Positive Start to Diet Season Expected to
Fuel Third Consecutive Year of Double-Digit Revenue Growth in
2016
Company Reports 15% Growth in 2015 and Tenth
Consecutive Quarter of Year-over-Year Revenue Growth
Adjusted EBITDA Increased 34% and Adjusted
Earnings per Share Increased 44% for 2015
Nutrisystem, Inc. (NASDAQ: NTRI), a leading provider of weight
management products and services, today reported financial results
for the quarter and full year ended December 31, 2015.
Dawn Zier, President and Chief Executive Officer, stated, “I am
very pleased to report our second year of double-digit revenue
growth. In 2015, we continued to strengthen our business by
investing in new product innovation, enhancing the customer
experience, and driving strong execution. For 2016, we expect to
deliver our third consecutive year of double-digit revenue growth,
fueled by the strength of our direct-to-consumer business and
increased demand for our programs.”
Ms. Zier added, “We are building our strategic vision around a
multi-brand and multi-product approach to capture an even more
significant share of the weight loss market and expand into the
broader health and wellness space. To accomplish these goals, in
2016, we are developing the products, program, and infrastructure
to support a 2017 launch of the South Beach Diet. We are also
investing in and have just begun testing Shake360, a continuity
program targeted at a new customer segment – an often younger,
health conscious consumer – who is looking for clean,
nutrient-dense, gluten-free solutions for optimal nutrition. We
intend to leverage our product development, marketing, ecommerce,
supply chain, and distribution know-how to drive the successful
commercialization of these new offerings.”
The following are key financial highlights for the period and
reconciliations of certain GAAP to non-GAAP measures are provided
later in this press release.
Full Year 2015 Compared to Full Year 2014
- Revenue increased 15% to $462.6
million, compared to $403.1 million
- Gross margin improved 90 basis points
to 51.5%
- Adjusted EBITDA grew 34% to $57.1
million, compared to $42.7 million
- Adjusted net income increased 45% to
$28.0 million, compared to $19.3 million; GAAP net income increased
35% to $26.1 million including South Beach transaction costs and
investment initiative expense
- Adjusted diluted income per common
share increased 44% to $0.95, compared to $0.66; diluted income per
common share was $0.89, including South Beach transaction costs and
investment initiative expense
- In 2015, the Company returned $20.5
million in cash to stockholders via dividends. The Board of
Directors has declared a quarterly dividend of $0.175 per share,
payable March 17, 2016 to stockholders of record as of March 7,
2016.
Fourth Quarter 2015 Compared to Fourth Quarter 2014
- Revenue grew 14% to $90.2 million,
compared to $79.2 million
- Gross profit margin was 50.8% and gross
profit increased 12% to $45.9 million, compared to $40.8
million
- Adjusted EBITDA increased to $12.1
million, compared to $11.6 million
- Adjusted diluted income per common
share increased to $0.19, compared to $0.18. Diluted income per
common share was $0.13 including $0.06 of South Beach transaction
cost and investment initiative expense
Mike Monahan, Chief Financial Officer, commented, “We achieved
our 2015 financial goals and are projecting solid top and bottom
line growth in 2016. We expect the investment costs related to the
South Beach Diet and Shake360 will impact diluted income per common
share by $0.14 in 2016 and are factored into our guidance. We
expect these initiatives to be accretive in 2017 and deliver a
favorable return on investment to stockholders.”
First Quarter and Full Year 2016 Guidance
The Company’s first quarter and full year 2016 guidance are
outlined below. Reconciliations of certain GAAP to non-GAAP
measures are provided later in this press release along with tables
detailing the expected impact of the investment. As previously
disclosed when we announced the South Beach acquisition in
December, Nutrisystem does not anticipate any revenue from this
brand in 2016.
- First quarter revenue expected to be in
the range of $148 to $158 million, adjusted EBITDA between $5.5 and
$7.5 million, and diluted income per common share between $0.02 and
$0.07. This guidance includes $1.3 million of cash operating
expense and $0.3 million of amortization expense, or $0.03 per
common share investment for the South Beach Diet ($0.01) and
Shake360 ($0.02).
