UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
May 11, 2015
CVSL INC.
(Exact name of registrant as specified in
its charter)
Florida |
001-36755 |
98-0534701 |
(State or other jurisdiction |
(Commission File Number) |
(IRS Employer |
of incorporation or organization) |
|
Identification No.) |
2400 North Dallas Parkway, Suite 230,
Plano, Texas 75093
(Address of principal executive offices
and zip code)
(972) 398-7120
(Registrant’s telephone number, including
area code)
Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d- 2(b)) |
| ¨ | Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 – Results of Operations
and Financial Condition.
On May 11, 2015, CVSL
Inc., a Florida corporation (the “Registrant") issued a press release that included financial information for its fiscal
quarter ended March 31, 2015. A copy of the press release is attached as Exhibit 99.1 to this Report on Form 8-K. The information
contained in the press release is being furnished to the Securities and Exchange Commission (the “Commission”) and
shall not be deemed incorporated by reference into any of the Registrant’s registration statements or other filings with
the Commission.
| Item 9.01 | Financial Statements and Exhibits. |
| 99.1 | Press Release of CVSL Inc., dated May 11, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
CVSL Inc. |
|
|
|
|
|
|
Date: May 12, 2015 |
By: |
/s/ John P. Rochon |
|
|
John P. Rochon |
|
|
Chief Executive Officer and President |
EXHIBIT INDEX
Exhibit
Number |
|
Description |
|
|
|
99.1 |
|
Press Release of CVSL Inc. dated May 11, 2015 |
Exhibit 99.1
FINAL VERSION
CVSL INC. REPORTS FIRST QUARTER RESULTS
Pro Forma Revenue Increased By 20.0%
after Taking Into Account the Results of Our Kleeneze Transaction
For Immediate Release
Dallas, TX (May 11, 2015) – CVSL Inc. (NYSE
MKT: CVSL) (“CVSL” or the “Company”), a growing portfolio of direct-to-consumer companies, today reported
financial results for the first quarter of 2015 ended March 31, 2015.
This press release presents revenue on a reported and pro forma
basis. Management believes that, because CVSL is in the early stage of executing its strategy of scaling up the business through
acquisitions, the pro forma figure allows for better comparisons with historical results. For the first quarter of 2015, reported
revenue includes virtually no results from Kleeneze, a UK-based direct-to-consumer company, which CVSL acquired at the end of the
quarter, on March 25, 2015. Pro forma revenue is calculated assuming that CVSL had acquired Kleeneze on January 1, 2015.
First Quarter 2015 Financial Highlights
| · | Pro forma revenue grew 20.0% |
| · | Reported revenue declined 27.9% |
| · | Gross margin improved to 60.6% from 51.3% |
| · | Reported net loss attributable to common stockholders increased to
$4.9 million from $3.1 million |
| · | Total assets increased by $25.9 million to $83.3 million, including
the assets of Kleeneze at March 31, 2015 |
| · | Total cash items, including cash and equivalents, marketable securities,
restricted cash and cash held as security deposit, totaled $22.7 million |
Management Commentary
“Our reported results were in line with the Company’s
expectations, said John Rochon Jr., CVSL’s vice chairman and chief financial officer. “Reported revenue was primarily
influenced by the ongoing turnaround process at The Longaberger Company. One of our strategies at Longaberger is to get away from
excessive discounting, which we believe weakens the brand and ultimately hurts the income of our sales force. Another is to stop
the company’s ill-conceived strategy of competing with its own sales force by selling at a discount through outlet mall stores.
While these actions have a negative short term effect on revenue, we believe they make the company healthier and more appealing
as an earning opportunity in the long run. The West Coast dockworkers’ strike also caused some disruption at Longaberger
this quarter, but now we have products flowing more quickly through the supply chain and we’ve reduced back orders.
“Turning around The Longaberger Company is the largest
factor in these reported results,” Mr. Rochon added. “At Longaberger, we spent the first two years solving fundamental
problems that we inherited. We had to focus on reducing bloated SG&A costs and paying off bank debt to bring Longaberger out
of danger. Now we’ve begun turning our attention to stabilizing the revenue line.
“Our reported revenue was also negatively impacted this
quarter by political unrest in two of Agel’s largest markets, Ukraine and Russia, as well as by the unfavorable effect of
a strong U.S. dollar versus certain international currencies, such as the Euro.
“A success story of the quarter has been
Your Inspiration At Home. That company’s revenue is on a run rate to exceed $15.6 million this year, which is remarkable
growth for a company that joined CVSL less than two years ago with annual revenue at that time of only about $1.3 million.”
