Company Delivers
Operating Expenses Decline
Company Sells More Than 1.4
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.
Fourth Quarter 2021 Financial Highlights
- Revenue, net was
$10.0 million . - Gross margin was (5.2%) due to increased protein and freight costs; gross margin adjusted for the delay in sales and continued run-off of discount accruals was 5.0%.
- Gross margin was 35.0% for MP Performance Energy.
- Operating expenses were
$3.5 million - Net loss was
$(6.8) million . - Loss per share was
$(0.20) . - Adjusted EBITDA was
$(4.0) million .
Fiscal Year 2021 Financial Highlights
- Revenue, net was
$50.0 million . - Gross margin was 10.7% due to increased protein and freight costs.
- Gross margin was 45.0% for MP Performance Energy.
- Operating expenses were
$14.3 million . - Net loss was
$(12.9) million . - Loss per share was
$(0.39) . - Adjusted EBITDA was
$(8.0) million .
The following are key business highlights.
- Planned expansion in summer 2022 into 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 more than 1.4 million cans since launching in
September 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.
- Built out national distribution network for MP Performance Energy drink line with the signing of eight independent beverage distributor partners.
- Rolled out new and improved MP Combat Protein Powder to Costco US in a newly sized recyclable 6.2-litre tub.
- Launched new and improved formula of two top selling products, Combat 100% Whey and Combat Protein Powder.
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 | Twelve Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Revenue, net | $ | 10,042 | $ | 15,131 | $ | 50,042 | $ | 64,440 | |||||||
Cost of revenue | 10,569 | 10,327 | 44,671 | 44,831 | |||||||||||
Gross profit | (527 | ) | 4,804 | 5,371 | 19,609 | ||||||||||
Operating expenses: | |||||||||||||||
General and administration | 2,497 | 2,655 | 9,891 | 12,952 | |||||||||||
Selling and promotion | 984 | 1,083 | 4,393 | 3,888 | |||||||||||
Impairment of intangible assets | - | - | - | 167 | |||||||||||
Total operating expenses | 3,481 | 3,738 | 14,284 | 17,007 | |||||||||||
Income (loss) from operations | (4,008 | ) | 1,066 | (8,913 | ) | 2,602 | |||||||||
Other (expense) income: | |||||||||||||||
Loss on settlement obligation | - | (8 | ) | (2 | ) | (95 | ) | ||||||||
Interest expense | (3,628 | ) | 376 | (5,460 | ) | (1,493 | ) | ||||||||
Other income (expense), net | 951 | 134 | 1,358 | 465 | |||||||||||
Gain on settlement of payables | (122 | ) | 1,169 | 143 | 1,687 | ||||||||||
Income (loss) before provision for income taxes | (6,807 | ) | 2,737 | (12,874 | ) | 3,166 | |||||||||
Benefit for income taxes | (31 | ) | (83 | ) | (8 | ) | (19 | ) | |||||||
Net income (loss) | $ | (6,776 | ) | $ | 2,820 | $ | (12,866 | ) | $ | 3,185 | |||||
Net income (loss) per share, basic | $ | (0.20 | ) | $ | 0.09 | $ | (0.39 | ) | $ | 0.10 | |||||
Net income (loss) per share, diluted | $ | (0.20 | ) | $ | 0.06 | $ | (0.39 | ) | $ | 0.07 | |||||
Weighted average shares used to compute net income (loss) per share, basic | 33,386,200 | 33,009,224 | 33,363,321 | 32,812,462 | |||||||||||
Weighted average shares used to compute net income (loss) per share, diluted | 33,386,200 | 47,765,617 | 33,363,321 | 47,765,617 |
Consolidated Balance Sheets | ||||||||
(In thousands, except share and per share data) | ||||||||
2021 | 2020 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash | $ | 1,223 | $ | 2,003 | ||||
Accounts receivable, net | 6,388 | 7,488 | ||||||
Inventory | 1,830 | 1,032 | ||||||
Prepaid expenses and other current assets | 1,526 | 1,341 | ||||||
Total current assets | 10,967 | 11,864 | ||||||
Property and equipment, net | 5 | 13 | ||||||
Intangible assets, net | 35 | 356 | ||||||
Operating lease right-of-use assets | 203 | 474 | ||||||
Other assets | — | 295 | ||||||
Total Assets | $ | 11,210 | $ | 13,002 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 17,980 | $ | 14,719 | ||||
Accrued and other liabilities | 5,942 | 6,194 | ||||||
Obligation under secured borrowing arrangement | 6,446 | 7,098 | ||||||
Line of credit | — | 743 | ||||||
Operating lease liability | 342 | 381 | ||||||
Senior notes payable | 5,035 | — | ||||||
Convertible notes with a related party | 5,330 | 2,872 | ||||||
Total Current Liabilities | 41,075 | 32,007 | ||||||
Operating lease liability, long term | — | 343 | ||||||
Other long term liabilities | 2,326 | 5,071 | ||||||
Total Liabilities | 43,401 | 37,421 | ||||||
