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| [March 01, 2010] |
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Nutrisystem, Inc. Reports Fourth Quarter and Full Year 2009 Results; Announces Quarterly Dividend of $0.175 Per Share
HORSHAM, Pa. --(Business Wire)--
Nutrisystem, Inc. (NASDAQ: NTRI), a leading provider of weight management products and services, today reported financial results for the fourth quarter and year ended 2009, including adjusted EPS from continuing operations prior to the previously announced one-time impairment charge related to Nu-Kitchen, of $0.18 for fourth quarter 2009 and $1.02 for the full year 2009. Highlights for the quarter and full year ended December 31, 2009 include:
Fourth Quarter 2009
Revenues of $106.2 million as compared to $114.6 million for Q4 2008;
Operating income from continuing operations of $4.0 million as compared to $8.9 million for Q4 2008;
Net income of $2.7 million, or $0.09 per diluted share, which included the one- time Nu-Kitchen impairment charge reflected in depreciation and amortization expense. This compares to Q4 2008 net loss of $3.3 million, or $(0.11) per diluted share;
Adjusted EPS from continuing operations of $0.18 before previously announced Nu-Kitchen one-time impairment charge of $2.9 million (net of tax) or $0.09 per share; and
Adjusted EBITDA of $14.5 million compared to $13.5 million for Q4 2008. Adjusted EBITDA is defined as income from continuing operations excluding non-cash employee compensation, other income or expense, equity and impairment loss, interest, income taxes and depreciation and amortization.
Full Year 2009
Revenues of $527.7 million as compared to $687.7 million for 2008;
Operating income from continuing operations of $43.3 million as compared to $90.1 million for 2008;
Net income of $28.8 million, or $0.92 per diluted share, which included the one-time Nu-Kitchen impairment charge reflected in depreciation and amortization expense. This compares to 2008 net income of $46.3 million, or $1.45 per diluted share;
Adjusted EPS from continuing operations of $1.02 before previously announced Nu-Kitchen one-time impairment charge of $2.9 million (net of tax) or $0.09 per share; and
Adjusted EBITDA of $68.9 million as compared to $106.4 million for 2008. Adjusted EBITDA is defined as income from continuing operations excluding non-cash employee compensation, other income or expense, equity and impairment loss, interest, income taxes and depreciation and amortization.
"2009 was a year of challenges for the U.S. consumer. Our revenue was suppressed by these macro-economic conditions. We were encouraged in the second half of the year as we started to close the gap with improvements in new customer starts and full implementation of cost reductions within the organization," stated Chairman and CEO Joe Redling. "The macro-economic headwinds continue to impact the diet category, and while the first month of 2010 was challenging we are encouraged by recent signs that year over year growth can be achieved."
The Board of Directors declared the Company's quarterly dividend of $0.175 per share, payable March 22, 2010, to shareholders of record as of March 11, 2010. While the Company intends to continue to pay regular quarterly dividends, the declaration and payment of future dividends are discretionary and will be subject to determination by the Board of Directors each quarter following its review of the Company's financial performance.
"In the second half of 2009, we saw improvement in trends in revenue, new customers, gross margin as well as reduced G&A expenses. While we expect these trends to continue into 2010, their impact will be offset in the first quarter by higher media rates and one-time costs related to retail," said David Clark, Chief Financial Officer. "For the full year 2010, we expect these pressures to subside, and anticipate a modest year-over-year profitability improvement."
Conference Call and Webcast
Management will host a webcast to discuss fourth quarter and year end 2009 financial results as well as the outlook for 2010 today at 4:30 PM Eastern time. The webcast will include remarks from Chairman and Chief Executive Officer Joe Redling and Chief Financial Officer David Clark.
The webcast will be available live under the Investor Relations section of Nutrisystem's website, www.nutrisystem.com. Please click on Investor Relations at the bottom of the home page and then click on the microphone icon on the Investor Relations home page. Interested parties unable to access the conference call via the webcast may dial 1-866-831-9862 (outside US/Canada 706-758-5226); the conference ID is 56501256. A replay of the conference call will be available on the Company website following the event.
About Nutrisystem, Inc.
