GNC Holdings, Inc. (NYSE: GNC) (the “Company”) reported
consolidated revenue of $564.8 million in the first quarter of
2019, compared with consolidated revenue of $607.5 million in the
first quarter of 2018. The decrease in revenue was primarily
a result of the transfer of the Nutra manufacturing and China
e-commerce businesses to the newly formed joint ventures and the
closure of company-owned stores from our store portfolio
optimization strategy.
Key Updates
- Integration of the recently
announced joint ventures with Harbin Pharmaceutical Group
("Harbin") and International Vitamin Corporation ("IVC") currently
on track with expectations
- Retired legacy B-1 Term Loan on
March 4th and reduced the extended B-2 Term Loan during the first
quarter of 2019 by $114 million. In aggregate, retired over $350
million in debt since beginning of fourth quarter of 2018.
- Ended first quarter with $211
million in liquidity
- Recently launched CBD topical
products in 23 states and the District of Columbia
- GNC brand mix increased to 52%
compared with 50% in the first quarter of 2018
For the first quarter of 2019, the Company
reported a net loss of $15.3 million compared with net income of
$6.2 million in the prior year quarter. Diluted loss per share was
$0.23 in the current quarter compared with diluted earnings per
share ("EPS") of $0.07 in the prior year quarter. In the first
quarter of 2019, the Company recorded a $16.8 million loss on
forward contracts related to the issuance of convertible preferred
stock as a result of the Harbin investment and a $19.5 million loss
on the exchange of net assets for the newly formed joint
ventures. In the prior year quarter the Company recorded a
$16.7 million loss on debt refinancing. Excluding these items
and other expenses as outlined in the table below, adjusted net
income was $19.0 million1 in the current quarter, compared with
adjusted net income of $20.1 million1 in the prior year
quarter. Adjusted EPS was $0.151 in the current quarter
compared with $0.241 in the prior year quarter.
Adjusted EBITDA, as defined and reconciled to
net (loss) income in the table below, was $65.9 million2, or 11.7%
of revenue in the current quarter compared with $59.3 million2, or
9.8% of revenue in the prior year quarter.
"We are pleased with the EBITDA margin
improvement we delivered in the first quarter of 2019." said Ken
Martindale, GNC's Chairman and CEO. "During the past six months we
have completed a number of important partnerships, including the
strategic investment by Harbin and the joint ventures with Harbin
and IVC, which further enable our team to focus on our core
business. In addition, during that period, we have improved
our balance sheet by retiring over $350 million in debt."
______________________1 This Non-GAAP financial
measure is reconciled to GAAP below, under the caption
"Reconciliation of Net (Loss) Income and Diluted EPS to Adjusted
Net Income and Adjusted EPS"2 This Non-GAAP financial measure
is reconciled to GAAP below, under the caption "Reconciliation of
Net (Loss) Income to Adjusted EBITDA"
Segment Operating
Performance
U.S. & Canada
Revenues in the U.S. and Canada segment
decreased $23.2 million, or 4.5%, to $489.2 million for the three
months ended March 31, 2019 compared with $512.4 million in the
prior year quarter. E-commerce sales were 7.4% of U.S. and Canada
revenue for the three months ended March 31, 2019 compared with
7.1% in the prior year quarter.
The decrease in revenue compared with the prior
year quarter was primarily due to the closure of company-owned
stores under our store portfolio optimization strategy, which
contributed an approximate $14 million decrease in revenue, and
negative same store sales of 1.6%, which resulted in a revenue
decrease of $6.2 million. In domestic franchise locations, same
store sales for the first quarter of 2019 increased 0.6% over the
prior year quarter.
Operating income increased $8.6 million to $52.1
million, or 10.7% of segment revenue, for the three months ended
March 31, 2019 compared with $43.5 million, or 8.5% of segment
revenue, for the same period in 2018. The increase in operating
income percentage was due to lower occupancy and marketing costs,
partially offset by a decrease in product margin rate.
International
Revenues in the International segment increased
$0.8 million, or 2.1%, to $40.9 million for the three months ended
March 31, 2019 compared with $40.1 million in the prior year
quarter, primarily due to an increase in sales to our international
franchisees of $4.6 million partially offset by a decline in China
sales of $3.4 million to $4.5 million mostly due to the transfer of
the cross-border e-commerce China business to the newly formed
joint venture effective February 13, 2019.
