Legacy Education Alliance, Inc. Announces Third Quarter of 2017 Results
- Non-U.S. Revenue increased 26.4% YoY
- Other Foreign Markets Segment Revenue increased 42.4% YoY
- Total Revenue of $25.2 Million increased 12.0% YoY
- Cash Sales of $24.5 Million increased 14.0% YoY
- Operating Cash Flows and Liquidity increased $6.7 Million YoY
Company to hold Conference Call on Wednesday, November 15, 2017 at 8:00 a.m.
CAPE CORAL, Fla.--(BUSINESS WIRE)-- Legacy Education Alliance, Inc. (OTCQB: LEAI) (www.legacyeducationalliance.com), a leading international provider of practical, high-quality, and value-based educational training on the topics of personal finance, entrepreneurship, real estate, and financial markets investing strategies and techniques, today announced financial results for the three months and nine months ended September 30, 2017.
Third Quarter 2017 Highlights
- Net income was $1.4 million or $0.06 per basic and diluted common share for the quarter ended September 30, 2017 compared with net income of $1.2 million or $0.05 per basic and diluted common share for the quarter ended September 30, 2016.
- Revenue was $25.2 million for the quarter ended September 30, 2017 compared to $22.5 million for the quarter ended September 30, 2016, an increase of $2.7 million or 12.0%.
- Non-U.S. revenue was $11.0 million for the quarter ended September 30, 2017 compared to $8.7 million for the quarter ended September 30, 2016, an increase of $2.3 million or 26.4%.
- Other Foreign Markets segment revenue was $4.7 million for the quarter ended September 30, 2017 compared to $3.3 million for the quarter ended September 30, 2016, an increase of $1.4 million or 42.4%.
- Cash sales were $24.5 million for the quarter ended September 30, 2017 compared to $21.5 million for the quarter ended September 30, 2016, an increase of $3.0 million or 14.0%.
- Total operating costs and expenses were $23.6 million for the quarter ended September 30, 2017 compared to $21.7 million for the quarter ended September 30, 2016, an increase of $1.9 million or 8.8%.
- Net cash provided by operating activities was $4.7 million in the nine months ended September 30, 2017 compared to net cash used in operating activities of $2.0 million in the nine months ended September 30, 2016, representing a period-over-period increase of $6.7 million.
“Our continued strong execution on our key business initiatives keeps us squarely on the path of becoming the global leader in providing quality financial education,” said Anthony Humpage, CEO of Legacy Education Alliance. “We are pleased to report another quarter of exceptional financial and operational performance. Overall revenues increased 12.0% year-over-year to $25.2 million, driven by a 26% increase in our Non-U.S. business. In addition, we continue to improve on our operating cash flows and liquidity which increased $6.7 million year-over-year. We are continuing to expand internationally at a measured pace. This is indicative of our success in furthering our brand penetration and diversification,” Mr. Humpage added. "On November 1, we announced we would receive an aggregate sum of Five Million Dollars ($5,000,000.00) to settle litigation brought to recover funds withheld from us in connection with the processing of credit card sales from 2007 through 2011. After accounting for outstanding legal fees, the net amount we recently received from the settlement was $4,332,798."
THIRD QUARTER 2017 VERSUS THIRD QUARTER 2016 RESULTS
Revenue was $25.2 million for the three months ended September 30, 2017 compared to $22.5 million for the three months ended September 30, 2016. Revenue increased $2.7 million or 12.0% during the three months ended September 30, 2017 compared to the same period in 2016. The increase in revenue was due to increase in recognition of revenue from expired contracts of $1.8 million or 42.9% and increased attendance (i.e. fulfillment) of $0.9 million or 4.9%.
Total operating costs and expenses were $23.6 million for the three months ended September 30, 2017 compared to $21.7 million for the three months ended September 30, 2016, an increase of $1.9 million or 8.8%, which is consistent with the increase in revenue. The increase was primarily due to a $1.1 million increase in direct course expenses, a $0.5 million increase in general and administrative expenses, of which $0.1 million was due to our new Enterprise Resource Planning ("ERP") system upgrade, a $0.4 million increase in advertising and sales expenses, partially offset by a $0.1 million decrease in royalty expense.
