Nutrisystem, Inc. (NASDAQ: NTRI), a leading provider of weight
management products and services, today reported financial results
for the third quarter 2012. The company also announced that the
Board of Directors has declared a quarterly dividend of $0.175 per
share, payable November 29, 2012, to stockholders of record as of
November 19, 2012.
The following are financial highlights for the third quarter
ended September 30, 2012:
- Revenues were $81.3 million, compared
to $85.6 million in Q3 2011.
- Operating income for the quarter was
$1.9 million.
- Net income in the quarter was $2.6
million.
- Net income per diluted share in the
quarter was 9 cents.
- Adjusted EBITDA was $8.9 million.
Adjusted EBITDA is defined as net income excluding non-cash
employee compensation, other expense, interest, income taxes,
depreciation and amortization, severance and related charges, and
impairment of supplier advance.
- One-time charges, the majority of which
were related to the writedown of a supplier advance as well as the
previously disclosed management transition, totaled $2.9 million on
a pretax basis or $2.0 million after tax. These one-time charges
negatively impacted earnings per share by 7 cents in the
quarter.
- Cash, cash equivalents, and short term
investments were $68.8 million at September 30, 2012.
Mike Hagan, chairman of the Nutrisystem board of directors,
said, “As we announced earlier this week, Dawn Zier is joining
Nutrisystem as president and chief executive officer and a member
of our board of directors, and we are looking forward to her
contributions. Clearly the past few years have been challenging for
Nutrisystem as a tough economy and intense competition have
negatively impacted financial results, and this continued in the
third quarter. With a fresh outside perspective from a long-time
direct-to-consumer marketing professional, along with a sound
strategic plan for the 2013 diet season launch, we are confident
that we can turn around the company’s financial performance.”
David Clark, chief financial officer, added, “Based on current
trends, we are forecasting full year earnings per share before
one-time charges in the range of 15 to 20 cents. Additionally, we
will be evaluating a range of decisions that could further reduce
earnings for both the fourth quarter and the full year. We expect
revenue for the year to be flat or slightly down from 2011
levels.”
Conference Call and Webcast
Management will host a webcast to discuss third quarter 2012
financial results today at 8:30 AM Eastern time. The webcast will
include remarks from chairman of the board of directors Mike Hagan,
chief financial officer David Clark, and chief marketing officer
Mike Amburgey. A webcast of the conference call will be available
live on the Investor Relations section of the Nutrisystem website
(www.nutrisystem.com) and a replay will be available for 30 days.
Interested parties unable to access the conference call via the
webcast may dial 719-325-2495, and reference conference ID
5447181.
About Nutrisystem, Inc.
Having helped Americans lose millions of pounds over the last 40
years, Nutrisystem, Inc. (NASDAQ: NTRI) develops evidence-based
programs for healthy weight management, and is the leading provider
of home-delivered weight loss meal plans. Nutrisystem offers
balanced nutrition in the form of low glycemic index meal plans
designed for men and women, including seniors, vegetarians and the
Nutrisystem® D® program for people with diabetes or at risk for
type 2 diabetes. Nutrisystem® plans include a wide variety of
pantry and fresh-frozen entrees and snacks to aid in program
satisfaction and adherence, as well as transition plans to support
long-term success. The Fort Washington, PA-based company also
provides weight management support and counseling by trained
weight-loss coaches and registered dietitians, as well as through
an engaged online community, online tools and trackers, mobile
apps, cookbooks and more. Healthcare professionals may learn more
about the programs by visiting www.nutrisystem.com/hcp.
Nutrisystem® weight loss plans are available directly to consumers
through www.nutrisystem.com, by phone (1-800-435-4074) and at
select retailers. The Company has also introduced a new in-store
retail line, Nutrisystem® Everyday™ products, comprised of
nutritionally balanced bars, smoothies, bakery and breakfast items
aimed at consumers who aspire to eat healthier.
Forward-Looking Statement Disclaimer
Information provided and statements contained in this press
release that are not purely historical, such as 2012 fourth quarter
and full year guidance, management transition, 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, specific factors discussed herein
and in other releases and public filings made by the Company
(including filings by the Company with the Securities and Exchange
Commission). 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.
NUTRISYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share
amounts)
Three Months Ended Nine Months Ended September 30,
September 30,
2012
2011
2012
2011
REVENUE
$ 81,276
$ 85,643 $
334,353 $ 334,444
COSTS AND EXPENSES: Cost of revenue 43,835 41,257
180,783 162,711 Marketing 18,176 20,279 91,927 92,833 General and
administrative 14,772 11,502 51,520 48,186 Depreciation and
amortization
2,570
2,961 8,112
9,186 Total costs and expenses
79,353 75,999
332,342 312,916
Operating income 1,923 9,644 2,011 21,528 OTHER EXPENSE 0 0 (78 ) 0
INTEREST EXPENSE, net
(244 )
(52 ) (754
) (408 ) Income
before income taxes 1,679 9,592 1,179 21,120
INCOME TAX (BENEFIT) EXPENSE
(911 ) 3,524
(1,045 )
7,709 Net income
$
2,590 $ 6,068
$ 2,224 $
13,411 BASIC INCOME PER COMMON SHARE
$ 0.09 $
0.22 $ 0.07
$ 0.48 DILUTED INCOME PER COMMON
SHARE
$ 0.09 $
0.21 $ 0.07
$ 0.47 WEIGHTED AVERAGE
SHARES OUTSTANDING: Basic 27,562 27,092 27,442 26,948 Diluted
27,801 27,335 27,642 27,272 DIVIDENDS DECLARED PER COMMON
SHARE
$ 0.175 $
0.175 $ 0.525
$ 0.525 NUTRISYSTEM,
INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share and
per share amounts)
September 30, December 31, 2012
2011
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 48,674 $ 47,594 Short
term investments 20,135 10,013 Receivables 4,977 11,198
Inventories, net 16,708 31,514 Prepaid income taxes 430 3,350
Deferred income taxes 3,609 1,584 Supplier advances 1,308 2,637
Other current assets
5,630
9,011 Total current assets 101,471 116,901
FIXED ASSETS, net 29,515 29,771 OTHER ASSETS
5,082 3,682 Total
assets
$ 136,068 $
150,354
LIABILITIES AND
STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES: Accounts payable $ 21,297 $ 32,581 Accrued
payroll and related benefits 3,606 679 Deferred revenue 2,286 2,916
Other accrued expenses and current liabilities
5,394 4,486 Total
current liabilities 32,583 40,662 BORROWINGS UNDER CREDIT FACILITY
30,000 30,000 NON-CURRENT LIABILITIES
4,017
4,734 Total liabilities
66,600 75,396
STOCKHOLDERS’ EQUITY: Preferred stock, $.001 par value (5,000,000
shares authorized, no shares issued and outstanding) 0 0 Common
stock, $.001 par value (100,000,000 shares authorized; shares
issued – 28,553,225 at September 30, 2012 and 28,180,705 at
December 31, 2011) 28 28 Additional paid-in capital 17,302 10,091
Treasury stock, at cost, 7,691 shares at September 30, 2012 and 0
shares at December 31, 2011
(83
)
0 Retained earnings 52,273 64,931 Accumulated other comprehensive
loss
(52 ) (92
) Total stockholders’ equity
69,468 74,958 Total
liabilities and stockholders’ equity
$
136,068 $ 150,354
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Nine Months Ended September 30, 2012
2011 CASH FLOWS FROM OPERATING ACTIVITIES: Net income
$ 2,224 $ 13,411 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation and amortization
8,112 9,186 Loss (gain) on disposal of fixed assets 6 (17 )
Share–based compensation expense 8,181 7,502 Deferred income tax
benefit (4,229 ) (364 ) Realized loss on sales of marketable
securities 0 26 Realized loss on foreign currency translation
adjustment 57 0 Changes in operating assets and liabilities:
Accrued interest (11 ) 0 Receivables 6,221 2,866 Inventories, net
14,806 3,643 Supplier advances 1,599 14,647 Other assets 3,608
6,971 Accounts payable (11,052 ) (6,496 ) Accrued payroll and
related benefits 2,927 (2,847 ) Deferred revenue (630 ) (3,314 )
Income taxes 3,063 7,296 Other accrued expenses and liabilities
288 1,966 Net
cash provided by operating activities
35,170
54,476 CASH FLOWS FROM INVESTING
ACTIVITIES: Purchases of short term investments (10,298 ) (54 )
Proceeds from sales of short term investments 245 20,897 Capital
additions (8,306 ) (6,570 ) Proceeds from the sale of fixed assets
0 58 Net cash
(used in) provided by investing activities
(18,359 )
14,331
CASH FLOWS FROM FINANCING ACTIVITIES: Exercise of stock
options 10 128 Taxes related to equity compensation awards, net
(859 ) (2,692 ) Payment of dividends
(14,882
) (14,404 ) Net cash
used in financing activities
(15,731
) (16,968 ) NET
INCREASE IN CASH AND CASH EQUIVALENTS 1,080 51,839 CASH AND CASH
EQUIVALENTS, beginning of period
47,594
20,376 CASH AND CASH EQUIVALENTS, end of
period
$ 48,674 $
72,215
NUTRISYSTEM, INC. AND
SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION TO GAAP
RESULTS
(in thousands)
Three Months Ended September 30, Nine Months Ended
September 30, 2012
2011
2012
2011
Adjusted EBITDA $ 8,851 $ 14,680 $ 24,558 $ 38,091
Non-cash employee compensation expense (1,500 ) (2,075 ) (4,679 )
(7,377 ) Other expense 0 0 (78 ) 0 Interest expense, net (244 ) (52
) (754 ) (408 ) Income tax benefit (expense) 911 (3,524 ) 1,045
(7,709 ) Depreciation and amortization (2,570 ) (2,961 ) (8,112 )
(9,186 ) Severance and related charges (758 ) 0 (7,656 ) 0
Impairment of supplier advance (2,100 ) 0
(2,100 ) 0 Net income $ 2,590 $ 6,068
$ 2,224 $ 13,411
Adjusted EBITDA is defined as net income excluding non-cash
employee compensation, other expense, interest, income taxes,
depreciation and amortization, severance and related charges, and
impairment of supplier advance. We believe Adjusted EBITDA is a
useful performance metric for management and investors because it
is more indicative of the ongoing operations of the Company.
Adjusted EBITDA excludes certain non-cash and non-operating items
to facilitate comparisons and provide a meaningful measurement that
is focused on the performance of the ongoing operations of the
Company.
Severance and related charges include cash and non-cash
severance of $5,722 related to the upcoming management transition
and other related matters of $1,934 for the nine months ended
September 30, 2012.
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