Company Revenue Increases 31% Sequentially to
Company Triples MP Performance Energy Sales in First Quarter of 2022 from Fourth Quarter of 2021 to Over
Mr.
The following are key financial highlights for the period. Reconciliations of certain GAAP to non-GAAP measures are provided later in this press release.
First Quarter 2022 Financial Highlights
- Revenue, net was
$13.1 million . - Gross margin was 11.5%, marking the second consecutive sequential increase in gross margin, up from (5.2%) or 5.0% adjusted for the delay in sales and continued run-off of discount accruals in the fourth quarter 2021, and up from 0.2% in the third quarter 2021.
- Gross margin was 34.8% for MP Performance Energy.
- Operating expenses were
$4.0 million - Net loss was
$(6.3) million . - Loss per share was
$(0.19) . - Adjusted EBITDA was
$(2.0) million .
The following are key business highlights.
- Planned expansion in the second half of 2022 into the ready-to-drink shake protein category with the launch of new whey protein drink line under the leading MusclePharm brand; partnership formed with first-in-class production company.
- MP Performance Energy drink line sold
$1.6 million in sales since launching inSeptember 2021 with the addition of a variety pack launched with Amazon inMarch 2022 . - Partnership entered into with Costco and Amazon.com for MP Performance Energy drink line; Costco to carry product in
Southern California andHawaii regions in summer 2022. - National partnership formed with leading nationwide food and beverage broker, Alliance Sales & Marketing, to strategically expand MP Performance Energy drink line into grocery and convenience channels across the US.
Non-GAAP Financial Measures
Within this press release, the Company refers to a non-GAAP financial measure (Adjusted EBITDA) which has a directly comparable
Adjusted EBITDA is provided so that investors have the same financial data that management uses to assess the Company’s operating results with the belief that it will assist the investment community in properly assessing the ongoing performance of the Company for the periods being reported and future periods. The presentation of this additional information is not meant to be considered a substitute for measures prepared in accordance with
Conference Call Information
The Company will host a conference call to discuss its operating results today at
There will also be a simultaneous, live webcast with the ability to ask questions of management on the Investor Relations section of the Company’s website at www.musclepharm.com. The webcast will be archived for 30 days.
Forward-Looking Statements
This communication contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, relating to our business and financial outlook, which are based on our current beliefs, assumptions, expectations, estimates, forecasts and projections. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “projects,” “intends,” “predicts,” “potential,” or “continue” or other comparable terminology. Such forward-looking statements only speak as of the date of this press release and the Company assumes no obligation to update the information included in this press release. Statements made in this press release that are forward-looking in nature may involve risks and uncertainties. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees and are subject to certain risks, uncertainties and assumptions that are difficult to predict, including, without limitation, risks relating to consumer spending that may decline or that
This list of risks, uncertainties and other factors is not complete. We discuss some of these matters more fully, as well as certain risk factors that could affect our business, financial condition, results of operations, and prospects, in reports we file from time-to-time with the
About
Contact:
646-277-1254
John.Mills@icrinc.com
Consolidated Statements of Operations | |||||||
(In thousands, except share and per share data) | |||||||
Three Months Ended | |||||||
2022 | 2021 | ||||||
Revenue, net | $ | 13,101 | $ | 13,121 | |||
Cost of revenue | 11,592 | 9,432 | |||||
Gross profit | 1,509 | 3,689 | |||||
Operating expenses: | |||||||
Selling and promotion | 1,160 | 1,149 | |||||
General and administration | 2,829 | 2,268 | |||||
Total operating expenses | 3,989 | 3,417 | |||||
Income (loss) from operations | (2,480 | ) | 272 | ||||
Other (expense) income: | |||||||
Interest expense | (3,821 | ) | (510 | ) | |||
Other income (expense), net | (12 | ) | 132 | ||||
Gain on settlement of payables | 12 | 200 | |||||
Income (loss) before provision for income taxes | (6,301 | ) | 94 | ||||
Net income (loss) | $ | (6,301 | ) | $ | 94 | ||
Net income (loss) per share, basic | $ | (0.19 | ) | $ | 0.00 | ||
Net income (loss) per share, diluted | $ | (0.19 | ) | $ | 0.00 | ||
Weighted average shares used to compute net income (loss) per share, basic | 33,386,200 | 33,119,549 | |||||
Weighted average shares used to compute net income (loss) per share, diluted | 33,386,200 | 45,492,620 | |||||
Consolidated Balance Sheets | ||||||||
(In thousands, except share and per share data) | ||||||||
2022 | 2021 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 534 | $ | 1,223 | ||||
Accounts receivable, net | 9,277 | 6,388 | ||||||
Inventory | 975 | 1,830 | ||||||
Prepaid expenses and other current assets | 1,052 | 1,046 | ||||||
Total current assets | 11,838 | 10,487 | ||||||
Property and equipment, net | 4 | 5 | ||||||
Intangible assets, net | — | 35 | ||||||
Operating lease right-of-use assets | 135 | 203 | ||||||
