Company Reports 18% Top-Line Increase and On
Track to Achieve Third Consecutive Year of Double-Digit Revenue
Growth
Company Raises Full Year Guidance
Announces $50 Million Share Buyback
Program
Nutrisystem, Inc. (NASDAQ: NTRI), a leading provider of weight
management products and services, today reported that the Company
exceeded its previously provided revenue, adjusted EBITDA, and
diluted income per share guidance for the first quarter ended March
31, 2016 and is raising its previously provided outlook range for
the full year.
Dawn Zier, President and Chief Executive Officer, stated, “The
Nutrisystem brand continues to resonate well with customers.
Turbo10, Turbo shakes, and new flexible options drove
better-than-expected first quarter results. Our unique combination
of easy-to-use, highly effective weight-loss products provides a
strong value proposition that has made Nutrisystem a leading name
in weight-loss. We continue to execute on our strategic initiatives
and believe our investments in new products and further
enhancements to the customer experience have us well positioned to
achieve our third consecutive year of double-digit revenue
growth.”
Ms. Zier added, “Looking ahead, we are focused on unlocking
additional value to propel our future growth. We are on track to
launch the South Beach Diet for the 2017 diet season and continue
to test Shake360, which is being targeted to a new demographic of
customers. We believe these initiatives, coupled with the continued
development and growth of our core brand, will position Nutrisystem
to capture a greater share of the expanding weight-loss market and
further penetrate the broader health and wellness space.”
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.
First Quarter 2016 Compared to First Quarter 2015
- Revenue increased 18% to $162.1
million, compared to $137.2 million.
- Adjusted EBITDA was $8.0 million.
Excluding initiative expenses of $1.7 million for the South Beach
Diet and Shake360, adjusted EBITDA increased 21% to $9.7
million.
- GAAP net income was $2.6 million.
Adjusted net income, which excludes initiative expenses of $1.3
million for the South Beach Diet and Shake360, increased 31% to
$3.9 million.
- GAAP diluted income per common share
was $0.09. Adjusted diluted income per common share, which excludes
initiative expenses of $0.04 for the South Beach Diet and Shake360
increased 30% to $0.13.
- The Board of Directors has authorized a
share buyback program of up to $50 million and declared a quarterly
dividend of $0.175 per share, payable May 23, 2016 to stockholders
of record as of May 13, 2016.
Mike Monahan, Chief Financial Officer, commented, “We exceeded
our first quarter financial goals and are now projecting increased
top and bottom line growth ranges in 2016. Due to the continued
growth in our business and the strength of our balance sheet, we
are announcing our Board’s authorization of a $50 million stock
buyback. This gives us the flexibility to continue to invest in the
Company’s long-term strategy and take advantage of market
conditions to further enhance shareholder value.”
Second Quarter and Updated Full Year 2016 Guidance
The Company’s second 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 South Beach and Shake360
initiatives. As previously disclosed when we announced the South
Beach Diet acquisition in December 2015, Nutrisystem does not
anticipate any revenue from this brand in 2016.
- Second quarter revenue expected to be
in the range of $145 to $150 million, adjusted EBITDA between $27.5
and $29.5 million, and diluted income per common share between
$0.48 and $0.53. This guidance includes $0.8 million of cash
operating expense and $0.3 million of amortization expense, or
$0.02 per common share expense, for the South Beach Diet and
Shake360 initiatives.
- Full year 2016 revenue is now expected
to be in the range of $517 to $532 million compared to previous
range of $505 to $525 million, adjusted EBITDA between $66.0 and
$70.5 million compared to previous range of $62.5 to $67.0 million,
and diluted income per common share between $1.03 and $1.13
compared to previous range of $0.95 to $1.05. This updated guidance
includes $5.5 million of cash operating expense and $1.0 million of
amortization expense, or $0.14 per common share expense, for the
South Beach Diet and Shake360 initiatives. Nutrisystem’s adjusted
diluted income per common share is expected to be $1.17 to $1.27
compared to previous range of $1.09 to $1.19, which excludes the
expected impact of the South Beach Diet and Shake360
initiatives.
Share Repurchase Program
The Company’s Board of Directors has authorized a share
repurchase program, whereby the Company may repurchase up to $50
million of its common stock over the next 18 months in open market
transactions at amounts and prices that Company management deems
appropriate, subject to general market and economic conditions,
regulatory and contractual requirements and other considerations.
Repurchases will be funded from cash on hand and available
borrowings.
Conference Call and Webcast
Management will host a conference call to discuss first quarter
2016 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
13634709.
