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: | February 7, 2018 | By: | LIFEVANTAGE CORPORATION /s/ Steven R. Fife |
Name: | Steven R. Fife | ||
Title: | Chief Financial Officer |
• | Revenue increased 1.1% to $49.5 million year over year and 0.7% sequentially; |
• | Revenue in the Americas decreased 1.9% while revenue in Asia/Pacific & Europe increased 11.0% including a 9.3% increase in Japan, both on a year over year basis. On a sequential basis, revenue in the Americas increased 2.0% while revenue in Asia/Pacific & Europe decreased 3.0%, including a 4.4% decrease in Japan; |
• | Active independent distributors and active preferred customers decreased 1.6% and 2.7%, respectively, year over year and decreased on a sequential basis 1.6% and 0.9%, respectively; |
• | Adjusted EBITDA decreased 5.0% year over year to $3.7 million while increasing 37.6% sequentially; |
• | Earnings per diluted share were $0.02 and adjusted earnings per diluted share were $0.11; and |
• | Completed first share repurchases under the Company's $5.0 million shares repurchase program. |
LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(unaudited) | |||||||
(In thousands, except per share data) | December 31, 2017 | June 30, 2017 | |||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 12,794 | $ | 11,458 | |||
Accounts receivable | 1,542 | 1,334 | |||||
Income tax receivable | 86 | 913 | |||||
Inventory, net | 16,819 | 16,575 | |||||
Prepaid expenses and deposits | 4,052 | 5,266 | |||||
Total current assets | 35,293 | 35,546 | |||||
Property and equipment, net | 4,644 | 3,127 | |||||
Intangible assets, net | 1,181 | 1,247 | |||||
Long-term deferred income tax asset | 3,396 | 4,087 | |||||
Other long-term assets | 1,142 | 1,242 | |||||
TOTAL ASSETS | $ | 45,656 | $ | 45,249 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 3,269 | $ | 4,850 | |||
Commissions payable | 6,692 | 6,837 | |||||
Income tax payable | 407 | 215 | |||||
Other accrued expenses | 10,360 | 9,453 | |||||
Current portion of long-term debt | 2,000 | 2,000 | |||||
Total current liabilities | 22,728 | 23,355 | |||||
Long-term debt | |||||||
Principal amount | 4,500 | 5,500 | |||||
Less: unamortized discount and deferred offering costs | (43 | ) | (60 | ) | |||
Long-term debt, net of unamortized discount and deferred offering costs | 4,457 | 5,440 | |||||
Other long-term liabilities | 1,966 | 1,927 | |||||
Total liabilities | 29,151 | 30,722 | |||||
Commitments and contingencies | |||||||
Stockholders' equity | |||||||
Preferred stock — par value $0.001 per share, 50,000 shares authorized, no shares issued or outstanding | — | — | |||||
Common stock — par value $0.001 per share, 250,000 shares authorized and 14,211 and 14,232 issued and outstanding as of December 31, 2017 and June 30, 2017, respectively | 14 | 14 | |||||
Additional paid-in capital | 122,627 | 121,599 | |||||
Accumulated deficit | (106,108 | ) | (106,992 | ) | |||
Accumulated other comprehensive loss | (28 | ) | (94 | ) | |||
Total stockholders’ equity | 16,505 | 14,527 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 45,656 | $ | 45,249 |
LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Revenue, net | $ | 49,482 | $ | 48,947 | $ | 98,609 | $ | 103,841 | |||||||
Cost of sales | 9,117 | 7,500 | 17,856 | 16,332 | |||||||||||
Gross profit | 40,365 | 41,447 | 80,753 | 87,509 | |||||||||||
Operating expenses: | |||||||||||||||
Commissions and incentives | 23,395 | 23,540 | 46,804 | 49,836 | |||||||||||
Selling, general and administrative | 14,643 | 17,207 | 30,224 | 34,987 | |||||||||||
Total operating expenses | 38,038 | 40,747 | 77,028 | 84,823 | |||||||||||
Operating income | 2,327 | 700 | 3,725 | 2,686 | |||||||||||
Other expense: | |||||||||||||||
Interest expense | (103 | ) | (138 | ) | (265 | ) | (275 | ) | |||||||
Other expense, net | (169 | ) | (150 | ) | (147 | ) | (321 | ) | |||||||
Total other expense | (272 | ) | (288 | ) | (412 | ) | (596 | ) | |||||||
Income before income taxes | 2,055 | 412 | 3,313 | 2,090 | |||||||||||
Income tax expense | (1,738 | ) | (129 | ) | (2,179 | ) | (627 | ) | |||||||
Net income | $ | 317 | $ | 283 | $ | 1,134 | $ | 1,463 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.02 | $ | 0.02 | $ | 0.08 | $ | 0.11 | |||||||
Diluted | $ | 0.02 | $ | 0.02 | $ | 0.08 | $ | 0.10 | |||||||
Weighted-average shares outstanding: | |||||||||||||||
Basic | 13,956 | 13,840 | 13,959 | 13,830 | |||||||||||
Diluted | 14,153 | 14,132 | 14,117 | 14,176 |
LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||
Revenue by Region | |||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||
