LifeVantage Announces Financial Results for the
Second Quarter of Fiscal 2021
Revenue of $59.0 Million, Up 7.6% Sequentially
Second Quarter Adjusted EBITDA Increased 12.6%
Steven R. Fife Appointed President & CEO
Salt Lake City, UT, February 2, 2021, LifeVantage Corporation (Nasdaq: LFVN) today reported financial results for its second quarter ended December 31, 2020.
Second Quarter Fiscal 2021 Summary:
•Revenue of $59.0 million, an increase of 7.6% sequentially and a decline of 3.6% from the prior year period;
•Total active accounts increased 1.2% sequentially to 174,000, while declining 4.4% compared to the prior year period. The sequential growth included a 1.5% decline in distributors and a 2.9% increase in customers. Compared to the prior year period, distributors declined 1.5% and customers declined 6.1%;
•Earnings per diluted share were $0.26, up 52.9% sequentially, and down 13.3% over the prior year period;
•Adjusted earnings per diluted share were $0.25, consistent sequentially, and declined 19.4% compared to $0.31 in the prior year period;
•Adjusted EBITDA was consistent sequentially and increased 12.6% to $6.7 million compared to the prior year period;
•Repurchased 365,000, or $4.0 million, of common shares;
•Strong balance sheet with $19.7 million of cash and no debt; and
•Steven R. Fife appointed President & CEO; he has also joined the Board of Directors.
“We are proud to report continued earnings momentum with 31.6% adjusted operating income and 12.6% adjusted EBITDA growth while we saw modest declines in revenue of 3.6% compared to the prior year period, the highest quarterly revenue in the company’s history and 7.6% sequential revenue growth over the first quarter of fiscal 2021. We saw positive momentum from our virtual convention held in October which reached an estimated 20,000 participants in 18 countries. At the convention we launched limited time expanded Axio flavor offerings, featuring 6 new flavors and a new digital tool called ITT, aimed at standardizing the education and training of new customers and distributors. We saw strong adoption of the ITT system and a successful response to promotions launched in the quarter driving enrollments,” stated LifeVantage Chief Executive Officer and Chief Financial Officer, Steve Fife.
“As we look to the second half of fiscal 2021 we are excited for the initiatives we have in place, including the timely addition of new products to our portfolio in Q3 and Q4, innovative digital tools to aid our Distributors in customer retention, and the expansion of our virtual training platforms to develop the leadership of our Distributor base. We remain on track to meet our 2021 expectations and are confident in our business model as we continue to execute alongside the current pandemic. We are proud of the LifeVantage team and are focused on driving growth while delivering shareholder value.”
Second Quarter Fiscal 2021 Results
For the second fiscal quarter ended December 31, 2020, the Company reported revenue of $59.0 million, a 3.6% decrease compared to the second quarter of fiscal 2020. Revenue in the Americas for the second quarter of fiscal 2021 decreased 5.4% compared to the second quarter of fiscal 2020 and revenue in the Asia/Pacific & Europe region increased 1.0% compared to the second quarter of fiscal 2020. Revenue for the second quarter of fiscal 2021 was positively impacted $0.7 million, or 1.2%, by foreign currency fluctuations associated with revenue generated in international markets when compared to the second quarter of fiscal 2020.
Gross profit for the second quarter of fiscal 2021 was $48.8 million, or 82.7% of revenue, compared to $51.0 million, or 83.3% of revenue, for the same period in fiscal 2020. The decrease in gross margin as a percentage of revenue is primarily due to increased shipping to customer expenses and shifts in geographic and product sales mix.
Commissions and incentives expense for the second quarter of fiscal 2021 was $27.2 million, or 46.0% of revenue, compared to $29.2 million, or 47.7% of revenue, for the same period in fiscal 2020. The decrease in commissions and incentives expense as a percentage of revenue is due mainly to the timing and magnitude of investments in our promotional and incentive programs and our red carpet program.
Selling, general and administrative (SG&A) expense for the second quarter of fiscal 2021 was $16.2 million, or 27.5% of revenue, compared to $18.1 million, or 29.6% of revenue, for the same period in fiscal 2020. Adjusted for nonrecurring expenses and recoveries, which are detailed in the GAAP to non-GAAP reconciliation tables included at the end of this press release, adjusted non-GAAP SG&A expenses for the second quarter of fiscal 2021 were $16.6 million, or 28.1% of revenue, compared to adjusted non-GAAP SG&A expenses for the second quarter of fiscal 2020 of $17.9 million, or 29.3% of revenue. The year over year decrease in non-GAAP SG&A expenses was primarily due to decreased event and travel expenses as well as decreased stock and incentive compensation expenses partially due to the departure of executives.
