SAN DIEGO, May 20, 2019 /PRNewswire/ -- Youngevity
International, Inc. (NASDAQ: YGYI), a leading multi-channel
lifestyle company, today reported financial results for the first
quarter ended March 31, 2019.
Steve Wallach, Chairman and CEO
of Youngevity International stated, "We exceeded our quarterly
revenue expectations and we are encouraged by the increase in gross
profits and in Adjusted EBITDA over Q1 2018. We continue to
see revenue stabilization in the direct selling segment and this
combined with strong revenue delivered by our commercial coffee
segment has returned us to Q over Q growth. We reiterate
our annual revenue guidance for 2019 in the range of $220 million and $240
million which represents a projected annual growth rate
between 35% and 48% over 2018. We continue to anticipate
estimated annual revenue contribution from our new reporting
commercial hemp segment between $45
million and $50 million for
2019 with the great majority of this revenue being delivered in the
second half of the year."
Dave Briskie, President and CFO
of Youngevity International stated, "We made significant strides
toward our stated goals of returning to growth and profitability in
2019. The coffee segment delivering quarterly profitability
and strong Adjusted EBITDA is a big milestone for the
business. When backing out the impact of non-cash equity
compensation on a consolidated basis we are seeing significant
improvements toward reaching profitability this reporting
period. Adjusted EBITDA improving by 58.4% and a 30.9%
overall revenue growth rate is a good way to start 2019. We
eagerly anticipate our commercial hemp segment contributing to
revenue growth and profits in the back half of the year."
First Quarter 2019 Results
Revenues for the first quarter ended March 31, 2019 increased 30.9% to $56.3 million as compared to $43.0 million for the quarter ended March 31, 2018. We derived approximately 59%
of our revenue from our direct selling segment and approximately
41% of our revenue from our commercial coffee segment. Direct
selling segment revenues decreased 5.4% to $33.4 million in the current quarter as compared
to $35.3 million for the quarter
ended March 31, 2018. This decrease
was primarily attributed to revenues from new acquisitions of
$421,000, offset by a decrease of
$2,333,000 in revenues from existing
business. Commercial coffee segment revenues increased by 196.9% to
$22,813,000 in the current quarter as
compared to $7,683,000 for the
quarter ended March 31, 2018. This
increase was primarily attributed to increased revenues from our
new green coffee contract that CLR recently signed for
approximately $250 million over 5
years. The new commercial hemp segment recorded $67,000 in revenues related to the acquisition of
Khrysos which closed on February 15,
2019.
Gross profit for the first quarter ended March 31, 2019 increased 7.2% to $26.8 million as compared to $25.0 million for the first quarter ended
March 31, 2018. Gross profit in the
direct selling segment decreased 8.0% to $22,755,000 as compared to $24,735,000 for the first quarter ended
March 31, 2018. Gross Profit in the
commercial coffee segment increased to $4,067,000 in the current quarter, compared to
$277,000 for the first quarter ended
March 31, 2018, primarily due to
the increase in revenues from our new green coffee contract
discussed above. Overall gross profit as a percentage of revenues
decreased to 47.7% in the current quarter compared to 58.2% in the
same period last year, primarily due to the increased revenues in
the commercial coffee segment, which generally produces lower
margins than the direct selling segment.
Operating expenses increased 55.2% to $38,790,000 as compared to $24,988,000 for the three months ended
March 31, 2018. This increase
included an increase of $12,892,000
in non-cash equity-based compensation expense.
Distributor compensation paid to our independent distributors in
the direct selling segment decreased 4.4% to $14,890,000 for the three months ended
March 31, 2019, from $15,578,000 for the same period last year. This
decrease was primarily attributable to the decrease in direct
selling segment revenues.
For the three months ended March 31,
2019, total sales and marketing expense increased 14.9% to
$4,019,000 from $3,499,000 for the three months ended
March 31, 2018. This increase
included an increase of $471,000 in
non-cash equity-based compensation expense. Excluding the increase
in equity-based compensation expense, the increase in sales and
marketing expense would have been only 1.4%.
