LifeVantage Corporation reported financial results for its first quarter ended September 30, 2020.
First Quarter Fiscal 2021 Highlights*:
* All comparisons are on a year over year basis and compare the third quarter of fiscal 2020 to the third quarter of fiscal 2019, unless otherwise noted.
“We continue to generate strong year over year growth in active distributors both in the U.S. and internationally, while revenue growth was negatively impacted by the timing of our Elite Academy events as last year’s Q1 event was not replicated this year. However, we continue to drive strong adjusted EBITDA growth and nearly doubled adjusted EPS on a year over year basis,” stated LifeVantage Interim Chief Executive Officer and Chief Financial Officer, Steve Fife. “We completed a highly successful virtual convention early in the second quarter of fiscal 2021, launching 6 new flavors of our Axio product line and delivering incremental training and standardized selling tools and systems to our field. We continue to develop additional tools, product videos and messaging to support our distributors social media and standard selling practices. Furthering our growth efforts, we successfully launched our operations in Singapore and expanded our NFR offerings into Malaysia during the first quarter, continuing our expansion across Asia. LifeVantage continues to have a significant international growth opportunity that we believe will remain a core driver of sustainable long-term growth. Additionally, our financial position is one of significant strength, ending the first quarter with $18 million in cash and no debt. We believe we have the resources, the products and the team to drive significant growth in the future and deliver incremental shareholder value. “
First Quarter Fiscal 2021 Results
For the first fiscal quarter ended September 30, 2020, the Company reported revenue of $54.8 million, a 2.5% decrease over the first quarter of fiscal 2020. Revenue in the Americas for the first quarter decreased 3.7% compared to the first quarter of fiscal 2020 and revenue in the Asia/Pacific & Europe region increased 0.7% compared to the first quarter of fiscal 2020. Revenue for the first quarter of fiscal 2021 was positively impacted $0.2 million, or 0.3%, by foreign currency fluctuations associated with revenue generated in international markets when compared to the first quarter of fiscal 2020.
Gross profit for the first quarter of fiscal 2021 was $45.4 million, or 82.9% of revenue, compared to $47.0 million, or 83.7% of revenue, for the same period in fiscal 2020. The decline in gross margin as a percentage of revenue is primarily due to decreased revenue primarily reflecting the fact that we did not hold an Elite Academy event during the current year period as we did in the prior year same period. Additionally, gross margin was impacted during the current year due to increased shipping to customer expenses and shifts in geographic and product sales mix.
Commissions and incentives expense for the first quarter of fiscal 2021 was $25.6 million, or 46.8% of revenue, compared to $26.8 million, or 47.6% of revenue, for the same period in fiscal 2020. The decrease in commissions and incentives expense as a percentage of revenue is due mainly to the timing and magnitude of investments in our promotional and incentive programs and our red carpet program.
Selling, general and administrative expense (SG&A) for the first quarter of fiscal 2021 was $16.3 million, or 29.7% of revenue, compared to $17.7 million, or 31.5% of revenue, for the same period in fiscal 2020. Adjusted for nonrecurring expenses, which are detailed in the GAAP to non-GAAP reconciliation tables included at the end of this press release, adjusted non-GAAP SG&A expenses for the first quarter of fiscal 2021 were $14.7 million, or 26.8% of revenue, compared to adjusted non-GAAP SG&A expenses for the first quarter of fiscal 2020 of $17.5 million, or 31.0% of revenue. The year over year decrease in non-GAAP SG&A primarily was due to decreased events expenses as a result of no Elite Academy event being held during the current year period.
Operating income for the first quarter of fiscal 2021 was $3.5 million, or 6.4% of revenue, compared to $2.6 million, or 4.6% of revenue, for the first quarter of fiscal 2020. Accounting for non-GAAP adjustments noted previously, adjusted non-GAAP operating income for the first quarter of fiscal 2021 was $5.1 million, or 9.3% of revenue, compared to $2.8 million, or 5.0% of revenue, for the first quarter of fiscal 2020.
Net income for the first quarter of fiscal 2021 was $2.5 million, or $0.17 per diluted share. This compares to net income for the first quarter of fiscal 2020 of $1.8 million, or $0.12 per diluted share. Accounting for the non-GAAP adjustments noted previously, net of tax, adjusted non-GAAP net income for the first quarter of fiscal 2021 increased 88.5% year over year, to $3.6 million, or $0.25 per diluted share. Accounting for the non-GAAP adjustments noted previously, net of tax, adjusted non-GAAP net income for the first quarter of fiscal 2020 was $1.9 million, or $0.13 per diluted share.
