LifeVantage Announces Financial Results for the Fourth Fiscal Quarter and Full Fiscal Year 2019

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LifeVantage Corporation (Nasdaq: LFVN) reported financial results for its fourth quarter and full fiscal year ended June 30, 2019.

“We are proud to report a strong finish to fiscal 2019, generating the highest annual revenue in the Company’s history while exceeding our fiscal 2019 adjusted EPS guidance,” stated LifeVantage President and Chief Executive Officer, Darren Jensen. “We continue to see positive trends in our active member counts, reflecting successful execution of each of our 2019 strategic initiatives. We have also expanded our geographic footprint and enhanced our innovative product offering. Looking to fiscal 2020, we remain focused on the key drivers of our continued growth, while embracing new initiatives with the intent to expand these drivers and capitalize on the ever growing global consumer interest in improving health and enhancing lifestyles. Our key initiatives for 2020 include growing our biohacking subscriptions, attracting and creating influencers to expand reach, simplifying the business building opportunity at LifeVantage and building a solid foundation for future growth. I am confident that the future remains bright for LifeVantage and I look forward to executing on our plans for fiscal 2020 and beyond.”

Fourth Quarter Fiscal 2019 Results

For the fourth fiscal quarter ended June 30, 2019, the Company reported revenue of $56.2 million, an increase of 4.0% as compared to $54.0 million in the fourth quarter of fiscal 2018. Revenue in the Americas for the fourth quarter decreased 2.9% compared to the fourth quarter of fiscal 2018 and revenue in the Asia/Pacific & Europe region increased 24.4% compared to the fourth quarter of fiscal 2018. Revenue for the fourth quarter of fiscal 2019 was negatively impacted $0.4 million, or 0.7%, by foreign currency fluctuations associated with revenue generated in international markets when compared to the fourth quarter of fiscal 2018.

Gross profit for the fourth quarter of fiscal 2019 was $46.5 million, or 82.7% of revenue, compared to $46.0 million, or 85.1% of revenue, for the same period in fiscal 2018. The decrease in gross margin was largely driven by a benefit of $0.9 million in the fourth quarter of fiscal 2018 due to a change in accrued import estimates. Normalized for this change, adjusted non-GAAP gross profit was comparable to the prior year period.

Commissions and incentives expense for the fourth quarter of fiscal 2019 was $25.5 million, or 45.3% of revenue, compared to $27.1 million, or 50.1% of revenue, for the same period in fiscal 2018. The year over year decrease reflects the timing of accruals for incentive and promotional programs.

Selling, general and administrative expense (SG&A) for the fourth quarter of fiscal 2019 was $15.3 million, or 27.3% of revenue, compared to $14.6 million, or 27.0% of revenue, for the same period in fiscal 2018. Adjusted for other nonrecurring legal and accounting expenses of $0.1 million and class-action lawsuit expenses of $37,000, adjusted non-GAAP SG&A expenses for the fourth quarter of fiscal 2019 were $15.2 million or 27.1% of revenue. Adjusted for class-action lawsuit expenses of $0.3 million, executive severance, recruiting and transition expenses of $0.3 million and benefits from insurance reimbursements of $0.4 million, adjusted non-GAAP SG&A expenses for the fourth quarter of fiscal 2018 were $14.4 million or 26.6% of revenue. The modest year over year increase in non-GAAP SG&A was primarily due to increased expenses associated with stock and other employee incentive compensation programs, which increased as a result of improved revenue performance and increases in the Company’s share price as compared to the prior year period.

Operating income for the fourth quarter of fiscal 2019 was $5.7 million, compared to $4.3 million for the fourth quarter of fiscal 2018. Accounting for the non-GAAP adjustments noted previously, adjusted non-GAAP operating income for the fourth quarter of fiscal 2019 was $5.8 million, compared to $3.7 million for the fourth quarter of fiscal 2018.

Adjusted EBITDA increased 48.6% to $7.7 million for the fourth quarter of fiscal 2019, compared to $5.2 million for the comparable period in fiscal 2018.

