Positive Start to Diet Season Expected to
Fuel Continued Growth in Fiscal 2015
Company Reports Sixth Consecutive Quarter of
Year-over-Year Revenue Growth; Revenue for Fiscal 2014 Increased
13%
Adjusted EBITDA Increased 35% and Adjusted
Earnings per Share Increased 65% for Fiscal 2014
Nutrisystem, Inc. (NASDAQ: NTRI), a leading provider of weight
management products and services, today reported that the Company
achieved its previously provided revenue, adjusted EBITDA and
earnings per share guidance for the fourth quarter and 2014 fiscal
year and provided an outlook for 2015.
Dawn Zier, President and Chief Executive Officer, stated, “I am
pleased we have delivered six consecutive quarters of
year-over-year revenue growth. Our strong results for fiscal 2014
demonstrate the successful execution of our turnaround plan as well
as our ability to be nimble and proactively address evolving
customer needs. We’re attracting new customers to the brand,
successfully launching new products, implementing new pricing
strategies, and operating with strategic and financial discipline
to drive growth to our top and bottom lines.”
Full Year 2014
- Revenue increased 13% to $403.1
million, compared to $358.1 million in 2013.
- Adjusted EBITDA grew 35% to $42.7
million, compared to $31.6 million in 2013.
- Net income increased 66% to $19.3
million, compared to adjusted net income of $11.6 million in
2013.
- GAAP diluted earnings per share
increased 65% to $0.66 per share from adjusted earnings of $0.40
per share in 2013.
- Cash, cash equivalents, and short term
investments increased $2.9 million to $29.2 million at December 31,
2014 from $26.3 million at December 31, 2013. The Company had no
borrowings outstanding under its bank facility.
- In 2014, the Company returned $20.4
million in cash to stockholders via dividends. The Board of
Directors has declared a quarterly dividend of $0.175 per share,
payable March 23, 2015 to stockholders of record as of March 12,
2015.
Fourth Quarter 2014
- Revenue grew 13% to $79.2 million,
compared to $69.9 million in the fourth quarter of 2013.
- Gross profit margin improved 380 basis
points to 51.5% and gross profit increased 22% to $40.8 million
compared to the fourth quarter of 2013.
- Adjusted EBITDA increased 152% to $11.6
million, compared to adjusted EBITDA of $4.6 million in the fourth
quarter of 2013.
- Earnings per share increased to $0.18
from $0.04 in the fourth quarter of 2013.
Ms. Zier added, “We look forward to entering a new chapter of
continued growth, innovation, and profitability fueled by the
positive momentum generated this past year and our 2015 Diet Season
performance to date. We are well positioned to continue growing our
direct-to-consumer and retail businesses by leveraging our broad
integrated marketing, distribution, segmentation and
price-optimization capabilities.”
Mike Monahan, Chief Financial Officer, commented, “We continued
to improve our profit contribution per customer and expanded our
adjusted EBITDA margins by 180 basis points in 2014. Our 2015
guidance implies continued margin expansion with increased
investments in marketing and product development to support future
growth.”
Our first quarter and full year 2015 guidance is as follows.
Reconciliations of certain GAAP to non-GAAP measures are provided
later in this press release.
First Quarter and Full Year 2015 Guidance
- First quarter revenue expected to be in
the range of $129 to $134 million, adjusted EBITDA between $4.5 and
$6.7 million, and GAAP earnings per share between $0.02 and
$0.07.
- Full year revenue expected to be in the
range of $425 to $445 million, adjusted EBITDA between $47.8 and
$52.5 million, and GAAP earnings per share between $0.73 and
$0.83.
Conference Call and Webcast
Management will host a conference call to discuss fourth quarter
and full year 2014 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 the Nutrisystem website (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
13601170.
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 excluding
interest, income taxes and depreciation and amortization. Adjusted
EBITDA is defined as EBITDA excluding non-cash employee
compensation and one-time charges. Adjusted net income is defined
as net income as reported excluding one-time charges.