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. Adjusted net income is defined as net income
excluding new program and product initiatives to provide investors
with insight into the core operations of the Company. Adjusted
diluted income per share is defined as diluted income per share
excluding new program and product initiatives. The Nutrisystem core
business adjusted EBITDA is defined as adjusted EBITDA excluding
expenses related to the South Beach Diet and Shake360 initiatives.
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.
Forward-Looking Statements
Information provided and statements contained in this press
release that are not purely historical, such as second 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® My Way®, Fast 5, and Turbo 10, all
clinically tested, structured food delivery programs that come with
the digital platform NuMi® by Nutrisystem. Additionally, the
Company offers multi-day kits and individual products available at
select retail outlets. 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. In December of
2015, the Company purchased the South Beach Diet brand. 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 March 31, 2016
2015 REVENUE $ 162,110 $ 137,225 COSTS AND EXPENSES:
Cost of revenue 78,558 65,869 Marketing 59,354 47,663 General and
administrative 17,562 16,945 Depreciation and amortization
2,850 2,224 Total costs and expenses 158,324
132,701 Operating income 3,786 4,524 INTEREST EXPENSE, net
13 49 Income before income tax expense 3,773 4,475 INCOME
TAX EXPENSE 1,221 1,532 Net income $ 2,552 $ 2,943
BASIC INCOME PER COMMON SHARE $ 0.09 $ 0.10 DILUTED INCOME PER
COMMON SHARE $ 0.09 $ 0.10 WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 29,027 28,392 Diluted 29,371 28,933 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,
2016 2015
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 14,548 $ 6,191 Short
term investments 11,556 9,317 Receivables 23,037 18,385 Inventories
28,046 30,530 Prepaid income taxes 1,200 1,149 Deferred income
taxes 1,231 1,192 Other current assets 9,773
10,118 Total current assets 89,391 76,882 FIXED ASSETS, net
31,491 30,849 INTANGIBLE ASSETS, net 14,834 15,084 DEFERRED INCOME
TAXES 5,631 6,107 OTHER ASSETS 960 971
Total assets $ 142,307 $ 129,893
LIABILITIES AND
STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES: Accounts payable $ 50,270 $ 38,381 Accrued
payroll and related benefits 4,248 7,556 Deferred revenue 10,770
5,618 Other accrued expenses and current liabilities 7,979
6,126 Total current liabilities 73,267 57,681
NON-CURRENT LIABILITIES 1,945 2,284
Total liabilities 75,212 59,965
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; shares issued – 29,892 at March 31, 2016 and
29,621 at December 31, 2015)
30 29 Additional paid-in capital 43,598 41,392
Treasury stock, at cost, 510 shares at
March 31, 2016 and 389 shares at December 31, 2015
(8,127 ) (5,672 ) Retained earnings 31,563 34,191 Accumulated other
comprehensive income (loss) 31 (12 ) Total
stockholders’ equity 67,095 69,928
Total liabilities and stockholders’ equity $ 142,307 $
129,893
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended March 31,
2016 2015 CASH FLOWS FROM
OPERATING ACTIVITIES: Net income $ 2,552 $ 2,943 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation and amortization 2,850 2,224 Loss on disposal of fixed
assets 96 14 Share–based compensation expense 1,347 1,208 Deferred
income tax expense 431 405 Other non-cash charges (2 ) 2 Changes in
operating assets and liabilities: Receivables (4,652 ) (10,557 )
Inventories 2,484 2,689 Other assets 356 1,300 Accounts payable
11,308 15,101 Accrued payroll and related benefits (3,308 ) (1,818
) Deferred revenue 5,152 3,822 Income taxes (70 ) (1,888 ) Other
accrued expenses and liabilities 1,475 470
Net cash provided by operating activities 20,019
15,915 CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short term investments (4,385 ) (1,752 ) Proceeds from
sales of short term investments 2,214 6,716 Capital additions
(2,718 ) (2,731 ) Net cash (used in) provided by
investing activities (4,889 ) 2,233 CASH FLOWS
FROM FINANCING ACTIVITIES: Exercise of stock options 0 268 Employee
tax withholdings related to the vesting of equity awards (2,455 )
(2,162 ) Excess tax benefits from share-based compensation 862
1,114 Payment of dividends (5,180 ) (5,107 ) Net cash
used in financing activities (6,773 ) (5,887 ) NET
INCREASE IN CASH AND CASH EQUIVALENTS 8,357 12,261 CASH AND CASH
EQUIVALENTS, beginning of period 6,191 12,620
CASH AND CASH EQUIVALENTS, end of period $ 14,548 $
24,881
NUTRISYSTEM, INC. AND SUBSIDIARIES
ADJUSTED NET INCOME RECONCILIATION TO GAAP RESULTS
(Unaudited, in thousands, except per share
amounts)
Three Months Ended March 31,
2016 2015 Net income as reported $
2,552 $ 2,943 Income tax expense as reported 1,221
1,532 Income before income tax expense 3,773 4,475
South Beach Diet and Shake360 (pre-tax)
(a)
1,929 0 Adjusted income before income tax expense
5,702 4,475
Adjusted income tax expense(b)
1,845 1,532 Adjusted net income $ 3,857 $ 2,943
Adjusted diluted income per common share $ 0.13 $ 0.10
Diluted weighted average shares
outstanding
29,371 28,933
(a) The after-tax impact of the initiative
expenses for the South Beach Diet and Shake360 was $1.3
million.