Concluded Mr. Rochon, “Our strategy is to buy companies
at favorable prices, apply our expertise to fix them and increase free cash flow, and scale up our portfolio with acquisitions.
We’re proud of what we’ve accomplished in a short time. Barely two years since making our first acquisition in this
sector we’ve acquired eight companies, uplisted to the NYSE and paid down bank debt. We’re climbing up the ranks of
the top 100 direct selling companies as reported by Direct Selling News and we are now one of the fastest growing direct-to-consumer
companies in the world. We did all of this while spending, on average, about ten cents on the revenue dollar to acquire our first
eight companies. Even when you factor in the acquisition expenses we incurred we’re still bringing these companies into CVSL
at a tremendous value.”
First Quarter Financial Review
For the quarter ending March 31, 2015, reported revenue was
$19.2 million compared to $26.7 million in the first quarter a year ago. Revenue on a pro forma basis, including the revenue of
CVSL’s most recently-acquired company, Kleeneze, was $32.0 million in the first quarter, representing a 20.0% increase over
the first quarter a year ago.
Program costs and discounts were $2.2 million in the first quarter
of 2015, versus $5.0 million in the prior year period. Net revenues were $17.1 million in the first quarter of 2015, versus $21.7
million in the prior year period. Cost of sales were $5.4 million in the first quarter of 2015, versus $8.0 million in the prior
year period. The gross profit in the first quarter of 2015 increased to 60.6% as a percentage of revenue, compared to 51.3% a year
ago.
Commissions and incentives were $5.9 million in the first quarter
of 2015, versus $7.0 million in the prior year period. Selling, general and administration costs remained flat at $9.4 million
in the first quarter of 2015 compared to the same amount a year ago.
The Company realized an operating loss of $4.2 million in the
first quarter of 2015, versus an operating loss of $2.7 million in the prior year’s period.
The net loss for the quarter ending March 31, 2015 was $4.9
million, compared to a loss of $3.1 million in the same quarter last year.
Conference Call
Management will host a conference call to discuss the operating
and financial results and take investor questions at 9:00am ET on Tuesday, May 12, 2015. To participate in the conference
call, please dial 1-888-317-6003 approximately 10 minutes prior to the call. International callers should dial 1-412-317-6061.
Please reference conference ID # 3942759.
A live webcast of the conference
call will be available at http://public.viavid.com/index.php?id=114584
Please access the website 15 minutes prior to the start of the call to download and install any necessary audio software.
A webcast replay of the conference call will be available in the investor relations section of the Company’s website following
the call.
Use of Non-GAAP Financial Information
In addition to our U.S. GAAP results, this press release also
includes disclosure on pro forma financials that include the performance of our Kleeneze acquisition over the entire period ended
March 31, 2015 as if we had completed the acquisition at the beginning of the period. The Company believes these pro forma results
are the most accurate way to view our financial performance given our strategy of additional acquisitions. Pro forma performance
is a key measure used by management to evaluate the Company’s results and make strategic decisions about the Company, including
potential acquisitions. Management believes this measure is useful to investors because it is an indicator of operational performance
including all currently-owned subsidiaries for the entire period.
Pursuant to the requirements of Regulation G, we have provided
the pro forma financial statements for the period ended March 31, 2015 as an exhibit to this press release.
Pro forma Consolidated Statement of Operations for the
quarter ended March 31, 2015.
The following summary presents the pro forma results of operations
for the current year up to the date of March 31, 2015 as though the companies had combined at the beginning of the reported period.
