PITTSBURGH, July 26, 2018 /PRNewswire/ -- GNC Holdings,
Inc. (NYSE: GNC) (the "Company") reported consolidated revenue of
$617.9 million in the second quarter
of 2018, compared with consolidated revenue of $650.2 million in the second quarter of
2017. The sale of Lucky Vitamin on September 30, 2017 resulted in a $22.6 million reduction to revenue.
Same store sales decreased 0.4% in domestic company-owned stores
(including GNC.com) in the second quarter of 2018. Excluding
the impact of higher loyalty points redemption in the current
quarter compared with the prior year quarter as the program
matures, same store sales increased 1.3%. In domestic
franchise locations, same store sales decreased 4.0%.
For the second quarter of 2018, the Company reported net income
of $13.3 million compared with
$16.6 million in the prior year
quarter. Diluted earnings per share ("EPS") was $0.16 in the current quarter compared with
$0.24 in the prior year
quarter. Excluding the expenses outlined in the table below,
adjusted net income was $16.9 million
in the current quarter compared with $28.8
million in the prior year quarter and adjusted EPS was
$0.20 in the current quarter compared
with $0.42 in the prior year
quarter.
Adjusted EBITDA, as defined and reconciled in the table below,
was $63.5 million in the current
quarter compared with $74.8 million
in the prior year quarter.
"During the second quarter of 2018, although we experienced some
softness in our U.S. brick and mortar business, we delivered
meaningful growth in our e-commerce and international businesses
consistent with our long-term growth initiatives" said Ken Martindale, chief executive officer.
"Our focus remains building on the fundamental strengths of GNC
through product and service innovation, effectiveness of our
loyalty programs, leveraging the strength of the GNC brand and
delivering an integrated customer experience."
Key Updates
- Growth in our international segment driven by China and our franchise business.
- Harbin Pharmaceutical Group transaction expected to close in
2018.
- Strong performance from category-defining Slimvance
weight-management product line and re-launch of Beyond Raw and Amp
brands, with additional innovation and new proprietary products
expected in the latter half of the year.
- GNC brand mix for domestic system-wide sales increased to 50%
compared with 43% in the second quarter of 2017.
- Increase in loyalty membership of 14.3% in the current quarter
compared to March 31, 2018; now 14.6
million members, including over 1.0 million members enrolled in PRO
Access, an 8.8% increase from March 31,
2018.
Segment Operating Performance
U.S. & Canada
Revenues in the U.S. and Canada
segment decreased $10.5 million, or
2.0%, to $517.3 million for the three
months ended June 30, 2018 compared
with $527.8 million in the prior year
quarter. E-commerce sales were 8.3% of U.S. and Canada revenue, an increase of 2.8% over the
prior year quarter and 1.2% over the first quarter of 2018.
Company-owned net store closures contributed an approximate
$9 million decrease compared with the
prior year quarter, while domestic franchise revenue declined
$8.2 million due to a decrease in
retail same store sales, as well as a reduction in the number of
franchise stores. Partially offsetting the above decreases in
revenue was an increase of $9.9
million relating to the Company's loyalty programs; PRO
Access paid membership fees and the myGNC Rewards change in
deferred points liability.
Excluding a $0.2 million
refranchising gain in the current quarter, operating income
decreased $7.1 million to
$45.4 million for the three months
ended June 30, 2018 compared with
$52.5 million for the same period in
2017. Operating income, excluding the gain, as a percentage of
segment revenue was 8.8% in the current quarter compared with 9.9%
in the prior year quarter primarily due to one-time vendor funding
support received in the prior year (which had an approximate impact
of 100 basis points), and expense deleverage, partially offset by a
higher sales mix of proprietary product.
International
Revenues in the International segment increased $4.8 million, or 11.0%, to $48.6 million in the current quarter compared
with $43.8 million in the prior year
quarter primarily due to an increase in China e-commerce sales of $3.7 million and an increase in sales to our
international franchisees of $0.9
million.
