DALLAS, Dec. 6, 2016 /PRNewswire/ -- JRjr33, Inc.,
doing business as JRJR Networks [NYSE MKT: JRJR] today
announced it has filed its Form 10-Q for the period ended
June 30, 2016.
In addition, the Company has filed an amended Form 10-Q for the
period ended June 30, 2015. Following
the Form 8-K filed on September 19,
2016, the Company identified several issues which triggered
a restatement of the prior year financials.
John Rochon, Founder and Chairman
of JRJR Networks, commented, "We are pleased to report
substantially higher year over year revenues resulting in
$16.6 million of incremental sales
mostly arriving from our newly acquired entity Betterware in the
UK. While we remain focused on integrating efficiencies into
the costs structure of our platform companies, these efforts were
not yet realized in the June quarter due to the timing of the
acquisition and additional costs related to regaining compliancy of
our public filings.
Having spent the best part of 2015 and 2016 integrating the
sales, marketing and operations of 10 businesses, operating in over
50 countries, with in excess of 70,000 sales personnel, into the
Company. We are pleased with this substantial year-over-year
expansion in revenues. The hard work of our team has borne
fruit and has set the table to take the Company's strategic
development plan forward.
With our filing of the June 30,
2016 Form 10-Q, we achieved a very large milestone in filing
our Q within the plan period approved by the New York Stock
Exchange. We are diligently working on our September 30, 2016 Form 10-Q.
Once we regain compliancy with the Exchange, we believe there
are several interesting opportunities currently under review that
should continue to enhance the brand and business model we are
committed to. We look forward to beginning 2017 with a series
of operating initiatives focused on brand supremacy, sales
penetration and additional operational enhancements."
Financial Highlights
Revenue for the second quarter was approximately $36.4 million, which is comparable to last year's
revenue of $36.0 million. The revenue
for the six months ended June 30,
2016 was approximately $72.5
million, compared to $55.9
million during the same period the prior year, an increase
of $16.6 million, or 30%.
Net revenue for the second quarter was approximately
$30.1 million, which is comparable to
last year's net revenue of $30.5
million. The net revenue for the six months ended
June 30, 2016 was approximately
$60.3 million, compared to
$47.8 million during the same period
the prior year, an increase of $12.5
million, or 26%.
Gross profit was approximately $20.8
million, compared to $21.0
which is about equal to the second quarter last year. The gross
profit for the six months ended June 30,
2016 was approximately $40.6
million, compared to $33.1
million during the same period the prior year, an increase
of $7.5 million, or 23%.
Gross profit margin during the quarter was 57% of revenue,
compared to 58% of revenue in the prior year. The gross profit
margin for the six months ended June 30,
2016 was 56%, compared to 59% during the same period the
prior year, a decrease of 3%.
Operating loss for the second quarter increased to approximately
$(4.5) million, compared to
$(3.3) million in the prior year, a
change of $1.2 million. The operating
loss increased to approximately $(11.3)
million, compared to $(7.5)
million in the prior year, a change of $3.8 million. The operating loss increased in the
second quarter due to a decrease in the gross profit as well as an
increase in operating expenses of approximately $1.1 million due to the addition of Betterware.
Betterware added approximately $4.2
million of operating expenses in the quarter which means
that the Company has organically reduced operating expenses
compared to last year.
Net loss attributable to JRjr33, Inc. for the second quarter was
approximately $(4.6) million, or a
loss of 13% of revenue, increased compared to the $(3.0) million, or a loss of 8% of revenue,
experienced during the second quarter of last year. The net loss
attributable to JRjr33, Inc. for the six months ended June 30, 2016 was approximately $(11.4) million, or a loss of 16% of revenue,
compared to $(7.1) million, or a loss
of 13% of revenue, during the same period the prior year, an
increase of $4.3 million. The net
loss in the second quarter increased as a result of the increase in
operating losses as well as the increase in interest expense as a
result of the company taking on additional debt in the fourth
quarter of last year as well $0.2
million in late filing penalties to Dominion.
