DALLAS, Jan. 3, 2017 /PRNewswire/ -- JRjr33, Inc., doing business as JRJR Networks [NYSE MKT: JRJR] today announced it filed its Form 10-Q for the period ended September 30, 2016 on Friday, December 30, 2016.
John Walker, the Chief Financial Officer commented, "We are pleased to file the Q by the original filing extension for the September 30, 2016 10-Q granted by the Exchange. This filing comes just three weeks after the December 6, 2016 filing of the 10-Q for the period ended June 30, 2016. While the Exchange provided an additional extension to file the September 10-Q until January 31, 2017, the organization felt it was important to demonstrate the seriousness in which we have taken this issue. I believe this speaks of the Company's commitment to adhering to the listing requirements of the Exchange and the importance of this information for our shareholders. While it has been a trying and costly exercise regaining compliancy, we are very pleased with the conclusion of this process and will now start work on our annual audit.
I am also pleased to report higher year to date gross revenues for the nine months ended September 30, 2016, which are up 16% percent over the prior year. Improvements in our restructuring programs yielded a $782 thousand savings in general and administrative expenses for the quarter. While it has been a challenging year, we are pleased to have the distracting issues facing the business behind us and look forward to focusing on our business and growth initiatives in 2017.
We are reviewing several interesting opportunities that will continue to enhance the brand and business model that we are committed to. We look forward to beginning 2017 with a series of operating initiatives focused on brand supremacy, sales penetration and additional operational enhancements."
Financial Highlights
Gross Revenue for the third quarter was approximately $34.1 million, compared to last year's revenue of $37.0 million. The revenue for the nine months ended September 30, 2016 increased to approximately $106.6 million, compared to $91.9 million during the same period for the prior year, an increase of $14.7 million, or 16%.
Net revenue for the third quarter was approximately $28.5 million, which is comparable to last year's net revenue of $31.1 million. The net revenue for the nine months ended September 30, 2016 was approximately $88.8 million, compared to $79.8 million during the same period for the prior year, an increase of $9.0 million, or 11.3%.
Gross profit was approximately $19.4 million, compared to $21.4 million in the same quarter last year. The gross profit for the nine months ended September 30, 2016 was approximately $60.0 million, compared to $55.8 million during the same period for the prior year, an increase of $4.2 million, or 7.5%.
Gross profit margin during the quarter was 56.9% of revenue, compared to 57.9% of revenue in the prior year. The gross profit margin for the nine months ended September 30, 2016 was 56.3%, compared to 60.7% during the same period for the prior year. The decrease in gross profit margin is primarily due to our acquisition of Betterware which has lower gross profit margins compared to the other companies in the portfolio.
Operating loss for the third quarter improved to approximately $4.1 million, compared to $4.4 million in the prior year, a change of $0.3 million. The operating loss increased to approximately $15.5 million, compared to $11.1 million in the prior year, a change of $4.4 million. The operating loss decreased in the third quarter due to a decrease in the gross profit which was a result of lower profit margins.
Net loss attributable to JRjr33, Inc. for the third quarter was approximately $4.7 million, or a loss of 13.8% of revenue, increased compared to the $3.9 million, or a loss of 10.5% of revenue, experienced during the third quarter of last year. The net loss attributable to JRjr33, Inc. for the nine months ended September 30, 2016 was approximately $16.1 million, or a loss of 15.1% of revenue, compared to $7.6 million, or a loss of 8.3% of revenue, during the same period for the prior year, an increase of $8.5 million. The net loss increased as a result of the increase in operating losses as well as the increase in interest expense as a result of the Company taking on additional debt in quarter four of last year as well as $859 thousand in late filing penalties to Dominion.
Adjusted EBITDA (losses) for the quarter was approximately $1.7 million, or a loss of 4.9% of revenue, which is consistent with the prior year's loss of $1.7 million, or a loss of 4.5% of revenue. The adjusted EBITDA (losses) for the nine months ended September 30, 2016 was approximately $8.0 million, or a loss of 7.5% of revenue, which has increased from the prior year's loss of $2.4 million, or a loss of 2.6% of revenue.
The Company will hold a conference call Wednesday January 4, 2017 at 4:30 p.m. Eastern Time, to discuss the Company's third quarter 2016 financial results.
To participate in the conference call, please dial toll free 888-428-9470.
For international callers, please dial (toll) 719-325-2366.
An audio replay of the conference call will be available in the investor relations section of the Company's website following completion of the call for approximately 30 business days.