| |
| | |
| | |
Pro Forma | | |
| | |
Pro Forma | |
| |
CVSL | | |
Kleeneze | | |
Adjustments | | |
Note | | |
CVSL | |
Revenue | |
| 18,850 | | |
| 13,181 | | |
| - | | |
| | | |
| 32,031 | |
Program costs and discounts | |
| (2,161 | ) | |
| - | | |
| - | | |
| | | |
| (2,161 | ) |
Net revenue | |
| 16,689 | | |
| 13,181 | | |
| - | | |
| | | |
| 29,870 | |
Costs of sales | |
| 5,215 | | |
| 5,250 | | |
| - | | |
| | | |
| 10,465 | |
Gross profit | |
| 11,474 | | |
| 7,931 | | |
| - | | |
| | | |
| 19,405 | |
Commissions and incentives | |
| 5,714 | | |
| 5,063 | | |
| - | | |
| | | |
| 10,777 | |
Gain on sale of assets | |
| (43 | ) | |
| - | | |
| - | | |
| | | |
| (43 | ) |
Selling, general and administrative | |
| 9,141 | | |
| 3,430 | | |
| - | | |
| | | |
| 12,571 | |
Amortization and depreciation | |
| 618 | | |
| - | | |
| - | | |
| | | |
| 618 | |
Operating loss | |
| (3,956 | ) | |
| (562 | ) | |
| - | | |
| | | |
| (4,518 | ) |
Loss on marketable securities | |
| 7 | | |
| - | | |
| - | | |
| | | |
| 7 | |
Interest expense, net | |
| 597 | | |
| (106 | ) | |
| - | | |
| | | |
| 491 | |
Loss from continuing operations before income tax provision | |
| (4,560 | ) | |
| (456 | ) | |
| - | | |
| | | |
| (5,016 | ) |
Income tax provision | |
| 191 | | |
| 4 | | |
| - | | |
| | | |
| 195 | |
Loss before extraordinary item | |
| (4,751 | ) | |
| (460 | ) | |
| - | | |
| | | |
| (5,211 | ) |
Extraordinary item, net of tax | |
| - | | |
| 33,638 | | |
| (33,638 | ) | |
| A | | |
| - | |
Net loss | |
| (4,751 | ) | |
| (34,098 | ) | |
| 33,638 | | |
| | | |
| (5,211 | ) |
Net loss attributable to non-controlling interest | |
| (166 | ) | |
| - | | |
| - | | |
| | | |
| (166 | ) |
Net loss attributable to common stockholders | |
| (4,585 | ) | |
| (34,098 | ) | |
| 33,638 | | |
| | | |
| (5,045 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and diluted loss per share: | |
| | | |
| | | |
| | | |
| | | |
| | |
Weighted average common shares outstanding | |
| 29,668,069 | | |
| 29,668,069 | | |
| 29,668,069 | | |
| | | |
| 29,668,069 | |
Gain (loss) per common share attributable to common stockholders | |
| (0.15 | ) | |
| (1.15 | ) | |
| 1.13 | | |
| | | |
| (0.17 | ) |
Notes to Pro Forma Unaudited Condensed Consolidated Financial
Statement
A Losses were incurred as a result of the write down
of intercompany receivables that were forgiven prior to and in accordance with the transaction. As these losses were direct and
one-time events related specifically to the acquisition, we have excluded these items from the pro forma income statement shown
below.
About CVSL INC.
CVSL is a growing federation of direct-to-consumer companies.
Within CVSL, each company retains its own separate brand identity, sales force and compensation plan. CVSL companies currently
include The Longaberger Company, a 42-year old maker of hand-crafted baskets and other home decor items; Your Inspiration
At Home, an award-winning maker of hand-crafted spices and other gourmet food items from around the world; Tomboy Tools,
a direct seller of tools designed for women as well as home security systems; Agel Enterprises, a global seller of nutritional
products in gel form as well as a skin care line, operating in 40 countries; Paperly, which offers a line of custom stationery
and other personalized products; My Secret Kitchen, a U.K.-based seller of gourmet food products; Uppercase Living,
which offers an extensive line of customizable vinyl expressions for display on walls in the home; and Kleeneze, a UK-based
seller of cleaning, health, beauty, home, outdoor and a variety of other products. CVSL also includes Happenings, a lifestyle
publication and marketing company.
Cautionary Note Regarding Forward-Looking Statements:
This press release contains forward-looking statements that
involve risks and uncertainties. All statements other than statements of historical fact contained in this press release are forward-looking
statements. We have attempted to identify forward-looking statements by terminology including “anticipate,” “believe,”
“can,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “plan,” “potential,” “predict,” “project,” “should,”
or “will” or the negative of these terms or other comparable terminology. Although we do not make forward-looking statements
unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements include statements
regarding CVSL’s continued growth, the impact of the changes at Longaberger, and indications to be derived from pro forma
numbers. These statements are subject to a number of risks and uncertainties, as to CVSL’s ability to continue making acquisitions
and CVSL’s ability to turn around Longaberger and other risks outlined under “Risk Factors” in CVSL’s Annual
Report on Form 10-K/A for its fiscal year ended December 31, 2014 and those risks discussed in other documents we file with the
Securities and Exchange Commission, which may cause our actual results, levels of activity, performance, or achievements expressed
or implied by these forward-looking statements to differ materially from expectations. Except as required by law, we undertake
no obligation to update or revise publicly any of the forward-looking statements after the date of this press release to conform
our statements to actual results or changed expectations.
Company Contact: |
Investor Relations Contact: |
Russell Mack |
Ed McGregor/Jody Burfening |
Executive Vice President |
LHA |
rmack@cvsl.us.com |
(212) 838-3777 |
|
emcgregor@lhai.com |
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