DALLAS, May 11, 2015 /PRNewswire/ -- CVSL
Inc. (NYSE MKT: CVSL) ("CVSL" or the "Company"), a growing
portfolio of direct-to-consumer companies, today reported financial
results for the first quarter of 2015 ended March 31, 2015.
This press release presents revenue on a reported and pro forma
basis. Management believes that, because CVSL is in the early
stage of executing its strategy of scaling up the business through
acquisitions, the pro forma figure allows for better comparisons
with historical results. For the first quarter of 2015,
reported revenue includes virtually no results from Kleeneze, a
UK-based direct-to-consumer company, which CVSL acquired at the end
of the quarter, on March 25, 2015.
Pro forma revenue is calculated assuming that CVSL had acquired
Kleeneze on January 1, 2015.
First Quarter 2015 Financial Highlights
- Pro forma revenue grew 20.0%
- Reported revenue declined 27.9%
- Gross margin improved to 60.6% from 51.3%
- Reported net loss attributable to common stockholders increased
to $4.9 million from $3.1 million
- Total assets increased by $25.9
million to $83.3 million,
including the assets of Kleeneze at March
31, 2015
- Total cash items, including cash and equivalents, marketable
securities, restricted cash and cash held as security deposit,
totaled $22.7 million
Management Commentary
"Our reported results were in line with the Company's
expectations, said John Rochon Jr.,
CVSL's vice chairman and chief financial officer. "Reported
revenue was primarily influenced by the ongoing turnaround process
at The Longaberger Company. One of our strategies at Longaberger is
to get away from excessive discounting, which we believe weakens
the brand and ultimately hurts the income of our sales force.
Another is to stop the company's ill-conceived strategy of
competing with its own sales force by selling at a discount through
outlet mall stores. While these actions have a negative short
term effect on revenue, we believe they make the company healthier
and more appealing as an earning opportunity in the long run. The
West Coast dockworkers' strike also caused some disruption at
Longaberger this quarter, but now we have products flowing more
quickly through the supply chain and we've reduced back
orders.
"Turning around The Longaberger Company is the largest factor in
these reported results," Mr. Rochon added. "At Longaberger,
we spent the first two years solving fundamental problems that we
inherited. We had to focus on reducing bloated SG&A costs
and paying off bank debt to bring Longaberger out of danger.
Now we've begun turning our attention to stabilizing the revenue
line.
"Our reported revenue was also negatively impacted this quarter
by political unrest in two of Agel's largest markets, Ukraine and Russia, as well as by the unfavorable effect
of a strong U.S. dollar versus certain international currencies,
such as the Euro.
"A success story of the quarter has been Your Inspiration At
Home. That company's revenue is on a run rate to exceed
$15.6 million this year, which is
remarkable growth for a company that joined CVSL less than two
years ago with annual revenue at that time of only about
$1.3 million."
Concluded Mr. Rochon, "Our strategy is to buy companies at
favorable prices, apply our expertise to fix them and increase free
cash flow, and scale up our portfolio with acquisitions. We're
proud of what we've accomplished in a short time. Barely two
years since making our first acquisition in this sector we've
acquired eight companies, uplisted to the NYSE and paid down bank
debt. We're climbing up the ranks of the top 100 direct
selling companies as reported by Direct Selling News and we
are now one of the fastest growing direct-to-consumer companies in
the world. We did all of this while spending, on average, about
ten cents on the revenue dollar to
acquire our first eight companies. Even when you factor
in the acquisition expenses we incurred we're still bringing these
companies into CVSL at a tremendous value."
First Quarter Financial Review
For the quarter ending March 31,
2015, reported revenue was $19.2
million compared to $26.7
million in the first quarter a year ago. Revenue on a pro
forma basis, including the revenue of CVSL's most recently-acquired
company, Kleeneze, was $32.0 million
in the first quarter, representing a 20.0% increase over the first
quarter a year ago.
