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-- Revenues of $127.0 million as compared to $162.7 million for Q3 2008;
-- Operating income from continuing operations of $13.3 million as compared to $22.1 million for Q3 2008;
-- Net income of $8.5 million as compared to $13.5 million for Q3 2008;
-- Adjusted EBITDA of $18.7 million as compared to $26.7 million for Q3 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;
-- Diluted EPS of $0.27 as compared $0.43 for Q3 2008; and
-- Cash, cash equivalents and marketable securities of $97.6 million at September 30, 2009 as compared to $38.3 million at December 31, 2008. The Company's $200 million credit facility remains unfunded and fully available.
"Third quarter revenues resulted in operating income from continuing operations and adjusted EBITDA that were an improvement from second quarter 2009, as we experienced continued growth in our diabetic product as well as stabilization in the core business," stated Chairman and CEO Joe Redling.
"Despite continued macroeconomic pressures, we have continued to expand our footprint from a geographic, product and channel standpoint," added Mr. Redling. Earlier this month, the Company announced further expansion of its retail card program with the 14-day Nutrisystem Starter Program at an expected 3200 Walmart locations in the continental United States beginning in October. The Company also announced an international licensing agreement with House Foods in Japan. House Foods will exclusively manufacture and sell the Nutrisystem J-diet, tailored specifically for Japanese consumers.
"The Company continues to generate positive free cash flow, and our cost reduction initiatives announced in the first quarter resulted in improvements in gross margin and reductions in general and administrative expenses," said David Clark, Chief Financial Officer. "These improvements position us well for consumer recovery. For the full year 2009 we are projecting an EPS range of $0.99 to $1.01 per share."
The Board of Directors declared a Company's quarterly dividend of $0.175 per share, payable November 16, 2009, to shareholders of record as of November 6, 2009. 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.
Conference Call and Webcast
Management will host a webcast to discuss third quarter 2009 financial results 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 36165334. 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 new clinically tested Nutrisystem D plan, formulated specifically to help people with type 2 diabetes who want to lose weight. The Nutrisystem program is based on 35 years of nutrition research and offers a variety of great tasting, satisfying high-fiber, heart healthy, good carbohydrate meals that are low on the Glycemic Index and contain zero trans fats. Nutrisystem is hundreds of dollars cheaper than other weight loss programs, based on an independent survey by National Business Research Institute (October 2008). 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 is proud to support the American Diabetes Association and its fight to stop diabetes. For more information or to become a customer visit http://www.nutrisystem.com or call 1-877-681-THIN (8446).
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 fourth quarter of 2009 and the full year 2009, continuing to pay regular quarterly dividends, investments for 2010 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 Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
REVENUE $ 127,031 $ 162,681 $ 421,534 $ 573,178
COSTS AND EXPENSES:
Cost of revenue 57,776 76,341 195,000 272,914
Marketing 36,293 39,165 118,986 148,449
General and administrative 16,684 22,577 59,780 64,391
Depreciation and amortization 3,002 2,484 8,385 6,170
Total costs and expenses 113,755 140,567 382,151 491,924
Operating income from continuing operations 13,276 22,114 39,383 81,254
OTHER INCOME (EXPENSE) 149 (40 ) 339 (84 )
EQUITY AND IMPAIRMENT LOSS -- (552 ) (4,000 ) (2,660 )
INTEREST (EXPENSE) INCOME, net 80 216 (14 ) 508
Income from continuing operations before income taxes 13,505 21,738 35,708 79,018
INCOME TAXES 4,994 8,043 9,549 29,234
Income from continuing operations 8,511 13,695 26,159 49,784
DISCONTINUED OPERATION:
Loss on discontinued operation, net of income tax benefit (60 ) (164 ) (87 ) (202 )
Net income $ 8,451 $ 13,531 $ 26,072 $ 49,582
BASIC INCOME PER COMMON SHARE:
Income from continuing operations $ 0.27 $ 0.44 $ 0.85 $ 1.56
Net loss from discontinued operation -- -- -- --
Net income $ 0.27 $ 0.44 $ 0.85 $ 1.56
DILUTED INCOME PER COMMON SHARE:
Income from continuing operations $ 0.27 $ 0.44 $ 0.84 $ 1.54