Operating income for the second quarter of fiscal 2021 was $5.4 million, or 9.2% of revenue, compared to $3.6 million, or 6.0% of revenue, for the second quarter of fiscal 2020. Accounting for non-GAAP adjustments noted previously, adjusted non-GAAP operating income for the second quarter of fiscal 2021 was $5.1 million, or 8.6% of revenue, compared to $3.9 million, or 6.3% of revenue, for the second quarter of fiscal 2020.
Net income for the second quarter of fiscal 2021 was $3.8 million, or $0.26 per diluted share. This compares to net income for the second quarter of fiscal 2020 of $4.3 million, or $0.30 per diluted share. Accounting for the non-GAAP adjustments noted previously, net of tax, adjusted non-GAAP net income for the second quarter of fiscal 2021 declined 22.1% year over year, to $3.6 million, or $0.25 per diluted share. Accounting for the non-GAAP adjustments noted previously, net of tax, adjusted non-GAAP net income for the second quarter of fiscal 2020 was $4.6 million, or $0.31 per diluted share. The Company’s effective tax rate increased to 31.6% in the second fiscal quarter of 2021 compared to an effective tax benefit of (24.5%) in the prior year period. The increase in the current year tax rate negatively impacted adjusted earnings per share by approximately $0.20.
Adjusted EBITDA increased 12.6% to $6.7 million for the second quarter of fiscal 2021, compared to $6.0 million for the comparable period in fiscal 2020.
Fiscal 2021 First Six Month Results
For the first six months of fiscal 2021, the Company reported revenue of $113.8 million, a decrease of 3.1% as compared to $117.5 million for the first six months of fiscal 2020. In the first six months of fiscal 2021, revenue in the Americas decreased 4.6% and revenue in Asia/Pacific & Europe increased 0.8%. Revenue for the first six months of fiscal 2021 was positively impacted $0.9 million, or 0.8%, by foreign currency fluctuations associated with revenue generated in international markets when compared to the first six months of fiscal 2020.
Gross profit for the first six months of fiscal 2021 was $94.2 million, or 82.8% of revenue, compared to $98.0 million, or 83.5% of revenue, for the first six months of fiscal 2020. The decrease in gross margin as a percentage of revenue is primarily due to increased shipping expenses, decreased fee revenues as a result of fewer distributor meetings in conjunction with the COVID-19 pandemic, as well as shifts in geographic and product sales mix.
Commissions and incentives expense for the first six months of fiscal 2021 was $52.8 million, or 46.4% of revenue, compared to $56.0 million, or 47.7% of revenue, for the same period in fiscal 2020. Commissions and incentives expense as a percentage of revenue decreased during the comparable periods due to the timing and magnitude of investments in our promotional and incentive programs and our red carpet program, all of which have been limited as a result of COVID-19 restrictions and mandates.
SG&A expense for the first six months of fiscal 2021 was $32.5 million, or 28.6% of revenue, compared to $35.8 million, or 30.5% of revenue, for the same period in fiscal 2020. Adjusted for nonrecurring expenses, which are detailed in the GAAP to non-GAAP reconciliation tables included at the end of this press release, adjusted non-GAAP SG&A expenses for the first six months of fiscal 2021 were $31.3 million, or 27.5% of revenue, compared to adjusted non-GAAP SG&A expenses for the first six months of fiscal 2020 of $35.4 million, or 30.1% of revenue. The year over year decrease in non-GAAP SG&A expenses was primarily due to the cancellation of in-person events and decreased travel expenses related to the restrictions associated with the COVID-19 pandemic, as well as lower stock and incentive compensation expenses due in part to the departure of executives.
Operating income for the first six months of fiscal 2021 was $8.9 million, or 7.9% of revenue, compared to $6.2 million, or 5.3% of revenue, for the first six months of fiscal 2020. Accounting for non-GAAP adjustments noted previously, adjusted non-GAAP operating income for the first six months of fiscal 2021 was $10.2 million, or 8.9% of revenue, compared to $6.7 million, or 5.7% of revenue, for the same period in fiscal 2020.
