LifeVantage Announces Second Quarter Fiscal Year 2014 Results

LifeVantage Announces Second Quarter Fiscal Year 2014 Results

       Revenue in Americas Increases 7.2% Compared to Prior Year Period

   Company Plans New Product Launch in April 2014 at its Global Convention

 Expands Senior Management with Appointments of Chief Sales Officer and Chief
                               Science Officer

  Company Reiterates Fiscal 2014 Operating Margin and EPS Guidance; Updates
                      Fiscal 2014 Revenue Guidance Range

SALT LAKE CITY, Feb. 6, 2014 (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 2014
second quarter and six months ended December 31, 2013.

Fiscal 2014 Second Quarter Highlights:

  oNet revenue of $51.5 million, negatively impacted by $3.6 million of
    year-over-year foreign currency fluctuation;
  oIncreased revenue in the Americas 7.2% compared to prior year;
  oHired Chief Sales Officer and Chief Science Officer;
  oBegan Real Salt Lake Major League Soccer marketing sponsorship;
  oAchieved operating income of $5.2 million and net income of $3.3 million;
    and
  oPlanned product launch date for April.

Douglas C. Robinson, President and Chief Executive Officer of LifeVantage
stated, "During the second quarter, we have taken significant steps to
reignite growth by: (1) enhancing our management team with the additions of a
new Chief Sales Officer and a new Chief Science Officer, (2) beginning our
sports marketing sponsorship, (3) expanding our geographic reach and (4)
continuing to strengthen our distributor culture with improved marketing
programs. These initiatives contributed to our year-over-year sales increase
in the Americas of 7.2% and increased sales in Hong Kong."

Mr. Robinson continued, "These steps have us better positioned for future
growth.However, the second quarter strength we experienced in certain regions
was offset by foreign currency fluctuations, primarily the Yen, coupled with
slower than expected improvement in Japan. We remain committed to returning
this important market to strong and sustainable growth.In addition, after
extensive product testing, we are preparing to launch new products in April
2014 at our Global Convention to further strengthen our markets."

Fiscal 2014 Second Quarter Results

For the second fiscal quarter ended December 31, 2013, the Company reported
net revenue of $51.5 million, compared to $53.4 million for the same period in
fiscal 2013. Revenue growth of $2.3 million, or 7.2%, in the Americas and $1.9
million from Hong Kong was offset by lower sales in Japan. Revenue for the
quarter was negatively impacted $3.6 million, or 6.7%, by foreign currency
fluctuation.

Gross profit for the second fiscal quarter ended December 31, 2013 was $43.6
million, compared to $38.8 million for the same period last year, delivering a
gross margin of 84.6%, compared to 72.5% in the prior year period. Gross
profit for the second fiscal quarter of last year included the impact of
approximately $5.9 million of one-time costs associated with the Company's
product recall in that period.

Operating income for the second fiscal quarter of 2014 was $5.2 million,
compared to $0.5 million in the same period last year, including one-time
expenses.Operating margin for the current quarter was 10.0%.

Net income for the second fiscal quarter of 2014 was $3.3 million, or $0.03
per diluted share.This compares to net income in the second fiscal quarter of
2013 of $209 thousand, or $0.00 per diluted share, including one-time
expenses.

Fiscal 2014 First Six Months Results

For the six months ended December 31, 2013, the Company reported net revenue
of $102.9 million, compared to $106.3 million in the prior year. Revenue in
the Americas increased $4.5 million, or 7%, and Hong Kong contributed $3.6
million.Revenue for the first six months of fiscal 2014 was negatively
impacted $7.5 million, or 7.0%, by currency fluctuation and continued softness
of the Japan market.

Operating income for the first six months of fiscal 2014 was $10.2 million,
for an operating margin of 10.0%, compared to $7.3 million, for an operating
margin of 6.9%, in the prior year period, including one-time expenses.

Net income for the first six months of fiscal 2014 was $6.5 million, or $0.06
per diluted share, compared to $4.4 million, or $0.03 per diluted share in the
prior year period, including one-time expenses.

Balance Sheet & Liquidity

The Company's cash and cash equivalents at December 31, 2013 were $34.5
million, compared to $26.3 million at the end of fiscal year 2013 and $28.0
million at September 30, 2013. The Company generated $6.9 million of cash flow
from operations in the first six months of 2014 compared to $6.4 million in
the first six months of fiscal 2013.

