Attached files
file | filename |
---|---|
8-K - CURRENT REPORT - Youngevity International, Inc. | ygyi8k_nov132017.htm |
Exhibit
99.1
Youngevity
International Announces Record Third Quarter
Revenues
Shareholder Conference Call today at 4:15 PM
EDT
Highlights:
International Revenue in Direct Selling Division Up 36% Led by
Asia
Coffee Division Revenue Up 29.2%
Green Coffee Distribution and
Café La Rica Drive Growth
SAN
DIEGO, CA--(November 13, 2017) - Youngevity
International, Inc. (NASDAQ: YGYI ), a
leading omni-direct lifestyle company, today reported financial
results for the third quarter and nine months ended September 30,
2017.
Steve
Wallach, CEO and Co-Founder of Youngevity stated, “I am
pleased to see the performance of our international markets
contribute to the top line of our direct selling business. We have
invested heavily in establishing a global footprint and we believe
that we will begin to enjoy returns on these significant
investments in the coming quarters. I am equally pleased to see the
revenue growth taking place in our Coffee Division, especially the
sales success taking place with our Café La Rica™ Brand.
We expect the strength of this brand has significant potential to
bring shareholder value.”
Youngevity
President and CFO, Dave Briskie stated, “We invested heavily
in creating a platform that is capable of creating top line revenue
growth throughout a number of verticals and in various markets
across the globe. We anticipate that we will be able to leverage
our platform and drive top line growth. With that said, as we
complete 2017 and move through 2018 we will focus on our plans to
improve our profitability, expand our liquidity, and strengthen our
balance sheet.”
THIRD QUARTER 2017 FINANCIAL RESULTS
For the three months ended September 30, 2017, our revenue
increased 1.9% to $44,395,000 as compared to $43,562,000 for the
three months ended September 30, 2016. During the three months
ended September 30, 2017, we derived approximately 85% of our
revenue from our direct sales and approximately 15% of our revenue
from our commercial coffee sales. Direct selling segment
revenues decreased by $622,000 or 1.6% to $37,954,000 as compared
to $38,576,000 for the three months ended September 30, 2016.
Commercial coffee segment revenues increased by $1,455,000 or 29.2%
to $6,441,000 in the current quarter as compared to $4,986,000 for
the same period last year. This increase was primarily attributed
to increased revenues in our green coffee business.
For the three months ended September 30, 2017, gross profit
decreased approximately 2.3% to $25,764,000 as compared to
$26,368,000 for the three months ended September 30, 2016. Overall
gross profit as a percentage of revenues decreased to 58.0%,
compared to 60.5% in the same period last year.
For the three months ended September 30, 2017, our operating
expenses increased approximately 6.9% to $27,581,000 as compared to
$25,792,000 for the three months ended September 30,
2016.
A breakdown of operating expenses is as follows: Distributor
compensation decreased 3.9% to $17,391,000 from $18,101,000 for the
three months ended September 30, 2016. This decrease was primarily
attributable to the decrease in direct selling revenues and lower
commissions paid on discounted items. Sales and marketing expense
increased 28.1% to $4,074,000 from $3,181,000 for the three months
ended September 30, 2016 primarily due to expenses related to the
Company’s twentieth anniversary convention held in Dallas,
Texas in August 2017 and increase in wages and related benefits.
General and administrative expense increased 35.6% to $6,116,000
from $4,510,000 for the three months ended September 30, 2016
primarily due to increases in costs related to legal fees, computer
and internet related costs, international expansion, investor
relations, wages and related benefits, amortization and stock based
compensation costs.
For the three months ended September 30, 2017, total other expense
decreased by $36,000 to $541,000 as compared to other expense of
$577,000 for the three months ended September 30, 2016. Total other
expense includes net interest expense, the change in the fair value
of warrant derivative and extinguishment loss on debt.
For the three months ended September 30, 2017, the Company reported
a net loss of $1,068,000 as compared to net income of $67,000 for
the same period last year.
Adjusted EBITDA
EBITDA (earnings before interest, income taxes, depreciation and
amortization) as adjusted to remove the effect of stock
based compensation expense, the change in the fair value of the
warrant derivative and extinguishment
loss on debt or "Adjusted EBITDA," decreased to a negative $359,000
for the three months ended September 30, 2017 compared to
$1,620,000 for the same period in 2016.
Fiscal 2017 Nine Months Results
For the nine months ended September 30, 2017, our revenues
increased 0.3% to $124,655,000 as compared to $124,264,000 for the
nine months ended September 30, 2016. During the nine months
ended September 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 $3,659,000 or 3.3% to $106,734,000 as
compared to $110,393,000 for the nine months ended September 30,
2016. Commercial coffee segment revenues increased by $4,050,000 or
29.2% to $17,921,000 for the nine months ended September 30, 2017,
as compared to $13,871,000 for the same period last year. This
increase was primarily attributed to increased revenues in our
green coffee business and coffee roasting business.