Net loss from discontinued operation -- (0.01 ) -- (0.01 )
Net income $ 0.27 $ 0.43 $ 0.84 $ 1.53
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 29,529 29,709 29,407 31,076
Diluted 29,847 30,247 29,667 31,597
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
September 30, December 31,
2009 2008
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 67,498 $ 38,309
Marketable securities 30,148 --
Receivables 11,513 17,200
Inventories 20,022 50,986
Prepaid income taxes 5,840 3,714
Deferred income taxes 2,778 1,651
Other current assets 6,170 8,611
Current assets of discontinued operation 257 325
Total current assets 144,226 120,796
FIXED ASSETS, net 22,816 24,312
EQUITY INVESTMENT -- 4,000
GOODWILL 2,717 2,717
IDENTIFIABLE INTANGIBLE ASSETS, net 2,100 2,590
OTHER ASSETS 2,408 5,056
$ 174,267 $ 159,471
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 34,797 $ 31,448
Accrued payroll and related benefits 1,768 2,150
Deferred revenue 2,187 4,964
Other accrued expenses and current liabilities 4,141 3,743
Current liabilities of discontinued operation 50 43
Total current liabilities 42,943 42,348
NON-CURRENT LIABILITIES 1,565 1,298
Total liabilities 44,508 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 29 29
issued - 30,951,262 at September 30, 2009 and 30,784,920 at December
31, 2008)
Additional paid-in capital 4,552 --
Retained earnings 125,206 115,771
Accumulated other comprehensive (loss) income (28 ) 25
Total stockholders' equity 129,759 115,825
$ 174,267 $ 159,471
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Nine Months Ended September 30,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 26,072 $ 49,582
Adjustments to reconcile net income to net cash provided by
operating activities-
Loss on discontinued operation 87 202
Depreciation and amortization 8,385 6,170
Loss on disposal of fixed assets 29 85
Share-based expense 6,686 5,704
Deferred income tax expense (benefit) 1,227 (336 )
Equity and impairment loss 4,000 2,660
Changes in operating assets and liabilities
Accrued interest income -- 19
Receivables 5,722 3,009
Inventories 31,084 43,426
Other assets 2,876 4,442
Accounts payable 3,288 (15,602 )
Accrued payroll and related benefits (383 ) 2,426
Deferred revenue (2,791 ) 2,420
Income taxes (2,088 ) (7,483 )
Other accrued expenses and liabilities 680 403
Net cash provided by operating activities of continuing operations 84,874 97,127
Net cash used in operating activities of discontinued operation (79 ) (95 )
Net cash provided by operating activities 84,795 97,032
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (30,108 ) --
Sales of marketable securities -- 1,750
Cash paid for acquisition of business -- (4,217 )
Capital additions (6,551 ) (8,540 )
Proceeds from the sale of fixed assets 100 --
Net cash used in investing activities (36,559 ) (11,007 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit facility -- 35,000
Repayments of borrowings under credit facility -- (35,000 )
Exercise of stock options 426 819
Tax effect of equity compensation awards, net (1,392 ) 1,133
Payment of dividends (16,000 ) (10,829 )
Repurchase and retirement of common stock (1,939 ) (59,787 )
Net cash used in financing activities (18,905 ) (68,664 )
Effect of exchange rate changes on cash and cash equivalents (209 ) (130 )
NET INCREASE IN CASH AND CASH EQUIVALENTS 29,122 17,231
CASH AND CASH EQUIVALENTS, beginning of period 38,631 41,190
CASH AND CASH EQUIVALENTS, end of period 67,753 58,421
LESS CASH AND CASH EQUIVALENTS OF DISCONTINUED OPERATION, end of 255 372
period
CASH AND CASH EQUIVALENTS OF CONTINUING OPERATIONS, end of period $ 67,498 $ 58,049
NUTRISYSTEM, INC. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION TO GAAP RESULTS
(in thousands)
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
Adjusted EBITDA $ 18,670 $ 26,728 $ 54,412 $ 92,854
Non-cash employee compensation expense (2,392 ) (2,130 ) (6,644 ) (5,430 )
Other income (expense) 149 (40 ) 339 (84 )
Equity and impairment loss -- (552 ) (4,000 ) (2,660 )
Interest (expense) income, net 80 216 (14 ) 508
Income taxes (4,994 ) (8,043 ) (9,549 ) (29,234 )
Depreciation and amortization (3,002 ) (2,484 ) (8,385 ) (6,170 )
Income from continuing operations $ 8,511 $ 13,695 $ 26,159 $ 49,784
Adjusted EBITDA is defined as income from continuing operations excluding non-cash employee compensation, other income (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.
SOURCE: Nutrisystem, Inc.
Nutrisystem, Inc. Cindy Warner Investor Relations 215-346-8136 IR@nutrisystem.com
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