For the three months ended March 31,
2019, total general and administrative expense increased
236.3% to $19,881,000 from
$5,911,000 for the three months ended
March 31, 2018. This increase
included an increase of $12,421,000
in non-cash equity-based compensation expense. Excluding the
increase in equity-based compensation expense, the increase in
general and administration expense would have been 27.2%. In the
direct selling segment, general and administrative expense
increased by 223.7% to $16,459,000 in
the current quarter from $5,084,000
for the same period last year. This increase included an increase
of $10,995,000 in non-cash
equity-based compensation expense. Excluding the increase in
equity-based compensation expense, general and administrative
expense would have increased by 7.7%. This increase was primarily
due to an increase in accounting and legal fees. In addition, there
was no contingent liability revaluation adjustment in the current
quarter compared to a reduction in expense of $213,000 for the same period last year. In the
commercial coffee segment, general and administrative costs
increased by $2,065,000 or 249.7% to
$2,892,000 in the current quarter
compared to $827,000 in the same
period last year. This increase included an increase of
$1,425,000 in non-cash equity-based
compensation expense. Excluding the increase in stock-based
compensation expense, general and administration expense in the
commercial coffee segment would have increased by 77.4%. This was
primarily due to an increase in wages, incentives, warehouse
storage costs, workers' compensation costs and profit-sharing
expense of $243,000, compared to a
profit-sharing benefit of $223,000 in
the same period last year. General and administrative expense was
$530,000 in the commercial hemp
segment, mostly related to wages, supplies and general office costs
as this segment begins to scale up in anticipation of greater
revenues.
Other expense for the first quarter ended March 31, 2019 decreased by $2,061,000 to $21,000, as compared to other expense of
$2,082,000 for the three months ended
March 31, 2018. Net interest expense
decreased by $205,000 for the three
months ended March 31, 2019 to
$1,507,000, compared to $1,712,000 for the three months ended
March 31, 2018. Change in fair value
of derivative liabilities increased by 774,000 for the three months
ended March 31, 2019 to $1,486,000 in other income compared to
$712,000 for the three months ended
March 31, 2018. For the three
months ended March 31, 2018, we
recorded a non-cash extinguishment loss on debt of $1,082,000 as a result of the triggering of the
automatic conversion of the 2017 Notes associated with our
July 2017 Private Placement to common
stock.
Income tax provision for the first quarter ended March 31, 2019 was $298,000 as compared to an income tax provision
of $250,000 for the first quarter
ended March 31, 2018.
Net loss for the first quarter ended March 31, 2019 was $12,660,000 as compared to net loss of
$2,308,000 for the three months ended
March 31, 2018. The primary reason
for the increase in net loss was the increase of $12,966,000 in non-cash equity-based compensation
expense.
EBITDA (earnings before interest, income taxes, depreciation and
amortization) as adjusted to remove the effect of equity-based
compensation expense, the change in the fair value of the warrant
derivatives and non-cash loss on extinguishment of debt or
"Adjusted EBITDA," increased 58.4% to $2,407,000 for the quarter ended March 31, 2019, compared to $1,520,000 in the same period last year.
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 (loss), and adding back the
expenses related to interest, income taxes, depreciation,
amortization, stock-based compensation expense, change in the fair
value of the warrant derivative, non-cash impairment loss and debt
extinguishment gain or loss, 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
presented in the table at the end of this press release.
BALANCE SHEET HIGHLIGHTS:
- Cash & cash equivalents were $2,540,000 at March 31,
2019 verses $2,879,000 at
December 31, 2018
- Total assets were $142,997,000 at
March 31, 2019 verses $75,973,000 at December
31, 2018
- Total liabilities were $95,379,000 at March 31,
2019 verses $52,998,000 at
December 31, 2018
- Total stockholders' equity was $47,618,000 at March 31,
2019 verses $22,975,000 at
December 31, 2018
Conference Call Information
Youngevity International will host a conference call tomorrow,
Tuesday, May 21 at 1:00 p.m. Eastern Daylight Time (10:00 Pacific Daylight Time) to discuss its
financial results, quarterly and yearly highlights and business
outlook.
All interested parties can attend the event by clicking
https://InstantTeleseminar.com/Events/115629726 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=115629726
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/
About Youngevity International, Inc.
