Blueprint
Exhibit 99.1
Youngevity International, Inc. Reports 2018 Fourth
Quarter
And Full Year Results
●
Full year Revenues
were $162.4 million compared to $165.7 million in the prior year, a
decrease of 2.0%
●
Full year Operating
Loss improved by 55% to a loss of $2.6 million from a loss of $5.9
million in the prior year
●
Full year Adjusted
EBITDA improved to $7.0 million from negative $549,000 in the prior
year
SAN DIEGO, Calif. ---April 16, 2019 - Youngevity International, Inc.
(NASDAQ:
YGYI), a leading
multi-channel lifestyle company, today reported financial results
for the fourth quarter and full year ended December 31,
2018.
Steve Wallach, Chairman and CEO of Youngevity International stated,
“We are encouraged by the improvement in our gross margins
and the significant turnaround in Adjusted EBITDA over 2017. We are
seeing revenue stabilization in the direct selling segment
and we
anticipate a return to revenue growth in 2019. This is expected to
be primarily driven by our commercial coffee segment and our new
commercial hemp reporting segment. We are providing annual revenue
guidance for 2019 in the range of $220 million and $240 million
which represents a projected annual growth rate between 35% and 48%
over 2018. This revenue guidance includes estimated annual revenue contribution
from our new reporting commercial hemp segment between $45 Million
and $50 Million for 2019.”
Dave Briskie, President and CFO of Youngevity International stated,
“We cut our operating losses by over 50% for the year ended
2018 and closed out the year by achieving significant improvements
to our balance sheet. As we closed out 2018 total assets increased
by over $3.5 million while total liabilities decreased by
approximately $12 million improving stockholders’ equity by
over $15.5 million. Returning to profitability remains a key focus
of the business for 2019.”
Fourth Quarter 2018 Results
Revenues
for the fourth quarter ended December 31, 2018 decreased 12.0% to
$36,114,000 as compared to $41,041,000 for the fourth quarter ended
December 31, 2017. We derived approximately 90% of our revenue
from our direct sales and approximately 10% of our revenue from our
commercial coffee sales during the quarter. Direct selling
segment revenues decreased 9.2% to $32,418,000 in the current
quarter as compared to $35,716,000 for the quarter ended December
31, 2017. Commercial coffee segment revenues decreased 30.6% to
$3,696,000 in the current quarter as compared to $5,325,000 for the
quarter ended December 31, 2017. This decrease was primarily
attributed to timing of shipments in our green coffee
business.
Gross
profit for the fourth quarter ended December 31, 2018 decreased
12.2% to $20,926,000 as compared to $23,833,000 for the fourth
quarter ended December 31, 2017. Gross profit in the direct selling
segment decreased 10% to $21,466,000 as compared to $23,857,000 for
the fourth quarter ended December 31, 2017. Gross Profit in the
commercial coffee segment was a loss of $504,000 in the current
quarter, compared to a loss of $24,000 for the fourth quarter ended
December 31, 2017. Overall gross
profit as a percentage of revenues decreased to 57.9% in the
current quarter compared to 58.1% in the same period last
year.
Operating
loss for the fourth quarter ended December 31, 2018 increased
$919,000 to $1,908,000 as compared to $989,000 for the fourth
quarter ended December 31, 2017. This increase was primarily due to
the lower gross profit and the loss of $975,000 on impairment of
intangible assets in the current quarter, offset by decreases in
distributor compensation expense, sales and marketing expenses and
general and administrative expenses.
Other
expense for the fourth quarter ended December 31, 2018 increased to
$6,633,000 as compared to other expense of $341,000 for the fourth
quarter ended December 31, 2017. This increase was primarily due to
the loss in debt exchange of $4,706,000, the change in the fair
value of warrant derivative of negative $11,000 in the current
quarter, compared to a gain of $1,237,000 for the same period in
the prior year and the increase in interest expense by $338,000 in
the current quarter.
Income
tax provision for the fourth quarter ended December 31, 2018 was
$197,000 as compared to an income tax provision of $5,490,000 for
the fourth quarter ended December 31, 2017. The income tax
provision in the fourth quarter ended December 31, 2017 included an
increase of $3,550,000 in the deferred tax valuation
allowance.
Net
loss for the fourth quarter ended December 31, 2018 was $8,738,000
as compared to a net loss of $6,820,000 for the fourth quarter
ended December 31, 2017. The increase in net loss is primarily due
to the increases in operating loss and other expense discussed
above, partially offset by the decrease in income tax provision
expense discussed above.
