Nutrisystem, Inc. (NASDAQ: NTRI), a leading provider of weight
management products and services, today reported financial results
for the second quarter 2013. The Company also announced that the
Board of Directors has declared a quarterly dividend of $0.175 per
share, payable August 19, 2013, to stockholders of record as of
August 8, 2013.
The following are financial highlights for the second quarter
ended June 30, 2013:
- Revenues for the quarter were $97.5
million and operating income was $9.8 million, both of which were
in line with the company’s expectations;
- Adjusted EBITDA for the quarter was
$13.5 million. Adjusted EBITDA is defined as net income excluding
non-cash employee compensation, interest, income taxes,
depreciation and amortization;
- Net income for the quarter was $6.4
million, and net income per diluted share was 22 cents, exceeding
the Company’s projected range of 15 to 20 cents per share; and
- Cash, cash equivalents, and short term
investments were $35.1 million at June 30, 2013. The Company had no
outstanding bank debt at quarter-end under its existing bank
facility.
Dawn Zier, President and Chief Executive Officer, said,
“Year-to-date adjusted earnings increased 8 cents from the prior
year, up 57%, driven by continued gross margin improvement, careful
management of marketing spend and G&A expense discipline. We
successfully increased our average selling price through the
execution of cross-sell initiatives and reduced discounting, as
well as improved our reactivation yield through segmentation and
targeting. While response and conversion remained challenged, these
improvements, combined with our retail success at Walmart, are
enabling us to deliver on the plan we outlined at the start of the
year.”
Ms. Zier continued, “On a parallel path we are working hard on
initiatives to stabilize and then grow revenue in future quarters.
We are focused on diversifying sales channels, building our
innovation pipeline, and developing new creative and programs for
the 2014 diet season launch. Results from our research show that
our new product concepts, enhancements and messaging are resonating
with customers and we believe this will help us to broaden appeal
and interest in Nutrisystem for the upcoming diet season.”
Mike Monahan, Chief Financial Officer, added, “We continue to
execute against our 2013 financial plan of increasing annual
profitability while investing in our growth initiatives and
returning cash to our stockholders. The upside in second quarter
earnings per share has enabled us to increase our guidance for FY
2013. We now expect adjusted earnings per share to be in the range
of 27 to 35 cents, up from our previously-announced range of 23 to
33 cents. We are also projecting third quarter earnings per share
in the range of 8 to 13 cents, as we expect the year-over-year
revenue pressure we realized during the first half of the year to
begin to abate.”
Conference Call and Webcast
Management will host a webcast to discuss second quarter 2013
financial results today at 4:30 PM Eastern time. The webcast 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 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 888-430-8705,
and reference conference ID 2531595.
Forward-Looking Statements
Information provided and statements contained in this press
release that are not purely historical, such as third quarter and
full year 2013 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, 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.
About Nutrisystem
Having helped Americans lose millions of pounds for over 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, or at risk for, type 2
diabetes. Nutrisystem® plans include a wide variety of pantry and
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.
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,
2013
2012
2013
2012
REVENUE
$ 97,469
$ 124,560 $
202,853 $ 253,077
COSTS AND EXPENSES: Cost of revenue 47,716 66,419
100,069 136,948 Marketing 24,250 28,546 60,566 74,213 General and
administrative 13,350 19,971 28,601 36,286 Depreciation and
amortization
2,342
2,706 4,891
5,542 Total costs and expenses
87,658 117,642
194,127 252,989
Operating income 9,811 6,918 8,726 88 OTHER EXPENSE 0 (78 )
0 (78 ) INTEREST EXPENSE, net
(29
) (236 )
(82 ) (510
) Income (loss) before income taxes 9,782 6,604 8,644