Operating income of $15.7 million
in the current quarter was relatively flat compared with the prior
year quarter, and as a percentage of segment revenue was 32.3% in
the current quarter compared with 36.0% in the prior year
quarter. The decrease in operating income percentage was
primarily due to a higher mix of China sales, which contribute lower margins
relative to franchise sales. In addition, as we invest to
grow the brand in China, marketing
expense increased in our China
business compared with the prior year quarter.
Manufacturing / Wholesale
Revenues in the Manufacturing / Wholesale segment, excluding
intersegment sales, decreased $4.0
million, or 7.2%, to $52.0
million for the three months ended June 30, 2018 compared with $56.0 million in the prior year quarter primarily
due to a $3.6 million decrease in
third-party contract manufacturing sales. Intersegment sales
increased $9.2 million reflecting the
Company's increasing focus on proprietary products.
Operating income decreased $2.7
million, or 14.7%, to $15.9
million for the three months ended June 30, 2018
compared with $18.6 million in the
prior year quarter. Operating income as a percentage of
segment revenue decreased from 16.6% in the prior year quarter to
13.6% in the current quarter primarily due to a lower margin rate
from third-party contract manufacturing, partially offset by higher
intersegment sales, which contribute higher margins.
Year-to-Date Performance
For the first six months of 2018, the Company reported
consolidated revenue of $1,225.5
million, a decrease of $79.7
million compared with consolidated revenue of $1,305.2 million for the first six months of
2017. The decrease was primarily due to the sale of Lucky Vitamin
on September 30, 2017, which resulted
in a $45.4 million reduction to
revenue, and the termination of the U.S. Gold Card Member Pricing
program in the prior year, which resulted in a $23.0 million decrease in revenue.
Same store sales increased 0.1% in domestic company-owned stores
(including GNC.com sales) for the first half of 2018 and excluding
the impact of loyalty points redeemed, same store sales increased
1.9%. In domestic franchise locations, same store sales decreased
3.0%.
For the first six months of 2018, the Company reported net
income of $19.5 million and EPS of
$0.23 compared with net income of
$41.4 million and EPS of $0.61 for the first six months of 2017. Excluding
the expenses outlined in the table below, adjusted EPS was
$0.44 and $0.80 in the first six months of 2018 and 2017,
respectively.
Cash Flow and Liquidity Metrics
For the six months ended June 30,
2018, the Company generated net cash from operating
activities of $49.1 million, a
$23.8 million decrease compared with
the six months ended June 30, 2017 of
$72.9 million. The decrease was
primarily related to the refinancing of our long-term debt, which
resulted in $16.3 million in fees
paid to third-parties and higher interest payments, partially
offset by lower tax payments.
For the six months ended June 30,
2018, the Company generated $58.2
million in free cash flow, an increase of $4.0 million or 7.4% compared with $54.2 million for the six months ended
June 30, 2017. The Company defines
free cash flow as cash provided by operating activities (excluding
fees relating to the debt refinancing) less cash used in investing
activities. At June 30, 2018, the
Company's cash and cash equivalents were $43.4 million and debt was $1.3 billion. No borrowings were outstanding on
the Revolving Credit Facility.
Conference Call
GNC has scheduled a live webcast to report its second quarter
2018 financial results on July 26,
2018 at 8:30 a.m. ET. To
participate on the live call, listeners in North America may dial (800) 263-0877 and
international listeners may dial (323) 794-2094. In addition,
a live webcast of the call will be available on
www.gnc.com via the Investor Relations section under "About
GNC." A replay of this webcast will be available through
August 9, 2018.
About Us
GNC Holdings, Inc. (NYSE: GNC) - Headquartered in
Pittsburgh, PA - is a leading
global specialty health, wellness and performance retailer.
GNC connects customers to their best selves by offering a
premium assortment of heath, wellness and performance products,
including protein, performance supplements, weight management
supplements, vitamins, herbs and greens, wellness supplements,
health and beauty, food and drink and other general merchandise.
This assortment features proprietary GNC and nationally recognized
third-party brands.
