Company Reports 19% Year-over-Year Revenue
GrowthCompany Exceeds Third Quarter Revenue Expectations and
Raises Full Year Revenue and EPS Guidance
Nutrisystem, Inc. (NASDAQ: NTRI), a leading provider of weight
management products and services, today reported financial results
for the quarter and nine months ended September 30, 2016.
Dawn Zier, President and Chief Executive Officer, stated, “Our
ongoing record of success underscores the health of the business
and growing demand for our expanding portfolio of products. As we
gear up for 2017, we’re excited about our Diet Season plans for our
primary brand, Nutrisystem, and remain on track for the 2017 launch
of the South Beach Diet program. We’re strongly positioned to
achieve further long-term growth and value creation for our
shareholders.”
The following are key financial highlights for the period.
Reconciliations of certain GAAP to non-GAAP measures are provided
later in this press release.
Third Quarter 2016 Compared to Third Quarter 2015
- Revenue increased 19% to $124.6
million, compared to $104.9 million.
- Net income increased 9% to $7.9
million, which reflects a $1.3 million pre-tax non-cash IT asset
write-down, compared to $7.3 million.
- Diluted income per common share
increased 8% to $0.27, compared to $0.25.
- Adjusted EBITDA increased 25% to $18.1
million, compared to $14.5 million.
- The Board of Directors has declared a
quarterly dividend of $0.175 per share, payable November 17, 2016
to stockholders of record as of November 7, 2016.
Mike Monahan, Chief Financial Officer, commented, “Our third
quarter and year-to-date results reflected strong top-line growth
and solid cash flow even as we continue to invest in new
opportunities that we believe will propel the long-term expansion
of our business. As a result of this performance, we are raising
our guidance ranges for the full year.”
Fourth Quarter and Updated Full Year 2016 Guidance
The Company’s fourth quarter and updated full year 2016 guidance
are outlined below. Reconciliations of certain GAAP to non-GAAP
measures are provided later in this press release.
- Fourth quarter revenue is expected to
be in the range of $96.5 to $101.5 million, net income between $6.1
and $7.5 million, diluted income per common share between $0.20 and
$0.25, and adjusted EBITDA between $14.4 and $16.4 million. This
guidance includes $0.8 million of net operating expense and $0.3
million of amortization expense, or $0.02 per common share expense,
for the South Beach Diet and Shake360 initiatives.
- Full year 2016 revenue is now expected
to be in the range of $533 to $538 million compared to previous
range of $520 to $532 million, net income between $32.8 and $34.1
million compared to the previous range of $31.1 to $33.6 million,
diluted income per common share between $1.10 and $1.15 compared to
previous range of $1.05 and $1.13, and adjusted EBITDA between
$70.5 and $72.5 million compared to previous range of $66.8 and
$70.5 million. This updated guidance includes $1.3 million of a
non-cash expense related to IT asset write-down (or $0.03 per
common share expense), $5.5 million of net operating expense and
$1.0 million of amortization expense (or $0.14 per common share
expense) for the South Beach Diet and Shake360 initiatives.
Conference Call and Webcast
Management will host a conference call to discuss third quarter
2016 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 877-870-5176 using replay pin number
13647183.
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. EBITDA is 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. 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.
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 fourth quarter and
updated full year 2016 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 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. 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 more than 40 years. The Company’s weight loss
solutions include Nutrisystem® My Way®, Fast 5, and Turbo 10, all
clinically tested, structured food delivery programs that come with
the digital platform NuMi® by Nutrisystem. Additionally, the
Company offers multi-day kits and individual products available at
select retail outlets. The Company’s current product line offers
customers the most meal choices, including more than 150 foods
with no artificial colors, flavors or sweeteners. Nutrisystem
provides customers the flexibility to align their diet with the US
Healthy Eating Meal Pattern, as recommended by the USDA Dietary
Guidelines. Plans include comprehensive counseling options from
trained weight loss coaches, registered dietitians and certified
diabetes educators and can be customized to specific dietary needs
and preferences including the Nutrisystem® D® program for
people with Type 2 diabetes or pre-diabetes. The Company also owns
and operates the South Beach Diet® as well as multiple shake
lines including NutriCrush® Shakes, Turbo
Shakes® and Shake360™ brands. For more information, go
to NutrisystemNews.com.