Operating income decreased $0.4 million to $14.1
million, or 34.3% of segment revenue, for the three months ended
March 31, 2019 compared with $14.5 million, or 36.1% of segment
revenue, for the same period in 2018. The decrease in
operating income percentage was primarily due to a lower margin
rate driven by a change in revenue mix.
Manufacturing / Wholesale
Revenues in the Manufacturing / Wholesale
segment, excluding intersegment sales, decreased $20.4 million, or
37.0%, to $34.7 million for the three months ended March 31, 2019
compared with $55.1 million in the prior year quarter primarily due
to the transaction with IVC for the newly formed manufacturing
joint venture effective March 1, 2019.
Operating income increased $0.3 million to $15.3
million, or 21.9% of segment revenue, for the three months ended
March 31, 2019 compared with $15.0 million, or 12.5% of segment
revenue, in the prior year quarter. The increase in operating
income percentage was primarily due to a decrease in revenues as a
result of the newly formed manufacturing joint venture.
Although revenue decreased, the operating income reduction was
minimal as GNC continues to recognize margin on product sold
in March, but purchased prior to the formation of the joint
venture. The remaining increase in operating income is the
result of an increase in GNC brand sales.
Cash Flow and Liquidity
Metrics
For the three months ended March 31, 2019, the
Company generated net cash from operating activities of $68.7
million compared with $25.1 million for the three months ended
March 31, 2018. The increase was driven by favorable working
capital changes primarily due to an increase in accounts payable as
a result of the Company's cash management efforts and an increase
in accounts payable related to the establishment of the
manufacturing joint venture.
For the three months ended March 31, 2019, the
Company generated $154.3 million3 in free cash flow which includes
$101 million proceeds from the Nutra manufacturing transaction,
compared with $37.4 million for the three months ended March 31,
2018. The Company defines free cash flow as cash provided by
operating activities (excluding fees relating to the debt
refinancing) less cash used in investing activities. At March 31,
2019, the Company’s cash and cash equivalents were $137.1 million
and debt was $888.4 million. No borrowings were outstanding on the
Revolving Credit Facility at the end of the first quarter of
2019.
Conference Call
GNC has scheduled a live webcast to report its
first quarter 2019 financial results on April 25, 2019 at 8:30 a.m.
ET. To participate on the live call, listeners in North America may
dial 1-866-575-6539 and international listeners may dial
1-323-994-2082. In addition, a live webcast of the call will
be available on www.gnc.com via the Investor Relations section
under “About GNC.” A replay of this webcast will be available
through May 9, 2019.
About Us
GNC Holdings, Inc. (NYSE: GNC) is a global
health and wellness brand that helps people live well. The company
is known and trusted for quality performance and nutritional
supplements, and its broad assortment features innovative
private-label products as well as national recognized third-party
brands, many of which are exclusive to GNC.
GNC’s diversified, omni-channel business model
has global reach and a well-recognized, trusted brand, and provides
customers with excellent service, product knowledge and solutions.
The company reaches consumers
worldwide through company-owned retail
locations, and domestic and international franchise
activities, and e-commerce. GNC also
has exceptional innovation and product development
capabilities, manufactures products for third parties and generates
revenue through corporate partnerships. As of March 31,
2019, GNC had approximately 8,200 locations, of which approximately
6,000 retail locations are in the United States (including
approximately 2,100 Rite Aid licensed store-within-a-store
locations) and the remainder are franchise locations in
approximately 50 countries.