Nutrisystem, Inc. (NASDAQ: NTRI) is a leading provider of weight management products and services. Nutrisystem is sold direct to the consumer through nutrisystem.com, by phone, and at select retailers, for convenient home delivery. The Company offers proven nutritionally balanced weight loss programs designed for women, men, and seniors, as well as the clinically tested Nutrisystem D plan, designed to help people with type 2 diabetes who want to lose weight. The Nutrisystem program is based on 35 years of nutrition research and the science of the low glycemic index, and offers a variety of great tasting, satisfying high-fiber, heart healthy, good carbohydrate meals that contain zero trans fats. Nutrisystem was named the "Best Value" of the six most popular commercial diet programs by SmartMoney magazine in January, 2010. The program has no membership fees and provides 24/7 weight management support by trained weight loss coaches and online weight management tools free of charge. In 2009 Nutrisystem was selected as the #1 overall online retailer in the Food and Drug category and #46 out of the top 500 online retailers overall by Internet Retailer Magazine. Nutrisystem also proudly supports the American Diabetes Association in its Movement to Stop Diabetes. For more information or to become a customer visit http://www.nutrisystem.com or call 1-800-435-4074.
Forward-Looking Statement Disclaimer
This press release may contain forward-looking statements that are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements regarding Nutrisystem's plans and expectations for the first quarter of 2010 and the full year 2010, continuing to reduce costs and improve operating efficiency, continuing to pay regular quarterly dividends and other statements that are not statements of historical fact constitute forward-looking statements. These forward-looking statements involve a number of risks and uncertainties, which are described in Nutrisystem, Inc.'s Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission. The actual results may differ materially from any forward-looking statements due to such risks and uncertainties. Nutrisystem, Inc. undertakes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
Three Months Ended
Year Ended
December 31,
December 31,
2009
2008
2009
2008
REVENUE
$
106,197
$
114,563
$
527,731
$
687,741
COSTS AND EXPENSES:
Cost of revenue
48,690
53,539
243,690
326,453
Marketing
28,031
26,578
147,017
175,027
General and administrative
17,609
23,214
77,389
87,605
Depreciation and amortization
7,909
2,338
16,294
8,508
Total costs and expenses
102,239
105,669
484,390
597,593
Operating income from continuing operations
3,958
8,894
43,341
90,148
OTHER INCOME (EXPENSE)
68
(1,061
)
407
(1,145
)
EQUITY AND IMPAIRMENT LOSS
(6,798
)
(4,000
)
(9,458
)
INTEREST INCOME (EXPENSE), net
120
(54
)
106
454
Income from continuing operations before income taxes
4,146
981
39,854
79,999
INCOME TAXES
1,269
4,338
10,818
33,572
Income (loss) from continuing operations
2,877
(3,357
)
29,036
46,427
DISCONTINUED OPERATIONS:
(Loss) gain on discontinued operations, net of income taxes
(159
)
28
(246
)
(174
)
Net income (loss)
$
2,718
$
(3,329
)
$
28,790
$
46,253
BASIC INCOME (LOSS) PER COMMON SHARE:
Income (loss) from continuing operations
$
0.09
$
(0.11
)
$
0.94
$
1.48
Net loss from discontinued operations
(0.01
)
(0.01
)
Net income (loss)
$
0.09
$
(0.11
)
$
0.93
$
1.47
DILUTED INCOME (LOSS) PER COMMON SHARE:
Income (loss) from continuing operations
$
0.09
$
(0.11
)
$
0.93
$
1.46
Net loss from discontinued operations
(0.01
)
(0.01
)
Net income (loss)
$
0.09
$
(0.11
)
$
0.92
$
1.45
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic
29,610
29,516
29,458
30,684
Diluted
30,075
29,907
29,769
31,172
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share and per share amounts)
Year Ended
December 31,
2009
2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
32,198
$
38,309
Marketable securities
30,324
Receivables
13,057
17,200
Inventories, net
52,012
50,986
Prepaid income taxes
2,420
3,714
Deferred income taxes
2,756
1,651
Other current assets
10,682
8,611
Current assets of discontinued operation
166
325
Total current assets
143,615
120,796
FIXED ASSETS, net
21,164
24,312
EQUITY INVESTMENT
4,000
GOODWILL
2,717
IDENTIFIABLE INTANGIBLE ASSETS, net
250
2,590
OTHER ASSETS
5,758
5,056
$
170,787
$
159,471
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable
$
32,488
$
31,448
Accrued payroll and related benefits
1,097
2,150
Deferred revenue
3,853
4,964
Other accrued expenses and current liabilities
2,653
3,743
Current liabilities of discontinued operation
183
43
Total current liabilities
40,274
42,348
NON-CURRENT LIABILITIES
1,550
1,298
Total liabilities
41,824
43,646
