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:
- Net revenue of $51.5 million, negatively impacted by $3.6 million of year-over-year foreign currency fluctuation;
- Increased revenue in the Americas 7.2% compared to prior year;
- Hired Chief Sales Officer and Chief Science Officer;
- Began Real Salt Lake Major League Soccer marketing sponsorship;
- Achieved operating income of $5.2 million and net income of $3.3 million; and
- Planned 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.
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.