Revenue During First Six Months of Fiscal Year
2015, Excluding Japan, Increased 4.5%
Repurchased $4.6 Million Common Stock in Second
Quarter
Generated $13 Million of Adjusted EBITDA in the
First Six Months of Fiscal Year 2015
LifeVantage Corporation (Nasdaq:LFVN) today reported financial
results for its second quarter and six months ended December 31,
2014.
Second Quarter Fiscal 2015 Highlights:
- Revenue was $48 million compared to $52 million in the prior
year period;
- Revenue, excluding Japan, increased by 1.6% compared to the
prior year period;
- Operating income was $3.1 million, compared to $5.2 million in
the prior year period;
- Repurchased $4.6 million or 3.5 million shares; and
- Opened corporate office in Hong Kong.
Dave S. Manovich, Executive Vice Chairman of LifeVantage stated,
"We do not believe the overall second quarter results reflect the
strength of our distribution network or our expanded,
scientifically-validated product line. In order to improve upon
these results and return to meaningful top line growth and reignite
growth and enthusiasm in our Company we recently implemented
executive changes within our management team."
"During the second quarter, we achieved growth in several
markets, including our core Americas market, but this was offset by
lower sales primarily in Japan. We are disappointed that pressures
in the Japan market continue to impact our overall performance and
know we can do better in this market as proven by previous results.
We are intensely focused on identifying and implementing corrective
actions designed to stabilize our efforts in Japan and improve
growth rates in our other countries as well."
Mr. Manovich continued, "We are encouraged by our distributors'
and customers' positive responses to our expanded product
offerings, including Axio and TrueScience, but we need to do a
better job of engaging with our distributors to ensure that we are
taking the right steps to maximize the sales of our newest
products. We also are making progress with our geographic expansion
efforts. In the second quarter, we opened a corporate office in
Hong Kong, which we expect will facilitate a more expedited process
for purchasing and receiving products in the region. In addition,
we remain on track to commence sales in Thailand during the current
fiscal year."
Second Quarter Fiscal 2015 Results
For the second fiscal quarter ended December 31, 2014, the
Company reported revenue of $48.2 million, compared to $51.5
million for the same period in fiscal 2014. Revenue reflects an
increase of 2% in the Americas, and a decrease in the Asia/Pacific
region of 23%, primarily due to the decline in Japan. Revenue for
the quarter was negatively impacted $1.6 million, or 3%, by foreign
currency fluctuation.
Operating income for the second fiscal quarter of 2015 was $3.1
million, compared to $5.2 million in the second fiscal quarter of
2014. Additionally, Adjusted EBITDA was $4.2 million for the second
fiscal quarter of 2015, compared to $6.4 million in the prior year
period.
Commissions and incentives for the second fiscal quarter of 2015
were $23.2 million, or 48.1% of revenue, compared to $25.4 million,
or 49.3% of revenue, in the same period last year. Selling, general
and administrative expenses (SG&A) for the second fiscal
quarter of 2015 were $14.5 million, or 30.0% of revenue, compared
to $13.0 million, or 25.3% of revenue, in the same period last
year. The increase in SG&A expenses is a result of the Company
continuing to invest in sales, marketing and product development
initiatives, primarily due to its investment in the October 2014
Axio product launch.
Net income for the second fiscal quarter of 2015 was $1.5
million, or $0.01 per diluted share, calculated on 100.7 million
fully diluted shares. This compares to net income in the second
fiscal quarter of 2014 of $3.3 million, or $0.03 per diluted share,
calculated on 112.4 million fully diluted shares.
Fiscal 2015 First Six Months Results
For the six months ended December 31, 2014, the Company reported
net revenue of $99.9 million, compared to $102.9 million in the
prior year period. Revenue in the Americas increased 4%, while
revenue in Asia Pacific decreased 16% due primarily to lower sales
in Japan. Revenue for the first six months of fiscal 2015 was
negatively impacted $2.3 million, or 4%, by foreign currency
fluctuation.
