Exhibit
99.1
Youngevity International Delivers Record Revenue for Q3
2016
SAN DIEGO, CA--( Nov 11, 2016) - Youngevity
International, Inc. ( OTCQX : YGYI ) (www.YGYI.com), a
global direct marketer of a diversified portfolio of wholesome
products and consumer services operating multiple subsidiaries
around the world including a “field to cup”
vertically-integrated coffee operation today reported
financial results for the third quarter and nine months ended
September 30, 2016.
Third Quarter 2016 Highlights:
●
Revenues increased 5.4% over the prior year period to $43.5
million;
●
Gross Profit increased 5.3% to $26.4 million compared to the
prior year period;
●
Coffee Segment records significant improvement in gross profit
and operating margins.
"We are excited to report record revenue for the third quarter
2016. We continue to see improved sales and customer growth in the
United States and our international markets," stated Steve Wallach,
Chief Executive Officer of Youngevity International. He continued,
“I was proud to see the significant improvements derived from
our coffee segment as this business continues to
scale."
"The third quarter typically represents a slower selling season,
however, our diversified revenue model was able to deliver record
quarterly revenue to our top line,” said Dave Briskie,
President and Chief Financial Officer of Youngevity
International. He continued, “We were pleased to see our
distributors evolving their sales organizations toward broader
based consumption through our diversified platform of products and
services.”
Third Quarter 2016 Financial Results
For the three months ended September 30, 2016, our total revenue
increased 5.4% to $43.5 million as compared to $41.3 million for
the three months ended September 30, 2015. During the three
months ended September 30, 2016, we derived approximately 89% of
our revenue from our direct sales and approximately 11% of our
revenue from our commercial coffee sales.
Gross profit for the third quarter increased approximately 5.3% to
$26.4 million as compared to $25.0 million for the three months
ended September 30, 2015. Gross profit in the commercial
coffee segment improved, primarily due to increased margins in the
green coffee business.
For the three months ended September 30, 2016, our operating
expenses increased approximately 7.6% to $25.8 million as compared
to $24.0 million for the three months ended September 30, 2015.
Sales and marketing expenses for the three months ending September
30, 2016 increased 34.0% to $3.2 million from $2.4 million for the
three months ended September 30, 2015, primarily due to expenses
related to the distributor annual convention held in the current
quarter and increases in marketing related wages and expenses and
customer service labor costs.
General and administrative expense increased 7.0% to $4.5 million
compared to the same period in the prior year, primarily due to
increases in costs related to our international expansion, employee
compensation and labor costs, amortization costs, computer related
costs, travel costs, offset by a decrease in non-cash expense of
$253,000 as compared to the same period last year. In
addition, the contingent liability revaluation resulted in a
benefit of $315,000 in the current quarter compared to an expense
of $120,000 in the same period last year.
For the three months ended September 30, 2016, total other expense
increased by $545,000 to $577,000 as compared to $32,000 for the
three months ended September 30, 2015 primarily due to the change
in fair value of the warrant derivative liability benefit from $1.1
million in 2015 to $369,000 for the three months ended September
30, 2016. Net interest expense decreased by $155,000 to $946,000 as
compared to $1.1 million for the same period last
year.
For the third quarter ended September 30, 2016, the Company
reported a net income of $67,000 as compared to net income of
$416,000 for the same period last year.
Fiscal 2016 First Nine Months Results:
For the nine months ended September 30, 2016, revenues increased
6.3% to $124.3 million as compared to $116.9 million for the nine
months ended September 30, 2015. During the nine months ended
September 30, 2016, we derived approximately 89% of our revenue
from our direct sales and approximately 11% of our revenue from our
commercial coffee sales. The increase derived from direct
selling was primarily attributed to the increase in our product
offerings, the increase in the number of distributors selling our
product, price increases on certain products and the increase in
the number of customers consuming our products as well as $4.1
million in additional revenues derived from the Company’s
2016 acquisitions.
For the nine months ended September 30, 2016, gross profit
increased approximately 8.7% to $75.2 million as compared to $69.1
million for the same period last year. Gross profit in the
commercial coffee segment improved, primarily due to increased
margins in the green coffee business.
For the nine months ended September 30, 2016, our operating
expenses increased approximately 9.9% to $71.9 million as compared
to $65.4 million for the same period last year.
