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8-K - FORM 8K - Youngevity International, Inc. | ygyi8k_august142018.htm |
EXHIBIT
99.1
Youngevity International Announces Second Quarter 2018
Results
Shareholder Conference Call Today at
1:00 PM EST, 10:00AM PST
Highlights Q2 2018 compared to Q2 2017:
Total revenues increased 6.6% to $44.3 million
Coffee Segment revenues increased 23.7%
Operating income increased to $653,000 compared to operating loss
of $676,000
Adjusted EBITDA increased to $2.2 million compared to
$745,000
SAN
DIEGO, CA--(August 14, 2018) - Youngevity
International, Inc. (NASDAQ: YGYI ), a
leading omni-direct lifestyle company, today reported financial
results for the second quarter and six months ended June 30,
2018.
Steve
Wallach, CEO and Co-Founder of Youngevity stated, “We are
encouraged to see our revenue and adjusted EBITDA bounce back from
the levels achieved last year. A 6.6% revenue increase and over a
$1.3 million improvement in operating income comparing the same
quarter 2017 to 2018 is a step in the right direction. I am most
encouraged by the contribution coming from our global expansion
which contributed over 17% of our direct selling
revenue.”
Youngevity
President and CFO, Dave Briskie stated, “We believe eclipsing
$3.7 million in adjusted EBITDA at the half way point of 2018 is a
significant improvement over last year. Directing our efforts
toward revenue growth, improved profitability for the remainder of
this year and combining this initiative with the $250 million, 5
year coffee contract announced just two weeks ago should have us
well positioned for 2019.”
SECOND QUARTER 2018 FINANCIAL RESULTS
For the three months ended June 30, 2018, revenues increased 6.6%
to $44,255,000 as compared to $41,527,000 for the three months
ended June 30, 2017. During the three months ended June 30,
2018, the Company derived approximately 83% of its revenues from
direct selling sales and approximately 17% of its revenues from
commercial coffee sales. For the three months ended June 30,
2018, direct selling segment revenues increased by $1,308,000
or 3.7% to $36,846,000 as compared to $35,538,000 for the three
months ended June 30, 2017. This increase was primarily attributed
to revenues from new acquisitions and price increases on certain
products that went into effect on January 1, 2018.
For the three months ended June 30,
2018, commercial coffee segment revenues increased by $1,420,000 or
23.7% to $7,409,000 as compared to $5,989,000 for the three months
ended June 30, 2017. This increase was primarily attributed to
increased revenues of $1,168,000 from our green coffee
business.
For the three months ended June 30, 2018, gross profit increased
approximately 5.3% to $25,382,000 as compared to $24,102,000 for
the three months ended June 30, 2017. Overall gross profit as a
percentage of revenues decreased to 57.4%, compared to 58.0% in the
same period last year.
For the three months ended June 30, 2018, our operating expenses
decreased 0.2% to $24,729,000 as compared to $24,778,000 for the
three months ended June 30, 2017.
Distributor compensation expense decreased 1.2% to $16,487,000 for
the three months ended June 30, 2018 from $16,686,000 for the same
period in the prior year primarily due to the price increases
reflected in revenues which did not impact commissionable base
revenues. Sales and marketing expense increased 6.0% to $3,076,000
for the three months ended June 30, 2018 from $2,901,000 for the
same period in the prior year, primarily due to the Asia convention
that was held in Malaysia. General and administrative expense
decreased 0.5% to $5,166,000 from $5,191,000 for the three months
ended June 30, 2017 primarily due to contingent liability
revaluation that resulted in a benefit of $1,246,000 for the three
months ended June 30, 2018 compared to a benefit of $680,000 for
the three months ended June 30, 2017. This decrease was offset by
increases in information technology (IT) consulting costs,
amortization costs, investor relations, salaries and other related
costs, legal fees and accounting costs.
