Nutrisystem Reports Second Quarter 2013 Results
Nutrisystem Reports Second Quarter 2013 Results
Board of Directors declares dividend of 17.5 cents per share
Quarterly earnings per share of 22 cents outperforms second quarter guidance
Full year EPS guidance increased
FORT WASHINGTON, Pa.--(BUSINESS WIRE)-- Nutrisystem, Inc. (NAS: 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. (NAS: 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 | ||||
