Company Initiates 2019 Guidance
Nutrisystem, Inc. (Nasdaq: NTRI), a leading provider
of health and wellness and weight management products and
services including Nutrisystem®, South Beach Diet®, and DNA Body
Blueprint™ brands, today reported financial results for the fourth
quarter and full year ended December 31, 2018.
Dawn Zier, President and Chief Executive Officer, stated, “Our
fourth quarter and full year 2018 financial results are consistent
with our preliminary results released on January 28, 2019.”
Ms. Zier added, “We’re pleased with our new programs for 2019
-- Nutrisystem FreshStart, which offers the best balance
between structure and flexibility, and our new keto-friendly South
Beach Diet program, both of which reflect evolving consumer
trends. We continue to focus on the near and long-term growth
of our brands and are excited about the planned combination of our
company with Tivity Health. We strongly believe our companies
are highly complementary and that Tivity Health’s expertise in
fitness and deep relationships in healthcare, combined with our
nutrition and consumer engagement and marketing expertise, can
change the paradigm for health and wellness and provide significant
growth opportunities in the coming years.”
The following are key financial highlights for the period. These
results include the impact of certain transaction costs that were
incurred in 2018. Reconciliations of certain GAAP to non-GAAP
measures are provided later in this press release.
Full Year 2018 Compared to Full Year 2017
- Revenue was $691.0 million compared to
$697.0 million.
- Gross margin was 52.9% compared to
53.9%.
- Net income was $58.6 million (including
approximately $3.6 million of certain after-tax transaction
expenses and $1.1 million of additional tax expense due to
additional analysis of and changes to interpretations of the tax
reform act) compared to $57.9 million.
- Diluted income per common share was
$1.95 (including approximately $0.12 of certain after-tax
transaction expenses and $0.04 of additional tax expense due to
additional analysis of and changes to interpretations of the tax
reform act) compared to $1.90.
- Adjusted EBITDA was $104.1 million
compared to $109.4 million.
- In 2018, the Company returned $30
million in cash to stockholders via dividends.
- The Company repurchased $26 million of
common stock in 2018.
- Cash, cash equivalents and short-term
investments are $81.3 million compared to $72.2 million.
Fourth Quarter 2018 Compared to Fourth Quarter 2017
- Revenue was $129.5 million compared to
$131.2 million.
- Gross margin was 52.0% compared to
53.1%.
- Net income was $13.7 million (including
approximately $3.4 million of certain after-tax transaction
expenses and $1.1 million of additional tax expense due to
additional analysis of and changes to interpretations of the tax
reform act) compared to $10.9 million.
- Diluted income per common share was
$0.46 (including approximately $0.12 of certain after-tax
transaction expenses and $0.03 of additional tax expense due to
additional analysis of and changes to interpretations of the tax
reform act) compared to $0.36.
- Adjusted EBITDA was $28.4 million
compared to $23.7 million.
Full Year 2019 and First Quarter 2019 Guidance
The Company’s first quarter and full year 2019 selective
guidance is outlined below.
- Full year 2019 revenue is expected to
be in the range of $682 to $702 million and adjusted EBITDA between
$100 and $110 million. Non-cash compensation is expected to
approximate $10 million and capital expenditures are expected to
approximate $14 million. Finally, free cash flow (defined as cash
flows from operations less capital expenditures) is expected to be
$65-$75 million for the year.
- First quarter 2019 revenue is expected
to represent approximately 28% of the full year 2019 revenue, and
adjusted EBITDA is expected to represent approximately 5-6% of the
full year 2019 adjusted EBITDA.
Conference Call and Webcast
Nutrisystem management will participate in Tivity Health’s
conference call to discuss this release today at 5:00 p.m. Eastern
Time. Investors will have the opportunity to listen to the
conference call live by dialing 866-393-4306 or 734-385-2616 for
international callers and referencing code 6390017 or over the
Internet by going to www.tivityhealth.com and clicking "Investors"
at least 15 minutes early to register, download, and install any
necessary audio software. For those who cannot listen to the live
broadcast, a telephonic replay will be available for one week at
855-859-2056 or 404-537-3406 for international callers, code
6390017, and the replay will also be available on the Company's
website for the next 12 months.