For the three months ended June 30, 2018, total other expense
decreased by $1,242,000 to $1,357,000 as compared to $2,599,000 for
the three months ended June 30, 2017. Total other expense includes
net interest expense and the change in the fair value of derivative
liabilities. Net interest expense increased by $291,000 for the
three months ended June 30, 2018 to $1,549,000 compared to
$1,258,000 for the three months ended June 30, 2017. Change in fair
value of derivative liabilities decreased by $1,533,000 for the
three months ended June 30, 2018 to a $192,000 benefit compared to
$1,341,000 expense for the three months ended June 30,
2017.
For the three months ended June 30, 2018, the Company reported a
net loss of $614,000 as compared to a net loss of $2,730,000 for
the same period in the prior year. The decrease in net loss was due
to a net loss before income taxes in the current quarter of
$704,000 offset by a tax benefit of $90,000, compared to a net loss
before income taxes of $3,275,000 offset by a tax benefit of
$545,000 for the same period last year.
Adjusted EBITDA
EBITDA (earnings before interest, income taxes, depreciation and
amortization) as adjusted to remove the effect of stock based
compensation expense and the
non-cash loss on extinguishment of debt and the change in the fair
value of the warrant derivative or "Adjusted EBITDA," increased to
$2,203,000 for the three months ended June 30, 2018 compared to
$745,000 for the three months ending June 30,
2017.
Fiscal 2018 First Six Months Results
For the six months ended June 30, 2018, our revenues increased 8.7%
to $87,249,000 as compared to $80,260,000 for the six months ended
June 30, 2017. During the six months ended June 30, 2018, we
derived approximately 83% of our revenue from our direct selling
sales and approximately 17% of our revenue from our commercial
coffee sales. For the six months ended June 30,
2018, direct selling segment revenues increased by $3,377,000
or 4.9% to $72,157,000 as compared to $68,780,000 for the six
months ended June 30, 2017. Commercial coffee segment revenues
increased for the six months ended June 30, 2018 by $3,612,000 or
31.5% to $15,092,000 as compared to $11,480,000 for the same period
last year. This increase was primarily attributed to increased
revenues from our green coffee business.
For the six months ended June 30, 2018, gross profit increased
approximately 9.6% to $50,394,000 as compared to $45,968,000 for
the six months ended June 30, 2017. Overall gross profit as a
percentage of revenues increased to 57.8%, compared to 57.3% in the
same period last year. The increase in gross profit in the direct
selling segment was primarily attributable to the price increases
on certain products and changes in product sales mix.
For the six months ended June 30, 2018, our operating expenses
increased 1.4% to $49,717,000 as compared to $49,044,000 for the
six months ended June 30, 2017. Distributor compensation decreased
0.1% to $32,065,000 for
the six months ended June 30, 2018 compared to $32,105,000 for the
same period last year. This decrease was primarily attributable to
the price increases reflected in revenues, which did not impact
commissionable base revenues. Sales and marketing expense decreased
by only $1,000 to $6,575,000 for the six months ended June 30,
2018, compared to $6,576,000 for the same period last year. General
and administrative expense increased 6.9% to $11,077,000 for the
six months ended June 30, 2018, compared to $10,363,000 for the
same period last year.
For the six months ended June 30, 2018, total other expense
increased by $253,000 to $3,439,000 as compared to $3,186,000 for
the six months ended June 30, 2017. Net interest expense increased
by $806,000 for the six months ended June 30, 2018 to $3,261,000
compared to $2,455,000 for the same period last year. Change in
fair value of derivative liabilities was a benefit of $904,000 for
the six months ended June 30, 2018, compared to $731,000 expense
for the same period last year.
For the six months ended June 30, 2018, the Company reported a net
loss of $2,922,000 as compared to a net loss of $4,789,000 for the
same period last year.
Adjusted EBITDA
EBITDA (earnings before interest, income taxes, depreciation and
amortization) as adjusted to remove the effect of stock-based
compensation expense and the non-cash loss on extinguishment of debt and the
change in the fair value of the warrant derivative or "Adjusted
EBITDA,” increased to $3,723,000 for the six months ended
June 30, 2018 compared to a negative $492,000 in
2017.
