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| 8-K - CURRENT REPORT - Youngevity International, Inc. | ygyi8k_may142018.htm |
Exhibit 99.1
Youngevity International, Inc. Announces First Quarter
Results
Revenues increased 11.0% and Adjusted EBITDA increased to $1.5
million
Shareholder Conference Call today at 4:15 PM EDT
SAN DIEGO, Calif. --- May 14, 2018 -
Youngevity International, Inc. (NASDAQ:
YGYI), a leading
omni-direct lifestyle company, today reported financial
results for the first quarter ended March 31, 2018.
2018
First Quarter Highlights:
●
Revenues
increased 11.0% over the prior year to $43.0 million
●
Gross Profit
increased 14.4% to $25.0 million compared to the prior
year
●
Adjusted EBITDA
increased to $1.5 million compared to negative $1.2 million in the
prior year
●
The Coffee
Segment posted 39.9% revenue growth over prior year
Steve Wallach, Chairman and CEO of Youngevity stated, “We are
pleased to see revenue growth for both segments in the first
quarter. Our international markets are beginning to contribute more
significantly to overall revenue lead by top line growth coming
from Asia. We believe this overall growth is sustainable in the
coming quarters.”
Dave Briskie, President and CFO of Youngevity said, “We have
been focused on the fundamentals as we entered 2018. We feel we
made significant progress by improving adjusted EBITDA and
strengthening our balance sheet as well. The recent financing and
debt conversion contributed significantly to the improvement in our
Stockholders’ Equity and will help reduce borrowing costs in
the coming quarters.
FIRST QUARTER 2018 FINANCIAL RESULTS
Revenues
increased 11.0% to $42,994,000 in the current period as compared to
$38,733,000 for the same period last year. We derived
approximately 82% of our revenue from direct selling sales and
approximately 18% from commercial coffee sales. Direct selling
revenues increased by $2,069,000 or 6.2% to $35,311,000 as compared
to $33,242,000 for the same period last year. Commercial coffee
revenues increased by $2,192,000 or 39.9% to $7,683,000 as compared
to $5,491,000 for the same period last year.
Gross profit increased 14.4% to $25,012,000 in the current period
as compared to $21,866,000 for the same period last year. Overall
gross profit as a percentage of revenues increased to 58.2%,
compared to 56.5% in the same period last year.
Total operating expenses increased 3.0% to $24,988,000 in the
current period, compared to $24,266,000 for the same period last
year.
A
breakdown of operating expenses is as follows:
Distributor compensation in the direct selling segment increased
1.0% to $15,578,000 compared to $15,419,000 for the same period
last year.
Sales and marketing expense decreased 4.8% to $3,499,000 from
$3,675,000 for the same period last year, primarily due to a
reduction in distributor events
General and administrative expense increased 14.3% to $5,911,000
from $5,172,000 for the same period last year, primarily due to
increases in amortization costs, non-cash compensation costs and
increased general and administration costs at the commercial coffee
segment as well as increased international costs, primarily related
to operations in Russia, Mexico, Taiwan and New
Zealand.
Total other expense increased by $1,495,000 to $2,082,000 as
compared to $587,000 for the same period last year. Total other
expense includes net interest expense, the change in the fair value
of derivative liabilities and extinguishment loss on debt. Net
interest expense increased by $515,000 in the current quarter to
$1,712,000, and the change in fair value of derivative liabilities
increased by $102,000 in the current quarter to $712,000 which
resulted in a reduction to other expense. We also recorded a
non-cash extinguishment loss on debt of $1,082,000 in the current
period as a result of the triggering of the automatic conversion of
our 2017 Notes associated with our July 2017 Private Placement to
common stock.
The Company has recognized an income tax expense of $250,000, which
is the estimated federal, state and foreign income tax expense for
the current quarter, compared to an income tax benefit of $928,000
for the same period in the prior year.
The Company reported a net loss of $2,308,000 in the current period
as compared to net loss of $2,059,000 for the same period last
year. This increase in net loss was as a result of the increases in
other expense, income taxes and operating expense, partially offset
by an increase in gross profit.
Adjusted EBITDA
EBITDA (earnings before
interest, income taxes, depreciation and amortization) as adjusted
to remove the effect of stock-based compensation expense and the
non-cash loss on extinguishment of debt and the change in the fair
value of the derivatives or "Adjusted EBITDA," increased to
$1,520,000 for the current period compared to negative $1,237,000
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 third
quarter financial results, for the quarter ended March 31,
2018. Investors
can attend the event by clicking https://InstantTeleseminar.com/Events/107589540
fifteen minutes prior to the start of the call, or by dialing 206
402 0100 and entering the access code 634174# at least five minutes
prior to the start. International and alternative numbers are
available at https://instantteleseminar.com/Local/?eventid=107589540
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.
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 such as we believe this overall
growth is sustainable in the coming quarters, the significant
progress made by improving adjusted EBITDA and strengthening the
balance sheet and the recent financing and debt conversion helping
to reduce borrowing costs in the coming quarters. 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 leverage our platform and
global infrastructure to drive organic 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 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.
Youngevity International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In
thousands) (Unaudited)
|
|
Three Months Ended
March 31,
|
|
|
|
2018
|
2017
|
|
Revenues
|
$42,994
|
$38,733
|
|
Cost
of revenues
|
17,982
|
16,867
|
|
Gross
profit
|
25,012
|
21,866
|
|
Operating
expenses
|
|
|
|
Distributor
compensation
|
15,578
|
15,419
|
|
Sales
and marketing
|
3,499
|
3,675
|
|
General
and administrative
|
5,911
|
5,172
|
|
Total
operating expenses
|
24,988
|
24,266
|
|
Income
(loss) from operations
|
24
|
(2,400)
|
|
Change
in fair value of warrant derivative liability
|
712
|
610
|
|
Interest
expense, net
|
(1,712)
|
(1,197)
|
|
Extinguishment
loss on debt
|
(1,082)
|
-
|
|
Total
other expense
|
(2,082)
|
(587)
|
|
Net
loss before income taxes
|
(2,058)
|
(2,987)
|
|
Income
tax provision (benefit)
|
250
|
(928)
|
|
Net
loss
|
$(2,308)
|
$(2,059)
|
|
|
|
|
|
Basic
loss per share
|
$(0.12)
|
$(0.11)
|
|
Diluted
loss per share
|
$(0.13)
|
$(0.13)
|
Reconciliation of Non-GAAP Measure
Adjusted EBITDA to Net (Loss) Income
(In thousands) (Unaudited)
|
|
Three Months Ended
March 31,
|
|
|
|
2018
|
2017
|
|
Net
loss
|
$(2,308)
|
$(2,059)
|
|
Add:
|
|
|
|
Interest,
net
|
1,712
|
1,197
|
|
Income
tax provision (benefit)
|
250
|
(928)
|
|
Depreciation
|
432
|
391
|
|
Amortization
|
827
|
645
|
|
EBITDA
|
913
|
(754)
|
|
Add:
|
|
|
|
Stock
based compensation
|
237
|
127
|
|
Change
in fair value of warrant derivative
|
(712)
|
(610)
|
|
Extinguishment
loss on debt
|
1,082
|
-
|
|
Adjusted
EBITDA
|
$1,520
|
$(1,237)
|
Investor Relations:
Chuck Harbey
PCG Advisory Group
charbey@pcgadvisory.com
P: 646.863.7997