Revenue Increased 4.3% Over Prior Year
Full Year Adjusted Free Cash Flow was $2.35 million for Q4
Writes off Good Will & Recognizes Other Non-Cash Charges
Company Cleans up Post-Acquisition Balance Sheet
JRjr33, Inc., doing business as JRJR Networks [NYSE MKT: JRJR]
today announced financial results for its full year of 2016.
John Rochon Jr., Founder and Vice Chairman of JRJR Networks,
commented, "We are pleased to announce our financial results for
the full year of 2016. Sales have increased in 2016 to $144.2
million from $138.4 million in 2015 while gross profit for the full
year went down less than 1% even as our cost of sales increased by
over $4 million. While it has been a challenging year, the Company
has shown strong resilience and we are confident the distracting
issues facing the business are behind us. We will be focusing on
our business and profit initiatives in 2017.
"We are reviewing several interesting opportunities that will
continue to enhance the brand and business model to which we are
committed. It is our continuing strategy to focus on a series of
operating initiatives based on brand supremacy, sales penetration,
and additional operational enhancements. Profits and Mergers &
Acquisitions return to a strategic focus now that we can expect to
report on a timely basis. The Company is focused on profitable
revenue and intends to eliminate “zombie” revenue, revenue that
looks alive but is very costly and, in fact, dead, during the
course of 2017.”
Financial Highlights
For Q4 2016, gross revenue
was approximately $37.7 million, compared to approximately $46.6
million in Q4 2015; a decrease of $8.9 million or 23.7%.
Gross profit for Q4 2016 was
approximately $18.4 million, compared to $25.8 million in the
previous year.
Gross profit margin during Q4 2016
decreased to 59.06% of total revenue, compared to 66.57% of total
revenue in the same quarter a year ago.
Operating margin decreased to
(47.76)% from (17.22)% compared to the same period last year;
largely as a result of non-cash charges.
For the full year of 2016,
sales were $144.2 million, compared to approximately $138.4 million
in 2015; an increase of $5.9 million or 4.3%.
Gross profit for the full year
decreased to $78.35 million, compared to $79.09 million in the
previous year; a decrease of $.75 million or .95%.
Gross profit margins decreased to
65.33% from 67.85% for the previous year.
JRjr33, Inc.
Condensed Consolidated Balance
Sheets
(Unaudited)
December31, 2016
December31, 2015
Assets
Current assets: Cash and cash equivalents 2,203,000 6,482,000
Marketable securities 389,000 5,306,000 Accounts receivable, net
3,556,000 4,828,000 Inventory, net 15,823,000 20,799,000 Other
current assets 3,627,000 2,303,000 Total current
assets 25,598,000 39,718,000 Assets held for sale 1,000,000
1,111,000 Restricted cash — 2,857,000 Sale leaseback security
deposit 4,414,000 4,414,000 Property, plant and equipment, net
2,859,000 5,387,000 Property under capital leases, net 13,875,000
14,654,000 Goodwill 1,846,000 5,427,000 Intangibles, net 3,862,000
8,801,000 Other assets 37,000 135,000 Total assets
53,491,000 82,504,000
Liabilities and
stockholders’ equity Current liabilities: Accounts payable
14,018,000 15,839,000 Related party payables 5,853,000 1,704,000
Accrued commissions 1,676,000 3,033,000 Accrued liabilities
8,028,000 7,303,000 Deferred revenue 3,706,000 2,307,000 Taxes
payable 8,969,000 4,830,000 Current portion of lease obligation
15,856,000 313,000 Current portion of long-term debt 11,703,000
3,048,000 Other current liabilities 666,000 578,000
Total current liabilities 70,475,000 38,955,000 Deferred tax
liability 372,000 744,000 Long-term debt, less current portion
1,830,000 12,784,000 Capital lease obligation, less current portion
283,000 16,217,000 Other long-term liabilities 2,765,000
2,864,000 Total liabilities 75,725,000 71,564,000
Commitments & contingencies Stockholders’ equity:
Preferred stock, par value $0.001 per share, 500,000 authorized;
-0-issued and outstanding — — Common stock, par value $0.0001 per
share, 250,000,000 shares authorized; 39,348,214 and 35,718,279
shares issued and outstanding, at December 31, 2016 and December
31, 2015, respectively 4,000 4,000 Additional paid-in capital
62,390,000 58,837,000 Accumulated other comprehensive loss
(2,390,000 ) (586,000 ) Accumulated deficit (76,214,000 )
(45,255,000 ) Total stockholders’ equity attributable to JRjr33,
Inc. (16,210,000 ) 13,000,000 Stockholders’ equity attributable to
non-controlling interest (6,024,000 ) (2,060,000 ) Total
stockholders’ equity (22,234,000 ) 10,940,000 Total
liabilities and stockholders’ equity 53,491,000 82,504,000
JRjr33, Inc.