For the nine months ended September 30, 2017, gross profit
decreased approximately 4.6% to $71,732,000 as compared to
$75,162,000 for the same period last year. Overall gross profit as
a percentage of revenues decreased to 57.5%, compared to 60.5% in
the same period last year. The decrease was primarily due
to increased social selling discounts offered in the
current year in the direct selling segment and additional costs
incurred due to increased direct labor costs, repairs and
maintenance, and depreciation expense in the commercial coffee
segment.
For the nine months ended September 30, 2017, our operating
expenses increased approximately 6.6% to $76,625,000 as compared to
$71,899,000 for the same period last year, primarily due to
increases in convention and distributor events costs, legal fees,
increased wages and related benefits and increased marketing
expenses.
For the nine months ended September 30, 2017, total other expense
increased by $1,123,000 to $3,727,000 as compared to $2,604,000 for
the nine months ended September 30, 2016. Total other expense
includes net interest expense, the change in the fair value of
warrant derivative and extinguishment loss on debt.
For the nine months ended September 30, 2017, the Company reported
a net loss of $5,857,000 as compared to net income of $109,000 for
the same period last year.
Adjusted EBITDA
EBITDA (earnings before interest, income taxes, depreciation and
amortization) as adjusted to remove the effect of stock
based compensation expense, the change in the fair value of the
warrant derivative and extinguishment
loss on debt or "Adjusted EBITDA," decreased to a negative $851,000
for the nine months ended September 30, 2017 compared to $6,420,000
for 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 third
quarter financial results, for the quarter ended September 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, loss on extinguishment of debt
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.
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 expected growth
in international markets in the coming
quarters providing a return on
our significant investments in establishing a global footprint, the
strength of the Café La Rica Brand having significant
potential to bring shareholder value, and leveraging our platform
to drive top line growth, our plans to improve our profitability,
expand our liquidity, and strengthen our balance sheet. 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 expand our sales of the
Café La Rica™ coffee, our ability to leverage our
platform to drive top line growth, our ability to improve our
profitability, expand our liquidity, and strengthen our balance
sheet, 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/A
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 September 30,
|
Nine Months Ended September 30,
|
||
|
2017
|
2016
|
2017
|
2016
|
|
|
|
|
|
Revenues
|
$44,395
|
$43,562
|
$124,655
|
$124,264
|
Cost
of revenues
|
18,631
|
17,194
|
52,923
|
49,102
|
Gross
profit
|
25,764
|
26,368
|
71,732
|
75,162
|
Operating
expenses
|
|
|
|
|
Distributor
compensation
|
17,391
|
18,101
|
49,496
|
50,871
|
Sales
and marketing
|
4,074
|
3,181
|
10,650
|
7,619
|
General
and administrative
|
6,116
|
4,510
|
16,479
|
13,409
|
Total
operating expenses
|
27,581
|
25,792
|
76,625
|
71,899
|
Operating
(loss) income
|
(1,817)
|
576
|
(4,893)
|
3,263
|
Change
in the fair value of warrant derivative
|
1,519
|
369
|
788
|
535
|
Interest
expense, net
|
(1,752)
|
(946)
|
(4,207)
|
(3,139)
|
Extinguishment
loss on debt
|
(308)
|
-
|
(308)
|
-
|
Total
other expense
|
(541)
|
(577)
|
(3,727)
|
(2,604)
|
Net
(loss) income before income taxes
|
(2,358)
|
(1)
|
(8,620)
|
659
|
Income tax
(benefit) provision
|
(1,290)
|
(68)
|
(2,763)
|
550
|
Net
(loss) income
|
$(1,068)
|
$67
|
$(5,857)
|
$109
|
Net
loss per share basic and diluted
|
$(0.05)
|
$-
|
$(0.30)
|
$-
|
|
|
|
|
|
Reconciliation of Non-GAAP Measure
|
|
|
|
|
Adjusted EBITDA to Net (Loss) Income
|
|
|
|
|
(In
thousands - unaudited))
|
|
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||
|
2017
|
2016
|
2017
|
2016
|
Net
(loss) income
|
$(1,068)
|
$67
|
$(5,857)
|
$109
|
Add:
|
|
|
|
|
Interest
|
1,752
|
946
|
4,207
|
3,139
|
Income
taxes
|
(1,290)
|
(68)
|
(2,763)
|
550
|
Depreciation
|
419
|
341
|
1,183
|
1,119
|
Amortization
|
712
|
537
|
2,047
|
1,746
|
EBITDA
|
525
|
1,823
|
(1,183)
|
6,663
|
Add:
|
|
|
|
|
Stock
based compensation -options and warrants issuance
|
327
|
166
|
812
|
292
|
Change
in the fair value of warrant derivative
|
(1,519)
|
(369)
|
(788)
|
(535)
|
Extinguishment
loss on debt
|
308
|
-
|
308
|
-
|
Adjusted
EBITDA
|
$(359)
|
$1,620
|
$(851)
|
$6,420
|