Revenue Increases 9.3% Compared to Prior Year
Period
Operating Income Increases 13.4% Compared to
Prior Year Period
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 its fiscal 2014
third quarter and the nine months ended March 31, 2014.
Third Quarter Fiscal 2014 Highlights:
- Net revenue was $55.1 million, an increase of 9.3% over the
prior year period, negatively impacted by $2.3 million of
year-over-year foreign currency fluctuation;
- Revenue increased in Asia/Pacific by 29.8% compared to the
prior year period, including a $2.2 million negative impact related
to currency fluctuation;
- Operating income was $4.5 million, an increase of 13.4% over
the prior year period;
- Cash position improved to $35.7 million; and
- Share repurchase program and accelerated debt retirement
initiative was implemented.
Douglas C. Robinson, President and Chief Executive Officer of
LifeVantage stated, "In the third quarter, we executed on our key
initiatives to reignite growth and delivered year-over-year
improvements in sales and operating income. We are encouraged by
the improving trends in our important Asia/Pacific market, which
achieved a 30% increase in sales. In the quarter, we made the
strategic decision to announce a price increase and a corresponding
distributor commission increase in Japan. This increase, which
became effective April 1st, is expected to help offset the
year-over-year devaluation of the Yen. We believe this announcement
resulted in accelerated purchasing of products and pulled a portion
of revenue into the third quarter from the fourth quarter. We
believe that these implemented changes in this market will be an
important component of our long-term growth."
"We have recently made a number of key announcements that
improve the foundation of our business," Mr. Robinson continued.
"At our Annual Global Convention in April, we launched the
TrueScienceTM Skin Care Regimen, which builds upon our existing
Nrf2 research and technology. In addition, we also acquired the
assets of Wicked Fast Sports Nutrition, a sports nutrition company.
Both product initiatives fit within our Feel Better, Look Better,
and Perform Better product strategy. As we begin the final quarter
of this fiscal year, we remain focused on our three key growth
strategies of investing and strengthening our sales and marketing
efforts, continued product innovation, and expanding our geographic
reach."
Third Quarter Fiscal 2014 Results
For the third fiscal quarter ended March 31, 2014, the Company
reported net revenue of $55.1 million, an increase of 9.3% compared
to $50.4 million for the same period in fiscal 2013. Revenue
reflects a slight decline of 1.4% in sales in the America region,
offset by an increase of 29.8% in the Asia/Pacific region due to
growth in Japan and Hong Kong. Revenue for the quarter was
negatively impacted $2.3 million, or 4.6%, by foreign currency
fluctuation. Based on preliminary unaudited April results,
Asia/Pacific revenue in the third quarter benefitted by
approximately $2 million from certain customers accelerating their
purchasing in advance of price increases that went into effect on
April 1, 2014. The Company had previously announced that it was
increasing the price of its products to help offset the devaluation
of the Yen, which occurred simultaneously with an increase of the
Japanese consumption tax.
Gross profit for the third fiscal quarter ended March 31, 2014
was $46.6 million, compared to $43.5 million for the same period
last year. Gross margin for the third fiscal quarter of 2014 was
84.6%, compared to 86.4% in the prior year period. The
year-over-year decline in gross margin was primarily due to a $500
thousand insurance claim benefit in the prior year related to the
Company's 2012 product recall.
Operating income for the third fiscal quarter of 2014 was $4.5
million, for an operating margin of 8.1%, compared to $3.9 million,
or 7.8% in the same period last year.
Interest and other expense in the third fiscal quarter of 2014
was $1.3 million, compared to interest and other income of $0.1
million in the same period last year. The expense incurred in the
current quarter is due to interest payments made on the Company's
term loan which did not exist this time last year.
Net income for the third fiscal quarter of 2014 was $2.5
million, or $0.02 per diluted share, calculated on 107 million
shares outstanding. This compares to net income in the third fiscal
quarter of 2013 of $3.4 million, or $0.03 per diluted share,
calculated on 125 million shares outstanding.
First Nine Months Fiscal 2014 Results
For the nine months ended March 31, 2014, the Company reported
revenue of $157.9 million, compared to $156.7 million in the prior
year period. Revenue in the Americas increased 3.9%, which was
partially offset by lower sales in the Asia/Pacific region. Revenue
for the first nine months of fiscal 2014 was negatively impacted
$9.8 million or 6.2% by currency fluctuation.