Non-GAAP Financial Measures
Within this press release, the Company makes reference to a
non-GAAP financial measure (adjusted EBITDA) which has a directly
comparable GAAP financial measure (net income). EBITDA is defined
as net income excluding interest, income taxes and depreciation and
amortization. Adjusted EBITDA is defined as EBITDA excluding
non-cash employee compensation expense and certain transaction
costs. The Company excludes non-cash employee compensation expense
because it is a non-cash expense that is not reflective of the
ongoing cash expense of the Company. The Company excludes the other
costs as they are not reflective of the ongoing operations of the
Company. Adjusted EBITDA is provided so that investors have the
same financial data that management uses to assess the Company’s
operating results with the belief that it will assist the
investment community in properly assessing the ongoing performance
of the Company for the periods being reported and future periods.
The presentation of this additional information is not meant to be
considered a substitute for measures prepared in accordance with
GAAP.
Forward-Looking Statements
Information provided and statements contained in this press
release that are not purely historical, such as first quarter and
full year 2019 guidance, and the Company’s financial and
operational outlook, are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, Section 21E
of the Securities Exchange Act of 1934 and the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements only
speak as of the date of this press release and the Company assumes
no obligation to update the information included in this press
release. Statements made in this press release that are
forward-looking in nature may involve risks and uncertainties.
Accordingly, readers are cautioned that any such forward-looking
statements are not guarantees and are subject to certain risks,
uncertainties and assumptions that are difficult to predict,
including, without limitation, risks relating to cybersecurity
breaches, risks that consumer spending may decline or that U.S. and
global macroeconomic conditions may worsen resulting in reduced
demand for the Company’s products, risks relating to changes in
consumer preferences away from the Company’s food offerings
including its pre-packaged foods, risks relating to the
effectiveness and efficiency of the Company’s advertising campaigns
and marketing expenditures, including existing brands and the
launch of new brands, which may not result in increased revenue or
generate sufficient levels of brand name and program awareness,
risks if the Company is unable to obtain sufficient quantities,
quality and variety of food products in a timely and low-cost
manner from its food vendors, risks of exposure to product
liability claims if the use of the Company’s products results in
illness or injury, risks if the Company becomes subject to health
or advertising related claims from its customers, competitors or
governmental and regulatory bodies, and risks relating to increased
competition from other weight management product and service
providers. These risks and uncertainties also include, among other
things: the timing and likelihood of, and any conditions or
requirements imposed in connection with, obtaining required
stockholder or regulatory approval of the Company’s proposed
transaction with Tivity Health; the possibility that the closing
conditions to the proposed transaction may not be satisfied or
waived; delay in closing the proposed transaction or the
possibility of non-consummation of the proposed transaction; the
risk that expected benefits, synergies and growth opportunities of
the proposed transaction may not be achieved in a timely manner or
at all, including that the proposed transaction may not be
accretive within the expected timeframe or to the extent
anticipated; the occurrence of any event that could give rise to
termination of the merger agreement; the risk that stockholder
litigation in connection with the proposed transaction may affect
the timing or occurrence of the proposed transaction or result in
significant costs of defense, indemnification and liability; the
risk that Tivity Health and Nutrisystem will be unable to retain or
hire key personnel; the ability to successfully integrate
Nutrisystem’s business with Tivity Health following the closing;
the risk that the significant indebtedness incurred to fund the
purchase price may limit Tivity Health’s ability to adapt to
changes in the economy or market conditions, expose the company to
interest rate risk for the variable rate indebtedness and require a
substantial portion of cash flows from operations to be dedicated
to the repayment of indebtedness; and the risk that disruption from
the proposed transaction may adversely affect Tivity Health’s and
Nutrisystem’s respective businesses and relationships with
customers, vendors or employees. For further details and a
discussion of these risks and uncertainties, see the Company's
periodic reports, including the annual report on Form 10-K,
quarterly reports on Form 10-Q and current reports on Form 8-K,
filed with or furnished to the Securities and Exchange Commission
and available at www.sec.gov. Although the Company believes that
the expectations reflected in such forward-looking statements are
reasonable as of the date made, expectations may prove to have been
materially different from the results expressed or implied by such
forward-looking statements. Unless otherwise required by law, the
Company also disclaims any obligation to update its view of any
such risks or uncertainties or to announce publicly the results of
any revisions to the forward-looking statements made in this press
release.
About Nutrisystem, Inc.
Nutrisystem, Inc. (Nasdaq: NTRI) is a leading provider of
health and wellness and weight management products and services and
has helped millions of people lose weight over the course of more
than 45 years. The Company’s multi-brand approach to weight loss
includes multiple plans for 2019. For more information, go
to NutrisystemNews.com and Newsroom.SouthBeachDiet.com.
