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LifeVantage Announces Third Quarter Fiscal Year 2013 Results

LifeVantage Announces Third Quarter Fiscal Year 2013 Results

   Third Quarter Net Revenue Increased 39% Over Prior Year Period to $50.4
                                   Million

 Independent Distributors Grew 19% in Third Quarter, 2013 Compared to Second
                                Quarter, 2013

                 Company Generated Net Income of $3.4 Million

 Company Announces Intent to Pursue $30-$40 Million Share Repurchase Program

                Company Updates Full Year Fiscal 2013 Guidance

SALT LAKE CITY, May 9, 2013 (GLOBE NEWSWIRE) -- LifeVantage Corporation
(Nasdaq:LFVN), a company dedicated to helping people achieve healthy living
through a combination of a compelling business opportunity and scientifically
validated products, today reported financial results for the fiscal 2013 third
quarter and the nine months ended March 31, 2013.

Fiscal 2013 Third Quarter Highlights:

  oNet revenue increased 39% to $50.4 million compared to same period last
    year;
  oGross profit increased to $43.5 million compared to $31.2 million in same
    period last year;
  oThe number of active independent distributors increased to approximately
    63,000 as of March 31, 2013, compared to 55,000 as of December 31, 2012
    and 37,000 as of March 31, 2012; and
  oThe Company completed $5 million stock repurchase program announced on
    December 15, 2012.

Douglas C. Robinson, President and Chief Executive Officer of LifeVantage,
stated, "Third quarter top-line results were affected significantly by the
transition to an on-the-ground operation in Japan and our prior quarter
voluntary product recall of Protandim. However, with the recall behind us and
the transition in Japan further along, we believe we are better positioned to
regain revenue momentum in the coming quarters." 

Mr. Robinson continued, "With the introduction of our Canine Health product,
our growing geographic presence that now includes operations in Hong Kong, and
expected improvements in our operating margins, we are in a stronger position
as we near the end of our 2013 fiscal year and move into fiscal 2014.During
the third fiscal quarter, we continued our strategic infrastructure
investment, with a focus on scaling our business in fiscal year 2014 and
beyond.With record attendance at our recent Annual Global Convention in Salt
Lake City, the high energy confirmed the on-going dedication of our
distributors. Through a number of key initiatives, primarily LifeVantage
University and the MyLifeVenture recognition program, we are better educating
and engaging our distributors and expect this will help drive our top-line
growth in fiscal 2014."

"Based on our projected revenue growth and our expected improvements in
operating cash flow, we are pleased to announce that we have engaged D.A.
Davidson as our advisor to pursue a $30-$40 million dollar credit facility. We
intend to use these funds to repurchase shares of our common stock. This
repurchase will be in addition to the current $5 million share buyback that
was authorized in March 2013 and is expected to commence shortly."

Fiscal 2013 Third Quarter Results

For the fiscal quarter ended March 31, 2013, the Company reported net revenue
of $50.4 million, compared to $36.2 million for the same period in fiscal
2012, an increase of 39.1%.Local currency net revenue for the period
increased by 43.5%, but this was partially offset by an unfavorable foreign
exchange impact of 4.4%.

The year-over-year sales increase was driven by increases in the number of
both active independent distributors and active preferred customers.The
number of active independent distributors, people who purchased product in the
prior three months for retail and personal consumption, increased to
approximately 63,000 as of March 31, 2013, compared to 55,000 as of December
31, 2012 and 37,000 active independent distributors as of March 31, 2012.The
number of active preferred customers, people who purchased product in the
prior three months for personal consumption only with no intent to resell,
decreased sequentially to approximately 140,000 as of March 31, 2013, compared
to 141,000 as of December 31, 2012, and increased on a year-over-year basis
from 92,000 active preferred customers as of March 31, 2012.The decrease on a
sequential quarter basis was largely due to the effects of our product recall
in December 2012 and the transition to full-scale on-the-ground operations in
Japan.