Forward-Looking Statements
Information provided and statements contained in this press
release that are not purely historical, such as first quarter and
full year 2015 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 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®, a 28-day structured food delivery
program, multi-day kits available at select retail outlets and a
new free app and digital platform NuMi® by Nutrisystem. Nutrisystem
meal plans feature a wide variety of choices, including more than
100 foods containing no artificial preservatives or artificial
flavors, along with comprehensive counseling options from trained
weight-loss coaches, registered dietitians and certified diabetes
educators. Nutrisystem® plans are consistent with national
guidelines for dietary intake meeting targets for fat, sodium,
sugar, cholesterol, fiber and physical activity. Plans can be
customized to specific dietary needs and preferences including the
Nutrisystem® D® program for people with Type 2 diabetes or
pre-diabetes. 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. 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
December 31,
Year Ended
December 31,
2014
2013
2014
2013
REVENUE
$ 79,233 $
69,873 $ 403,083
$ 358,086 COSTS AND EXPENSES: Cost
of revenue 38,448 36,514 199,053 184,210 Marketing 17,584 15,235
107,706 95,784 General and administrative 12,776 15,290 59,231
58,227 Depreciation and amortization
2,102
2,093 7,849
8,896 Total costs and expenses
70,910 69,132
373,839 347,117 Operating income
8,323 741 29,244 10,969 INTEREST EXPENSE (INCOME), net
9 (34 )
142 89 Income before income tax
expense (benefit) 8,314 775 29,102 10,880
INCOME TAX EXPENSE (BENEFIT)
3,006 (520 )
9,791 3,510 Net income
$ 5,308 $ 1,295
$ 19,311 $
7,370 BASIC INCOME PER COMMON SHARE
$ 0.18 $ 0.04
$ 0.67 $
0.26 DILUTED INCOME PER COMMON SHARE
$
0.18 $ 0.04
$ 0.66 $ 0.25
WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 28,299 28,003
28,323 28,013 Diluted 28,933 28,542 28,787 28,287 DIVIDENDS
DECLARED PER COMMON SHARE
$ 0.175
$ 0.175 $
0.70 $ 0.70
NUTRISYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE
SHEETS (Unaudited, in thousands, except par value
amounts)
December 31,
2014
2013
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 12,620 $ 9,772
Short term investments 16,627 16,551 Receivables 12,206 7,738
Inventories 26,899 26,088 Prepaid income taxes 0 2,167 Deferred
income taxes 1,051 931 Other current assets
7,095 6,034 Total
current assets 76,498 69,281 FIXED ASSETS, net 26,851 26,029
DEFERRED INCOME TAXES 5,461 5,924 OTHER ASSETS
1,082 1,211 Total
assets
$ 109,892 $
102,445
LIABILITIES AND
STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES: Accounts payable $ 34,261 $ 29,117
Accrued payroll and related benefits 6,550 6,723 Income taxes
payable 301 0 Deferred revenue 4,424 4,228 Other accrued expenses
and current liabilities
6,131
7,441 Total current liabilities 51,667 47,509
NON-CURRENT LIABILITIES
2,710
2,779 Total liabilities
54,377 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 –
28,990 at December 31, 2014 and 28,866 at December 31, 2013) 29 29
Additional paid-in capital 29,992 24,095 Treasury stock, at cost,
249 shares at December 31, 2014 and 158 shares at December 31, 2013
(3,062 ) (1,586 ) Retained earnings 28,552 29,611 Accumulated other
comprehensive income
4
8 Total stockholders’ equity
55,515 52,157 Total
liabilities and stockholders’ equity
$
109,892 $ 102,445
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in
thousands)
Year Ended December 31,
2014 2013 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $ 19,311 $ 7,370 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 7,849 8,896 Loss on disposal of fixed
assets 35 145 Share–based compensation expense 5,651 5,832 Deferred
income tax benefit (248 ) (1,560 ) Other non-cash charges 22 48
Changes in operating assets and liabilities: Receivables (4,468 )
749 Inventories (811 ) (2,451 ) Other assets (932 ) 1,192 Accounts
payable 4,688 6,018 Accrued payroll and related benefits (173 )
5,397 Deferred revenue 196 885 Income taxes 3,051 2,316 Other
accrued expenses and liabilities
(1,364
) 549 Net cash provided by
operating activities
32,807
35,386 CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short term investments (8,225 ) (24,513 ) Proceeds
from sales of short term investments 8,121 11,137 Capital additions
(8,265 ) (7,614 ) Proceeds from the sale of fixed assets
0 28 Net cash used
in investing activities
(8,369 )
(20,962 ) CASH FLOWS FROM
FINANCING ACTIVITIES: Exercise of stock options 314 0 Taxes related
to equity compensation awards, net (1,534 ) (825 ) Payment of
dividends
(20,370 )
(20,013 ) Net cash used in financing
activities
(21,590 )
(20,838 ) NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 2,848 (6,414 ) CASH AND CASH EQUIVALENTS,
beginning of year
9,772
16,186 CASH AND CASH EQUIVALENTS, end of year
$ 12,620 $
9,772 NUTRISYSTEM, INC.
