LifeVantage 2016 Sales Up 8.5% To $206.5 Million

 

LifeVantage Announces Financial Results for Fiscal Year 2016 and the First Quarter of Fiscal 2017

Company files Forms 10-K and 10-Q for periods ended June 30, 2016 and
 September 30, 2016, respectively 
Expects to regain compliance with Nasdaq listing rules 
First Quarter of Fiscal 2017 Revenue Increased 21.0% year-over-year 
Fourth Quarter of Fiscal Year 2016 Revenue Increased 17.1% year-over-year 
Fiscal Year 2016 Revenue Increased 8.5% to $206.5 million 
Company Initiates Fiscal 2017 Guidance

LifeVantage Corporation (Nasdaq:LFVN) today reported financial results for its fourth fiscal quarter and full fiscal year ended June 30, 2016; and its first fiscal quarter of 2017.

Today we filed our Form 10-K for fiscal 2016 and our Form 10-Q for the first fiscal quarter of 2017 and are again current with our SEC filings, which puts us back into compliance with our loan covenants and is expected to put us back into compliance with Nasdaq listing rules, stated LifeVantage President and Chief Executive Officer Darren Jensen. This unanticipated delay in our financial reporting was necessary as we look to ensure that we have the appropriate internal policies and procedures in place to support our international growth.

First Quarter Fiscal 2017 Highlights:

• Revenue increased 21.0% to $54.9 million, compared to $45.4 million in the first fiscal quarter of 2016;
• Revenue in the Americas increased 15.6% and revenue in Asia/Pacific & Europe increased 38.9%, both when compared to the comparable period of fiscal 2016;
• Adjusted EBITDA decreased 2.8% to $4.3 million, compared to $4.5 million in the comparable period of fiscal 2016;
• Earnings per diluted share were $0.08, compared to $0.08 in the first fiscal quarter of 2016; and
• Adjusted earnings per diluted share were $0.13, compared to $0.13 in the first fiscal quarter of 2016.

Fourth Quarter Fiscal 2016 Highlights:

• Revenue increased 17.1% to $53.0 million, compared to $45.3 million in the fourth fiscal quarter of 2015;
• Revenue in the Americas increased 17.1% and revenue in Asia/Pacific & Europe increased 16.9%, both when compared to the comparable period of fiscal 2015;
• Adjusted EBITDA increased 78.3% to $5.6 million, compared to $3.1 million in the comparable period of fiscal 2015;
• Earnings per diluted share increased to $0.16, compared to $0.02 in the fourth fiscal quarter of 2015; and
• Adjusted earnings per diluted share increased to $0.22, compared to $0.05 in the fourth fiscal quarter of 2015.

Fiscal Year 2016 Highlights:

• Revenue increased 8.5% to $206.5 million, compared to $190.3 million in fiscal 2015;
• Revenue in the Americas increased 14.6% and revenue in Asia/Pacific & Europe decreased 7.6%, both when compared to fiscal 2015;
• Adjusted EBITDA increased 12.7% to $19.7 million, compared to $17.4 million in fiscal 2015;
• Earnings per diluted share decreased 16.1% to $0.41, compared to $0.49 in fiscal 2015; and
• Adjusted earnings per diluted share increased 31.8% to $0.62, compared to $0.47 in fiscal 2015.

First Quarter Fiscal 2017 Results
For the first fiscal quarter ended September 30, 2016, the Company reported revenue of $54.9 million, a 21.0% increase compared to $45.4 million for the comparable period in fiscal 2016. Year-over-year quarterly revenue reflects an increase of 15.6% in the Americas and a 38.9% increase in the Asia/Pacific & Europe region. Revenue for the first fiscal quarter of 2017 was positively impacted by $2.1 million, or 4.6%, by foreign currency fluctuations, primarily associated with revenue in Japan.

Commissions and incentives expense for the first fiscal quarter of 2017 was $26.3 million, or 47.9% of revenue, compared to $22.0 million, or 48.6% of revenue, for the same period in fiscal 2016. Selling, general and administrative expense (SG&A) for the fourth fiscal quarter of 2016 was $17.8 million, or 32.4% of revenue, compared to $13.7 million, or 30.1% of revenue, in the comparable period of fiscal 2016.

Operating income for the first fiscal quarter of 2017 was $2.0 million, compared to $2.7 million for the first fiscal quarter of 2016. Operating income during the first quarter of fiscal 2017 included approximately $1.0 million of costs associated with the Audit Committee's independent review. Operating income during the first fiscal quarter of 2016 included approximately $1.1 million of executive transition costs. Adjusted EBITDA was $4.3 million for the first fiscal quarter of 2017, compared to $4.5 million for the comparable period in fiscal 2016.

Net income for the first fiscal quarter of 2017 was $1.2 million, or $0.08 per diluted share, calculated on 14.5 million fully diluted shares.  This compares to net income for the first fiscal quarter of 2016 of $1.1 million, or $0.08 per diluted share, calculated on 13.8 million fully diluted shares. Adjusted for costs associated with the audit committee's independent review of $0.7 million, net of tax, adjusted Non-GAAP net income was $1.9 million for the first fiscal quarter of 2017, or $0.13 per diluted share; compared to $1.7 million, or $0.13 per diluted share for the comparable period of fiscal 2016. Non-GAAP adjustments to net income during the first fiscal quarter of 2016 included $0.7 million of executive team transition costs, net of tax.