Conference Call Information
Management will host a conference call today at 1:00 PM Eastern
Standard Time (10:00 AM Pacific Standard Time), to discuss the
Company's second quarter financial results, for the quarter ended
June 30, 2018. All interested parties can attend the event by
clicking https://InstantTeleseminar.com/Events/109631496 fifteen
minutes prior to the start of the call, or by dialing 206 402 0100
and entering the access code 634174# at least five minutes prior to
the start of the call. International and alternative numbers are
available at https://InstantTeleseminar.com/Local/?eventid=109631496
The
conference call will be recorded and available for replay shortly
after the conclusion of the call. An archived replay of the call
will be available for approximately 3 months on the company’s
newly launched Investor Relations website: https://ygyi.com/
Non-GAAP Financial Measure - Adjusted EBITDA
This
news release includes information on Adjusted EBITDA, which is a
non-GAAP financial measure as defined by SEC Regulation
G.
Management
believes that Adjusted EBITDA, when viewed with our results under
GAAP and the accompanying reconciliations, provides useful
information about our period-over-period growth. Adjusted EBITDA is
presented because management believes it provides additional
information with respect to the performance of our fundamental
business activities and is also frequently used by securities
analysts, investors and other interested parties in the evaluation
of comparable companies. We also rely on Adjusted EBITDA as a
primary measure to review and assess the operating performance of
our Company and our management team.
Adjusted
EBITDA is a non-GAAP financial measure. We calculate adjusted
EBITDA by taking net income, and adding back the expenses related
to interest, income taxes, depreciation, amortization, stock based
compensation expense and the non-cash loss on extinguishment of
debt and the change in the fair value of the warrant
derivative, as each of those elements are calculated in accordance
with GAAP. Adjusted EBITDA should not be construed as a substitute
for net income (loss) (as determined in accordance with GAAP) for
the purpose of analyzing our operating performance or financial
position, as Adjusted EBITDA is not defined by GAAP. A
reconciliation of Adjusted EBITDA to net loss is provided in the
tables at the end of this press release.
About Youngevity International, Inc.
Youngevity International, Inc.
( NASDAQ : YGYI ),
is a leading omni-direct lifestyle company -- offering a hybrid of
the direct selling business model, that also offers e-commerce and
the power of social selling. Assembling a virtual Main Street
of products and services under one corporate entity, Youngevity
offers products from the six top selling retail categories:
health/nutrition, home/family, food/beverage (including coffee),
spa/beauty, apparel/jewelry, as well as innovative
services. The Company was formed in the course of the summer
2011 merger of Youngevity Essential Life Sciences with
Javalution® Coffee Company (now part of the company's food and
beverage division). For investor information, please
visit YGYI.com. Be
sure to like us on Facebook and
follow us on Twitter.
Safe Harbor Statement
This
release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. In some
cases, forward-looking statements can be identified by terminology
such as "may," "should," "potential," "continue," "expects,"
"anticipates," "intends," "plans," "believes," "estimates," and
similar expressions, and includes statements such as our company
being well positioned for 2019. These
forward-looking statements are based on management's expectations
and assumptions as of the date of this press release and are
subject to a number of risks and uncertainties, many of which are
difficult to predict that could cause actual results to differ
materially from current expectations and assumptions from those set
forth or implied by any forward-looking statements. Important
factors that could cause actual results to differ materially from
current expectations include, among others, our ability to continue
our international growth, our ability to continue our coffee
segment growth, our ability to leverage our platform and global
infrastructure to drive organic growth, our ability to improve our
profitability, expand our liquidity, and strengthen our balance
sheet, our ability to continue to maintain compliance with the
NASDAQ requirements, the acceptance of the omni-direct approach by
our customers, our ability to expand our distribution, our ability
to add additional products (whether developed internally or through
acquisitions), our ability to continue our financial performance,
and the other factors discussed in our Annual Report on Form 10-K
and our subsequent filings with the SEC, including subsequent
periodic reports on Forms 10-Q and 8-K. The information in this
release is provided only as of the date of this release, and we
undertake no obligation to update any forward-looking statements
contained in this release on account of new information, future
events, or otherwise, except as required by law.
