LifeVantage Corporation (Nasdaq: LFVN) today reported financial
results for its first quarter ended September 30, 2020.
First Quarter Fiscal 2021 Highlights*:
- Revenue of $54.8 million, a decline of 2.5% from the prior year
period, largely reflecting the lack of an Elite Academy event not
replicated during the first quarter of fiscal 2021;
- Revenue in the Americas decreased 3.7% and revenue in
Asia/Pacific & Europe increased 0.7%;
- Total active accounts decreased 3.9% sequentially to 172,000,
while declining 5.0% compared to the prior year period. The
sequential decline included a 6.8% decline in distributors and a
1.9% decline in customers. Compared to the prior year period,
distributors grew 4.6% and customers declined 10.3%;
- Earnings per diluted share were $0.17, up 41.7% over the prior
year period;
- Adjusted earnings per diluted share were up 92.3% to $0.25,
compared to $0.13 in the prior year period;
- Adjusted EBITDA increased 42.5% compared to the prior year
period to $6.7 million;
- Repurchased 136,000, or $2.0 million, of common shares;
and
- Strong balance sheet with $18.0 million of cash and no
debt.
* All comparisons are on a year over year basis and compare the
third quarter of fiscal 2020 to the third quarter of fiscal 2019,
unless otherwise noted.
"We continue to generate strong year over year growth in active
distributors both in the U.S. and internationally, while revenue
growth was negatively impacted by the timing of our Elite Academy
events as last year’s Q1 event was not replicated this year.
However, we continue to drive strong adjusted EBITDA growth and
nearly doubled adjusted EPS on a year over year basis,” stated
LifeVantage Interim Chief Executive Officer and Chief Financial
Officer, Steve Fife. “We completed a highly successful virtual
convention early in the second quarter of fiscal 2021, launching 6
new flavors of our Axio product line and delivering incremental
training and standardized selling tools and systems to our field.
We continue to develop additional tools, product videos and
messaging to support our distributors social media and standard
selling practices. Furthering our growth efforts, we successfully
launched our operations in Singapore and expanded our NFR offerings
into Malaysia during the first quarter, continuing our expansion
across Asia. LifeVantage continues to have a significant
international growth opportunity that we believe will remain a core
driver of sustainable long-term growth. Additionally, our financial
position is one of significant strength, ending the first quarter
with $18 million in cash and no debt. We believe we have the
resources, the products and the team to drive significant growth in
the future and deliver incremental shareholder value. "
First Quarter Fiscal 2021 Results
For the first fiscal quarter ended September 30, 2020, the
Company reported revenue of $54.8 million, a 2.5% decrease over the
first quarter of fiscal 2020. Revenue in the Americas for the first
quarter decreased 3.7% compared to the first quarter of fiscal 2020
and revenue in the Asia/Pacific & Europe region increased 0.7%
compared to the first quarter of fiscal 2020. Revenue for the first
quarter of fiscal 2021 was positively impacted $0.2 million, or
0.3%, by foreign currency fluctuations associated with revenue
generated in international markets when compared to the first
quarter of fiscal 2020.
Gross profit for the first quarter of fiscal 2021 was $45.4
million, or 82.9% of revenue, compared to $47.0 million, or 83.7%
of revenue, for the same period in fiscal 2020. The decline in
gross margin as a percentage of revenue is primarily due to
decreased revenue primarily reflecting the fact that we did not
hold an Elite Academy event during the current year period as we
did in the prior year same period. Additionally, gross margin was
impacted during the current year due to increased shipping to
customer expenses and shifts in geographic and product sales
mix.
Commissions and incentives expense for the first quarter of
fiscal 2021 was $25.6 million, or 46.8% of revenue, compared to
$26.8 million, or 47.6% of revenue, for the same period in fiscal
2020. The decrease in commissions and incentives expense as a
percentage of revenue is due mainly to the timing and magnitude of
investments in our promotional and incentive programs and our red
carpet program.