______________________3 This Non-GAAP financial
measure is reconciled to GAAP below, under the caption
"Reconciliation of Net Cash Provided by Operating Activities to
Free Cash Flow"
Forward-Looking Statements Involving
Known and Unknown Risks and Uncertainties
This release contains certain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 with respect to the Company’s financial
condition, results of operations and business that is not
historical information. Forward-looking statements can be
identified by the use of terminology such as “subject to,”
“believes,” “anticipates,” “plans,” “expects,” “intends,”
“estimates,” “projects,” “may,” “will,” “should,” “can,” the
negatives thereof, variations thereon and similar expressions, or
by discussions regarding dividend, share repurchase plan, strategy
and outlook. While GNC believes there is a reasonable basis for its
expectations and beliefs, they are inherently uncertain. The
Company may not realize its expectations and its beliefs may not
prove correct. Many factors could affect future performance and
cause actual results to differ materially from those matters
expressed in or implied by forward-looking statements, including
but not limited to competition; our ability execute on, or realize
the expected benefit from the implementation of, our strategic
initiatives; resources devoted to product innovation may not yield
new products that achieve commercial success; difficulties with our
vendors; failure to maintain and/or upgrade our information
technology systems, including electronic payments systems; risks
and costs associated with security breaches, data loss, credit card
fraud and identity theft; risks associated with our international
operations; impact of our current debt profile and obligations
under our debt instruments; deployment of real estate strategy and
significant lease obligation; successful development and
maintenance of a relevant omni-channel experience for our
customers; disruptions in our manufacturing system; unfavorable
publicity or consumer perception of our products; any significant
disruption to our distribution network, inventory management
system, or to the timely receipt of inventory; issues with
franchisees; material product liability claims, or product recalls;
any increase in the price and shortage of supply of key raw
materials; general economic conditions, including a prolonged
weakness in the economy; compliance with new and existing laws and
governmental regulations; failure to comply with FTC regulations;
failure to protect our brand name and intellectual property;
potential impact of issuance of Series A Convertible Preferred
Stock including dividend and repurchase obligations; the terms and
features of our current Notes may have a negative impact on our
liquidity, dilution or reported financial results; issues related
to joint ventures; failure to attract or retain key employees; not
being insured for a significant portion of our claims exposure; our
use of derivative instruments for hedging purposes; impact of
potential future impairment charges; our holding company structure;
historic volatility of our common stock price; and the impact of
natural disasters (whether or not caused by climate change),
unusually adverse weather conditions, pandemic outbreaks, terrorist
acts and global political.
The Company undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise. Actual results
could differ materially from those described or implied by such
forward-looking statements. For a listing of factors that may
materially affect such forward-looking statements, please refer to
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2018.
Non-GAAP Measures
Management has included non-GAAP financial
measures in this press release, including adjusted net income,
adjusted EPS, adjusted EBITDA, segment operating income, and
segment operating income as a percentage of segment revenue,
adjusted as reflected in this release, and free cash flow, because
it believes they represent an effective supplemental means by which
to measure the Company’s operating performance.
Management believes that these measures are
useful to investors as they enable the Company and its investors to
evaluate and compare the Company’s results from operations in a
more meaningful and consistent manner by excluding specific items
which are not reflective of ongoing operating results and that can
differ significantly from company to company depending on long-term
strategic decisions regarding capital structure, the tax
jurisdictions in which companies operate and capital
investments.
However, these measures are not measurements of
the Company’s performance under GAAP and should not be considered
as alternatives to earnings per share, net income or any other
performance measures derived in accordance with GAAP, or as an
alternative to GAAP cash flow from operating activities, or as a
measure of the Company’s profitability or liquidity. For more
information, see the attached reconciliations of non-GAAP financial
measures.
