General Nutrition Centers, Inc. Reports Fourth Quarter 2009 Results
PITTSBURGH, March 3 /PRNewswire/ -- General Nutrition Centers, Inc. ("GNC" or the "Company"), a leading global specialty retailer of nutritional products, today reported its financial results for the year and quarter ended December 31, 2009.
For the fourth quarter of 2009, the Company reported net income of $12.7 million, a $4.6 million, or 56.3%, increase over net income of $8.1 million for the fourth quarter of 2008. Net income as a percentage of revenue was 3.1% in the fourth quarter of 2009 as compared to 2.1% in the fourth quarter of 2008.
For the fourth quarter of 2009, the Company reported consolidated revenue of $403.9 million, an increase of 3.1% over the consolidated revenue of $391.7 million for the fourth quarter of 2008. Revenue increased in each of the Company's segments: retail by 3.2%, franchise by 4.3%, and manufacturing/wholesale by 1.1%. Same store sales improved 1.2% in domestic Company-owned stores (including e-commerce sales) representing the 18th consecutive quarter of positive same store sales.
Earnings before interest, income taxes, depreciation, amortization and non-cash stock-based compensation ("Adjusted EBITDA") for the fourth quarter of 2009 was $50.6 million, a $4.4 million, or 9.5%, increase over the Adjusted EBITDA of $46.2 million for the fourth quarter of 2008. Adjusted EBITDA was 12.5% as a percentage of revenue in the fourth quarter of 2009, compared to 11.8% in the fourth quarter of 2008.
For the fourth quarter of 2009, the Company generated net cash from operations of $36.1 million, incurred capital expenditures of approximately $8.2 million, and paid approximately $5.4 million in principal on outstanding debt. At December 31, 2009, the Company's cash balance was $75.1 million.
In the fourth quarter of 2009, the Company opened 25 net new domestic Company-owned stores, 1 net new Company-owned store in Canada, 50 net new international franchise locations, and 55 net new franchise store-within-a- store Rite Aid locations, and closed 10 net domestic franchise locations.
The Company announced last month that it, together with its parent company, had entered into a memorandum of understanding to form a strategic partnership with Shanghai-based Bright Food (Group) Co, LTD. This partnership, to be named GNC China, will participate in China's nutritional products market and promote the GNC brands in China's large to medium-sized cities.
Joe Fortunato, Chief Executive Officer, said, "The fourth quarter capped a successful 2009, as we continued to grow revenue, profit, Adjusted EBITDA margin, and cash generation. Equally important, we made key investments in the business and launched several initiatives, including our China venture, to provide a foundation for future growth. We remain focused on science and product innovation that will continue to strengthen GNC's leading position in the health and wellness industry."
For the year ended December 31, 2009, the Company reported net income of $69.6 million; a $14.8 million, or 27.1%, increase over net income of $54.8 million for 2008. Net income as a percentage of revenue was 4.1% for the year ended December 31, 2009 compared to 3.3% for 2008.
For the year ended December 31, 2009, the Company reported consolidated revenue of $1,707.0 million, an increase of $50.3 million, or 3.0%, over the consolidated revenue of $1,656.7 million for the year ended December 31, 2008. Revenue increased in each of the Company's business segments: retail by 3.0%, franchise by 2.4%, and manufacturing / wholesale by 4.0%. For the year, same store sales improved 2.8% in domestic Company-owned stores (including e- commerce sales).
Adjusted EBITDA was $230.7 million for the year ended December 31, 2009, a $15.9 million, or 7.4%, increase over the Adjusted EBITDA of $214.8 million for the year ended December 31, 2008. Adjusted EBITDA improved to 13.5% as a percentage of revenue for the year ended December 31, 2009 compared to 13.0% for 2008.
For the year ended December 31, 2009, the Company generated net cash from operations of $114.0 million, incurred capital expenditures of $28.7 million, and paid approximately $25.3 million in principal on outstanding debt.
For the year ended December 31, 2009, the Company opened 51 net new domestic Company-owned stores, 7 net new Company-owned stores in Canada, 117 net new international franchise locations, and 157 net new franchise store- within-a-store Rite Aid locations and closed 45 net domestic franchise locations.
General Nutrition Centers, Inc., headquartered in Pittsburgh, Pa., is a leading global specialty retailer of nutritional products including vitamin, mineral, herbal and other specialty supplements and sports nutrition, diet and energy products. General Nutrition Centers, Inc. is an indirect wholly owned subsidiary of GNC Parent LLC, which was acquired by affiliates of Ares Management LLC and Ontario Teachers' Pension Plan Board through a merger on March 16, 2007.