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share
amounts)
Three Months Ended September 30,
Nine Months Ended
September 30,
2016 2015 2016
2015 REVENUE $ 124,571 $ 104,877 $ 436,504 $ 372,363
COSTS AND EXPENSES: Cost of revenue 57,694 51,749 205,394 180,188
Marketing 33,499 25,566 128,441 103,880 General and administrative
16,707 14,228 51,744 47,536 Depreciation and amortization
4,332 2,304 10,160 6,761 Total costs and
expenses 112,232 93,847 395,739 338,365
Operating income 12,339 11,030 40,765 33,998 INTEREST (INCOME)
EXPENSE, net (11 ) 61 23 140 Income
before income tax expense 12,350 10,969 40,742 33,858 INCOME TAX
EXPENSE 4,401 3,660 14,123 11,521 Net
income $ 7,949 $ 7,309 $ 26,619 $ 22,337 BASIC INCOME PER COMMON
SHARE $ 0.27 $ 0.25 $ 0.90 $ 0.77 DILUTED INCOME PER COMMON SHARE $
0.27 $ 0.25 $ 0.90 $ 0.76 WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 29,320 28,831 29,162 28,618 Diluted 29,613 29,273 29,465
29,094 DIVIDENDS DECLARED PER COMMON SHARE $ 0.175 $ 0.175 $ 0.525
$ 0.525
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except par value
amounts)
September 30,
2016
December 31,
2015
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 27,017 $ 6,191 Short
term investments 19,415 9,317 Receivables 11,723 18,385 Inventories
19,428 30,530 Prepaid income taxes 2,481 1,149 Deferred income
taxes 1,068 1,192 Other current assets 6,875 10,118
Total current assets 88,007 76,882 FIXED ASSETS, net 32,006 30,849
INTANGIBLE ASSETS, net 14,334 15,084 DEFERRED INCOME TAXES 4,413
6,107 OTHER ASSETS 924 971 Total assets $ 139,684 $
129,893
LIABILITIES AND
STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES: Accounts payable $ 31,813 $ 38,381 Accrued
payroll and related benefits 7,283 7,556 Deferred revenue 5,811
5,618 Other accrued expenses and current liabilities 5,811
6,126 Total current liabilities 50,718 57,681 NON-CURRENT
LIABILITIES 1,869 2,284 Total liabilities
52,587 59,965 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 30,098 at September 30, 2016 and
29,621 at December 31, 2015)
30 29 Additional paid-in capital 50,128 41,392
Treasury stock, at cost, 517 shares at
September 30, 2016 and 389 shares at December 31, 2015
(8,324 ) (5,672 ) Retained earnings 45,223 34,191 Accumulated other
comprehensive income (loss) 40 (12 ) Total
stockholders’ equity 87,097 69,928 Total liabilities
and stockholders’ equity $ 139,684 $ 129,893
NUTRISYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Nine Months Ended September 30, 2016
2015 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $
26,619 $ 22,337
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 10,160 6,761 Loss on disposal of
fixed assets 104 16 Share–based compensation expense 5,134 4,255
Deferred income tax expense 1,609 0 Other charges 2 24 Changes in
operating assets and liabilities: Receivables 6,662 1,813
Inventories 11,102 9,425 Other assets 3,290 1,257 Accounts payable
(6,698 ) (6,628 ) Accrued payroll and related benefits (273 ) (275
) Deferred revenue 193 1,445 Income taxes (1,153 ) (2,884 ) Other
accrued expenses and liabilities (827 ) (938 ) Net
cash provided by operating activities 55,924 36,608
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of short term
investments (14,067 ) (12,117 ) Proceeds from sales of short term
investments 4,047 9,574 Capital additions (10,444 )
(6,302 ) Net cash used in investing activities (20,464 )
(8,845 ) CASH FLOWS FROM FINANCING ACTIVITIES: Exercise of
stock options 1,839 2,762
Employee tax withholdings related to the
vesting of equity awards
(2,652 ) (2,548 ) Excess tax benefits from share-based compensation
1,766 2,804 Payment of dividends (15,587 ) (15,352 )
Net cash used in financing activities (14,634 )
(12,334 ) NET INCREASE IN CASH AND CASH EQUIVALENTS 20,826 15,429
CASH AND CASH EQUIVALENTS, beginning of period 6,191
12,620 CASH AND CASH EQUIVALENTS, end of period $ 27,017 $ 28,049
NUTRISYSTEM, INC. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION TO GAAP RESULTS
(Unaudited, in thousands)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2016 2015 2016
2015 Net income $ 7,949 $ 7,309 $ 26,619 $ 22,337
Interest (income) expense, net (11 ) 61 23 140 Income tax expense
4,401 3,660 14,123 11,521 Depreciation and amortization
4,332 2,304 10,160 6,761 EBITDA 16,671 13,334
50,925 40,759 Non-cash employee compensation
expense
1,468 1,209 5,134 4,255 Adjusted EBITDA
$ 18,139 $ 14,543 $ 56,059 $ 45,014
NUTRISYSTEM,
INC. AND SUBSIDIARIES ADJUSTED EBITDA RECONCILIATION
TO GAAP GUIDANCE
(Unaudited, in thousands)
Three Months Ending
December 31, 2016
Twelve Months Ending
December 31, 2016
Low High Low
High Net income $ 6,146 $ 7,453 $ 32,765 $ 34,072
Interest expense, net 37 37 60 60 Income tax expense 3,257 3,950
17,380 18,073 Depreciation and amortization 3,410
3,410 13,570 13,570 EBITDA 12,850 14,850 63,775
65,775 Non-cash employee compensation
expense
1,551 1,551 6,685 6,685 Adjusted EBITDA
$ 14,401 $ 16,401 $ 70,460 $ 72,460
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version on businesswire.com: http://www.businesswire.com/news/home/20161026006598/en/
ICR, Inc.John Mills,
Partner646-277-1254ir@nutrisystem.comJohn.Mills@Icrinc.com
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