- Full year revenue expected to be in the
range of $505 to $525 million, adjusted EBITDA between $62.5 and
$67.0 million, and diluted income per common share between $0.95
and $1.05. This guidance includes $5.5 million of cash operating
expenses and $1.0 million of amortization expense or $0.14 per
common share investment for the South Beach Diet ($0.09) and
Shake360 ($0.05). Nutrisystem’s adjusted diluted income per common
share is expected to be $1.09 to $1.19, which excludes the expected
impact of the South Beach Diet and Shake360 investments (see
attached tables for detail).
Conference Call and Webcast
Management will host a conference call to discuss fourth quarter
and full year 2015 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 Nutrisystem's website at 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
13629537.
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 certain one-time charges. Adjusted net income is
defined as net income excluding a new product initiative and
certain one-time charges. Adjusted earnings per share is defined as
earnings per share excluding a new product initiative and certain
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 2016 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, risks relating to cybersecurity
breaches, risks that consumer spending may decline or that U.S. and
global macroeconomic conditions may worsen resulting in reduced
demand for the Company’s products, risks relating to changes in
consumer preferences away from the Company’s food offerings
including its pre-packaged foods, risks relating to the
effectiveness and efficiency of the Company’s marketing
expenditures which may not result in increased revenue or generate
sufficient levels of brand name and program awareness, risks if the
Company is unable to obtain sufficient quantities, quality and
variety of food products in a timely and low-cost manner from its
food vendors, risks of exposure to product liability claims if the
use of the Company’s products results in illness or injury, risks
if the Company becomes subject to health or advertising related
claims from its customers, competitors or governmental and
regulatory bodies, and risks relating to increased competition from
other weight management providers. 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® MyWay®, a structured food delivery program
including a digital platform NuMi® by
Nutrisystem, with multi-day kits and individual products available
at select retail outlets. The Company recently launched
Turbo10, a clinically tested program that delivers up to a 10-pound
weight loss and an overall reduction of five inches from the waist,
hips, thighs, chest, and arms in just the first month. The
Company’s current product line offers customers the most meal
choices, including more than 100 foods containing no artificial
preservatives or artificial flavors. Nutrisystem provides customers
the flexibility to align their diet with the US Healthy Eating Meal
Pattern, as recommended by the USDA Dietary Guidelines. Plans
include comprehensive counseling options from trained weight loss
coaches, registered dietitians and certified diabetes educators and
can be customized to specific dietary needs and preferences
including the Nutrisystem® D® program for people with Type 2
diabetes or pre-diabetes. 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,
2015
2014
2015
2014
REVENUE
$ 90,246 $
79,233 $ 462,609
$ 403,083 COSTS AND EXPENSES: Cost
of revenue 44,393 38,448 224,581 199,053 Marketing 20,329 17,584
124,209 107,706 General and administrative 17,115 12,776 64,651
59,231 Depreciation and amortization
2,397
2,102 9,158
7,849 Total costs and expenses
84,234 70,910
422,599 373,839 Operating income
6,012 8,323 40,010 29,244 INTEREST EXPENSE, net
29 9 169
142 Income before income tax expense 5,983
8,314 39,841 29,102
INCOME TAX EXPENSE
2,177 3,006
13,698 9,791 Net income
$ 3,806 $ 5,308
$ 26,143 $
19,311 BASIC INCOME PER COMMON SHARE
$ 0.13 $ 0.18