Table Follows
Youngevity International, Inc. and Subsidiaries
Youngevity International, Inc. and Subsidiaries
|
Condensed Consolidated Statements of Operations
|
(In
thousands)
|
(Unaudited)
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
|
Revenues
|
$44,255
|
$41,527
|
$87,249
|
$80,260
|
Cost
of revenues
|
18,873
|
17,425
|
36,855
|
34,292
|
Gross profit
|
25,382
|
24,102
|
50,394
|
45,968
|
Operating
expenses
|
|
|
|
|
Distributor compensation
|
16,487
|
16,686
|
32,065
|
32,105
|
Sales and marketing
|
3,076
|
2,901
|
6,575
|
6,576
|
General and administrative
|
5,166
|
5,191
|
11,077
|
10,363
|
Total
operating expenses
|
24,729
|
24,778
|
49,717
|
49,044
|
Operating
income (loss)
|
653
|
(676)
|
677
|
(3,076)
|
Change
in fair value of warrant derivative liability
|
192
|
(1,341)
|
904
|
(731)
|
Interest
expense, net
|
(1,549)
|
(1,258)
|
(3,261)
|
(2,455)
|
Extinguishment
loss on debt
|
-
|
-
|
(1,082)
|
-
|
Total other expense
|
(1,357)
|
(2,599)
|
(3,439)
|
(3,186)
|
Loss
before income taxes
|
(704)
|
(3,275)
|
(2,762)
|
(6,262)
|
Income
tax (benefit) provision
|
(90)
|
(545)
|
160
|
(1,473)
|
Net
loss
|
(614)
|
(2,730)
|
(2,922)
|
(4,789)
|
Preferred
stock dividends
|
(42)
|
(3)
|
(45)
|
(6)
|
Net
loss attributable to common stockholders
|
$(656)
|
$(2,733)
|
$(2,967)
|
$(4,795)
|
|
|
|
|
|
Net
loss per share, basic and diluted
|
$(0.03)
|
$(0.14)
|
$(0.14)
|
$(0.24)
|
|
|
|
|
|
Weighted
average shares outstanding, basic & diluted
|
21,506,833
|
19,651,705
|
20,630,383
|
19,643,486
|
Reconciliation of Non-GAAP Measure
|
Adjusted EBITDA to Net (Loss) Income
|
(In
thousands - unaudited))
|
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
||
|
2018
|
2017
|
2018
|
2017
|
Net
loss
|
$(614)
|
$(2,730)
|
$(2,922)
|
$(4,789)
|
Add:
|
|
|
|
|
Interest, net
|
1,549
|
1,258
|
3,261
|
2,455
|
Income taxes (benefit) provision
|
(90)
|
(545)
|
160
|
(1,473)
|
Depreciation
|
470
|
373
|
902
|
764
|
Amortization
|
865
|
690
|
1,692
|
1,335
|
EBITDA
|
2,180
|
(954)
|
3,093
|
(1,708)
|
Add:
|
|
|
|
|
Stock based compensation
|
215
|
358
|
452
|
485
|
Loss on extinguishment of debt
|
-
|
-
|
1,082
|
-
|
Change in the fair value of warrant derivative
|
(192)
|
1,341
|
(904)
|
731
|
Adjusted
EBITDA
|
$2,203
|
$745
|
$3,723
|
$(492)
|
Contacts:
Youngevity International, Inc.
Dave
Briskie
President
and Chief Financial Officer
1 800
982 3189 X6500
Investor Relations
YGYI
investor relations
800.504.8650
investors@ygyi.com
Media Relations
Trendlogic
PR
800.992.6299
contact@trendlogicpr.com