The Company announced that it entered into a Financing Agreement on October
18, 2013, with a fund managed by TCW Special Situations, LLC. The Financing
Agreement provides for a senior secured credit facility in an aggregate
principal amount of up to $67 million, of which $47 million was funded at
closing. On October 31, 2013, the Company also announced that it completed a
modified Dutch auction which was funded with proceeds received under the
credit facility. The Company repurchased an aggregate of 16,326,530 shares of
its common stock at a purchase price of $2.45 per share, for an aggregate cost
of $40 million. The shares repurchased in the modified Dutch auction
represented approximately 13.9% of the Company's total shares outstanding as
of September 13, 2013.

Fiscal Year 2014 Guidance

The Company is updating its annual revenue guidance. The Company expects to
generate revenue in the range of $205 to $220 million in fiscal year 2014
compared to the previous range of $225 to $235 million.The Company is
reiterating its previous GAAP operating margin of 9% to 10% and the Company is
also reiterating its GAAP earnings per diluted share in the range of $0.09 to
$0.11, based on estimated weighted average diluted shares outstanding of 111
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) 349-9617 from the U.S.International callers can
dial (719) 325-2207.A telephone replay will be available approximately two
hours after the call concludes and will be available through Saturday,
February 8, 2014, by dialing (877) 870-5176 from the U.S. and entering
confirmation code 6572357, or (858) 384-5517 from international locations, and
entering confirmation code 6572357.

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 network
marketing 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. LifeVantage 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, product launches and future investment
and growth. 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, those discussed in greater detail in the Company's Annual Report
on Form 10-K and the Company's 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 set forth below present a 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
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                               
(In thousands, except per share data)          As of
ASSETS                                         December 31, 2013 June 30, 2013
Current assets                                                  
Cash and cash equivalents                      $34,454         $26,299
Accounts receivable                            873               1,789
Income tax receivable                          651               2,150
Inventory                                      9,843             10,524
Current deferred income tax asset              2,885             2,885
Prepaid expenses and deposits                  4,161             2,294
Total current assets                           52,867            45,941
                                                               
Long-term assets                                                
Property and equipment, net                    5,279             5,692
Intangible assets, net                         1,731             1,747
Deferred debt offing costs, net                1,472             --
Long-term deferred income tax asset            730               730
Other long-term assets                         1,315             1,374
TOTAL ASSETS                                   $63,394         $55,484
LIABILITIES AND STOCKHOLDERS' EQUITY                            
Current liabilities                                             
Accounts payable                               $2,805          $5,171
Commissions payable                            7,183             7,564
Other accrued expenses                         7,230             7,831
Short-term portion of debt                     4,700             --
Total current liabilities                      21,918            20,566
                                                               
Long-term debt                                                  
Principal amount                               42,300            --
Less: unamortized discount                     (1,145)          --
Long-term debt, net of unamortized discount    41,155            --
Other long-term liabilities                    869               973
Total liabilities                              63,942            21,539
                                                               
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; 103,898 and 117,088 issued and     104               121
outstanding as of December 31, 2013 and June
30, 2013, respectively
Additional paid-in capital                     113,014           110,413
Accumulated deficit                            (113,087)        (76,476)
Accumulated other comprehensive loss           (579)            (113)
Total stockholders' equity                     (548)            33,945
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $63,394         $55,484


LIFEVANTAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
                                                               
                          For the three months ended For the six months ended
                           December 31,               December 31,
                          2013          2012         2013         2012
(In thousands, except per                                       
share data)
Sales, net                 $51,538     $53,438     $102,866   $106,297
Cost of sales              7,944        8,799        15,753      16,606
Product recall costs       --          5,879       --         5,879
Gross profit               43,594        38,760       87,113       83,812
                                                               
Operating expenses:                                             
Sales and marketing        29,785        29,593       60,027       59,133
General and administrative 7,561         7,495        14,962       15,404
Research and development   584           742          891          1,257
Depreciation and           498           443          997          681
amortization
Total operating expenses   38,428        38,273       76,877       76,475
Operating income           5,166        487         10,236      7,337
                                                               
