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Nutrisystem Reports Second Quarter 2013 Results

Stocks in this article: NTRI

About Nutrisystem

Having helped Americans lose millions of pounds for over 40 years, Nutrisystem, Inc. (NASDAQ: NTRI) develops evidence-based programs for healthy weight management, and is the leading provider of home-delivered weight loss meal plans. Nutrisystem offers balanced nutrition in the form of low glycemic index meal plans designed for men and women, including seniors, vegetarians and the Nutrisystem® D® program for people with, or at risk for, type 2 diabetes. Nutrisystem® plans include a wide variety of pantry and frozen entrees and snacks to aid in program satisfaction and adherence, as well as transition plans to support long-term success. The Fort Washington, PA-based company also provides weight management support and counseling by trained weight-loss coaches and registered dietitians, as well as through an engaged online community, online tools and trackers, mobile apps, cookbooks and more. Healthcare professionals may learn more about the programs by visiting www.nutrisystem.com/hcp. Nutrisystem® weight loss plans are available directly to consumers through www.nutrisystem.com, by phone (1-800-435-4074) and at select retailers.

 
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share amounts)
   

Three Months Ended

June 30,

Six Months Ended

June 30,

2013

 

2012

2013

2012

 
REVENUE $ 97,469   $ 124,560   $ 202,853   $ 253,077  
 
COSTS AND EXPENSES:
Cost of revenue 47,716 66,419 100,069 136,948
Marketing 24,250 28,546 60,566 74,213
General and administrative 13,350 19,971 28,601 36,286
Depreciation and amortization   2,342     2,706     4,891     5,542  
Total costs and expenses   87,658     117,642     194,127     252,989  
Operating income 9,811 6,918 8,726 88
OTHER EXPENSE 0 (78 ) 0 (78 )
INTEREST EXPENSE, net   (29 )   (236 )   (82 )   (510 )
Income (loss) before income taxes 9,782 6,604 8,644 (500 )

INCOME TAX EXPENSE (BENEFIT)

  3,423     2,489     2,925     (134 )
Net income (loss) $ 6,359   $ 4,115   $ 5,719   $ (366 )
 
BASIC INCOME (LOSS) PER COMMON SHARE $ 0.22   $ 0.14   $ 0.20   $ (0.01 )
DILUTED INCOME (LOSS) PER COMMON SHARE $ 0.22   $ 0.14   $ 0.20   $ (0.01 )
 
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 27,895 27,441 27,905 27,381
Diluted 28,001 27,622 28,046 27,381
 
DIVIDENDS DECLARED PER COMMON SHARE $ 0.175   $ 0.175   $ 0.35   $ 0.35  
 
 
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share and par value amounts)
   
June 30, December 31,
2013 2012
 

ASSETS

CURRENT ASSETS:
Cash and cash equivalents $ 17,085 $ 16,186
Short term investments 17,988 3,205
Receivables 7,620 8,487
Inventories 22,811 23,637
Prepaid income taxes 775 4,531
Deferred income taxes 2,069 2,969
Other current assets   5,000     7,160  
Total current assets 73,348 66,175
 
FIXED ASSETS, net 26,902 28,003
OTHER ASSETS   5,519     4,228  
Total assets $ 105,769   $ 98,406  

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable $ 29,760 $ 23,192
Accrued payroll and related benefits 3,353 1,326
Deferred revenue 3,410 3,343
Other accrued expenses and current liabilities   8,093     6,911  
Total current liabilities 44,616 34,772
NON-CURRENT LIABILITIES   3,293     3,525  
Total liabilities   47,909     38,297  

STOCKHOLDERS’ EQUITY:

Preferred stock, $.001 par value (5,000,000 shares authorized, no shares issued and outstanding) 0 0
Common stock, $.001 par value (100,000,000 shares authorized; shares issued – 28,848,838 at June 30, 2013 and 28,631,464 at December 31, 2012)

 

29

29
Additional paid-in capital 20,897 18,466

Treasury stock, at cost, 131,591 shares at June 30, 2013 and 72,561 shares at December 31, 2012

(1,143 ) (636 )
Retained earnings 38,105 42,254
Accumulated other comprehensive loss   (28 )   (4 )
Total stockholders’ equity   57,860     60,109  
Total liabilities and stockholders’ equity $ 105,769   $ 98,406  
 
 
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 

Six Months Ended June 30,

2013   2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 5,719 $ (366 )
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization 4,891 5,542
Loss on disposal of fixed assets 48 6
Share–based compensation expense 2,890 6,574
Deferred income tax benefit (788 ) (3,162 )
Other non-cash charges 30 57
Changes in operating assets and liabilities:
Receivables 867 1,826
Inventories 826 8,356
Other assets 2,153 3,796
Accounts payable 6,642 726
Accrued payroll and related benefits 2,027 3,056
Deferred revenue 67 (633 )
Income taxes 3,658 2,859
Other accrued expenses and liabilities   1,006     486  
Net cash provided by operating activities   30,036     29,123  
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short term investments (18,458 ) (8,527 )
Proceeds from sales of short term investments 3,594 0
Capital additions (3,984 ) (5,496 )
Proceeds from the sale of fixed assets   28     0  
Net cash used in investing activities   (18,820 )   (14,023 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt issuance costs 0 (200 )
Exercise of stock options 0 9
Taxes related to equity compensation awards, net (449 ) (627 )
Payment of dividends   (9,868 )   (9,894 )
Net cash used in financing activities   (10,317 )   (10,712 )
NET INCREASE IN CASH AND CASH EQUIVALENTS 899 4,388
CASH AND CASH EQUIVALENTS, beginning of period   16,186     47,594  
CASH AND CASH EQUIVALENTS, end of period $ 17,085   $ 51,982  
 
 
NUTRISYSTEM, INC. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION TO GAAP RESULTS
(Unaudited, in thousands)
 
Three Months Ended June 30, Six Months Ended June 30,
2013   2012 2013   2012

 

 

 

 

 

Adjusted EBITDA

$

13,541

$

17,653

$

17,427

$

15,707

Non-cash employee compensation expense

(1,388

)

(1,428

)

(2,369

)

(3,179

)

Other expense 0 (78 ) 0 (78 )
Interest expense, net (29 ) (236 ) (82 ) (510 )
Income tax (expense) benefit (3,423 ) (2,489 ) (2,925 ) 134
Depreciation and amortization (2,342 ) (2,706 ) (4,891 ) (5,542 )
Severance and related charges   0     (6,601 )   (1,441 )   (6,898 )
Net income (loss) $ 6,359   $ 4,115   $ 5,719   $ (366 )
 
Adjusted EBITDA is defined as net income (loss) excluding non-cash employee compensation, other expense, interest, income taxes, depreciation and amortization and severance and related charges.
 
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 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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