Adjusted EBITDA increased 42.5% to $6.7 million for the first quarter of fiscal 2021, compared to $4.7 million for the comparable period in fiscal 2020.
Balance Sheet & Liquidity
The Company used $1.1 million of cash from operations during fiscal 2021 compared to using $3.5 million during fiscal 2020. The Company’s cash and cash equivalents at September 30, 2020 were $18.0 million, compared to $22.1 million at June 30, 2020. The Company has no debt outstanding at September 30, 2020, and at June 30, 2020. During the first quarter of fiscal 2021, the Company repurchased 136,000 common shares for $2.0 million under its share repurchase program.
Fiscal Year 2021 Guidance
The Company is reiterating its outlook for fiscal 2021, which was initially provided when the Company reported fourth fiscal quarter and full fiscal year 2020 results on August 18, 2020. The Company expects to generate revenue in the range of $240 million to $251 million in fiscal year 2021 and adjusted EBITDA of $25 million to $27 million, with adjusted earnings per share in the range of $0.87 to $0.91, which assumes a full year tax rate of approximately 30%. The Company’s guidance for adjusted non-GAAP EBITDA and adjusted non-GAAP earnings per diluted share excludes any non-operating or non-recurring expenses that may materialize during fiscal 2021. This guidance reflects the current trends in the business and the Company’s current view as to the impact of the COVID-19 pandemic on its business. However, the impact of the COVID-19 pandemic continues to rapidly evolve and actual results could be adversely affected by further deterioration to the global economic and operating environments as a result of future COVID-19 developments. The Company is not providing guidance for GAAP earnings per diluted share for fiscal 2021 due to the potential occurrence of one or more non-operating, one-time expenses, which the Company does not believe it can reliably predict.
Conference Call Information
The Company will hold an investor conference call today at 2:30 p.m. MDT (4:30 p.m. EDT). Investors interested in participating in the live call can dial (877) 705-6003 from the U.S. International callers can dial (201) 493-6725. A telephone replay will be available approximately two hours after the call concludes and will be available through Tuesday, November 10, 2020, by dialing (844) 512-2921 from the U.S. and entering confirmation code 13711780, or (412) 317-6671 from international locations, and entering confirmation code 13711780.
There will also be a simultaneous, live webcast available on the Investor Relations section of the Company’s web site at https://lifevantage.gcs-web.com/events-and-presentations or directly at http://public.viavid.com/index.php?id=141906. The webcast will be archived for approximately 30 days.
About LifeVantage Corporation
LifeVantage Corporation is a pioneer in Nutrigenomics – a new science dedicated to biohacking the human aging code. The Company engages in the identification, research, development and distribution of advanced nutraceutical dietary supplements and skin and hair care products, including its Protandim® product line, LifeVantage® Omega+ and ProBio dietary supplements, the TrueScience® line of Nrf2 infused skin care and hair care products, Petandim® for Dogs, Axio® smart energy drink mixes, and the PhysIQ™ weight management system. LifeVantage was founded in 2003 and is headquartered in Salt Lake City, Utah. For more information, visit www.lifevantage.com.
About Non-GAAP Financial Measures
We define Non-GAAP EBITDA as earnings before interest expense, income taxes, depreciation and amortization and Non-GAAP Adjusted EBITDA as earnings before interest expense, income taxes, depreciation and amortization, stock compensation expense, other income, net, and certain other adjustments. Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. We define Non-GAAP Net Income as GAAP net income less certain tax adjusted non-recurring one-time expenses incurred during the period and Non-GAAP Earnings per Share as Non-GAAP Net Income divided by weighted-average shares outstanding.
We are presenting Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings Per Share because management believes that they provide additional ways to view our operations when considered with both our GAAP results and the reconciliation to net income, which we believe provides a more complete understanding of our business than could be obtained absent this disclosure. Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings Per Share are presented solely as supplemental disclosure because: (i) we believe these measures are a useful tool for investors to assess the operating performance of the business without the effect of these items; (ii) we believe that investors will find this data useful in assessing shareholder value; and (iii) we use Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings Per Share internally as benchmarks to evaluate our operating performance or compare our performance to that of our competitors. The use of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings per Share has limitations and you should not consider these measures in isolation from or as an alternative to the relevant GAAP measure of net income prepared in accordance with GAAP, or as a measure of profitability or liquidity.
The tables set forth below present reconciliations of Non-GAAP EBITDA, Non-GAAP Adjusted EBITDA, Non-GAAP Net Income and Non-GAAP Earnings per Share, which are non-GAAP financial measures to Net Income and Earnings per Share, our most directly comparable financial measures presented in accordance with GAAP.
Investor Relations Contacts:
Scott Van Winkle, ICR