Operating income for the first six months of fiscal 2015 was
$10.9 million, compared to $10.2 million in the prior year period.
Additionally, Adjusted EBITDA was $13.0 million for the first six
months of fiscal 2015, compared to $12.7 million in the prior year.
First six months fiscal 2015 operating income and Adjusted EBITDA
include the benefit of approximately $2 million from proceeds
recovered and related to the Company's December 2012 product
recall.
Net income for the first six months of fiscal 2015 was $6.2
million, or $0.06 per diluted share, compared to $6.5 million, or
$0.06 per diluted share in the prior year period.
Balance Sheet & Liquidity
The Company generated $8.0 million of cash flow from operations
in the first six months of fiscal 2015. Cash flow benefited from a
one-time cash settlement of approximately $2 million in the first
quarter. The $3.2 million increase in inventory is related to the
Company's recent product launches, TrueScience and Axio, and
partially due to the recent decline in revenue. The Company's cash
and cash equivalents at December 31, 2014 were $18.6 million,
compared to $20.4 million at the end of fiscal year 2014. The
Company repaid $2.3 million of debt during the first six months of
fiscal 2015. During the first six months fiscal 2015, the Company
has returned $6.6 million to shareholders by repurchasing a total
of 4.9 million shares. The Company entered the third quarter with
$4.4 million remaining on its current $7 million share repurchase
program announced on November 6, 2014.
Fiscal Year 2015 Guidance
The Company is updating its guidance for fiscal year 2015. Due
to the downward pressures related to Japan revenue, and a softening
in our other markets the Company expects to generate revenue in the
range of $185 million to $195 million in fiscal year 2015. The
Company has modeled Japan to decline by approximately 40% with the
remaining countries collectively impacting revenue from a negative
3.0% at the bottom end of our range, to a positive 4% at the top
end of our range, on a year-over-year basis. The Company expects
its operating margin to be in the range of 7% to 9% and earnings
per diluted share in the range of $0.06 to $0.08, based on an
estimated 101 million diluted shares and a 33% effective tax
rate.
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) 215-7015 from the
U.S. International callers can dial (913) 643-4201. A
telephone replay will be available approximately two hours after
the call concludes and will be available through Friday, February
6, 2015, by dialing (877) 870-5176 from the U.S. and entering
confirmation code 3120122, or (858) 384-5517 from international
locations, and entering confirmation code 3120122.
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), is a science based
network marketing company that is dedicated to visionary science
that looks to transform health, wellness and anti-aging internally
and externally at the cellular level. The company is the maker of
Protandim®, the Nrf2 Synergizer® patented dietary supplement, the
TrueScience™ Anti-Aging Skin Care Regimen, Canine Health, and the
AXIO™ energy product line. 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, our expansion and investment in new and
existing international markets, our future results of operations in
Japan 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 Non-GAAP EBITDA as earnings before interest expense,
income taxes, depreciation and amortization and Non-GAAP Adjusted
EBITDA as earnings before interest expense, income taxes,
depreciation and amortization, stock compensation expense and other
income, net. Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA may not
be comparable to similarly titled measures reported by other
companies.
We are presenting Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA
because management believes that they provide additional ways to
view our operations when considered with both our GAAP results and
the reconciliation to net income, which we believe provides a more
complete understanding of our business than could be obtained
absent this disclosure. Non-GAAP EBITDA and Non-GAAP Adjusted
EBITDA are 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; (ii) we believe that investors will find this data useful in
assessing shareholder value; and (iii) we use Non-GAAP EBITDA and
Non-GAAP Adjusted EBITDA internally as a benchmark to evaluate our
operating performance or compare our performance to that of our
competitors. The use of Non-GAAP EBITDA and Non-GAAP Adjusted
EBITDA has limitations and you should not consider these measures
in isolation from or as an alternative to the relevant GAAP measure
of net income prepared in accordance with GAAP, or as a measure of
profitability or liquidity.
The tables set forth below present Non-GAAP EBITDA and Non-GAAP
Adjusted EBITDA which are non-GAAP financial measures to Net
Income, our most directly comparable financial measure presented in
accordance with GAAP.