For the nine months ended September 30, 2016, distributor
compensation increased 7.6% to $50.9 million from $47.3 million for
the same period last year. This increase was primarily attributable
to the increase in revenues and increased distributor incentives.
Distributor compensation as a percentage of direct selling revenues
increased to 46.1% as compared to 45.8% for the same period last
year.
For the nine months ended September 30, 2016, the sales and
marketing expense increased 25.2% to $7.6 million from $6.1 million
in the same period last year, primarily due to an increase in
convention and distributor event costs, as well as marketing and
customer service labor costs.
For the nine months ended September 30, 2016, the general and
administrative expense increased 11.2% to $13.4 million from $12.1
million in the same period last year, primarily due to increases in
consulting costs related to international expansion, travel
expenses, website maintenance costs, insurance, bank fees and
employee compensation costs, offset by a decrease in non-cash
expense of $253,000 as compared to the same period last
year. In addition, the contingent liability revaluation
resulted in a benefit of $1.185 million for the nine months ended
September 30, 2016, compared to an expense of $120,000 in the same
period last year.
Total other expense for the nine months ended September 30, 2016
decreased by $1.9 million to $2.6 million as compared to $4.5
million for the nine months ended September 30, 2015 primarily due
to the change in fair value of the warrant derivative liability
from an expense of $1.2 million in 2015 to a gain of $535,000
in 2016. Net interest expense decreased by $141,000 to $3.1 million
as compared to $3.3 million for the same period last
year.
For the nine months ended September 30, 2016, the Company reported
net income of $109,000 as compared to a net loss of $361,000 for
the same period last year. The primary reason for the increase in
net income when compared to prior year was due to the change
in fair value of the warrant derivative liability discussed above,
offset by a decrease in operating income discussed above and tax
expense of $550,000 compared to a tax benefit of $431,000 in the
prior year.
EBITDA (earnings before interest, income taxes, depreciation and
amortization) as adjusted to remove the effect of stock based
compensation expense and the change in the fair value of the
warrant derivative or "Adjusted EBITDA," was $6.4 million for the
nine months ended September 30, 2016 compared to $6.6
million for the same period
last year.
Conference Call Information
Management will host a conference call today at 4:15 PM EST (1:15
PM PST), to discuss the Company's financial results, for the third
quarter and nine months ended September 30, 2016. Investors can
access the conference call by dialing Toll: 1 (213) 929-4212 and
entering the access code: 796-491-997. It is advised that you
dial-in at least five minutes prior to the call. The conference
call will be recorded and available for replay shortly after the
conclusion of the call. Recorded calls are available in the
Investor Relations section of the Youngevity International
website: http://ygyi.com/calls.php
Non-GAAP Financial Measure -- Adjusted EBITDA
This
news release includes information on Adjusted EBITDA, which is a
non-GAAP financial measure as defined by SEC Regulation
G.
Management
believes that Adjusted EBITDA, when viewed with our results under
GAAP and the accompanying reconciliations, provides useful
information about our period-over-period growth. Adjusted EBITDA is
presented because management believes it provides additional
information with respect to the performance of our fundamental
business activities and is also frequently used by securities
analysts, investors and other interested parties in the evaluation
of comparable companies. We also rely on Adjusted EBITDA as a
primary measure to review and assess the operating performance of
our company and our management team.
Adjusted
EBITDA is a non-GAAP financial measure. We calculate adjusted
EBITDA by taking net income, and adding back the expenses related
to interest, income taxes, depreciation, and amortization, stock
based compensation expense and change in the fair value of the
warrant derivative, as each of those elements are calculated in
accordance with GAAP. Adjusted EBITDA should not be construed
as a substitute for net income (loss) (as determined in accordance
with GAAP) for the purpose of analyzing our operating performance
or financial position, as Adjusted EBITDA is not defined by GAAP. A
reconciliation is provided at the end of this press
release.