Condensed Consolidated Statements of
Operations
(Unaudited)
Fiscal year Ended December 31,
2016
2015
Revenue 144,245,000 138,352,000 Program costs and discounts
(24,322,000 ) (21,795,000 ) Net revenues 119,923,000
116,557,000 Costs of sales 41,499,000
37,466,000 Gross profit 78,424,000 79,091,000 General and
administrative expense 40,943,000 41,245,000 Distributor expense
37,384,000 36,696,000 Selling expense 18,682,000 15,944,000 Share
based compensation expense 147,000 (116,000 ) Depreciation and
amortization 2,508,000 2,214,000 Loss (gain) on sale of assets
464,000 (657,000 ) Impairment of goodwill and intangibles 6,719,000
192,000 Loss on extinguishment of debt 1,904,000 — Impairment of
assets held for sale — 3,329,000
Operating loss (30,327,000 ) (19,756,000 ) Gain on marketable
securities (12,000 ) (189,000 ) Gain on acquisition of a business —
(3,625,000 ) Interest expense, net 4,172,000
2,588,000 Loss from operations before income tax provision
(34,487,000 ) (18,530,000 ) Income tax provision 447,000
349,000 Net loss (34,934,000 ) (18,879,000 )
Net loss attributable to non-controlling interest 3,975,000
5,783,000 Net loss attributed to JRjr33, Inc.
(30,959,000 ) (13,096,000 ) Basic and diluted loss
per share: Weighted average common shares outstanding 36,580,892
33,478,601
Loss per common share attributable to
common stockholders, basic and diluted
$ (0.85 ) $ (0.39 ) Net loss (34,934,000 )
(18,879,000 ) Interest, net 4,172,000 2,588,000 Income tax expense
447,000 349,000 Depreciation and amortization 3,072,000
2,778,000 EBITDA (26,813,000 ) (13,164,000 )
Capital market expenses 445,000 1,155,000 M&A expenses
1,335,000 1,420,000 M&A infrastructure expense 2,365,000
2,992,000 Other EBITDA Adjustments 10,315,000
3,293,000 Adjusted EBITDA (12,353,000 )
(4,304,000 )
This news release includes information on Adjusted EBITDA, which
is a non-GAAP financial measure as defined by SEC Regulation G.
Management believes that Adjusted EBITDA, when viewed with our
results under GAAP and the accompanying reconciliations, provides
useful information about our period-over-period growth. Adjusted
EBITDA is presented because management believes it provides
additional information with respect to the performance of our
fundamental business activities and is also frequently used by
securities analysts, investors and other interested parties in the
evaluation of comparable companies. We also rely on Adjusted EBITDA
as a primary measure to review and assess the operating performance
of our company and our management team.
Adjusted EBITDA is a non-GAAP financial measure. We calculate
adjusted EBITDA by taking net income, and adding back the expenses
related to interest, income taxes, depreciation, and amortization,
stock compensation expenses, non-cash compensation, deferred rent,
inventory write-off adjustments, gains/losses in relation to the
sale of an asset, asset impairment costs such as goodwill or other
identifiable intangible impairment, asset fair value adjustments,
and debt forgiveness expenses, as each of those elements are
calculated in accordance with GAAP. Adjusted EBITDA should not be
construed as a substitute for net income (loss) (as determined in
accordance with GAAP) for the purpose of analyzing our operating
performance or financial position, as Adjusted EBITDA is not
defined by GAAP. A reconciliation is provided above in this press
release.
About JRJR Networks
(www.jrjrnetworks.com)
JRJR Networks is a growing platform of direct-to-consumer
brands. Within JRJR Networks, each company retains its separate
identity, sales force, product line and compensation plan, while
JRJR Networks seeks synergies and efficiencies in operational
areas. JRJR Networks companies currently include The Longaberger
Company, a 42year old maker of hand-crafted baskets and other home
decor items; Tomboy Tools, a direct seller of tools designed for
women; Agel Enterprises, a global seller of nutritional products in
gel form as well as a skin care line, operating in 50 countries;
Paperly, which offers a line of custom stationery and other
personalized products; Uppercase Living, which offers a line of
customizable vinyl expressions for display on walls in the home;
Kleeneze, a 95year old UKbased catalog seller of cleaning,
health, beauty, home, outdoor and a variety of other products, and
Betterware, a UKbased home catalog seller. JRJR Networks also
includes Happenings, a lifestyle publication and marketing
company.
Cautionary Note Regarding Forward-Looking Statements:
This press release contains forwardlooking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements other than statements of historical fact
contained in this press release are forward-looking statements. In
some cases, forward-looking statements can be identified by
terminology such as "anticipate," "believe," "can," "continue,"
"could," "estimate," "expect," "intend," "may," "plan,"
"potential," "predict," "project," "should," or "will" or the
negative of these terms or other comparable terminology and include
statements regarding the opportunities under review and the
continued enhancement of the brand and business model. These
forwardlooking statements are based on management's expectations
and assumptions as of the date of this press release and are
subject to a number of risks and uncertainties, many of which are
difficult to predict that could cause actual results to differ
materially from current expectations and assumptions from those set
forth or implied by any forward-looking statements. Important
factors that could cause actual results to differ materially from
current expectations include, among others, our ability to expand
leadership activities in support of our sales, our ability to
continue to grow, our ability to integrate the entities that we
have acquired, our ability to strengthen our internal controls and
the other risks outlined under "Risk Factors" in our Annual Report
on Form 10-K for our fiscal year ended December 31, 2015 and our
other filings with the SEC, including subsequent reports on Forms
10-Q and 8-K. The information in this release is provided only as
of the date of this release, and we undertake no obligation to
update any forward-looking statements contained in this release on
account of new information, future events, or otherwise, except as
required by law.
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version on businesswire.com: http://www.businesswire.com/news/home/20171018006712/en/
JRJR NetworksInvestor Relations:Brenton
Bakerbrenton.baker@jrjrnetworks.com
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