Company Reports 30% Top-Line Growth for
Second Quarter 2017
Diluted Income Per Share Increased 48% to
$0.80 for the Second Quarter 2017
Company Raises Full Year 2017 Revenue and
Diluted Income Per Share Guidance
Nutrisystem, Inc. (NASDAQ: NTRI), a leading provider of weight
management products and services, today reported financial results
for the quarter and six months ended June 30, 2017.
Dawn Zier, President and Chief Executive Officer, stated, “We
are pleased to report our 16th consecutive quarter of strong
top-line growth. Both new and reactivation customer revenues are
growing at double-digit rates for the Nutrisystem brand.
Additionally, our newly launched South Beach Diet is resonating
with consumers and is expanding our customer reach.”
Ms. Zier added, “As we turn our focus to 2018, we will continue
to leverage our many strengths to provide customers with the
products and tools they need to achieve their weight loss goals. We
believe our multi-brand approach to the market has us
well-positioned to deliver meaningful and ongoing shareholder value
as the Nutrisystem brand commands a larger share of the expanding
weight loss space and the South Beach Diet brand begins to
grow.”
The following are key financial highlights for the period.
Reconciliations of certain GAAP to non-GAAP measures are provided
later in this press release.
Second Quarter 2017 Compared to Second Quarter 2016
- Revenue increased 30% to $194.9
million, compared to $149.8 million.
- Gross margin increased 40 basis points
to 54.3%, compared to 53.9%.
- Net income increased 52% to $24.4
million, compared to $16.1 million.
- Diluted income per common share
increased 48% to $0.80, compared to $0.54.
- Adjusted EBITDA increased 42% to $42.5
million, compared to $29.9 million.
- The Board of Directors has declared a
quarterly dividend of $0.175 per share, payable August 17, 2017 to
stockholders of record as of August 7, 2017.
Mike Monahan, Chief Financial Officer, commented, “Our second
quarter results demonstrate the strength of our business model as
we improved both gross and operating margins. Based on our second
quarter results and improved expectations for the second half of
2017 we are raising full year 2017 revenue and earnings per share
guidance.”
Third Quarter and Updated Full Year 2017 Guidance
The Company’s third quarter and updated full year 2017 guidance
are outlined below. Reconciliations of certain GAAP to non-GAAP
measures are provided later in this press release.
- Third quarter revenue is expected to be
in the range of $153 to $158 million, net income between $13.0 and
$14.3 million, diluted income per common share between $0.42 and
$0.47, and adjusted EBITDA between $25.6 and $27.6 million.
- Full year 2017 revenue is now expected
to be in the range of $684 to $694 million compared to the previous
range of $650 to $665 million, net income between $56.1 and $59.0
million compared to the previous range of $49.9 to $52.9 million,
diluted income per common share between $1.84 and $1.94 compared to
the previous range of $1.65 to $1.75, and adjusted EBITDA between
$107.1 and $111.3 million compared to the previous range of $100.0
to $104.5 million.
Conference Call and Webcast
Management will host a conference call to discuss second quarter
2017 financial results today at 5:00 PM Eastern time. The
conference call will include remarks from President and Chief
Executive Officer Dawn Zier, Chief Financial Officer Mike Monahan,
and Chief Marketing Officer Keira Krausz. A webcast of the
conference call will be available live on the Investor Relations
section of Nutrisystem's website at www.nutrisystem.com. Interested
parties unable to access the conference call via the webcast may
dial 877-407-3982. A replay of the conference call will be
available on the Company website for 30 days following the event
and can be accessed at 844-512-2921 using replay pin number
13666132.
Non-GAAP Financial Measures
Within this announcement, the Company makes reference to certain
adjusted financial measures, which have directly comparable GAAP
financial measures as identified in this press release. In this
release, EBITDA is defined as net income excluding interest, income
taxes and depreciation and amortization. Adjusted EBITDA is defined
as EBITDA excluding non-cash employee compensation. The Company
excludes non-cash employee compensation because it is a non-cash
expense that is not reflective of the cash expenses of the Company.
EBITDA and adjusted EBITDA are provided so that investors have the
same financial data that management uses with the belief that it
will assist the investment community in properly assessing the
ongoing performance of the Company for the periods being reported
and future periods. The presentation of this additional information
is not meant to be considered a substitute for measures prepared in
accordance with GAAP.
