Blueprint
Youngevity International, Inc. Reports 2017 Fourth
Quarter
And Full Year Results
Record Full Year Revenues Driven By
Strong Commercial Coffee Sales
Fourth Quarter Revenues of
$41 million, Up 6.9%
Full Year Revenues of $166 million, Up
1.9%
SAN DIEGO, Calif. ---March 29, 2018 -
Youngevity International, Inc. (NASDAQ:
YGYI), a
leading omni-direct lifestyle company, today reported financial
results for the fourth quarter and full year ended December 31,
2017.
Steve Wallach, Chairman and CEO of Youngevity International stated,
“We are encouraged by the revenue growth experienced in Q4
and we are optimistic that this growth will continue into 2018. We
made a considerable investment in our global infrastructure over
the last several years including 2017 and we believe that we are
just beginning to see this investment producing
revenues.”
Dave Briskie, President and CFO of Youngevity International stated,
“Organic growth, which had been a challenge for us during the
first three quarters of 2017 seemed to bounce back in Q4. We expect
Q1 to display continued progress. With our coffee segment revenue
up considerably and international markets showing 28.9% revenue
increases over 2016, we intend to set our sights on delivering
profitability and improvement to our balance sheet. This will be a
main focus of 2018.”
Fourth Quarter 2017 Results
Revenues
for the fourth quarter ended December 31, 2017 increased 6.9% to
$41,041,000 as compared to $38,403,000 for the fourth quarter ended
December 31, 2016. We derived approximately 87% of our revenue
from our direct sales and approximately 13% of our revenue from our
commercial coffee sales during the quarter. Direct selling
segment revenues increased 2.0% to $35,716,000 in the current
quarter as compared to $35,025,000 for the quarter ended December
31, 2016. Commercial coffee segment revenues increased 57.6% to
$5,325,000 in the current quarter as compared to $3,378,000 for the
quarter ended December 31, 2016. This increase was primarily
attributed to increased revenues in our green coffee
business.
Gross
profit for the fourth quarter ended December 31, 2017 increased
3.7% to $23,833,000 as compared to $22,975,000 for the fourth
quarter ended December 31, 2016. Gross profit percentage increase
was lower than our revenue percentage increase primarily due to the
increase in the green coffee business which carries lower margins.
Overall gross profit as a percentage of revenues decreased to 58.1%
in the current quarter compared to 59.8% in the same period last
year.
Operating
loss for the fourth quarter ended December 31, 2017 increased
$241,000 to $989,000 as compared to $748,000 for the fourth quarter
ended December 31, 2016. This increase was primarily due to
increases in operating expenses related to our international
expansion and legal fees.
Income
tax provision for the fourth quarter ended December 31, 2017 was
$5,490,000 as compared to an income tax benefit of $740,000 for the
fourth quarter ended December 31, 2016. The Company increased the
deferred tax valuation allowance by $3,550,000 for the year ended
December 31, 2017. The final income tax provision for the year,
combined with the additional valuation allowance discussed above
resulted in an income tax provision of $5,490,000 for the fourth
quarter ended December 31, 2017.
Net
loss for the fourth quarter ended December 31, 2017 was $6,820,000
as compared to a net loss of $507,000 for the fourth quarter ended
December 31, 2016. The increase in net loss is primarily due to the
income tax provision expense discussed above.
Adjusted
EBITDA for the fourth quarter ended December 31, 2017 was $302,000
as compared to $352,000 for the fourth quarter ended December 31,
2016.
Full Year 2017 Results
Revenues
for the
year ended December 31, 2017 increased 1.9% to $165,696,000 as
compared to $162,667,000 for the year ended December 31,
2016. During the year ended December 31, 2017, we derived
approximately 86% of our revenue from our direct sales and
approximately 14% of our revenue from our commercial coffee
sales. Direct selling segment revenues decreased by $2,968,000
or 2.0% to $142,450,000 as compared to $145,418,000 for the year
ended December 31, 2016. For the year ended December 31, 2017,
commercial coffee segment revenues increased by $5,997,000 or 34.8%
to $23,246,000 as compared to $17,249,000 for the year ended
December 31, 2016. This increase was primarily attributed to
increased revenues in our green coffee business and coffee roasting
business.