$ 0.90 $ 0.67
DILUTED INCOME PER COMMON SHARE
$ 0.13
$ 0.18 $ 0.89
$ 0.66 WEIGHTED AVERAGE SHARES
OUTSTANDING: Basic 28,924 28,299 28,695 28,323 Diluted 29,414
28,933 29,175 28,787 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,
2015 2014
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 6,191 $ 12,620
Short term investments 9,317 16,627 Receivables 18,385 12,206
Inventories 30,530 26,899 Prepaid income taxes 1,149 0 Deferred
income taxes 1,192 1,051 Other current assets
10,118 7,095 Total current
assets 76,882 76,498 FIXED ASSETS, net 30,849 26,851 INTANGIBLE
ASSETS 15,084 84 DEFERRED INCOME TAXES 6,107 5,461 OTHER ASSETS
971 998 Total assets
$ 129,893 $ 109,892
LIABILITIES AND
STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES: Accounts payable $ 38,381 $ 34,261
Accrued payroll and related benefits 7,556 6,550 Income taxes
payable 0 301 Deferred revenue 5,618 4,424 Other accrued expenses
and current liabilities
6,126
6,131 Total current liabilities 57,681 51,667
NON-CURRENT LIABILITIES
2,284
2,710 Total liabilities
59,965 54,377
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 –
29,621 at December 31, 2015 and 28,990 at December 31, 2014) 29 29
Additional paid-in capital 41,392 29,992 Treasury stock, at cost,
389 shares at December 31, 2015 and 249 shares at December 31, 2014
(5,672 ) (3,062 ) Retained earnings 34,191 28,552 Accumulated other
comprehensive (loss) income
(12 )
4 Total stockholders’ equity
69,928 55,515 Total
liabilities and stockholders’ equity
$
129,893 $ 109,892
NUTRISYSTEM, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Year Ended December 31,
2015 2014 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $ 26,143 $ 19,311 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 9,158 7,849 Loss on disposal of fixed
assets 17 35 Share–based compensation expense 5,468 5,651 Deferred
income tax benefit (728 ) (248 ) Other non-cash charges 67 22
Changes in operating assets and liabilities: Receivables (6,179 )
(4,468 ) Inventories (3,631 ) (811 ) Other assets (2,972 ) (932 )
Accounts payable 4,336 4,688 Accrued payroll and related benefits
1,006 (173 ) Deferred revenue 1,194 196 Income taxes (1,873 ) 3,051
Other accrued expenses and liabilities
(834
) (1,364 ) Net cash
provided by operating activities
31,172
32,807 CASH FLOWS FROM INVESTING
ACTIVITIES: Purchases of short term investments (16,811 ) (8,225 )
Proceeds from sales of short term investments 24,030 8,121 Capital
additions (12,986 ) (8,265 ) Cash paid for acquisition of a
business
(15,000 )
0 Net cash used in investing activities
(20,767 ) (8,369
) CASH FLOWS FROM FINANCING ACTIVITIES: Exercise of
stock options 3,182 314 Taxes related to equity compensation
awards, net 512 (1,534 ) Payment of dividends (20,504 ) (20,370 )
Debt issuance costs
(24 )
0 Net cash used in financing activities
(16,834 ) (21,590
) NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(6,429 ) 2,848 CASH AND CASH EQUIVALENTS, beginning of year
12,620 9,772 CASH
AND CASH EQUIVALENTS, end of year
$ 6,191
$ 12,620
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,
2015
2014 (b)
2015
2014 (b)
Net income as reported $ 3,806 $ 5,308 $ 26,143 $ 19,311
Income tax expense as reported 2,177 3,006
13,698 9,791 Income before income tax expense
5,983 8,314 39,841 29,102
Acquisition transaction costs (South Beach
Diet)
2,498 0 2,498 0 New product initiative (Shake360) 397
0 397 0 Adjusted income before income
tax expense 8,878 8,314 42,736 29,102 Adjusted income tax
expense(a) 3,231 3,006 14,693
9,791 Adjusted net income $ 5,647 $ 5,308 $ 28,043 $
19,311 Adjusted diluted income per common share $
0.19 $ 0.18 $ 0.95 $ 0.66 Diluted weighted average shares
outstanding 29,414 28,933 29,175 28,787
(a) Adjusted income tax expense for the three months and year
ended December 31, 2015 has been calculated using a tax rate of
36.39% and 34.38%, respectively.
(b) No adjustments for one-time charges were included for the
three months or year ended December 31, 2014.