Adjusted EBITDA (losses) for the quarter was approximately
$(2.4) million, or a loss of 7% of
revenue, which has increased from the prior year's loss of
$(1.0) million, or a loss of 3% of
revenue. The adjusted EBITDA (losses) for the six months ended
June 30, 2016 was approximately
$(6.3) million, or a loss of 9% of
revenue, which has increased from the prior year's loss of
$(4.1) million, or a loss of 7% of
revenue. The EBITDA loss increased in the second quarter for the
same reasons as the operating loss, a decrease in gross profit and
an increase in operating expenses due to the addition of
Betterware.
As the Company will hold a conference call Wednesday December 7th at 4:30 p.m. Eastern Time, to discuss the company's
first quarter 2016 financial results.
To participate in the conference call, please dial toll free
(888) 437 - 9366. Please use conference pass code 9757078.
For international callers, please dial (toll) (719) 325-2351,
with the same pass code.
An audio replay of the conference call will be available in the
investor relations section of the Company's website following
completion of the call for approximately 10 business days.
JRjr33, Inc. Condensed Consolidated
Balance Sheets (Unaudited)
|
|
(in thousands,
except share and per share data)
|
|
June 30,
2016
|
|
December 31,
2015
|
Assets
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
2,196
|
|
|
$
|
6,482
|
|
Marketable
securities
|
|
1,247
|
|
|
5,306
|
|
Accounts receivable,
net
|
|
5,036
|
|
|
4,828
|
|
Inventory,
net
|
|
19,310
|
|
|
20,799
|
|
Other current
assets
|
|
4,235
|
|
|
2,303
|
|
Total current
assets
|
|
32,024
|
|
|
39,718
|
|
Assets held for
sale
|
|
998
|
|
|
1,111
|
|
Restricted
cash
|
|
—
|
|
|
2,857
|
|
Sale leaseback
security deposit
|
|
4,414
|
|
|
4,414
|
|
Property, plant and
equipment, net
|
|
4,687
|
|
|
5,387
|
|
Property under
capital leases, net
|
|
14,053
|
|
|
14,654
|
|
Goodwill
|
|
5,146
|
|
|
5,427
|
|
Intangibles,
net
|
|
8,088
|
|
|
8,801
|
|
Other
assets
|
|
37
|
|
|
135
|
|
Total
assets
|
|
$
|
69,447
|
|
|
$
|
82,504
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
|
15,144
|
|
|
$
|
15,937
|
|
Related party
payables
|
|
1,799
|
|
|
1,605
|
|
Accrued
commissions
|
|
4,314
|
|
|
3,033
|
|
Accrued
liabilities
|
|
8,397
|
|
|
7,303
|
|
Deferred
revenue
|
|
2,879
|
|
|
2,307
|
|
Taxes
payable
|
|
5,444
|
|
|
4,830
|
|
Current portion of
long-term debt
|
|
8,627
|
|
|
3,048
|
|
Other current
liabilities
|
|
857
|
|
|
777
|
|
Total current
liabilities
|
|
47,461
|
|
|
38,840
|
|
Deferred tax
liability
|
|
780
|
|
|
744
|
|
Long-term debt, less
current portion
|
|
6,077
|
|
|
12,784
|
|
Capital lease
obligation, less current portion
|
|
16,057
|
|
|
16,332
|
|
Other long-term
liabilities
|
|
2,870
|
|
|
2,864
|
|
Total
liabilities
|
|
73,245
|
|
|
71,564
|
|
Commitments and
contingencies (Note 12)
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred stock, par
value $0.001 per share, 500,000 authorized; -0-issued and
outstanding
|
|
—
|
|
|
—
|
|
Common stock, par
value $0.0001 per share, 250,000,000 shares authorized; 35,993,324
and 35,718,279 shares issued and outstanding, at June 30, 2016 and
at December 31, 2015 respectively
|
|
4
|
|
|
4
|
|
Additional paid-in
capital
|
|
59,166
|
|
|
58,837
|
|
Accumulated other
comprehensive loss
|
|
(2,056)
|
|
|
(586)
|
|
Accumulated
deficit
|
|
(56,642)
|
|
|
(45,255)
|
|
Total stockholders'
equity attributable to JRjr33, Inc.