GNC HOLDINGS, INC. AND
SUBSIDIARIESConsolidated Statements of
Operations(in thousands, except per share
amounts)
|
Three months endedMarch 31, |
|
2019 |
|
2018 |
|
(unaudited) |
Revenue |
$ |
564,764 |
|
|
$ |
607,533 |
|
Cost of
sales, including warehousing, distribution and occupancy |
361,673 |
|
|
400,659 |
|
Gross
profit |
203,091 |
|
|
206,874 |
|
Selling,
general, and administrative |
148,303 |
|
|
160,730 |
|
Loss on
net asset exchange for the formation of the joint ventures |
19,514 |
|
|
— |
|
Other
income, net |
(208 |
) |
|
(245 |
) |
Operating
income |
35,482 |
|
|
46,389 |
|
Interest
expense, net |
32,956 |
|
|
21,773 |
|
Loss on
debt refinancing |
— |
|
|
16,740 |
|
Loss on
forward contracts for the issuance of convertible preferred
stock |
16,787 |
|
|
— |
|
(Loss) income
before income taxes |
(14,261 |
) |
|
7,876 |
|
Income
tax expense |
1,956 |
|
|
1,686 |
|
(Loss) income
before equity income from equity method investments |
(16,217 |
) |
|
6,190 |
|
Equity
income from equity method investments |
955 |
|
|
— |
|
Net (loss)
income |
$ |
(15,262 |
) |
|
$ |
6,190 |
|
(Loss) earnings
per share: |
|
|
|
Basic |
$ |
(0.23 |
) |
|
$ |
0.07 |
|
Diluted |
$ |
(0.23 |
) |
|
$ |
0.07 |
|
Weighted
average common shares outstanding: |
|
|
|
Basic |
83,510 |
|
|
83,232 |
|
Diluted |
83,510 |
|
|
83,368 |
|
|
|
|
|
|
|
GNC HOLDINGS, INC. AND
SUBSIDIARIESReconciliation of Net (Loss) Income
and Diluted EPS to Adjusted Net Income and Adjusted
EPS(in thousands, except per share
data)
|
Three months ended March 31, |
|
2019 |
|
2018 |
|
Net (Loss) Income |
|
Diluted EPS 1 |
|
Net Income |
|
Diluted EPS |
|
(unaudited) |
Reported |
$ |
(15,262 |
) |
|
$ |
(0.23 |
) |
|
$ |
6,190 |
|
|
$ |
0.07 |
|
Loss on
debt refinancing |
— |
|
|
— |
|
|
16,740 |
|
|
0.20 |
|
Amortization of discount in connection with early debt payment |
3,119 |
|
|
0.02 |
|
|
— |
|
|
— |
|
Loss on
net asset exchange for the formation of the joint ventures |
19,514 |
|
|
0.15 |
|
|
— |
|
|
— |
|
Loss on
forward contracts related to the issuance of convertible preferred
stock |
16,787 |
|
|
0.13 |
|
|
— |
|
|
— |
|
Other
2 |
713 |
|
|
0.01 |
|
|
808 |
|
|
0.01 |
|
Tax
effect of items above |
(5,837 |
) |
|
(0.05 |
) |
|
(3,654 |
) |
|
(0.04 |
) |
Adjusted |
$ |
19,034 |
|
|
$ |
0.15 |
|
|
$ |
20,084 |
|
|
$ |
0.24 |
|
|
|
|
|
|
|
|
|
Weighted
average diluted common shares outstanding |
126,628 |
|
|
|
|
83,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net (Loss) Income to
Adjusted EBITDA(in thousands)
|
Three months ended March 31, |
|
2019 |
|
2018 |
|
(unaudited) |
Net (loss)
income |
$ |
(15,262 |
) |
|
$ |
6,190 |
|
Income
tax expense |
1,956 |
|
|
1,686 |
|
Interest
expense, net |
32,956 |
|
|
21,773 |
|
Equity
income from equity method investments |
(955 |
) |
|
— |
|
Loss on
debt refinancing |
— |
|
|
16,740 |
|
Depreciation and amortization |
10,190 |
|
|
12,105 |
|
Loss on
net asset exchange for the formation of the joint ventures |
19,514 |
|
|
— |
|
Loss on
forward contract related to the issuance of convertible preferred
stock |
16,787 |
|
|
— |
|
Other
2 |
713 |
|
|
808 |
|
Adjusted
EBITDA |
$ |
65,899 |
|
|
$ |
59,302 |
|
|
|
|
|
|
|
|
|
1 The Company applies the if-converted method to
calculate the dilution impact of the convertible senior notes and
the convertible preferred stock. For the reported diluted EPS
calculation for the three months ended March 31, 2019, the
underlying shares of the convertible preferred stock and the
convertible senior notes are anti-dilutive. For the adjusted
diluted EPS calculation for the three months ended March 31, 2019,
the underlying shares of the convertible preferred stock are
dilutive and the convertible senior notes are anti-dilutive.
Additionally, the reported diluted EPS calculation for the first
quarter of 2019 includes the cumulative undeclared dividends of
approximately $3.7 million within reported net income. As a result,
amounts in the 2019 Diluted EPS column do not sum.
2 2019 includes $0.7 million retention and an
immaterial refranchising gain. 2018 included $0.8 million
retention. The retention expense recognized in 2019 and 2018
relates to an incentive program to retain senior executives and
certain other key personnel below the executive level who are
critical to the execution and success of the Company's
strategy. The total amount awarded was approximately $10
million, of which $1 million was forfeited, which vests in four
installments of 25% each over two years. Vesting dates are on
November 2018, February 2019, August 2019 and February 2020.
