Revenue Increases 16% to $122.2 Million as
Product Innovation and Marketing Execution Deliver New Customer
Growth
Company Raises Full Year 2014 Revenue and
Earnings per Share Guidance Range
Nutrisystem, Inc. (NASDAQ: NTRI), a leading provider of weight
management products and services, today reported financial results
for the quarter ended March 31, 2014 that exceeded previous
guidance. The following are key financial highlights for the period
and a reconciliation of GAAP to non-GAAP measures is provided later
in this press release.
First Quarter 2014
- Revenues of $122.2 million, an increase
of 16% from revenues of $105.4 million in the first quarter of
2013, driven by growth in both the Direct and Retail channels;
- Gross Profit increased 13% to $59.8
million;
- Adjusted EBITDA was $3.2 million
compared to $3.9 million in the first quarter of 2013 due to the
planned increase of 2014 seasonal promotions;
- GAAP earnings per share of $0.01
exceeded GAAP loss per share of ($0.02) in the first quarter of
2013; and
- Cash, cash equivalents, and short term
investments increased $3.2 million during the quarter to $29.5
million at March 31, 2014 from $26.3 million at December 31, 2013.
The Company had no outstanding bank debt at quarter-end under its
existing bank facility.
Dawn Zier, President and Chief Executive Officer, said, “We are
off to a strong start this year and our performance during this
diet season in the direct and retail channels enabled us to exceed
our revenue and earnings per share expectations for the first
quarter and achieve our third consecutive quarter of year-over-year
revenue growth. New product innovation and effective benefit-driven
advertising allowed us to achieve customer growth north of 20% and
reduce discount messaging. We also implemented a mid-quarter price
increase.”
Ms. Zier continued, “We believe that Nutrisystem leads the
industry in meaningful product innovation. We are pleased with our
launches of Nutrisystem® My Way® and the Fast 5™ kit, our Men’s
Protein Powered 5-day kit that just launched in retail, our
Kickstart™ 7-day kit introduced yesterday, and our recently
announced launch of NuMi, a new multi-platform digital product that
addresses the needs of do-it-yourself dieters and also helps people
transition from structured programs. Our channel expansion into
retail and digital is enabling us to increase brand awareness and
capture new customer segments. We expect to achieve full year
revenue growth in 2014 for the first time in seven years and are
just beginning to realize our brand potential.”
Mike Monahan, Chief Financial Officer, commented, “We continue
to return capital to stockholders and improve our balance sheet as
we execute on our strategic plan. In addition, because of the
improvements we are seeing in many aspects of our business, we are
increasing our revenue and earnings per share guidance range for
the full year of 2014.”
The Company announced that the Board of Directors has declared a
quarterly dividend of $0.175 per share, payable May 22, 2014 to
stockholders of record as of May 12, 2014.
Second Quarter and Updated Full Year 2014 Guidance
For the second quarter of 2014, the Company expects revenues to
be in the range of $106 million to $111 million. Going forward, the
Company will begin providing adjusted EBITDA as a guidance metric
to assist the investment community to better understand the
Company’s performance. The Company expects second quarter adjusted
EBITDA to be in the range of $14.5 million to $16.5 million. The
Company also expects second quarter of 2014 GAAP earnings per share
to be in the range of $0.23 to $0.28.
For the full year of 2014, the Company is raising its revenue
guidance from a previous range of $385 million to $405 million to
now be in the range of $392 million to $407 million. The Company
expects annual adjusted EBITDA to be in the range of $40.0 million
to $44.0 million. In addition, the Company is raising its GAAP
earnings per share guidance from a previous range of $0.51 to $0.61
to now be in the range of $0.57 to $0.67 for the full year of
2014.
Conference Call and Webcast
Management will host a webcast to discuss first quarter 2014
financial results today at 5:00 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 877-407-3982, and reference conference ID
13580476.
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. These
adjusted measures are 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
performance of the Company for the periods being reported and
future periods. The presentation of this additional information is
not meant to be considered a substitute for measures prepared in
accordance with GAAP.