Adjusted
EBITDA for the fourth quarter ended December 31, 2018 increased to
$620,000 as compared to $302,000 for the fourth quarter ended
December 31, 2017.
Full Year 2018 Results
Revenues
for the
year ended December 31, 2018 decreased 2.0% to $162,445,000 as
compared to $165,696,000 for the year ended December 31,
2017. During the year ended December 31, 2018, we derived
approximately 85% of our revenue from our direct sales and
approximately 15% of our revenue from our commercial coffee
sales. Direct selling segment revenues decreased by $3,595,000
or 2.5% to $138,855,000 as compared to $142,450,000 for the year
ended December 31, 2017. This decrease was primarily attributed to
a decrease of $11,002,000 in revenues from existing business,
offset by revenues from new acquisitions of $7,457,000. We
attribute the decrease from existing business primarily to a
general decline in net sales in North America in the direct selling
business as well as a decline in new distributors. The Company also
changed its promotion strategy by targeting products with higher
gross margins and utilized incentives that had less costly impact
on profitability. For the year ended December 31, 2018, commercial
coffee segment revenues increased by $344,000 or 1.5% to
$23,590,000 as compared to $23,246,000 for the year ended December
31, 2017. This increase was primarily attributed to an increase of
$1,048,000 revenues from the Company’s roasted coffee
business, offset by a decrease of $704,000 in green coffee
business.
For the
year ended December 31, 2018, gross profit decreased approximately
0.6% to $95,032,000 as compared to $95,565,000 for the year ended
December 31, 2017. Overall gross profit as a percentage of revenues
increased to 58.5%, compared to 57.7% in the same period last year.
Gross profit in the direct selling segment decreased by 0.5% to
$94,910,000 from $95,379,000 in the prior period primarily as a
result of the lower revenues in the current year offset by 6.6%
decrease in cost of sales. Gross profit as a percentage of revenues
in the direct selling segment increased by approximately 1.4% to
68.4% for the year ended December 31, 2018, compared to 67.0% in
the same period last year. This increase was primarily due to the
price increases on certain products that went into effect on
January 1, 2018 and changes to our product sales mix.
Gross profit in the commercial coffee segment decreased by
34.4% to $122,000 compared to $186,000 in the prior period. The
decrease in gross profit in the commercial coffee segment was
primarily due to additional costs related to the roasted coffee
business and inventory reserve expense. Gross profit as a
percentage of revenues in the commercial coffee segment decreased
by 0.3% to 0.5% for the year ended December 31, 2018, compared to
0.8% in the same period last year.
Operating expenses for the year ended December 31, 2018 decreased
3.7% to $97,669,000 as compared to $101,447,000 for the year ended
December 31, 2017. Distributor compensation as a percentage of
direct selling revenues decreased to 44.0% for the year ended
December 31, 2018 as compared to 46.2% for the year ended December
31, 2017. This decrease was primarily attributable to the price
increases reflected in 2018 revenues, which did not impact
commissionable base revenues. Sales and marketing expense decreased
by $310,000 to $13,398,000 from $13,708,000 for the year ended
December 31, 2017. This was primarily due to reduction in
compensation expense, distributor events and convention costs for
the year ended December 31, 2018 as compared to the same period
last year, offset by an increase in advertising and promotion costs
in the commercial coffee segment. General and administrative
expense decreased 8.6% to $20,009,000 from $21,883,000 for the year
ended December 31, 2017 primarily due to a benefit of $6,600,000
from the contingent liability revaluation for the year ended
December 31, 2018 compared to a benefit of $1,664,000 for the year
ended December 31, 2017. Legal expense, IT related costs and
consulting costs also decreased for the year ended December 31,
2018. These decreases were offset by increases in
depreciation and amortization costs, repairs and maintenance costs,
investor relations, stock-based compensation, accounting costs and
increases in costs related to operations in Mexico, Russia, New
Zealand, Taiwan and Colombia as well as increased bad debt expense
and repairs and maintenance costs, and compensation and finance
costs in the commercial coffee segment. For the year ended December
31, 2018, we recorded a loss on impairment of intangible assets of
approximately $2,550,000 and $625,000 related to our acquisitions
of BeautiControl and Future Global Vision, Inc.,
respectively.
