LifeVantage Reports 2016 Q2 Results – Revenue Up 14.6% To $52 Million0
LifeVantage Reports 2016 Q2 Results – Revenue Up 14.6% To $52 Million
LifeVantage Corporation (NASDAQ:LFVN) today reported financial results for its second quarter ended December 31, 2015.
Second Quarter Fiscal 2016 Highlights:
- Revenue increased 14.6% to $52 million on a sequential basis and increased 7.8% compared to second fiscal quarter of 2015;
- Revenue in the Americas increased 15.3% and revenue in Asia/Pacific increased 12.4% on a sequential basis, including a 7.3% sequential revenue increase in Japan;
- Adjusted EBITDA increased 7.3% to $4.5 million, compared to $4.2 million in the second fiscal quarter of 2015;
- Net income was $1.6 million which includes approximately $0.5 million of pretax one-time charges
- Executed on strategic growth plan including investments in new product launches and enhanced distributor technology platforms.
“We are pleased to report revenue growth on both a sequential and year-over-year basis, which underscores the early success of our growth plan and gives us confidence that our business is on a path to deliver long-term and sustainable improved financial performance,” stated LifeVantage President and Chief Executive Officer Darren Jensen.”
“In the second quarter, we made meaningful progress on our critical growth initiatives to expand our product portfolio with the launch of PhysIQ™ Smart Weight Management System, marking our entry into the estimated $148 billion worldwide weight management market. While it is still in its very early stages, we have been encouraged by the strong consumer and distributor responses to our newest product offerings. In addition, we expanded our skincare product offering with the launch of True Science™ Micro Lift Serum in the second quarter.”
Mr. Jensen concluded, “We continue to make progress across all aspects of our growth plan, including investments in distributor leadership development, mobile technology with the introduction of new business building technologies, new products, brand development, and international expansion. Our strategic plan focuses on changing the revenue trends to a positive trajectory and we are pleased that revenue is responding to these investments. Nevertheless, these investments will impact our operating income results in the near-term. However, we are confident that investing in our future growth will better position our company to capitalize on opportunities ahead and achieve accelerated sales growth.”
Second Quarter Fiscal 2016 Results
For the second fiscal quarter ended December 31, 2015, the Company reported revenue of $52 million, a 14.6% increase compared sequentially to revenue of $45.4 million for the first fiscal quarter ended September 30, 2015, and a 7.8% increase compared to $48.2 million for the comparable period in fiscal 2015. Year-over-year quarterly revenue reflects an increase of 14.3% in the Americas and a decrease in the Asia/Pacific region of 9.6%. Revenue for the quarter was negatively impacted by $0.9 million, or approximately 1.9%, by foreign currency fluctuation.
Commissions and incentives expense for the second fiscal quarter of 2016 was $27.3 million, or 52.5% of revenue, compared to $23.2 million, or 48.1% of revenue, in the same period last year. Selling, general and administrative expense (SG&A) for the second fiscal quarter of 2016 was $13.8 million, or 26.6% of revenue, compared to $14.5 million, or 30% of revenue, in the same period last year.
Second fiscal quarter of 2016 SG&A expenses include costs associated with new product launches, initiatives to enhance business building technology, and other strategic investments to position the Company for future growth. Furthermore, SG&A includes $0.5 million of pre-tax one-time expenses; consisting of $0.4 million in executive team transition costs, and $0.1 million in expenses associated with the Company’s reverse stock split.
Operating income for the second fiscal quarter of 2016 was $3 million, compared to $3.1 million for the second fiscal quarter of 2015. This includes the aforementioned investments to drive future sales and profit growth along with the previously mentioned one-time expenses.
Adjusted EBITDA was $4.5 million for the second fiscal quarter of 2016, compared to $4.5 million for the first fiscal quarter of 2016 and $4.2 million for the prior year period.
Net income for the second fiscal quarter of 2016 was $1.6 million, or $0.11 per diluted share, calculated on 14 million fully diluted shares. This compares to net income for the second fiscal quarter of 2015 of $1.5 million, or $0.10 per diluted share, calculated on 14.4 million fully diluted shares. On a tax adjusted basis the previously mentioned one-time charges were $0.3 million for the quarter resulting in adjusted net income of $1.9 million for the second fiscal quarter of 2016, or $0.14 per diluted share, compared to $1.5 million, or $0.10 per diluted share in the comparable period last year.
Fiscal 2016 First Six Months Results
For the six months ended December 31, 2015, the Company reported net revenue of $97.3 million, compared to $99.9 million in the prior year period. Revenue in the Americas increased 4.6%, while revenue in Asia/Pacific decreased 20.5% due primarily to lower sales in Japan. Revenue for the first six months of fiscal 2016 was negatively impacted $2.8 million, or 2.8%, by foreign currency fluctuation.
Operating income for the first six months of fiscal 2016 was $5.7 million, compared to $10.9 million in the prior year period. Operating income for the six months ended December 31, 2015 includes $1.6 million of the previously mentioned one-time expenses. Adjusted EBITDA was $8.9 million for the first six months of fiscal 2016, compared to $11 million in the prior year. First six months fiscal 2015 operating income and Adjusted EBITDA include the benefit of approximately $2 million from proceeds recovered and related to the Company’s December 2012 product recall.
Net income for the first six months of fiscal 2016 was $2.7 million, or $0.19 per diluted share, compared to $6.2 million, or $0.43 per diluted share in the prior year period. On a tax adjusted basis the previously mentioned one-time charges were $1 million for the first six months of fiscal 2016 resulting in adjusted net income of $3.7 million or $0.27 per diluted share. On a tax adjusted basis the one-time insurance benefit for the first six months of fiscal 2015 was $1.3 million, resulting in adjusted net income of $4.8 million or $0.34 per diluted share.
Balance Sheet & Liquidity
The Company generated $8.5 million of cash flow from operations in the first six months of fiscal 2016, compared to $8 million in the same period last year. The Company’s cash and cash equivalents at December 31, 2015 were $15.8 million compared to $13.9 million at the end of fiscal year 2015. The Company repaid $6.8 million of debt during the first six months of fiscal 2016.
Fiscal Year 2016 Guidance
The Company is updating its fiscal year 2016 annual guidance. The Company continues to expect to generate revenue in the range of $195 million to $210 million in fiscal year 2016. On an adjusted non-GAAP earnings per diluted share basis, excluding certain one-time costs, the Company expects to achieve the range of $0.50 to $0.60.
Based on the previously mentioned one-time expenses, the Company now expects GAAP earnings per diluted share in the range of $0.42 to $0.52 compared to the previous range of $0.56 to $0.77, based on an estimated 14.0 million diluted shares and a 36% effective tax rate.
About LifeVantage Corporation
LifeVantage Corporation (Nasdaq:LFVN), is a science based network marketing company dedicated to visionary science that looks to transform health, wellness and anti-aging internally and externally at the cellular level. The company is the maker of Protandim®, the Nrf2 Synergizer® patented dietary supplement, the TrueScience™ Anti-Aging Skin Care Regimen, Canine Health, the AXIO™ energy product line and the PhysIQ™ smart weight management system. LifeVantage was founded in 2003 and is headquartered in Salt Lake City, Utah.