-- Reports Q1 Revenues of $238 Million and EPS of $1.04
-- Raises Guidance for Full Year 2007; Expects EPS of $3.34 to
$3.46 for 2007
HORSHAM, Pa.--(BUSINESS WIRE)--April 25, 2007--NutriSystem, Inc.
(NASDAQ:NTRI), a leading provider of weight management and fitness
products and services, today announced results for the first quarter
ended March 31, 2007, including:
-- An increase in revenues of 62% to $238,360,000 in the first
quarter of 2007 compared to $146,751,000 in revenues in the
first quarter of 2006;
-- Growth in operating income to $59,610,000 (25.0% of revenues)
in the first quarter of 2007 compared to $35,179,000 (24.0% of
revenues) in the first quarter of 2006; and
-- An increase in net income of 70% to $37,867,000 or $1.04 per
diluted share in the first quarter of 2007 compared to net
income of $22,335,000 or $0.60 per diluted share in the first
quarter of 2006.
"The solid growth of our core women's market and continued
strength of the men's market allowed us to achieve record earnings,"
said Michael J. Hagan, Chairman, President and Chief Executive
Officer. "In addition, an integral part of our first quarter has been
the ongoing expansion of our pool of ex-customers and their desire to
return to NutriSystem for weight management services. The operating
margin expansion we saw in the first quarter was partially due to the
growth in revenue from ex-customers," continued Mr. Hagan.
Direct channel revenues reached $217,859,000 in the first quarter
of 2007, a 64% increase over the same period in 2006. The Company
added approximately 358,000 Direct channel new customers, a 52%
increase from approximately 235,000 new customers in the first quarter
of 2006.
"Our customer economics are strong and getting stronger," said
James D. Brown, Executive Vice President and Chief Financial Officer.
"Compared to the first quarter of last year, revenue per customer in
the initial diet cycle, gross margin and the value per customer net of
food and customer acquisition costs all increased. We also expect that
reactivation revenue (revenue from customers more than nine months
removed from their first purchase) will be about $93 million in the
aggregate in 2007 compared to $38 million in 2006."
"The business continues to generate substantial operating cash
flow," continued Mr. Brown. "We deployed $76 million in the first
quarter to repurchase 1.7 million shares of common stock, and funded
most of the buyback with net cash from operations of $66 million."
Second Quarter and Revised Full Year 2007 Outlook
For the second quarter of 2007, the Company estimates that
revenues will be between $190 and $200 million, an increase of at
least 43% year over year. Diluted earnings per share are expected to
be between $0.82 and $0.86, an increase of at least 55%. Further, the
Company expects to add at least 210,000 new Direct channel customers
in the second quarter of 2007. The Company now expects full year 2007
revenues will be between $790 million and $805 million. 2007 diluted
earnings per share are expected to be between $3.34 and $3.46 per
share. This guidance does not reflect the effect of any potential
future stock repurchases.
"2007 is shaping up to be a very good year for us. Our 2007
strategy is to focus on three areas: profitable new customer growth
across all market segments - women, men, and seniors; continue to
improve retention and reactivation efforts; and invest in product
areas such as our new 2008 weight loss program that advance customer
health while growing the lifelong value of each customer," commented
Mr. Hagan.
Conference Call and Webcast
Management will host a conference call and simultaneous webcast to
discuss first 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 800-591-6945
(international: 617-614-4911) and entering access code 52455166, 5-10
minutes prior to the initiation of the call. A replay of the
conference call will be available through May 25, 2007, by dialing
888-286-8010 (international: 617-801-6888) and entering access code
62406521. 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
March 31,
--------------------------
2007 2006
------------ ------------
REVENUE $ 238,360 $ 146,751
------------ ------------
COSTS AND EXPENSES:
Cost of revenue 111,650 73,687
Marketing 51,712 26,935
General and administrative 14,419 10,424
Depreciation and amortization 969 526
------------ ------------
Total costs and expenses 178,750 111,572
------------ ------------
Operating income 59,610 35,179
INTEREST INCOME, net 977 579
------------ ------------
Income before income taxes 60,587 35,758
INCOME TAXES 22,720 13,423
------------ ------------
Net income $ 37,867 $ 22,335
============ ============
BASIC INCOME PER COMMON SHARE $ 1.07 $ 0.63
============ ============
DILUTED INCOME PER COMMON SHARE $ 1.04 $ 0.60
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic 35,364 35,697
Diluted 36,274 37,119
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands except share and per share amounts)
March 31, December 31,
2007 2006
------------ ------------
ASSETS
-------
CURRENT ASSETS:
Cash and cash equivalents $ 15,173 $ 13,785
Marketable securities 54,086 68,469
Receivables 23,361 17,218
Inventories 57,145 72,366
Deferred income taxes 3,667 2,743
Other current assets 7,592 11,202
------------ ------------
Total current assets 161,024 185,783
FIXED ASSETS, net 11,593 9,374
OTHER ASSETS 2,919 2,710
------------ ------------
$ 175,536 $ 197,867
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 35,384 $ 45,306
Accrued payroll and related benefits 3,140 1,371
Accrued income taxes 18,915 --
Other accrued expenses and current
liabilities 8,607 5,057
------------ ------------
Total current liabilities 66,046 51,734
NON-CURRENT LIABILITIES 753 831
------------ ------------
Total liabilities 66,799 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 - 34,317,855 at March 31, 2007
and 35,918,506 at December 31, 2006) 34 35
Additional paid-in capital 100,603 103,468
Retained earnings 8,100 41,799
------------ ------------
Total stockholders' equity 108,737 145,302
------------ ------------
$ 175,536 $ 197,867
============ ============
NUTRISYSTEM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
Three Months Ended
March 31,
--------------------------
2007 2006
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 37,867 $ 22,335
Adjustments to reconcile net income to
net cash provided by operating
activities-
Depreciation and amortization 969 526
Share-based expense 802 1,888
Deferred tax (benefit) expense (1,333) 3,571
Changes in operating assets and
liabilities-
Accrued interest income 183 224
Receivables (6,143) (6,412)
Inventories 15,221 (5,758)
Other assets 3,915 (416)
Accounts payable (9,922) 2,452
Accrued payroll and related benefits 1,769 710
Accrued income taxes 18,915 7,175
Other accrued expenses and
liabilities 3,719 1,967
------------ ------------
Net cash provided by operating
activities 65,962 28,262
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable securities (47,000) (29,850)
Sales of marketable securities 61,200 3,400
Capital additions (3,172) (1,465)
------------ ------------
Net cash provided by (used in)
investing activities 11,028 (27,915)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of stock options 240 887
Tax benefit from stock option exercises 729 2,677
Payment on note payable (150) --
Repurchases and retirement of common
stock (76,421) --
------------ ------------
Net cash (used in) provided by
financing activities (75,602) 3,564
------------ ------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,388 3,911
CASH AND CASH EQUIVALENTS, beginning of
period 13,785 3,902
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 15,173 $ 7,813
============ ============
CONTACT: NutriSystem, Inc.
James D. Brown, 215-706-5302
Email: jbrown@nutrisystem.com
or
Investor Relations:
The Piacente Group, Inc.
Brandi Piacente, 212-481-2050
Email: brandi@thepiacentegroup.com
SOURCE: NutriSystem, Inc.
