Revenue During First Nine Months of Fiscal Year
2015 in the Americas Increased 2.8%
LifeVantage Corporation (Nasdaq:LFVN) today reported financial
results for its third quarter and nine months ended March 31, 2015.
Third Quarter Fiscal 2015 Highlights:
- Revenue was $45 million compared to $55 million in the prior
year period;
- Revenue in the Americas increased by 1% compared to the prior
year period;
- Adjusted EBITDA was $3.3 million, compared to $5.7 million in
the prior year period;
- Identified annual cost structure savings of approximately $4
million.
Dave S. Manovich, Executive Vice Chairman of
LifeVantage stated, "We are very pleased with our recently
announced appointment of Darren Jensen as our next President and
Chief Executive Officer. Throughout the transition to a new CEO, we
have focused on taking the necessary steps to help us reignite top
and bottom line growth. We have identified approximately $4 million
in annual cost reductions. Approximately $1.3 million has
already been implemented through headcount reductions and the
remaining $2.7 million will be implemented in selling, general and
administrative expense reductions over the course of fiscal
2016. Upon joining the company in mid-May, Mr. Jensen will
have the flexibility to further shape, drive and articulate the
Company’s strategic initiatives.”
Mr. Manovich continued, “While our year-to-date
revenue in the Americas grew approximately 3% compared to the prior
year, our Asia Pacific revenue declined 28%. We are not
pleased with these current revenue trends and remain committed to
improving the level of engagement with our strong distributor base
and expanding awareness and understanding of our full product
lineup.”
Third Quarter Fiscal 2015 Results
For the third fiscal quarter ended March 31,
2015, the Company reported revenue of $45.2 million, compared to
$55.1 million for the same period in fiscal 2014. Revenue includes
an increase of 1% in the Americas, and a decrease in the
Asia/Pacific region of 45%. The year-over-year decline in the
Asia/Pacific region is primarily due to Japan’s lower volume,
negative foreign currency exchange and a benefit in the prior year
period from customers accelerating purchasing in advance of
announced price increases that went into effect on April 1, 2014.
Revenue for the quarter was negatively impacted $1.8 million, or
3%, by foreign currency fluctuation.
Commissions and incentives for the third fiscal
quarter of 2015 were $21.6 million, or 47.9% of revenue, compared
to $26.8 million, or 48.6% of revenue, in the same period last
year. Selling, general and administrative expenses (SG&A) for
the third fiscal quarter of 2015 were $14.5 million, or 32.1% of
revenue, compared to $15.4 million, or 27.9% of revenue, in the
same period last year. SG&A expenses in the third fiscal
quarter of 2015 include $1.2 million in one-time expenses,
including CEO severance costs, the engagement of an executive
search firm and one-time investments in new sales events.
Operating income for the third fiscal quarter of
2015 was $1.5 million, compared to $4.5 million in the third fiscal
quarter of 2014.
Net income for the third fiscal quarter of 2015
was $0.6 million, or $0.01 per diluted share, calculated on 97.7
million fully diluted shares. This compares to net income in
the third fiscal quarter of 2014 of $2.5 million, or $0.02 per
diluted share, calculated on 106.6 million fully diluted
shares. Adjusted EBITDA was $3.3 million for the third fiscal
quarter of 2015, compared to $5.7 million in the prior year period.
Adjusted EBITDA excludes the CEO severance and related executive
search firm expenses.
Fiscal 2015 First Nine Months Results
For the nine months ended March 31, 2015, the
Company reported net revenue of $145.0 million, compared to $157.9
million in the prior year period. Revenue in the Americas increased
3%, while revenue in the Asia/Pacific region decreased 28% due
primarily to lower sales in Japan. Revenue for the first nine
months of fiscal 2015 was negatively impacted $4.0 million, or 7%,
by foreign currency fluctuation.
Operating income for the first nine months of
fiscal 2015 was $12.3 million, compared to $14.7 million in the
prior year period.
