LIFEVANTAGE CORPORATION (Exact name of registrant as specified in its charter) |
Delaware | 001-35647 | 90-0224471 | ||
(State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
9785 S. Monroe Street, Suite 400, 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: | August 15, 2018 | LIFEVANTAGE CORPORATION |
By: | /s/ Steven R. Fife | |
Name: | Steven R. Fife | |
Title: | Chief Financial Officer |
• | Revenue increased 6.7% to $54.0 million year over year and 6.9% sequentially; |
• | Revenue in the Americas increased 4.7% year over year and 6.6% sequentially. Revenue in Asia/Pacific & Europe increased 13.3% year over year and 7.8% sequentially; |
• | Active independent distributors were consistent with the third quarter of 2018 and active customers increased 5.5% sequentially; |
• | Adjusted EBITDA increased 58.8% year over year to $5.2 million; |
• | Earnings per diluted share were $0.21, up from $0.01 in the prior year period; and |
• | Adjusted earnings per diluted share were $0.20, up from $0.04 in the prior year period. |
• | Revenue increased 1.9% to $203.2 million; |
• | Revenue in the Americas increased 0.5% and revenue in Asia/Pacific & Europe increased 6.1%; |
• | Active independent distributors decreased 1.6% and active customers increased 3.6%; |
• | Adjusted EBITDA increased 13.9% to $14.9 million; |
• | Earnings per diluted share were $0.41, compared to $0.11 in fiscal 2017; and |
• | Adjusted earnings per diluted share were $0.51, compared to $0.27 in fiscal 2017. |
LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
As of | |||||||
(In thousands, except per share data) | June 30, 2018 | June 30, 2017 | |||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 16,652 | $ | 11,458 | |||
Accounts receivable | 2,067 | 1,334 | |||||
Income tax receivable | 451 | 913 | |||||
Inventory, net | 13,627 | 16,575 | |||||
Prepaid expenses and deposits | 6,141 | 5,266 | |||||
Total current assets | 38,938 | 35,546 | |||||
Property and equipment, net | 6,587 | 3,127 | |||||
Intangible assets, net | 1,115 | 1,247 | |||||
Long-term deferred income tax asset | 3,255 | 4,087 | |||||
Other long-term assets | 1,247 | 1,242 | |||||
TOTAL ASSETS | $ | 51,142 | $ | 45,249 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities | |||||||
Accounts payable | $ | 3,813 | $ | 4,850 | |||
Commissions payable | 7,546 | 6,837 | |||||
Income tax payable | 39 | 215 | |||||
Other accrued expenses | 10,407 | 9,453 | |||||
Current portion of long-term debt | 2,000 | 2,000 | |||||
Total current liabilities | 23,805 | 23,355 | |||||
Long-term debt | |||||||
Principal amount | 3,500 | 5,500 | |||||
Less: unamortized discount and deferred offering costs | (88 | ) | (60 | ) | |||
Long-term debt, net of unamortized discount and deferred offering costs | 3,412 | 5,440 | |||||
Other long-term liabilities | 1,978 | 1,927 | |||||
Total liabilities | 29,195 | 30,722 | |||||
Commitments and contingencies | |||||||
Stockholders' equity | |||||||
Preferred stock — par value $0.0001 and $0.001 per share, 5,000 and 50,000 shares authorized, no shares issued or outstanding | — | — | |||||
Common stock — par value $0.0001 and $0.001 per share, 40,000 and 250,000 shares authorized and 14,073 and 14,232 issued and outstanding as of June 30, 2018 and 2017, respectively | 1 | 14 | |||||
Additional paid-in capital | 124,663 | 121,599 | |||||
Accumulated deficit | (102,731 | ) | (106,992 | ) | |||
Accumulated other comprehensive income (loss) | 14 | (94 | ) | ||||