Selling, general and administrative expense (SG&A) for the
first quarter of fiscal 2021 was $16.3 million, or 29.7% of
revenue, compared to $17.7 million, or 31.5% of revenue, for the
same period in fiscal 2020. Adjusted for nonrecurring expenses,
which are detailed in the GAAP to non-GAAP reconciliation tables
included at the end of this press release, adjusted non-GAAP
SG&A expenses for the first quarter of fiscal 2021 were $14.7
million, or 26.8% of revenue, compared to adjusted non-GAAP
SG&A expenses for the first quarter of fiscal 2020 of $17.5
million, or 31.0% of revenue. The year over year decrease in
non-GAAP SG&A primarily was due to decreased events expenses as
a result of no Elite Academy event being held during the current
year period.
Operating income for the first quarter of fiscal 2021 was $3.5
million, or 6.4% of revenue, compared to $2.6 million, or 4.6% of
revenue, for the first quarter of fiscal 2020. Accounting for
non-GAAP adjustments noted previously, adjusted non-GAAP operating
income for the first quarter of fiscal 2021 was $5.1 million, or
9.3% of revenue, compared to $2.8 million, or 5.0% of revenue, for
the first quarter of fiscal 2020.
Net income for the first quarter of fiscal 2021 was $2.5
million, or $0.17 per diluted share. This compares to net income
for the first quarter of fiscal 2020 of $1.8 million, or $0.12 per
diluted share. Accounting for the non-GAAP adjustments noted
previously, net of tax, adjusted non-GAAP net income for the first
quarter of fiscal 2021 increased 88.5% year over year, to $3.6
million, or $0.25 per diluted share. Accounting for the
non-GAAP adjustments noted previously, net of tax, adjusted
non-GAAP net income for the first quarter of fiscal 2020 was $1.9
million, or $0.13 per diluted share.
Adjusted EBITDA increased 42.5% to $6.7 million for the first
quarter of fiscal 2021, compared to $4.7 million for the comparable
period in fiscal 2020.
Balance Sheet & Liquidity
The Company used $1.1 million of cash from operations during
fiscal 2021 compared to using $3.5 million during fiscal 2020. The
Company's cash and cash equivalents at September 30, 2020 were
$18.0 million, compared to $22.1 million at June 30, 2020. The
Company has no debt outstanding at September 30, 2020, and at
June 30, 2020. During the first quarter of fiscal 2021, the
Company repurchased 136,000 common shares for $2.0 million under
its share repurchase program.
Fiscal Year 2021 Guidance
The Company is reiterating its outlook for fiscal 2021, which
was initially provided when the Company reported fourth fiscal
quarter and full fiscal year 2020 results on August 18, 2020. The
Company expects to generate revenue in the range of $240 million to
$251 million in fiscal year 2021 and adjusted EBITDA of $25 million
to $27 million, with adjusted earnings per share in the range of
$0.87 to $0.91, which assumes a full year tax rate of approximately
30%. The Company's guidance for adjusted non-GAAP EBITDA and
adjusted non-GAAP earnings per diluted share excludes any
non-operating or non-recurring expenses that may materialize during
fiscal 2021. This guidance reflects the current trends in the
business and the Company’s current view as to the impact of the
COVID-19 pandemic on its business. However, the impact of the
COVID-19 pandemic continues to rapidly evolve and actual results
could be adversely affected by further deterioration to the global
economic and operating environments as a result of future COVID-19
developments. The Company is not providing guidance for GAAP
earnings per diluted share for fiscal 2021 due to the potential
occurrence of one or more non-operating, one-time expenses, which
the Company does not believe it can reliably predict.
Conference Call Information
The Company will hold an investor conference call today at 2:30
p.m. MDT (4:30 p.m. EDT). Investors interested in participating in
the live call can dial (877) 705-6003 from the U.S. International
callers can dial (201) 493-6725. A telephone replay will be
available approximately two hours after the call concludes and will
be available through Tuesday, November 10, 2020, by dialing (844)
512-2921 from the U.S. and entering confirmation code 13711780, or
(412) 317-6671 from international locations, and entering
confirmation code 13711780.
There will also be a simultaneous, live webcast available on the
Investor Relations section of the Company's web site at
https://lifevantage.gcs-web.com/events-and-presentations or
directly at http://public.viavid.com/index.php?id=141906. The
webcast will be archived for approximately 30 days.