IMPORTANT ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the Company’s proposed transaction with
Tivity Health, on January 14, 2019, Tivity Health filed with the
SEC an amendment to the registration statement on Form S-4 that was
originally filed on January 7, 2019 (the “registration statement”),
which includes a proxy statement of Nutrisystem and that also
constitutes a prospectus of Tivity Health (the “proxy
statement/prospectus”) in preliminary form. The registration
statement became effective on February 3, 2019, and on February 4,
2019, Nutrisystem commenced mailing of the definitive proxy
statement/prospectus to its stockholders in connection with the
proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO
CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT, PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT INFORMATION FILED AND TO BE
FILED WITH THE SEC, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT
INFORMATION ABOUT TIVITY HEALTH, NUTRISYSTEM AND THE PROPOSED
TRANSACTION. The registration statement and other documents filed
by Tivity Health with the SEC may be obtained free of charge at
Tivity Health’s website at http://www.tivityhealth.com or at the
SEC’s website at http://www.sec.gov. These documents may also be
obtained free of charge from Tivity Health by requesting them by
mail at Tivity Health, Inc., 701 Cool Springs Boulevard, Franklin,
Tennessee 37067, Attention: Investor Relations, or by telephone at
(615) 614-4576. The proxy statement/prospectus and other documents
filed by Nutrisystem with the SEC may be obtained free of charge at
Nutrisystem’s website at http://www.nutrisystem.com or at the SEC’s
website at http://www.sec.gov. These documents may also be obtained
free of charge from Nutrisystem by requesting them by mail at
Nutrisystem, Inc., 600 Office Center Drive, Fort Washington,
Pennsylvania 19034, Attention: Investor Relations, or by telephone
at (646) 277-1254.
PARTICIPANTS IN SOLICITATION
Tivity Health and Nutrisystem and their respective directors and
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies in
respect of the proposed transaction. Information about Tivity
Health’s directors and executive officers is available in Tivity
Health’s proxy statement for Tivity Health’s 2018 annual meeting of
stockholders filed with the SEC on April 13, 2018 on Schedule 14A.
Information about Nutrisystem’s directors and executive officers is
available in Nutrisystem’s proxy statement for Nutrisystem’s 2018
annual meeting of stockholders filed with the SEC on March 26, 2018
on Schedule 14A. Other information regarding the participants in
the proxy solicitation and a description of their direct and
indirect interests, by security holdings or otherwise, are
contained in the definitive proxy statement/prospectus and that
will be contained in other relevant materials to be filed with the
SEC regarding the transaction when they become available. Investors
should read the definitive proxy statement/prospectus carefully
before making any voting or investment decisions. You may obtain
free copies of these documents from Tivity Health or Nutrisystem as
indicated above.
NO OFFER OR SOLICITATION
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the Securities
Act of 1933, as amended.
NUTRISYSTEM, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited, in thousands, except per share
amounts)
Three Months Ended December 31, Year Ended
December 31, 2018 2017 2018
2017 REVENUE $ 129,543 $ 131,237 $ 691,039 $
696,957 COSTS AND EXPENSES: Cost of revenue 62,203 61,526
325,235 321,210 Marketing 27,022 30,364 203,189 198,949 Selling,
general and administrative 18,110 18,685 72,717 78,305 Depreciation
and amortization 4,344 3,761 15,875
15,082 Total costs and expenses 111,679 114,336
617,016 613,546 Operating income 17,864 16,901 74,023
83,411 INTEREST INCOME, net (340 ) (45 ) (852
) (119 ) Income before income tax expense 18,204 16,946
74,875 83,530 INCOME TAX EXPENSE 4,544 6,020
16,282 25,658 Net income $ 13,660 $ 10,926 $ 58,593 $ 57,872
BASIC INCOME PER COMMON SHARE $ 0.46 $ 0.36 $ 1.98 $ 1.93 DILUTED
INCOME PER COMMON SHARE $ 0.46 $ 0.36 $ 1.95 $ 1.90 WEIGHTED
AVERAGE SHARES OUTSTANDING: Basic 29,188 29,766 29,396 29,706
