By Ted Nuyten
LifeVantage Corporation (Nasdaq:LFVN) today reported financial results for its second quarter ended December 31, 2017.
Second Quarter Fiscal 2018 Summary:
Revenue increased 1.1% to $49.5 million year over year and 0.7% sequentially;
Revenue in the Americas decreased 1.9% while revenue in Asia/Pacific & Europe increased 11.0% including a 9.3% increase in Japan, both on a year over year basis. On a sequential basis, revenue in the Americas increased 2.0% while revenue in Asia/Pacific & Europe decreased 3.0%, including a 4.4% decrease in Japan;
Active independent distributors and active preferred customers decreased 1.6% and 2.7%, respectively, year over year and decreased on a sequential basis 1.6% and 0.9%, respectively;
Adjusted EBITDA decreased 5.0% year over year to $3.7 million while increasing 37.6% sequentially;
Earnings per diluted share were $0.02 and adjusted earnings per diluted share were $0.11; and
Completed first share repurchases under the Company’s $5.0 million shares repurchase program.
“We continue to execute on our key initiatives for fiscal 2018 and generated both year over year and sequential revenue growth during the second quarter,”
stated LifeVantage President and Chief Executive Officer Darren Jensen.
“The recent launch of our highly anticipated Vitality Stack Packets is a key aspect of our product strategy initiatives.
We are also pleased to have successfully completed our commercial test of the new business model supporting our entry into China and formally launched in this promising new market on February 1, 2018.
As we enter the second half of our fiscal year, we are focused on accelerating revenue growth as our transformational initiatives take hold across LifeVantage’s growing global footprint.”
Second Quarter Fiscal 2018 Results
For the second fiscal quarter ended December 31, 2017, the Company reported revenue of $49.5 million, an increase of 1.1% as compared to $48.9 million in the second quarter of fiscal 2017. Revenue in the Americas for the second quarter decreased 1.9% compared to the second quarter of fiscal 2017, while revenue in the Asia/Pacific & Europe region increased 11.0% compared to the second quarter of fiscal 2017. Revenue in Japan increased 9.3% compared to the second quarter of fiscal 2017. Revenue for the second quarter of fiscal 2018 was negatively impacted $0.1 million, or 0.3%, by foreign currency fluctuations associated with revenue generated in several international markets when compared to the second quarter of fiscal 2017.
Gross profit for the second quarter of fiscal 2018 was $40.4 million, or 81.6% of revenue, compared to $41.4 million, or 84.7% of revenue, for the same period in fiscal 2017. Commissions and incentives expense for the second quarter of fiscal 2018 was $23.4 million, or 47.3% of revenue, compared to $23.5 million, or 48.1% of revenue, for the same period in fiscal 2017. Selling, general and administrative expense (SG&A) for the second quarter of fiscal 2018 was $14.6 million, or 29.6% of revenue, compared to $17.2 million, or 35.2% of revenue, for the same period in fiscal 2017.
Operating income for the second quarter of fiscal 2018 was $2.3 million, compared to $0.7 million for the second quarter of fiscal 2017. Operating income during the second quarter of fiscal 2018 included approximately $0.2 million of expenses associated with recruiting and transition fees and approximately $20,000 for expenses associated with class-action lawsuits. Adjusted EBITDA was $3.7 million for the second quarter of fiscal 2018, compared to $3.9 million for the comparable period in fiscal 2017.
Net income for the second quarter of fiscal 2018 was $0.3 million, or $0.02 per diluted share. This compares to net income for the second quarter of fiscal 2017 of $0.3 million, or $0.02 per diluted share.
Adjusted for recruiting and transition expenses of $0.2 million and class-action lawsuit expense of $20,000, net of $56,000 of tax impacts of these adjustments, and $1.2 million of one-time, non-cash tax expense associated with the re-valuation of deferred tax assets to the new federal corporate tax rate, adjusted Non-GAAP net income was $1.6 million for the second quarter of fiscal 2018, or $0.11per diluted share; compared to $1.6 million, or $0.11 per diluted share for the comparable period of fiscal 2017.
Non-GAAP adjustments to net income during the second quarter of fiscal 2017 included costs associated with the audit committee’s independent review of $1.7 million and executive recruiting and transition expenses of $0.1 million, net of $0.6 million of tax impacts for this adjustment.
About LifeVantage Corporation
LifeVantage Corporation is a science-based health, wellness and anti-aging company dedicated to helping people transform themselves internally and externally at a cellular level. Its scientifically-validated product lines include Protandim® Nrf2 and NRF1 Synergizers, TrueScience® Anti-Aging Skin Care Regimen, Petandim® for Dogs, AXIO® Smart Energy and the PhysIQ™ Smart Weight Management System.
LifeVantage was founded in 2003 and is headquartered in Salt Lake City, Utah. For more information, visit www.lifevantage.com.