About LifeVantage Corporation
LifeVantage Corporation (Nasdaq: LFVN) is a pioneer in
Nutrigenomics - a new science dedicated to biohacking the human
aging code. The Company engages in the identification, research,
development and distribution of advanced nutraceutical dietary
supplements and skin and hair care products, including its
Protandim® product line, LifeVantage® Omega+ and ProBio dietary
supplements, the TrueScience® line of Nrf2 infused skin care and
hair care products, Petandim® for Dogs, Axio® smart energy drink
mixes, and the PhysIQ™ weight management system. LifeVantage was
founded in 2003 and is headquartered in Salt Lake City, Utah.
For more information, visit www.lifevantage.com.
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," "will," "hopes," "intends," "estimates,"
"expects," "projects," "plans," "anticipates," "look forward to,"
"goal," “may be,” 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 executing
against and the benefits of our key initiatives, future growth,
including geographic and product expansion, and expected financial
performance. 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, further deterioration to
the global economic and operating environments as a result of
future COVID-19 developments, as well as 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, other
income, net, and certain other adjustments. Non-GAAP EBITDA and
Non-GAAP Adjusted EBITDA may not be comparable to similarly titled
measures reported by other companies. We define Non-GAAP Net Income
as GAAP net income less certain tax adjusted non-recurring one-time
expenses incurred during the period and Non-GAAP Earnings per Share
as Non-GAAP Net Income divided by weighted-average shares
outstanding.
We are presenting Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA,
Non-GAAP Net Income and Non-GAAP Earnings Per Share 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, Non-GAAP Adjusted EBITDA,
Non-GAAP Net Income and Non-GAAP Earnings Per Share are presented
solely as supplemental disclosure because: (i) we believe these
measures are 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, Non-GAAP
Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings Per
Share internally as benchmarks to evaluate our operating
performance or compare our performance to that of our competitors.
The use of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net
Income and Non-GAAP Earnings per Share 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 reconciliations of Non-GAAP
EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP
Earnings per Share, which are non-GAAP financial measures to Net
Income and Earnings per Share, our most directly comparable
financial measures presented in accordance with GAAP.
Investor Relations Contacts:
Scott Van Winkle, ICR (617)
956-6736scott.vanwinkle@icrinc.com
|
|
LIFEVANTAGE CORPORATION AND SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
(unaudited) |
(In thousands, except per
share data) |
September 30, 2020 |
|
June 30, 2020 |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
17,960 |
|
|
$ |
22,138 |
|
Accounts receivable |
2,342 |
|
|
2,610 |
|
Income tax receivable |
98 |
|
|
— |
|
Inventory, net |
14,798 |
|
|
13,888 |
|
Prepaid expenses and other |
5,835 |
|
|
5,232 |
|
Total current assets |
41,033 |
|
|
43,868 |
|
|
|
|
|
Property and equipment, net |
7,033 |
|
|
7,170 |
|
Right-of-use assets |
14,554 |
|
|
956 |
|
Intangible assets, net |
818 |
|
|
851 |
|
Deferred income tax asset |