Other income (expense),                                         
net:
Interest and other income  (365)        (16)        (327)       (1)
(expense), net
Total otherincome         (365)        (16)        (327)       (1)
(expense)
Net income before income   4,801        471         9,909       7,336
taxes
Income tax expense         (1,519)      (262)       (3,371)     (2,963)
Net income                 $3,282      $209       $6,538     $4,373
Net income per share:                                           
Basic                      $0.03       $0.00      $0.06      $0.04
Diluted                    $0.03       $0.00      $0.06      $0.03
Weighted average shares                                         
outstanding:
Basic                      105,770       113,449      110,218      112,158
Diluted                    112,392       127,131      117,363      126,046
                                                               
Other comprehensive loss,                                       
net of tax:
Foreign currency           (192)        68          (466)       63
translation adjustment
Other comprehensive loss   $(192)      $68        $(466)     $63
Comprehensive income       $3,090      $277       $6,072     $4,436


LIFEVANTAGE CORPORATION
Sales by Region
(Unaudited)
                                                                  
              Three months ended              Six months ended
               December 31,                    December 31,
              2013             2012           2013            2012
(In thousands)                                                     
Americas       $34,418  67%   $32,112 60%  $68,916  67%  $64,419  61%
Asia/Pacific   17,120    33%   21,326   40%  33,950    33%  41,878    39%
Total Net      $51,538  100%  $53,438 100% $102,866 100% $106,297 100%
Sales
                                                                  
                                                                  
              LIFEVANTAGE CORPORATION                                 
              Active Independent Distributors                         
               ^(1)
              (Unaudited)                                             
                                                                  
              December 31,                                            
              2013             2012                                   
Americas       43,000     62%   35,000    64%                          
Asia/Pacific   26,000     38%   20,000    36%                          
Total          69,000     100%  55,000    100%                         
                                                                  
              LIFEVANTAGE CORPORATION                                 
              Active Preferred Customers^(2)                          
              (Unaudited)                                             
                                                                  
              December 31,                                            
              2013             2012                                   
Americas       110,000    81%   116,000   82%                          
Asia/Pacific   25,000     19%   25,000    18%                          
Total          135,000    100%  141,000   100%                         
                                                                  
(1)Active Independent Distributors have purchased product in the prior three
months for retail or personal consumption.
(2) Active Preferred Customers have purchased product in the prior three
months for personal consumption only.


LIFEVANTAGE CORPORATION
Reconciliation of GAAP Gross Profit to Non-GAAP Adjusted Gross Profit:
(Unaudited)
                        For the three months ended  For the six months ended
                         December 31,                December 31,
                        2013          2012          2013         2012
(In thousands)                                                 
GAAP Gross profit        $43,594     $38,760     $87,113    $83,812
                                                              
Adjustments:                                                   
Cost of sales associated (525)        5,879        (525)       5,879
with product recall
Total adjustments        (525)        5,879        (525)       5,879
Non-GAAP Adjusted gross  $43,069     $44,639     $86,588    $89,691
profit
                                                              
Reconciliation of GAAP Operating Income to Non-GAAP Adjusted Operating Income:
                                                              
                        For the three months ended  For the six months ended
                         December 31,                December 31,
                        2013          2012          2013         2012
(In thousands)                                                 
GAAP Operating income    $5,166      $487        $10,236    $7,337
                                                              
Adjustments:                                                   
Costs associated with                                          
product recall:
Cost of sales            (525)        5,879        (525)       5,879
General and              --          71           --         71
administrative
Total adjustments        (525)        5,950        (525)       5,950
Non-GAAP Adjusted        $4,641      $6,437      $9,711     $13,287
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 six months ended
                         December 31,                December 31,
                        2013          2012          2013         2012
(In thousands)                                                 
GAAP Net income          $3,282      $209        $6,538     $4,373
                                                              
Adjustments:                                                   
Costs associated with                                          
product recall:
Cost of sales            (525)        5,879        (525)       5,879
General and              --          71           --         71
administrative
Tax impact of            179          (2,358)      179         (2,358)
adjustments
Total adjustments        (347)        3,592        (347)       3,592
Non-GAAP Adjusted net    $2,936      $3,801      $6,192     $7,965
income
                                                              
Diluted shares           112,392       127,131       117,363      126,046
                                                              
Non-GAAP Adjusted
diluted net income per   $0.03       $0.03       $0.05      $0.06
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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