Net income for the fourth quarter of fiscal 2019 was $3.9 million, or $0.26 per diluted share. This compares to net income for the fourth quarter of fiscal 2018 of $3.0 million, or $0.21 per diluted share. Accounting for the non-GAAP adjustments noted previously, and tax impacts of these adjustments of $27,000, adjusted non-GAAP net income for the fourth quarter of fiscal 2019 increased 41.6% to $4.0 million, or $0.26 per diluted share. Accounting for the non-GAAP adjustments noted previously, and tax impacts of these adjustments of $0.2 million as well as tax expense of $0.3 million associated with the revaluation of deferred tax assets associated with the 2017 tax reform, adjusted non-GAAP net income for the fourth quarter of fiscal 2018 was $2.8 million, or $0.20 per diluted share.

Fiscal 2019 Full Year Results

For the fiscal year ended June 30, 2019, the Company reported net revenue of $226.0 million, an increase of 11.2% compared to $203.2 million for fiscal 2018. In fiscal 2019, revenue in the Americas increased 7.7% and revenue in Asia/Pacific & Europe increased 21.6%. Revenue for fiscal 2019 was negatively impacted $1.6 million, or 0.8%, by foreign currency fluctuations associated with revenue generated in international markets.

Gross profit during fiscal 2019 was $188.0 million, or 83.2% of revenue, compared to $168.4 million, or 82.9% of revenue, for fiscal 2018. The increase in gross margin was primarily due to benefits of a price increase during the second half of fiscal 2018, decreased inventory obsolescence and handling costs, partially offset by changes to our geographic and product sales mix related to the revenue growth and product expansion outside of the United States. Fiscal 2018 gross profit benefited by $0.9 million due to a change in accrued import estimates. Adjusted non-GAAP gross profit for fiscal 2018 was $167.5 million, or 82.4%.

Commissions and incentives expense for fiscal 2019 was $108.6 million, or 48.1% of revenue, compared to $98.2 million, or 48.3% of revenue, for fiscal 2018. Commissions and incentives expense, as a percentage of revenue, remained consistent on a comparative basis.

SG&A for fiscal 2019 was $69.6 million, or 30.8% of revenue, compared to $59.8 million, or 29.4% of revenue, for fiscal 2018. Adjusted for class-action lawsuit expenses of $0.6 million and nonrecurring legal and accounting expenses of $0.5 million, partially offset by a benefit associated with executive severance of $0.1 million, adjusted non-GAAP SG&A for fiscal 2019 was $68.5 million, or 30.3% of revenue. Adjusted for class-action lawsuit expenses of $0.7 million, executive severance, recruiting and transition expenses of $0.6 million, nonrecurring legal and accounting expenses of $0.1 million and benefits from insurance reimbursements received of $0.4 million, adjusted non-GAAP SG&A for fiscal 2018 was $59.0 million, or 29.0% of revenue. The $9.6 million year over year increase in non-GAAP SG&A was primarily due to increased expenses associated with stock and other employee incentive compensation programs, which increased as a result of improved revenue performance and increases in the Company’s share price as compared to the prior year period, costs associated with higher staffing levels added in late fiscal 2018, and due to increased expenses associated with Global Convention, Japan Convention and a Japan Elite Academy.

Operating income during fiscal 2019 was $9.8 million, compared to $10.3 million for fiscal 2018. Accounting for non-GAAP adjustments noted previously, adjusted non-GAAP operating income for fiscal 2019 was $10.8 million compared to $10.3 million for fiscal 2018.

Adjusted EBITDA increased 22.4% to $18.2 million for fiscal 2019, compared to $14.9 million for fiscal 2018.

Net income during fiscal 2019 was $7.4 million, or $0.50 per diluted share, compared to $5.8 million, or $0.41 per diluted share for fiscal 2018. Accounting for the non-GAAP adjustments noted previously, and tax benefits of these adjustments of $0.4 million, adjusted non-GAAP net income for fiscal 2019 increased 23.6% to $8.9 million, or $0.59 per diluted share. Accounting for the non-GAAP adjustments noted previously, and tax impacts of these adjustments of $42,000, as well as tax expense of $1.5 million associated with the revaluation of deferred tax assets associated with the 2017 tax reform, adjusted non-GAAP net income for fiscal 2018 was $7.2 million, or $0.51 per diluted share.

About LifeVantage Corporation

LifeVantage Corporation (Nasdaq: LFVN) 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 nutrigenomic 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 and hair care products, Petandim for Dogs, Axio Smart Energy Drink mixes, and the PhysIQ Smart Weight Management System. LifeVantage was founded in 2003 and is headquartered in Salt Lake City, Utah.

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