Net income was $1.4 million or $0.06 per basic and diluted common share for the three months ended September 30, 2017 compared to net income of $1.2 million or $0.05 per basic and diluted common share for the three months ended September 30, 2016. The increase in net income of $0.2 million, or $0.1 per basic and diluted common share was primarily driven by increase in revenue, partially offset by increase in operating expenses.
CASH FLOW AND CAPITAL STRUCTURE
Net cash provided by operating activities was $4.7 million in the nine months ended September 30, 2017 compared to net cash used in operating activities of $2.0 million in the nine months ended September 30, 2016, representing a period-over-period increase of $6.7 million. This increase was primarily the result of an increase in current liabilities for deferred revenue in 2017 as a result of increased cash sales.
Our consolidated capital structure as of September 30, 2017 and December 31, 2016 was 100.0% equity.
YTD 2017 VERSUS YTD 2016 RESULTS
Revenue was $73.4 million for the nine months ended September 30, 2017 compared to $68.6 million for the nine months ended September 30, 2016. Revenue increased $4.8 million or 7.0% during the nine months ended September 30, 2017 compared to the same period in 2016. The increase in revenue was due to increased attendance (i.e. fulfillment) of $3.4 million or 6.1% and increase in recognition of revenue from expired contracts of $1.7 million or 15.0%, which was partially offset by the decline in recognition of revenue of $0.3 million, due to the change in our revenue recognition policy with regards to DVD fulfillment.
Cash sales were $75.7 million for the nine months ended September 30, 2017 compared to $65.5 million for the nine months ended September 30, 2016, an increase of $10.2 million or 15.6%. The increase was driven primarily by a $5.2 million increase in our Other Foreign Markets segment, a $3.2 million increase in our U.S. segment, and a $2.4 million increase in our U.K. segment, which was partially offset by a $0.6 million decrease in our Canada segment.
Total operating costs and expenses were $70.6 million for the nine months ended September 30, 2017 compared to $66.3 million for the nine months ended September 30, 2016, an increase of $4.3 million or 6.5%. The increase was primarily due to a $3.0 million increase in direct course expenses, a $1.4 million increase in general and administrative expenses, of which $0.7 million was due to our new ERP system upgrade, and a $0.4 million increase in royalty expense, partially offset by a $0.5 million decrease in advertising and sales expenses.
Net income was $3.0 million or $0.13 per basic and $0.12 per diluted common share for the nine months ended September 30, 2017 compared to a net income of $2.8 million or $0.13 per basic and $0.12 per diluted common share for the nine months ended September 30, 2016. The increase in net income of $0.2 million was primarily driven by increase in revenue, partially offset by increase in operating expenses.
CONFERENCE CALL
Legacy Education Alliance, Inc. will hold a conference call on Wednesday, November 15, 2017 at 8:00 a.m. ET to discuss its financial results for the third quarter that ended September 30, 2017.
To listen to the conference call, interested parties within the U.S. should dial 1-800-239-9838 or 1-323-794-2551 for international calls, approximately 10 minutes prior to the scheduled start time. Participants should ask for the Legacy Educations Alliance conference call. Conference ID: 2873848. The conference call will also be available through a live webcast at http://public.viavid.com/index.php?id=127244. Management will answer pre-submitted questions gathered prior to the earnings conference call in the Question and Answer period of the call. Interested parties may submit questions for Management’s review prior to the call by submitting them in writing to Legacy Education Alliance Investor Relations at scottg@coreir.com.
A replay of the call will be available approximately one hour after the conclusion of the call through November 29, 2017. The number for the replay is (844) 512-2921 (US), or (412) 317-6671 for international calls; the passcode for the replay is 2873848. The replay will also be available via the internet at http://public.viavid.com/index.php?id=127244 and through the company’s website at http://ir.legacyeducationalliance.com/ir-calendar.
About Legacy Education Alliance, Inc.