Net income for the first nine months of fiscal
2015 was $6.8 million, or $0.07 per diluted share, compared to $9.0
million, or $0.08 per diluted share in the prior year period.
Additionally, Adjusted EBITDA was $14.3 million for the first nine
months of fiscal 2015, compared to $18.4 million in the prior year
period.
Balance Sheet & Liquidity
The Company generated $9.0 million of cash flow
from operations in the first nine months of fiscal 2015. Cash
flow benefited from a one-time cash settlement of approximately $2
million in the first quarter. The Company's cash and cash
equivalents at March 31, 2015 were $15.4 million, compared to $20.4
million at the end of fiscal year 2014. The Company repaid $3.5
million of debt during the first nine months of fiscal 2015. In
addition, during the first nine months of fiscal 2015 the Company
has returned $9.9 million to shareholders by repurchasing a total
of 7.6 million shares. Inventory increased $2.0 million compared to
June 30, 2014, which is related to the Company’s recent product
launches, TrueScience and Axio, as well as the recent decline in
revenue. On a sequential basis, inventory decreased $1.2 million
highlighting the Company’s inventory control efforts.
Fiscal Year 2015 Guidance
The Company is reaffirming its guidance for
fiscal year 2015. 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 35% with
the remaining countries collectively impacting revenue from a
negative 3.0% at the bottom end of our range, to a positive 2% 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 $0.07 to $0.08, based on
an estimated 100 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) 256-9128 from the U.S. International callers can dial
(913) 312-1430. A telephone replay will be available
approximately two hours after the call concludes and will be
available through Friday, May 8, 2015, by dialing (877) 870-5176
from the U.S. and entering confirmation code 9503189, or (858)
384-5517 from international locations, and entering confirmation
code 9503189.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 |
March
31, 2015 |
|
June 30, 2014 |
|
Current
assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
15,353 |
|
|
$ |
20,387 |
|
|
|
Accounts receivable |
|
1,258 |
|
|
|
1,317 |
|
|
|
Income tax receivable |
|
3,490 |
|
|
|
4,681 |
|
|
|
Inventory |
|
10,899 |
|
|
|
8,826 |
|
|
|
Current deferred income tax
asset |
|
158 |
|
|
|
158 |
|
|
|
Prepaid expenses and deposits |
|
3,699 |
|
|
|
4,604 |
|
|
|
Total current assets |
|
34,857 |
|
|
|
39,973 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
6,239 |
|
|
|
6,941 |
|
|
|
Intangible assets, net |
|
1,913 |
|
|
|
2,014 |
|
|
|
Deferred debt offering costs,
net |
|
1,164 |
|
|
|
1,353 |
|
|
|
Long-term deferred income tax
asset |
|
1,285 |
|
|
|
1,285 |
|
|
|
Other long-term assets |
|
1,468 |
|
|
|
2,433 |
|
|
TOTAL
ASSETS |
$ |
46,926 |
|
|
$ |
53,999 |
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY |
|
|
|
|
Current
liabilities |
|
|
|
|
|
Accounts payable |
$ |
2,723 |
|
|
$ |
2,854 |
|
|
|
Commissions payable |
|
6,719 |
|
|
|
7,594 |
|
|
|
Other accrued expenses |
|
6,154 |
|
|
