||||||||||
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| Net income |
$ | 12,197 | $ | 16,268 | $ | 49,632 | $ | 55,327 | ||||||||
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| Weighted average common shares outstanding |
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| Basic |
30,332,506 | 30,011,914 | 30,327,800 | 29,967,212 | ||||||||||||
| Diluted |
30,710,564 | 30,535,129 | 30,767,854 | 30,504,210 | ||||||||||||
| Net income per common share |
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| Basic |
$ | 0.40 | $ | 0.54 | $ | 1.64 | $ | 1.85 | ||||||||
| Diluted |
$ | 0.40 | $ | 0.53 | $ | 1.61 | $ | 1.81 | ||||||||
TABLE 2
VITAMIN SHOPPE, INC. AND SUBSIDIARY
SEGMENT DATA, KEY PERFORMANCE INDICATORS AND STORE INFO
($ in thousands)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 27, | September 28, | September 27, | September 28, | |||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Net sales: |
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| Retail |
$ | 260,324 | $ | 243,909 | $ | 802,378 | $ | 743,188 | ||||||||
| Direct |
31,337 | 28,563 | 99,148 | 87,854 | ||||||||||||
| Manufacturing |
19,933 | — | 24,947 | — | ||||||||||||
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| Segment net sales |
311,594 | 272,472 | 926,473 | 831,042 | ||||||||||||
| Elimination of intersegment revenues |
(2,684 | ) | — | (3,509 | ) | — | ||||||||||
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| Net sales |
$ | 308,910 | $ | 272,472 | $ | 922,964 | $ | 831,042 | ||||||||
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| Income from operations: |
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| Retail |
$ | 45,919 | $ | 47,386 | $ | 154,355 | $ | 153,615 | ||||||||
| Direct |
4,931 | 5,425 | 17,716 | 16,537 | ||||||||||||
| Manufacturing |
(2,141 | ) | — | (3,012 | ) | — | ||||||||||
| Corporate costs |
(28,160 | ) | (26,709 | ) | (86,097 | ) | (78,785 | ) | ||||||||
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| Income from operations |
$ | 20,549 | $ | 26,102 | $ | 82,962 | $ | 91,367 | ||||||||
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| Increase in total comparable net sales |
3.8 | % | 3.5 | % | 4.2 | % | 4.1 | % | ||||||||
| Increase in comparable store net sales |
3.1 | % | 2.6 | % | 3.1 | % | 3.1 | % | ||||||||
| Gross profit as a percent of net sales |
31.5 | % | 34.2 | % | 33.6 | % | 35.1 | % | ||||||||
| Income from operations as a percent of net sales |
6.7 | % | 9.6 | % | 9.0 | % | 11.0 | % | ||||||||
| Capital Expenditures |
$ | 11,783 | $ | 8,516 | $ | 30,801 | $ | 32,353 | ||||||||
| Depreciation and Amortization |
$ | 8,613 | $ | 6,948 | $ | 25,060 | $ | 20,012 | ||||||||
| Acquisition and integration costs |
$ | 289 | $ | 868 | $ | 4,295 | $ | 3,859 | ||||||||
| Insurance recoveries from Superstorm Sandy |
$ | — | $ | — | $ | — | $ | 1,079 | ||||||||
| Store Data: |
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| Stores open at beginning of period |
678 | 630 | 659 | 579 | ||||||||||||
| Stores opened |
23 | 10 | 44 | 33 | ||||||||||||
| Stores acquired |
— | — | — | 31 | ||||||||||||
| Stores closed |
— | — | (2 | ) | (3 | ) | ||||||||||
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| Stores open at end of period |
701 | 640 | 701 | 640 | ||||||||||||
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| Total retail square footage at end of period (in thous) |
2,523 | 2,334 | 2,523 | 2,334 | ||||||||||||
TABLE 3
VITAMIN SHOPPE, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)
(Unaudited)
| September 27, | December 28, | |||||||
| 2014 | 2013 | |||||||
| ASSETS | ||||||||
| Current assets: |
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| Cash and cash equivalents |
$ | 32,161 | $ | 74,036 | ||||
| Accounts receivable, net of allowance of $1,051 in 2014 |
10,105 | — | ||||||
| Inventories |
192,032 | 163,921 | ||||||
| Prepaid expenses and other current assets |
45,801 | 37,228 | ||||||
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| Total current assets |
280,099 | 275,185 | ||||||
| Property and equipment, net of accumulated depreciation and amortization of $231,270 and $207,928 in 2014 and 2013, respectively |
138,293 | 120,142 | ||||||
| Goodwill |
243,756 | 210,633 | ||||||
| Other intangibles, net |
89,425 | 71,264 | ||||||
| Other assets |
2,832 | 4,840 | ||||||
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| Total assets |
$ | 754,405 | $ | 682,064 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
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| Accounts payable |
$ | 35,811 | $ | 39,106 | ||||
| Accrued expenses and other current liabilities |
76,364 | 63,738 | ||||||
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| Total current liabilities |
112,175 | 102,844 | ||||||
| Deferred income taxes |
16,812 | 11,588 | ||||||
| Deferred rent |
38,942 | 36,032 | ||||||
| Other long-term liabilities |
710 | 3,260 | ||||||
| Commitments and contingencies |
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| Stockholders’ equity: |
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| Preferred stock, $0.01 par value; 250,000,000 shares authorized and no shares issued and outstanding at September 27, 2014 and December 28, 2013 |
— | — | ||||||
| Common stock, $0.01 par value; 400,000,000 shares authorized, 30,925,439 shares issued and 30,870,071 shares outstanding at September 27, 2014, and 30,531,550 shares issued and 30,525,234 shares outstanding at December 28, 2013 |
309 | 305 | ||||||
| Additional paid-in capital |
312,441 | 302,314 | ||||||
| Treasury stock, at cost; 55,368 shares at September 27, 2014 and 6,316 shares at December 28, 2013 |
(2,600 | ) | (280 | ) | ||||
| Accumulated other comprehensive loss |
(103 | ) | (86 | ) | ||||
| Retained earnings |
275,719 | 226,087 | ||||||
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| Total stockholders’ equity |
585,766 | 528,340 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 754,405 | $ | 682,064 | ||||
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