Operating income for the first nine months of fiscal 2014 was
$14.7 million, for an operating margin of 9.3%. This compares to
operating income of $11.8 million, or 7.5%, in the prior year
period. The first nine months of fiscal 2013 operating income
included approximately $5.6 million of one-time costs associated
with the Company's product recall.
Net income for the first nine months of fiscal 2014 was $9.0
million, or $0.08 per diluted share, calculated on 114 million
shares outstanding, compared to $7.8 million, or $0.06 per diluted
share in the prior year period, including one-time expenses,
calculated on 125 million shares outstanding.
Balance Sheet & Liquidity
The Company's cash and cash equivalents at March 31, 2014 were
$35.7 million, compared to $26.3 million at the end of fiscal year
2013. The Company generated $10.2 million of cash flow from
operations in the first nine months of 2014 compared to $10.1
million in the first nine months of fiscal 2013.
On March 11, 2014, the Company announced that its Board of
Directors approved an initial $6 million that will be used for an
accelerated debt pay down and common stock repurchase program. The
Company will fund up to $3 million in stock repurchases with the
remainder expected to be used to accelerate debt repayment.
Fiscal Year 2014 Guidance
The Company expects to generate revenue in the range of $208 to
$215 million in fiscal year 2014. The Company expects its operating
margin to be in the range of 9% to 10% and earnings per diluted
share in the range of $0.09 to $0.11, based on estimated weighted
average diluted shares outstanding of 114 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) 397-5354 from the
U.S. International callers can dial (719) 457-2642. A telephone
replay will be available approximately two hours after the call
concludes and will be available through Thursday, May 8, 2014, by
dialing (877) 870-5176 from the U.S. and entering confirmation code
1367202, or (858) 384-5517 from international locations, and
entering confirmation code 1367202.
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, product launches 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.
About Non-GAAP Financial Measures
We define Adjusted Gross Profit as Gross Profit as determined in
accordance with GAAP excluding certain costs associated with the
product recall included in GAAP cost of sales. We define Adjusted
Gross Margin as gross margin as determined in accordance with GAAP
(gross profit as a percentage of sales, net) excluding the costs
associated with the product recall. We define Adjusted Operating
Income as Operating Income excluding certain costs associated with
the product recall. We define Adjusted Net Income as Net Income
excluding certain costs associated with the product recall and the
applicable tax impacts associated with these items. Adjusted EPS is
calculated based on Adjusted Net Income and the weighted average
number of common and potential common shares outstanding during the
period. Adjusted Gross Profit, Adjusted Gross Margin, Adjusted
Operating Income, Adjusted Net Income and Adjusted EPS may not be
comparable to similarly titled measures reported by other
companies.
We are presenting Adjusted Gross Profit, Adjusted Gross Margin,
Adjusted Operating Income, Adjusted Net Income and Adjusted EPS
because management believes that excluding the product recall costs
from the relevant GAAP measures, when viewed with our results under
GAAP and the accompanying reconciliations provides useful
information about our period-over-period growth and profitability
and provides additional information that is useful for evaluating
our operating performance. Each of Adjusted Gross Profit, Adjusted
Gross Margin, Adjusted Operating Income, Adjusted Net Income and
Adjusted EPS is presented solely as a supplemental disclosure
because: (i) we believe it is a useful tool for investors to assess
the operating performance of the business without the effect of
these items; and (ii) we use Adjusted Gross Profit, Adjusted
Operating Income, Adjusted Net Income and Adjusted EPS internally
as a benchmark to evaluate our operating performance or compare our
performance to that of our competitors. The use of Adjusted Gross
Profit, Adjusted Gross Margin, Adjusted Operating Income, Adjusted
Net Income and Adjusted EPS has limitations and you should not
consider these measures in isolation from or as an alternative to
the relevant GAAP measures, including gross profit, gross margin,
operating income, net income or net income per diluted share
prepared in accordance with GAAP, or as a measure of profitability
or liquidity.
