Successfully Completes $40 Million Common Stock
Modified Dutch Auction at $2.45
Expands Branding Reach with Jersey-Front
Partnership with Real Salt Lake Professional Soccer Team
Company Reiterates Fiscal 2014 Revenue, Operating
Income and EPS Guidance
LifeVantage Corporation (Nasdaq:LFVN), a company dedicated to
helping people achieve healthy living through a combination of a
compelling business opportunity and scientifically validated
products, today reported financial results for the fiscal 2014
first quarter ended September 30, 2013.
Fiscal 2014 First Quarter Highlights:
- Net revenue was $51.3 million; negatively impacted 7.4% by
year-over-year foreign currency fluctuation;
- Cash and cash equivalents increased $1.7 million to $28.0
million compared to year end fiscal year 2013; and
- The number of active independent distributors increased to
67,000 and active preferred customers totaled 139,000.
Douglas C. Robinson, President and Chief Executive Officer of
LifeVantage stated, "As expected, our revenue level during the
first quarter was similar to the same period last year but would
have increased over 4% if you exclude the devaluation of the Yen.
Overall, financial results in the first quarter were in-line with
our expectations; therefore, we are reiterating our annual revenue,
operating income and earnings per share guidance. During the
quarter, we also generated strong cash flow and continued to
strengthen our balance sheet."
Mr. Robinson continued, "During the past few months, we have
achieved some very important goals that have enhanced our platform
and which we believe have strengthened our company. We believe the
achievement of these goals will enable us to deliver improved
shareholder value over the long-term. These accomplishments include
the following:
- In addition to our quarterly sales promotions, in July 2013 we
launched a major sales promotion program, "MyLifeVenture" for our
new and existing distributors;
- In October 2013 we announced that we entered into a sports
marketing partnership with the Real Salt Lake professional soccer
team, which we believe will raise domestic and international
awareness of our LifeVantage brand;
- We will begin selling our products for personal consumption in
the Philippines in December, in-line with our strategy to
selectively and strategically enter into new international markets;
and
- We entered into a new credit facility and completed a modified
Dutch auction under which we repurchased over 16 million shares of
our common stock, which brings the cumulative amount of cash we
have paid to shareholders for the repurchase of shares to over $50
million in this calendar year.
"We believe that these recent initiatives will reinvigorate
long-term revenue growth. The company continues to realize strong
cash flow and we are committed to reducing our total shares
outstanding while maintaining ample capital to invest in the future
of our business. These initiatives position our company to generate
positive long-term returns for our shareholders."
Fiscal 2014 First Quarter Results
For the first fiscal quarter ended September 30, 2013, the
Company reported net revenue of $51.3 million, compared to $52.9
million for the same period in fiscal 2013. Revenue for the quarter
was negatively impacted 7.4% by foreign currency fluctuation.
Gross profit for the first fiscal quarter ended September 30,
2013 was $43.5 million, compared to $45.1 million for the same
period last year, delivering a gross margin of 84.8%, compared to
85.2% in the prior year period.
Operating income for the first fiscal quarter of 2014 was $5.1
million, compared to $6.9 million in the same period last year.
Operating margin in the first fiscal quarter of 2014 was 9.9%,
compared to 13.1% in the prior year period. The decline in
operating margin in the first fiscal quarter of 2014 is due to
lower sales growth in the quarter coupled with planned higher
operating expenses needed to expand the Company's core operational
functions. These investments included costs associated with
continued quarterly sales promotions, the office space the Company
opened in fiscal year 2013 in Tokyo, Japan, consolidation of the
Company's office space in Salt Lake City, Utah, personnel hires
required to perform operational functions, and investments in
back-office program support systems such as a robust accounting/ERP
system and commission system capable of supporting an expanding
distributor base and global expansion. The Company anticipates that
future operating expenses are expected to be in line with future
revenue growth.
Net income for the first fiscal quarter of 2014 was $3.3
million, or $0.03 per diluted share. This compares to net income in
the first fiscal quarter of 2013 of $4.2 million, or $0.03 per
diluted share.
Balance Sheet & Liquidity
The Company's cash and cash equivalents at September 30, 2013
were $28.0 million, compared to $26.3 million as of June 30, 2013.
The Company generated $4.9 million of cash flow from operations in
the first fiscal quarter of 2014 compared to $0.9 million in the
first fiscal quarter of 2013.
In the first fiscal quarter of 2014, the Company completed its
$5 million stock repurchase program that was implemented in the
fourth quarter of fiscal 2013. In the first quarter of fiscal 2014,
the Company repurchased 1.1 million shares for $2.9 million.
Subsequent to the end of the first fiscal quarter, the Company
announced that it entered into a Financing Agreement on October 18,
2013, with a fund managed by TCW Special Situations, LLC. The
Financing Agreement provides for a senior secured credit facility
in an aggregate principal amount of up to $67 million, of which $47
million was funded at closing (the "Term Loan") and up to $20
million (the "Delayed Draw Term Loan") will be available for
borrowing in specified minimum amounts and subject to certain
conditions until October 18, 2014. The Term Loan is a five
year loan maturing on October 18, 2018 and the principal amount is
repayable in consecutive quarterly installments beginning with the
calendar quarter ending March 31, 2014.
On October 31, 2013, the Company also announced that it
completed a modified Dutch auction which was funded with proceeds
received under the credit facility. The Company has repurchased an
aggregate of 16,326,530 shares of its common stock at a purchase
price of $2.45 per share, for an aggregate cost of approximately
$40 million. The shares repurchased in the modified Dutch auction
represent approximately 13.9% of the Company's total shares
outstanding as of September 13, 2013.
Fiscal Year 2014 Guidance
The Company is reiterating its annual revenue, operating income
and annual earnings per share guidance, which includes the expected
impact of the loan under the recent credit facility agreement and
completion of the modified Dutch auction. The Company
continues to expect to generate revenue in the range of $225 to
$235 million in fiscal year 2014. The Company expects to generate
GAAP operating income in the range of $20.5 to $23.5 million, and
an operating margin of 9% to 10%.The Company expects to generate
earnings per diluted share in the range of $0.09 to $0.11, based on
estimated weighted average diluted shares outstanding of 111
million.
Conference Call Information
The Company will hold an investor conference call today at 2:30
p.m. Mountain time (4:30 p.m. Eastern time). Investors interested
in participating in the live call can dial (888) 401-4685 from the
U.S. International callers can dial (719) 457-2630. A
telephone replay will be available approximately two hours after
the call concludes and will be available through Saturday, November
9, 2013, by dialing (877) 870-5176 from the U.S. and entering
confirmation code 5202716, or (858) 384-5517 from international
locations, and entering confirmation code 5202716.
There also will be a simultaneous, live webcast available on the
Investor Relations section of the Company's web site at
http://investor.lifevantage.com/events.cfm. The webcast will be
archived for approximately 30 days.
About LifeVantage Corporation
LifeVantage Corporation (Nasdaq:LFVN), a leader in Nrf2 science
and the maker of Protandim®, the Nrf2 Synergizer® patented dietary
supplement, TrueScience® Anti-Aging Cream and LifeVantage® Canine
Health, is a science based network marketing company. LifeVantage
is dedicated to visionary science that looks to transform wellness
and anti-aging internally and externally with products that
dramatically reduce oxidative stress at the cellular level.
LifeVantage was founded in 2003 and is headquartered in Salt Lake
City, Utah.
Forward Looking Statements
This document contains forward-looking statements made pursuant
to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Words and expressions reflecting optimism,
satisfaction or disappointment with current prospects, as well as
words such as "believe," "hopes," "intends," "estimates,"
"expects," "projects," "plans," "anticipates," "look forward to"
and variations thereof, identify forward-looking statements, but
their absence does not mean that a statement is not
forward-looking. Examples of forward-looking statements include,
but are not limited to, statements we make regarding our future
revenue, operating income, operating margins, earnings per share,
cash flow from operations and future investment and growth. Such
forward-looking statements are not guarantees of performance and
the Company's actual results could differ materially from those
contained in such statements. These forward-looking statements are
based on the Company's current expectations and beliefs concerning
future events affecting the Company and involve known and unknown
risks and uncertainties that may cause the Company's actual results
or outcomes to be materially different from those anticipated and
discussed herein. These risks and uncertainties include, among
others, those discussed in greater detail in the Company's Annual
Report on Form 10-K and the Company's Quarterly Report on Form 10-Q
under the caption "Risk Factors," and in other documents filed by
the Company from time to time with the Securities and Exchange
Commission. The Company cautions investors not to place undue
reliance on the forward-looking statements contained in this
document. All forward-looking statements are based on information
currently available to the Company on the date hereof, and the
Company undertakes no obligation to revise or update these
forward-looking statements to reflect events or circumstances after
the date of this document, except as required by law.
LIFEVANTAGE CORPORATION
AND SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
|
|
|
(In thousands, except per share data) |
As
of |
ASSETS |
September 30,
2013 |
June 30, 2013 |
Current assets |
|
|
Cash and cash equivalents |
$ 27,957 |
$ 26,299 |
Accounts receivable |
923 |
1,789 |
Income tax receivable |
298 |
2,150 |
Inventory |
10,625 |
10,524 |
Current deferred income tax
asset |
2,885 |
2,885 |
Prepaid expenses and
deposits |
2,202 |
2,294 |
Total current assets |
44,890 |
45,941 |
|
|
|
Long-term assets |
|
|
Property and equipment,
net |
5,490 |
5,692 |
Intangible assets, net |
1,765 |
1,747 |
Long-term deferred income tax
asset |
730 |
730 |
Other long-term assets |
1,588 |
1,374 |
TOTAL ASSETS |
$ 54,463 |
$ 55,484 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
Current liabilities |
|
|
Accounts payable |
$ 3,000 |
$ 5,171 |
Commissions payable |
7,648 |
7,564 |
Reserve for sales returns |
1,041 |
648 |
Other accrued expenses |
6,741 |
7,183 |
|
|
|
Total current liabilities |
18,430 |
20,566 |
|
|
|
Long-term liabilities |
|
|
Other long-term
liabilities |
950 |
973 |
Total liabilities |
19,380 |
21,539 |
|
|
|
Commitments and
contingencies |
|
|
Stockholders' equity |
|
|
Preferred stock - par value
$.001, 50,000 shares authorized; no shares issued or
outstanding |
-- |
-- |
Common stock - par value $.001,
250,000 shares authorized; 117,713 and 117,088 issued and
outstanding as of September 30, 2013 and June 30, 2013,
respectively |
118 |
121 |
Additional paid-in capital |
111,432 |
110,413 |
Accumulated deficit |
(76,080) |
(76,476) |
Accumulated other comprehensive
loss |
(387) |
(113) |
Total stockholders' equity |
35,083 |
33,945 |
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY |
$ 54,463 |
$ 55,484 |
|
LIFEVANTAGE CORPORATION
AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE INCOME |
(Unaudited) |
|
|
|
|
For the three
months ended September 30, |
|
2013 |
2012 |
(In thousands, except per share data) |
|
|
Sales, net |
$ 51,328 |
$ 52,859 |
Cost of sales |
7,809 |
7,807 |
Gross profit |
43,519 |
45,052 |
|
|
|
Operating expenses: |
|
|
Sales and marketing |
30,242 |
29,540 |
General and administrative |
7,401 |
7,853 |
Research and development |
307 |
514 |
Depreciation and
amortization |
499 |
238 |
Total operating expenses |
38,449 |
38,145 |
Operating income |
5,070 |
6,907 |
|
|
|
Other income (expense), net: |
|
|
Interest and other income (expense), net |
38 |
(41) |
Total other income
(expense) |
38 |
(41) |
Net income before income taxes |
5,108 |
6,866 |
Income tax expense |
(1,852) |
(2,701) |
Net income |
$ 3,256 |
$ 4,165 |
Net income per share: |
|
|
Basic |
$ 0.03 |
$ 0.04 |
Diluted |
$ 0.03 |
$ 0.03 |
Weighted average shares outstanding: |
|
|
Basic |
114,666 |
110,867 |
Diluted |
123,542 |
125,781 |
|
|
|
Other comprehensive loss, net of tax: |
|
|
Foreign currency translation
adjustment |
(274) |
(5) |
Other comprehensive loss |
$ (274) |
$ (5) |
Comprehensive income |
$ 2,982 |
$ 4,160 |
|
|
|
LIFEVANTAGE
CORPORATION |
|
Sales by
Region |
|
(Unaudited) |
|
|
|
|
|
|
Three months
ended September 30, |
|
2013 |
2012 |
(In thousands) |
|
|
|
|
Americas |
$ 34,498 |
67% |
$ 32,306 |
61% |
Asia/Pacific |
16,830 |
33% |
20,553 |
39% |
Total Net Sales |
$ 51,328 |
100% |
$ 52,859 |
100% |
|
|
|
|
|
|
|
|
|
|
|
LIFEVANTAGE
CORPORATION |
|
Active Independent
Distributors (1) |
|
(Unaudited) |
|
|
|
|
|
|
September
30, |
|
2013 |
2012 |
Americas |
42,000 |
63% |
35,000 |
65% |
Asia/Pacific |
25,000 |
37% |
19,000 |
35% |
Total |
67,000 |
100% |
54,000 |
100% |
|
|
|
|
|
|
LIFEVANTAGE
CORPORATION |
|
Active Preferred
Customers (2) |
|
(Unaudited) |
|
|
|
|
|
|
September
30, |
|
2013 |
2012 |
Americas |
115,000 |
83% |
114,000 |
83% |
Asia/Pacific |
24,000 |
17% |
23,000 |
17% |
|
139,000 |
100% |
137,000 |
100% |
|
|
|
|
|
(1) Active Independent
Distributors have purchased product in the prior three months for
retail or personal consumption. |
(2) Active Preferred Customers
have purchased product in the prior three months for personal
consumption only. |
CONTACT: Investor Relations Contact:
Cindy England (801) 432-9036
Director of Investor Relations
-or-
John Mills (310) 954-1105
Senior Managing Director, ICR, LLC
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