Total stockholders’ equity | 21,947 | 14,527 | |||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 51,142 | $ | 45,249 |
LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
For the Three Months Ended June 30, (unaudited) | Fiscal Year Ended June 30, | ||||||||||||||
(In thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Revenue, net | $ | 54,033 | $ | 50,641 | $ | 203,204 | $ | 199,489 | |||||||
Cost of sales | 8,071 | 8,891 | 34,848 | 33,456 | |||||||||||
Gross profit | 45,962 | 41,750 | 168,356 | 166,033 | |||||||||||
Operating expenses: | |||||||||||||||
Commissions and incentives | 27,069 | 23,984 | 98,193 | 96,662 | |||||||||||
Selling, general and administrative | 14,594 | 16,226 | 59,840 | 64,922 | |||||||||||
Total operating expenses | 41,663 | 40,210 | 158,033 | 161,584 | |||||||||||
Operating income | 4,299 | 1,540 | 10,323 | 4,449 | |||||||||||
Other expense: | |||||||||||||||
Interest expense | (99 | ) | (164 | ) | (456 | ) | (570 | ) | |||||||
Other expense, net | (199 | ) | (616 | ) | (319 | ) | (969 | ) | |||||||
Total other expense | (298 | ) | (780 | ) | (775 | ) | (1,539 | ) | |||||||
Income before income taxes | 4,001 | 760 | 9,548 | 2,910 | |||||||||||
Income tax expense | (1,009 | ) | (676 | ) | (3,787 | ) | (1,302 | ) | |||||||
Net income | $ | 2,992 | $ | 84 | $ | 5,761 | $ | 1,608 | |||||||
Net income per share: | |||||||||||||||
Basic | $ | 0.21 | $ | 0.01 | $ | 0.41 | $ | 0.12 | |||||||
Diluted | $ | 0.21 | $ | 0.01 | $ | 0.41 | $ | 0.11 | |||||||
Weighted-average shares outstanding: | |||||||||||||||
Basic | 14,046 | 13,952 | 13,992 | 13,881 | |||||||||||
Diluted | 14,147 | 14,085 | 14,136 | 14,118 |
LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||
Revenue by Region | |||||||||||||||||||||||||||
Three Months Ended June 30, (unaudited) | Fiscal Year Ended June 30, | ||||||||||||||||||||||||||
(In thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
Americas | $ | 40,517 | 75 | % | $ | 38,714 | 76 | % | $ | 151,609 | 75 | % | $ | 150,841 | 76 | % | |||||||||||
Asia/Pacific & Europe | 13,516 | 25 | % | 11,927 | 24 | % | 51,595 | 25 | % | 48,648 | 24 | % | |||||||||||||||
Total | $ | 54,033 | 100 | % | $ | 50,641 | 100 | % | $ | 203,204 | 100 | % | $ | 199,489 | 100 | % | |||||||||||
Active Independent Distributors (1) | |||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
As of June 30, | |||||||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||||||
Americas | 45,000 | 71 | % | 47,000 | 73 | % | |||||||||||||||||||||
Asia/Pacific & Europe | 18,000 | 29 | % | 17,000 | 27 | % | |||||||||||||||||||||
Total | 63,000 | 100 | % | 64,000 | 100 | % | |||||||||||||||||||||
Active Customers (2) | |||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||
As of June 30, | |||||||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||||||
Americas | 94,000 | 81 | % | 90,000 | 80 | % | |||||||||||||||||||||
Asia/Pacific & Europe | 22,000 | 19 | % | 22,000 | 20 | % | |||||||||||||||||||||
Total | 116,000 | 100 | % | 112,000 | 100 | % | |||||||||||||||||||||
(1) Active Independent Distributors have purchased product in the prior three months for retail or personal consumption. | |||||||||||||||||||||||||||
(2) Active 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 June 30, | Fiscal Year Ended June 30, | ||||||||||||||
(In thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
GAAP Net income | $ | 2,992 | $ | 84 | $ | 5,761 | $ | 1,608 | |||||||