|
|
472
|
|
|
13,000
|
|
Stockholders' equity
attributable to non-controlling interest
|
|
(4,270)
|
|
|
(2,060)
|
|
Total stockholders'
equity
|
|
(3,798)
|
|
|
10,940
|
|
Total liabilities and
stockholders' equity
|
|
$
|
69,447
|
|
|
$
|
82,504
|
|
JRjr33, Inc. Condensed Consolidated
Statements of Operations (Unaudited)
|
|
|
|
Three Months
Ended June
30,
|
|
Six Months
Ended June
30,
|
(in thousands,
except share and per common share data)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenue
|
|
$
|
36,414
|
|
|
$
|
36,028
|
|
|
$
|
72,489
|
|
|
$
|
55,906
|
|
Program costs and
discounts
|
|
(6,292)
|
|
|
(5,553)
|
|
|
(12,194)
|
|
|
(8,124)
|
|
Net
revenues
|
|
30,122
|
|
|
30,475
|
|
|
60,295
|
|
|
47,782
|
|
Costs of
sales
|
|
9,274
|
|
|
9,468
|
|
|
19,726
|
|
|
14,658
|
|
Gross
profit
|
|
20,848
|
|
|
21,007
|
|
|
40,569
|
|
|
33,124
|
|
Distributor
expense
|
|
9,224
|
|
|
9,269
|
|
|
18,656
|
|
|
15,769
|
|
Selling
expense
|
|
4,729
|
|
|
4,299
|
|
|
9,251
|
|
|
6,609
|
|
General and
administrative expense
|
|
10,726
|
|
|
10,103
|
|
|
22,499
|
|
|
18,536
|
|
Share based
compensation expense
|
|
49
|
|
|
(30)
|
|
|
50
|
|
|
(1,197)
|
|
Depreciation and
amortization
|
|
696
|
|
|
492
|
|
|
1,368
|
|
|
771
|
|
Gain on sale of
assets
|
|
(70)
|
|
|
(40)
|
|
|
(112)
|
|
|
(83)
|
|
Impairment of
goodwill
|
|
—
|
|
|
192
|
|
|
191
|
|
|
192
|
|
Operating
loss
|
|
(4,506)
|
|
|
(3,278)
|
|
|
(11,334)
|
|
|
(7,473)
|
|
Gain on sale of
marketable securities
|
|
(7)
|
|
|
—
|
|
|
(9)
|
|
|
(192)
|
|
Interest expense,
net
|
|
1,037
|
|
|
565
|
|
|
1,868
|
|
|
1,164
|
|
Loss before income
tax provision
|
|
(5,536)
|
|
|
(3,843)
|
|
|
(13,193)
|
|
|
(8,445)
|
|
Income tax
provision
|
|
334
|
|
|
195
|
|
|
410
|
|
|
386
|
|
Net loss
|
|
(5,870)
|
|
|
(4,038)
|
|
|
(13,603)
|
|
|
(8,831)
|
|
Net loss attributable
to non-controlling interest
|
|
1,253
|
|
|
1,016
|
|
|
2,216
|
|
|
1,686
|
|
Net loss attributable
to JRjr33, Inc.
|
|
$
|
(4,617)
|
|
|
$
|
(3,022)
|
|
|
$
|
(11,387)
|
|
|
$
|
(7,145)
|
|
Basic and diluted
loss per share:
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding
|
|
35,892,137
|
|
|
34,367,095
|
|
|
35,912,156
|
|
|
32,017,582
|
|
Loss per common share
attributable to JRjr33, Inc., basic and diluted
|
|
$
|
(0.13)
|
|
|
$
|
(0.09)
|
|
|
$
|
(0.32)
|
|
|
$
|
(0.22)
|
|
JRjr33, Inc. EBITDA (losses)
Reconciliation (Unaudited)
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net loss
|
$
|
(5,870)
|
|
|
$
|
(4,038)
|
|
|
$
|
(13,603)
|
|
|
$
|
(8,831)
|
|
Interest,
net
|
1,037
|
|
|
565
|
|
|
1,868
|
|
|
1,164
|
|
Income tax
expense
|
334
|
|
|
195
|
|
|
410
|
|
|
386
|
|
Depreciation and
amortization
|
837
|
|
|
633
|
|
|
1,649
|
|
|
1,053
|
|
EBITDA
(losses)
|
(3,662)
|
|
|
(2,645)
|
|
|
(9,676)
|
|
|
(6,228)
|
|
Capital market
expenses
|
107
|
|
|
361
|
|
|
243
|
|
|
835
|
|
M&A
expenses
|
432
|
|
|
312
|
|
|
825
|
|
|
642
|
|
M&A infrastructure
expense
|
614
|
|
|
778
|
|
|
1,289
|
|
|
1,497
|
|
Other EBITDA
Adjustments
|
134
|
|
|
223
|
|
|
1,013
|
|
|
(887)
|
|
Adjusted EBITDA
(losses)
|
$
|
(2,375)
|
|
|
$
|
(971)
|
|
|
$
|
(6,306)
|
|
|
$
|
(4,141)
|
|
Cautionary Note Regarding Adjusted EBITDA:
This news release includes information on Adjusted EBITDA,
which is a non-GAAP financial measure as defined by SEC Regulation
G.