(500 )
INCOME TAX EXPENSE (BENEFIT)
3,423 2,489
2,925 (134
) Net income (loss)
$ 6,359
$ 4,115 $
5,719 $ (366
) BASIC INCOME (LOSS) PER COMMON SHARE
$ 0.22 $
0.14 $ 0.20
$ (0.01 ) DILUTED INCOME
(LOSS) PER COMMON SHARE
$ 0.22
$ 0.14 $
0.20 $ (0.01
) WEIGHTED AVERAGE SHARES OUTSTANDING: Basic
27,895 27,441 27,905 27,381 Diluted 28,001 27,622 28,046 27,381
DIVIDENDS DECLARED PER COMMON SHARE
$
0.175 $ 0.175
$ 0.35 $
0.35 NUTRISYSTEM, INC. AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited,
in thousands, except share and par value amounts)
June 30, December 31, 2013 2012
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 17,085 $ 16,186 Short
term investments 17,988 3,205 Receivables 7,620 8,487 Inventories
22,811 23,637 Prepaid income taxes 775 4,531 Deferred income taxes
2,069 2,969 Other current assets
5,000
7,160 Total current assets 73,348 66,175
FIXED ASSETS, net 26,902 28,003 OTHER ASSETS
5,519 4,228 Total
assets
$ 105,769 $
98,406
LIABILITIES AND
STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES: Accounts payable $ 29,760 $ 23,192 Accrued
payroll and related benefits 3,353 1,326 Deferred revenue 3,410
3,343 Other accrued expenses and current liabilities
8,093 6,911 Total
current liabilities 44,616 34,772 NON-CURRENT LIABILITIES
3,293 3,525 Total
liabilities
47,909
38,297
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 – 28,848,838 at June
30, 2013 and 28,631,464 at December 31, 2012)
29
29 Additional paid-in capital 20,897 18,466
Treasury stock, at cost, 131,591 shares at
June 30, 2013 and 72,561 shares at December 31, 2012
(1,143 ) (636 ) Retained earnings 38,105 42,254 Accumulated other
comprehensive loss
(28 )
(4 ) Total stockholders’ equity
57,860 60,109 Total
liabilities and stockholders’ equity
$
105,769 $ 98,406
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in
thousands)
Six Months Ended June 30,
2013 2012 CASH FLOWS FROM OPERATING ACTIVITIES: Net income
(loss) $ 5,719 $ (366 ) Adjustments to reconcile net income (loss)
to net cash provided by operating activities: Depreciation and
amortization 4,891 5,542 Loss on disposal of fixed assets 48 6
Share–based compensation expense 2,890 6,574 Deferred income tax
benefit (788 ) (3,162 ) Other non-cash charges 30 57 Changes in
operating assets and liabilities: Receivables 867 1,826 Inventories
826 8,356 Other assets 2,153 3,796 Accounts payable 6,642 726
Accrued payroll and related benefits 2,027 3,056 Deferred revenue
67 (633 ) Income taxes 3,658 2,859 Other accrued expenses and
liabilities
1,006
486 Net cash provided by operating activities
30,036 29,123
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of short term
investments (18,458 ) (8,527 ) Proceeds from sales of short term
investments 3,594 0 Capital additions (3,984 ) (5,496 ) Proceeds
from the sale of fixed assets
28
0 Net cash used in investing activities
(18,820 ) (14,023
) CASH FLOWS FROM FINANCING ACTIVITIES: Debt issuance
costs 0 (200 ) Exercise of stock options 0 9 Taxes related to
equity compensation awards, net (449 ) (627 ) Payment of dividends
(9,868 )
(9,894 ) Net cash used in financing
activities
(10,317 )
(10,712 ) NET INCREASE IN CASH AND CASH
EQUIVALENTS 899 4,388 CASH AND CASH EQUIVALENTS, beginning of
period
16,186 47,594
CASH AND CASH EQUIVALENTS, end of period
$
17,085 $ 51,982
NUTRISYSTEM, INC. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION TO GAAP RESULTS
(Unaudited, in thousands) Three Months Ended June 30,
Six Months Ended June 30, 2013 2012 2013 2012
Adjusted EBITDA
$
13,541
$
17,653
$
17,427
$
15,707
Non-cash employee compensation expense
(1,388
)
(1,428
)
(2,369
)
(3,179
)
Other expense 0 (78 ) 0 (78 ) Interest expense, net (29 ) (236 )
(82 ) (510 ) Income tax (expense) benefit (3,423 ) (2,489 ) (2,925
) 134 Depreciation and amortization (2,342 ) (2,706 ) (4,891 )
(5,542 ) Severance and related charges 0
(6,601 ) (1,441 ) (6,898 ) Net income (loss) $ 6,359
$ 4,115 $ 5,719 $ (366 ) Adjusted
EBITDA is defined as net income (loss) excluding non-cash employee
compensation, other expense, interest, income taxes, depreciation
and amortization and severance and related charges. 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
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.
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