Commitments and contingencies (Note 12) | ||||||||
Stockholders’ deficit: | ||||||||
Preferred stock, zero issued and outstanding | — | — | ||||||
Common stock, par value of | 32 | 32 | ||||||
Additional paid-in capital | 183,355 | 178,261 | ||||||
Treasury Stock at Cost, 875,621 shares | (10,039 | ) | (10,039 | ) | ||||
Accumulated deficit | (205,539 | ) | (192,673 | ) | ||||
Total Stockholders’ Equity | (32,191 | ) | (24,419 | ) | ||||
Total Liabilities and Stockholders’ Equity | $ | 11,210 | $ | 13,002 |
Consolidated Statements of Cash Flows (In thousands) | |||||||||
For the Year Ended | |||||||||
2021 | 2020 | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||
Net income/(loss) | $ | (12,866 | ) | $ | 3,185 | ||||
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities: | |||||||||
Depreciation and amortization of property and equipment | 10 | 145 | |||||||
Amortization of intangible assets | 321 | 320 | |||||||
Bad debt expense | 475 | 172 | |||||||
Gain on disposal of property and equipment | — | (160 | ) | ||||||
Gain on settlment of payables | (143 | ) | (1,687 | ) | |||||
Provision for inventory write down | (96 | ) | — | ||||||
Stock-based compensation | 653 | 144 | |||||||
Stock issued to nonemployees | — | 204 | |||||||
Impairment of operating lease right-of-use assets | — | 167 | |||||||
Amortization of debt issue cost | 368 | — | |||||||
OID Interest | 498 | — | |||||||
Amortization of debt discount | 1,928 | — | |||||||
Gain on extinguishment of Paycheck Protection Program Loan | (965 | ) | — | ||||||
Changes in operating assets and liabilities: | |||||||||
Accounts receivable, net | 625 | (2,852 | ) | ||||||
Inventory | (702 | ) | 3,687 | ||||||
Prepaid expenses and other current assets | 480 | (39 | ) | ||||||
Right of use asset and other assets | — | 549 | |||||||
Accounts payable | 3,261 | — | |||||||
Other long-term liabilities | (1,780 | ) | — | ||||||
Accrued and other liabilities | (109 | ) | (4,703 | ) | |||||
Net cash provided by/(used in) operating activities | (8,042 | ) | (868 | ) | |||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||
Purchase of property and equipment | (2 | ) | (4 | ) | |||||
Proceeds from disposal of property and equipment | — | 222 | |||||||
Net cash provided by/(used in) investing activities | (2 | ) | 218 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||
Proceeds from line of credit | — | 1,243 | |||||||
Payments on lines of credit | — | (3,465 | ) | ||||||
Proceeds from secured borrowing arrangement, net of reserves | 49,060 | 46,377 | |||||||
Payments to secured borrowing arrangement, net of fees | (49,713 | ) | (43,722 | ) | |||||
Proceeds from convertible shareholder's loan | 2,458 | — | |||||||
Proceeds from issuance of Paycheck Protection Program Loan | — | 965 | |||||||
Proceeds from senior notes payable and warrants | 7,050 | — | |||||||
Debt issuance costs | (848 | ) | — | ||||||
Repayment of notes payable | (743 | ) | (277 | ) | |||||
Net cash provided by/(used in) financing activities | 7,264 | 1,121 | |||||||
Net increase/(decrease) in cash and cash equivalents | (780 | ) | 471 | ||||||
Cash and cash equivalents, beginning of period | 2,003 | 1,532 | |||||||
Cash and cash equivalents, end of period | $ | 1,223 | $ | 2,003 | |||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||
Cash paid for interest | $ | 3,126 | $ | 1,437 | |||||
Cash paid for taxes | 40 | 39 |
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 | Twelve Months Ended | ||||||||||||||
2021 | 2020 | 2021 | 2020 | ||||||||||||
Net income (loss) (GAAP) | $ | (6,776 | ) | $ | 2,820 | $ | (12,866 | ) | $ | 3,185 | |||||
Non-GAAP adjustments: | |||||||||||||||
Loss on disposal of property and equipment | - | 16 | - | (160 | ) | ||||||||||
Loss/(gain) on settlements | 122 | (1,162 | ) | (143 | ) | (1,687 | ) | ||||||||
Impairment of operating lease right of use asset | - | - | - | 167 | |||||||||||
Stock compensation expense | (41 | ) | - | 653 | 144 | ||||||||||
Interest and other expense, net | 3,637 | (523 | ) | 5,039 | 1,188 | ||||||||||
Depreciation of Property and Equipment | 2 | 16 | 10 | 145 | |||||||||||
Amortization of Intangible Assets | 80 | 80 | 321 | 320 | |||||||||||
PPP Loan Forgiveness | (965 | ) | - | (965 | ) | - | |||||||||
Provision for income taxes | (31 | ) | (83 | ) | (8 | ) | (19 | ) | |||||||
Loss foreign currency | 5 | 13 | 28 | - | |||||||||||
Adjusted EBITDA (non-GAAP) | $ | (3,967 | ) | $ | 1,177 | $ | (7,931 | ) | $ | 3,283 | |||||
Source:
2022 GlobeNewswire, Inc., source