Americas | $ | 36,903 | 75 | % | $ | 37,613 | 77 | % | $ | 73,066 | 74 | % | $ | 77,748 | 75 | % | |||||||||||
Asia/Pacific & Europe | 12,579 | 25 | % | 11,334 | 23 | % | 25,543 | 26 | % | 26,093 | 25 | % | |||||||||||||||
Total | $ | 49,482 | 100 | % | $ | 48,947 | 100 | % | $ | 98,609 | 100 | % | $ | 103,841 | 100 | % | |||||||||||
Active Independent Distributors (1) | |||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
As of December 31, | |||||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||||
Americas | 44,000 | 71 | % | 46,000 | 73 | % | |||||||||||||||||||||
Asia/Pacific & Europe | 18,000 | 29 | % | 17,000 | 27 | % | |||||||||||||||||||||
Total | 62,000 | 100 | % | 63,000 | 100 | % | |||||||||||||||||||||
Active Preferred Customers (2) | |||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
As of December 31, | |||||||||||||||||||||||||||
2017 | 2016 | ||||||||||||||||||||||||||
Americas | 86,000 | 80 | % | 89,000 | 80 | % | |||||||||||||||||||||
Asia/Pacific & Europe | 22,000 | 20 | % | 22,000 | 20 | % | |||||||||||||||||||||
Total | 108,000 | 100 | % | 111,000 | 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) | |||||||||||||||
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In thousands) | |||||||||||||||
GAAP Net income | $ | 317 | $ | 283 | $ | 1,134 | $ | 1,463 | |||||||
Interest Expense | 103 | 138 | 265 | 275 | |||||||||||
Provision for income taxes | 1,738 | 129 | 2,179 | 627 | |||||||||||
Depreciation and amortization | 322 | 414 | 672 | 826 | |||||||||||
Non-GAAP EBITDA: | 2,480 | 964 | 4,250 | 3,191 | |||||||||||
Adjustments: | |||||||||||||||
Stock compensation expense | 830 | 576 | 1,453 | 1,515 | |||||||||||
Other (income) expense, net | 169 | 150 | 147 | 321 | |||||||||||
Other adjustments(1) | 183 | 2,165 | 474 | 3,176 | |||||||||||
Total adjustments | 1,182 | 2,891 | 2,074 | 5,012 | |||||||||||
Non-GAAP Adjusted EBITDA | $ | 3,662 | $ | 3,855 | $ | 6,324 | $ | 8,203 | |||||||
(1) Other adjustments for the three months ended December 31, 2017 include approximately $0.2 million for expenses associated with executive transition fees and $20,000 for expenses associated with class-action lawsuits. Other adjustments for the three months ended December 31, 2016 include approximately $1.7 million for costs associated with the audit committee review and $0.5 million for executive severance and recruiting fees. Other adjustments for the six months ended December 31, 2017 include approximately $0.2 million for expenses associated with executive recruiting fees, $0.2 million for expenses associated with class-action lawsuits and $0.1 million for expenses associated with non-recurring legal and accounting expenses. Other adjustments for the six months ended December 31, 2016 include approximately $2.7 million for costs associated with the audit committee review and $0.5 million for executive severance and recruiting fees. |
LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||||||||||
Reconciliation of GAAP Net Income to Non-GAAP Net Income and Non-GAAP Adjusted EPS | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(In thousands) | |||||||||||||||
GAAP Net income | $ | 317 | $ | 283 | $ | 1,134 | $ | 1,463 | |||||||
Adjustments: | |||||||||||||||
Executive team severance expenses, net | — | 79 | — | 79 | |||||||||||
Executive team recruiting and transition expenses | 163 | 65 | 207 | 65 | |||||||||||
Audit committee independent review expenses | — | 1,730 | — | 2,742 | |||||||||||
Class-action lawsuit expenses | 20 | — | 216 | — | |||||||||||
Other nonrecurring legal and accounting expenses | — | — | 51 | — | |||||||||||
Tax impact of adjustments (1) | (56 | ) | (563 | ) | (145 | ) | (867 | ) | |||||||
Tax expense impact of revaluation of deferred tax assets (2) | 1,166 | — | 1,166 | — | |||||||||||
Total adjustments, net of tax | 1,293 | 1,311 | 1,495 | 2,019 | |||||||||||
Non-GAAP Net Income: | $ | 1,610 | $ | 1,594 | $ | 2,629 | $ | 3,482 | |||||||
Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Diluted earnings per share, as reported | $ | 0.02 | $ | 0.02 | $ | 0.08 | $ | 0.10 | |||||||
Total adjustments, net of tax | 0.09 | 0.09 | 0.11 | 0.14 | |||||||||||
Diluted earnings per share, as adjusted | $ | 0.11 | $ | 0.11 | $ | 0.19 | $ | 0.24 | |||||||
(1) Tax impact of adjustments excludes the effect of the one-time deferred tax asset adjustment. | |||||||||||||||
(2) Tax impact of the remeasurement of our deferred tax assets, pursuant to the 2017 tax reform legislation. Deferred tax assets were reduced as the reversal of the underlying transactions will be deductible at the lower corporate tax rates included in the 2017 legislation. |
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