Program costs and discounts were $2.2
million in the first quarter of 2015, versus $5.0 million in the prior year period. Net
revenues were $17.1 million in the
first quarter of 2015, versus $21.7
million in the prior year period. Cost of sales were
$5.4 million in the first quarter of
2015, versus $8.0 million in the
prior year period. The gross profit in the first quarter of 2015
increased to 60.6% as a percentage of revenue, compared to 51.3% a
year ago.
Commissions and incentives were $5.9
million in the first quarter of 2015, versus $7.0 million in the prior year period. Selling,
general and administration costs remained flat at $9.4 million in the first quarter of 2015
compared to the same amount a year ago.
The Company realized an operating loss of $4.2 million in the first quarter of 2015, versus
an operating loss of $2.7 million in
the prior year's period.
The net loss for the quarter ending March
31, 2015 was $4.9 million,
compared to a loss of $3.1 million in
the same quarter last year.
Conference Call
Management will host a conference call to discuss the operating
and financial results and take investor questions at 9:00am ET on Tuesday, May
12, 2015. To participate in the conference call,
please dial 1-888-317-6003 approximately 10 minutes prior to the
call. International callers should dial 1-412-317-6061. Please
reference conference ID # 3942759.
A live webcast of the conference call will be available at
http://public.viavid.com/index.php?id=114584 Please
access the website 15 minutes prior to the start of the call to
download and install any necessary audio software. A webcast replay
of the conference call will be available in the investor relations
section of the Company's website following the call.
Use of Non-GAAP Financial Information
In addition to our U.S. GAAP results, this press release also
includes disclosure on pro forma financials that include the
performance of our Kleeneze acquisition over the entire period
ended March 31, 2015 as if we had
completed the acquisition at the beginning of the period. The
Company believes these pro forma results are the most accurate way
to view our financial performance given our strategy of additional
acquisitions. Pro forma performance is a key measure used by
management to evaluate the Company's results and make strategic
decisions about the Company, including potential acquisitions.
Management believes this measure is useful to investors because it
is an indicator of operational performance including all
currently-owned subsidiaries for the entire period.
Pursuant to the requirements of Regulation G, we have provided
the pro forma financial statements for the period ended
March 31, 2015 as an exhibit to this
press release.
Pro forma Consolidated Statement of Operations for the
quarter ended March 31, 2015.
The following summary presents the pro forma results of
operations for the current year up to the date of March 31, 2015 as though the companies had
combined at the beginning of the reported period.
|
|
|
|
|
Pro
Forma
|
|
|
|
Pro
Forma
|
|
CVSL
|
|
Kleeneze
|
|
Adjustments
|
|
Note
|
|
CVSL
|
Revenue
|
18,850
|
|
13,181
|
|
-
|
|
|
|
32,031
|
Program costs and
discounts
|
(2,161)
|
|
-
|
|
-
|
|
|
|
(2,161)
|
Net
revenue
|
16,689
|
|
13,181
|
|
-
|
|
|
|
29,870
|
Costs of
sales
|
5,215
|
|
5,250
|
|
-
|
|
|
|
10,465
|
Gross
profit
|
11,474
|
|
7,931
|
|
-
|
|
|
|
19,405
|
Commissions and
incentives
|
5,714
|
|
5,063
|
|
-
|
|
|
|
10,777
|
Gain on sale of
assets
|
(43)
|
|
-
|
|
-
|
|
|
|
(43)
|
Selling, general and
administrative
|
9,141
|
|
3,430
|
|
-
|
|
|
|
12,571
|
Amortization and
depreciation
|
618
|
|
-
|
|
-
|
|
|
|
618
|
Operating
loss
|
(3,956)
|
|
(562)
|
|
-
|
|
|
|
(4,518)
|
Loss on marketable
securities
|
7
|
|
-
|
|
-
|
|
|
|
7
|
Interest expense,
net
|
597
|
|
(106)
|
|
-
|
|
|
|
491
|
Loss from continuing
operations before income tax provision
|
(4,560)
|
|
(456)
|
|
-
|
|
|
|
(5,016)
|
Income tax
provision
|
191
|
|
4
|
|
-
|
|
|
|
195
|
Loss before
