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LifeVantage Q3 Fiscal 2019 Sales Up 10.8% To $56 Million

LifeVantage Q3 Fiscal 2019 Sales Up 10.8% To $56 Million

LifeVantage Corporation (Nasdaq: LFVN) today reported financial results for its third quarter ended March 31, 2019.

Third Quarter Fiscal 2019 Summary:

  • Revenue increased 10.8% to $56.0 million year over year;
  • Revenue in the Americas increased 6.2% year over year, and revenue in Asia/Pacific & Europe increased 24.8% year over year;
  • Active members increased 9.2%, including independent distributor growth of 7.9% and active customer growth of 10.0% year over year;
  • Adjusted EBITDA increased 18.2% to $4.0 million year over year;
  • Earnings per diluted share were $0.12, consistent with the prior year period;
  • Adjusted earnings per diluted share were $0.13, compared to $0.12 in the prior year period;
  • Narrowing fiscal 2019 revenue guidance to a range of $224 million to $228 million; and
  • Raising fiscal 2019 adjusted diluted earnings per share guidance to a range of $0.50 to $0.54.

* All year over year growth rates compare the third quarter of fiscal 2019 to the third quarter of fiscal 2018.

“We continued to see strong trends during the third quarter, including 11% revenue growth and 9% active member growth, with each of our global markets posting year over year gains. We continue to have good momentum in the business, with the last two quarters representing two of the largest four revenue quarters in our history, and we are on track to have a record revenue year,”

stated LifeVantage President and Chief Executive Officer Darren Jensen.

“During the third quarter we saw a strong response to our opening of Spain, held our launch event to commemorate the opening of Taiwan and introduced a brand refresh of our PhysIQ smart weight management system. We remain on track for additional geographic expansions in Europe later this fiscal year and continue to execute each of our product, geographic and member growth strategies.”

Third Quarter Fiscal 2019 Results

For the third fiscal quarter ended March 31, 2019, the Company reported revenue of $56.0 million, an increase of 10.8% as compared to $50.6 million in the third quarter of fiscal 2018. Revenue in the Americas for the third quarter increased 6.2% compared to the third quarter of fiscal 2018 and revenue in the Asia/Pacific & Europe region increased 24.8% compared to the third quarter of fiscal 2018. Revenue for the third quarter of fiscal 2019 was negatively impacted $0.6 million, or 1.3%, by foreign currency fluctuations associated with revenue generated in international markets when compared to the third quarter of fiscal 2018.

Gross profit for the third quarter of fiscal 2019 was $46.7 million, or 83.4% of revenue, compared to $41.6 million, or 82.4% of revenue, for the same period in fiscal 2018. The increase in gross margin is primarily due to benefits of a price increase during the second half of fiscal 2018, decreased inventory obsolescence and handling costs, and changes to our geographic and product sales mix.

Commissions and incentives expense for the third quarter of fiscal 2019 was $27.2 million, or 48.6% of revenue, compared to $24.3 million, or 48.1% of revenue, for the same period in fiscal 2018. The year over year increase is due to continued investment in our red carpet program and other promotional and incentive programs designed to increase revenues.

Selling, general and administrative expense (SG&A) for the third quarter of fiscal 2019 was $17.3 million, or 30.9% of revenue, compared to $15.0 million, or 29.7% of revenue, for the same period in fiscal 2018. Adjusted for class-action action lawsuit expense of $0.2 million and nonrecurring legal and accounting expenses of $0.1 million, adjusted non-GAAP SG&A expenses for the third quarter of fiscal 2019 were $17.1 million, or 30.5% of revenue. Adjusted for class-action lawsuit expense of $0.1 million and executive severance, recruiting and transition expenses of $0.1 million, adjusted non-GAAP SG&A expenses for the third quarter of fiscal 2018 were $14.8 million, or 29.3% of revenue. The $2.3 millionyear over year increase in non-GAAP SG&A was primarily due to increased expenses associated with stock and other employee incentive compensation programs as a result of improved revenue performance and increases in our share price as compared to the prior year period.

Operating income for the third quarter of fiscal 2019 was $2.2 million, compared to $2.3 million for the third quarter of fiscal 2018. Accounting for non-GAAP adjustments noted previously, adjusted non-GAAP operating income for the third quarter of fiscal 2019 was $2.5 million, consistent with the third quarter of fiscal 2018.

Adjusted EBITDA was $4.0 million for the third quarter of fiscal 2019, compared to $3.4 million for the comparable period in fiscal 2018.

Net income for the third quarter of fiscal 2019 was $1.8 million, or $0.12 per diluted share. This compares to net income for the third quarter of fiscal 2018 of $1.6 million, or $0.12per diluted share. Accounting for the non-GAAP adjustments noted previously, and tax impacts of these adjustments of $39,000, adjusted non-GAAP net income for the third quarter of fiscal 2019 was $2.0 million, or $0.13 per diluted share. Accounting for the non-GAAP adjustments noted previously, and tax impacts of these adjustments of $0.1 million, adjusted non-GAAP net income for the third quarter of fiscal 2018 was $1.8 million, or $0.12 per diluted share.

Fiscal 2019 First Nine Months Results

For the first nine months of fiscal 2019, the Company reported net revenue of $169.8 million, an increase of 13.8% compared to $149.2 million for the first nine months of fiscal 2018. In the first nine months of fiscal 2019, revenue in the Americas increased 11.5% and revenue in Asia/Pacific & Europe increased 20.5% compared to the prior year period. Revenue for the first nine months of fiscal 2019 was negatively impacted $1.2 million, or 0.8%, by foreign currency fluctuations associated with revenue generated in international markets.