The tables set forth below present a reconciliation of Adjusted
Gross Profit, Adjusted Operating Income, Adjusted Net Income and
Adjusted EPS, all of which are non-GAAP financial measures, to
Gross Profit, Operating Income, Net Income, and Diluted EPS, our
most directly comparable financial measures presented in accordance
with GAAP.
|
|
|
LIFEVANTAGE CORPORATION
AND SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
|
|
|
(In thousands, except per share data) |
As
of |
ASSETS |
March 31, 2014 |
June 30, 2013 |
Current assets |
|
|
Cash and cash equivalents |
$ 35,681 |
$ 26,299 |
Accounts receivable |
2,606 |
1,789 |
Income tax receivable |
1,511 |
2,150 |
Inventory |
8,576 |
10,524 |
Current deferred income tax asset |
2,885 |
2,885 |
Prepaid expenses and deposits |
4,999 |
2,294 |
Total current assets |
56,258 |
45,941 |
|
|
|
Long-term assets |
|
|
Property and equipment, net |
7,183 |
5,692 |
Intangible assets, net |
1,697 |
1,747 |
Deferred debt offing costs, net |
1,413 |
-- |
Long-term deferred income tax asset |
730 |
730 |
Other long-term assets |
3,021 |
1,374 |
TOTAL ASSETS |
$ 70,302 |
$ 55,484 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities |
|
|
Accounts payable |
$ 2,641 |
$ 5,171 |
Commissions payable |
9,595 |
7,564 |
Other accrued expenses |
8,369 |
7,831 |
Short-term portion of debt |
4,700 |
-- |
|
|
|
Total current liabilities |
25,305 |
20,566 |
|
|
|
Long-term debt |
|
|
Principal amount |
41,125 |
-- |
Less: unamortized discount |
(1,098) |
-- |
Long-term debt, net of
unamortized discount |
40,027 |
-- |
Other long-term liabilities |
2,243 |
973 |
Total liabilities |
67,575 |
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; 104,024 and 117,088 issued and outstanding as of
March 31, 2014 and June 30, 2013, respectively |
104 |
121 |
Additional paid-in capital |
113,692 |
110,413 |
Accumulated deficit |
(110,593) |
(76,476) |
Accumulated other comprehensive loss |
(476) |
(113) |
Total stockholders' equity |
2,727 |
33,945 |
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY |
$ 70,302 |
$ 55,484 |
|
|
|
|
|
|
|
|
LIFEVANTAGE CORPORATION
AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE INCOME |
(Unaudited) |
|
|
|
|
|
|
For the three
months ended March 31, |
For the nine
months ended March 31, |
|
2014 |
2013 |
2014 |
2013 |
(In thousands, except per share data) |
|
|
|
|
Sales, net |
$ 55,064 |
$ 50,370 |
$ 157,930 |
$ 156,667 |
Cost of sales |
8,459 |
7,330 |
24,212 |
23,936 |
Product recall costs |
-- |
(461) |
-- |
5,418 |
Gross profit |
46,605 |
43,501 |
133,718 |
127,313 |
|
|
|
|
|
Operating expenses: |
|
|
|
|
Sales and marketing |
32,483 |
29,844 |
92,510 |
88,976 |
General and administrative |
8,470 |
8,370 |
23,432 |
23,227 |
Research and development |
655 |
848 |
1,546 |
2,105 |
Depreciation and amortization |
530 |
499 |
1,527 |
1,180 |
Total operating
expenses |
42,138 |
39,561 |
119,015 |
115,488 |
Operating income |
4,467 |
3,940 |
14,703 |
11,825 |
|
|
|
|
|
Other income (expense), net: |
|
|
|
|
Interest and other income (expense),
net |
(1,278) |
122 |
(1,605) |
(426) |
Total other income
(expense) |
(1,278) |
122 |
(1,605) |
(426) |
Net income before income taxes |
3,189 |
4,062 |
13,098 |
11,399 |
Income tax expense |
(695) |
(646) |
(4,066) |
(3,609) |
Net income |
$ 2,494 |
$ 3,416 |
$ 9,032 |
$ 7,790 |
Net income per share: |
|
|
|
|
Basic |
$ 0.02 |
$ 0.03 |
$ 0.08 |
$ 0.07 |
Diluted |
$ 0.02 |
$ 0.03 |
$ 0.08 |
$ 0.06 |
Weighted average shares outstanding: |
|
|
|
|
Basic |
101,594 |
112,806 |
107,385 |
112,203 |
Diluted |
106,578 |
124,985 |
113,717 |
125,371 |
|
|
|
|
|
Other comprehensive income (loss), net of
tax: |
|
|
|
|