(b) Adjusted income tax expense for the
three months ended March 31, 2016 has been calculated using a tax
rate of 32.36%.
NUTRISYSTEM, INC. AND SUBSIDIARIES ADJUSTED
DILUTED INCOME PER COMMON SHARE BREAKOUT
(Unaudited)
Three Months Ended March 31,
2016 2015 Adjusted diluted
income per common share $ 0.13 $ 0.10 South Beach Diet and Shake360
(0.04 ) 0.00 Diluted income per common share as
reported $ 0.09 $ 0.10
NUTRISYSTEM, INC. AND
SUBSIDIARIES ADJUSTED EBITDA RECONCILIATION TO GAAP
RESULTS
(Unaudited, in thousands)
Three Months Ended March 31,
2016 2015 Net income $ 2,552 $ 2,943
Interest expense, net 13 49 Income tax expense 1,221 1,532
Depreciation and amortization 2,850 2,224 EBITDA
6,636 6,748 Non-cash employee compensation expense 1,347
1,208 Adjusted EBITDA $ 7,983 $ 7,956
NUTRISYSTEM,
INC. AND SUBSIDIARIES ADJUSTED EBITDA BREAKOUT
(Unaudited, in thousands)
Three Months Ended March 31,
2016 2015 Nutrisystem core
business $ 9,654 $ 7,956 South Beach Diet and Shake360
(1,671 ) 0 Adjusted EBITDA $ 7,983 $ 7,956
NUTRISYSTEM, INC. AND SUBSIDIARIES ADJUSTED DILUTED
INCOME PER COMMON SHARE GUIDANCE BREAKOUT
(Unaudited)
Three Months Ending Year Ending
June 30, 2016 December 31, 2016 Low
High Low High Adjusted diluted
income per share $ 0.50 $ 0.55 $ 1.17 $ 1.27 South Beach Diet and
Shake360 (0.02 ) (0.02 ) (0.14 ) (0.14
) Diluted income per common share $ 0.48 $ 0.53 $
1.03 $ 1.13
NUTRISYSTEM, INC. AND
SUBSIDIARIES ADJUSTED EBITDA GUIDANCE RECONCILIATION TO GAAP
MEASURES
(Unaudited, in thousands)
Three Months Ending Year Ending
June 30, 2016 December 31, 2016 Low
High Low High Net income $
14,586 $ 15,898 $ 30,881 $ 33,833 Interest expense, net 40 40 125
125 Income tax expense 7,649 8,337 16,194 17,742 Depreciation and
amortization 3,075 3,075 12,450 12,450
EBITDA 25,350 27,350 59,650 64,150
Non-cash employee compensation expense
2,150 2,150 6,350 6,350 Adjusted EBITDA
$ 27,500 $ 29,500 $ 66,000 $ 70,500
NUTRISYSTEM, INC. AND
SUBSIDIARIES ADJUSTED EBITDA GUIDANCE BREAKOUT
(Unaudited, in thousands)
Three Months Ending Year Ending
June 30, 2016 December 31, 2016 Low
High Low High Nutrisystem core
business $ 28,300 $ 30,300 $ 71,500 $ 76,000 South Beach Diet and
Shake360 (800 ) (800 ) (5,500 ) (5,500
) Adjusted EBITDA $ 27,500 $ 29,500 $ 66,000 $
70,500
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160503006895/en/
ICR, Inc.John Mills,
Partner646-277-1254ir@nutrisystem.comJohn.Mills@Icrinc.com
Nutrisystem (NASDAQ:NTRI)
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