Attached files
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| 8-K - 8-K - JRjr33, Inc. | a1207168kpressrelease.htm |
Exhibit 99.1
JRJR NETWORKS FILES SECOND QUARTER 10-Q
Q2 REVENUE OF $36.4 MILLION EVEN COMPARED TO PRIOR YEAR;
YTD REVENUE OF $72.5 MILLION, A 30% INCREASE OVER THE PRIOR YEAR;
For Immediate Release
(Dallas, TX, December 6, 2016) - JRjr33, Inc., doing business as JRJR Networks [NYSE MKT: JRJR] today announced it has filed its Form 10-Q for the period ended June 30, 2016.
In addition, the Company has filed an amended Form 10-Q for the period ended June 30, 2015. Following the Form 8-K filed on September 19, 2016, the Company identified several issues which triggered a restatement of the prior year financials.
John Rochon, Founder and Chairman of JRJR Networks, commented, “We are pleased to report substantially higher year over year revenues resulting in $16.6 million of incremental sales mostly arriving from our newly acquired entity Betterware in the UK. While we remain focused on integrating efficiencies into the costs structure of our platform companies, these efforts were not yet realized in the June quarter due to the timing of the acquisition and additional costs related to regaining compliancy of our public filings.
Having spent the best part of 2015 and 2016 integrating the sales, marketing and operations of 10 businesses, operating in over 50 countries, with in excess of 70,000 sales personnel, into the Company. We are pleased with this substantial year-over-year expansion in revenues. The hard work of our team has borne fruit and has set the table to take the Company’s strategic development plan forward.
With our filing of the June 30, 2016 Form 10-Q, we achieved a very large milestone in filing our Q within the plan period approved by the New York Stock Exchange. We are diligently working on our September 30, 2016 Form 10-Q,
Once we regain compliancy with the Exchange, we believe there are several interesting opportunities currently under review that should continue to enhance the brand and business model we are committed to. We look forward to beginning 2017 with a series of operating initiatives focused on brand supremacy, sales penetration and additional operational enhancements.”
Financial Highlights
Revenue for the second quarter was approximately $36.4 million, which is comparable to last year’s revenue of $36.0 million. The revenue for the six months ended June 30, 2016 was approximately $72.5 million, compared to $55.9 million during the same period the prior year, an increase of $16.6 million, or 30%.
Net revenue for the second quarter was approximately $30.1 million, which is comparable to last year’s net revenue of $30.5 million. The net revenue for the six months ended June 30, 2016 was approximately $60.3 million, compared to $47.8 million during the same period the prior year, an increase of $12.5 million, or 26%.
Gross profit was approximately $20.8 million, compared to $21.0 which is about equal to the second quarter last year. The gross profit for the six months ended June 30, 2016 was approximately $40.6 million, compared to $33.1 million during the same period the prior year, an increase of $7.5 million, or 23%.
Gross profit margin during the quarter was 57% of revenue, compared to 58% of revenue in the prior year. The gross profit margin for the six months ended June 30, 2016 was 56%, compared to 59% during the same period the prior year, a decrease of 3%.
Operating loss for the second quarter increased to approximately $(4.5) million, compared to $(3.3) million in the prior year, a change of $1.2 million. The operating loss increased to approximately $(11.3) million, compared to $(7.5) million in the prior year, a change of $3.8 million. The operating loss increased in the second quarter due to a decrease in the gross profit as well as an increase in operating expenses of approximately $1.1 million due to the addition of Betterware. Betterware added approximately $4.2 million of operating expenses in the quarter which means that the Company has organically reduced operating expenses compared to last year.
Net loss attributable to JRjr33, Inc. for the second quarter was approximately $(4.6) million, or a loss of 13% of revenue, increased compared to the $(3.0) million, or a loss of 8% of revenue, experienced during the second quarter of last year. The net loss attributable to JRjr33, Inc. for the six months ended June 30, 2016 was approximately $(11.4) million, or a loss of 16% of revenue, compared to $(7.1) million, or a loss of 13% of revenue, during the same period the prior year, an increase of $4.3 million. The net loss in the second quarter increased as a result of the increase in operating losses as well as the increase in interest expense as a result of the company taking on additional debt in the fourth quarter of last year as well $0.2 million in late filing penalties to Dominion.
Adjusted EBITDA (losses) for the quarter was approximately $(2.4) million, or a loss of 7% of revenue, which has increased from the prior year’s loss of $(1.0) million, or a loss of 3% of revenue. The adjusted EBITDA (losses) for the six months ended June 30, 2016 was approximately $(6.3) million, or a loss of 9% of revenue, which has increased from the prior year’s loss of $(4.1) million, or a loss of 7% of revenue. The
EBITDA loss increased in the second quarter for the same reasons as the operating loss, a decrease in gross profit and an increase in operating expenses due to the addition of Betterware.
As the Company will hold a conference call Wednesday December 7th at 4:30 p.m. Eastern Time, to discuss the company's second quarter 2016 financial results.
To participate in the conference call, please dial toll free (888) 437 - 9366. Please use conference pass code 9757078.
For international callers, please dial (toll) (719) 325-2351, with the same pass code.