Gross
profit for the year ended December 31, 2017 decreased 2.6% to
$95,565,000 as compared to $98,137,000 for the year ended December
31, 2016. Gross profit in the direct selling segment decreased by
1.9% to $95,379,000 from $97,219,000 in the prior period primarily
as a result of the decrease in revenues discussed above. Gross
profit as a percentage of revenues in the direct selling segment
increased by approximately 0.1% to 66.9% for the year ended
December 31, 2017, compared to 66.8% in the same period last year.
Gross profit in the commercial coffee segment decreased to
$186,000 compared to $918,000 in the prior period. The decrease in
gross profit in the commercial coffee segment was primarily due to
increase in raw material costs in the roasting business and
additional costs incurred due to increased direct labor costs,
repairs and maintenance, depreciation expense and the lower margin
impact from the green coffee business. Overall gross profit as a
percentage of revenues decreased to 57.7% in the current quarter
compared to 60.3% in the same period last year.
Operating
expenses for the year ended December 31, 2017 increased 6.1% to
$101,447,000 as compared to $95,622,000 for the year ended December
31, 2016. Sales and marketing expense increased 31.6% to
$13,708,000 from $10,413,000 for the year ended December 31, 2016
primarily due to increases in convention and distributor events
costs, increased wages and related benefits and increased marketing
expenses. The increase in convention cost was primarily due to the
20th
anniversary celebration of the Company. General and administrative
expense increased 21.2% to $21,883,000 from $18,061,000 for the
year ended December 31, 2016 primarily due to increased legal fees
related to litigation, computer and internet related costs,
international expansion, investor relations, depreciation,
amortization and stock-based compensation costs.
Operating
loss for the year ended December 31, 2017 was $5,882,000 as
compared to operating income of $2,515,000 for the year ended
December 31, 2016.
Total
other expense for the year ended December 31, 2017, increased by
$965,000 to $4,068,000 as compared to $3,103,000 for the year ended
December 31, 2016. Total other expense includes net interest
expense, the change in the fair value of derivative liabilities and
extinguishment loss on debt.
Income
tax provision for the year ended December 31, 2017 was $2,727,000
as compared to an income tax benefit of $190,000 for the year ended
December 31, 2016. This increase was primarily due to the increase
in deferred tax valuation allowance by $3,550,000 offset by income
tax benefit for the year ended December 31, 2017.
For
the year ended December 31, 2017, the Company reported a net loss
of $12,677,000 as compared to net loss of $398,000 for the year
ended December 31, 2016.
EBITDA
(earnings before interest, income taxes, depreciation and
amortization) as adjusted to remove the effect of stock-based
compensation expense, the change in the fair value of the warrant
derivative and extinguishment loss on debt or "Adjusted EBITDA,"
decreased to a negative $549,000 for the year ended December 31,
2017 compared to $6,772,000 in 2016.
Conference Call Information
Youngevity
International will host a conference call today at 4:15 p.m.
Eastern Daylight Time (1:15 Pacific Daylight Time) to discuss its
financial results, quarterly highlights and business
outlook.
Investors
can access the conference call by dialing Toll: +1 (206) 402-0100
and entering the access code: 634 174#, or by web link for
international, overflow or to listen anywhere via
internet: https://InstantTeleseminar.com/Events/106475763 .
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 in the Investor Relations section
of Youngevity International's website: http://ygyi.com/calls.php. The
webcast will be archived for approximately 60 days.
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 (loss), and adding back the expenses
related to interest, income taxes, depreciation, amortization,
stock based compensation expense, change in the fair value of the
warrant derivative, non-cash impairment loss and debt
extinguishment gain or loss, 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.
About Youngevity International, Inc.
