Category: Consumer Services

Nutrisystem, Inc. Reports Third Quarter 2009 Results; Announces Quarterly Dividend of $0.175 Per Share

Nutrisystem, Inc. (NASDAQ: NTRI), a leading provider of weight management products and services, today reported financial results for the third quarter of 2009. Details include:

“Third quarter revenues resulted in operating income from continuing operations and adjusted EBITDA that were an improvement from second quarter 2009, as we experienced continued growth in our diabetic product as well as stabilization in the core business,” stated Chairman and CEO Joe Redling.

“Despite continued macroeconomic pressures, we have continued to expand our footprint from a geographic, product and channel standpoint,” added Mr. Redling. Earlier this month, the Company announced further expansion of its retail card program with the 14-day Nutrisystem Starter Program at an expected 3200 Walmart locations in the continental United States beginning in October. The Company also announced an international licensing agreement with House Foods in Japan. House Foods will exclusively manufacture and sell the Nutrisystem J-diet, tailored specifically for Japanese consumers.

“The Company continues to generate positive free cash flow, and our cost reduction initiatives announced in the first quarter resulted in improvements in gross margin and reductions in general and administrative expenses,” said David Clark, Chief Financial Officer. “These improvements position us well for consumer recovery. For the full year 2009 we are projecting an EPS range of $0.99 to $1.01 per share.”

The Board of Directors declared a Company’s quarterly dividend of $0.175 per share, payable November 16, 2009, to shareholders of record as of November 6, 2009. While the Company intends to continue to pay regular quarterly dividends, the declaration and payment of future dividends are discretionary and will be subject to determination by the Board of Directors each quarter following its review of the Company’s financial performance.

Conference Call and Webcast

Management will host a webcast to discuss third quarter 2009 financial results today at 4:30 PM Eastern time. The webcast will include remarks from Chairman and Chief Executive Officer Joe Redling and Chief Financial Officer David Clark.

The webcast will be available live under the Investor Relations section of Nutrisystem's website, www.nutrisystem.com. Please click on Investor Relations at the bottom of the home page and then click on the microphone icon on the Investor Relations home page. Interested parties unable to access the conference call via the webcast may dial 1-866-831-9862 (outside US/Canada 706-758-5226); the conference ID is 36165334. A replay of the conference call will be available on the Company website following the event.

About Nutrisystem, Inc.

Nutrisystem, Inc. (NASDAQ: NTRI) is a leading provider of weight management products and services. Nutrisystem is sold direct to the consumer through nutrisystem.com, by phone, and at select retailers, for convenient home delivery. The company offers proven nutritionally balanced weight-loss programs designed for women, men, and seniors, as well as the new clinically tested Nutrisystem D plan, formulated specifically to help people with type 2 diabetes who want to lose weight. The Nutrisystem program is based on 35 years of nutrition research and offers a variety of great tasting, satisfying high-fiber, heart healthy, good carbohydrate meals that are low on the Glycemic Index and contain zero trans fats. Nutrisystem is hundreds of dollars cheaper than other weight loss programs, based on an independent survey by National Business Research Institute (October 2008). The program has no membership fees and provides 24/7 weight management support by trained weight loss coaches and online weight management tools free of charge. In 2009 Nutrisystem was selected as the #1 overall online retailer in the Food and Drug category and #46 out of the top 500 online retailers overall by Internet Retailer Magazine. Nutrisystem is proud to support the American Diabetes Association and its fight to stop diabetes. For more information or to become a customer visit http://www.nutrisystem.com or call 1-877-681-THIN (8446).

Forward-Looking Statement Disclaimer

This press release may contain forward-looking statements that are made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements regarding Nutrisystem’s plans and expectations for the fourth quarter of 2009 and the full year 2009, continuing to pay regular quarterly dividends, investments for 2010 and other statements that are not statements of historical fact constitute forward-looking statements. These forward-looking statements involve a number of risks and uncertainties, which are described in Nutrisystem, Inc.'s Annual Report on Form 10-K and its other filings with the Securities and Exchange Commission. The actual results may differ materially from any forward-looking statements due to such risks and uncertainties. Nutrisystem, Inc. undertakes no obligation to revise or update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.