GNC's diversified, multi-channel business model generates
revenue from product sales through company-owned retail stores,
domestic and international franchise activities, third-party
contract manufacturing, e-commerce and corporate partnerships. As
of June 30, 2018, GNC had
approximately 8,800 locations, of which approximately 6,600 retail
locations are in the United States
(including approximately 2,400 Rite Aid franchise
store-within-a-store locations) and franchise operations in
approximately 50 countries.
Forward-Looking Statements Involving Known and Unknown Risks
and Uncertainties
This release contains certain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
with respect to the Company's financial condition, results of
operations and business that is not historical information.
Forward-looking statements can be identified by the use of
terminology such as "subject to," "believes," "anticipates,"
"plans," "expects," "intends," "estimates," "projects," "may,"
"will," "should," "can," the negatives thereof, variations thereon
and similar expressions, or by discussions regarding dividend,
share repurchase plan, strategy and outlook. While GNC believes
there is a reasonable basis for its expectations and beliefs, they
are inherently uncertain. The Company may not realize its
expectations and its beliefs may not prove correct. Many factors
could affect future performance and cause actual results to differ
materially from those matters expressed in or implied by
forward-looking statements, including but not limited to
unfavorable publicity or consumer perception of the Company's
products; costs of compliance and any failure on management's part
to comply with new and existing governmental regulations governing
our products; limitations of or disruptions in the manufacturing
system or losses of manufacturing certifications; disruptions in
the distribution network; or failure to successfully execute the
Company's growth strategy, including any inability to expand
franchise operations or attract new franchisees, any inability to
expand company-owned retail operations, any inability to grow the
international footprint, any inability to expand the e-commerce
businesses, or any inability to successfully integrate businesses
that are acquired. The Company undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result
of new information, future events or otherwise. Actual results
could differ materially from those described or implied by such
forward-looking statements. For a listing of factors that may
materially affect such forward-looking statements, please refer to
the Company's Annual Report on Form 10-K for the year ended
December 31, 2017.
Same Store Sales
Same store sales for company-owned stores include point-of-sale
retail sales from all domestic stores which have been operating for
twelve full months following the opening period. The Company is an
omnichannel retailer with capabilities that allow a customer to use
more than one channel when making a purchase, including in-store
and through e-commerce channels which include its wholly-owned
website GNC.com and third party websites (the sales from which are
included in the GNC.com business unit) where product assortment and
price are controlled by the Company, in which purchases are
fulfilled by direct shipment to the customer from one of the
Company's distribution facilities as well as third party e-commerce
vendors. In-store sales are reduced by sales originally consummated
online or through mobile devices and subsequently returned
in-store. Sales of membership programs, including the new PRO
Access loyalty program and former Gold Card program, which is no
longer offered in the U.S., as well as the net change in the
deferred points liability associated with the myGNC Rewards
program, are excluded from same store sales.
Same store sales are calculated on a daily basis for each store
and exclude the net sales of a store for any period if the store
was not open during the same period of the prior year. When a
store's square footage has been changed as a result of
reconfiguration or relocation in the same mall or shopping center,
the store continues to be treated as a same store. If, during the
period presented, a store was closed, relocated to a different mall
or shopping center, or converted to a franchise store or a
company-owned store, sales from that store up to and including the
closing day or the day immediately preceding the relocation or
conversion are included as same store sales as long as the store
was open during the same period of the prior year. Corporate stores
are included in same store sales after the thirteenth month
following a relocation or conversion to a company-owned store.
The Company also provides retail comparable same stores sales of
its franchisees as well as its Canada business if meaningful to current
results. While retail sales of franchisees are not included in the
Company's Consolidated Financial Statements, the metric serves as a
key performance indicator for its franchisees, which ultimately
impacts wholesale sales, royalties and fees received from
franchisees. The Company computes same store sales for its
franchisees and Canada business
consistent with the description of corporate same store sales
above. Same store sales for international franchisees and
Canada exclude the impact of
foreign exchange rate changes relative to the U.S. dollar.
Non-GAAP Measures
Management has included non-GAAP financial measures in this
press release because it believes they represent an effective
supplemental means by which to measure the Company's operating
performance, including adjusted net income, adjusted EPS, adjusted
EBITDA, segment operating income, and segment operating income as a
percentage of segment revenue, adjusted to exclude gains on
refranchising and certain other items as reflected in this release,
and free cash flow. Adjusted EBITDA is defined as net income
plus interest expense, net, loss on debt refinancing, income taxes
and depreciation and amortization and certain other items as
reflected in this release.