2,418 |
|
|
2,164 |
|
Equity securities |
2,205 |
|
|
2,205 |
|
Other long-term assets |
2,151 |
|
|
1,663 |
|
TOTAL ASSETS |
$ |
70,212 |
|
|
$ |
58,877 |
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
4,733 |
|
|
$ |
3,521 |
|
Commissions payable |
7,841 |
|
|
9,219 |
|
Income tax payable |
603 |
|
|
784 |
|
Lease liabilities |
2,299 |
|
|
1,184 |
|
Other accrued expenses |
6,544 |
|
|
10,311 |
|
Total current liabilities |
22,020 |
|
|
25,019 |
|
|
|
|
|
Lease liabilities |
13,160 |
|
|
— |
|
Other long-term
liabilities |
896 |
|
|
604 |
|
Total liabilities |
36,076 |
|
|
25,623 |
|
Commitments and
contingencies |
|
|
|
Stockholders' equity |
|
|
|
Preferred stock — par value $0.0001 per share, 5,000 shares
authorized, no shares issued or outstanding |
— |
|
|
— |
|
Common stock — par value $0.0001 per share, 40,000 shares
authorized and 14,238 and 14,313 issued and outstanding as of
September 30, 2020 and June 30, 2020, respectively |
1 |
|
|
1 |
|
Additional paid-in capital |
126,687 |
|
|
126,416 |
|
Accumulated deficit |
(92,856 |
) |
|
(93,307 |
) |
Accumulated other comprehensive income |
304 |
|
|
144 |
|
Total stockholders’ equity |
34,136 |
|
|
33,254 |
|
TOTAL LIABILITIES AND
STOCKHOLDERS’ EQUITY |
$ |
70,212 |
|
|
$ |
58,877 |
|
|
|
|
|
|
|
|
|
LIFEVANTAGE CORPORATION AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(unaudited) |
|
|
|
|
|
Three Months Ended September 30, |
(In thousands, except per
share data) |
2020 |
|
2019 |
Revenue, net |
$ |
54,827 |
|
|
$ |
56,228 |
|
Cost of sales |
9,398 |
|
|
9,190 |
|
Gross profit |
45,429 |
|
|
47,038 |
|
|
|
|
|
Operating expenses: |
|
|
|
Commissions and incentives |
25,633 |
|
|
26,774 |
|
Selling, general and administrative |
16,299 |
|
|
17,686 |
|
Total operating expenses |
41,932 |
|
|
44,460 |
|
Operating income |
3,497 |
|
|
2,578 |
|
|
|
|
|
Other expense: |
|
|
|
Interest expense, net |
(6 |
) |
|
(48 |
) |
Other expense, net |
(141 |
) |
|
(80 |
) |
Total other expense |
(147 |
) |
|
(128 |
) |
Income before income
taxes |
3,350 |
|
|
2,450 |
|
Income tax expense |
(899 |
) |
|
(689 |
) |
Net income |
$ |
2,451 |
|
|
$ |
1,761 |
|
Net income per share: |
|
|
|
Basic |
$ |
0.17 |
|
|
$ |
0.13 |
|
Diluted |
$ |
0.17 |
|
|
$ |
0.12 |
|
Weighted-average shares
outstanding: |
|
|
|
Basic |
14,269 |
|
|
14,009 |
|
Diluted |
14,695 |
|
|
15,106 |
|
LIFEVANTAGE CORPORATION AND SUBSIDIARIES |
|
|
Revenue by Region |
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
|
|
|
|
|
(In thousands) |
2020 |
|
2019 |
|
|
|
|
|
|
Americas |
$ |
38,675 |
|
|
71 |
% |
|
$ |
40,181 |
|
|
71 |
% |
|
|
|
|
|
|
Asia/Pacific & Europe |
16,152 |
|
|
29 |
% |
|
16,047 |
|
|
29 |
% |
|
|
|
|
|
|
Total |
$ |
54,827 |
|
|
100 |
% |
|
$ |
56,228 |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active Accounts |
|
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, |
|
|
|
|
|
|
|
2020 |
|
2019 |
|
Change from Prior Year |
|
Percent Change |
Active Independent
Distributors (1) |
|
|
|
|
|
|
|
|
|
|
|
Americas |
46,000 |
|
|
68 |
% |
|
44,000 |
|
|
68 |
% |
|
2,000 |
|
|
4.5 |
% |
Asia/Pacific & Europe |
22,000 |
|
|
32 |
% |
|
21,000 |
|
|
32 |
% |
|
1,000 |
|
|
4.8 |
% |
Total Active Independent Distributors |
68,000 |
|
|
100 |
% |
|
65,000 |
|
|
100 |
% |
|
3,000 |
|
|
4.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
Active Customers (2) |
|
|
|
|
|
|
|
|
|
|
|
Americas |
81,000 |
|
|
78 |
% |
|
92,000 |
|
|
79 |
% |
|
(11,000 |
) |
|
(12.0 |
)% |
Asia/Pacific & Europe |
23,000 |
|
|
22 |