|
7,554 |
|
|
|
Current portion of long-term
debt |
|
9,200 |
|
|
|
4,700 |
|
|
|
Total current
liabilities |
|
24,796 |
|
|
|
22,702 |
|
|
|
|
|
|
|
|
Long-term debt |
|
|
|
|
|
Principal amount |
|
18,100 |
|
|
|
26,125 |
|
|
|
Less: unamortized discount |
|
(905 |
) |
|
|
(1,052 |
) |
|
|
Long-term debt, net of unamortized
discount |
|
17,195 |
|
|
|
25,073 |
|
|
|
Other long-term
liabilities |
|
2,105 |
|
|
|
2,234 |
|
|
|
Total liabilities |
|
44,096 |
|
|
|
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 96,985 and 102,173 issued and
outstanding as of March 31, 2015 and June 30, 2014,
respectively |
|
97 |
|
|
|
102 |
|
|
|
Additional paid-in capital |
|
117,248 |
|
|
|
115,244 |
|
|
|
Accumulated deficit |
|
(114,321 |
) |
|
|
(111,240 |
) |
|
|
Accumulated other comprehensive
loss |
|
(194 |
) |
|
|
(116 |
) |
|
|
Total stockholders’
equity |
|
2,830 |
|
|
|
3,990 |
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY |
$ |
46,926 |
|
|
$ |
53,999 |
|
|
|
|
|
|
|
|
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, |
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
(In thousands, except
per share data) |
|
|
|
|
|
|
|
Revenue, net |
$ |
45,155 |
|
|
$ |
55,064 |
|
|
$ |
145,035 |
|
|
$ |
157,930 |
|
Cost of sales |
|
7,552 |
|
|
|
8,459 |
|
|
|
20,717 |
|
|
|
24,212 |
|
Gross profit |
|
37,603 |
|
|
|
46,605 |
|
|
|
124,318 |
|
|
|
133,718 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Commissions and incentives |
|
21,637 |
|
|
|
26,760 |
|
|
|
69,406 |
|
|
|
77,558 |
|
Selling, general and
administrative |
|
14,481 |
|
|
|
15,378 |
|
|
|
42,572 |
|
|
|
41,457 |
|
Total operating expenses |
|
36,118 |
|
|
|
42,138 |
|
|
|
111,978 |
|
|
|
119,015 |
|
Operating
income |
|
1,485 |
|
|
|
4,467 |
|
|
|
12,340 |
|
|
|
14,703 |
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
Interest expense |
|
(748 |
) |
|
|
(1,160 |
) |
|
|
(2,341 |
) |
|
|
(1,996 |
) |
Other income (expense), net |
|
(13 |
) |
|
|
(118 |
) |
|
|
(56 |
) |
|
|
391 |
|
Total other income (expense) |
|
(761 |
) |
|
|
(1,278 |
) |
|
|
(2,397 |
) |
|
|
(1,605 |
) |
Income before income
taxes |
|
724 |
|
|
|
3,189 |
|
|
|
9,943 |
|
|
|
13,098 |
|
Income tax expense |
|
(151 |
) |
|
|
(695 |
) |
|
|
(3,182 |
) |
|
|
(4,066 |
) |
Net income |
$ |
573 |
|
|
$ |
2,494 |
|
|
$ |
6,761 |
|
|
$ |
9,032 |
|
Net income per share: |
|
|
|
|
|
|
|
Basic |
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
0.07 |
|
|
$ |
0.08 |
|
Diluted |
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
0.07 |
|
|
$ |
0.08 |
|
Weighted average shares
outstanding: |
|
|
|
|
|
|
|
Basic |
|
96,069 |
|
|
|
101,594 |
|
|
|
97,785 |
|
|
|
107,385 |
|
Diluted |
|
97,725 |
|
|
|
106,578 |
|
|
|
99,793 |
|
|
|
113,717 |
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
Foreign currency translation
adjustment |
|
1 |
|
|
|
103 |
|
|
|
(78 |
) |
|
|
(363 |
) |
Other
comprehensive income (loss), net of tax |
$ |
1 |
|
|
$ |
103 |
|
|
$ |
(78 |
) |
|
$ |
(363 |
) |
Comprehensive
income |
$ |
574 |
|
|
$ |
2,597 |
|
|
$ |
6,683 |
|
|
$ |
8,669 |
|
|
|
|
|
|
|
|
|
LIFEVANTAGE CORPORATION AND
SUBSIDIARIES |
|