LIFEVANTAGE CORPORATION
AND SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
|
|
|
(In thousands, except per share data) |
As
of |
ASSETS |
Dec. 31,
2014 |
June 30,
2014 |
Current assets |
|
|
Cash and cash
equivalents |
$ 18,647 |
$ 20,387 |
Accounts
receivable |
1,106 |
1,317 |
Income tax
receivable |
2,320 |
4,681 |
Inventory |
12,099 |
8,826 |
Current deferred
income tax asset |
158 |
158 |
Prepaid expenses
and deposits |
4,288 |
4,604 |
Total current assets |
38,618 |
39,973 |
|
|
|
Property and
equipment, net |
6,533 |
6,941 |
Intangible
assets, net |
1,946 |
2,014 |
Deferred debt
offering costs, net |
1,229 |
1,353 |
Long-term
deferred income tax asset |
1,285 |
1,285 |
Other long-term
assets |
1,443 |
2,433 |
TOTAL ASSETS |
$ 51,054 |
$ 53,999 |
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
Current liabilities |
|
|
Accounts
payable |
$ 4,002 |
$ 2,854 |
Commissions
payable |
6,718 |
7,594 |
Other accrued
expenses |
6,136 |
7,554 |
Current portion
of long-term debt |
4,700 |
4,700 |
Total current
liabilities |
21,556 |
22,702 |
|
|
|
Long-term debt |
|
|
Principal amount |
23,775 |
26,125 |
Less: unamortized discount |
(955) |
(1,052) |
Long-term debt, net of
unamortized discount |
22,820 |
25,073 |
Other long-term
liabilities |
2,131 |
2,234 |
Total
liabilities |
46,507 |
50,009 |
Commitments and contingencies - Note 6 |
|
|
Stockholders' equity |
|
|
Preferred stock - par value
$.001 per share, 50,000 shares authorized; no shares issued or
outstanding |
-- |
-- |
Common stock - par value $.001
per share, 250,000 shares authorized and 98,836 and 102,173 issued
and outstanding as of December 31, 2014 and June 30, 2014,
respectively |
99 |
102 |
Additional paid-in capital |
116,300 |
115,244 |
Accumulated deficit |
(111,657) |
(111,240) |
Accumulated other comprehensive
loss |
(195) |
(116) |
Total
stockholders' equity |
4,547 |
3,990 |
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY |
$ 51,054 |
$ 53,999 |
|
|
|
|
|
|
LIFEVANTAGE CORPORATION
AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF OPERATIONS AND COMPREHENSIVE INCOME |
(Unaudited) |
|
|
|
|
|
|
For the Three Months
Ended |
For the Six Months
Ended |
|
December 31, |
December 31, |
|
2014 |
2013 |
2014 |
2013 |
(In thousands, except per share data) |
|
|
|
|
Revenue, net |
$ 48,247 |
$ 51,538 |
$ 99,880 |
$ 102,866 |
Cost of sales |
7,486 |
7,944 |
13,165 |
15,753 |
Gross profit |
40,761 |
43,594 |
86,715 |
87,113 |
|
|
|
|
|
Operating expenses: |
|
|
|
|
Commissions and incentives |
23,195 |
25,399 |
47,769 |
50,798 |
Selling, general and
administrative |
14,476 |
13,029 |
28,091 |
26,079 |
Total operating expenses |
37,671 |
38,428 |
75,860 |
76,877 |
Operating income |
3,090 |
5,166 |
10,855 |
10,236 |
|
|
|
|
|
Other income (expense): |
|
|
|
|
Interest expense |
(785) |
(833) |
(1,593) |
(836) |
Other income (expense),
net |
(246) |
468 |
(43) |
509 |
Total other income
(expense) |
(1,031) |
(365) |
(1,636) |
(327) |