As of December 31, 2009, GNC has more than 6,900 locations, of which more than 5,400 retail locations are in the United States (including 909 franchise and 1,869 Rite Aid franchise store-within-a-store locations) and franchise operations in 47 countries. The Company -- which is dedicated to helping consumers Live Well -- also offers products and product information online at www.gnc.com. GNC has scheduled a conference call and webcast to report its fourth quarter 2009 financial results on Thursday, March 11, 2010 at 11:00 am EST. To listen to this call dial 1-866-468-1032 inside the U.S. and 1-832- 445-1665 outside the U.S. The conference identification number for international participants only is 59306888. A webcast of the call will also be available through the "About GNC" link on www.gnc.com through April 2, 2010.
This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations and business that is not historical information. Forward-looking statements can be identified by the use of terminology such as "subject to," "believes," "anticipates," "plans," "expects," "intends," "estimates," "projects," "may," "will," "should," "can," the negatives thereof, variations thereon and similar expressions, or by discussions of strategy. While GNC believes there is a reasonable basis for its expectations and beliefs, they are inherently uncertain, and the Company may not realize its expectations and its beliefs may not prove correct. GNC undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Actual results could differ materially from those described or implied by such forward-looking statements. For a listing of factors that may materially affect such forward-looking statements, please refer to our quarterly and annual filings with the Securities and Exchange Commission.
Adjusted EBITDA is a non-GAAP financial measure within the meaning of the Securities and Exchange Commission's Regulation G. Management has included this information because it believes it represents a more effective means by which to measure the Company's operating performance. This press release contains a reconciliation of the non-GAAP measure to the financial measure calculated and presented in accordance with GAAP which is most directly comparable to the applicable non-GAAP financial measure.
GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands)
Three months ended Year ended
------------------------ ------------------------
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
----------- ----------- ----------- -----------
(unaudited) (unaudited)
Revenue $403,896 $391,740 $1,707,007 $1,656,729
Cost of sales, including
costs of warehousing,
distribution and
occupancy 267,196 259,487 1,116,437 1,082,630
----------- ----------- ----------- -----------
Gross profit 136,700 132,253 590,570 574,099
Compensation and
related benefits 66,725 61,987 263,046 249,793
Advertising and
promotion 9,857 9,708 50,034 55,060
Other selling, general
and administrative 22,448 25,228 96,454 98,732
Foreign currency
(gain) loss (128) 594 (155) 733
----------- ----------- ----------- -----------
Operating income 37,798 34,736 181,191 169,781
Interest expense, net 16,937 20,782 69,953 83,000
----------- ----------- ----------- -----------
Income before income
taxes 20,861 13,954 111,238 86,781
Income tax expense 8,179 5,838 41,619 32,001
----------- ----------- ----------- -----------
Net income $12,682 $8,116 $69,619 $54,780
=========== =========== =========== ===========
Three months ended Year ended
------------------------ ------------------------
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
----------- ----------- ----------- -----------
(unaudited) (unaudited)
Net income $12,682 $8,116 $69,619 $54,780
Interest expense, net 16,937 20,782 69,953 83,000
Income tax expense 8,179 5,838 41,619 32,001
Depreciation and
amortization 12,031 11,093 46,665 42,453
Non-cash stock-based
compensation expense 793 413 2,855 2,594
----------- ----------- ----------- -----------
Adjusted EBITDA $50,622 $46,242 $230,711 $214,828
=========== =========== =========== ===========
We define Adjusted EBITDA as net income before interest expense (net), income tax expense, depreciation, amortization and non-cash stock-based compensation. Management uses Adjusted EBITDA as a tool to measure operating performance of the business. We use Adjusted EBITDA as one criterion for evaluating our performance relative to our competitors and also as a measurement for the calculation of management incentive compensation. Although we primarily view Adjusted EBITDA as an operating performance measure, we also consider it to be a useful analytical tool for measuring our liquidity, our leverage capacity, and our ability to service our debt and generate cash for other purposes. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income, operating income, or any other performance measures derived in accordance with GAAP, or as an alternative to GAAP cash flow from operating activities, as a measure of our profitability or liquidity.
GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands)
December 31, December 31,
2009 2008
----------- -----------
Current assets: (unaudited)
Cash and cash equivalents $75,089 $42,307
Receivables, net 94,355 89,413
Inventories, net 370,492 363,654
Prepaids and other current assets 42,219 59,407
----------- -----------
Total current assets 582,155 554,781
Long-term assets:
Goodwill, brands and other
intangibles, net 1,499,123 1,506,085
Property, plant and equipment, net 199,581 206,154
Other long-term assets 22,743 24,988
----------- -----------
Total long-term assets 1,721,447 1,737,227
----------- -----------
Total assets $2,303,602 $2,292,008
=========== ===========
Current liabilities:
Accounts payable $95,904 $123,577
Other current liabilities 103,683 126,145
----------- -----------
Total current liabilities 199,587 249,722
Long-term liabilities:
Long-term debt 1,058,085 1,071,237
Other long-term liabilities 328,414 318,987
----------- -----------
Total long-term liabilities 1,386,499 1,390,224
----------- -----------
Total liabilities 1,586,086 1,639,946
Total stockholder's equity 717,516 652,062
----------- -----------
Total liabilities and
stockholder's equity $2,303,602 $2,292,008
=========== ===========
GENERAL NUTRITION CENTERS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
Year ended
-------------------------
December 31, December 31,
2009 2008
----------- -----------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
-------------------------------------
Net income $69,619 $54,780
Adjustments to reconcile net income to
net cash provided by operating activities: ------------------------------------------- Depreciation and amortization expense 46,665 42,453
Amortization of deferred financing costs 4,478 4,246
Non-cash stock-based compensation 2,855 2,594
Other 30,042 39,030
Changes in:
Receivables (3,488) (5,371)
Inventory (15,661) (48,248)
Accounts payable (28,119) 22,075
Other assets and liabilities 7,566 (34,194)
----------- -----------
Net cash provided by operating activities 113,957 77,365
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
-------------------------------------
Capital expenditures (28,682) (48,666)
Acquisition of the Company (11,268) (10,842)
Other (2,224) (917)
----------- -----------
Net cash used in investing activities (42,174) (60,425)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
-------------------------------------
Dividend payment (13,600) -
Borrowings on debt - 5,375
Payments on long-term debt (25,327) (7,974)
Other (323) (832)
----------- -----------
Net cash used in financing activities (39,250) (3,431)
----------- -----------
Effect of exchange rate on cash 249 (56)
----------- -----------
Net increase in cash 32,782 13,453
Beginning balance, cash 42,307 28,854
----------- -----------
Ending balance, cash $75,089 $42,307
=========== ===========
Segment Financial Data and Store Counts
Retail Segment - Company-owned stores in the U.S. and Canada as well as e-
commerce
Three months ended Year ended
December 31, December 31,
$ in thousands 2009 2008 2009 2008
-------- -------- ---------- ----------
Revenue $293,728 $284,681 $1,256,314 $1,219,305
Comp Store Sales - Domestic 1.2% 2.5% 2.8% 2.7%
Operating income $29,865 $29,248 $153,142 $140,916
Franchise Segment- Franchise-operated Domestic and International locations
Three months ended Year ended
December 31, December 31,
$ in thousands 2009 2008 2009 2008
-------- -------- ---------- ----------
Revenue $63,104 $60,508 $264,168 $258,020
Operating income $19,557 $19,699 $80,800 $80,816
Wholesale/ Manufacturing Segment- Third-party contract manufacturing; wholesale and consignment sales with Rite Aid and drugstore.com
Three months ended Year ended
December 31, December 31,
$ in thousands 2009 2008 2009 2008
-------- -------- ---------- ----------
Revenue $47,064 $46,551 $186,525 $179,404
Operating income $19,378 $15,389 $73,450 $67,378
Consolidated unallocated costs (a)
Three months ended Year ended
December 31, December 31,
$ in thousands 2009 2008 2009 2008
-------- -------- ---------- ----------
Warehousing and
distribution costs $(13,099) $(13,121) $(53,557) $(54,266)
Corporate costs $(17,903) $(16,479) $(72,644) $(65,063)
(a) Part of consolidated operating income
Consolidated Store Count Activity
Year ended December 31, 2009
----------------------------------------------------
Franchised stores
Company- ----------------------------------------
owned (2) Domestic International Rite Aid Total
--------- -------- ------------- -------- -----
Beginning of period
balance 2,774 954 1,190 1,712 6,630
Store openings (1) 98 31 187 177 493
Store closings (40) (76) (70) (20) (206)
--------- -------- ------------- -------- -----
End of period balance 2,832 909 1,307 1,869 6,917
========= ======== ============= ======== =====
Year ended December 31, 2008
----------------------------------------------------
Franchised stores
Company- ----------------------------------------
owned (2) Domestic International Rite Aid Total
--------- -------- ------------- -------- -----
Beginning of period
balance 2,745 978 1,078 1,358 6,159
Store openings (1) 104 41 198 401 744
Store closings (75) (65) (86) (47) (273)
--------- -------- ------------- -------- -----
End of period balance 2,774 954 1,190 1,712 6,630
========= ======== ============= ======== =====
(1) openings include new stores and corporate/franchise conversion
activity (2) including Canada
SOURCE General Nutrition Centers, Inc.
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article