Exhibit 99.1
NUTRISYSTEM, INC. ANNOUNCES RESULTS
FOR THIRD QUARTER 2005
Third Quarter 2005 Revenues Up 743% Year over Year;
Full Year 2005 Revenues Now Expected to be Above $200 Million
Horsham, PA -- October 25, 2005--NutriSystem, Inc. (NASDAQ: NTRI), a leading provider of weight management and fitness products and services, today announced results for the third quarter ended September 30, 2005, including:
- Revenues in the first nine months of 2005 increased 374% to $142,889,000, compared to $30,117,000 in the first nine months of 2004;
- Strong growth in operating income of over 5,000% to $11,115,000 in the third quarter of 2005 compared to $189,000 in the third quarter of 2004;
- Operating income in the first nine months of 2005 grew 782% to $23,635,000 compared to $2,681,000 in the same period in 2004;
- An increase in net income to $7,195,000 ($0.19 per diluted share) in the third quarter 2005 as compared to net income of $121,000 ($0.00 per diluted share) generated in the third quarter of 2004; and
- The sum of cash and cash equivalents and short term investments amounted to $54,669,000 at September 30, 2005.
"Third quarter revenues again came in above our expectations due to the effectiveness of our marketing programs," said Michael J. Hagan, Chairman and Chief Executive Officer. "The combination of higher than expected new customer counts and lower than expected customer acquisition costs underscores the momentum we're beginning to see in our business. This is a good leading indicator for us for 2006."
Direct channel revenues reached $57,670,000 in the third quarter of 2005, an 814% increase over the same period in 2004. The Company added approximately115,100 Direct channel new customers, a 1,000% increase from approximately 9,700 new customers in the third quarter 2004.
"We are particularly pleased with the positive trends we see going from the second quarter to the third quarter 2005," said James D. Brown, Executive Vice President and Chief Financial Officer. "Traditionally, in the weight loss industry, the third quarter is weaker than the second, but we increased revenues by 58% going from the second to the third quarter and nearly doubled new customer count for the Direct channel from about 58,000 to 115,000. We also reduced our new customer acquisition cost from $150 in the second quarter to $130 in the third quarter even though we increased non-media spending in marketing by over $1 million from quarter to quarter. Operating income was 17.2% of revenues in a quarter of accelerating media spend, once again demonstrating the financial power of our business model."
Fourth Quarter and Full Year 2005 Outlook
For the fourth quarter of 2005, the Company estimates that revenues will be $58 to $63 million, operating income will be $9.5 to $10.5 million, and diluted earnings per share to be $0.16 to $0.17. Using the low end of the ranges, this represents expected growth in the fourth quarter of 2005 of approximately 635% in revenues, compared to the fourth quarter 2004, during which the Company reported an operating loss of over $1 million. Further, the Company expects to add at least 100,000 Direct channel new customers in the fourth quarter of 2005, which represents an expected increase of approximately 650% as compared to the fourth quarter of the prior year.
For the full year 2005, the Company estimates that revenues will be $201 to $206 million, operating income will be $33 to $34 million, and diluted earnings per share to be $0.58 to $0.59.
"We're pleased with the momentum we're building in the business and we believe we're on track for a great 2006 as well," Hagan concluded. "Success, convenience and value are the three 'pillars' of our value proposition, and they also resonate quite well with today's dieter."
Conference Call and Webcast
Management will host a conference call and simultaneous webcast to discuss third quarter 2005 financial results today at 5:00 PM Eastern time. The conference call will include remarks about the quarter and the Company's outlook from members of the NutriSystem senior management team including Chairman and Chief Executive Officer Michael Hagan, President and Chief Operating Officer George Jankovic, and Executive Vice President and Chief Financial Officer James D. Brown. Interested parties may participate in the conference call by dialing 800-299-8538 (international: 617-786-2902) 5-10 minutes prior to the initiation of the call. The access code is 85793670. A replay of the conference call will be available through November 1, 2005 by dialing 888-286-8010 (international:617-801-6888) and entering access code 83804033. A webcast of the conference call will also be available for 60 days under the investor information section of the NutriSystem website, www.nutrisystem.com.
About NutriSystem, Inc.