Management believes that these measures are useful to investors
as they enable the Company and its investors to evaluate and
compare the Company's results from operations in a more meaningful
and consistent manner by excluding specific items which are not
reflective of ongoing operating results and that can differ
significantly from company to company depending on long-term
strategic decisions regarding capital structure, the tax
jurisdictions in which companies operate and capital
investments.
However, these measures are not measurements of the Company's
performance under GAAP and should not be considered as alternatives
to earnings per share, net income or any other performance measures
derived in accordance with GAAP, or as an alternative to GAAP cash
flow from operating activities, or as a measure of the Company's
profitability or liquidity. For more information, see the
attached reconciliations of non-GAAP financial measures.
GNC
HOLDINGS, INC. AND SUBSIDIARIES
|
Consolidated
Statements of Operations
|
(in thousands,
except per share amounts)
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(unaudited)
|
Revenue
|
$
|
617,944
|
|
|
$
|
650,238
|
|
|
$
|
1,225,477
|
|
|
$
|
1,305,186
|
|
Cost of sales,
including warehousing,
distribution and occupancy
|
410,209
|
|
|
430,455
|
|
|
810,868
|
|
|
865,541
|
|
Gross
profit
|
207,735
|
|
|
219,783
|
|
|
414,609
|
|
|
439,645
|
|
Selling, general, and
administrative
|
158,531
|
|
|
159,540
|
|
|
319,261
|
|
|
325,567
|
|
Long-lived asset
impairments
|
—
|
|
|
19,356
|
|
|
—
|
|
|
19,356
|
|
Other loss (income),
net
|
320
|
|
|
(486)
|
|
|
75
|
|
|
(1,619)
|
|
Operating
income
|
48,884
|
|
|
41,373
|
|
|
95,273
|
|
|
96,341
|
|
Interest expense,
net
|
32,943
|
|
|
16,067
|
|
|
54,716
|
|
|
31,961
|
|
Loss on debt
refinancing
|
—
|
|
|
—
|
|
|
16,740
|
|
|
—
|
|
Income before
income taxes
|
15,941
|
|
|
25,306
|
|
|
23,817
|
|
|
64,380
|
|
Income tax
expense
|
2,600
|
|
|
8,662
|
|
|
4,286
|
|
|
22,992
|
|
Net
income
|
$
|
13,341
|
|
|
$
|
16,644
|
|
|
$
|
19,531
|
|
|
$
|
41,388
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.16
|
|
|
$
|
0.24
|
|
|
$
|
0.23
|
|
|
$
|
0.61
|
|
Diluted
|
$
|
0.16
|
|
|
$
|
0.24
|
|
|
$
|
0.23
|
|
|
$
|
0.61
|
|
Weighted average
common shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
83,332
|
|
|
68,287
|
|
|
83,282
|
|
|
68,267
|
|
Diluted
|
83,409
|
|
|
68,362
|
|
|
83,389
|
|
|
68,331
|
|
GNC
HOLDINGS, INC. AND SUBSIDIARIES
|
Reconciliation of
Net Income and Diluted EPS to Adjusted Net Income and Adjusted
EPS
|
(in thousands,
except per share data)
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Net
Income
|
|
Diluted
EPS
|
|
Net
Income
|
|
Diluted
EPS
|
|
Net
Income
|
|
Diluted
EPS
|
|
Net
Income
|
|
Diluted
EPS
|
|
(unaudited)
|
Reported
|
$
|
13,341
|
|
|
$
|
0.16
|
|
|
$
|
16,644
|
|
|
$
|
0.24
|
|
|
$
|
19,531
|
|
|
$
|
0.23
|
|
|
$
|
41,388
|
|
|
$
|
0.61
|
|
Gains on
refranchising
|
(208)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(208)
|
|
|
—
|
|
|
(124)
|
|
|
—
|
|
Retention
(1)
|
2,231
|
|
|
0.02
|
|
|
—
|
|
|
—
|
|
|
3,039