Youngevity International, Inc. (NASDAQ: YGYI), is a
multi-channel lifestyle company operating in 3 distinct business
segments including a commercial coffee enterprise, a commercial
hemp enterprise, and a multi-vertical omni direct selling
enterprise. The Company features a multi country selling
network and has assembled a virtual Main Street of products and
services under one corporate entity, YGYI 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. 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
regarding the $220 million to
$240 million estimated revenue for
2019, the projected annual growth rate of 35% to 48% over 2018, the
$45 Million to $50 Million estimated revenue contribution from
the commercial hemp segment for 2019, the goal of returning to
growth and profitability in 2019 and the commercial hemp segment
contributing to revenue growth and profits in the back half of the
year. 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 generate $220 Million to
$240 million in revenue for 2019,
$45 Million to $50 Million in revenue in 2019 through new
commercial hemp segment and projected annual growth of between 35%
to 48% over 2018, our ability to drive revenue in our
commercial coffee segment, our ability to develop and grow
our hemp commercial segment, our ability to continue our
international growth, our ability to leverage our platform and
global infrastructure to drive organic growth, our ability to
return to 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), and the other factors
discussed in our Annual Report on Form 10-K for the year ended
December 31, 2018 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
|
|
|
|
Condensed
Consolidated Statements of Operations
|
|
|
|
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
|
|
Revenues
|
$
56,300
|
|
$
42,994
|
|
13,306
|
30.9%
|
Cost of
revenues
|
29,451
|
|
17,982
|
|
11,469
|
63.8%
|
Gross profit
|
26,849
|
|
25,012
|
|
1,837
|
7.3%
|
Operating
expenses
|
|
|
|
|
|
|
Distributor
compensation
|
14,890
|
|
15,578
|
|
(688)
|
-4.4%
|
Sales and
marketing
|
4,019
|
|
3,499
|
|
520
|
14.9%
|
General and
administrative
|
19,881
|
|
5,911
|
|
13,970
|
236.3%
|
Total operating expenses
|
38,790
|
|
24,988
|
|
13,802
|
55.2%
|
Income (loss) from
operations
|
(11,941)
|
|
24
|
|
(11,965)
|
-49854.2%
|
Change in fair
value of warrant derivative liability
|
1,486
|
|
712
|
|
774
|
108.7%
|
Interest
expense, net
|
(1,507)
|
|
(1,712)
|
|
205
|
-12.0%
|
Extinguishment
loss on debt
|
-
|
|
(1,082)
|
|
1,082
|
-100.0%
|
Total other
expense
|
(21)
|
|
(2,082)
|
|
2,061
|
-99.0%
|
Net loss before
income taxes
|
|
(11,962)
|
|
(2,058)
|
|
(9,904)
|
481.2%
|
Income
tax provision
|
298
|
|
250
|
|
48
|
19.2%
|
Net loss
|
(12,260)
|
|
(2,308)
|
|
(9,952)
|
431.2%
|
Preferred stock
dividends
|
(14)
|
|
(3)
|
|
|
|
Net loss available to
common stockholders
|
(12,274)
|
|
(2,311)
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per
share
|
$
(0.45)
|
|
$
(0.12)
|
|
(0)
|
275.0%
|
Diluted loss per
share
|
$
(0.49)
|
|
$
(0.13)
|
|
(0)
|
276.9%
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding, basic
|
27,577,576
|
|
19,744,144
|
|
7,833,432
|
|
Weighted average
shares outstanding, diluted
|
28,025,172
|
|
19,758,402
|
|
8,266,770
|
|
|
|
|
|
|
|
|
|
Reconciliation of
Non-GAAP Measure
|
|
|
Adjusted EBITDA to
Net Loss
|
|
|
(In thousands)
(Unaudited)
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
|
|
Net loss
|
$
(12,260)
|
|
$
(2,308)
|
|
(9,952)
|
431.2%
|
Add:
|
|
|
|
|
-
|
|
Interest,
net
|
1,507
|
|
1,712
|
|
(205)
|
-12.0%
|
Income
tax provision
|
298
|
|
250
|
|
48
|
19.2%
|
Depreciation
|
475
|
|
432
|
|
43
|
10.0%
|
Amortization
|
670
|
|
827
|
|
(157)
|
-19.0%
|
EBITDA
|
(9,310)
|
|
913
|
|
(10,223)
|
-1119.7%
|
Add
(subtract):
|
|
|
|
|
|
|
Equity-based
compensation
|
13,203
|
|
237
|
|
12,966
|
5470.9%
|
Change in the
fair value of derivatives
|
(1,486)
|
|
(712)
|
|
(774)
|
108.7%
|
Extinguishment
loss on debt
|
-
|
|
1,082
|
|
(1,082)
|
-100.0%
|
Adjusted
EBITDA
|
$
2,407
|
|
$
1,520
|
|
887
|
58.4%
|
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
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SOURCE Youngevity International, Inc.