Management believes that Adjusted EBITDA, when viewed with
our results under GAAP and the accompanying reconciliations,
provides useful information about our period-over-period growth.
Adjusted EBITDA is presented because management believes it
provides additional information with respect to the performance of
our fundamental business activities and is also frequently used by
securities analysts, investors and other interested parties in the
evaluation of comparable companies. We also rely on Adjusted EBITDA
as a primary measure to review and assess the operating performance
of our company and our management team.
Adjusted EBITDA is a non-GAAP financial measure. We
calculate adjusted EBITDA by taking net income, and adding back the
expenses related to interest, income taxes, depreciation, and
amortization, stock compensation expenses, non-cash compensation,
deferred rent, inventory write-off adjustments, gains/losses in
relation to the sale of an asset, asset impairment costs such as
goodwill or other identifiable intangible impairment, asset fair
value adjustments, and debt forgiveness expenses, as each of those
elements are calculated in accordance with GAAP. Adjusted
EBITDA should not be construed as a substitute for net income
(loss) (as determined in accordance with GAAP) for the purpose of
analyzing our operating performance or financial position, as
Adjusted EBITDA is not defined by GAAP. A reconciliation is
provided above in this press release.
About JRJR Networks
(www.jrjrnetworks.com)
JRJR Networks is a growing platform of direct-to-consumer
brands. Within JRJR Networks, each company retains its separate
identity, sales force, product line and compensation plan, while
JRJR Networks seeks synergies and efficiencies in operational
areas. JRJR Networks 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; 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; Uppercase
Living, which offers a line of customizable vinyl expressions for
display on walls in the home; Kleeneze, a 95-year old UK-based
catalog seller of cleaning, health, beauty, home, outdoor and a
variety of other products, and Betterware, a UK-based home
catalog seller. JRJR Networks also includes Happenings, a
lifestyle publication and marketing company.
Cautionary Note Regarding Forward-Looking Statements:
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements other than statements of historical fact
contained in this press release are forward-looking statements. In
some cases, forward-looking statements can be identified by
terminology such as "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 and include
statements regarding the expected timing of the filing of the Form
10-Q for the period ended June 30,
2016, the continued sales force and employee performance and
our continued growth. These forward-looking statements
are based on management's expectations and assumptions as of the
date of this press release and are subject to a number of risks and
uncertainties, many of which are difficult to predict that could
cause actual results to differ materially from current expectations
and assumptions from those set forth or implied by any
forward-looking statements. Important factors that could cause
actual results to differ materially from current expectations
include, among others, our ability to expand leadership
activities in support of our sales, our ability to continue to
grow, our ability to integrate the entities that we have acquired,
our ability to strengthen our internal controls and the other risks
outlined under "Risk Factors" in our Annual Report on Form 10-K for
our fiscal year ended December 31,
2015 and our other filings with the SEC, including
subsequent reports on Forms 10-Q and 8-K. The information in this
release is provided only as of the date of this release, and we
undertake no obligation to update any forward-looking statements
contained in this release on account of new information, future
events, or otherwise, except as required by law.
Contact:
Investor Relations: Tucker Gagen
(tucker.gagen@jrjrnetworks.com)
Media Contact: Brenton Baker
(brenton.baker@jrjrnetworks.com)
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SOURCE JRJR Networks