Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Youngevity International, Inc. | ygyi8k_aug102017.htm |
Exhibit
99.1
Youngevity International Announces
Second Quarter 2017 Results
Shareholder Conference Call at 4:15 PM EDT
Highlights:
Revenues
increased $2.8 million versus first quarter
Direct Selling
Segment Revenue Increases 6.9% over first
quarter
Coffee Segment
Revenue Increases 9.1% over first quarter
Adjusted EBITDA is $745 Thousand versus a $1.24 million loss in the
first quarter
SAN
DIEGO, CA--(August 10, 2017) - Youngevity
International, Inc. (NASDAQ: YGYI ), a
leading omni-direct lifestyle company, today reported financial
results for the second quarter and six months ended June 30,
2017.
Steve
Wallach, CEO and Co-Founder of Youngevity stated, “We are
encouraged to see our revenue and adjusted EBITDA bounce back from
the levels achieved in the last two quarters. A 7.2% revenue
increase over last quarter and a nearly $2 million improvement in
adjusted EBITDA over the last quarter is certainly a move in the
right direction. As our plans for international growth gain
traction we anticipate a return to quarter over prior quarter
growth.”
Youngevity
President and CFO, Dave Briskie stated, “Following the fourth
quarter of 2016 and the first quarter of 2017 which we felt were
lackluster our executive team has refocused and increased its
commitment toward driving consolidated revenue growth,
strengthening our adjusted EBITDA, accelerating our international
sales, and driving top line revenue growth for our coffee segment.
In the second quarter, we made solid progress in each of these key
metrics and we will be measuring our performance in these areas in
the coming quarters with an expectation of continued progress for
the remainder of 2017 and into 2018.”
SECOND QUARTER 2017 FINANCIAL RESULTS
For the three months ended June 30, 2017, our revenue decreased
2.3% to $41,527,000 as compared to $42,500,000 for the three months
ended June 30, 2016. During the three months ended June 30,
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
$1,481,000 or 4.0% to $35,538,000 as compared to $37,019,000 for
the three months ended June 30, 2016. Commercial coffee segment
revenues increased by $508,000 or 9.3% to $5,989,000 for the three
months ended June 30, 2017, as compared to $5,481,000 for the three
months ended June 30, 2016. This increase was primarily attributed
to increased revenues in our coffee roasting and green coffee
business.
For the three months ended June 30, 2017, gross profit decreased
approximately 5.2% to $24,102,000 as compared to $25,431,000 for
the same period in the prior year. Overall gross profit as a
percentage of revenues decreased to 58.0%, compared to 59.8% in the
same period last year. This decrease was primarily as a result of
increased direct costs which adversely impacted the commercial
coffee segment gross margins.
For the three months ended June 30, 2017, operating expenses
increased approximately 3.6% to $24,778,000 as compared to
$23,907,000 for the same period in the prior year.
A breakdown of operating expenses is as follows: Distributor
compensation expense decreased 0.7% to $16,686,000 for the three
months ended June 30, 2017 from $16,796,000 for the same period in
the prior year primarily due to the decrease in
revenues. Sales
and marketing expense increased 10.0% to $2,901,000 for the three
months ended June 30, 2017 from $2,637,000 for the same period in
the prior year primarily due to increases in marketing staff and
related costs as the Company is revamping its marketing content.
General and administrative expense increased 16.0% to $5,191,000
from $4,474,000 for the three months ended June 30, 2016 primarily
due to increases in costs related to the international expansion,
legal fees, investor relations, wages and related benefits,
amortization and stock based compensation costs, computer and
internet related costs and travel costs. In addition, the
contingent liability revaluation resulted in a benefit of $680,000
for the three months ended June 30, 2017 compared to a benefit of
$480,000 for the three months ended June 30,
2016.
For the three months ended June 30, 2017, total other expense
increased by $1,026,000 to $2,599,000 as compared to $1,573,000 for
the same period in the prior year. Total other expense is net
interest expense of $1,258,000 and the change in the fair value of
warrant derivative of $1,341,000.
For the three months ended June 30, 2017, the Company reported a
net loss of $2,730,000 as compared to a net loss of $109,000 for
the same period in the prior year. The increase in net loss was due
to a net loss before income taxes of $3,275,000 in 2017 compared to
a net loss before income taxes in 2016 of $49,000 offset by a tax
benefit of $545,000 in 2017 when compared to a $60,000 tax
provision in 2016.
Adjusted EBITDA
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 $745,000 for
the three months ended June 30, 2017 compared to $2,564,000 for the
three months ending June 30, 2016.
Fiscal 2017 First Six Months Results
For the six months ended June 30, 2017, our revenue decreased 0.6%
to $80,260,000 as compared to $80,702,000 for the same period in
the prior year. During the six months ended June 30, 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 $3,037,000 or 4.2% to
$68,780,000 as compared to $71,817,000 for the same period in the
prior year. Commercial coffee segment revenues increased by
$2,595,000 or 29.2% to $11,480,000 as compared to $8,885,000 for
the same period in the prior year. This increase was primarily
attributed to increased revenues in our coffee roasting business
and green coffee business.