|
|
|
0.03
|
|
|
|
|
—
|
|
Loss on debt
refinancing
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16,740
|
|
|
0.20
|
|
|
—
|
|
|
—
|
|
Joint venture
start-up costs (2)
|
632
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
|
632
|
|
|
0.01
|
|
|
—
|
|
|
—
|
|
Legal charge
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,097
|
|
|
0.03
|
|
Long-lived asset
impairments (4)
|
—
|
|
|
—
|
|
|
19,356
|
|
|
0.28
|
|
|
—
|
|
|
—
|
|
|
19,356
|
|
|
0.28
|
|
Tax effect of items
above
|
943
|
|
|
0.01
|
|
|
(7,176)
|
|
|
(0.10)
|
|
|
(2,711)
|
|
|
(0.03)
|
|
|
(7,892)
|
|
|
(0.12)
|
|
Adjusted
|
$
|
16,939
|
|
|
$
|
0.20
|
|
|
$
|
28,824
|
|
|
$
|
0.42
|
|
|
$
|
37,023
|
|
|
$
|
0.44
|
|
|
$
|
54,825
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted common
shares outstanding
|
83,409
|
|
|
|
|
68,362
|
|
|
|
|
83,389
|
|
|
|
|
68,331
|
|
|
|
Reconciliation of
Net Income to Adjusted EBITDA
|
(in
thousands)
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(unaudited)
|
Net
Income
|
$
|
13,341
|
|
|
$
|
16,644
|
|
|
$
|
19,531
|
|
|
$
|
41,388
|
|
Income tax
expense
|
2,600
|
|
|
8,662
|
|
|
4,286
|
|
|
22,992
|
|
Interest expense,
net
|
32,943
|
|
|
16,067
|
|
|
54,716
|
|
|
31,961
|
|
Loss on debt
refinancing
|
—
|
|
|
—
|
|
|
16,740
|
|
|
—
|
|
Depreciation and
amortization (5)
|
12,001
|
|
|
14,115
|
|
|
24,106
|
|
|
30,854
|
|
Retention
(1)
|
2,231
|
|
|
—
|
|
|
3,039
|
|
|
—
|
|
Joint venture
start-up costs (2)
|
632
|
|
|
—
|
|
|
632
|
|
|
—
|
|
Legal charge
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
2,097
|
|
Long-lived asset
impairments (4)
|
—
|
|
|
19,356
|
|
|
—
|
|
|
19,356
|
|
Gains on
refranchising
|
(208)
|
|
|
—
|
|
|
(208)
|
|
|
(124)
|
|
Adjusted
EBITDA
|
$
|
63,540
|
|
|
$
|
74,844
|
|
|
$
|
122,842
|
|
|
$
|
148,524
|
|
|
(1) Relates to
incentive program to retain senior executives and certain other key
personnel below the executive level who are critical to the
execution and success of the Company's strategy. The total
amount awarded was approximately $10 million, which vests in four
installments of 25% each over the next two years. Vesting
dates are on the earlier of February 2019 or the closing of the
Harbin transaction, February 2019, August 2019 and February
2020.
|
|
(2) Relates to legal
and other start-up costs incurred in connection with the formation
of a commercial joint venture in China with Harbin Pharmaceutical
Group.
|
|
(3) Relates to the
outcome of litigation the Company pursued relating to a potential
breach under its UK license agreement.
|
|
(4) Relates to
pre-tax non-cash impairment of goodwill and other long-lived assets
associated with its Lucky Vitamin e-commerce business.
|
|
(5) The decrease in
the current year compared with the prior year was primarily due to
the prior year quarter accelerated depreciation associated with the
re-platforming of the GNC.com website from a third-party to a
cloud-based solution, as well as long-lived asset impairments
recorded within the U.S. and Canada segment for certain of our
underperforming stores in the third and fourth quarter of
2017.