Net income for the first six months of fiscal 2021 was $6.3 million, or $0.43 per diluted share compared to $6.1 million, or $0.42 per diluted share for the first six months ended 2020. Accounting for the non-GAAP adjustments noted previously, net of tax, adjusted non-GAAP net income for the first six months of fiscal 2021 increased 10.8% to $7.2 million, or $0.49 per diluted share. This compares to adjusted non-GAAP net income for the first six months of fiscal 2020 of $6.5 million, or $0.45 per diluted share. On a non-GAAP basis, the Company’s effective tax rate increased to 29.3% in the first half of fiscal 2021 compared to an effective tax benefit of (2.3%) in the prior year period. The increase in the current year tax rate negatively impacted adjusted earnings per share by approximately $0.22.
Adjusted EBITDA increased 25.8% to $13.4 million for the first six months of fiscal 2021, compared to $10.7 million for the comparable period in fiscal 2020.
Balance Sheet & Liquidity
The Company generated $4.8 million of cash from operations during the first six months of fiscal 2021 compared to $5.8 million in the same period in fiscal 2020. The Company's cash and cash equivalents at December 31, 2020 were $19.7 million, compared to $22.1 million at June 30, 2020. The Company had no debt outstanding at December 31, 2020 and June 30, 2020, respectively. During the second quarter of fiscal 2021, the Company repurchased approximately 365,000 common shares for $4.0 million under its share repurchase program.
Management Changes
Also announced on February 2, 2021, the Company named Steven R. Fife as President and Chief Executive Officer. Mr. Fife’s appointment is effective immediately as he has been serving as Interim Chief Executive Officer since September, 2020. He has also joined the Board of Directors.
Additionally, the Company announced it has initiated an executive search to identify a new Chief Financial Officer. Mr. Fife will continue to serve in this role until a replacement is established.
Fiscal Year 2021 Guidance
The Company is reiterating its outlook for fiscal 2021 adjusted net income and adjusted EBITDA, and now anticipates fiscal 2021 revenue to be at the low end of our prior revenue guidance range of approximately $240 million to $251 million for fiscal year 2021, reflecting the timing of our product and geographic launches. The Company expects to generate adjusted EBITDA of $25 million to $27 million, with adjusted earnings per share in
the range of $0.87 to $0.91, which assumes a full year tax rate of approximately 30%. The Company's guidance for adjusted non-GAAP EBITDA and adjusted non-GAAP earnings per diluted share excludes any non-operating or non-recurring expenses that may materialize during fiscal 2021. This guidance reflects the current trends in the business and the Company’s current view as to the impact of the COVID-19 pandemic on its business. However, the impact of the COVID-19 pandemic continues to evolve and actual results could be adversely affected by further deterioration to the global economic and operating environments as a result of future COVID-19 developments. The Company is not providing guidance for GAAP earnings per diluted share for fiscal 2021 due to the potential occurrence of one or more non-operating, one-time expenses, which the Company does not believe it can reliably predict.
Conference Call Information
The Company will hold an investor conference call today at 2:30 p.m. MST (4:30 p.m. EST). Investors interested in participating in the live call can dial (877) 705-6003 from the U.S. International callers can dial (201) 493-6725. A telephone replay will be available approximately two hours after the call concludes and will be available through Tuesday, February 9, 2021, by dialing (844) 512-2921 from the U.S. and entering confirmation code 13714685, or (412) 317-6671 from international locations, and entering confirmation code 1374685.
There will also be a simultaneous, live webcast available on the Investor Relations section of the Company's web site at http://investor.lifevantage.com/events-and-presentations or directly at
http://public.viavid.com/index.php?id=142898.The webcast will be archived for approximately 30 days.
About LifeVantage Corporation
LifeVantage Corporation (Nasdaq: LFVN) is a pioneer in Nutrigenomics, a new science dedicated to biohacking the human aging code. The Company engages in the identification, research, development and distribution of advanced nutraceutical dietary supplements and skin and hair care products, including its Protandim® product line, LifeVantage® Omega+ and ProBio dietary supplements, the TrueScience® line of Nrf2 infused skin care and hair care products, Petandim® for Dogs, Axio® smart energy drink mixes, and the PhysIQ™ weight management system. LifeVantage was founded in 2003 and is headquartered in Salt Lake City, Utah. For more information, visit www.lifevantage.com.
