Nutrisystem 2011 revenues decrease to $401.3M

Nutrisystem, Inc.Mar 5 2012

Nutrisystem, Inc. (NASDAQ: NTRI), a leading provider of weight management products and services, today reported financial results for the year ended December 31, 2011. The company also announced that the Board of Directors has declared a quarterly dividend of $0.175 per share, payable March 26, 2012, to shareholders of record as of March 15, 2012.

For the year ended December 31, 2011:

• Revenues were $401.3 million, compared to $509.5 million in 2010.
• Operating income from continuing operations was $19.1 million, compared to $53.2 million in 2010.
• Net income was $12.3 million, compared to $33.6 million in 2010.
• Earnings per diluted share was $0.43, compared to $1.12 per diluted share in 2010.
• Adjusted EBITDA was $40.1 million, compared to $75.8 million in 2010.
• Cash, cash equivalents and marketable securities were $57.6 million at December 31, 2011.

Joe Redling, Chairman and Chief Executive Officer said, "While our financial performance was disappointing in 2011, I'm proud of how the Nutrisystem team pulled together to improve execution in the tough, competitive and economic environment. We creatively used promotions throughout the year to energize consumer response and conversion. We carefully controlled costs all throughout the business, with reductions in general and administrative and marketing expenses. We reinvested in new products, new sales channels, new celebrity spokespersons, and new advertising and public relations strategies to return to growth in 2012. The net result was Nutrisystem remained profitable for the year with a solid bottom line, and generated significant cash flow to return cash to shareholders while still investing in growth initiatives for the future."

Mr. Redling added, "Our 2012 marketing approach is reaching a broader customer base and introducing new prospective customers to the new Nutrisystem SUCCESS core program as witnessed by early spikes in demand we experienced at the beginning of the diet season. We attracted a significant number of new buyers to the brand and we are now adjusting our promotional strategies to improve conversion rates both in the call center and on the web. Our retail strategy is coming into focus and we expect to launch with Nutrisystem-branded product in select grocery store diet aisles in mid-2012. We believe this is a significant long-term revenue opportunity that will enhance awareness of our products, expose new customers to the Nutrisystem brand, and provide our direct customers with additional resources for their weight maintenance needs after they have succeeded on our program, all while leveraging the reach and effectiveness of our over $100 million annual marketing spend."

David Clark, Chief Financial Officer added, "As expected, our balance sheet strengthened in 2011 as we ended the year with $57.6 million of cash, cash equivalents, and marketable securities and only $30 million of outstanding debt under our recently renewed $100 million revolving credit facility. We expect 2012 to be another year of solid cash flow, with positive adjusted EBITDA. Due to the strength of our liquidity position, our Board of Directors authorized a quarterly dividend of 17.5 cents per share."

Mr. Clark continued, "We are seeing improved financial results in 2012, with revenue growth expected to be in the mid-single digits, and diluted earnings per share in the range of 45 to 55 cents per share. In the first quarter we are forecasting a loss of 5 to 10 cents per share due to in-quarter, promotional strategies designed to build demand for the full year."