Forward-Looking Statements
Information provided and statements contained in this press
release that are not purely historical, such as third quarter and
updated full year 2017 guidance, and the Company’s financial and
operational outlook, are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, Section 21E
of the Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements only
speak as of the date of this press release and the Company assumes
no obligation to update the information included in this press
release. Statements made in this press release that are
forward-looking in nature may involve risks and uncertainties.
Accordingly, readers are cautioned that any such forward-looking
statements are not guarantees and are subject to certain risks,
uncertainties and assumptions that are difficult to predict,
including, without limitation, risks relating to cybersecurity
breaches, risks that consumer spending may decline or that U.S. and
global macroeconomic conditions may worsen resulting in reduced
demand for the Company’s products, risks relating to changes in
consumer preferences away from the Company’s food offerings
including its pre-packaged foods, risks relating to the
effectiveness and efficiency of the Company’s marketing
expenditures, including the launch of new brands, which may not
result in increased revenue or generate sufficient levels of brand
name and program awareness, risks if the Company is unable to
obtain sufficient quantities, quality and variety of food products
in a timely and low-cost manner from its food vendors, risks of
exposure to product liability claims if the use of the Company’s
products results in illness or injury, risks if the Company becomes
subject to health or advertising related claims from its customers,
competitors or governmental and regulatory bodies, and risks
relating to increased competition from other weight management
providers. For further details and a discussion of these risks and
uncertainties, see the Company's periodic reports, including the
annual report on Form 10-K, quarterly reports on Form 10-Q and
current reports on Form 8-K, filed with or furnished to the
Securities and Exchange Commission and available at www.sec.gov.
Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable as of the date made,
expectations may prove to have been materially different from the
results expressed or implied by such forward-looking statements.
Unless otherwise required by law, the Company also disclaims any
obligation to update its view of any such risks or uncertainties or
to announce publicly the result of any revisions to the
forward-looking statements made in this press release.
About Nutrisystem, Inc.
Nutrisystem, Inc. (NASDAQ: NTRI) is a leader in the weight loss
industry, having helped millions of people lose weight over the
course of 45 years. The Company’s multi-brand approach to weight
loss includes two distinct programs for 2017. From the flagship
Nutrisystem® brand comes the clinically-tested Nutrisystem® Lean13
program, designed to deliver weight loss of up to 13 pounds and
seven inches in the first month. In 2017, South Beach Diet® became
an all-new structured meal delivery weight-loss program following
the acquisition of the brand in December 2015. Additional
Nutrisystem branded weight-loss products include Fast 5 and Turbo
10, as well as multi-day kits and individual products at select
retail outlets.
NUTRISYSTEM, INC. AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited, in thousands, except per share
amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
REVENUE $ 194,894 $ 149,823 $ 407,571 $ 311,933 COSTS AND
EXPENSES: Cost of revenue 89,097 69,142 187,327 147,700 Marketing
44,840 35,588 126,518 94,942 General and administrative 21,405
17,475 40,994 35,037 Depreciation and amortization 3,789
2,978 7,566 5,828 Total costs and expenses
159,131 125,183 362,405 283,507
Operating income 35,763 24,640 45,166 28,426 INTEREST (INCOME)
EXPENSE, net (2 ) 21 (26 ) 34 Income
before income tax expense 35,765 24,619 45,192 28,392 INCOME TAX
EXPENSE 11,330 8,501 13,273 9,722 Net
income $ 24,435 $ 16,118 $ 31,919 $ 18,670 BASIC INCOME PER COMMON
SHARE $ 0.82 $ 0.55 $ 1.07 $ 0.64 DILUTED INCOME PER COMMON SHARE $
0.80 $ 0.54 $ 1.05 $ 0.63 WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 29,696 29,188 29,627 29,105 Diluted 30,206 29,461 30,096
