-- Reports Second Quarter Revenue of $214 Million and EPS of
$0.96
-- Raises Full Year Revenue and EPS Guidance
HORSHAM, Pa.--(BUSINESS WIRE)--July 24, 2007--NutriSystem, Inc.
(NASDAQ: NTRI), a leading provider of weight management and fitness
products and services, today announced results for the second quarter
ended June 30, 2007, including:
-- An increase in revenue of 61% to $213,556,000 in the second
quarter of 2007 compared to $132,631,000 in revenue in the
second quarter of 2006;
-- Growth in operating income to $52,729,000 (24.7% of revenues)
in the second quarter of 2007 compared to $31,030,000 (23.4%
of revenues) in the second quarter of 2006; and
-- An increase in diluted earnings per share of 81% to $0.96 in
the second quarter of 2007 compared to $0.53 per diluted share
in the second quarter of 2006.
"The quarter was a very good one and we were pleased with the
solid growth in our core women's market and continued strength in
revenue coming from our ex-customers," said Michael J. Hagan,
Chairman, President and Chief Executive Officer. "In addition, the
growth in the men's and senior's market segments for the second
quarter exceeded our expectations," continued Mr. Hagan.
Direct channel revenue reached $202,413,000 in the second quarter
of 2007, a 65% increase over the same period in 2006. The Company
added approximately 246,000 Direct channel new customers, a 46%
increase from approximately 168,000 new customers in the second
quarter of 2006.
"In the second quarter, we increased operating margin by 130 basis
points year over year," said James D. Brown, Executive Vice President
and Chief Financial Officer. "At the same time we made substantial
investments in the business to improve future profitability including
a new e-commerce platform, the new food program, a new call center and
international expansion."
"To date we've used our strong cash flow to fund stock buy-backs,"
continued Mr. Brown. "In the first half of 2007, we generated net cash
from operations of $98 million and repurchased 2.0 million shares for
$98 million."
Third Quarter and Revised Full Year 2007 Outlook
For the third quarter of 2007, the Company estimates that revenue
will be between $200 and $208 million, and expects diluted earnings
per share to be between $0.77 and $0.82. Further, the Company expects
to add approximately 245,000 new Direct channel customers in the third
quarter of 2007. The Company is raising its full year 2007 guidance
and now expects revenue to be between $810 million and $820 million
and 2007 diluted earnings per share to be between $3.46 and $3.52 per
share. This guidance does not reflect the effect of any potential
future stock repurchases.
"The business performed extremely well for the first half of 2007.
We continue to be excited about the new market segments we've launched
in the past year and even more excited about how often our
ex-customers are returning to us," commented Mr. Hagan. "We've come a
long way in the last few years with over two million Americans relying
on NutriSystem to help them reach and maintain their weight loss
goals. The future remains bright with an all-new program planned for
2008, our first international market, and new product extensions that
we believe will expand our customer's life long value."
Conference Call and Webcast
Management will host a conference call and simultaneous webcast to
discuss second quarter 2007 financial results today at 5:00 PM Eastern
time. The conference call will include remarks about the quarter and
the Company's outlook from members of the NutriSystem senior
management team including Chairman, President and Chief Executive
Officer Michael Hagan, Executive Vice President and Chief Marketing
Officer Tom Connerty, and Executive Vice President and Chief Financial
Officer James D. Brown. In the conference call the senior management
team will refer to a brief slide presentation that will be available
in the presentations page of the investor relations section of
NutriSystem's website, www.nutrisystem.com. Interested parties may
participate in the conference call by dialing 888-713-4216
(international: 617-213-4868) and entering access code 75690000, 5-10
minutes prior to the initiation of the call. A replay of the
conference call will be available through August 24, 2007, by dialing
888-286-8010 (international: 617-801-6888) and entering access code
27096683. A webcast of the conference call will also be available for
one year under the investor information section of NutriSystem's
website.
About NutriSystem, Inc.
Founded in 1972, NutriSystem (NASDAQ: NTRI) is a leading provider
of weight management and fitness products and services. The Company
offers a weight loss program based on portion-controlled, lower
Glycemic Index prepared meals. The program has no membership fees and
provides free online and telephone counseling.