GNC HOLDINGS, INC. AND
SUBSIDIARIESU.S. Company-Owned Same Store Sales
(including GNC.com)
|
Three months ended March 31, |
|
2019 |
|
2018 |
Contribution to
same store sales: |
|
|
|
Domestic retail same
store sales |
(1.9 |
)% |
|
(1.2 |
)% |
GNC.com
contribution to same store sales |
0.3 |
% |
|
1.7 |
% |
Total same
store sales |
(1.6 |
)% |
|
0.5 |
% |
|
|
|
|
|
|
GNC HOLDINGS, INC. AND
SUBSIDIARIESConsolidated Balance
Sheets(in thousands)
|
March 31, |
|
December 31, |
|
2019 |
|
2018 |
|
(unaudited) |
Current
assets: |
|
|
|
Cash and cash
equivalents |
$ |
137,117 |
|
|
$ |
67,224 |
|
Receivables, net |
119,352 |
|
|
127,317 |
|
Inventory |
410,951 |
|
|
465,572 |
|
Forward
contracts for the issuance of convertible preferred stock |
— |
|
|
88,942 |
|
Prepaid
and other current assets |
17,528 |
|
|
55,109 |
|
Total current assets |
684,948 |
|
|
804,164 |
|
Long-term
assets: |
|
|
|
Goodwill |
79,111 |
|
|
140,764 |
|
Brand
name |
300,720 |
|
|
300,720 |
|
Other
intangible assets, net |
75,463 |
|
|
92,727 |
|
Property,
plant and equipment, net |
95,574 |
|
|
155,095 |
|
Right-of-use assets |
401,456 |
|
|
— |
|
Equity
method investments |
97,803 |
|
|
— |
|
Other
long-term assets |
35,062 |
|
|
34,380 |
|
Total long-term assets |
1,085,189 |
|
|
723,686 |
|
Total assets |
$ |
1,770,137 |
|
|
$ |
1,527,850 |
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
174,682 |
|
|
$ |
148,782 |
|
Current
portion of long-term debt |
— |
|
|
158,756 |
|
Current
portion of lease liabilities |
117,093 |
|
|
— |
|
Deferred
revenue and other current liabilities |
107,770 |
|
|
120,169 |
|
Total current liabilities |
399,545 |
|
|
427,707 |
|
Long-term
liabilities: |
|
|
|
Long-term
debt |
888,353 |
|
|
993,566 |
|
Deferred
income taxes |
15,304 |
|
|
39,834 |
|
Lease
liabilities |
401,617 |
|
|
— |
|
Other
long-term liabilities |
43,007 |
|
|
82,249 |
|
Total long-term liabilities |
1,348,281 |
|
|
1,115,649 |
|
Total liabilities |
1,747,826 |
|
|
1,543,356 |
|
|
|
|
|
Mezzanine
equity: |
|
|
|
Convertible preferred stock |
211,395 |
|
|
98,804 |
|
|
|
|
|
Stockholders’
deficit: |
|
|
|
Common
stock |
130 |
|
|
130 |
|
Additional paid-in capital |
1,009,041 |
|
|
1,007,827 |
|
Retained
earnings |
538,439 |
|
|
613,637 |
|
Treasury
stock, at cost |
(1,725,349 |
) |
|
(1,725,349 |
) |
Accumulated other comprehensive loss |
(11,345 |
) |
|
(10,555 |
) |
Total stockholders’ deficit |
(189,084 |
) |
|
(114,310 |
) |
Total liabilities, mezzanine equity and stockholders’
deficit |
$ |
1,770,137 |
|
|
$ |
1,527,850 |
|
|
|
|
|
|
|
|
|
GNC HOLDINGS, INC. AND
SUBSIDIARIESConsolidated Statements of Cash
Flows(in thousands)
|
Three months ended March 31, |
|
2019 |
|
2018 |
|
(unaudited) |
Cash flows from
operating activities: |
|
|
|
Net (loss)
income |
$ |
(15,262 |
) |
|
$ |
6,190 |