For the six months ended June 30, 2017, gross profit decreased
approximately 5.8% to $45,968,000 as compared to $48,794,000 for
the same period in the prior year. Overall gross profit as a
percentage of revenues decreased to 57.3%, compared to 60.5% in the
same period last year. This decrease was primarily as a result of
increased direct costs which adversely impacted the commercial
coffee segment gross margins.
For the six months ended June 30, 2017, our operating expenses
increased approximately 6.4% to $49,044,000 as compared to
$46,107,000 for the same period in the prior year.
For the six months ended June 30, 2017, total other expense
increased by $1,159,000 to $3,186,000 as compared to $2,027,000 for
the same period in the prior year. Total other expense is net
interest expense of $2,455,000 and the net change in the fair value
of warrant derivative of $731,000.
For the six months ended June 30, 2017, the Company reported a net
loss of $4,789,000 as compared to net income of $42,000 for the
same period in the prior year.
Adjusted EBITDA
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 a
negative $492,000 for the six months ended June 30, 2017 compared
to $4,800,000 for the six months ending June 30, 2016.
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 second
quarter financial results, for the quarter ended June 30, 2017.
Investors can access the conference call by dialing: 877-388-7629.
No access code is needed to join the call. 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. An archived replay of the call
will be available for approximately 6 months 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, Inc.
Youngevity
International, Inc. ( NASDAQ : YGYI ), is a
leading omni-direct lifestyle company -- offering a hybrid of the
direct selling business model, that also offers e-commerce and the
power of social selling. Assembling a virtual Main Street of
products and services under one corporate entity, Youngevity offers
products from the six top selling retail categories:
health/nutrition, home/family, food/beverage (including coffee),
spa/beauty, apparel/jewelry, as well as innovative
services. The Company was formed in the course of the summer
2011 merger of Youngevity Essential Life Sciences with
Javalution® Coffee Company (now part of the company's food and
beverage division). The resulting company became Youngevity
International, Inc. in July 2013. For investor information,
please visit YGYI.com. Be sure to like us
on Facebook and follow us on Twitter.
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 includes statements regarding the planned
international growth, the anticipated return to quarter over
quarter growth and continued improvement in adjusted EBITDA in
third and fourth quarters of this year and the expected continued
progress for the remainder of 2017 and 2018. 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 continue our international
growth, our ability to continue to maintain compliance with the
NASDAQ requirements, the acceptance of the omni-direct approach by
our customers, 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
June 30,
|
Six Months Ended
June 30,
|
||
|
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
|
|
Revenues
|
$41,527
|
$42,500
|
$80,260
|
$80,702
|
|
Cost
of revenues
|
17,425
|
17,069
|
34,292
|
31,908
|
|
Gross
profit
|
24,102
|
25,431
|
45,968
|
48,794
|
|
Operating
expenses
|
|
|
|
|
|
Distributor
compensation
|
16,686
|
16,796
|
32,105
|
32,770
|
|
Sales
and marketing
|
2,901
|
2,637
|
6,576
|
4,438
|
|
General
and administrative
|
5,191
|
4,474
|
10,363
|
8,899
|
|
Total
operating expenses
|
24,778
|
23,907
|
49,044
|
46,107
|
|
Operating
(loss) income
|
(676)
|
1,524
|
(3,076)
|
2,687
|
|
Change
in the fair value of warrant derivative
|
(1,341)
|
(484)
|
(731)
|
166
|
|
Interest
expense, net
|
(1,258)
|
(1,089)
|
(2,455)
|
(2,193)
|
|
Total
other expense
|
(2,599)
|
(1,573)
|
(3,186)
|
(2,027)
|
|
Net
(loss) income before income taxes
|
(3,275)
|
(49)
|
(6,262)
|
660
|
|
Income
tax (benefit) provision
|
(545)
|
60
|
(1,473)
|
618
|
|
Net
(loss) income
|
$(2,730)
|
$(109)
|
$(4,789)
|
$42
|
Reconciliation of Non-GAAP Measure
Adjusted EBITDA to Net (Loss) Income
(In thousands - unaudited)
|
|
Three Months Ended
June 30,
|
Six Months Ended J
une 30,
|
||
|
|
2017
|
2016
|
2017
|
2016
|
|
Net
(loss) income
|
$(2,730)
|
$(109)
|
$(4,789)
|
$42
|
|
Add:
|
|
|
|
|
|
Interest
|
1,258
|
1,089
|
2,455
|
2,193
|
|
Income
taxes
|
(545)
|
60
|
(1,473)
|
618
|
|
Depreciation
|
373
|
379
|
764
|
778
|
|
Amortization
|
690
|
605
|
1,335
|
1,209
|
|
EBITDA
|
(954)
|
2,024
|
(1,708)
|
4,840
|
|
Add:
|
|
|
|
|
|
Stock
based compensation
|
358
|
56
|
485
|
126
|
|
Change
in the fair value of warrant derivative
|
1,341
|
484
|
731
|
(166)
|
|
Adjusted
EBITDA
|
$745
|
$2,564
|
$(492)
|
$4,800
|
Contacts:
Youngevity
International, Inc
Dave
Briskie
President and Chief
Financial Officer
1 800
982 3189 X6500
Investors:
Chuck
Harbey
PCG
Advisory
Group
charbey@pcgadvisory.com
646.863.7997