Fourth Quarter Fiscal 2016 Results
For the fourth fiscal quarter ended June 30, 2016, the Company reported revenue of $53.0 million, a 17.1% increase compared to $45.3 million for the comparable period in fiscal 2015. Year-over-year quarterly revenue reflects an increase of 17.1% in the Americas and a 16.9% increase in the Asia/Pacific & Europe region. Revenue for the fourth fiscal quarter of 2016 was positively impacted by $0.9 million, or 2.1%, by foreign currency fluctuations, primarily associated with revenue in Japan.

Commissions and incentives expense for the fourth fiscal quarter of 2016 was $25.6 million, or 48.3% of revenue, compared to $21.7 million, or 47.8% of revenue, for the same period in fiscal 2015. Selling, general and administrative expense (SG&A) for the fourth fiscal quarter of 2016 was $14.0 million, or 26.3% of revenue, compared to $14.8 million, or 32.6% of revenue, in the comparable prior year period.

Operating income for the fourth fiscal quarter of 2016 was $4.1 million, compared to $1.6 million for the fourth fiscal quarter of 2015. Operating income during the fourth quarter of fiscal 2015 included approximately $0.7 million of executive transition expenses. Adjusted EBITDA was $5.6 million for the fourth fiscal quarter of 2016, compared to $3.1 million for the comparable period in fiscal 2015.

Net income for the fourth fiscal quarter of 2016 was $2.4 million, or $0.16 per diluted share, calculated on 14.6 million fully diluted shares.  This compares to net income for the fourth fiscal quarter of 2015 of $0.2 million, or $0.02 per diluted share, calculated on 13.8 million fully diluted shares. Adjusted primarily for a write-off of capitalized software development costs of $0.8 million, net of tax, adjusted Non-GAAP net income was $3.2 million for the fourth fiscal quarter of 2016, or $0.22 per diluted share; compared to $0.7 million, or $0.05 per diluted share for the comparable prior year period. Non-GAAP adjustments to net income during the fourth fiscal quarter of 2015 included $0.5 million of executive team transition costs, net of tax.

Fiscal 2016 Full Year Results
For the fiscal year ended June 30, 2016, the Company reported net revenue of $206.5 million, an increase of 8.5% compared to $190.3 million for fiscal 2015. Revenue in the Americas increased 14.6%, while revenue in Asia/Pacific & Europe decreased 7.6% due predominantly to lower sales in Japan that occurred primarily during the first quarter of fiscal 2016. Revenue for fiscal year 2016 was negatively impacted $1.8 million, or 1.0%, by foreign currency fluctuations associated with revenue generated in several international markets.

Commissions and incentives expense for fiscal 2016 was $103.1 million, or 49.9% of revenue, compared to $91.0 million, or 47.8% of revenue, for fiscal 2015. Selling, general and administrative expense (SG&A) for fiscal 2016 was $56.1 million, or 27.1% of revenue, compared to $57.4 million, or 30.1% of revenue, in the prior year.

Operating income for fiscal 2016 was $13.4 million, compared to $13.9 million for fiscal 2015. Operating income for the fiscal year ended June 30, 2016 includes $1.7 million of the previously announced executive transition expenses and costs associated with the reverse split during fiscal 2016. Operating income in fiscal 2015 includes the benefit of approximately $2.0 million from proceeds recovered and related to the Company's December 2012 product recall, partially offset by severance and executive team transition costs of $1.4 million. Adjusted EBITDA was $19.7 million for the full fiscal year of 2016, compared to $17.4 million in fiscal 2015.

Net income for fiscal 2016 was $6.0 million, or $0.41 per diluted share, compared to $7.0 million, or $0.49 per diluted share for fiscal 2015. On a tax adjusted basis, adjusting for previously announced executive transition expenses and costs associated with the reverse split of $1.2 million, collectively, along with a $0.8 million write-off of capitalized software development costs and a $1.1 million write-off of deferred debt transaction costs during fiscal 2016, adjusted Non-GAAP net income for the fiscal year ended June 30, 2016 was $9.1 million, or $0.62 per diluted share. On a tax adjusted basis, adjusting for the one-time insurance benefit during fiscal 2015 of $1.3 million, partially offset by $0.9 million of executive transition costs, adjusted Non-GAAP net income for the fiscal year ended June 30, 2015 was $6.6 million or $0.47 per diluted share. 

Balance Sheet & Liquidity
The Company generated $6.0 million of cash from operations during fiscal year 2016 and $2.9 million of cash from operations during the first quarter of fiscal 2017, compared to $13.2 million and $2.8 million during the same respective prior year periods. The year-over-year reduction in cash provided by operations during fiscal 2016 primarily relates to increased inventory investments during the fiscal year. The Company's cash and cash equivalents at September 30, 2016 were $10.2 million compared to $7.9 million at the end of fiscal year 2016.

We reported strong year-over-year revenue growth in both the fourth fiscal quarter of 2016 and the first fiscal quarter of 2017, commented LifeVantage President and Chief Executive Officer Darren Jensen. However, we anticipate some revenue disruptions near-term from recent policy changes affecting some international markets.

There will also be a simultaneous, live webcast available on the Investor Relations section of the Company's web site at https://investor.lifevantage.com/events.cfm. The webcast will be archived for approximately 30 days.

About LifeVantage Corporation

LifeVantage Corporation (Nasdaq:LFVN), is a science-based direct selling company dedicated to visionary science that looks to transform health, wellness and anti-aging internally and externally at the cellular level. The company is the maker of Protandim^® Nrf2 and NRF1 Synergizers, its line of scientifically-validated dietary supplements, the TrueScience^® Anti-Aging Skin Care Regimen, Canine Health^®, the AXIO^® energy product line and the PhysIQ™ Smart Weight Management System. LifeVantage was founded in 2003 and is headquartered in Salt Lake City, Utah.  www.lifevantage.com