|
Adjustments to
reconcile net (loss) income to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization expense |
10,190 |
|
|
12,105 |
|
Equity
income from equity investments |
(955 |
) |
|
— |
|
Amortization of debt costs |
7,988 |
|
|
3,609 |
|
Stock-based compensation |
1,334 |
|
|
1,512 |
|
Loss on
forward contracts related to the issuance of convertible preferred
stock |
16,787 |
|
|
— |
|
Loss on
net asset exchange for the formation of the joint ventures |
19,514 |
|
|
— |
|
Gains on
refranchising |
(21 |
) |
|
— |
|
Loss on
debt refinancing |
— |
|
|
16,740 |
|
Third-party fees associated with refinancing |
— |
|
|
(15,753 |
) |
Changes
in assets and liabilities 1: |
|
|
|
(Increase) decrease in receivables |
(12,567 |
) |
|
11,840 |
|
Increase
in inventory |
(6,886 |
) |
|
(22,766 |
) |
Increase
in prepaid and other current assets |
(3,658 |
) |
|
(9,473 |
) |
Increase
in accounts payable |
57,722 |
|
|
21,791 |
|
Increase
in deferred revenue and accrued liabilities |
(627 |
) |
|
388 |
|
Other
operating activities |
(4,848 |
) |
|
(1,111 |
) |
Net cash provided by operating activities |
68,711 |
|
|
25,072 |
|
|
|
|
|
Cash flows from
investing activities: |
|
|
|
Capital
expenditures |
(3,017 |
) |
|
(3,732 |
) |
Refranchising proceeds |
710 |
|
|
465 |
|
Store
acquisition costs |
(43 |
) |
|
(116 |
) |
Proceeds
from net asset exchange |
101,000 |
|
|
— |
|
Capital
contribution to the newly formed joint ventures |
(13,079 |
) |
|
— |
|
Net cash provided by (used in) investing
activities |
85,571 |
|
|
(3,383 |
) |
|
|
|
|
Cash flows from
financing activities: |
|
|
|
Borrowings under revolving credit facility |
22,000 |
|
|
50,000 |
|
Payments
on revolving credit facility |
(22,000 |
) |
|
(32,500 |
) |
Proceeds
from the issuance of convertible preferred stock |
199,950 |
|
|
— |
|
Payments
on Tranche B-1 Term Loan |
(147,312 |
) |
|
(1,138 |
) |
Payments
on Tranche B-2 Term Loan |
(114,000 |
) |
|
(10,700 |
) |
Original
Issuance Discount and revolving credit facility fees |
(10,365 |
) |
|
(35,216 |
) |
Fees
associated with the issuance of convertible preferred stock |
(12,564 |
) |
|
(2,183 |
) |
Minimum
tax withholding requirements |
(120 |
) |
|
(223 |
) |
Net cash used in financing activities |
(84,411 |
) |
|
(31,960 |
) |
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
22 |
|
|
141 |
|
Net increase (decrease)
in cash and cash equivalents |
69,893 |
|
|
(10,130 |
) |
Beginning balance, cash
and cash equivalents |
67,224 |
|
|
64,001 |
|
Ending balance, cash
and cash equivalents |
$ |
137,117 |
|
|
$ |
53,871 |
|
|
|
|
|
|
|
|
|
1 Change in working capital amounts related to
the contribution of net assets to the manufacturing and the China
joint ventures are included in the loss on net asset exchange for
the formation of joint ventures.