                 

NUTRISYSTEM, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
                 
   

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

   

2009

 

2008

 

2009

 

2008

                 
REVENUE   $ 127,031     $ 162,681     $ 421,534     $ 573,178  
                 
COSTS AND EXPENSES:                
Cost of revenue     57,776       76,341       195,000       272,914  
Marketing     36,293       39,165       118,986       148,449  
General and administrative     16,684       22,577       59,780       64,391  
Depreciation and amortization     3,002       2,484       8,385       6,170  
Total costs and expenses     113,755       140,567       382,151       491,924  
Operating income from continuing operations     13,276       22,114       39,383       81,254  
OTHER INCOME (EXPENSE)     149       (40 )     339       (84 )
EQUITY AND IMPAIRMENT LOSS           (552 )     (4,000 )     (2,660 )
INTEREST (EXPENSE) INCOME, net     80       216       (14 )     508  
Income from continuing operations before income taxes     13,505       21,738       35,708       79,018  

INCOME TAXES

    4,994       8,043       9,549       29,234  
Income from continuing operations     8,511       13,695       26,159       49,784  
DISCONTINUED OPERATION:                
Loss on discontinued operation, net of income tax benefit     (60 )     (164 )     (87 )     (202 )
Net income   $ 8,451     $ 13,531     $ 26,072     $ 49,582  
                 
BASIC INCOME PER COMMON SHARE:                
Income from continuing operations   $ 0.27     $ 0.44     $ 0.85     $ 1.56  
Net loss from discontinued operation                        
Net income   $ 0.27     $ 0.44     $ 0.85     $ 1.56  
DILUTED INCOME PER COMMON SHARE:                
Income from continuing operations   $ 0.27     $ 0.44     $ 0.84     $ 1.54  
Net loss from discontinued operation           (0.01 )           (0.01 )
Net income   $ 0.27     $ 0.43     $ 0.84     $ 1.53  
WEIGHTED AVERAGE SHARES OUTSTANDING:                
Basic     29,529       29,709       29,407       31,076  
Diluted     29,847       30,247       29,667       31,597  
                 
         
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
         
    September 30,   December 31,
    2009   2008
    (Unaudited)    

ASSETS

       
CURRENT ASSETS:        
Cash and cash equivalents   $ 67,498     $ 38,309
Marketable securities     30,148      
Receivables     11,513       17,200
Inventories     20,022       50,986
Prepaid income taxes     5,840       3,714
Deferred income taxes     2,778       1,651
Other current assets     6,170       8,611
Current assets of discontinued operation     257       325
Total current assets     144,226       120,796
         
FIXED ASSETS, net     22,816       24,312
EQUITY INVESTMENT           4,000
GOODWILL     2,717       2,717
IDENTIFIABLE INTANGIBLE ASSETS, net     2,100       2,590
OTHER ASSETS     2,408       5,056
    $ 174,267     $ 159,471

LIABILITIES AND STOCKHOLDERS’ EQUITY

       
CURRENT LIABILITIES:        
Accounts payable   $ 34,797     $ 31,448
Accrued payroll and related benefits     1,768       2,150
Deferred revenue     2,187       4,964
Other accrued expenses and current liabilities     4,141       3,743
Current liabilities of discontinued operation     50       43
Total current liabilities     42,943       42,348
NON-CURRENT LIABILITIES     1,565       1,298
Total liabilities     44,508       43,646
         
COMMITMENTS AND CONTINGENCIES        
STOCKHOLDERS’ EQUITY:        
Preferred stock, $.001 par value (5,000,000 shares authorized, no shares issued and outstanding)          
Common stock, $.001 par value (100,000,000 shares authorized; shares issued – 30,951,262 at September 30, 2009 and 30,784,920 at December 31, 2008)     29       29
Additional paid-in capital     4,552      
Retained earnings     125,206       115,771
Accumulated other comprehensive (loss) income     (28 )     25
Total stockholders’ equity     129,759       115,825
    $ 174,267     $ 159,471
               