Interest expense | 99 | 164 | 456 | 570 | |||||||||||
Provision for income taxes | 1,009 | 676 | 3,787 | 1,302 | |||||||||||
Depreciation and amortization | 383 | 417 | 1,325 | 1,643 | |||||||||||
Non-GAAP EBITDA: | 4,483 | 1,341 | 11,329 | 5,123 | |||||||||||
Adjustments: | |||||||||||||||
Stock compensation expense | 1,087 | 855 | 3,196 | 2,647 | |||||||||||
Other income, net | 199 | 616 | 319 | 969 | |||||||||||
Other adjustments(1) | (594 | ) | 447 | 66 | 4,348 | ||||||||||
Total adjustments | 692 | 1,918 | 3,581 | 7,964 | |||||||||||
Non-GAAP Adjusted EBITDA | $ | 5,175 | $ | 3,259 | $ | 14,910 | $ | 13,087 | |||||||
(1) Other adjustments breakout: | |||||||||||||||
Audit committee review expenses | $ | — | $ | — | $ | — | $ | 2,742 | |||||||
Class-action lawsuit expenses | 317 | 84 | 659 | 170 | |||||||||||
Executive team severance expenses, net | 377 | — | 437 | 532 | |||||||||||
Executive team recruiting and transition expenses | — | 203 | 207 | 744 | |||||||||||
Other nonrecurring legal expenses | — | 160 | 51 | 160 | |||||||||||
Insurance reimbursement | (425 | ) | — | (425 | ) | — | |||||||||
Change in estimate of accrued import liabilities | (863 | ) | — | (863 | ) | — | |||||||||
Total adjustments | $ | (594 | ) | $ | 447 | $ | 66 | $ | 4,348 |
LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||||||||||
Reconciliation of GAAP Net Income to Non-GAAP Net Income and Non-GAAP Adjusted EPS: | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended June 30, | Fiscal Year Ended June 30, | ||||||||||||||
(In thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||||
GAAP Net income | $ | 2,992 | $ | 84 | $ | 5,761 | $ | 1,608 | |||||||
Adjustments: | |||||||||||||||
Executive team severance expenses, net (1) | 314 | — | 374 | 39 | |||||||||||
Executive team recruiting and transition expenses | — | 203 | 207 | 744 | |||||||||||
Audit committee independent review expenses | — | — | — | 2,742 | |||||||||||
Class-action lawsuit expenses | 317 | 84 | 659 | 170 | |||||||||||
Other nonrecurring legal expenses | — | 160 | 51 | 160 | |||||||||||
Write-off of intangible assets | — | 350 | — | 350 | |||||||||||
Insurance reimbursement | (425 | ) | — | (425 | ) | — | |||||||||
Change in estimate of accrued import liabilities | (863 | ) | — | (863 | ) | — | |||||||||
Tax impact of adjustments (2) | 166 | (356 | ) | (42 | ) | (1,881 | ) | ||||||||
Tax expense impact of revaluation of deferred tax assets (3) | 306 | — | 1,472 | — | |||||||||||
Total adjustments, net of tax | (185 | ) | 441 | 1,433 | 2,324 | ||||||||||
Non-GAAP Net Income | $ | 2,807 | $ | 525 | $ | 7,194 | $ | 3,932 | |||||||
Three Months Ended June 30, | Fiscal Year Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Diluted earnings per share, as reported | $ | 0.21 | $ | 0.01 | $ | 0.41 | $ | 0.11 | |||||||
Total adjustments, net of tax | (0.01 | ) | 0.03 | 0.10 | 0.16 | ||||||||||
Diluted earnings per share, as adjusted | $ | 0.20 | $ | 0.04 | $ | 0.51 | $ | 0.27 | |||||||
(1) Net of $63,000 of compensation expense benefit related to unvested stock award reversals for the fiscal year ended June 30, 2018. Net of $493,000 of compensation expense benefit related to unvested stock award reversals for the fiscal year ended June 30, 2017. | |||||||||||||||
(2) Tax impact of adjustments excludes the effect of the one-time deferred tax asset adjustment. | |||||||||||||||
(3) 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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