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| 8-K - FORM 8-K - Youngevity International, Inc. | ygyi8k_may122017.htm |
Exhibit
99.1
Youngevity International Announces First Quarter 2017
Results
Shareholder Conference Call at 4:15 PM
EDT
Revenues
increased 1.4% over the prior-year period to $38.7
million
Coffee segment delivers strong revenue growth and improvements in
other key financial metrics
SAN
DIEGO, CA--(May 12, 2017) - Youngevity International, Inc.
(OTCQX: YGYI), a leading omni-direct
lifestyle company, today reported financial results for the first
quarter ended March 31, 2017
Steve
Wallach, CEO of Youngevity International stated, ‘We have
invested significantly in marketing efforts, compliance efforts,
global infrastructure, and a comprehensive rebranding strategy that
began in the fourth quarter of last year and carried over into the
first quarter of this year. The compliance effort and enforcement
measures created revenue drag on our direct selling segment into
the first quarter. We believe these were necessary measures and as
a result, the Company is better positioned for continued growth.
The month of March showed a significant increase in revenues which
we believe is sustainable as we move through
2017.”
Dave
Briskie, President and CFO said, “The first quarter of 2017
illustrates our commitment to continue to implement our growth
strategies and to simultaneously focus on managing that process.
This affected our direct selling segment, which experienced
significant and necessary additional expenses for the first
quarter. Although this had a negative impact on our bottom line we
are confident our omni direct platform is gaining acceptance
throughout the enterprise. We were pleased with the performance of
the coffee segment and we are bullish that growth will continue for
this segment.”
First Quarter 2017 Financial Results
For
the three months ended March 31, 2017, our revenue increased 1.4%
to $38.7 million as compared to $38.2 million in the same period
last year. During the three months ended March 31, 2017, we
derived approximately 86% of our revenue from our direct sales and
approximately 14% of our revenue from our commercial coffee sales.
Direct selling segment revenues decreased by $1.6 million or 4.5%
to $33.2 million as compared to the three months ended March 31,
2016. This decrease was primarily attributed to a decrease in
existing business as a result of general weakness in this segment
during the first two months of the quarter. Commercial coffee
segment revenues increased by $2.1 million or 61.3% to $5.5 million
compared to the same period last year. Revenues increased in both
our coffee roasting business and green coffee
business.
Gross
profit decreased approximately 6.4% to $21.9 million for the three
months ended March 31, 2017, as compared to $23.4 million in the
same period last year. Gross profit in the direct selling segment
decreased by 7.0% to $21.9 million from $23.5 million in the prior
period as a result of the lower revenues and an increase in sales
with lower margin products. Gross profit in the commercial
coffee segment improved to $11,000 in the current quarter, compared
to a loss of $127,000 in the same period last year.
Operating
expenses increased approximately 9.3% to $24.3 million for the
three months ended March 31, 2017, as compared to $22.2 million in
the same period last year.
A
breakdown of operating expenses is as follows: Sales and marketing
expense increased to $3.7 million in the current period from $1.8
million in the same period last year, primarily due to increased
activity in distributor events and an increase in marketing and
consulting costs as the Company is revamping its marketing content,
including video content and a re-branding and packaging effort.
General and administrative expense increased 16.9% to $5.2 million
in the current period from $4.4 million in the same period last
year, primarily due to increases in costs related to the
international expansion efforts, consulting fees, amortization
costs, web platform costs and travel costs.
For
the three months ended March 31, 2017, the Company reported a net
loss of $2.1 million as compared to net income of $151,000 in the
same period last year. The primary reason for the increase in net
loss when compared to the prior period was due to the decrease in
gross profit and increase in operating expenses discussed
above.
EBITDA
(earnings before interest, income taxes, depreciation and
amortization) as adjusted to remove the effect of stock based
compensation expense and the change in the fair value of the
warrant derivative or "Adjusted EBITDA," decreased to negative $1.2
million for the three months ended March 31, 2017 compared to $2.2
million in the same period last year.
Conference Call Information
Management
will host a conference call today at 4:15 PM Eastern Daylight Time
(1:15 PM Pacific Daylight Time), to discuss the Company's first
quarter financial results, for the quarter ended March 31, 2017.