NUTRISYSTEM, INC. AND SUBSIDIARIES ADJUSTED
DILUTED INCOME PER COMMON SHARE BREAKOUT
(Unaudited)
Three Months Ended Year Ended December 31, December 31,
2015 2014 2015 2014
Diluted income per common share as reported $ 0.13 $ 0.18 $
0.89 $ 0.66 Acquisition transaction costs (South Beach Diet) 0.05
0.00 0.05 0.00 New product initiative (Shake360) 0.01
0.00 0.01 0.00 Adjusted diluted income per common
share $ 0.19 $ 0.18 $ 0.95 $ 0.66
NUTRISYSTEM, INC. AND SUBSIDIARIES ADJUSTED EBITDA
RECONCILIATION TO GAAP RESULTS
(Unaudited, in thousands)
Three Months Ended Year Ended December 31, December 31,
2015 2014 2015 2014
Net income $ 3,806 $ 5,308 $ 26,143 $ 19,311 Interest
expense, net 29 9 169 142 Income tax expense 2,177 3,006 13,698
9,791 Depreciation and amortization 2,397 2,102
9,158 7,849 EBITDA 8,409 10,425 49,168 37,093
Non-cash employee compensation expense 1,213 1,178 5,468 5,621
Acquisition transaction costs (South Beach
Diet)
2,498 0 2,498 0 Adjusted EBITDA $
12,120 $ 11,603 $ 57,134 $ 42,714
NUTRISYSTEM, INC. AND SUBSIDIARIES ADJUSTED DILUTED
INCOME PER COMMON SHARE GUIDANCE BREAKOUT
(Unaudited)
Three Months Ending Year Ending March 31, 2016 December 31,
2016 Low High Low High Adjusted diluted income
per share $ 0.05 $ 0.10 $ 1.09 $ 1.19 South Beach Diet (0.01 )
(0.01 ) (0.09 ) (0.09 ) Shake360 (0.02 ) (0.02 )
(0.05 ) (0.05 ) Diluted income per common share $
0.02 $ 0.07 $ 0.95 $ 1.05
NUTRISYSTEM, INC. AND SUBSIDIARIES ADJUSTED EBITDA
GUIDANCE RECONCILIATION TO GAAP MEASURES
(Unaudited, in thousands)
Three Months Ending Year Ending March 31, 2016 December 31,
2016 Low High Low High Net income $ 765 $
2,077 $ 28,654 $ 31,606 Interest expense, net 34 34 150 150 Income
tax expense 401 1,089 15,026 16,574 Depreciation and amortization
2,850 2,850 12,250 12,250 EBITDA 4,050
6,050 56,080 60,580
Non-cash employee compensation expense
1,450 1,450 6,420 6,420 Adjusted EBITDA
$ 5,500 $ 7,500 $ 62,500 $ 67,000
NUTRISYSTEM, INC. AND SUBSIDIARIES ADJUSTED EBITDA
GUIDANCE BREAKOUT
(Unaudited, in thousands)
Three Months Ending Year Ending March 31, 2016 December 31,
2016 Low High Low High Nutrisystem core
business $ 6,800 $ 8,800 $ 68,000 $ 72,500 South Beach Diet (300 )
(300 ) (3,100 ) (3,100 ) Shake360 (1,000 ) (1,000 )
(2,400 ) (2,400 ) Adjusted EBITDA $ 5,500 $
7,500 $ 62,500 $ 67,000
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 certain
one-time charges.
Statement Regarding Non-GAAP Financial Measures
We believe EBITDA, adjusted EBITDA, adjusted net income,
adjusted diluted income per common share, adjusted EBITDA guidance
and adjusted diluted income per share guidance are useful
performance metrics for management and investors because they are
indicative of the ongoing operations of the Company. Adjusted net
income also excludes a new product initiative to provide investors
with insight into the income associated with the core 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160225006456/en/
ICR, Inc.John Mills,
Partner646-277-1254ir@nutrisystem.comJohn.Mills@Icrinc.com
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