NutriSystem Report Q3 Earnings
Nov. 3, 2014 -- NutriSystem today reported its 3rd quarter results. Main results were that:
- Revenue was $90.6 million up from $85.4 million in the third quarter of 2013;
- Adjusted gross profit margin improved 130 basis points to 51.4% and adjusted gross profit increased 9% versus prior year to $46.5 million.
Dawn Zier, President and Chief Executive Officer, said, "We are pleased with the progress we have made in delivering strong results for the first nine months of 2014. Our revenue growth in the third quarter represents the fifth consecutive quarter of year-over-year top-line growth. Additionally, we exceeded the top-end of our revenue and adjusted EBITDA guidance reflecting the continued demand for our products across all channels, the success of our marketing strategy, and the disciplined management of costs while maintaining a focus on the customer experience."
Ms. Zier added, "We are confident in our full year guidance. We believe the momentum of our 2014 successes that drove new customer growth at higher margins, coupled with our demonstrated ability to innovate on both the product and marketing fronts, has us well positioned for the 2015 diet season and continued revenue and EBITDA growth."
Mike Monahan, Chief Financial Officer, commented, "Our year-over-year revenue growth in the third quarter was driven by new customer starts, improvement in reactivation and increased retail sales. Additionally, due to successfully implemented price increases in the first and second quarters and effective changes to promotions, adjusted gross profit margin increased to 51.4% reflecting a 130 basis point improvement year-over-year."
For the fourth quarter of 2014, the company expects revenue to be in the range of $78.1 million to $83.1 million. For the full year of 2014, the company is updating its revenue guidance to now be in the range of $402.0 million to $407.0 million.
Conference Call Info.
Marketdata analysts listened to the company's conference call at the end of the day, for additional insights. Management reported that they did a September test of the "Simply fresh" food plan in California. This plan, with a price of $20+/day, targets a more affluent dieter. Based on test results, the firm may roll this plan out to other regions. The company also did a 12-week test with Target, but Target has no concrete plans to include NutriSystem products in its stores for the 2015 diet season. Target usually makes these decisions in April.
NTRI plans to expand its relationship with Walmart, and also plans a test in Jan. 2015 of e-commerce with Amazon (12 products). Management also stated that the direct to consumer business is a lot stronger going into the new diet season than last year. They also will be emphasizing the NuMe technology platform that integrates with wearable devices, as a complementary tool bundled with the firm's diet plans. There is a free version available on Apple and Android. The firm wants to create more personalized communication streams with clients, to keep them engaged longer (and hopefully lengthen the typical 11 week stay on the program).
Company financials for the quarter can be found here: