MusclePharm CEO Issues Update Letter to Shareholders
Company Provides 2014 Outlook: Total Net Revenue of
Approximately $150 Million; Diluted Earnings per Share in Range of
$0.20 to $0.22; Announces Preliminary Unaudited Net Revenue Results
for 2013 of Approximately $110 Million
DENVER, CO--(Marketwired - Jan 29, 2014) - MusclePharm
Corporation (OTCQB: MSLP), a leading, award-winning sports
nutrition company, today issued the following letter to
shareholders from its Chairman and CEO, Brad Pyatt:
Dear Fellow Shareholders:
As we look at the growth of our company over the past year,
perhaps no three things characterize our achievements better than
strength, innovation and customer experience.
The Strength of Our Brand
Today, MusclePharm is leading the charge for the next generation
in sports nutrition. At the same time, we are building a
solid-growth company that exceeded our revenue goal for 2013.
Preliminary results indicate we will report revenues of more than
$110 million for the year, an increase of more than 64% over
2012.
Full financial results for 2013 are expected to be reported in
March, but I am pleased to provide you with this update as we begin
2014.
The growth of our company in a relatively short period of time
reflects the strength of the MusclePharm brand and customers'
belief in the science behind our products. We have gained the trust
of millions of consumers by offering nothing but the best
supplements on the market, backed by dedicated research and
development and strict adherence to quality control, efficacy and
safety.
MusclePharm's Scientific Advisory Board paves our path to
success, guiding the in-house quality control and scientific team
comprised of 20 scientists, pharmacists and doctors. The Board is
led by Dr. Roscoe Moore, former Assistant U.S. Surgeon General and
U.S. Food and Drug Administration director, and Dr. Phillip Frost,
chairman of TEVA Pharmaceuticals. TEVA is one of the world's
largest and most highly-respected generic pharmaceutical companies.
The MP scientific team conducts Institutional Review Board-approved
clinical trials in-house at the 35,000 sq. ft. MusclePharm Sports
Science Institute. Ongoing studies are performed to validate for
safety, efficacy and performance through the University of North
Carolina at Chapel Hill and other universities. Clinical write-ups
of select MP products will be published in future medical journals.
This level of commitment sets MusclePharm apart and is why millions
of customers trust the brand.
As our brand has grown, the company's financial position also
has improved. Today, we have a clean balance sheet, with no
long-term debt and no warrants, and we recently secured a credit
line with U.S. Bank.
As we move forward in 2014, emphasis will be on quality growth
and profitability, coupled with maintaining momentum and our
leadership position through innovation and the prudent building of
the organization.
Bringing Innovative New Products to Market
The recent successes of our women's brand FitMiss™ and the
iconic Arnold Schwarzenegger™ Series, along with continued
achievements by line extensions of our MP brand, are examples of
how MusclePharm is leading the charge for the next generation of
sports nutrition.
We are currently in more than 35,000 stores worldwide and sold
in more than 110 countries. To help you track our progress, we will
be breaking out our business into three categories: Specialty,
International and FDM (Food, Drug, Mass).
Specialty Market: This is comprised of brick-and-mortar and
ecommerce. We use distributors, as well as sell direct to larger
customers. We will continue to grow this portion of our business by
offering continued line extensions, as well as leveraging our
retailers to grow new customer acquisitions within their
channels.
International: This will be an area we focus on growing by
continuing to offer new products, as well as improving the supply
cycles and opening new distribution centers in select regions of
the world to improve both tariff fees, as well as shipping
time.
FDM (Food, Drug, Mass): This is a new sales channel where
we will continue to focus, namely by expanding the distribution
platform for our current line of brands and products. In 2013, this
represented approximately 9% of our business and in 2014 FDM will
represent 15% of our business.
The diversification among our channels domestically, along with
MusclePharm's strong presence internationally, will allow us to
continue to provide top-line growth for years to come.
Furthermore, the recently-announced acquisition of what is
substantially all assets of Biozone Pharmaceuticals and its
subsidiaries gives us the ability to accelerate new product
development utilizing a state-of-the-art, science-based
organization that is focused on quality control and safety. This
will help our sales team expand into new distribution channels with
unique and innovative products. Without tipping our hand too much,
several new product lines that are currently in development and
will be available in the near future will contribute to the quality
of our products and aggressive-growth strategy.
Providing a One-of-a-Kind Customer Experience
Along with innovative products, we also remain focused on
providing a one-of-a-kind customer experience. Customer
satisfaction drives our success, and with that aim, we have built
one of the strongest social communities in the industry, often
referred to as #MPNation. We recently opened up our Social Media
& Customer Command Center in Columbus, Ohio, where our staff
provides a high-level brand experience for customers.
Popular social media contributions from Co-Founder Cory Gregory
include daily workouts, training advice and a commitment to
providing real-time feedback to our customers. In addition, key
brand influencer partners such as Ultimate Fighting Championship
(UFC), which reaches more than 820 million households globally,
along with Arnold Schwarzenegger and football legend Colin
Kaepernick give the brand credibility and connect with millions of
potential customers.
Building the Organization
With this foundation, we took steps to build our company through
the addition of talented professionals and an enhanced sales and
marketing infrastructure, along with stronger reporting processes
and procedures.
Recently, we created divisional business leader positions and
hired industry veterans who bring decades of experience and
established relationships within the sports nutrition category. To
give them yet another advantage in marketing our products and
connecting with consumers, we are working to become the only
nutrition and supplement organization with every product batch on
the market fully certified by "Informed-Choice" -- the
globally-recognized standard that guarantees products are free of
all banned substances.
As demand for our products has grown, our need for real-time
analytics also has increased. Accordingly, we implemented a
high-level ERP/CRM system to analyze growth trends, inventory
levels and improve sales cycles through quicker shipping. In 2014,
we plan on launching distribution centers for the West Coast in
California and internationally in Europe, Latin America and Western
Canada.
With our rapid rate of growth, we also recognize the need to
improve internal financial controls, which will facilitate more
accurate forecasting and allow us to better monitor day-to-day
results. An internal audit department recently was established and
now reports directly to the Audit Committee. All areas of internal
controls, from the sales cycle to cash management, have been
reviewed internally and are being strengthened. In addition, the
strengthening of these systems aligns with our objective of
applying for a listing on NASDAQ.
I also want you to know that as previously reported, the company
continues to provide cooperation to the Denver office of the
Securities and Exchange Commission regarding an ongoing
investigation. It is our belief that there are no material items
that will impact our future business.
Our Outlook - Achieving Strong, Profitable Growth
Our entire team is excited about the year ahead as we continue
to build market share, generate further sales growth and achieve
profitability. We have come a long way in a very short time:
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2010 |
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2011 |
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2012 |
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2013* |
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2014* |
Net
Revenues |
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3,202,687 |
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17,212,636 |
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67,055,215 |
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110,000,000 |
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150,000,000 |
Gross
Margin % |
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12.4% |
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13.8% |
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21.4% |
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29.5% |
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~33% |
EBITDA % |
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-569.3% |
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-93.2% |
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-12.3% |
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-12.5% |
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~2% |
EPS |
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($408.00) |
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($70.30) |
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($13.00) |
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($1.44) |
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$0.20-$0.22 |
YOY
Growth % |
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437% |
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290% |
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64% |
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36% |
YOY
CAGR % |
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358% |
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153% |
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50% |
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Preliminary |
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Estimated |
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*2013 results are preliminary unaudited and based on certain
assumptions by management believed to be reasonable; 2014 are
estimates.
Moving forward, our strategy is to continue to drive revenue
growth and achieve profitability through margin enhancement. To
achieve this, we established a supply chain team to analyze
incremental volume, optimize purchase pricing and evaluate product
and line extensions in sports nutrition areas that command higher
margins. Longer-term (over the course of the next two to three
years) we plan to ramp up internal production through vertical
integration of manufacturing. Over time, we believe these strategic
initiatives will enhance profitability and increase margins
incrementally.
In conjunction with achieving our objectives and incentivizing
our staff, we will be implementing an Employee Stock Incentive Plan
(ESOP) in 2014 that will allow us to attract and retain qualified
candidates. We intend to create stock and option awards that carry
three- to four-year vesting periods. This new plan will reserve 1.5
million shares for employees, consultants and athletes and will be
subject to shareholder approval.
I look forward to continuing to report our progress to you. On
behalf of our Board of Directors and management team, I extend deep
gratitude and thanks for your continued support.
Sincerely,
Brad Pyatt, Chairman and CEO
About MusclePharm MusclePharm® is a leading international,
award-winning sports nutrition company offering vitamins and
nutritional supplements which are available in more than 110
countries and available in 35,000+ retail outlets, including
Costco, Dick's Sporting Goods, 24 Hour Fitness, Walgreens, Bally's,
GNC, Vitamin Shoppe and Vitamin World. The company's brands are
MusclePharm®, Arnold Schwarzenegger™ Series, and FitMiss™. The
comprehensive lines of clinically-proven, safe and effective
nutritional supplements are developed through a six-stage research
process that utilizes the expertise of leading nutritional
scientists, doctors and universities. For more information, visit
www.musclepharmcorp.com. Follow the company at
http://www.facebook.com/MusclePharm and
www.Twitter.com/MusclePharm.
FORWARD-LOOKING STATEMENTS Any statements that are not
historical facts contained in this release and the letter are
"forward-looking statements" as that term is defined under the
Private Securities Litigation Reform Act of 1995
("PSLRA"). Statements that are not a description of historical
facts constitute forward-looking statements and may often, but not
always, be identified by the use of such words as "expects",
"anticipates", "intends", "estimates", "plans", "potential",
"possible", "probable", "believes", "seeks", "may", "will",
"should", "could" or the negative of such terms or other similar
expressions. Actual results may differ materially from those set
forth in this release due to the risks and uncertainties inherent
in the Company's business. More detailed information about the
Company and the risk factors that may affect the realization of
forward-looking statements is set forth in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 2012,
the Company's Quarter Reports on Form 10-Q and other filings
submitted by the Company to the SEC, copies of which may be
obtained from the SEC's website at www.sec.gov. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. All
forward-looking statements are qualified in their entirety by this
cautionary statement and the Company undertakes no obligation to
revise or update this release to reflect events or circumstances
after the date hereof. The forward-looking statements contained in
this release and the letter herein speak only as of the date the
statements were made, and we do not undertake any obligation to
update forward-looking statements. We intend that all
forward-looking statements be subject to the safe-harbor provisions
of the PSLRA.
For more information, please contact MusclePharm's investor
relations representatives: Matt Sheldon/Evan Pondel PondelWilkinson
Inc. (310) 279-5980 Email Contact
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