Forward Looking Statements
This document contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as "believe," "will," "hopes," "intends," "estimates," "expects," "projects," "plans," "anticipates," "look forward to," "goal," “may be,” and variations thereof, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. Examples of forward-looking statements include, but are not limited to, statements we make regarding executing against and the benefits of our key initiatives, future growth, including geographic and product expansion, and expected financial performance. Such forward-looking statements are not guarantees of performance and the Company's actual results could differ materially from those contained in such statements. These forward-looking statements are based on the Company's current expectations and beliefs concerning future events affecting the Company and involve known and unknown risks and uncertainties that may cause the Company's actual results or outcomes to be materially different from those anticipated and discussed herein. These risks and uncertainties include, among others, further deterioration to the global economic and operating environments as a result of future COVID-19 developments, as well as those discussed in greater detail in the Company's Annual Report on Form 10-K and the Company's Quarterly Report on Form 10-Q under the caption "Risk Factors," and in other documents filed by the Company from time to time with the Securities and Exchange Commission. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this document. All forward-looking statements are based on information currently available to the Company on the date hereof, and the Company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date of this document, except as required by law.
About Non-GAAP Financial Measures
We define Non-GAAP EBITDA as earnings before interest expense, income taxes, depreciation and amortization and Non-GAAP Adjusted EBITDA as earnings before interest expense, income taxes, depreciation and amortization, stock compensation expense, other income, net, and certain other adjustments. Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. We define Non-GAAP Net Income as GAAP net income less certain tax adjusted non-recurring one-time expenses incurred during the period and Non-GAAP Earnings per Share as Non-GAAP Net Income divided by weighted-average shares outstanding.
We are presenting Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings Per Share because management believes that they provide additional ways to view our operations when considered with both our GAAP results and the reconciliation to net income, which we believe provides a more complete understanding of our business than could be obtained absent this disclosure. Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings Per Share are presented solely as supplemental disclosure because: (i) we believe these measures are a useful tool for investors to assess the operating performance of the business without the effect of these items; (ii) we believe that investors will find this data useful in assessing shareholder value; and (iii) we use Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings Per Share internally as benchmarks to evaluate our operating performance or compare our performance to that of our competitors. The use of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings per Share has limitations and you should not consider these measures in isolation from or as an alternative to the relevant GAAP measure of net income prepared in accordance with GAAP, or as a measure of profitability or liquidity.
The tables set forth below present reconciliations of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings per Share, which are non-GAAP financial measures to Net Income and Earnings per Share, our most directly comparable financial measures presented in accordance with GAAP.
Investor Relations Contacts:
Reed Anderson, ICR
(646) 277-1260
reed.anderson@icrinc.com
| LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||
| (unaudited) | |||||||||||
| (In thousands, except per share data) | December 31, 2020 | June 30, 2020 | |||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 19,726 | $ | 22,138 | |||||||
| Accounts receivable | 3,269 | 2,610 | |||||||||
| Income tax receivable | 536 | — | |||||||||
| Inventory, net | 14,712 | 13,888 | |||||||||
| Prepaid expenses and other | 4,216 | 5,232 | |||||||||
| Total current assets | 42,459 | 43,868 | |||||||||
| Property and equipment, net | 11,027 | 7,170 | |||||||||
