Exhibit 99.1
NUTRISYSTEM, INC. REPORTS SECOND QUARTER 2009 RESULTS; ANNOUNCES QUARTERLY DIVIDEND OF $0.175 PER SHARE
Reports Second Quarter 2009 Revenues of $132 Million and Adjusted EBITDA of $16 Million
Horsham, PA - July 29, 2009-Nutrisystem, Inc. (NASDAQ: NTRI), a leading provider of weight management products and services, today reported financial results for the second quarter of 2009, including expected diluted EPS of $0.28 after the impact of the previously announced Zero Water investment abandonment and $1.3 million in pretax charges related to right-sizing the organization; other details include:
- Revenues of $131.8 million as compared to $194.0 million for Q2 2008;
- Operating income from continuing operations of $11.4 million as compared to $35.6 million for Q2 2008;
- Expected net income of $8.8 million as compared to $22.0 million for Q2 2008;
- Adjusted EBITDA of $16.3 million as compared to $39.5 million for Q2 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;
- Expected diluted EPS of $0.28 subject to finalization of $4.9 million tax benefit due to the Zero Water abandonment, as compared $0.69 for Q2 2008; and
- Cash, cash equivalents and marketable securities of $73.7 million at June 30, 2009 as compared to $38.3 million at December 31, 2008. There is no funded debt and $200 million available under its credit agreement.
"The second quarter was very challenging, but trends improved late in the quarter concurrent with our launch of Nutrisystem D," stated Chairman and CEO Joe Redling. "The Diabetic program strengthens our overall product offering, holds excellent promise for growth and with it we expect to see improved trends in the second half of 2009."
The Board of Directors declared the Company's quarterly dividend of $0.175 per share, payable August 17, 2009, to shareholders of record as of August 7, 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.
"In light of continued demand pressures, during the second quarter we right-sized our organization as well as implemented non-labor cost reduction programs while maintaining a strong cash position. All the while, focused on positioning us for future profitability growth when the economy recovers," said David Clark, Chief Financial Officer. "Our outlook for the third quarter is based on stable reactivation revenues, growth in Nutrisystem D and continued softness in non-Diabetic new customer revenue, thereby forecasting a diluted EPS range of $0.23 to $0.26."
Conference Call and Webcast
Management will host a webcast to discuss second 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 20728051. 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 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 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 study 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. Nutrisystem is the #1 online retailer in the Food and Drug category and #46 out of the top 500 online retailers overall based on 2008 online sales as ranked by Internet Retailer Magazine.
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 third quarter of 2009 and the full year 2009, intentions and plans regarding continued stability in reactivation revenue during 2009, 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 i n order to reflect events or circumstances that may arise after the date of this release.
Contact:
Cindy Warner Investor Relations Nutrisystem, Inc. Tel: 215-346-8136 Email: IR@nutrisystem.com | |
NUTRISYSTEM, INC. AND SUBSIDIARIES
PRELIMINARY CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
| Three Months Ended June 30, __________________________ | Six Months Ended June 30, _______________________ |
| | 2009 | 2008 | 2009 | 2008 |
| | | | |
REVENUE | $ 131,813 | $ 194,029 | $ 294,503 | $ 410,497 |
| | | | | |
COSTS AND EXPENSES: | | | | |
Cost of revenue | 60,950 | 93,221 | 137,224 | 196,573 |
Marketing | 35,495 | 41,953 | 82,693 | 109,284 |
General and administrative | 21,250 | 21,288 | 43,096 | 41,814 |
Depreciation and amortization | 2,719 | 1,925 | 5,383 | 3,686 |
Total costs and expenses | 120,414 | 158,387 | 268,396 | 351,357 |
Operating income from continuing operations | 11,399 | 35,642 | 26,107 | 59,140 |
OTHER INCOME (EXPENSE) | 281 | (4) | 190 | (44) |
EQUITY AND IMPAIRMENT LOSS | (3,610) | (901) | (4,000) | (2,108) |
INTEREST (EXPENSE) INCOME, net | (46) | 118 | (94) | 292 |
Income from continuing operations before income taxes | 8,024 | 34,855 | 22,203 | 57,280 |
INCOME TAXES (BENEFIT) | (777) | 12,887 | 4,555 | 21,191 |
Income from continuing operations | 8,801 | 21,968 | 17,648 | 36,089 |
DISCONTINUED OPERATION: | | | | |
Loss on discontinued operation, net of income tax benefit | (22) | (14) | (27) | (38) |
Net income | $ 8,779 | $ 21,954 | $ 17,621 | $ 36,051 |
| | | | | |
BASIC INCOME PER COMMON SHARE: | | | | |
Income from continuing operations | $ 0.29 | $ 0.70 | $ 0.57 | $ 1.11 |
Net loss from discontinued operation | - | - | - | - |
Net income | $ 0.29 | $ 0.70 | $ 0.57 | $ 1.11 |
DILUTED INCOME PER COMMON SHARE: | | | | |
Income from continuing operations | $ 0.28 | $ 0.69 | $ 0.57 | $ 1.09 |
