DANIA BEACH, Fla., Aug. 17, 2015
/PRNewswire/ -- Vapor Corp. (NASDAQ CM: VPCO, VPCOU) ("Vapor"
or the "Company"), a leading U.S.-based distributor and retailer of
vaporizers, e-liquids and e-cigarettes, today announced its
financial and operating results for the second quarter ended
June 30, 2015.
Second Quarter 2015 Financial Highlights
- Net Sales More Than Double Q2 2015 vs Q1 2015
Net
sales for the second quarter of 2015 were $3.0 million compared to $1.5 million in the first quarter of 2015, an
increase of 105%. This increase was primarily due to the Company's
retail Vape Stores expansion strategy and increased wholesale
sales.
- Gross Margins Increase
Gross margins for the second
quarter of 2015 increased to 45.2% from 25.3% the same quarter one
year ago and from (-12.4)% from the first quarter of 2015. This
increase was primarily related to product returns and discounts
that were recognized in the previous quarters, as well as improved
operating margins from the Company's retail operations. The Company
has struck new wholesale agreements with many of its retail
customers to minimize the impact of future product returns and
discount programs.
- Adjusted EBITDA Loss Reduced 46% in Q2 2015 vs Q1
2015
Adjusted EBITDA, a non-GAAP financial measure, was
($1.5) million in the second quarter
of 2015 compared to ($2.8) million in
the first quarter of 2015. This significant reduction was a result
of the Company's two-pronged strategy to shift its wholesale
business to concentrate on smaller retail chains (generally 150
stores and less), while seeing the benefit from operating more of
its vape stores for a full quarter.
"In the second quarter of 2015, we drove sequential quarterly
revenue growth of 105% through our revised wholesale strategy and
the strong performance of our 'The Vape Store' retail locations,"
said Jeff Holman, CEO of Vapor Corp.
"The recent completion of our $41.4
million capital raise offers us the ability to significantly
expand our direct-to-consumer model, 'The Vape Store,' by opening
new locations and acquiring existing vaporizer retailers, which
will be transitioned over to our brand. We currently have 11 'The
Vape Store' locations, with a goal of increasing the number of
company-owned retail stores by 20 to 30 locations before the end of
the calendar year."
Greg Brauser, President of Vapor
Corp., stated, "Vapor Corp.'s competitive differentiator is rooted
in our buying power and fast-growing network of retail locations.
As we continue to acquire stores and expand our brand, our
economies of scale and purchasing power will increasingly improve,
further enhancing our ability to offer the industry's highest
quality e-liquids and vaporizers to customers at reduced prices.
These strengths elevate our competitiveness in the approximately
$3.5 billion vaporizer market and
favorably position us to achieve our long-term goal of being the
leading national vaporizer retailer."
Recent Business Highlights
- Completed an offering of 3,761,657 convertible preferred stock
units at $11 per unit for gross
proceeds of approximately $41.4
million and net proceeds to Vapor Corp. of approximately
$38.7 million.
- Opened 11th "The Vape Store" location in Kissimmee, FL, in response to the growing
consumer demand for vaping products and in recognition of the shift
in consumer preferences to shop in vape-dedicated
stores.
- Fully implemented a new point-of-sale and retail software
system in all of the Company's Vape Stores to improve efficiencies
and controls as part of its expansion plan.
- Completed overhaul and relaunch of TheVapeStoreOnline.com,
Vapor Corp.'s e-commerce channel and premier destination for
e-liquids, devices, tanks and coils, as well as educational
resources for both new and experienced vaping customers.
- Successfully relaunched Vapor Corp.'s affiliate program,
whereby affiliates are supplied with a unique coupon code and
receive commission for every product purchased online at Vapor
Corp.'s e-commerce websites when a customer enters their code at
checkout.
- Rolled out a rewards program across all retail store locations
and on Vapor Corp.'s e-commerce site.
- Launched "Naked Fish", a new, premium line of dripper
e-liquids. The Naked Fish line is mixed using the highest quality
USP Kosher Food Grade Vegetable Glycerin and Propylene
Glycol.
"On the heels of our recent capital raise, we are in a much
stronger financial position. We are debt-free as of today and
have what is likely the largest cash war chest in this segment of
the industry. During the second quarter we completed the
recognition of all returns and write-downs on expired e-cigarette
product. In addition, we have entered new agreements with many of
our larger wholesale retail customers that minimize our
responsibility for the sell-through of product through their
stores, mitigating our exposure to the magnitude of returns that
stymied the e-cig industry in 2014," concluded Mr. Holman.