Foreign currency translation
adjustment |
103 |
(87) |
(363) |
(24) |
Other comprehensive income (loss) |
$ 103 |
$ (87) |
$ (363) |
$ (24) |
Comprehensive income |
$ 2,597 |
$ 3,329 |
$ 8,669 |
$ 7,766 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFEVANTAGE
CORPORATION |
Sales by
Region |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Three months
ended March 31, |
Nine months ended
March 31, |
|
2014 |
2013 |
2014 |
2013 |
(In thousands) |
|
|
|
|
|
|
|
|
Americas |
$ 32,641 |
59% |
$ 33,098 |
66% |
$ 101,557 |
64% |
$ 97,720 |
62% |
Asia/Pacific |
22,423 |
41% |
17,272 |
34% |
56,373 |
36% |
58,947 |
38% |
Total Net Sales |
$ 55,064 |
100% |
$ 50,370 |
100% |
$ 157,930 |
100% |
$ 156,667 |
100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFEVANTAGE
CORPORATION |
|
|
|
|
|
Active Independent
Distributors (1) |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31, |
|
|
|
|
|
2014 |
2013 |
|
|
|
|
Americas |
43,000 |
59% |
38,000 |
60% |
|
|
|
|
Asia/Pacific |
30,000 |
41% |
25,000 |
40% |
|
|
|
|
Total |
73,000 |
100% |
63,000 |
100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFEVANTAGE
CORPORATION |
|
|
|
|
|
Active Preferred
Customers(2) |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March |
|
|
|
|
|
2014 |
2013 |
|
|
|
|
Americas |
106,000 |
79% |
115,000 |
82% |
|
|
|
|
Asia/Pacific |
28,000 |
21% |
25,000 |
18% |
|
|
|
|
Total |
134,000 |
100% |
140,000 |
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. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFEVANTAGE
CORPORATION |
Reconciliation of GAAP
Gross Profit to Non-GAAP Adjusted Gross Profit: |
(Unaudited) |
|
For the three
months ended March 31, |
For the nine
months ended March 31, |
|
2014 |
2013 |
2014 |
2013 |
(In thousands) |
|
|
|
|
GAAP Gross profit |
$ 46,605 |
$ 43,501 |
$ 133,718 |
$ 127,313 |
|
|
|
|
|
Adjustments: |
|
|
|
|
Cost of sales associated with product
recall |
|
(461) |
|
5,418 |
Total adjustments |
-- |
(461) |
-- |
5,418 |
Non-GAAP Adjusted gross profit |
$ 46,605 |
$ 43,040 |
$ 133,718 |
$ 132,731 |
|
|
|
|
|
Reconciliation of GAAP
Operating Income to Non-GAAP Adjusted Operating
Income: |
|
|
|
|
|
|
For the three
months ended March 31, |
For the nine
months ended March 31, |
|
2014 |
2013 |
2014 |
2013 |
(In thousands) |
|
|
|
|
GAAP Operating income |
$ 4,467 |
$ 3,940 |
$ 14,703 |
$ 11,825 |
|
|
|
|
|
Adjustments: |
|
|
|
|
Costs associated with product recall: |
|
|
|
|
Cost of sales |
-- |
(461) |
-- |
5,418 |
General and administrative |
-- |
158 |
-- |
229 |
Total adjustments |
-- |
(303) |
-- |
5,647 |
Non-GAAP Adjusted operating income |
$ 4,467 |
$ 3,637 |
$ 14,703 |
$ 17,472 |
|
|
|
|
|
Reconciliation of GAAP
Net Income to Non-GAAP Adjusted Net Income and related Adjusted
Earnings Per Share: |
|
|
|
|
|
|
For the three
months ended March 31, |
For the nine
months ended March 31, |
|
2014 |
2013 |
2014 |
2013 |
(In thousands) |
|
|
|
|
GAAP Net income |
$ 2,494 |
$ 3,416 |
$ 9,032 |
$ 7,790 |
|
|
|
|
|
Adjustments: |
|
|
|
|
Costs associated with product recall: |
|
|
|
|
Cost of sales |
-- |
(461) |
-- |
5,418 |
General and administrative |
-- |
158 |
-- |
229 |
Tax impact of adjustments |
-- |
107 |
-- |
(1,997) |
Total adjustments |
-- |
(196) |
-- |
3,650 |
Non-GAAP Adjusted net income |
$ 2,494 |
$ 3,220 |
$ 9,032 |
$ 11,440 |
|
|
|
|
|
Diluted shares |
106,578 |
124,985 |
113,717 |
125,371 |
|
|
|
|
|
Non-GAAP Adjusted diluted net income per
share |
$ 0.02 |
$ 0.03 |
$ 0.08 |
$ 0.09 |
|
|
|
|
|
CONTACT: Investor Relations Contact:
Cindy England (801) 432-9036
Director of Investor Relations
-or-
John Mills (310) 954-1105
Partner, ICR INC
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