|
GNC
HOLDINGS, INC. AND SUBSIDIARIES
|
U.S. Company-Owned
Same Store Sales (including GNC.com)
|
|
|
2018
|
|
2017
|
|
Q1
3/31
|
|
Q2
6/30
|
|
Q1
3/31
|
|
Q2
6/30
|
Contribution to
same store sales:
|
|
|
|
|
|
|
|
Domestic retail same
store sales
|
(1.2)
|
%
|
|
(4.2)
|
%
|
|
(3.6)
|
%
|
|
(0.5)
|
%
|
GNC.com contribution
to same store sales
|
1.7
|
%
|
|
3.8
|
%
|
|
(0.3)
|
%
|
|
(0.4)
|
%
|
Total same store
sales
|
0.5
|
%
|
|
(0.4)
|
%
|
|
(3.9)
|
%
|
|
(0.9)
|
%
|
GNC
HOLDINGS, INC. AND SUBSIDIARIES
|
Consolidated
Balance Sheets
|
(in
thousands)
|
|
|
June
30,
|
|
December
31,
|
|
2018
|
|
2017
|
|
(unaudited)
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
43,353
|
|
|
$
|
64,001
|
|
Receivables,
net
|
124,178
|
|
|
126,650
|
|
Inventory
|
493,653
|
|
|
485,732
|
|
Prepaid and other
current assets
|
73,033
|
|
|
66,648
|
|
Total current
assets
|
734,217
|
|
|
743,031
|
|
Long-term
assets:
|
|
|
|
Goodwill
|
140,883
|
|
|
141,029
|
|
Brand name
|
324,400
|
|
|
324,400
|
|
Other intangible
assets, net
|
96,200
|
|
|
99,715
|
|
Property, plant and
equipment, net
|
173,664
|
|
|
186,562
|
|
Other long-term
assets
|
29,710
|
|
|
25,026
|
|
Total long-term
assets
|
764,857
|
|
|
776,732
|
|
Total
assets
|
$
|
1,499,074
|
|
|
$
|
1,519,763
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
159,272
|
|
|
$
|
153,018
|
|
Current
debt
|
205,617
|
|
|
—
|
|
Deferred revenue and
other current liabilities
|
119,096
|
|
|
114,081
|
|
Total current
liabilities
|
483,985
|
|
|
267,099
|
|
Long-term
liabilities:
|
|
|
|
Long-term
debt
|
1,046,069
|
|
|
1,297,023
|
|
Deferred income
taxes
|
50,279
|
|
|
56,060
|
|
Other long-term
liabilities
|
84,799
|
|
|
85,502
|
|
Total long-term
liabilities
|
1,181,147
|
|
|
1,438,585
|
|
Total
liabilities
|
1,665,132
|
|
|
1,705,684
|
|
Stockholders'
deficit:
|
|
|
|
Common
stock
|
130
|
|
|
130
|
|
Additional paid-in
capital
|
1,004,563
|
|
|
1,001,315
|
|
Retained
earnings
|
563,387
|
|
|
543,814
|
|
Treasury stock, at
cost
|
(1,725,349)
|
|
|
(1,725,349)
|
|
Accumulated other
comprehensive loss
|
(8,789)
|
|
|
(5,831)
|
|
Total stockholders'
deficit
|
(166,058)
|
|
|
(185,921)
|
|
Total liabilities
and stockholders' deficit
|
$
|
1,499,074
|
|
|
$
|
1,519,763
|
|
GNC
HOLDINGS, INC. AND SUBSIDIARIES
|
Consolidated
Statements of Cash Flows
|
(in
thousands)
|
|
|
Six months ended
June 30,
|
|
2018
|
|
2017
|
|
(unaudited)
|
Net
income
|
$
|
19,531
|
|
|
$
|
41,388
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization expense
|
24,106
|
|
|
30,854
|
|
Amortization of debt
costs
|
9,025
|
|
|
6,602
|
|
Stock-based
compensation
|
3,474
|
|
|
2,709
|
|
Long-lived asset
impairments
|
—
|
|
|
19,356
|
|
Gains on
refranchising
|
(208)
|
|
|
(124)
|
|
Loss on debt
refinancing
|
16,740
|
|
|
—
|
|