An audio replay of the conference call will be available in the investor relations section of the Company's website following completion of the call for approximately 10 business days.
JRjr33, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share data) | June 30, 2016 | December 31, 2015 | ||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 2,196 | $ | 6,482 | ||||
Marketable securities | 1,247 | 5,306 | ||||||
Accounts receivable, net | 5,036 | 4,828 | ||||||
Inventory, net | 19,310 | 20,799 | ||||||
Other current assets | 4,235 | 2,303 | ||||||
Total current assets | 32,024 | 39,718 | ||||||
Assets held for sale | 998 | 1,111 | ||||||
Restricted cash | — | 2,857 | ||||||
Sale leaseback security deposit | 4,414 | 4,414 | ||||||
Property, plant and equipment, net | 4,687 | 5,387 | ||||||
Property under capital leases, net | 14,053 | 14,654 | ||||||
Goodwill | 5,146 | 5,427 | ||||||
Intangibles, net | 8,088 | 8,801 | ||||||
Other assets | 37 | 135 | ||||||
Total assets | $ | 69,447 | $ | 82,504 | ||||
Liabilities and stockholders’ equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 15,144 | $ | 15,937 | ||||
Related party payables | 1,799 | 1,605 | ||||||
Accrued commissions | 4,314 | 3,033 | ||||||
Accrued liabilities | 8,397 | 7,303 | ||||||
Deferred revenue | 2,879 | 2,307 | ||||||
Taxes payable | 5,444 | 4,830 | ||||||
Current portion of long-term debt | 8,627 | 3,048 | ||||||
Other current liabilities | 857 | 777 | ||||||
Total current liabilities | 47,461 | 38,840 | ||||||
Deferred tax liability | 780 | 744 | ||||||
Long-term debt, less current portion | 6,077 | 12,784 | ||||||
Capital lease obligation, less current portion | 16,057 | 16,332 | ||||||
Other long-term liabilities | 2,870 | 2,864 | ||||||
Total liabilities | 73,245 | 71,564 | ||||||
Commitments and contingencies (Note 12) | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, par value $0.001 per share, 500,000 authorized; -0-issued and outstanding | — | — | ||||||
Common stock, par value $0.0001 per share, 250,000,000 shares authorized; 35,993,324 and 35,718,279 shares issued and outstanding, at June 30, 2016 and at December 31, 2015 respectively | 4 | 4 | ||||||
Additional paid-in capital | 59,166 | 58,837 | ||||||
Accumulated other comprehensive loss | (2,056 | ) | (586 | ) | ||||
Accumulated deficit | (56,642 | ) | (45,255 | ) | ||||
Total stockholders’ equity attributable to JRjr33, Inc. | 472 | 13,000 | ||||||
Stockholders’ equity attributable to non-controlling interest | (4,270 | ) | (2,060 | ) | ||||
Total stockholders’ equity | (3,798 | ) | 10,940 | |||||
Total liabilities and stockholders’ equity | $ | 69,447 | $ | 82,504 | ||||
JRjr33, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(in thousands, except share and per common share data) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
Revenue | $ | 36,414 | $ | 36,028 | $ | 72,489 | $ | 55,906 | ||||||||
Program costs and discounts | (6,292 | ) | (5,553 | ) | (12,194 | ) | (8,124 | ) | ||||||||
Net revenues | 30,122 | 30,475 | 60,295 | 47,782 | ||||||||||||
Costs of sales | 9,274 | 9,468 | 19,726 | 14,658 | ||||||||||||
Gross profit | 20,848 | 21,007 | 40,569 | 33,124 | ||||||||||||
Distributor expense | 9,224 | 9,269 | 18,656 | 15,769 | ||||||||||||
Selling expense | 4,729 | 4,299 | 9,251 | 6,609 | ||||||||||||
General and administrative expense | 10,726 | 10,103 | 22,499 | 18,536 | ||||||||||||
Share based compensation expense | 49 | (30 | ) | 50 | (1,197 | ) | ||||||||||
Depreciation and amortization | 696 | 492 | 1,368 | 771 | ||||||||||||
Gain on sale of assets | (70 | ) | (40 | ) | (112 | ) | (83 | ) | ||||||||
Impairment of goodwill | — | 192 | 191 | 192 | ||||||||||||
Operating loss | (4,506 | ) | (3,278 | ) | (11,334 | ) | (7,473 | ) | ||||||||
Gain on sale of marketable securities | (7 | ) | — | (9 | ) | (192 | ) | |||||||||
Interest expense, net | 1,037 | 565 | 1,868 | 1,164 | ||||||||||||
Loss before income tax provision | (5,536 | ) | (3,843 | ) | (13,193 | ) | (8,445 | ) | ||||||||
Income tax provision | 334 | 195 | 410 | 386 | ||||||||||||
Net loss | (5,870 | ) | (4,038 | ) | (13,603 | ) | (8,831 | ) | ||||||||
Net loss attributable to non-controlling interest | 1,253 | 1,016 | 2,216 | 1,686 | ||||||||||||
Net loss attributable to JRjr33, Inc. | $ | (4,617 | ) | $ | (3,022 | ) | $ | (11,387 | ) | $ | (7,145 | ) | ||||
Basic and diluted loss per share: | ||||||||||||||||
Weighted average common shares outstanding | 35,892,137 | 34,367,095 | 35,912,156 | 32,017,582 | ||||||||||||
Loss per common share attributable to JRjr33, Inc., basic and diluted | $ | (0.13 | ) | $ | (0.09 | ) | $ | (0.32 | ) | $ | (0.22 | ) | ||||
JRjr33, Inc.