AND SUBSIDIARIES ADJUSTED EBITDA RECONCILIATION TO GAAP
RESULTS (Unaudited, in thousands) Three Months
Ended Year Ended December 31, December 31, 2014
2013 2014 2013 Net income
$ 5,308 $ 1,295 $ 19,311 $ 7,370 Interest expense (income), net 9
(34 ) 142 89 Income tax expense (benefit) 3,006 (520 ) 9,791 3,510
Depreciation and amortization 2,102 2,093
7,849 8,896 EBITDA 10,425 2,834 37,093 19,865
Non-cash employee compensation expense 1,178 1,801 5,621 5,311
One-time charges Settlement with supplier 0 0 0 5,000 Severance and
related charges 0 0 0 1,441
Total one-time charges 0 0 0
6,441 Adjusted EBITDA $ 11,603 $ 4,635 $ 42,714 $ 31,617
NUTRISYSTEM, INC. AND SUBSIDIARIES
ADJUSTED EBITDA GUIDANCE RECONCILIATION TO GAAP MEASURES
(Unaudited, in thousands) Three Months Ending Year
Ending March 31, 2015 December 31, 2015 Low High Low
High Net income $ 627 $ 2,079 $ 21,608 $ 24,710 Interest
expense, net 50 50 230 230 Income tax expense 323 1,071 11,132
12,730 Depreciation and amortization 2,250 2,250
9,100 9,100 EBITDA 3,250 5,450 42,070 46,770 Non-cash
employee
compensation expense
1,250 1,250 5,730 5,730 Adjusted EBITDA
$ 4,500 $ 6,700 $ 47,800 $ 52,500
EBITDA is defined as net income excluding interest, income taxes
and depreciation and amortization. Adjusted EBITDA is defined as
EBITDA excluding non-cash employee compensation and one-time
charges.
NUTRISYSTEM, INC. AND SUBSIDIARIES ADJUSTED
NET INCOME RECONCILIATION TO GAAP RESULTS (Unaudited, in
thousands, except per share amounts) Three Months Ended
Year Ended December 31, December 31, 2014 2013
2014 2013 Net income as
reported $ 5,308 $ 1,295 $ 19,311 $ 7,370 Income tax expense
(benefit) as reported 3,006 (520 ) 9,791
3,510 Income before income tax expense (benefit)
8,314 775 29,102 10,880 Adjustment for one-time charges 0
0 0 6,441 Adjusted income before
income tax expense (benefit) 8,314 775 29,102 17,321 Adjusted
income tax expense (benefit) 3,006 (520 )
9,791
5,716
(a)
Adjusted net income $ 5,308 $ 1,295 $ 19,311 $ 11,605
Adjusted diluted income per common share (b) $ 0.18 $ 0.04 $
0.66 $ 0.40 Diluted weighted average shares outstanding 28,933
28,542 28,787 28,287
(a) Adjusted income tax expense for the year ended December 31,
2013 has been calculated using a tax rate of 33%.
(b) Included in the results for the year ended December 31, 2013
was $0.15 of adjusted income per common share for one-time charges.
No adjustments for one-time charges were included for the three
months ended December 31, 2014 or 2013, or for the year ended
December 31, 2014.
Statement Regarding Non-GAAP Financial Measures
We believe EBITDA, adjusted EBITDA, adjusted EBITDA guidance,
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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