LIFEVANTAGE CORPORATION (Exact name of registrant as specified in its charter) |
Colorado | 001-35647 | 90-0224471 | ||
(State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
9785 S. Monroe Street, Suite 300, Sandy, UT 84070 | ||||
(Address of Principal Executive Offices and Zip Code) | ||||
Registrant’s telephone number, including area code: (801) 432-9000 |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Date: | September 7, 2017 | LIFEVANTAGE CORPORATION By: /s/ Steven R. Fife Name: Steven R. Fife Title: Chief Financial Officer |
• | Revenue increased 12.5% sequentially to $50.6 million when compared to $45.0 million in the third quarter of fiscal 2017 and decreased 4.5% when compared to $53.0 million in the fourth quarter of fiscal 2016; |
• | Revenue in the Americas increased 12.6% and revenue in Asia/Pacific & Europe increased 12.2%, both when compared sequentially to the third quarter of fiscal 2017. On a year over year basis, revenue in the Americas decreased 2.0% and revenue in Asia/Pacific & Europe decreased 11.9%. However, revenue in Japan increased 6.7% year over year; |
• | Active independent distributors and active preferred customers increased 1.6% and 0.9%, respectively, when compared to the third quarter of fiscal 2017; |
• | Adjusted EBITDA increased 100.6% to $3.3 million when compared to $1.6 million in the third quarter of fiscal 2017 and decreased 41.7% when compared to $5.6 million in the comparable period of fiscal 2016; |
• | Earnings per diluted share were $0.01, compared to $0.00 in the third quarter of fiscal 2017 and $0.17 in the fourth quarter of fiscal 2016; |
• | Adjusted earnings per diluted share were $0.04, compared to $0.02 in the third quarter of fiscal 2017 and $0.23 in the fourth quarter of fiscal 2016; and |
• | On September 1, 2017, the Company officially opened for business in Germany, the fourth largest direct selling market globally. |
• | Revenue decreased 3.4% to $199.5 million, compared to $206.5 million in fiscal 2016; |
• | Revenue in the Americas decreased 4.7% and revenue in Asia/Pacific & Europe increased 0.8%, both when compared to fiscal 2016; |
• | Adjusted EBITDA decreased 33.4% to $13.1 million, compared to $19.7 million for fiscal 2016; |
• | Earnings per diluted share were $0.11, compared to $0.42 in fiscal 2016; and |
• | Adjusted earnings per diluted share were $0.27, compared to $0.64 in fiscal 2016. |
LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(unaudited) | |||||||
As of | |||||||
June 30, 2017 | June 30, 2016 | ||||||
(In thousands, except per share data) | (As Revised) | ||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 11,458 | $ | 7,883 | |||
Accounts receivable | 1,334 | 1,552 | |||||
Income tax receivable | 913 | — | |||||
Inventory, net | 16,575 | 25,116 | |||||
Current deferred income tax asset | — | 2,260 | |||||
Prepaid expenses and deposits | 5,266 | 6,301 | |||||
Total current assets | 35,546 | 43,112 | |||||
Property and equipment, net | 3,127 | 3,456 | |||||
Intangible assets, net | 1,247 | 1,744 | |||||
Long-term deferred income tax asset | 4,087 | 1,023 | |||||
Other long-term assets | 1,242 | 1,520 | |||||
TOTAL ASSETS | $ | 45,249 | $ | 50,855 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 4,850 | $ | 8,891 | |||
Commissions payable | 6,837 | 7,719 | |||||
Income tax payable | 215 | 3,284 | |||||
Other accrued expenses | 9,453 | 8,734 | |||||
Current portion of long-term debt | 2,000 | 2,000 | |||||
Total current liabilities | 23,355 | 30,628 | |||||
Long-term debt | |||||||
Principal amount | 5,500 | 7,500 | |||||
Less: unamortized discount and deferred offering costs | (60 | ) | (91 | ) | |||
Long-term debt, net of unamortized discount and deferred offering costs | 5,440 | 7,409 | |||||
Other long-term liabilities | 1,927 | 2,169 | |||||
Total liabilities | 30,722 | 40,206 | |||||
Commitments and contingencies | |||||||
Stockholders' equity | |||||||
Preferred stock — par value $0.001, 50,000 shares authorized, no shares issued or outstanding | — | — | |||||
Common stock — par value $0.001, 250,000 shares authorized and 14,232 and 14,028 issued and outstanding as of June 30, 2017 and 2016, respectively | 14 | 14 | |||||