EBITDA (losses) Reconciliation
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2,015 | 2,016 | 2,015 | ||||||||||||
Net loss | $ | (5,870 | ) | $ | (4,038 | ) | $ | (13,603 | ) | $ | (8,831 | ) | |||
Interest, net | 1,037 | 565 | 1,868 | 1,164 | |||||||||||
Income tax expense | 334 | 195 | 410 | 386 | |||||||||||
Depreciation and amortization | 837 | 633 | 1,649 | 1,053 | |||||||||||
EBITDA (losses) | (3,662 | ) | (2,645 | ) | (9,676 | ) | (6,228 | ) | |||||||
Capital market expenses | 107 | 361 | 243 | 835 | |||||||||||
M&A expenses | 432 | 312 | 825 | 642 | |||||||||||
M&A infrastructure expense | 614 | 778 | 1,289 | 1,497 | |||||||||||
Other EBITDA Adjustments | 134 | 223 | 1,013 | (887 | ) | ||||||||||
Adjusted EBITDA (losses) | $ | (2,375 | ) | $ | (971 | ) | $ | (6,306 | ) | $ | (4,141 | ) | |||
Cautionary Note Regarding Adjusted EBITDA:
This news release includes information on Adjusted EBITDA, which is a non-GAAP financial measure as defined by SEC Regulation G.
Management believes that Adjusted EBITDA, when viewed with our results under GAAP and the accompanying reconciliations, provides useful information about our period-over-period growth. Adjusted EBITDA is presented because management believes it provides additional information with respect to the performance of our fundamental business activities and is also frequently used by securities analysts, investors and other interested parties in the evaluation of comparable companies. We also rely on Adjusted EBITDA as a primary measure to review and assess the operating performance of our company and our management team.
Adjusted EBITDA is a non-GAAP financial measure. We calculate adjusted EBITDA by taking net income, and adding back the expenses related to interest, income taxes, depreciation, and amortization, stock compensation expenses, non-cash compensation, deferred rent, inventory write-off adjustments, gains/losses in relation to the sale of an asset, asset impairment costs such as goodwill or other identifiable intangible impairment, asset fair value adjustments, and debt forgiveness expenses, as each of those elements are calculated in accordance with GAAP. Adjusted EBITDA should not be construed as a substitute for net income (loss) (as determined in accordance with GAAP) for the purpose of analyzing our operating performance or financial position, as Adjusted EBITDA is not defined by GAAP. A reconciliation is provided above in this press release.
About JRJR Networks (www.jrjrnetworks.com)
JRJR Networks is a growing platform of direct-to-consumer brands. Within JRJR Networks, each company retains its separate identity, sales force, product line and compensation plan, while JRJR Networks seeks synergies and efficiencies in operational areas. In addition to Your Inspiration at Home, JRJR Networks companies currently include The Longaberger Company, a 42-year old maker of hand-crafted baskets and other home decor items; Tomboy Tools, a direct seller of tools designed for women; Agel Enterprises, a global seller of nutritional products in gel form as well as a skin care line, operating in 40 countries; Paperly, which offers a line of custom stationery and other personalized products; Uppercase Living, which offers a line of customizable vinyl expressions for display on walls in the home; Kleeneze, a 95-year old UK-based catalog seller of cleaning, health, beauty, home, outdoor and a variety of other products, and Betterware, a UK-based home catalog seller. JRJR Networks also includes Happenings, a lifestyle publication and marketing company.
Cautionary Note Regarding Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," or "will" or the negative of these terms or other comparable terminology and include statements regarding the expected timing of the filing of the Form 10-Q for the period ended June 30, 2016, the continued sales force and employee performance and our continued growth. These forward-looking statements are based on management's expectations and assumptions as of the date of this press release and are subject to a number of risks and uncertainties, many of which are difficult to predict that could cause actual results to differ materially from current expectations and assumptions from those set forth or implied by any forward-looking statements. Important factors that could cause actual results to differ materially from current expectations include, among others, our ability to expand leadership activities in support of our sales, our ability to continue to grow, our ability to integrate the entities that we have acquired, our ability to strengthen our internal controls and the other risks outlined under "Risk Factors" in our Annual Report on Form 10-K for our fiscal year ended December 31, 2015 and our other filings with the SEC, including subsequent reports on Forms 10-Q and 8-K. The information in this release is provided only as of the date of this release, and we undertake no obligation to update any forward-looking statements contained in this release on account of new information, future events, or otherwise, except as required by law.
Contact:
Investor Relations: Tucker Gagen (tucker.gagen@jrjrnetworks.com)
Media Contact: Brenton Baker (brenton.baker@jrjrnetworks.com)