Legacy Education Alliance, Inc. (http://www.legacyeducationalliance.com) is a leading international provider of practical, high-quality, and value-based educational training on the topics of personal finance, entrepreneurship, real estate, and financial markets investing strategies and techniques. Legacy Education Alliance was founded in 1996, today we are a global company with approximately 200 employees that has cumulatively served more than two million students from more than 150 countries and territories over the course of our operating history.
We offer our training through a variety of brands including Rich Dad® Education; Rich Dad® Stock Education; Making Money from Property with Martin RobertsTM; Brick Buy BrickTM; Building Wealth; Robbie Fowler Property AcademyTM; Women in WealthTM; The Independent WomanTM; and Trade Up Investor EducationTM. For more information, please visit our website at www.legacyeducationalliance.com.
Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “project,” “prospects,” “outlook,” and similar words or expressions, or future or conditional verbs such as “will,” “should,” “would,” “may,” and “could” are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any anticipated results, performance or achievements. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company’s forward-looking statements, please see the Company’s Annual Report on Form 10-K (including but not limited to the discussion under “Risk Factors” therein) filed with the SEC on March 31, 2017 and which may be viewed at http://www.sec.gov.
| LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited) | ||||||||
| (In thousands, except share data) | ||||||||
| September 30, | December 31, | |||||||
| 2017 | 2016 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 5,199 | $ | 1,711 | ||||
| Restricted cash | 3,310 | 3,148 | ||||||
| Deferred course expenses | 9,920 | 9,067 | ||||||
| Prepaid expenses and other current assets | 4,787 | 3,458 | ||||||
| Inventory | 327 | 348 | ||||||
| Total current assets | 23,543 | 17,732 | ||||||
| Property and equipment, net | 1,151 | 1,130 | ||||||
| Deferred tax asset, net | 1,538 | 1,295 | ||||||
| Other assets | 314 | 207 | ||||||
| Total assets | $ | 26,546 | $ | 20,364 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,323 | $ | 3,344 | ||||
| Royalties payable | 305 | 175 | ||||||
| Accrued course expenses | 2,165 | 1,082 | ||||||
| Accrued salaries, wages and benefits | 964 | 840 | ||||||
| Other accrued expenses | 2,570 | 2,052 | ||||||
| Long-term debt, current portion | 11 | 11 | ||||||
| Deferred revenue, current portion | 58,253 | 54,389 | ||||||
| Total current liabilities | 67,591 | 61,893 | ||||||
| Long-term debt, net of current portion | 23 | 31 | ||||||
| Deferred revenue, net of current portion | 430 | 235 | ||||||
| Other liabilities | 470 | 379 | ||||||
| Total liabilities | 68,514 | 62,538 | ||||||
| Commitments and contingencies (Note 10) | ||||||||
| Stockholders’ deficit: | ||||||||
| Preferred stock, $0.0001 par value, 20,000,000 shares authorized, none issued | — | — | ||||||
| Common stock, $0.0001 par value, 200,000,000 shares authorized, 23,007,519 and | ||||||||
| 22,630,927 shares issued and outstanding at September 30, 2017 and December 31, | ||||||||
| 2016, respectively | 2 | 2 | ||||||
| Additional paid-in capital | 11,241 | 11,073 | ||||||
| Cumulative foreign currency translation adjustment | (324 | ) | 2,668 | |||||
| Accumulated deficit | (52,887 | ) | (55,917 | ) | ||||
| Total stockholders’ deficit | (41,968 | ) | (42,174 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 26,546 | $ | 20,364 | ||||
| LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
|
Three Months Ended |
Nine Months Ended |
|||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenue | $ | 25,235 | $ | 22,469 | $ | 73,408 | $ | 68,582 | ||||||||