% |
|
24,000 |
|
|
21 |
% |
|
(1,000 |
) |
|
(4.2 |
)% |
Total Active Customers |
104,000 |
|
|
100 |
% |
|
116,000 |
|
|
100 |
% |
|
(12,000 |
) |
|
(10.3 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
Active Accounts (3) |
|
|
|
|
|
|
|
|
|
|
|
Americas |
127,000 |
|
|
74 |
% |
|
136,000 |
|
|
75 |
% |
|
(9,000 |
) |
|
(6.6 |
)% |
Asia/Pacific & Europe |
45,000 |
|
|
26 |
% |
|
45,000 |
|
|
25 |
% |
|
— |
|
|
— |
% |
Total Active Accounts |
172,000 |
|
|
100 |
% |
|
181,000 |
|
|
100 |
% |
|
(9,000 |
) |
|
(5.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Active
Independent Distributors have purchased product in the prior three
months for retail or personal consumption. |
(2) Active
Customers have purchased product in the prior three months for
personal consumption only. |
(3) Total
Active Accounts is the sum of Active Independent Distributor
accounts and Active Customer accounts. |
LIFEVANTAGE CORPORATION AND SUBSIDIARIES |
Reconciliation of GAAP Net Income to Non-GAAP EBITDA and
Non-GAAP Adjusted EBITDA |
(Unaudited) |
|
|
|
Three Months Ended September 30, |
(In thousands) |
2020 |
|
2019 |
GAAP Net income |
$ |
2,451 |
|
|
$ |
1,761 |
|
Interest Expense |
6 |
|
|
48 |
|
Provision for income
taxes |
899 |
|
|
689 |
|
Depreciation and
amortization(1) |
1,132 |
|
|
536 |
|
Non-GAAP EBITDA: |
4,488 |
|
|
3,034 |
|
Adjustments: |
|
|
|
Stock compensation
expense |
464 |
|
|
1,372 |
|
Other expense, net |
141 |
|
|
80 |
|
Other adjustments(2) |
1,629 |
|
|
231 |
|
Total adjustments |
2,234 |
|
|
1,683 |
|
Non-GAAP Adjusted EBITDA |
$ |
6,722 |
|
|
$ |
4,717 |
|
|
|
|
|
(1) Includes
$101,000 of accelerated depreciation related to a change in lease
term and $335,000 leasehold depreciation on lease abandonment for
the three months ended September 30, 2020. |
|
|
|
|
(2) Other adjustments
breakout: |
|
|
|
Class-action lawsuit expenses |
$ |
609 |
|
|
$ |
132 |
|
Executive team severance expenses |
504 |
|
|
— |
|
Executive team recruiting and transition expenses |
21 |
|
|
— |
|
Lease abandonment |
495 |
|
|
— |
|
Other nonrecurring legal and accounting expenses |
— |
|
|
99 |
|
Total adjustments |
$ |
1,629 |
|
|
$ |
231 |
|
|
|
|
|
LIFEVANTAGE CORPORATION AND SUBSIDIARIES |
Reconciliation of GAAP Net Income to Non-GAAP Net Income and
Non-GAAP Adjusted EPS |
(Unaudited) |
|
|
|
Three Months Ended September 30, |
(In thousands) |
2020 |
|
2019 |
GAAP Net income |
$ |
2,451 |
|
|
$ |
1,761 |
|
Adjustments: |
|
|
|
Executive team severance expenses, net(1) |
54 |
|
|
— |
|
Executive team recruiting and transition expenses |
21 |
|
|
— |
|
Class-action lawsuit expenses |
609 |
|
|
132 |
|
Other nonrecurring legal and accounting expenses |
— |
|
|
99 |
|
Accelerated depreciation related to change in lease term |
101 |
|
|
— |
|
Lease abandonment(2) |
830 |
|
|
— |
|
Tax impact of adjustments |
(433 |
) |
|
(65 |
) |
Total adjustments, net of
tax |
1,182 |
|
|
166 |
|
Non-GAAP Net Income: |
$ |
3,633 |
|
|
$ |
1,927 |
|
|
|
|
|
|
Three Months Ended September 30, |
|
2020 |
|
2019 |
Diluted earnings per share, as
reported |
$ |
0.17 |
|
|
$ |
0.12 |
|
Total adjustments, net of tax |
0.08 |
|
|
0.01 |
|
Non-GAAP adjusted diluted
earnings per share |
$ |
0.25 |
|
|
$ |
0.13 |
|
|
|
|
|
(1) Net of $450,000 of compensation expense benefit related
to unvested stock award reversals |
(2) Includes remaining lease rent expense of $495,000 and
leasehold depreciation of $335,000 |
Lifevantage (NASDAQ:LFVN)
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