Third-party fees
associated with refinancing
|
(16,322)
|
|
|
—
|
|
Changes in assets and
liabilities:
|
|
|
|
Decrease in
receivables
|
2,112
|
|
|
13,227
|
|
(Increase) decrease
in inventory
|
(9,201)
|
|
|
15,039
|
|
Increase in prepaid
and other current assets
|
(3,175)
|
|
|
(1,917)
|
|
Increase (decrease)
in accounts payable
|
6,751
|
|
|
(38,607)
|
|
Decrease in deferred
revenue and accrued liabilities
|
(1,017)
|
|
|
(16,086)
|
|
Other operating
activities
|
(2,674)
|
|
|
409
|
|
Net cash provided
by operating activities
|
49,142
|
|
|
72,850
|
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Capital
expenditures
|
(8,333)
|
|
|
(20,397)
|
|
Refranchising
proceeds
|
1,175
|
|
|
2,160
|
|
Store acquisition
costs
|
(118)
|
|
|
(432)
|
|
Net cash used in
investing activities
|
(7,276)
|
|
|
(18,669)
|
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Borrowings under
revolving credit facility
|
104,000
|
|
|
151,000
|
|
Payments on revolving
credit facility
|
(104,000)
|
|
|
(147,000)
|
|
Payments on Tranche
B-1 Term Loan
|
(2,275)
|
|
|
(40,853)
|
|
Payments on Tranche
B-2 Term Loan
|
(21,400)
|
|
|
—
|
|
Original Issuance
Discount and revolving credit facility fees
|
(35,235)
|
|
|
—
|
|
Deferred fees
associated with pending equity transaction
|
(3,014)
|
|
|
—
|
|
Minimum tax
withholding requirements
|
(226)
|
|
|
(247)
|
|
Net cash used in
financing activities
|
(62,150)
|
|
|
(37,100)
|
|
|
|
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(364)
|
|
|
454
|
|
Net (decrease)
increase in cash and cash equivalents
|
(20,648)
|
|
|
17,535
|
|
Beginning balance,
cash and cash equivalents
|
64,001
|
|
|
34,464
|
|
Ending balance, cash
and cash equivalents
|
$
|
43,353
|
|
|
$
|
51,999
|
|
GNC
HOLDINGS, INC. AND SUBSIDIARIES
|
Reconciliation of
Net Cash Provided by Operating Activities to Free Cash
Flow
|
(in
thousands)
|
|
|
Six months ended
June 30,
|
|
2018
|
|
2017
|
|
(unaudited)
|
|
|
|
|
Net cash provided
by operating activities
|
$
|
49,142
|
|
|
$
|
72,850
|
|
Capital
expenditures
|
(8,333)
|
|
|
(20,397)
|
|
Refranchising
proceeds
|
1,175
|
|
|
2,160
|
|
Store acquisition
costs
|
(118)
|
|
|
(432)
|
|
Third-party fees
associated with refinancing
|
16,322
|
|
|
—
|
|
Free cash
flow
|
$
|
58,188
|
|
|
$
|
54,181
|
|
|
|
|
|
GNC
HOLDINGS, INC. AND SUBSIDIARIES
|
Segment Financial
Data
|
(in
thousands)
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(unaudited)
|
Revenue:
|
|
|
|
|
|
|
|
U.S. and
Canada
|
$
|
517,317
|
|
|
$
|
527,814
|
|
|
$
|
1,029,731
|
|
|
$
|
1,064,435
|
|
International
|
48,635
|
|
|
43,813
|
|
|
88,700
|
|
|
83,564
|
|
Manufacturing /
Wholesale:
|
|
|
|
|
|
|
|
Intersegment
revenues
|
65,238
|
|
|
56,000
|
|
|
129,901
|
|
|
117,298
|
|
Third-party
|
51,992
|
|
|
55,997
|
|
|
107,046
|
|
|
111,831