| Operating costs and expenses: | ||||||||||||||||
| Direct course expenses | 13,411 | 12,268 | 39,494 | 36,506 | ||||||||||||
| Advertising and sales expenses | 5,010 | 4,618 | 14,732 | 15,207 | ||||||||||||
| Royalty expenses | 1,119 | 1,208 | 3,651 | 3,251 | ||||||||||||
| General and administrative expenses | 4,114 | 3,595 | 12,686 | 11,339 | ||||||||||||
| Total operating costs and expenses | 23,654 | 21,689 | 70,563 | 66,303 | ||||||||||||
| Income from operations | 1,581 | 780 | 2,845 | 2,279 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (2 | ) | (1 | ) | (7 | ) | (3 | ) | ||||||||
| Other income (expense), net | (67 | ) | 397 | 85 | 537 | |||||||||||
| Total other income (expense), net | (69 | ) | 396 | 78 | 534 | |||||||||||
| Income before income taxes | 1,512 | 1,176 | 2,923 | 2,813 | ||||||||||||
| Income tax benefit (expense) | (119 | ) | (8 | ) | 107 | (27 | ) | |||||||||
| Net income | $ | 1,393 | $ | 1,168 | $ | 3,030 | $ | 2,786 | ||||||||
| Basic earnings per common share | $ | 0.06 | $ | 0.05 | $ | 0.13 | $ | 0.13 | ||||||||
| Diluted earnings per common share | $ | 0.06 | $ | 0.05 | $ | 0.12 | $ | 0.12 | ||||||||
| Basic weighted average common shares outstanding | 21,275 | 21,184 | 21,281 | 21,035 | ||||||||||||
| Diluted weighted average common shares outstanding | 23,022 | 22,204 | 22,807 | 21,966 | ||||||||||||
| Comprehensive income (loss): | ||||||||||||||||
| Net income | $ | 1,393 | $ | 1,168 | $ | 3,030 | $ | 2,786 | ||||||||
| Foreign currency translation adjustments, net of tax of $0 | (1,714 | ) | 581 | (2,992 | ) | 2,540 | ||||||||||
| Total comprehensive income (loss) | $ | (321 | ) | $ | 1,749 | $ | 38 | $ | 5,326 | |||||||
| LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
| (In thousands) | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 3,030 | $ | 2,786 | ||||
| Adjustments to reconcile net income to net cash provided by (used in) | ||||||||
| operating activities: | ||||||||
| Depreciation and amortization | 95 | 112 | ||||||
| Gain on change in fair value of derivatives | (97 | ) | (5 | ) | ||||
| Share-based compensation | 168 | 117 | ||||||
| Deferred income taxes | (145 | ) | — | |||||
| Changes in operating assets and liabilities: | ||||||||
| Restricted cash | (79 | ) | (513 | ) | ||||
| Deferred course expenses | (598 | ) | (281 | ) | ||||
| Prepaid expenses and other receivable | (1,248 | ) | (1,313 | ) | ||||
| Inventory | 36 | 53 | ||||||
| Other assets | (35 | ) | (4 | ) | ||||
| Accounts payable-trade | (200) | 1,456 | ||||||
| Royalties payable | 129 | 88 | ||||||
| Accrued course expenses | 1,041 | 509 | ||||||
| Accrued salaries, wages and benefits | 114 | (180 | ) | |||||
| Other accrued expenses | 719 | (1,442 | ) | |||||
| Deferred revenue | 1,813 | (3,389 | ) | |||||
| Net cash provided by (used in) operating activities | 4,743 | (2,006 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property and equipment | (114 | ) | (40 | ) | ||||
| Net cash used in investing activities | (114 | ) | (40 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Principal payments on debt | (8 | ) | (7 | ) | ||||
| Net cash used in financing activities | (8 | ) | (7 | ) | ||||
| Effect of exchange rate differences on cash | (1,133 | ) | 841 | |||||
| Net increase (decrease) in cash and cash equivalents | 3,488 | (1,212 | ) | |||||
| Cash and cash equivalents, beginning of period | $ | 1,711 | $ | 4,881 | ||||
| Cash and cash equivalents, end of period | $ | 5,199 | $ | 3,669 | ||||
| Supplemental disclosures: | ||||||||
| Cash paid during the period for interest | $ | 7 | $ | 6 | ||||
| Cash paid during the period for income taxes, net of refunds received | $ | 30 | $ | 32 | ||||
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CORE IR
Investor Contact
Scott Gordon, 516-222-2560
scottg@coreir.com
Source: Legacy Education Alliance, Inc.