Investors can access the conference call by dialing: 213-929-4232
and entering the access code 286-165-581. It is advised that you
dial-in at least five minutes prior to the call. The conference
call will be recorded and available for replay shortly after the
conclusion of the call. Recorded calls are available in the
Investor Relations section of Youngevity International's
website: http://ygyi.com/calls.php
Non-GAAP Financial Measure - 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, amortization, stock based
compensation expense and change in the fair value of the
warrant derivative, 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 of Adjusted EBITDA to net loss is provided in the
tables at the end of this press release.
About Youngevity International
Youngevity
International, Inc. (OTCQX: YGYI) (www.YGYI.com) is a
fast-growing, innovative, multi-dimensional company that offers a
wide range of consumer products and services, primarily through
person-to-person selling relationships that comprise a "network of
networks." The Company also is a vertically-integrated producer of
the finest coffees for the commercial, retail and direct sales
channels. The Company was formed after the merger of Youngevity
Essential Life Sciences (www.youngevity.com) and Javalution Coffee
Company in the summer of 2011. The Company was formerly known as AL
International, Inc. and changed its name to Youngevity
International Inc. in July 2013. For more information,
visit www.YGYI.com or find us on
Facebook https://www.facebook.com/Youngevity or follow us
on Twitter
@youngevity https://twitter.com/youngevity.
Safe Harbor Statement
This
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. In some cases
forward-looking statements can be identified by terminology such as
"may," "should," "potential," "continue," "expects," "anticipates,"
"intends," "plans," "believes," "estimates," and similar
expressions, and include statements regarding our belief that these were necessary
measures and as a result, the Company is better positioned for
continued growth, that the significant increase in revenues during
March 2017 is sustainable as we move through 2017 and the continued
growth of the coffee segment. 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 our distribution, our
ability to add additional products (whether developed internally or
through acquisitions), our ability to continue our financial
performance, and the other factors discussed in our Annual Report
on Form 10-K for the year ended December 31, 2016 and our
subsequent filings with the SEC, including subsequent periodic
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.
Table
follows
Youngevity International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In
thousands)
(Unaudited)
|
|
Three Months Ended
March 31,
|
|
|
|
2017
|
2016
|
|
|
|
|
|
Revenues
|
$38,733
|
$38,202
|
|
Cost
of revenues
|
16,867
|
14,839
|
|
Gross
profit
|
21,866
|
23,363
|
|
Operating
expenses
|
|
|
|
Distributor
compensation
|
15,419
|
15,974
|
|
Sales
and marketing
|
3,675
|
1,801
|
|
General
and administrative
|
5,172
|
4,425
|
|
Total
operating expenses
|
24,266
|
22,200
|
|
Operating
(loss) income
|
(2,400)
|
1,163
|
|
Change
in the fair value of warrant derivative liability
|
610
|
650
|
|
Interest
expense, net
|
(1,197)
|
(1,104)
|
|
Total
other expense
|
(587)
|
(454)
|
|
Net
(loss) income before income taxes
|
(2,987)
|
709
|
|
Income tax
(benefit) provision
|
(928)
|
558
|
|
Net
(loss) income
|
$(2,059)
|
$151
|
Reconciliation of Non-GAAP Measure
Adjusted EBITDA to Net (Loss) Income
(In
thousands)
|
|
Three Months Ended
March 31,
|
|
|
|
2017
|
2016
|
|
Net
(loss) income
|
$(2,059)
|
$151
|
|
Add:
|
|
|
|
Interest,
net
|
1,197
|
1,104
|
|
Income
taxes (benefit) provision
|
(928)
|
558
|
|
Depreciation
|
391
|
399
|
|
Amortization
|
645
|
604
|
|
EBITDA
|
(754)
|
2,816
|
|
Add:
|
|
|
|
Stock
based compensation
|
127
|
70
|
|
Change
in the fair value of warrant derivative
|
(610)
|
(650)
|
|
Adjusted
EBITDA
|
$(1,237)
|
$2,236
|
CONTACT INFORMATION
Contacts:
Youngevity International
Dave Briskie
President and Chief Financial Officer
1 800 982 3189 X6500
Investors:
Chuck Harbey
PCG Advisory Group
charbey@pcgadvisory.com
646.863.7997
Media Contact:
Bobbie Wasserman for Youngevity
bobbie@wave2alliances.com
P: 866.570.4441