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
outlook and guidance for the second quarter of 2007 and the full year
2007, its expectations regarding its ability to continue its growth
while maintaining costs, statements about momentum in its business 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 Six Months Ended
June 30, June 30,
------------------ -----------------
2007 2006 2007 2006
--------- -------- -------- --------
REVENUE $213,556 $132,631 $451,916 $279,382
--------- -------- -------- --------
COSTS AND EXPENSES:
Cost of revenue 96,260 63,492 207,910 137,179
Marketing 45,525 26,751 97,237 53,686
General and administrative 17,341 10,766 31,760 21,190
Depreciation and amortization 1,701 592 2,670 1,118
--------- -------- -------- --------
Total costs and expenses 160,827 101,601 339,577 213,173
--------- -------- -------- --------
Operating income 52,729 31,030 112,339 66,209
INTEREST INCOME, net 949 889 1,926 1,468
--------- -------- -------- --------
Income before income taxes 53,678 31,919 114,265 67,677
INCOME TAXES 20,129 12,129 42,849 25,552
--------- -------- -------- --------
Net income $ 33,549 $ 19,790 $ 71,416 $ 42,125
========= ======== ======== ========
BASIC INCOME PER COMMON SHARE $ 0.98 $ 0.55 $ 2.05 $ 1.17
========= ======== ======== ========
DILUTED INCOME PER COMMON SHARE $ 0.96 $ 0.53 $ 2.00 $ 1.13
========= ======== ======== ========
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 34,293 36,033 34,825 35,866
Diluted 35,111 37,481 35,690 37,301
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except share and per share amounts)
June 30, December 31,
2007 2006
-------- ------------
ASSETS
------------------------------------------------
CURRENT ASSETS:
Cash and cash equivalents $ 4,642 $ 13,785
Marketable securities 77,909 68,469
Receivables 17,209 17,218
Inventories 47,553 72,366
Deferred income taxes 3,120 2,743
Other current assets 7,104 11,202
-------- ------------
Total current assets 157,537 185,783
FIXED ASSETS, net 14,231 9,374
OTHER ASSETS 3,104 2,710
-------- ------------
$174,872 $197,867
======== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 30,503 $ 45,306
Accrued payroll and related benefits 6,004 1,371
Accrued income taxes 1,960 --
Other accrued expenses and current liabilities 6,757 5,057
-------- ------------
Total current liabilities 45,224 51,734
NON-CURRENT LIABILITIES 842 831
-------- ------------
Total liabilities 46,066 52,565
-------- ------------
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 - 34,263,723
at June 30, 2007 and 35,918,506 at December
31, 2006) 34 35
Additional paid-in capital -- 60,355
Retained earnings 128,772 84,912
-------- ------------
Total stockholders' equity 128,806 145,302
-------- ------------
$174,872 $197,867
======== ============
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Six Months Ended
June 30,
--------------------
2007 2006
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 71,416 $ 42,125
Adjustments to reconcile net income to net cash
provided by operating activities-
Depreciation and amortization 2,670 1,118
Share-based expense 1,898 3,948
Deferred tax (benefit) expense (995) 3,614
Changes in operating assets and liabilities-
Accrued interest income 85 (367)
Receivables 9 (390)
Inventories 24,813 (5,941)
Other assets 4,282 401
Accounts payable (14,803) (4,568)
Accrued payroll and related benefits 4,633 2,681
Accrued income taxes 1,960 1,664
Other accrued expenses and liabilities 1,829 300
---------- ---------
Net cash provided by operating activities 97,797 44,585
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (104,075) (54,550)
Sales of marketable securities 94,550 12,400
Capital additions (7,496) (2,500)
---------- ---------
Net cash used in investing activities (17,021) (44,650)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options 1,212 2,069
Tax benefit from stock option exercises 6,775 6,943
Payment on note payable (150) --
Repurchases and retirement of common stock (97,756) --
---------- ---------
Net cash (used in) provided by financing
activities (89,919) 9,012
---------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS (9,143) 8,947
CASH AND CASH EQUIVALENTS, beginning of period 13,785 3,902
---------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 4,642 $ 12,849
========== =========
CONTACT: NutriSystem, Inc.
James D. Brown, EVP and Chief Financial Officer
215-706-5302
jbrown@nutrisystem.com
or
Investor Relations:
The Piacente Group, Inc.
Brandi Piacente, 212-481-2050
brandi@thepiacentegroup.com
SOURCE: NutriSystem, Inc.