For the year ended December 31, 2018, operating loss decreased by
$3,245,000 to an operating loss of $2,637,000 as compared to an
operating loss of $5,882,000 for the year ended December 31, 2017.
This was primarily due to the decrease in operating expenses of
$3,778,000 offset by the decrease in gross profit of $533,000
discussed above.
For the year ended December 31, 2018, total other expense increased
by $12,949,000 to $17,017,000 as compared to $4,068,000 for the
year ended December 31, 2017. Net interest expense increased by
$799,000 for the year ended December 31, 2018 to $6,584,000
compared to $5,785,000 for the year ended December 31, 2017. Change
in fair value of derivative liabilities increased by $6,670,000 for
the year ended December 31, 2018 to a $4,645,000 expense compared
to a benefit of $2,025,000 for the year ended December 31, 2017, as
a result of the change in our stock price when compared to the
prior period. We recorded a non-cash extinguishment loss on debt of
$1,082,000 for the year ended December 31, 2018 as a result of the
triggering of the automatic conversion of the 2017 notes associated
with our July 2017 Private Placement to common stock. We also
recorded a non-cash loss on debt conversion of $4,706,000 as a
result of one of the investors in our July 2014 private placement
having conversion their 2014 note for shares of common
stock.
Income
tax provision for the year ended December 31, 2018 was $416,000 as
compared to an income tax provision of $2,727,000 for the year
ended December 31, 2017. The income tax provision in the fourth
quarter ended December 31, 2017 included an increase of $3,550,000
in the deferred tax valuation allowance.
For the year ended December 31, 2018, the Company reported a net
loss of $20,070,000 as compared to net loss of $12,677,000 for the
year ended December 31, 2017. The primary reason for the increase
in net loss when compared to the prior period was due to the
non-cash increase in Change in fair value of derivative liabilities
by $6,670,000 discussed above, the non-cash loss on debt exchange
of $4,706,000, increase of $774,000 in non-cash loss on
extinguishment of debt and the increase of $799,000 in interest
expense, offset by the decrease of $3,245,000 in operating expenses
and the decrease of $2,311,000 in income tax expense.
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 derivatives, non-cash loss on impairment of intangible
assets and non-cash loss on extinguishment of debt or "Adjusted EBITDA,"
increased to $7,013,000 for the year ended December 31, 2018,
compared to negative $549,000 in 2017.
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. A reconciliation of Adjusted EBITDA to Net Loss is
presented in the table at the end of this press
release.
BALANCE SHEET HIGHLIGHTS:
Cash & cash equivalents were $2,879,000 at December 31, 2018
verses $673,000 at December 31, 2017
Total assets were $75,973,000 at December 31, 2018 verses
$72,389,000 at December 31, 2017
Total liabilities were $52,998,000 at December 31, 2018 verses
$64,938,000 at December 31, 2017
Total stockholders’ equity was $22,975,000 at December 31,
2018 verses $7,451,000 at December 31, 2017
Conference Call Information
Youngevity
International will host a conference call today at 1:00 p.m.
Eastern Daylight Time (10:00 Pacific Daylight Time) to discuss its
financial results, quarterly and yearly highlights and business
outlook.
All interested parties can attend the event by
clicking https://InstantTeleseminar.com/Events/114922488 fifteen
minutes prior to the start of the call, or by dialing 206 402 0100
and entering the access code 634174# at least five minutes prior to
the start of the call. International and alternative numbers are
available at
http://YourConferenceLine.com/Local/?eventid=114922488
The
conference call will be recorded and available for replay shortly
after the conclusion of the call. An archived replay of the call
will be available for approximately 3 months on the Company’s
newly launched Investor Relations website: https://ygyi.com/
About Youngevity International, Inc.
Youngevity International, Inc.