Gross profit for the first nine months of fiscal 2019 was $141.5 million, or 83.4% of revenue, compared to $122.4 million, or 82.0% of revenue, for the first nine months of fiscal 2018.

Commissions and incentives expense for the first nine months of fiscal 2019 was $83.2 million, or 49.0% of revenue, compared to $71.1 million, or 47.7% of revenue, for the first nine months of fiscal 2018.

SG&A for the first nine months of fiscal 2019 was $54.2 million, or 31.9% of revenue, compared to $45.2 million, or 30.3% of revenue, for the first nine months of fiscal 2018. Adjusted for class-action lawsuit expense of $0.5 million and nonrecurring legal and accounting expenses of $0.5 million, partially offset by a benefit associated with executive severance of $0.1 million, adjusted non-GAAP SG&A of expenses for the first nine months of fiscal 2019 were $53.3 million or 31.4% of revenue. Adjusted for class-action lawsuit expenses of $0.3 million, executive severance, recruiting and transition expenses of $0.3 million and other nonrecurring legal and accounting expenses of $0.1 million, adjusted non-GAAP SG&A expenses for the first nine months of fiscal 2018 were $44.6 million or 29.9% of revenue. The $8.7 million year over year increase in non-GAAP SG&A was primarily due to increased expenses associated with stock and other employee incentive compensation programs, which increased as a result of improved revenue performance and increases in the Company’s share price as compared to the prior year period, costs associated with higher staffing levels added in late fiscal 2018, and due to increased expenses associated with Global Convention and other events, including the U.S. Elite Academy, and the Japan Convention and Elite Academy events.

Operating income for the first nine months of fiscal 2019 was $4.1 million, compared to $6.0 million for the first nine months of fiscal 2018. Accounting for non-GAAP adjustments noted previously, adjusted non-GAAP operating income for the first nine months of fiscal 2019 was $5.1 million compared to $6.7 million for the first nine months of fiscal 2018.

Adjusted EBITDA was $10.6 million for the first nine months of fiscal 2019, compared to $9.7 million for the same period in fiscal 2018.

Net income for the first nine months of fiscal 2019 was $3.5 million, or $0.24 per diluted share, compared to $2.8 million, or $0.20 per diluted share for the first nine months of fiscal 2018. Accounting for the non-GAAP adjustments noted previously, and tax benefits of these adjustments of $0.5 million, adjusted non-GAAP net income for the first nine months of fiscal 2019 was $4.9 million, or $0.33 per diluted share. Accounting for the non-GAAP adjustments noted previously, and tax expense of these adjustments of $0.2 million and $1.2 million of one-time, non-cash tax expense associated with the re-valuation of deferred tax assets to the new federal corporate tax rate, adjusted non-GAAP net income for the first nine months of fiscal 2018 was $4.4 million, or $0.31 per diluted share.

Balance Sheet & Liquidity

The Company generated $10.8 million of cash from operations during the first nine months of fiscal 2019 compared to $7.8 million in the comparable period of fiscal 2018. The Company’s cash and cash equivalents at March 31, 2019 were $15.9 million, compared to $16.7 million at June 30, 2018. Total debt at March 31, 2019 was $1.9 million compared to $5.4 million at June 30, 2018. During the first nine months of fiscal 2019, the Company repurchased $1.7 million of common shares under its share repurchase plan.

Fiscal Year 2019 Guidance

The Company is narrowing its revenue guidance for fiscal 2019 to a range of $224 million to $228 million, compared to $222 million to $232 million previously. The Company is raising its fiscal 2019 non-GAAP adjusted earnings per share guidance to a range of $0.50 to $0.54 compared to $0.46 to $0.52 previously. The significant increase in the Company’s share price during the first half of fiscal 2019 led to increases in the diluted share count and stock-based compensation expenses, each of which is directly correlated to the share price. The impact of these items does not affect expected growth in adjusted EBITDA, which the Company expects will more closely correlate with anticipated revenue growth. The Company’s adjusted non-GAAP earnings per diluted share guidance excludes any non-operating or non-recurring expenses that may materialize during the remainder of fiscal 2019. The Company is not providing GAAP earnings per diluted share guidance for fiscal 2019 due to the potential occurrence of one or more non-operating, one-time expenses, which the Company does not believe it can reliably predict.

About LifeVantage Corporation

LifeVantage Corporation (Nasdaq: LFVN) is a pioneer in Nutrigenomics – a new science dedicated to biohacking the human aging code.

The company is engaged in the identification, research, development and distribution of advanced nutraceutical dietary supplements and skin and hair care products, including Protandim®, a line of scientifically-validated dietary supplements; TrueScience®, a line of Nrf2 infused skin care and hair care products; Petandim™ for Dogs, a companion pet supplement formulated to combat oxidative stress in dogs; Axio® Smart Energy Drink mixes; PhysIQ™, a Smart Weight Management System; and Omega+, a 3-in-1 fish oil supplement.

LifeVantage was founded in 2003 and is headquartered in Salt Lake City, Utah. For more information, visit www.lifevantage.com.

 

Get more information, facts and figures about LifeVantage, click here for the LifeVantage overview.

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