extraordinary item
|
(4,751)
|
|
(460)
|
|
-
|
|
|
|
(5,211)
|
Extraordinary item, net
of tax
|
-
|
|
33,638
|
|
(33,638)
|
|
A
|
|
-
|
Net loss
|
(4,751)
|
|
(34,098)
|
|
33,638
|
|
|
|
(5,211)
|
Net loss attributable
to non-controlling interest
|
(166)
|
|
-
|
|
-
|
|
|
|
(166)
|
Net loss attributable
to common stockholders
|
(4,585)
|
|
(34,098)
|
|
33,638
|
|
|
|
(5,045)
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss
per share:
|
|
|
|
|
|
|
|
|
|
Weighted average common
shares outstanding
|
29,668,069
|
|
29,668,069
|
|
29,668,069
|
|
|
|
29,668,069
|
Gain (loss) per common
share attributable to common stockholders
|
(0.15)
|
|
(1.15)
|
|
1.13
|
|
|
|
(0.17)
|
Notes to Pro Forma Unaudited Condensed Consolidated Financial
Statement
A Losses
were incurred as a result of the write down of intercompany
receivables that were forgiven prior to and in accordance with the
transaction. As these losses were direct and one-time events
related specifically to the acquisition, we have excluded these
items from the pro forma income statement shown below.
About CVSL INC.
CVSL is a growing federation of direct-to-consumer companies.
Within CVSL, each company retains its own separate brand identity,
sales force and compensation plan. CVSL companies currently include
The Longaberger Company, a 42-year old maker of hand-crafted
baskets and other home decor items; Your Inspiration At
Home, an award-winning maker of hand-crafted spices and other
gourmet food items from around the world; Tomboy Tools, a
direct seller of tools designed for women as well as home security
systems; Agel Enterprises, a global seller of nutritional
products in gel form as well as a skin care line, operating in 40
countries; Paperly, which offers a line of custom stationery
and other personalized products; My Secret Kitchen, a
U.K.-based seller of gourmet food products; Uppercase
Living, which offers an extensive line of customizable vinyl
expressions for display on walls in the home; and Kleeneze,
a UK-based seller of cleaning, health, beauty, home, outdoor and a
variety of other products. CVSL also includes Happenings, a
lifestyle publication and marketing company.
Cautionary Note Regarding Forward-Looking
Statements:
This press release contains forward-looking statements that
involve risks and uncertainties. All statements other than
statements of historical fact contained in this press release are
forward-looking statements. We have attempted to identify
forward-looking statements by terminology including "anticipate,"
"believe," "can," "continue," "could," "estimate," "expect,"
"intend," "may," "plan," "potential," "predict," "project,"
"should," or "will" or the negative of these terms or other
comparable terminology. Although we do not make
forward-looking statements unless we believe we have a reasonable
basis for doing so, we cannot guarantee their accuracy. These
statements include statements regarding CVSL's continued growth,
the impact of the changes at Longaberger, and indications to be
derived from pro forma numbers. These statements are subject to a
number of risks and uncertainties, as to CVSL's ability to
continue making acquisitions and CVSL's ability to turn around
Longaberger and other risks outlined under "Risk Factors" in
CVSL's Annual Report on Form 10-K/A for its fiscal year ended
December 31, 2014 and those risks
discussed in other documents we file with the Securities and
Exchange Commission, which may cause our actual results, levels of
activity, performance, or achievements expressed or implied by
these forward-looking statements to differ materially from
expectations. Except as required by law, we undertake no
obligation to update or revise publicly any of the forward-looking
statements after the date of this press release to conform our
statements to actual results or changed expectations.
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visit:http://www.prnewswire.com/news-releases/cvsl-inc-reports-first-quarter-results-300081410.html
SOURCE CVSL Inc.