Additional paid-in capital | 121,599 | 119,242 | |||||
Accumulated deficit | (106,992 | ) | (108,600 | ) | |||
Accumulated other comprehensive income (loss) | (94 | ) | (7 | ) | |||
Total stockholders’ equity | 14,527 | 10,649 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 45,249 | $ | 50,855 |
LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | |||||||||||||||
For the Three Months Ended June 30, (Unaudited) | For the Twelve Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In thousands, except per share data) | (As revised) | (As revised) | |||||||||||||
Revenue, net | $ | 50,641 | $ | 53,033 | $ | 199,489 | $ | 206,540 | |||||||
Cost of sales | 8,891 | 9,401 | 33,456 | 33,932 | |||||||||||
Gross profit | 41,750 | 43,632 | 166,033 | 172,608 | |||||||||||
Operating expenses: | |||||||||||||||
Commissions and incentives | 23,984 | 25,595 | 96,662 | 103,120 | |||||||||||
Selling, general and administrative | 16,226 | 13,957 | 64,922 | 56,074 | |||||||||||
Total operating expenses | 40,210 | 39,552 | 161,584 | 159,194 | |||||||||||
Operating income | 1,540 | 4,080 | 4,449 | 13,414 | |||||||||||
Other expense: | |||||||||||||||
Interest expense | (164 | ) | (145 | ) | (570 | ) | (3,321 | ) | |||||||
Other expense, net | (616 | ) | (1,153 | ) | (969 | ) | (1,409 | ) | |||||||
Total other expense | (780 | ) | (1,298 | ) | (1,539 | ) | (4,730 | ) | |||||||
Income before income taxes | 760 | 2,782 | 2,910 | 8,684 | |||||||||||
Income tax expense | (676 | ) | (345 | ) | (1,302 | ) | (2,578 | ) | |||||||
Net income | $ | 84 | $ | 2,437 | $ | 1,608 | $ | 6,106 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.01 | $ | 0.18 | $ | 0.12 | $ | 0.44 | |||||||
Diluted | $ | 0.01 | $ | 0.17 | $ | 0.11 | $ | 0.42 | |||||||
Weighted-average shares outstanding: | |||||||||||||||
Basic | 13,952 | 13,758 | 13,881 | 13,730 | |||||||||||
Diluted | 14,085 | 14,640 | 14,118 | 14,531 | |||||||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Foreign currency translation adjustment | (15 | ) | 116 | (87 | ) | 244 | |||||||||
Other comprehensive income (loss), net of tax: | (15 | ) | 116 | (87 | ) | 244 | |||||||||
Comprehensive income | $ | 69 | $ | 2,553 | $ | 1,521 | $ | 6,350 |
LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||
Revenue by Region | |||||||||||||||||||||||||||
For the Three Months Ended June 30, (unaudited) | For the Twelve Months Ended June 30, | ||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||
Americas | $ | 38,714 | 76 | % | $ | 39,498 | 74 | % | $ | 150,841 | 76 | % | $ | 158,291 | 77 | % | |||||||||||
Asia/Pacific & Europe | 11,927 | 24 | % | 13,535 | 26 | % | 48,648 | 24 | % | 48,249 | 23 | % | |||||||||||||||
Total | $ | 50,641 | 100 | % | $ | 53,033 | 100 | % | $ | 199,489 | 100 | % | $ | 206,540 | 100 | % | |||||||||||
Active Independent Distributors (1) | |||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||||
Americas | 47,000 | 73 | % | 49,000 | 71 | % | |||||||||||||||||||||
Asia/Pacific & Europe | 17,000 | 27 | % | 20,000 | 29 | % | |||||||||||||||||||||
Total | 64,000 | 100 | % | 69,000 | 100 | % | |||||||||||||||||||||
Active Preferred Customers (2) | |||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
June 30, | |||||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||||
Americas | 90,000 | 80 | % | 95,000 | 81 | % | |||||||||||||||||||||
Asia/Pacific & Europe | 22,000 | 20 | % | 22,000 | 19 | % | |||||||||||||||||||||
Total | 112,000 | 100 | % | 117,000 | 100 | % | |||||||||||||||||||||
(1) Active Independent Distributors have purchased product in the prior three months for retail or personal consumption. | |||||||||||||||||||||||||||
(2) Active Preferred Customers have purchased product in the prior three months for personal consumption only. | |||||||||||||||||||||||||||
LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||||||||||
Reconciliation of GAAP Net Income to Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA: | |||||||||||||||
(Unaudited) | |||||||||||||||
For the Three Months Ended June 30, | For the Twelve Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In thousands) | (As Revised) | (As Revised) | |||||||||||||