Gross profit for the third fiscal quarter ended March 31, 2013 increased to
$43.5 million, compared to $31.2 million for the same period last year,
delivering a gross margin of 86.4%, compared to 86.2% in the prior year
period. The current quarter gross margin includes a benefit of approximately
$500 thousand from a partial insurance recovery relating to the Company's
recent product recall. The Company continues to aggressively pursue
recall-related cost recovery options.

Operating income for the third fiscal quarter of 2013 was $3.9 million,
compared to $6.4 million in the same period last year.Operating income margin
was 7.8% in the third fiscal quarter, compared to 17.7% in the same period
last year.The decline in operating margin in the third quarter of 2013 is
primarily due to lower than expected sales growth in the quarter and
infrastructure investments including costs associated with the launch of
Canine Health, office expansions in the U.S. and Japan, additional headcount,
and spending on sales promotions and incentives.

Net income for the third quarter of fiscal year 2013 was $3.4 million, or
$0.03 per diluted share.This compares to a net loss in the third quarter of
fiscal year 2012 of $4.8 million, or ($0.05) per diluted share, which included
a $10.7 million non-cash expense associated with a change in fair value of
derivative warrant liabilities.

Fiscal 2013 First Nine Months Results

For the nine months ended March 31, 2013, the Company reported net revenue of
$156.7 million, compared to $81.6 million for the same period in fiscal year
2012, a 92.0% increase.Local currency net revenue for the period increased by
94%, but this was partially offset by an unfavorable foreign exchange impact
of 2%.

Operating income for the first nine months of fiscal year 2013 was $11.8
million, which includes the impact of $5.6 million of net product recall
related costs in the second and third quarters, compared to $14.1 million in
the same period last year. 

Net income for the nine months ended March 31, 2013 was $7.8 million, or $0.06
per diluted share, which includes the impact of net recall related costs,
compared to $7.6 million, or $0.07 per diluted share in the nine months ended
March 31, 2012. Net income in the first nine months of fiscal year 2012
included an expense of $6.7 million associated with a change in fair value of
derivative warrant liabilities. 

Excluding one-time product recall costs, adjusted gross profit, adjusted
operating income, adjusted net income and adjusted diluted EPS for the nine
months ended March 31, 2013 were $132.7 million or 84.7%, $17.5 million or
11.2%, $11.4 million and $0.09, respectively.

Balance Sheet & Liquidity

The Company's cash and cash equivalents at March 31, 2013 were $27.2 million,
compared to $24.6 million at the end of fiscal year 2012. The Company
generated $10.1 million of cash flow from operations in the nine months ended
March 31, 2013.

During the third quarter of fiscal year 2013, the Company completed its
previously authorized $5 million stock repurchase program.In total, 2 million
shares of its common stock were repurchased as part of its program announced
on December 14, 2012.

David Colbert, the Company's Chief Financial Officer, commented, "We are in a
strong financial position as we enter the final quarter of fiscal year
2013.From June 30, 2012, to today, our cash on hand increased even as we
repurchased $5 million of our shares, invested $4.6 million in capital
expenditures, and added additional resources and programs throughout the
year. Based on our positive long-term view of the company's prospects, we
are excited about engaging D.A. Davidson as our advisor and pursuing a $30-$40
million credit facility with the intent to reduce our total number of shares
outstanding.This initiative, combined with our currently authorized $5
million repurchase program which we anticipate will begin within the next 45
days, underscores our commitment to enhancing long-term shareholder value."

Fiscal Year 2013 Guidance

Due to events that affected revenue late in the second fiscal quarter and
continuing into the third quarter, the Company is revising its GAAP guidance.
LifeVantage now expects to generate year over year revenue growth for fiscal
year 2013 in the range of 64% to 68% or $207 to $212 million compared to the
previously announced range of $250 to $260 million. The company expects a
gross margin of approximately 82% for the full year and expects to generate
operating income in the range of $12.5 to $14 million, which includes $5.6
million of recall related net costs.Operating margins are expected to be in
the range of 6% to 7% compared to the previous guidance in the range of 11% to
12%. The Company expects to generate earnings per diluted share in the range
of $0.06 to $0.07, compared to the previous guidance of $0.13 to $0.15, based
on an effective tax rate of 34% and an estimated weighted average diluted
shares outstanding of 126 million.