         
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
         
   

Nine Months Ended September 30,

    2009   2008
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income   $ 26,072     $ 49,582  
Adjustments to reconcile net income to net cash provided by operating activities-        
Loss on discontinued operation     87       202  
Depreciation and amortization     8,385       6,170  
Loss on disposal of fixed assets     29       85  
Share–based expense     6,686       5,704  
Deferred income tax expense (benefit)     1,227       (336 )
Equity and impairment loss     4,000       2,660  
Changes in operating assets and liabilities        
Accrued interest income           19  
Receivables     5,722       3,009  
Inventories     31,084       43,426  
Other assets     2,876       4,442  
Accounts payable     3,288       (15,602 )
Accrued payroll and related benefits     (383 )     2,426  
Deferred revenue     (2,791 )     2,420  
Income taxes     (2,088 )     (7,483 )
Other accrued expenses and liabilities     680       403  
Net cash provided by operating activities of continuing operations     84,874       97,127  
Net cash used in operating activities of discontinued operation     (79 )     (95 )
Net cash provided by operating activities     84,795       97,032  
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of marketable securities     (30,108 )      
Sales of marketable securities           1,750  
Cash paid for acquisition of business           (4,217 )
Capital additions     (6,551 )     (8,540 )
Proceeds from the sale of fixed assets     100        
Net cash used in investing activities     (36,559 )     (11,007 )
CASH FLOWS FROM FINANCING ACTIVITIES:        
Borrowings under credit facility           35,000  
Repayments of borrowings under credit facility           (35,000 )
Exercise of stock options     426       819  
Tax effect of equity compensation awards, net     (1,392 )     1,133  
Payment of dividends     (16,000 )     (10,829 )
Repurchase and retirement of common stock     (1,939 )     (59,787 )
Net cash used in financing activities     (18,905 )     (68,664 )
Effect of exchange rate changes on cash and cash equivalents     (209 )     (130 )
NET INCREASE IN CASH AND CASH EQUIVALENTS     29,122       17,231  

CASH AND CASH EQUIVALENTS, beginning of period

    38,631       41,190  

CASH AND CASH EQUIVALENTS, end of period

    67,753       58,421  

LESS CASH AND CASH EQUIVALENTS OF DISCONTINUED OPERATION, end of period

    255       372  

CASH AND CASH EQUIVALENTS OF CONTINUING OPERATIONS, end of period

  $ 67,498     $ 58,049  
                 
NUTRISYSTEM, INC. AND SUBSIDIARIES
ADJUSTED EBITDA RECONCILIATION TO GAAP RESULTS
(in thousands)
                 
    Three Months Ended September 30,   Nine Months Ended September 30,
    2009   2008   2009   2008
                 
Adjusted EBITDA   $ 18,670     $ 26,728     $ 54,412     $ 92,854  

Non-cash employee compensation expense

    (2,392 )     (2,130 )     (6,644 )     (5,430 )
Other income (expense)     149       (40 )     339       (84 )
Equity and impairment loss           (552 )     (4,000 )     (2,660 )
Interest (expense) income, net     80       216       (14 )     508  
Income taxes     (4,994 )     (8,043 )     (9,549 )     (29,234 )
Depreciation and amortization     (3,002 )     (2,484 )     (8,385 )     (6,170 )
Income from continuing operations   $ 8,511     $ 13,695     $ 26,159     $ 49,784  
                                 

Adjusted EBITDA is defined as income from continuing operations excluding non-cash employee compensation, other income (expense), equity and impairment loss, interest, income taxes and depreciation and amortization. We believe Adjusted EBITDA is a useful performance metric for management and investors because it is more indicative of the ongoing operations of the Company. Adjusted EBITDA excludes certain non-cash and non-operating items to facilitate comparisons and provide a meaningful measurement that is focused on the performance of the ongoing operations of the Company.

 

 

Nutrisystem, Inc.
Cindy Warner
Investor Relations
215-346-8136
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