Total Assets | $ | 11,977 | $ | 10,730 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 18,877 | $ | 17,980 | ||||
Accrued and other liabilities | 6,654 | 5,942 | ||||||
Obligation under secured borrowing arrangement | 6,592 | 6,446 | ||||||
Operating lease liability | 233 | 342 | ||||||
Senior notes payable | 7,738 | 4,555 | ||||||
Convertible notes with a related party | 5,330 | 5,330 | ||||||
Revolving line of credit, related party | 2,747 | — | ||||||
Total Current Liabilities | 48,171 | 40,595 | ||||||
Other long term liabilities | 1,861 | 2,326 | ||||||
Total Liabilities | 50,032 | 42,921 | ||||||
Commitments and contingencies (Note 8) | ||||||||
Stockholders’ deficit: | ||||||||
Common stock, par value of | 32 | 32 | ||||||
Additional paid-in capital | 183,792 | 183,355 | ||||||
Treasury Stock at Cost, 875,621 shares | (10,039 | ) | (10,039 | ) | ||||
Accumulated deficit | (211,840 | ) | (205,539 | ) | ||||
Total Stockholders’ Deficit | (38,055 | ) | (32,191 | ) | ||||
Total Liabilities and Stockholders’ Deficit | $ | 11,977 | $ | 10,730 | ||||
Consolidated Statements of Cash Flows | |||||||||
(In thousands) | |||||||||
For the Three Months Ended | |||||||||
2022 | 2021 | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Net income/(loss) | $ | (6,301 | ) | $ | 94 | ||||
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities: | |||||||||
Depreciation and amortization of property and equipment | 1 | 4 | |||||||
Amortization of intangible assets | 35 | 80 | |||||||
Bad debt expense | (355 | ) | (11 | ) | |||||
Provision for inventory write down | — | 86 | |||||||
Stock-based compensation | 437 | — | |||||||
Amortization of debt issue cost | 419 | — | |||||||
OID Interest | 568 | — | |||||||
Amortization of debt discount | 2,196 | — | |||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable, net | (2,534 | ) | 1,278 | ||||||
Inventory | 855 | (406 | ) | ||||||
Prepaid expenses and other current assets | (6 | ) | 527 | ||||||
Operating lease assets and liabilities | (41 | ) | 87 | ||||||
Accounts payable | 897 | (1,641 | ) | ||||||
Other long-term liabilities | (465 | ) | — | ||||||
Accrued and other liabilities | 712 | — | |||||||
Net cash provided by/(used in) operating activities | (3,582 | ) | 98 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
Purchase of property and equipment | — | (4 | ) | ||||||
Net cash provided by/(used in) investing activities | — | (4 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Proceeds from line of credit | — | 1,061 | |||||||
Payments on lines of credit | — | (100 | ) | ||||||
Proceeds from secured borrowing arrangement, net of reserves | 6,293 | 11,423 | |||||||
Payments to secured borrowing arrangement, net of fees | (6,147 | ) | (13,781 | ) | |||||
Proceeds from revolving line of credit, related party | 7,366 | — | |||||||
Payments on revolving line of credit, related party | (4,619 | ) | — | ||||||
Repayment of notes payable | — | (108 | ) | ||||||
Net cash provided by/(used in) financing activities | 2,893 | (1,505 | ) | ||||||
Net increase/(decrease) in cash and cash equivalents | (689 | ) | (1,411 | ) | |||||
Cash and cash equivalents, beginning of period | 1,223 | 2,003 | |||||||
Cash and cash equivalents, end of period | $ | 534 | $ | 592 | |||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||
Cash paid for interest | $ | 3,467 | $ | 101 | |||||
Non-GAAP Adjusted EBITDA
In addition to disclosing financial results calculated in accordance with GAAP, this press release discloses Adjusted EBITDA, which is net loss adjusted for stock-based compensation, gain on settlement of payables, (gain) loss on disposal of property and equipment, interest and other expense, net, depreciation of property and equipment, amortization of intangible assets, provision for doubtful accounts, and (benefit) provision for income taxes.
Management uses Adjusted EBITDA as a supplement to GAAP measures to further evaluate period-to-period operating performance, as well as the Company’s ability to meet future working capital requirements. The exclusion of non-cash charges, including stock-based compensation, depreciation and amortization, gain on settlement of payables and impairment of assets, is useful in measuring the Company’s cash available for operations and performance of the Company. Management believes these non-GAAP measures will provide investors with important additional perspectives in evaluating the Company’s ongoing business performance.
The GAAP measure most directly comparable to Adjusted EBITDA is net income (loss). The non-GAAP financial measure of Adjusted EBITDA should not be considered as an alternative to net income (loss). Adjusted EBITDA is not a presentation made in accordance with GAAP and has important limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA excludes some, but not all, items that affect net income (loss) and is defined differently by different companies, our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies.
Set forth below are reconciliations of our reported GAAP net income (loss) to Adjusted EBITDA (in thousands):
Three Months Ended | |||||||
2022 | 2021 | ||||||
Net income (loss) (GAAP) | $ | (6,301 | ) | $ | 94 | ||
Non-GAAP adjustments: | |||||||
(Gain) on settlements | (12 | ) | (200 | ) | |||
Stock compensation expense | 437 | - | |||||
Interest expense | 3,821 | 510 | |||||
Depreciation of property and equipment | 1 | 3 | |||||
Amortization of Intangible Assets | 35 | 80 | |||||
Gain (loss) foreign currency | 12 | (11 | ) | ||||
Adjusted EBITDA (non-GAAP) | $ | (2,007 | ) | $ | 476 | ||
Source:
2022 GlobeNewswire, Inc., source