Conference Call Information

The Company will hold an investor conference call today at 2:30 p.m. Mountain
time (4:30 p.m. Eastern time). Investors interested in participating in the
live call can dial (888) 205-6702 from the U.S.International callers can dial
(913) 981-5552.A telephone replay will be available approximately two hours
after the call concludes and will be available through Saturday, May 11, 2013,
by dialing (877) 870-5176 from the U.S. and entering confirmation code
2010117, or (858) 384-5517 from international locations, and entering
confirmation code 2010117.

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

About LifeVantage Corporation

LifeVantage Corporation (Nasdaq:LFVN), a leader in Nrf2 science and the maker
of Protandim®, the Nrf2 Synergizer® patented dietary supplement, TrueScience®
Anti-Aging Cream and LifeVantage^® Canine Health, is a science based
nutraceutical company.LifeVantage is dedicated to visionary science that
looks to transform wellness and anti-aging internally and externally with
products that dramatically reduce oxidative stress at the cellular level. The
Company was founded in 2003 and is headquartered in Salt Lake City, Utah.

Forward Looking Statements

This document contains forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Words and expressions reflecting optimism, satisfaction or disappointment with
current prospects, as well as words such as "believe," "hopes," "intends,"
"estimates," "expects," "projects," "plans," "anticipates," "look forward to"
and variations thereof, identify forward-looking statements, but their absence
does not mean that a statement is not forward-looking. Examples of
forward-looking statements include, but are not limited to, statements we make
regarding our future revenue, operating income, operating margins, earnings
per share, cash flow from operations and future investment and growth, as well
as statements regarding recovery of costs associated with our product recall,
improvements made in our manufacturing processes and our ability to obtain a
credit facility and repurchase shares of our stock. Such forward-looking
statements are not guarantees of performance and the Company's actual results
could differ materially from those contained in such statements. These
forward-looking statements are based on the Company's current expectations and
beliefs concerning future events affecting the Company and involve known and
unknown risks and uncertainties that may cause the Company's actual results or
outcomes to be materially different from those anticipated and discussed
herein. These risks and uncertainties include, among others, the Company's
inability to successfully expand our operations in existing and other markets
and thereafter manage our growth; the Company's ability to strengthen its
business in Japan; the Company's reliance on third party suppliers and
manufacturers; the Company's ability to retain independent distributors or to
attract new independent distributors on an ongoing basis; the Company's
ability to expand its product offerings; violations of law or our procedures
by the Company's independent distributors; the potential for third-party and
governmental actions involving the Company's network marketing efforts; the
potential for product liability claims against the Company; the risk that
government regulators and regulations could adversely affect the Company's
business; future laws or regulations may hinder or prohibit the production or
sale of the Company's existing product and any future products; unfavorable
publicity could materially hurt the Company's business; the Company's ability
to access raw materials for its Products as it grows; risks associated with
foreign currency fluctuations; and the Company's ability to protect its
intellectual property rights and the value of its product. These and other
risk factors are discussed in greater detail in the Company's Annual Report on
Form 10-K and its Quarterly Report on Form 10-Q under the caption "Risk
Factors," and in other documents filed by the Company from time to time with
the Securities and Exchange Commission. The Company cautions investors not to
place undue reliance on the forward-looking statements contained in this
document. All forward-looking statements are based on information currently
available to the Company on the date hereof, and the Company undertakes no
obligation to revise or update these forward-looking statements to reflect
events or circumstances after the date of this document, except as required by
law.