Founded in 1972, NutriSystem (NASDAQ: NTRI) is a leading provider of weight management and fitness products and services. The Company offers a weight loss program based on portion-controlled, lower Glycemic Index prepared meals. The program has no membership fees and provides free online and telephone counseling.
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 outlook and guidance for the fourth quarter of 2005 and the full year 2005, its expectations regarding its ability to continue its growth while maintaining costs, statements about momentum in its business 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 th e date of this release.
Contacts:
James D. Brown EVP and Chief Financial Officer NutriSystem, Inc. Tel: 215-706-5302 Email: jbrown@nutrisystem.com | Brandi Piacente Investor Relations The Piacente Group, Inc. Tel: 212-481-2050 Email: brandi@thepiacentegroup.com |
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
| Three Months Ended September 30, __________________________ | Nine Months Ended September 30, _______________________ |
| | 2005 | 2004 | 2005 | 2004 |
| | | | |
REVENUES | $ 64,518 | $ 7,655 | $ 142,889 | $ 30,117 |
| | | | | |
COSTS AND EXPENSES: | | | | |
Cost of revenues | 32,697 | 4,424 | 74,021 | 17,185 |
Marketing | 14,968 | 1,461 | 31,870 | 5,152 |
General and administrative | 5,506 | 1,515 | 12,784 | 4,903 |
Depreciation and amortization | 232 | 66 | 579 | 196 |
Total costs and expenses | 53,403 | 7,466 | 119,254 | 27,436 |
Operating income | 11,115 | 189 | 23,635 | 2,681 |
INTEREST INCOME, net | 330 | 12 | 390 | 24 |
Income before income taxes | 11,445 | 201 | 24,025 | 2,705 |
INCOME TAXES | 4,250 | 80 | 9,282 | 1,082 |
Net income | $ 7,195 | $ 121 | $ 14,743 | $ 1,623 |
| | | | | |
BASIC INCOME PER SHARE | $ 0.21 | $ 0.00 | $ 0.46 | $ 0.06 |
DILUTED INCOME PER SHARE | $ 0.19 | $ 0.00 | $ 0.42 | $ 0.05 |
| | | | | |
WEIGHTED AVERAGE SHARES OUTSTANDING: | | | | |
Basic | 34,309 | 29,263 | 32,196 | 28,995 |
Diluted | 36,957 | 31,298 | 35,045 | 31,777 |
| | | | | |
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except share data)
| | September 30, | December 31, |
| | 2005 | 2004 |
ASSETS | | |
CURRENT ASSETS | | |
Cash and cash equivalents | $ 9,223 | $ 4,201 |
Short term investments | 45,446 | --- |
Trade receivables | 6,325 | 1,028 |
Inventories | 11,641 | 3,679 |
Deferred income taxes | 201 | 421 |
Other current assets | 1,335 | 1,149 |
Total current assets | 74,171 | 10,478 |
| | |
FIXED ASSETS, net | 3,220 | 1,197 |
IDENTIFIABLE INTANGIBLE ASSETS, net | 1,411 | 1,615 |
GOODWILL | 465 | 465 |
DEFERRED INCOME TAXES | 1,506 | 3,938 |
OTHER ASSETS | 143 | 132 |
| $ 80,916 | $ 17,825 |
LIABILITIES AND STOCKHOLDERS' EQUITY | | |
CURRENT LIABILITIES | | |
Current portion of note payable and capital lease obligation | $ 169 | $ 136 |
Accounts payable | 16,676 | 4,359 |
Accrued payroll and related benefits | 2,864 | 368 |
Deferred revenue | 345 | 311 |
Income tax payable | 2,747 | --- |
Other current liabilities | ---
| 204 |
Total current liabilities | 22,801 | 5,378 |
NOTE PAYABLE AND CAPITAL LEASE OBLIGATION | 409 | 272 |
Total liabilities | 23,210 | 5,650 |
| | |
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 and outstanding-- 34,474,841 at September 30, 2005 and 30,132,860 at December 31, 2004) | 35 | 30 |
Additional paid-in capital | 64,161 | 33,378 |
Accumulated deficit | (6,490) | (21,233) |
Total stockholders' equity | 57,706 | 12,175 |
| $ 80,916 | $ 17,825 |