Youngevity
International, Inc. ( NASDAQ : YGYI ), is a leading
omni-direct lifestyle company -- offering a hybrid of the direct
selling business model, that also offers e-commerce and the power
of social selling. Assembling a virtual Main Street of
products and services under one corporate entity, Youngevity offers
products from the six top selling retail categories:
health/nutrition, home/family, food/beverage (including coffee),
spa/beauty, apparel/jewelry, as well as innovative
services. The Company was formed in the course of the summer
2011 merger of Youngevity Essential Life Sciences with
Javalution® Coffee Company (now part of the company's food and
beverage division). The resulting company became Youngevity
International, Inc. in July 2013. For investor information,
please visit YGYI.com. Be sure to like
us on Facebook and follow us
on Twitter.
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 includes statements regarding beginning to see our
investment in global infrastructure, produce revenues, Q1
displaying continued progress and setting our sights on delivering
profitability and improvement to our Balance Sheet. 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 continue
our international growth, our ability to leverage our platform and
global infrastructure to drive organic growth, our ability to
improve our profitability, expand our liquidity, and strengthen our
balance sheet, our ability to continue to maintain compliance with
the NASDAQ requirements, the acceptance of the omni-direct approach
by our customers, 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 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
|
|
|
Three Months Ended December 31,
|
|
|
|
|
|
|
Revenues
|
$41,041
|
$38,403
|
$165,696
|
$162,667
|
Cost
of revenues
|
17,208
|
15,428
|
70,131
|
64,530
|
Gross
profit
|
23,833
|
22,975
|
95,565
|
98,137
|
Operating
expenses
|
|
|
|
|
Distributor
compensation
|
16,360
|
16,277
|
65,856
|
67,148
|
Sales
and marketing
|
3,058
|
2,794
|
13,708
|
10,413
|
General
and administrative
|
5,404
|
4,652
|
21,883
|
18,061
|
Total
operating expenses
|
24,822
|
23,723
|
101,447
|
95,622
|
Operating
(loss) income
|
(989)
|
(748)
|
(5,882)
|
2,515
|
Change
in the fair value of warrant derivative
|
1,237
|
836
|
2,025
|
1,371
|
Interest
expense, net
|
(1,578)
|
(1,335)
|
(5,785)
|
(4,474)
|
Extinguishment
loss on debt
|
-
|
-
|
(308)
|
-
|
Total
other expense
|
(341)
|
(499)
|
(4,068)
|
(3,103)
|
Net
loss before income taxes
|
(1,330)
|
(1,247)
|
(9,950)
|
(588)
|
Income tax
provision (benefit)
|
5,490
|
(740)
|
2,727
|
(190)
|
Net
loss
|
$(6,820)
|
$(507)
|
$(12,677)
|
$(398)
|
Basic
loss per share
|
$(0.35)
|
$(0.03)
|
$(0.65)
|
$(0.02)
|
Diluted
loss per share
|
$(0.35)
|
$(0.05)
|
$(0.68)
|
$(0.05)
|
Reconciliation of Non-GAAP Measure
|
Adjusted EBITDA to Net Loss
|
|
|
Three Months Ended December 31,
|
|
|
|
|
|
|
Net
loss
|
$(6,820)
|
$(507)
|
$(12,677)
|
$(398)
|
Add:
|
|
|
|
|
Interest
|
1,578
|
1,335
|
5,785
|
4,474
|
Income
taxes
|
5,490
|
(740)
|
2,727
|
(190)
|
Depreciation
|
373
|
399
|
1,556
|
1,518
|
Amortization
|
735
|
598
|
2,782
|
2,344
|
EBITDA
|
1,356
|
1,085
|
173
|
7,748
|
Add:
|
|
|
|
|
Stock
based compensation
|
183
|
103
|
995
|
395
|
Change
in the fair value of warrant derivative
|
(1,237)
|
(836)
|
(2,025)
|
(1,371)
|
Extinguishment
loss on debt
|
-
|
-
|
308
|
-
|
Adjusted
EBITDA
|
$302
|
$352
|
$(549)
|
$6,772
|
Contacts:
Youngevity
International
Dave
Briskie
President
and Chief Financial Officer
dbriskie@ygyi.com
1
800 982 3189 X6500
Chuck
Harbey
PCG
Advisory Group
charbey@pcgadvisory.com
P:
646.863.7997