Net loss from discontinued operation | - | - | - | - |
Net income | $ 0.28 | $ 0.69 | $ 0.57 | $ 1.09 |
WEIGHTED AVERAGE SHARES OUTSTANDING: | | | | |
Basic | 29,399 | 30,503 | 29,358 | 31,771 |
Diluted | 29,648 | 30,996 | 29,590 | 32,283 |
NUTRISYSTEM, INC. AND SUBSIDIARIES
PRELIMINARY CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
| | June 30, | December 31, |
| | 2009 | 2008 |
| (Unaudited) | |
ASSETS | | |
CURRENT ASSETS: | | |
Cash and cash equivalents | $ 63,719 | $ 38,309 |
Marketable securities | 10,020 | - |
Receivables | 8,188 | 17,200 |
Inventories | 29,963 | 50,986 |
Prepaid income taxes | 8,536 | 3,714 |
Deferred income taxes | 3,919 | 1,651 |
Other current assets | 7,922 | 8,611 |
Current assets of discontinued operation | 286 | 325 |
Total current assets | 132,553 | 120,796 |
| | |
FIXED ASSETS, net | 24,372 | 24,312 |
EQUITY INVESTMENT | - | 4,000 |
GOODWILL | 2,717 | 2,717 |
IDENTIFIABLE INTANGIBLE ASSETS, net | 2,180 | 2,590 |
OTHER ASSETS | 3,483 | 5,056 |
| $ 165,305 | $ 159,471 |
LIABILITIES AND STOCKHOLDERS' EQUITY | | |
CURRENT LIABILITIES: | | |
Accounts payable | $ 29,415 | $ 31,448 |
Accrued payroll and related benefits | 3,058 | 2,150 |
Deferred revenue | 1,586 | 4,964 |
Other accrued expenses and current liabilities | 4,420 | 3,743 |
Current liabilities of discontinued operation | 36 | 43 |
Total current liabilities | 38,515 | 42,348 |
NON-CURRENT LIABILITIES | 1,496 | 1,298 |
Total liabilities | 40,011 | 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 - 30,944,531 at June 30, 2009 and 30,784,920 at December 31, 2008) | 29 | 29 |
Additional paid-in capital | 3,187 | - |
Retained earnings | 122,099 | 115,771 |
Accumulated other comprehensive (loss) income | (21) | 25 |
Total stockholders' equity | 125,294 | 115,825 |
| $ 165,305 | $ 159,471 |
NUTRISYSTEM, INC. AND SUBSIDIARIES
PRELIMINARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| | Six Months Ended June 30,
------------------------------------- |
| | 2009 | 2008 |
CASH FLOWS FROM OPERATING ACTIVITIES: | | |
Net income | $ 17,621 | $ 36,051 |
Adjustments to reconcile net income to net cash provided by operating activities | | |
Loss on discontinued operation | 27 | 38 |
Depreciation and amortization | 5,383 | 3,686 |
Loss on disposal of fixed assets | 29 | - |
Share-based expense | 4,251 | 3,536 |
Deferred income tax benefit | (945) | (633) |
Equity and impairment loss | 4,000 | 2,108 |
Changes in operating assets and liabilities | | |
Accrued interest income | - | 19 |
Receivables | 9,139 | (232) |
Inventories | 21,084 | 36,978 |
Other assets | 1,170 | 3,072 |
Accounts payable | (2,374) | (13,826) |
Accrued payroll and related benefits | 907 | 2,169 |
Deferred revenue | (3,395) | - |
Income taxes | (4,792) | (2,302) |
Other accrued expenses and liabilities | 887 | 1,635 |
Net cash provided by operating activities of continuing operations | 52,992 | 72,299 |
Net cash used in operating activities of discontinued operation | (27) | (38) |
Net cash provided by operating activities | 52,965 | 72,261 |
CASH FLOWS FROM INVESTING ACTIVITIES: | | |
Purchases of marketable securities | (10,000) | - |
Sales of marketable securities | - | 1,750 |
Capital additions | (5,179) | (5,328) |
Net cash used in investing activities | (15,179) | (3,578) |
CASH FLOWS FROM FINANCING ACTIVITIES: | | |
Borrowings under credit facility | - | 35,000 |
Repayments of borrowings under credit facility | - | (35,000) |
Exercise of stock options | 332 | 781 |
Tax effect of equity compensation awards, net | (322) | 1,888 |
Payment of dividends | (10,656) | (5,472) |
Repurchase and retirement of common stock | (1,939) | (44,557) |
Net cash used in financing activities | (12,585) | (47,360) |
Effect of exchange rate changes on cash and cash equivalents | 171 | (33) |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 25,372 | 21,290 |
CASH AND CASH EQUIVALENTS,
beginning of period | 38,631 | 41,190 |
CASH AND CASH EQUIVALENTS,
end of period | 64,003 | 62,480 |
LESS CASH AND CASH EQUIVALENTS OF DISCONTINUED OPERATION, end of period | 284 | 500 |
CASH AND CASH EQUIVALENTS OF CONTINUING OPERATIONS, end of period | $ 63,719 | $ 61,980 |
NUTRISYSTEM, INC. AND SUBSIDIARIES
PRELIMINARY ADJUSTED EBITDA RECONCILIATION TO GAAP RESULTS
(in thousands)
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2009 | | 2008 | | 2009 | | 2008 |
| | | | | | | |
Adjusted EBITDA | $ 16,328 | | $ 39,451 | | $ 35,741 | | $ 66,125 |
Non-cash employee compensation | | | | | | | |
expense | (2,210) | (1,884) | | (4,251) | (3,299) |
Other income (expense) | 281 | | (4) | | 190 | | (44) |
Equity and impairment loss | (3,610) | | (901) | | (4,000) | | (2,108) |
Interest (expense) income, net | (46) | | 118 | | (94) | | 292 |
Income (taxes) benefit | 777 | | (12,887) | | (4,555) | | (21,191) |
Depreciation and amortization | (2,719) | | (1,925) | | (5,383) | | (3,686) |
Income from continuing operations | $ 8,801 | | $ 21,968 | | $ 17,648 | | $ 36,089 |
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.
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