29,414 DIVIDENDS DECLARED PER COMMON SHARE $ 0.175 $ 0.175 $ 0.35 $
0.35
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except par value
amounts)
June 30, December 31, 2017 2016
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 45,821 $
9,623 Short term investments 35,286 23,873 Receivables 15,479
17,560 Inventories 27,919 38,504 Other current assets
8,506 10,084 Total current assets 133,011 99,644
FIXED ASSETS, net 31,797 32,643 INTANGIBLE ASSETS, net 13,584
14,084 DEFERRED INCOME TAXES 7,458 6,940 OTHER ASSETS
965 929 Total assets $ 186,815 $
154,240
LIABILITIES AND
STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES: Accounts payable $ 32,747 $ 33,106 Accrued
payroll and related benefits 7,801 10,351 Income taxes payable
6,061 228 Deferred revenue 8,776 7,482 Other accrued expenses and
current liabilities 7,299 6,672 Total
current liabilities 62,684 57,839 NON-CURRENT LIABILITIES
1,858 1,877 Total liabilities
64,542 59,716 STOCKHOLDERS’ EQUITY:
Preferred stock, $.001 par value (5,000
shares authorized, no shares issued and outstanding)
0 0 Common stock, $.001 par value (100,000 shares authorized;
shares issued –
30,555 at June 30, 2017 and 30,203 at
December 31, 2016)
30 30 Additional paid-in capital 62,868 54,057
Treasury stock, at cost, 551 shares at
June 30, 2017 and 517 shares at December 31, 2016
(9,902 ) (8,329 ) Retained earnings 69,296 48,799 Accumulated other
comprehensive loss (19 ) (33 ) Total
stockholders’ equity 122,273 94,524
Total liabilities and stockholders’ equity $ 186,815
$ 154,240
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months Ended June 30, 2017
2016 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $
31,919 $ 18,670 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
7,566 5,828 Loss on disposal of fixed assets 0 104 Share–based
compensation expense 5,274 3,666 Deferred income tax (benefit)
expense (534 ) 171 Other charges 12 1 Changes in operating assets
and liabilities: Receivables 2,081 2,828 Inventories 10,585 8,374
Other assets 1,542 3,061 Accounts payable (489 ) (10,029 ) Accrued
payroll and related benefits (2,550 ) (2,266 ) Deferred revenue
1,294 2,651 Income taxes 5,842 5,558 Other accrued expenses and
liabilities 254 778 Net cash provided by operating
activities 62,796 39,395 CASH FLOWS FROM INVESTING
ACTIVITIES: Purchases of short term investments (17,702 ) (10,998 )
Proceeds from sales of short term investments 6,298 3,175 Capital
additions (5,736 ) (6,569 ) Net cash used in
investing activities (17,140 ) (14,392 ) CASH FLOWS
FROM FINANCING ACTIVITIES: Exercise of stock options 3,537 1,102
Employee tax withholdings related to the vesting of equity awards
(1,573 ) (2,630 ) Excess tax benefits from share-based compensation
0 1,396 Repurchase and retirement of common stock to satisfy
employee tax withholdings (785 ) 0 Payment of dividends
(10,637 ) (10,375 ) Net cash used in financing activities
(9,458 ) (10,507 ) NET INCREASE IN CASH AND CASH
EQUIVALENTS 36,198 14,496 CASH AND CASH EQUIVALENTS, beginning of
period 9,623 6,191 CASH AND CASH EQUIVALENTS, end of
period $ 45,821 $ 20,687
NUTRISYSTEM, INC. AND SUBSIDIARIES ADJUSTED EBITDA
RECONCILIATION TO GAAP RESULTS
(Unaudited, in thousands)
Three Months Ended
June 30,
Six Months Ended
June 30,
2017 2016 2017 2016
Net income $ 24,435 $ 16,118 $ 31,919 $ 18,670 Interest
(income) expense, net (2 ) 21 (26 ) 34 Income tax expense 11,330
8,501 13,273 9,722 Depreciation and amortization 3,789
2,978 7,566 5,828 EBITDA 39,552 27,618 52,732
34,254 Non-cash employee compensation expense 2,957
2,319 5,274 3,666 Adjusted EBITDA $ 42,509 $ 29,937 $
58,006 $ 37,920
NUTRISYSTEM, INC. AND
SUBSIDIARIES ADJUSTED EBITDA RECONCILIATION TO GAAP
GUIDANCE
(Unaudited, in thousands)
Three Months Ending
September 30, 2017
Year Ending
December 31, 2017
Low High Low
High Net income $ 12,958 $ 14,286 $ 56,136 $ 59,009
Interest expense, net 25 25 30 30 Income tax expense 6,557 7,229
25,934 27,261 Depreciation and amortization 3,870
3,870 15,300 15,300 EBITDA 23,410 25,410 97,400
101,600 Non-cash employee compensation expense 2,190
2,190 9,700 9,700 Adjusted EBITDA $ 25,600 $ 27,600 $
107,100 $ 111,300
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version on businesswire.com: http://www.businesswire.com/news/home/20170726006261/en/
ICR, Inc.John Mills,
Partner646-277-1254ir@nutrisystem.comJohn.Mills@Icrinc.com
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