|
|
Subtotal
Manufacturing / Wholesale
|
117,230
|
|
|
111,997
|
|
|
236,947
|
|
|
229,129
|
|
Total reportable
segment revenues
|
683,182
|
|
|
683,624
|
|
|
1,355,378
|
|
|
1,377,128
|
|
Other
|
—
|
|
|
22,614
|
|
|
—
|
|
|
45,356
|
|
Elimination of
intersegment revenues
|
(65,238)
|
|
|
(56,000)
|
|
|
(129,901)
|
|
|
(117,298)
|
|
Total
revenue
|
$
|
617,944
|
|
|
$
|
650,238
|
|
|
$
|
1,225,477
|
|
|
$
|
1,305,186
|
|
Operating
income:
|
|
|
|
|
|
|
|
U.S. and
Canada
|
$
|
45,603
|
|
|
$
|
52,490
|
|
|
$
|
89,093
|
|
|
$
|
102,980
|
|
International
|
15,692
|
|
|
15,787
|
|
|
30,156
|
|
|
30,656
|
|
Manufacturing /
Wholesale
|
15,889
|
|
|
18,637
|
|
|
30,853
|
|
|
35,904
|
|
Total reportable
segment operating
income
|
77,184
|
|
|
86,914
|
|
|
150,102
|
|
|
169,540
|
|
Corporate
costs
|
(28,300)
|
|
|
(26,207)
|
|
|
(54,779)
|
|
|
(54,281)
|
|
Other
|
—
|
|
|
(19,334)
|
|
|
(50)
|
|
|
(18,918)
|
|
Unallocated corporate
costs and other
|
(28,300)
|
|
|
(45,541)
|
|
|
(54,829)
|
|
|
(73,199)
|
|
Total operating
income
|
$
|
48,884
|
|
|
$
|
41,373
|
|
|
$
|
95,273
|
|
|
$
|
96,341
|
|
GNC
HOLDINGS, INC. AND SUBSIDIARIES
|
Consolidated Store
Count Activity
|
|
|
Six months ended
June 30,
|
|
2018
|
|
2017
|
U.S. &
Canada
|
|
|
|
Company-owned(a):
|
|
|
|
Beginning of period
balance
|
3,423
|
|
|
3,513
|
|
Store
openings
|
11
|
|
|
36
|
|
Acquired franchise
stores(b)
|
12
|
|
|
33
|
|
Franchise
conversions(c)
|
(3)
|
|
|
(1)
|
|
Store
closings
|
(115)
|
|
|
(75)
|
|
End of period
balance
|
3,328
|
|
|
3,506
|
|
Domestic
Franchise:
|
|
|
|
Beginning of period
balance
|
1,099
|
|
|
1,178
|
|
Store
openings
|
9
|
|
|
13
|
|
Acquired franchise
stores(b)
|
(12)
|
|
|
(33)
|
|
Franchise
conversions(c)
|
3
|
|
|
1
|
|
Store
closings
|
(27)
|
|
|
(21)
|
|
End of period
balance
|
1,072
|
|
|
1,138
|
|
International(d):
|
|
|
|
Beginning of period
balance
|
2,015
|
|
|
1,973
|
|
Store
openings
|
36
|
|
|
45
|
|
Store
closings
|
(43)
|
|
|
(72)
|
|
End of period
balance
|
2,008
|
|
|
1,946
|
|
Store-within-a-store (Rite Aid):
|
|
|
|
Beginning of period
balance
|
2,418
|
|
|
2,358
|
|
Store
openings
|
21
|
|
|
26
|
|
Store
closings
|
(78)
|
|
|
(6)
|
|
End of period
balance
|
2,361
|
|
|
2,378
|
|
Total
Stores
|
8,769
|
|
|
8,968
|
|
|
|
|
|
(a) Includes
Canada.
|
|
(b) Stores that were
acquired from franchisees and subsequently converted into
company-owned stores.
|
|
(c) Company-owned
store locations sold to franchisees.
|
|
(d) Includes
franchise locations in approximately 50 countries (including
distribution centers where sales are made) and company-owned stores
located in Ireland and China.
|
View original
content:http://www.prnewswire.com/news-releases/gnc-holdings-inc-reports-second-quarter-2018-results-300686735.html
SOURCE GNC Holdings, Inc.