( NASDAQ : YGYI ), is an multi-channel lifestyle
company operating in 3 distinct business segments including a
commercial coffee enterprise, a commercial hemp enterprise, and a
multi-vertical omni direct selling enterprise. The Company features
a multi country selling network and has assembled a virtual Main
Street of products and services under one corporate entity, YGYI
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. 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 returning to
revenue growth in 2019 primarily driven by our commercial coffee
segment and our new commercial hemp reporting segment, the $220
Million to $240 million estimated revenue for 2019 and the $45
Million to $50 Million estimated revenue contribution from the
commercial hemp segment for 2019. 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 generate $45 Million to $50
Million in revenue in 2019 through new commercial hemp segment, our
ability to drive revenue in our commercial coffee segment, our
ability to continue our international growth, our ability to
leverage our platform and global infrastructure to drive organic
growth, our ability to return to 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 achieve $220 Million to $240 million in revenue for
2019 and the other factors discussed in our Annual Report on Form
10-K for the year ended December 31, 2018 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
|
$36,114
|
$41,041
|
$162,445
|
$165,696
|
Cost
of revenues
|
15,188
|
17,208
|
67,413
|
70,131
|
Gross
profit
|
20,926
|
23,833
|
95,032
|
95,565
|
Operating
expenses
|
|
|
|
|
Distributor
compensation
|
13,946
|
16,360
|
61,087
|
65,856
|
Sales
and marketing
|
2,861
|
3,058
|
13,398
|
13,708
|
General
and administrative
|
5,052
|
5,404
|
20,009
|
21,883
|
Loss
on impairment of intangible assets
|
975
|
-
|
3,175
|
-
|
Total
operating expenses
|
22,834
|
24,822
|
97,669
|
101,447
|
Operating
loss
|
(1,908)
|
(989)
|
(2,637)
|
(5,882)
|
Interest
expense, net
|
(1,916)
|
(1,578)
|
(6,584)
|
(5,785)
|
Change
in fair value of derivative liabilities
|
(11)
|
1,237
|
(4,645)
|
2,025
|
Loss
on debt conversion
|
(4,706)
|
-
|
(4,706)
|
-
|
Extinguishment
loss on debt
|
-
|
-
|
(1,082)
|
(308)
|
Total
other expense
|
(6,633)
|
(341)
|
(17,017)
|
(4,068)
|
Net
loss before income taxes
|
(8,541)
|
(1,330)
|
(19,654)
|
(9,950)
|
Income tax
provision
|
197
|
5,490
|
416
|
2,727
|
Net
loss
|
$(8,738)
|
$(6,820)
|
$(20,070)
|
$(12,677)
|
Deemed
dividend on preferred stock
|
(1,890)
|
-
|
(3,276)
|
-
|
Preferred
stock dividends
|
(14)
|
(3)
|
(151)
|
(12)
|
Net
loss attributable to common stockholders
|
$(10,642)
|
$(6,823)
|
$(23,497)
|
$(12,689)
|
|
|
|
|
|
Basic
loss per share
|
$(0.46)
|
$(0.35)
|
$(1.09)
|
$(0.65)
|
Diluted
loss per share
|
$(0.46)
|
$(0.35)
|
$(1.09)
|
$(0.68)
|
|
|
|
|
|
Weighted
average shares outstanding, basic
|
23,386,248
|
19,723,285
|
21,589,226
|
19,672,445
|
Weighted
average shares outstanding, diluted
|
23,386,248
|
19,723,285
|
21,589,226
|
19,751,892
|
Reconciliation of Non-GAAP Measure
|
Adjusted EBITDA to Net Loss
|
|
|
|
Three Months Ended December 31,
|
|
|
|
|
|
|
Net
loss
|
$(8,738)
|
$(6,820)
|
$(20,070)
|
$(12,677)
|
Add:
|
|
|
|
|
Interest
|
1,916
|
1,578
|
6,584
|
5,785
|
Income
taxes
|
197
|
5,490
|
416
|
2,727
|
Depreciation
|
454
|
373
|
1,819
|
1,556
|
Amortization
|
463
|
735
|
2,879
|
2,782
|
EBITDA
|
(5,708)
|
1,356
|
(8,372)
|
173
|
Add:
|
|
|
|
|
Stock
based compensation
|
636
|
(158)
|
1,777
|
654
|
Fair
value of warrants
|
-
|
341
|
-
|
341
|
Loss
on impairment of intangible assets
|
975
|
-
|
3,175
|
-
|
Loss
on extinguishment of debt
|
-
|
-
|
1,082
|
308
|
Change
in the fair value of warrant derivatives
|
11
|
(1,237)
|
4,645
|
(2,025)
|
Loss
on debt conversion
|
4,706
|
-
|
4,706
|
-
|
Adjusted
EBITDA
|
$620
|
$302
|
$7,013
|
$(549)
|
Contacts:
Youngevity International, Inc.
Dave
Briskie
President
and Chief Financial Officer
1 800
982 3189 X6500
Investor Relations
YGYI
Investor Relations
800.504.8650
investors@ygyi.com
Media Relations
Trendlogic
PR
800.992.6299
contact@trendlogicpr.com