About Youngevity International
Youngevity
International, Inc. ( OTCQX :YGYI ) (www.YGYI.com)
is a global direct marketer of a diversified portfolio of wholesome
products and consumer services. The company operates multiple
subsidiaries around the world including a vertically-integrated
coffee operation that serves, on a "field to cup" basis, gourmet
coffees to the commercial, retail and direct sales channels. The
Company was formed after the merger of Youngevity Essential Life
Sciences (www.youngevity.com)
and Javalution Coffee Company in the summer of 2011. For more
information, visit www.YGYI.com or
find us on Facebook https://www.facebook.com/Youngevity or
follow us on Twitter @youngevity https://twitter.com/youngevity.
Safe Harbor Statement
This release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. In some
cases forward-looking statements can be identified by terminology
such as "may," "should," "potential," "continue," "expects,"
"anticipates," "intends," "plans," "believes," "estimates," and
similar expressions, and include statements regarding our
continued improved sales
and customer growth in the United States and our international
markets and
the improvements in scale derived from our coffee
segment . These forward-looking
statements are based on management's expectations and assumptions
as of the date of this press release and are subject to a number of
risks and uncertainties, many of which are difficult to predict
that could cause actual results to differ materially from current
expectations and assumptions from those set forth or implied by any
forward-looking statements. Important factors that could cause
actual results to differ materially from current expectations
include, among others, our ability to expand our distribution, our
ability to add additional products (whether developed internally or
through acquisitions), our ability to continue our financial
performance, and the other factors discussed in our Annual Report
on Form 10-K for the year ended December 31, 2015 and our
subsequent filings with the SEC, including subsequent periodic
reports on Forms 10-Q and 8-K. The information in this release is
provided only as of the date of this release, and we undertake no
obligation to update any forward-looking statements contained in
this release on account of new information, future events, or
otherwise, except as required by law.
Table follows
Youngevity International, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(In thousands)
(Unaudited)
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||
|
|
2016
|
2015
|
2016
|
2015
|
|
|
|
|
|
|
|
Revenues
|
$43,562
|
$41,326
|
$124,264
|
$116,876
|
|
Cost
of revenues
|
17,194
|
16,293
|
49,102
|
47,752
|
|
Gross
profit
|
26,368
|
25,033
|
75,162
|
69,124
|
|
Operating
expenses
|
|
|
|
|
|
Distributor
compensation
|
18,101
|
17,387
|
50,871
|
47,261
|
|
Sales
and marketing
|
3,181
|
2,374
|
7,619
|
6,087
|
|
General
and administrative
|
4,510
|
4,215
|
13,409
|
12,056
|
|
Total
operating expenses
|
25,792
|
23,976
|
71,899
|
65,404
|
|
Operating
income
|
576
|
1,057
|
3,263
|
3,720
|
|
Change
in the fair value of warrant derivative
|
369
|
1,069
|
535
|
(1,232)
|
|
Interest
expense, net
|
(946)
|
(1,101)
|
(3,139)
|
(3,280)
|
|
Total
other expense
|
(577)
|
(32)
|
(2,604)
|
(4,512)
|
|
Net
(loss) income before income taxes
|
(1)
|
1,025
|
659
|
(792)
|
|
Income
tax provision (benefit)
|
(68)
|
609
|
550
|
(431)
|
|
Net
income (loss)
|
$67
|
$416
|
$109
|
$(361)
|
|
Reconciliation of Non-GAAP Measure
|
|
|
|
|
|
Adjusted EBITDA to Net Income (Loss)
|
|
|
|
|
|
(In
thousands - unaudited))
|
|
|
|
|
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||
|
|
2016
|
2015
|
2016
|
2015
|
|
Net
income (loss)
|
$67
|
$416
|
$109
|
$(361)
|
|
Add:
|
|
|
|
|
|
Interest
|
946
|
1,101
|
3,139
|
3,280
|
|
Income
taxes
|
(68)
|
609
|
550
|
(431)
|
|
Depreciation
|
341
|
325
|
1,119
|
895
|
|
Amortization
|
537
|
540
|
1,746
|
1,578
|
|
EBITDA
|
1,823
|
2,991
|
6,663
|
4,961
|
|
Add:
|
|
|
|
|
|
Stock
based compensation
|
166
|
161
|
292
|
436
|
|
Change
in the fair value of warrant derivative
|
(369)
|
(1,069)
|
(535)
|
1,232
|
|
Adjusted
EBITDA
|
$1,620
|
$2,083
|
$6,420
|
$6,629
|