Income before income taxes |
2,059 |
4,801 |
9,219 |
9,909 |
Income tax expense |
(587) |
(1,519) |
(3,031) |
(3,371) |
Net income |
$ 1,472 |
$ 3,282 |
$ 6,188 |
$ 6,538 |
Net income per share: |
|
|
|
|
Basic |
$ 0.02 |
$ 0.03 |
$ 0.06 |
$ 0.06 |
Diluted |
$ 0.01 |
$ 0.03 |
$ 0.06 |
$ 0.06 |
Weighted average shares outstanding: |
|
|
|
|
Basic |
97,694 |
105,770 |
98,624 |
110,218 |
Diluted |
100,716 |
112,392 |
101,663 |
117,363 |
|
|
|
|
|
Other comprehensive loss, net of tax: |
|
|
|
|
Foreign currency translation
adjustment |
(136) |
(192) |
(79) |
(466) |
Other comprehensive loss, net of tax: |
$ (136) |
$ (192) |
$ (79) |
$ (466) |
Comprehensive income |
$ 1,336 |
$ 3,090 |
$ 6,109 |
$ 6,072 |
|
|
|
|
|
|
|
|
|
|
LIFEVANTAGE CORPORATION
AND SUBSIDIARIES |
Revenue by
Region |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended |
For the Six Months
ended |
|
December 31, |
December 31, |
|
2014 |
2013 |
2014 |
2013 |
(In thousands) |
|
|
|
|
|
|
|
|
Americas |
$ 35,040 |
73% |
$ 34,418 |
67% |
$ 71,496 |
72% |
$ 68,916 |
67% |
Asia/Pacific |
13,207 |
27% |
17,120 |
33% |
28,384 |
28% |
33,950 |
33% |
Total |
$ 48,247 |
100% |
$ 51,538 |
100% |
$ 99,880 |
100% |
$ 102,866 |
100% |
|
|
|
|
|
|
|
|
|
|
Active Independent
Distributors (1) |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31 |
|
|
|
|
|
2014 |
2013 |
|
|
|
|
Americas |
44,000 |
66% |
43,000 |
62% |
|
|
|
|
Asia/Pacific |
23,000 |
34% |
26,000 |
38% |
|
|
|
|
Total |
67,000 |
100% |
69,000 |
100% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active Preferred
Customers(2) |
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31 |
|
|
|
|
|
2014 |
2013 |
|
|
|
|
Americas |
97,000 |
82% |
110,000 |
81% |
|
|
|
|
Asia/Pacific |
22,000 |
18% |
25,000 |
19% |
|
|
|
|
Total |
119,000 |
100% |
135,000 |
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
AND SUBSIDIARIES |
Reconciliation of GAAP
Net Income to Non-GAAP Adjusted EBITDA: |
|
|
|
|
|
|
For the Three Months
Ended |
For the Six Months
Ended |
|
December 31, |
December 31, |
|
2014 |
2013 |
2014* |
2013 |
(In thousands) |
|
|
|
|
GAAP Net income |
$ 1,472 |
$ 3,282 |
$ 6,188 |
$ 6,538 |
Interest Expense |
785 |
833 |
1,593 |
836 |
Provision for income taxes |
587 |
1,519 |
3,031 |
3,371 |
Depreciation and amortization |
580 |
498 |
1,165 |
997 |
Non-GAAP EBITDA: |
3,424 |
6,132 |
11,977 |
11,742 |
Adjustments: |
|
|
|
|
Stock compensation expense |
495 |
707 |
969 |
1,475 |
Other (income) expense, net |
246 |
(468) |
43 |
(509) |
Total adjustments |
741 |
239 |
1,012 |
966 |
Non-GAAP Adjusted EBITDA |
$ 4,165 |
$ 6,371 |
$ 12,989 |
$ 12,708 |
|
|
|
|
|
*Six months ended December 31,
2014 results include approximately $2M of a one-time pretax benefit
from settlement proceeds. |
|
|
|
|
|
CONTACT: Investor Relations Contact:
Cindy England (801) 432-9036
Director of Investor Relations
-or-
John Mills (646) 277-1254
Partner, ICR INC
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