GNC HOLDINGS, INC. AND
SUBSIDIARIESReconciliation of Net Cash Provided by
Operating Activities to Free Cash Flow(in
thousands)
|
Three months ended March
31, |
|
2019 |
|
2018 |
|
(unaudited) |
|
|
|
|
Net cash
provided by operating activities |
$ |
68,711 |
|
|
$ |
25,072 |
|
Capital
expenditures |
(3,017 |
) |
|
(3,732 |
) |
Refranchising proceeds |
710 |
|
|
465 |
|
Store
acquisition costs |
(43 |
) |
|
(116 |
) |
Proceeds
from net asset exchange |
101,000 |
|
|
— |
|
Capital
contribution to equity method investments |
(13,079 |
) |
|
— |
|
Third-party fees associated with refinancing |
— |
|
|
15,753 |
|
Free cash flow |
$ |
154,282 |
|
|
$ |
37,442 |
|
|
|
|
|
GNC HOLDINGS, INC. AND
SUBSIDIARIESSegment Financial
Data (in thousands)
|
Three months ended March 31, |
|
2019 |
|
2018 |
|
(unaudited) |
Revenue: |
|
|
|
U.S. and Canada |
$ |
489,157 |
|
|
$ |
512,414 |
|
International |
40,923 |
|
|
40,065 |
|
Manufacturing / Wholesale: |
|
|
|
Intersegment revenues |
35,505 |
|
|
64,663 |
|
Third-party |
34,684 |
|
|
55,054 |
|
Subtotal
Manufacturing / Wholesale |
70,189 |
|
|
119,717 |
|
Total
reportable segment revenues |
600,269 |
|
|
672,196 |
|
Elimination of intersegment revenues |
(35,505 |
) |
|
(64,663 |
) |
Total
revenue |
$ |
564,764 |
|
|
$ |
607,533 |
|
Operating
income: |
|
|
|
U.S. and
Canada |
$ |
52,100 |
|
|
$ |
43,490 |
|
International |
14,050 |
|
|
14,464 |
|
Manufacturing / Wholesale |
15,344 |
|
|
14,964 |
|
Total
reportable segment operating income |
81,494 |
|
|
72,918 |
|
Corporate
costs |
(26,261 |
) |
|
(26,479 |
) |
Loss on
net asset exchange for the formation of the joint ventures |
(19,514 |
) |
|
— |
|
Other |
(237 |
) |
|
(50 |
) |
Unallocated corporate costs, loss on net asset exchange and
other |
(46,012 |
) |
|
(26,529 |
) |
Total operating
income |
$ |
35,482 |
|
|
$ |
46,389 |
|
|
|
|
|
|
|
|
|
GNC HOLDINGS, INC. AND
SUBSIDIARIESConsolidated Store Count
Activity
|
Three months ended March 31, |
|
2019 |
|
2018 |
U.S. &
Canada |
|
|
|
Company-owned(a): |
|
|
|
Beginning of period
balance |
3,206 |
|
|
3,423 |
|
Store
openings |
5 |
|
|
5 |
|
Acquired
franchise stores(b) |
6 |
|
|
6 |
|
Franchise
conversions(c) |
(1 |
) |
|
— |
|
Store
closings |
(87 |
) |
|
(49 |
) |
End of
period balance |
3,129 |
|
|
3,385 |
|
Domestic Franchise: |
|
|
|
Beginning
of period balance |
1,037 |
|
|
1,099 |
|
Store
openings |
3 |
|
|
5 |
|
Acquired
franchise stores(b) |
(6 |
) |
|
(6 |
) |
Franchise
conversions(c) |
1 |
|
|
— |
|
Store
closings |
(17 |
) |
|
(15 |
) |
End of
period balance |
1,018 |
|
|
1,083 |
|
International(d): |
|
|
|
Beginning
of period balance |
1,957 |
|
|
2,015 |
|
Store
openings |
24 |
|
|
16 |
|
Store
closings |
(24 |
) |
|
(22 |
) |
China stores contributed to the China joint venture |
(5 |
) |
|
— |
|
End of
period balance |
1,952 |
|
|
2,009 |
|
Store-within-a-store (Rite Aid): |
|
|
|
Beginning
of period balance |
2,183 |
|
|
2,418 |
|
Store
openings |
11 |
|
|
16 |
|
Store
closings |
(85 |
) |
|
(6 |
) |
End of
period balance |
2,109 |
|
|
2,428 |
|
Total
Stores |
8,208 |
|
|
8,905 |
|
|
|
|
|
|
|
_______________________________________________________________________________
(a) Includes Canada.
(b) Stores that were acquired from franchisees and subsequently
converted into company-owned stores.
(c) Company-owned store locations sold to franchisees.
(d) Includes franchise locations in approximately 50 countries
(including distribution centers where sales are made) and
company-owned stores located in Ireland. Prior year also includes
company-owned stores located in China.
Contacts: |
|
|
Investors: |
|
Matt
Milanovich, VP- Investor Relations & Treasury, (412) 402-7260;
orJohn Mills, Partner - ICR, (646) 277-1254 |
|
|
|
SOURCE: |
|
GNC
Holdings, Inc. |
Web
site: |
|
http://www.gnc.com |
|
|
|
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