In this release, EBITDA is defined as net income (loss)
excluding interest, income taxes and depreciation and amortization.
Adjusted EBITDA is defined as EBITDA excluding non-cash employee
compensation and severance and related charges.
Forward-Looking Statements
Information provided and statements contained in this press
release that are not purely historical, such as second quarter and
full year 2014 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 press 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, Inc.
Nutrisystem, Inc. (NASDAQ: NTRI) is a leading provider of weight
loss solutions and weight-related products and services including
its structured food delivery program Nutrisystem® My Way® and its
new digital platform NuMi™ by Nutrisystem. Nutrisystem has helped
consumers lose weight for more than 40 years by providing quality
foods and a nutritionally balanced meal program. Nutrisystem® meal
plans feature more than 150 menu options, along with counseling
options from trained weight-loss coaches, registered dietitians and
certified diabetes educators. Customers are provided further
support from the online community, tools, trackers, mobile apps and
more. Nutrisystem® plans are consistent with national guidelines
for dietary intake meeting targets for fat, sodium, sugar,
cholesterol, fiber and physical activity. Additionally, plans can
be customized to specific dietary needs and preferences including
the Nutrisystem® D® program for people with diabetes or those at
risk for type 2 diabetes. 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 NuMi multi-platform system and downloadable
App can be found at http://www.numi.com.
NUTRISYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share
amounts)
Three Months Ended
March 31,
2014 2013
REVENUE
$ 122,228 $
105,384 COSTS AND EXPENSES: Cost of
revenue 62,421 52,353 Marketing 41,744 36,316 General and
administrative 15,918 15,251 Depreciation and amortization
1,758 2,549 Total costs and
expenses
121,841 106,469
Operating income (loss) 387 (1,085 ) INTEREST EXPENSE, net
45 53 Income (loss)
before income tax expense (benefit) 342 (1,138 ) INCOME TAX EXPENSE
(BENEFIT)
118 (498
) Net income (loss)
$ 224
$ (640 ) BASIC INCOME
(LOSS) PER COMMON SHARE
$ 0.01
$ (0.02 ) DILUTED INCOME
(LOSS) PER COMMON SHARE
$ 0.01
$ (0.02 ) WEIGHTED
AVERAGE SHARES OUTSTANDING: Basic 28,065 27,759 Diluted 28,489
27,759 DIVIDENDS DECLARED PER COMMON SHARE $ 0.175 $ 0.175
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except par value
amounts)
March 31,
December 31,
2014 2013
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 12,927 $ 9,772
Short term investments 16,562 16,551 Receivables 17,876 7,738
Inventories 24,368 26,088 Prepaid income taxes 1,481 2,167 Deferred
income taxes 1,277 931 Other current assets
6,391 6,034 Total
current assets 80,882 69,281 FIXED ASSETS, net 25,576 26,029
DEFERRED INCOME TAXES 6,255 5,924 OTHER ASSETS
1,179 1,211 Total
assets
$ 113,892 $
102,445
LIABILITIES AND
STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES: Accounts payable $ 42,647 $ 29,117
Accrued payroll and related benefits 4,260 6,723 Deferred revenue
8,273 4,228 Other accrued expenses and current liabilities
7,916 7,441 Total
current liabilities 63,096 47,509 NON-CURRENT LIABILITIES
2,750 2,779 Total
liabilities
65,846
50,288 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;
sharesissued – 28,976 at March 31, 2014 and 28,866 at December 31,
2013) 29 29 Additional paid-in capital 25,481 24,095 Treasury
stock, at cost, 199 shares at March 31, 2014 and 158 shares at
December 31, 2013 (2,202 ) (1,586 ) Retained earnings
24,725
29,611
Accumulated other comprehensive income
13
8
Total stockholders’ equity
48,046
52,157 Total liabilities and
stockholders’ equity
$ 113,892
$ 102,445
NUTRISYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended March 31,
2014 2013 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income (loss) $ 224 $ (640 ) Adjustments
to reconcile net income (loss) to net cash provided by operating
activities: Depreciation and amortization 1,758 2,549 Loss on
disposal of fixed assets 0 42 Share–based compensation expense
1,093 1,502 Deferred income tax benefit (491 ) (609 ) Other
non-cash charges 12 29 Changes in operating assets and liabilities:
Receivables (10,138 ) (3,988 ) Inventories 1,720 926 Other assets
(325 ) 2,915 Accounts payable 13,533 13,995 Accrued payroll and
related benefits (2,463 ) 1,943 Deferred revenue 4,045 2,568 Income
taxes 437 71 Other accrued expenses and liabilities
450 1,094 Net cash
provided by operating activities
9,855
22,397 CASH FLOWS FROM INVESTING
ACTIVITIES: Purchases of short term investments (2,475 ) (14,524 )
Proceeds from sales of short term investments 2,459 3,371 Capital
additions
(1,312 )
(1,555 ) Net cash used in investing
activities
(1,328 )
(12,708 ) CASH FLOWS FROM FINANCING
ACTIVITIES: Exercise of stock options 91 0 Taxes related to equity
compensation awards, net (353 ) (297 ) Payment of dividends
(5,110 ) (4,871
) Net cash used in financing activities
(5,372 ) (5,168
) NET INCREASE IN CASH AND CASH EQUIVALENTS 3,155
4,521 CASH AND CASH EQUIVALENTS, beginning of period
9,772 16,186 CASH
AND CASH EQUIVALENTS, end of period
$
12,927 $ 20,707
NUTRISYSTEM, INC. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION TO GAAP RESULTS
(Unaudited, in thousands)
Three Months Ended March 31, 2014 2013
Net income (loss) $ 224 $ (640 ) Interest expense,
net 45 53 Income tax expense (benefit) 118 (498 ) Depreciation and
amortization 1,758 2,549 EBITDA 2,145 1,464
Non-cash employee compensation expense 1,093 981 Severance and
related charges 0 1,441 Adjusted EBITDA $
3,238 $ 3,886
NUTRISYSTEM, INC. AND
SUBSIDIARIES ADJUSTED EBITDA GUIDANCE RECONCILIATION TO GAAP
MEASURES
(Unaudited, in thousands)
Three Months Ending Twelve Months Ending June 30, 2014
December 31, 2014 Low High Low High Net income
$ 6,900 $ 8,200 $ 16,900 $ 19,500 Interest expense, net 100 100 200
200 Income tax expense 3,600 4,300 9,000 10,400 Depreciation and
amortization 2,100 2,100 8,400 8,400
EBITDA 12,700 14,700 34,500 38,500 Non-cash employee compensation
expense 1,800 1,800 5,500 5,500
Adjusted EBITDA $ 14,500 $ 16,500 $ 40,000 $ 44,000
EBITDA is defined as net income (loss) excluding interest,
income taxes and depreciation and amortization. Adjusted EBITDA is
defined as EBITDA excluding non-cash employee compensation and
severance and related charges.
NUTRISYSTEM, INC. AND SUBSIDIARIES ADJUSTED NET
INCOME RECONCILIATION TO GAAP RESULTS
(Unaudited, in thousands, except per share
amounts)
Three Months Ended March 31,
2014 2013 Net income (loss) as
reported $ 224 $ (640 ) Income tax expense (benefit) as
reported
118
(498
)
Income (loss) before income tax expense 342 (1,138 ) Adjustment for
one-time charges 0 1,441 Adjusted income
before income tax
expense
342
303
Adjusted income tax expense 118 106 Adjusted
net income $ 224 $ 197 Adjusted diluted income per common
share $ 0.01
$
0.01
Adjusted diluted weighted average shares
outstanding
28,489
27,933
Adjusted income tax expense for the three months ended March 31,
2013 has been calculated using a tax rate of 35%.
Statement Regarding Non-GAAP Financial Measures
We believe EBITDA, adjusted EBITDA and adjusted net income are
useful performance metrics for management and investors because
they are indicative of the ongoing operations of the Company. These
non-GAAP measures exclude 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.
ICR, Inc.John Mills,
Partner646-277-1254ir@nutrisystem.comJohn.Mills@Icrinc.com
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