| Right-of-use assets | 14,037 | 956 | |||||||||
| Intangible assets, net | 785 | 851 | |||||||||
| Deferred income tax asset | 1,866 | 2,164 | |||||||||
| Equity securities | 2,205 | 2,205 | |||||||||
| Other long-term assets | 2,047 | 1,663 | |||||||||
| TOTAL ASSETS | $ | 74,426 | $ | 58,877 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 5,155 | $ | 3,521 | |||||||
| Commissions payable | 8,039 | 9,219 | |||||||||
| Income tax payable | 651 | 784 | |||||||||
| Lease liabilities | 2,049 | 1,184 | |||||||||
| Other accrued expenses | 6,560 | 10,311 | |||||||||
| Total current liabilities | 22,454 | 25,019 | |||||||||
| Lease liabilities | 15,409 | — | |||||||||
| Other long-term liabilities | 1,047 | 604 | |||||||||
| Total liabilities | 38,910 | 25,623 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity | |||||||||||
| Preferred stock — par value $0.0001 per share, 5,000 shares authorized, no shares issued or outstanding | — | — | |||||||||
| Common stock — par value $0.0001 per share, 40,000 shares authorized and 14,151 and 14,313 issued and outstanding as of December 31, 2020 and June 30, 2020, respectively | 1 | 1 | |||||||||
| Additional paid-in capital | 128,011 | 126,416 | |||||||||
| Accumulated deficit | (93,044) | (93,307) | |||||||||
| Accumulated other comprehensive income | 548 | 144 | |||||||||
| Total stockholders’ equity | 35,516 | 33,254 | |||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 74,426 | $ | 58,877 | |||||||
| LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||
| Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||||||||||
| (In thousands, except per share data) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| Revenue, net | $ | 59,007 | $ | 61,242 | $ | 113,835 | $ | 117,470 | |||||||||||||||
| Cost of sales | 10,189 | 10,230 | 19,587 | 19,421 | |||||||||||||||||||
| Gross profit | 48,818 | 51,012 | 94,248 | 98,049 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Commissions and incentives | 27,151 | 29,235 | 52,785 | 56,009 | |||||||||||||||||||
| Selling, general and administrative | 16,218 | 18,131 | 32,517 | 35,817 | |||||||||||||||||||
| Total operating expenses | 43,369 | 47,366 | 85,302 | 91,826 | |||||||||||||||||||
| Operating income | 5,449 | 3,646 | 8,946 | 6,223 | |||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||
| Interest expense, net | (9) | (41) | (15) | (89) | |||||||||||||||||||
| Other income (expense), net | 133 | (148) | (8) | (228) | |||||||||||||||||||
| Total other income (expense) | 124 | (189) | (23) | (317) | |||||||||||||||||||
| Income before income taxes | 5,573 | 3,457 | 8,923 | 5,906 | |||||||||||||||||||
| Income tax (expense) benefit | (1,761) | 846 | (2,660) | 158 | |||||||||||||||||||
| Net income | $ | 3,812 | $ | 4,303 | $ | 6,263 | $ | 6,064 | |||||||||||||||
| Net income per share: | |||||||||||||||||||||||
| Basic | $ | 0.27 | $ | 0.31 | $ | 0.44 | $ | 0.44 | |||||||||||||||
| Diluted | $ | 0.26 | $ | 0.30 | $ | 0.43 | $ | 0.42 | |||||||||||||||
| Weighted-average shares outstanding: | |||||||||||||||||||||||
| Basic | 14,193 | 13,902 | 14,225 | 13,908 | |||||||||||||||||||
| Diluted | 14,439 | 14,562 | 14,547 | 14,515 | |||||||||||||||||||
| LIFEVANTAGE CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenue by Region | |||||||||||||||||||||||||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
| Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||||||||||||||||||||||
| Americas | $ | 41,883 | 71 | % | $ | 44,284 | 72 | % | $ | 80,559 | 71 | % | $ | 84,465 | 72 | % | |||||||||||||||||||||||||||||||
| Asia/Pacific & Europe | 17,124 | 29 | % | 16,958 | 28 | % | 33,276 | 29 | % | 33,005 | 28 | % | |||||||||||||||||||||||||||||||||||
| Total | $ | 59,007 | 100 | % | $ | 61,242 | 100 | % | $ | 113,835 | 100 | % | $ | 117,470 | 100 | % | |||||||||||||||||||||||||||||||
| Active Accounts | |||||||||||||||||||||||||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | Change from Prior Year | Percent Change | ||||||||||||||||||||||||||||||||||||||||||||
Active Independent Distributors (1) | |||||||||||||||||||||||||||||||||||||||||||||||
| Americas | 45,000 | 67 | % | 46,000 | 68 | % | (1,000) | (2.2) | % | ||||||||||||||||||||||||||||||||||||||
| Asia/Pacific & Europe | 22,000 | 33 | % | 22,000 | 32 | % | — | — | % | ||||||||||||||||||||||||||||||||||||||
| Total Active Independent Distributors | 67,000 | 100 | % | 68,000 | 100 | % | (1,000) | (1.5) | % | ||||||||||||||||||||||||||||||||||||||
Active Customers (2) | |||||||||||||||||||||||||||||||||||||||||||||||
| Americas | 82,000 | 77 | % | 89,000 | 78 | % | (7,000) | (7.9) | % | ||||||||||||||||||||||||||||||||||||||