Revenue by Region |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended
March 31, |
|
|
For the Nine Months ended
March 31, |
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
2015 |
|
|
|
2014 |
|
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
$ |
32,901 |
|
|
|
73 |
% |
|
$ |
32,641 |
|
|
|
59 |
% |
|
|
$ |
104,397 |
|
|
|
72 |
% |
|
$ |
101,557 |
|
|
|
64 |
% |
|
Asia/Pacific |
|
|
12,254 |
|
|
|
27 |
% |
|
|
22,423 |
|
|
|
41 |
% |
|
|
|
40,638 |
|
|
|
28 |
% |
|
|
56,373 |
|
|
|
36 |
% |
|
Total |
|
$ |
45,155 |
|
|
|
100 |
% |
|
$ |
55,064 |
|
|
|
100 |
% |
|
|
$ |
145,035 |
|
|
|
100 |
% |
|
$ |
157,930 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active Independent Distributors
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
44,000 |
|
|
|
67 |
% |
|
|
43,000 |
|
|
|
59 |
% |
|
|
|
|
|
|
|
|
|
|
Asia/Pacific |
|
|
22,000 |
|
|
|
33 |
% |
|
|
30,000 |
|
|
|
41 |
% |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
66,000 |
|
|
|
100 |
% |
|
|
73,000 |
|
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active Preferred
Customers(2) |
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 |
|
|
|
2014 |
|
|
|
|
|
|
|
|
|
|
|
Americas |
|
|
93,000 |
|
|
|
82 |
% |
|
|
106,000 |
|
|
|
79 |
% |
|
|
|
|
|
|
|
|
|
|
Asia/Pacific |
|
|
21,000 |
|
|
|
18 |
% |
|
|
28,000 |
|
|
|
21 |
% |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
114,000 |
|
|
|
100 |
% |
|
|
134,000 |
|
|
|
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
EBITDA and Non-GAAP Adjusted EBITDA |
|
|
|
|
|
|
|
|
For the Three Months Ended March
31, |
|
For the Nine Months Ended March
31, |
|
|
|
2015 |
|
|
|
2014 |
|
|
|
2015 |
|
|
|
2014 |
|
|
(In thousands) |
|
|
|
|
|
|
|
|
GAAP Net income |
$ |
573 |
|
|
$ |
2,494 |
|
|
$ |
6,761 |
|
|
$ |
9,032 |
|
|
Interest Expense |
|
748 |
|
|
|
1,160 |
|
|
|
2,341 |
|
|
|
1,996 |
|
|
Provision for income
taxes |
|
151 |
|
|
|
695 |
|
|
|
3,182 |
|
|
|
4,066 |
|
|
Depreciation and
amortization |
|
573 |
|
|
|
530 |
|
|
|
1,738 |
|
|
|
1,527 |
|
|
Non-GAAP EBITDA: |
|
2,045 |
|
|
|
4,879 |
|
|
|
14,022 |
|
|
|
16,621 |
|
|
Adjustments: |
|
|
|
|
|
|
|
|
Stock compensation
expense |
|
536 |
|
|
|
694 |
|
|
|
1,505 |
|
|
|
2,169 |
|
|
Other (income) expense,
net |
|
13 |
|
|
|
118 |
|
|
|
56 |
|
|
|
(391 |
) |
|
Other adjustments* |
|
717 |
|
|
|
- |
|
|
|
(1,283 |
) |
|
|
- |
|
|
Total adjustments |
|
1,266 |
|
|
|
812 |
|
|
|
278 |
|
|
|
1,778 |
|
|
Non-GAAP Adjusted
EBITDA |
$ |
3,311 |
|
|
$ |
5,691 |
|
|
$ |
14,300 |
|
|
$ |
18,399 |
|
|
|
|
|
|
|
|
*Total adjustments for the three months ended March 31, 2015
include approximately $0.6 million for CEO severance expenses and
$0.2 million for search firm expenses associated with search for a
new CEO. Total adjustments for the nine months ended March
31, 2015 include $0.6 million for CEO severance expenses and $0.2
million for search firm expenses associated with search for a new
CEO along with a $2.0 million reduction for a one-time pretax
benefit from settlement proceeds. |
|
|
|
|
|
|
|
|
|
|
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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