GAAP Net income | $ | 84 | $ | 2,437 | $ | 1,608 | $ | 6,106 | |||||||
Interest expense | 164 | 145 | 570 | 3,321 | |||||||||||
Provision for income taxes | 676 | 345 | 1,302 | 2,578 | |||||||||||
Depreciation and amortization | 418 | 471 | 1,643 | 1,895 | |||||||||||
Non-GAAP EBITDA: | 1,342 | 3,398 | 5,123 | 13,900 | |||||||||||
Adjustments: | |||||||||||||||
Stock compensation expense | 855 | 1,045 | 2,647 | 2,621 | |||||||||||
Other income, net | 616 | 1,153 | 969 | 1,409 | |||||||||||
Other adjustments(1) | 446 | (7 | ) | 4,348 | 1,720 | ||||||||||
Total adjustments | 1,917 | 2,191 | 7,964 | 5,750 | |||||||||||
Non-GAAP Adjusted EBITDA | $ | 3,259 | $ | 5,589 | $ | 13,087 | $ | 19,650 | |||||||
(1) Other adjustments for the three months ended June 30, 2017 include approximately $0.2 million for executive search firm expenses, $0.2 million for other nonrecurring legal expenses and $0.1 for expenses associated with ongoing class-action lawsuits. Other adjustments for the three months ended June 30, 2016 include approximately ($7,000) for net severance, search firm and hiring expenses. Other adjustments for the twelve months ended June 30, 2017 include approximately $2.7 million for expenses associated with the audit committee independent review, $1.3 million for executive severance and search firm expenses, $0.2 million for other nonrecurring legal expenses and $0.2 million associated with the ongoing class-action lawsuits. Other adjustments for the twelve months ended June 30, 2016 include approximately $0.7 million for executive severance expenses, $0.9 million for search firm and hiring expenses associated with the search for executive officers, and $0.1 million for expenses associated with the reverse stock split completed during October 2015. |
LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||||||||||
Reconciliation of GAAP Net Income to Non-GAAP Net Income and Non-GAAP Adjusted EPS: | |||||||||||||||
(Unaudited) | |||||||||||||||
For the Three Months Ended June 30, | For the Twelve Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016(1) | ||||||||||||
(In thousands) | (As Revised) | (As Revised) | |||||||||||||
GAAP Net income | $ | 84 | $ | 2,437 | $ | 1,608 | $ | 6,106 | |||||||
Adjustments: | |||||||||||||||
Executive team severance expenses, net (2) | — | (45 | ) | 39 | 632 | ||||||||||
Executive team recruiting and transition expenses | 203 | 38 | 744 | 928 | |||||||||||
Reverse stock split administrative expenses | — | — | — | 159 | |||||||||||
Write-off of deferred debt transaction costs | — | — | — | 1,544 | |||||||||||
Write-off of capitalized software development costs | — | 1,186 | — | 1,186 | |||||||||||
Audit committee independent review expenses | — | — | 2,742 | — | |||||||||||
Class-action lawsuit expenses | 84 | — | 170 | — | |||||||||||
Other nonrecurring legal expenses | 160 | — | 160 | — | |||||||||||
Write-off of intangible assets | 350 | — | 350 | — | |||||||||||
Tax impact of adjustments | (356 | ) | (350 | ) | (1,881 | ) | (1,320 | ) | |||||||
Total adjustments, net of tax | 441 | 829 | 2,324 | 3,129 | |||||||||||
Non-GAAP Net Income: | $ | 525 | $ | 3,266 | $ | 3,932 | $ | 9,235 | |||||||
For the Three Months Ended June 30, | For the Twelve Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016(1) | ||||||||||||
(As Revised) | (As Revised) | ||||||||||||||
Diluted earnings per share, as reported | $ | 0.01 | $ | 0.17 | $ | 0.11 | $ | 0.42 | |||||||
Total adjustments, net of tax | 0.03 | 0.06 | 0.16 | 0.22 | |||||||||||
Diluted earnings per share, as adjusted | $ | 0.04 | $ | 0.23 | $ | 0.27 | $ | 0.64 | |||||||
(1) Executive team severance expenses for the prior period non-GAAP adjustments have been restated from previously reported results to display these expenses net of unvested stock award reversals for comparability purposes. | |||||||||||||||
(2) Net of $493,000 of compensation expense benefit related to unvested stock award reversals for the twelve months ended June 30, 2017. Net of $191,000 of compensation expense benefit related to unvested stock award reversals for the twelve months ended June 30, 2016. |
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