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value (5,000,000 shares authorized, no shares issued and outstanding)
Common stock, $.001 par value (100,000,000 shares authorized; shares issued - 30,949,784 at December 31, 2009 and 30,784,920 at December 31, 2008)
29
29
Additional paid-in capital
6,515
Retained earnings
122,503
115,771
Accumulated other comprehensive (loss) income
(84
)
25
Total stockholders' equity
128,963
115,825
$
170,787
$
159,471
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Year Ended
December 31,
2009
2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
28,790
$
46,253
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on discontinued operation
246
174
Depreciation and amortization
16,294
8,508
Loss (gain) on disposal of fixed assets
113
(71
)
Share-based expense
9,382
7,978
Deferred income tax (benefit) expense
(1,397
)
493
Equity and impairment loss
4,000
9,458
Changes in operating assets and liabilities:
Accrued interest income
19
Receivables
4,199
1,840
Inventories
(929
)
31,237
Other assets
(2,431
)
3,248
Accounts payable
949
(13,970
)
Accrued payroll and related benefits
(1,054
)
245
Deferred revenue
(1,111
)
4,964
Income taxes
1,341
(6,664
)
Other accrued expenses and liabilities
(825
)
(1,231
)
Net cash provided by operating activities of continuing operations
57,567
92,481
Net cash used in operating activities of discontinued operation
(103
)
(192
)
Net cash provided by operating activities
57,464
92,289
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities
(30,344
)
Sales of marketable securities
1,750
Cash paid for acquisition of business
(5,717
)
Capital additions
(8,352
)
(11,624
)
Proceeds from the sale of fixed assets
125
1,120
Net cash used in investing activities
(38,571
)
(14,471
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facility
35,000
Repayments of borrowings under credit facility
(35,000
)
Exercise of stock options
563
1,022
Equity compensation awards, net
(2,170
)
2,184
Repurchase and retirement of common stock
(1,939
)
(67,085
)
Payment of dividends
(21,421
)
(16,251
)
Net cash used in financing activities
(24,967
)
(80,130
)
Effect of exchange rate changes on cash and cash equivalents
(193
)
(247
)
NET (News - Alert) DECREASE IN CASH AND CASH EQUIVALENTS
(6,267
)
(2,559
)
CASH AND CASH EQUIVALENTS, beginning of year
38,631
41,190
CASH AND CASH EQUIVALENTS, end of year
32,364
38,631
LESS CASH AND CASH EQUIVALENTS OF DISCONTINUED OPERATION, end of year
166
322
CASH AND CASH EQUIVALENTS OF CONTINUING OPERATIONS, end of year
$
32,198
$
38,309
NUTRISYSTEM, INC. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION TO GAAP RESULTS
(in thousands)
Three Months Ended December 31,
Year Ended December 31,
2009
2008
2009
2008
Adjusted EBITDA
$
14,523
$
13,501
$
68,935
$
106,355
Non-cash employee compensation expense
(2,656
)
(2,269
)
(9,300
)
(7,699
)
Other income (expense)
68
(1,061
)
407
(1,145
)
Equity and impairment loss
(6,798
)
(4,000
)
(9,458
)
Interest income (expense), net
120
(54
)
106
454
Income taxes
(1,269
)
(4,338
)
(10,818
)
(33,572
)
Depreciation and amortization
(7,909
)
(2,338
)
(16,294
)
(8,508
)
Income (loss) from continuing operations
$
2,877
$
(3,357
)
$
29,036
$
46,427
Adjusted EBITDA is defined as income from continuing operations excluding non-cash employee compensation, other income or expense, equity and impairment loss, interest, income taxes and depreciation and amortization. We believe Adjusted EBITDA is a useful performance metric for management and investors because it is more indicative of the ongoing operations of the company.
Adjusted EBITDA excludes certain non-cash and non-operating items to facilitate comparisons and provide a meaningful measurement that is focused on the performance of the ongoing operations of the Company.
NUTRISYSTEM, INC. AND SUBSIDIARIES
EPS IMPACT OF NU-KITCHEN RECONCILIATION TO GAAP RESULTS
(in thousands)
Three Months Ended December 31,
Year Ended December 31,
2009
2008
2009
2008
Adjusted income (loss) from continuing operations
$
5,783
$
(3,357
)
$
31,942
$
46,427
Impairment loss
(4,541
)
(4,541
)
Income taxes associated with impairment loss
1,635
1,635
Income (loss) from continuing operations
$
2,877
$
(3,357
)
$
29,036
$
46,427
Diluted income per common share:
Income (loss) from continuing operations
$
0.09
$
(0.11
)
$
0 .93
$
1 .46
Adjusted income (loss) from continuing operations
$
0.18
$
(0.11
)
$
1.02
$
1 .46
The reconciliation to GAAP results for the three months and year ended December 31, 2009 and 2008, respectively, does not reflect any adjustment for the impact of Zero Water equity and impairment loss or any tax consequences related to the impairment.
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