JRjr33, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share
data) September 30, December 31,
2016 2015
--- ---- ----
Assets
Current assets:
Cash and cash equivalents $1,872 $6,482
Marketable securities 832 5,306
Accounts receivable, net 5,079 4,828
Inventory, net 19,162 20,799
Other current assets 4,055 2,303
----- -----
Total current assets 31,000 39,718
Assets held for sale 998 1,111
Restricted cash - 2,857
Sale leaseback security deposit 4,414 4,414
Property, plant and equipment, net 3,382 5,387
Property under capital leases, net 14,217 14,654
Goodwill 5,076 5,427
Intangibles, net 7,637 8,801
Other assets 37 135
--- ---
Total assets $66,761 $82,504
======= =======
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $16,298 $15,937
Related party payables 1,936 1,605
Accrued commissions 4,660 3,033
Accrued liabilities 8,562 7,303
Deferred revenue 4,351 2,307
Taxes payable 6,440 4,830
Current portion of long-term debt 9,853 3,048
Other current liabilities 1,041 777
Total current liabilities 53,141 38,840
------ ------
Deferred tax liability 795 744
Long-term debt, less current portion 4,381 12,784
Capital lease obligation, less current
portion 15,943 16,332
Other long-term liabilities 2,836 2,864
Total liabilities 77,096 71,564
------ ------
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock, par value $0.001 per share,
500,000 authorized; -0-issued and
outstanding - -
Common stock, par value $0.0001 per share,
250,000,000 shares authorized; 36,863,719
and 35,718,279 shares issued and
outstanding, at September 30, 2016 and at
December 31, 2015, respectively 4 4
Additional paid-in capital 60,102 58,837
Accumulated other comprehensive loss (3,661) (586)
Accumulated deficit (61,340) (45,255)
------- -------
Total stockholders' equity attributable to
JRjr33, Inc. (4,895) 13,000
Stockholders' equity attributable to non-
controlling interest (5,440) (2,060)
------ ------
Total stockholders' equity (10,335) 10,940
------- ------
Total liabilities and stockholders' equity $66,761 $82,504
======= =======
JRjr33, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands, except share
and per common share data) 2016 2015 2016 2015
--------------------------- ---- ---- ---- ----
Revenue $34,100 $36,954 $106,589 $91,915
Program costs and discounts (5,603) (5,838) (17,796) (12,141)
------ ------ ------- -------
Net revenues 28,497 31,116 88,793 79,774
Costs of sales 9,107 9,727 28,833 23,985
----- ----- ------ ------
Gross profit 19,390 21,389 59,960 55,789
Distributor expense 8,718 10,205 27,373 27,541
Selling expense 4,033 3,861 13,284 10,331
General and administrative
expense 9,467 10,249 31,969 27,351
Share based compensation
expense 58 1,087 107 (109)
Depreciation and
amortization 640 920 2,007 2,228
Gain on sale of assets 599 (532) 487 (615)
Impairment of goodwill - - 191 192
Operating loss (4,125) (4,401) (15,458) (11,130)
Loss (gain) on sale of
marketable securities (3) 2 (12) 9
Gain on acquisition of a
business - - - (2,819)
Interest expense, net 1,554 564 3,422 1,906
----- --- ----- -----
Loss before income tax
provision (5,676) (4,967) (18,868) (10,226)
Income tax provision
(benefit) 194 (29) 605 356
--- --- --- ---
Net loss (5,870) (4,938) (19,473) (10,582)
Net loss attributable to
non-controlling interest 1,172 1,043 3,388 2,935
----- ----- ----- -----
Net loss attributable to
JRjr33, Inc. $(4,698) $(3,895) $(16,085) $(7,647)
======= ======= ======== =======
Basic and diluted loss per
share:
Weighted average common
shares outstanding 36,322,360 34,367,095 35,996,384 32,842,579
Loss per common share
attributable to JRjr33,
Inc., basic and diluted $(0.13) $(0.11) $(0.45) $(0.23)
JRjr33, Inc.
EBITDA (losses) Reconciliation
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands) 2016 2015 2016 2015
------------- ---- ---- ---- ----
Net loss $(5,870) $(4,938) $(19,473) $(10,582)
Interest, net 1,554 564 3,422 1,906
Income tax expense 194 (29) 605 356
Depreciation and amortization 781 920 2,430 2,228
--- --- ----- -----
EBITDA (losses) (3,341) (3,483) (13,016) (6,092)
Capital market expenses 85 289 328 1,124
M&A expenses 280 290 1,105 932
M&A infrastructure expense 536 685 1,825 2,183
Other EBITDA Adjustments 763 555 1,776 (533)
Adjusted EBITDA (losses) $(1,677) $(1,664) $(7,982) $(2,386)
======= ======= ======= =======
Cautionary Note Regarding 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, and adding back the expenses related to interest, income taxes, depreciation, and amortization, stock compensation expenses, non-cash compensation, deferred rent, inventory write-off adjustments, gains/losses in relation to the sale of an asset, asset impairment costs such as goodwill or other identifiable intangible impairment, asset fair value adjustments, and debt forgiveness expenses, 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 is provided above in this press release.
About JRJR Networks (www.jrjrnetworks.com)
JRJR Networks is a growing platform of direct-to-consumer brands. Within JRJR Networks, each company retains its separate identity, sales force, product line and compensation plan, while JRJR Networks seeks synergies and efficiencies in operational areas. JRJR Networks 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; Agel Enterprises, a global seller of nutritional products in gel form as well as a skin care line, operating in 50 countries; Paperly, which offers a line of custom stationery and other personalized products; Uppercase Living, which offers a line of customizable vinyl expressions for display on walls in the home; Kleeneze, a 95-year old UK-based catalog seller of cleaning, health, beauty, home, outdoor and a variety of other products, and Betterware, a UK-based home catalog seller. JRJR Networks also includes Happenings, a lifestyle publication and marketing company.
Cautionary Note Regarding Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact contained in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "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 and include statements regarding the opportunities under review and the continued enhancement of the brand and business model. 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 expand leadership activities in support of our sales, our ability to continue to grow, our ability to integrate the entities that we have acquired, our ability to strengthen our internal controls and the other risks outlined under "Risk Factors" in our Annual Report on Form 10-K for our fiscal year ended December 31, 2015 and our other filings with the SEC, including subsequent 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.
Contact:
Investor Relations: Tucker Gagen (tucker.gagen@jrjrnetworks.com)
Media Contact: Brenton Baker (brenton.baker@jrjrnetworks.com)
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SOURCE JRJR Networks