Diluted 29,612 30,272 29,750 30,191 DIVIDENDS DECLARED PER COMMON
SHARE $ 0.250 $ 0.175 $ 1.000 $ 0.700
NUTRISYSTEM, INC. AND
SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Unaudited, in
thousands, except par value amounts)
December 31, 2018 2017
ASSETS
CURRENT ASSETS: Cash and cash equivalents $ 22,241 $ 24,654 Short
term investments 59,083 47,568 Receivables 16,640 17,871
Inventories 47,755 44,266 Prepaid income taxes 2,942 6,441 Prepaid
expenses and other current assets 12,180 11,758 Total
current assets 160,841 152,558 FIXED ASSETS, net 28,129 31,549
INTANGIBLE ASSETS, net 12,084 13,084 DEFERRED INCOME TAXES 2,039
3,202 OTHER ASSETS 1,144 1,150 Total assets $ 204,237
$ 201,543
LIABILITIES AND
STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES: Accounts payable $ 36,373 $ 34,816 Accrued
payroll and related benefits 4,980 15,229 Deferred revenue 8,407
7,991 Other accrued expenses and current liabilities 5,636
6,068 Total current liabilities 55,396 64,104 NON-CURRENT
LIABILITIES 2,325 1,636 Total liabilities
57,721 65,740 STOCKHOLDERS’ EQUITY: Preferred stock,
$.001 par value (5,000 shares authorized, no shares issued
and outstanding)
0 0 Common stock, $.001 par value (100,000 shares authorized;
shares issued –
31,159 at December 31, 2018 and 30,729 at
December 31, 2017)
31 31 Additional paid-in capital 81,488 69,245 Treasury stock, at
cost, 1,627 shares at December 31, 2018 and 679 shares at
December 31, 2017
(47,583 ) (16,359 ) Retained earnings 112,611 83,035 Accumulated
other comprehensive loss (31 ) (149 ) Total
stockholders’ equity 146,516 135,803 Total
liabilities and stockholders’ equity $ 204,237 $ 201,543
NUTRISYSTEM, INC. AND
SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited, in thousands)
Year Ended December 31, 2018
2017 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $
58,593 $ 57,872 Adjustments to reconcile net income to net cash
provided by operating
activities:
Depreciation and amortization 15,875 15,082 Share–based
compensation expense 10,304 10,923 Deferred income tax expense 869
3,775 Other charges 42 34 Changes in operating assets and
liabilities: Receivables 1,231 (311 ) Inventories (3,489 ) (5,762 )
Prepaid expenses and other assets (286 ) (1,895 ) Accounts payable
1,609 1,916 Accrued payroll and related benefits (10,249 ) 4,878
Deferred revenue 1,753 509 Income taxes 3,429 (6,643 ) Other
accrued expenses and liabilities 231 (631 ) Net cash
provided by operating activities 79,912 79,747 CASH
FLOWS FROM INVESTING ACTIVITIES: Purchases of short-term
investments (26,652 ) (38,479 ) Proceeds from the sale and maturity
of short-term investments 15,245 14,571 Capital additions
(11,481 ) (13,408 ) Net cash used in investing activities
(22,888 ) (37,316 ) CASH FLOWS FROM FINANCING
ACTIVITIES: Exercise of stock options 1,939 4,266 Employee tax
withholdings related to the vesting of equity awards (4,920 )
(4,545 ) Repurchase of common shares for treasury (26,304 ) (3,485
) Repurchase and retirement of common shares 0 (2,285 ) Payment of
dividends (30,152 ) (21,351 ) Net cash used in
financing activities (59,437 ) (27,400 ) NET
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (2,413 ) 15,031
CASH AND CASH EQUIVALENTS, beginning of year 24,654
9,623 CASH AND CASH EQUIVALENTS, end of year $ 22,241 $ 24,654
NUTRISYSTEM, INC. AND
SUBSIDIARIESADJUSTED EBITDA RECONCILIATION TO GAAP
RESULTS(Unaudited, in thousands)
Three Months Ended December 31, Year Ended
December 31, 2018 2017 2018
2017 Net income $ 13,660 $ 10,926 $
58,593 $ 57,872 Interest income, net (340 ) (45 ) (852 ) (119 )
Income tax expense 4,544 6,020 16,282 25,658 Depreciation and
amortization 4,344 3,761 15,875 15,082
EBITDA 22,208 20,662 89,898 98,493 Non-cash employee compensation
expense 2,549 3,024 10,304 10,923 Transaction costs related to
merger 2,795 0 2,795 0 Transaction costs related to stockholder
cooperation agreement 870 0 1,143 0
Adjusted EBITDA $ 28,422 $ 23,686 $ 104,140 $ 109,416
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190219005700/en/
John Mills, PartnerICR,
Inc.646-277-1254ir@nutrisystem.comJohn.Mills@Icrinc.com
Nutrisystem (NASDAQ:NTRI)
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