Non-GAAP Financial Measure
This press release includes both financial measures in
accordance with Generally Accepted Accounting Principles, or GAAP,
as well as a non-GAAP financial measure. Generally, a non-GAAP
financial measure is a numerical measure of a company's
performance, financial position or cash flows that either excludes
or includes amounts that are not normally included or excluded in
the most directly comparable measure calculated and presented in
accordance with GAAP. Non-GAAP financial measures should be viewed
as supplemental to, and should not be considered as alternatives to
net income, operating income, and cash flow from operating
activities, liquidity or any other financial measures. They may not
be indicative of the historical operating results of Vapor nor are
they intended to be predictive of potential future results.
Investors should not consider non-GAAP financial measures in
isolation or as substitutes for performance measures calculated in
accordance with GAAP.
Our management uses and relies on adjusted earnings before
interest, tax, depreciation and amortization, plus non-cash stock
based compensation and changes in the fair value of derivatives or
Adjusted EBITDA, as a non-GAAP financial measure. We believe that
both management and shareholders benefit from referring to the
following non-GAAP financial measure in planning, forecasting and
analyzing future periods. Our management uses this non-GAAP
financial measure in evaluating its financial and operational
decision making and as a means to evaluate period-to-period
comparison. Our management recognizes that the non-GAAP
financial measure has inherent limitations because of the excluded
items described below.
We have included a reconciliation of our non-GAAP financial
measure to the most comparable financial measures calculated in
accordance with GAAP. We believe that providing the non-GAAP
financial measure, together with the reconciliation to GAAP, helps
investors make comparisons between Vapor and other companies. In
making any comparisons to other companies, investors need to be
aware that companies use different non-GAAP measures to evaluate
their financial performance. Investors should pay close attention
to the specific definition being used and to the reconciliation
between such measure and the corresponding GAAP measure provided by
each company under applicable SEC rules.
The following table presents a reconciliation of Adjusted EBITDA
to Net loss, a GAAP financial measure:
|
2015
|
|
Q2 Three
months ended
June 30, 2015
|
Q1 Three
months ended
March 31, 2015
|
Sales, net
|
$
3,011,303
|
$
1,468,621
|
Gross
Margin
|
1,359,698
|
(182,489)
|
|
45.2%
|
-12.4%
|
|
|
|
Advertising
|
67,398
|
105,177
|
Selling, general and
administrative
|
3,534,304
|
3,243,189
|
|
3,601,702
|
3,348,366
|
|
|
|
Total other
expense
|
2,511,251
|
450,341
|
|
|
|
Net
Loss
|
(4,753,255)
|
(3,981,196)
|
|
|
|
Add
Back:
|
|
|
Interest,
net
|
535,001
|
377,459
|
Change in fair value
derivative liabilities
|
(214,768)
|
37,965
|
Depreciation and
amortization
|
648,981
|
437,632
|
Stock based
compensation
|
173,691
|
364,576
|
Other stock based
expense - waivers
|
2,113,889
|
-
|
|
3,256,794
|
1,217,632
|
|
|
|
Adjusted
EBITDA
|
$
(1,496,461)
|
$
(2,763,564)
|
About Vapor Corp.
Vapor Corp., a NASDAQ company, is a
U.S. based distributor and retailer of vaporizers, e-liquids and
electronic cigarettes. It recently acquired the retail store chain
"The Vape Store" as part of a merger with Vaporin, Inc. The
Company's innovative technology enables users to inhale nicotine
vapor without smoke, tar, ash or carbon monoxide. Vapor Corp. has a
streamlined supply chain, marketing strategies and wide
distribution capabilities to deliver its products. The Company's
brands include VaporX®, Krave®, Hookah Stix® and Vaporin™ and are
distributed to retail stores throughout the U.S. and Canada. The Company sells direct to consumer
via e-commerce and Company-owned brick-and-mortar retail locations
operating under "The Vape Store" brand.
Safe Harbor Statement
This press release includes
forward-looking statements including statements regarding future
profitability, opening up to 20-30 new vape stores and minimizing
future product returns. The words "believe," "may," "estimate,"
"continue," "anticipate," "intend," "should," "plan," "could,"
"target," "potential," "is likely," "will," "expect" and similar
expressions, as they relate to us, are intended to identify
forward-looking statements. We have based these forward-looking
statements largely on our current expectations and projections
about future events and financial trends that we believe may affect
our financial condition, results of operations, business strategy
and financial needs. The results anticipated by any or all of these
forward-looking statements might not occur. Important factors that
could cause actual results to differ from those in the
forward-looking statements include a shift in consumer preferences,
contractual difficulties which adversely affect Vapor's acquisition
strategy and future federal and/or state regulation regarding
vaporizers and tobacco alternatives. Further information on our
risk factors is contained in our filings with the SEC, including
the Prospectus dated July 23, 2015.
We undertake no obligation to publicly update or revise any
forward-looking statements, whether as the result of new
information, future events or otherwise.
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visit:http://www.prnewswire.com/news-releases/vapor-corp-reports-second-quarter-2015-results-300129116.html
SOURCE Vapor Corp.