| Asia/Pacific & Europe | 25,000 | 23 | % | 25,000 | 22 | % | — | — | % | ||||||||||||||||||||||||||||||||||||||
| Total Active Customers | 107,000 | 100 | % | 114,000 | 100 | % | (7,000) | (6.1) | % | ||||||||||||||||||||||||||||||||||||||
Active Accounts (3) | |||||||||||||||||||||||||||||||||||||||||||||||
| Americas | 127,000 | 73 | % | 135,000 | 74 | % | (8,000) | (5.9) | % | ||||||||||||||||||||||||||||||||||||||
| Asia/Pacific & Europe | 47,000 | 27 | % | 47,000 | 26 | % | — | — | % | ||||||||||||||||||||||||||||||||||||||
| Total Active Accounts | 174,000 | 100 | % | 182,000 | 100 | % | (8,000) | (4.4) | % | ||||||||||||||||||||||||||||||||||||||
| (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. | |||||||||||||||||||||||||||||||||||||||||||||||
| (3) Total Active Accounts is the sum of Active Independent Distributor accounts and Active Customer accounts. | |||||||||||||||||||||||||||||||||||||||||||||||
| 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, | ||||||||||||||||||||||
| (In thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| GAAP Net income | $ | 3,812 | $ | 4,303 | $ | 6,263 | $ | 6,064 | |||||||||||||||
| Interest Expense | 9 | 41 | 15 | 89 | |||||||||||||||||||
| Provision for income taxes | 1,761 | (846) | 2,660 | (158) | |||||||||||||||||||
Depreciation and amortization(1) | 651 | 709 | 1,782 | 1,245 | |||||||||||||||||||
| Non-GAAP EBITDA: | 6,233 | 4,207 | 10,720 | 7,240 | |||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Stock compensation expense | 983 | 1,547 | 1,447 | 2,918 | |||||||||||||||||||
| Other (income) expense, net | (133) | 148 | 8 | 228 | |||||||||||||||||||
Other adjustments(2) | (377) | 55 | 1,253 | 286 | |||||||||||||||||||
| Total adjustments | 473 | 1,750 | 2,708 | 3,432 | |||||||||||||||||||
| Non-GAAP Adjusted EBITDA | $ | 6,706 | $ | 5,957 | $ | 13,428 | $ | 10,672 | |||||||||||||||
| (1) Includes $101,000 of accelerated depreciation related to a change in lease term and $335,000 leasehold depreciation for the six months ended December 31, 2020. Includes $152,000 of accelerated depreciation related to a change in lease term for the three and six months ended December 31, 2019. | |||||||||||||||||||||||
| (2) Other adjustments breakout: | |||||||||||||||||||||||
| Class-action lawsuit (recoveries) expenses | $ | (396) | $ | 55 | $ | 213 | $ | 187 | |||||||||||||||
| Executive team severance expenses, net | 19 | — | 524 | — | |||||||||||||||||||
| Executive team recruiting and transition expenses | — | — | 21 | — | |||||||||||||||||||
| Lease abandonment | — | — | 495 | — | |||||||||||||||||||
| Other nonrecurring legal and accounting expenses | — | — | — | 99 | |||||||||||||||||||
| Total adjustments | $ | (377) | $ | 55 | $ | 1,253 | $ | 286 | |||||||||||||||
| 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, | ||||||||||||||||||||||
| (In thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
| GAAP Net income | $ | 3,812 | $ | 4,303 | $ | 6,263 | $ | 6,064 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
Executive team severance expenses, net(1) | 19 | — | 74 | — | |||||||||||||||||||
| Executive team recruiting and transition expenses | — | — | 21 | — | |||||||||||||||||||
| Class-action lawsuit (recoveries) expenses | (396) | 55 | 213 | 187 | |||||||||||||||||||
| Other nonrecurring legal and accounting expenses | — | — | — | 99 | |||||||||||||||||||
| Accelerated depreciation related to change in lease term | — | 152 | 101 | 152 | |||||||||||||||||||
Lease abandonment(2) | — | — | 830 | — | |||||||||||||||||||
| Tax impact of adjustments | 119 | 51 | (314) | (14) | |||||||||||||||||||
| Total adjustments, net of tax | (258) | 258 | 925 | 424 | |||||||||||||||||||
| Non-GAAP Net Income: | $ | 3,554 | $ | 4,561 | $ | 7,188 | $ | 6,488 | |||||||||||||||
| Three Months Ended December 31, | Six Months Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Diluted earnings per share, as reported | $ | 0.26 | $ | 0.30 | $ | 0.43 | $ | 0.42 | |||||||||||||||
| Total adjustments, net of tax | (0.02) | 0.02 | 0.06 | 0.03 | |||||||||||||||||||
Non-GAAP adjusted diluted earnings per share(3) | $ | 0.25 | $ | 0.31 | $ | 0.49 | $ | 0.45 | |||||||||||||||
| (1) Net of $450,000 of compensation expense benefit related to unvested stock award reversals. | |||||||||||||||||||||||
| (2) Includes remaining lease rent expense of $495,000 and leasehold depreciation of $335,000 for the six months ended December 31, 2020. | |||||||||||||||||||||||
| (3) May not add due to rounding. | |||||||||||||||||||||||