About Non-GAAP Financial Measures

We define Adjusted Gross Profit as Gross Profit as determined in accordance
with GAAP excluding certain costs associated with the product recall included
in GAAP cost of sales.We define Adjusted Gross Margin as gross margin as
determined in accordance with GAAP (gross profit as a percentage of sales,
net) excluding the costs associated with the product recall.We define
Adjusted Operating Income as Operating Income excluding certain costs
associated with the product recall.We define Adjusted Net Income as Net
Income excluding certain costs associated with the product recall and the
applicable tax impacts associated with these items.Adjusted EPS is calculated
based on Adjusted Net Income and the weighted average number of common and
potential common shares outstanding during the period.Adjusted Gross Profit,
Adjusted Gross Margin, Adjusted Operating Income, Adjusted Net Income and
Adjusted EPS may not be comparable to similarly titled measures reported by
other companies.

We are presenting Adjusted Gross Profit, Adjusted Gross Margin, Adjusted
Operating Income, Adjusted Net Income and Adjusted EPS because management
believes that excluding the product recall costs from the relevant GAAP
measures, when viewed with our results under GAAP and the accompanying
reconciliations provides useful information about our period-over-period
growth and profitability and provides additional information that is useful
for evaluating our operating performance.Each ofAdjusted Gross Profit,
Adjusted Gross Margin, Adjusted Operating Income, Adjusted Net Income and
Adjusted EPS is presented solely as a supplemental disclosure because: (i) we
believe it is a useful tool for investors to assess the operating performance
of the business without the effect of these items; and (ii) we use Adjusted
Gross Profit, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS
internally as a benchmark to evaluate our operating performance or compare our
performance to that of our competitors.The use of Adjusted Gross Profit,
Adjusted Gross Margin, Adjusted Operating Income, Adjusted Net Income and
Adjusted EPS has limitations and you should not consider these measures in
isolation from or as an alternative to the relevant GAAP measures, including
gross profit, gross margin, operating income, net income or net income per
diluted share prepared in accordance with GAAP, or as a measure of
profitability or liquidity.

The tables below set forth the reconciliation of Adjusted Gross Profit,
Adjusted Operating Income, Adjusted Net Income and Adjusted EPS, all of which
are non-GAAP financial measures, to Gross Profit, Operating Income, Net
Income, and Diluted EPS, our most directly comparable financial measures
presented in accordance with GAAP.


LIFEVANTAGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                               
(In thousands, except per share data)             As of,
ASSETS                                            March 31, 2013 June 30, 2012
Current assets                                                 
Cash and cash equivalents                         $27,239      $24,648
Accounts receivable                               1,381          333
Inventory                                         8,025          11,353
Current deferred income tax asset                 1,244          1,244
Prepaid expenses and deposits                     5,985          1,250
Total current assets                              43,874         38,828
                                                               
Long-term assets                                               
Property and equipment, net                       5,926          1,997
Intangible assets, net                            1,781          1,882
Long-term deferred income tax asset               1,479          1,479
Deposits                                          1,419          342
TOTAL ASSETS                                      $54,479      $44,528
LIABILITIES AND STOCKHOLDERS' EQUITY                           
Current liabilities                                            
Accounts payable                                  $4,608       $3,615
Commissions payable                               7,201          5,631
Reserve for sales returns                         821            863
Accrued bonuses                                   100            2,287
Income tax payable                                70            546
Other accrued expenses                            5,552          2,932
Customer deposits                                 228            154
                                                               
Total current liabilities                         18,580         16,028
                                                               
Long-term liabilities                                          
Other long-term liabilities                       1,042         217
Total liabilities                                 19,622         16,245
                                                               
Commitments and contingencies                                   
Stockholders' equity                                           
Preferred stock - par value $.001,50,000 shares  --           --
authorized; no shares issued or outstanding
Common stock - par value $.001, 250,000 shares
authorized; 113,464 and 110,174 issued and        116           111
outstanding as of March 31, 2013 and June 30,
2012, respectively
Additional paid-in capital                        108,850       105,154
Accumulated deficit                               (74,064)      (76,961)
Currency translation adjustment                   (45)          (21)
Total stockholders' equity                       34,857        28,283
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY        $54,479      $44,528



LIFEVANTAGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
                                                               
                         For the three months ended For the nine months ended
                          March 31,                  March 31,
                         2013         2012          2013          2012
(In thousands, except per                                       
share data)
Sales, net                $50,370    $36,212     $156,667    $81,579
Cost of sales             7,330        4,989         23,936        11,625
Product recall costs      (461)        --          5,418         --
Gross profit              43,501       31,223        127,313       69,954
                                                               
Operating expenses:                                             
Sales and marketing       29,844       19,676        88,976        44,097
General and               8,370        4,616         23,227        10,492
administrative
Research and development  848          378           2,105         924
Depreciation and          499          146           1,180         323
amortization
Total operating expenses  39,561       24,816        115,488       55,836
Operating income         3,940       6,407        11,825       14,118
                                                               
Other income (expense):                                         
Other income (expense),   122         21           (426)        9
net
Change in fair value of
derivative warrant        --         (10,687)     --          (6,741)
liabilities
Total other income        122         (10,666)     (426)        (6,732)
(expense)
Net income before income  4,062       (4,259)      11,399       7,386
taxes
Income tax (expense)      (646)       (587)        (3,609)      251
benefit
Net income (loss)         $3,416     $(4,846)    $7,790      $7,637
Net income (loss) per     $0.03      $(0.05)     $0.07       $0.08
share, basic
Net income (loss) per     $0.03      $(0.05)     $0.06       $0.07
share, diluted
                                                               
Weighted average shares,  112,806      103,016       112,203       100,451
basic
Weighted average shares,  124,985      103,016       125,371       115,232
diluted
                                                               
Other comprehensive                                             
income, net of tax:
Foreign currency          (87)        (80)         (24)         12
translation adjustment
Other comprehensive       $(87)      $(80)       $(24)       $12
income
Comprehensive income     $3,329     $(4,926)    $7,766      $7,649

                                                              
                                                                
                                                                
Reconciliation of GAAP Gross Profit to Non-GAAP                  
Adjusted Gross Profit:
                                                              
                       For the three months ended For the nine months ended
                        March 31,                   March 31,
                       2013          2012          2013          2012
(In thousands)                                                 
GAAP Gross profit       $43,501     $31,223     $127,313    $69,954
                                                              
Adjustments:                                                   
Cost of sales
associated with product (461)        --          5,418        --
recall
Total adjustments       (461)        --          5,418        --
Non-GAAP Adjusted gross $43,040     $31,223     $132,731    $69,954
profit
                                                              
Reconciliation of GAAP Operating Income to Non-GAAP              
Adjusted Operating Income:
                                                              
                       For the three months ended For the nine months ended
                        March 31,                   March 31,
                       2013          2012          2013          2012
(In thousands)                                                 
GAAP Operating income   $3,940      $6,407      $11,825     $14,118
                                                              
Adjustments:                                                   
Costs associated with                                          
product recall:
Cost of sales           (461)        --          5,418        --
General and             158          --          229          --
administrative
Total adjustments       (303)        --          5,647        --
Non-GAAP Adjusted       $3,637      $6,407      $17,472     $14,118
operating income
                                                              
                                                              
Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income and related
Adjusted Earnings Per Share:
                                                              
                       For the three months ended For the nine months ended
                        March 31,                   March 31,
                       2013          2012          2013          2012
(In thousands)                                                 
GAAP Net income (loss)  $3,416      $(4,846)    $7,790      $7,637
                                                              
Adjustments:                                                   
Costs associated with                                          
product recall:
Cost of sales           (461)        --          5,418        --
General and             158          --          229          --
administrative
Tax impact of           107          --          (1,997)      --
adjustments
Total adjustments       (196)        --          3,650        --
Non-GAAP Adjusted net   $3,220      $(4,846)    $11,440     $7,637
income (loss)
                                                              
Diluted shares          124,985       103,016       125,371       115,232
                                                              
Non-GAAP Adjusted
diluted net income      $0.03       $(0.05)     $0.09       $0.07
(loss) per share

CONTACT: Investor Relations Contact:
         Cindy England (801) 432-9036
         Director of Investor Relations
         -or-
         John Mills (310) 954-1105
         Senior Managing Director, ICR, LLC

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