General Nutrition Centers, Inc. ("GNC" or the "Company"), the largest global specialty retailer of nutritional supplements, today reported its financial results for the quarter and year ended December 31, 2008.
General Nutrition Centers, Inc. is an indirect wholly owned subsidiary of GNC Parent LLC, which was acquired by affiliates of Ares Management LLC ("Ares") and Ontario Teachers' Pension Plan Board ("Teachers") through a merger (the "Merger") on March 16, 2007. As a result, the financial results presented in this press release represent the aggregate of the financial results of the Company from January 1, 2007, through March 15, 2007, predecessor, and the results from March 16, 2007 to December 31, 2007, and for the year ended December 31, 2008, successor.
For the fourth quarter of 2008, the Company reported consolidated revenues of $391.7 million, an increase of 4.2% over the consolidated revenues of $376.1 million for the same quarter of 2007. Revenue increased in each of the Company's business segments: retail by 2.2%; franchise by 6.8% and manufacturing/wholesale by 13.8%. Same store sales improved 2.5% in domestic company-owned stores (including internet sales) and 3.2% in Canadian company-owned stores (in local currency).
For the fourth quarter of 2008, the Company reported earnings before income taxes, depreciation and amortization (EBITDA) of $45.8 million compared to $45.6 million for the same quarter of 2007, an increase of $0.2 million. Included as part of compensation expense for the fourth quarters of 2008 and 2007 was $0.4 million and $0.5 million, respectively, of non-cash stock-based compensation expense. Excluding this non-cash expense, adjusted EBITDA increased $0.1 million or 0.4% over the adjusted EBITDA of $46.1 million in the same quarter of 2007.
Revenue for the year ended December 31, 2008, was $1.657 billion, an increase of 6.7% over the consolidated revenues of $1.553 billion for the same period of 2007. Same store sales improved 2.7% in domestic company-owned stores (including internet sales) and 4.1% in Canadian company-owned stores (in local currency).
EBITDA was $212.2 million for 2008, compared to $125.5 million in 2007. Included in 2007, as a result of the acquisition, was $65.3 million of transaction related costs, including $34.6 million of transaction fees and expenses; $15.3 million of compensation expense (including $3.8 million of non-cash, stock-based compensation resulting from the cancellation of all outstanding stock options), and $15.4 million of non-cash purchase accounting adjustments included in cost of sales. Also included as part of compensation expense for 2008 and 2007 was $2.6 million and $2.2 million respectively, of non-cash stock-based compensation expense. Excluding non-cash compensation expense and merger-related transaction costs, adjusted EBITDA increased $21.8 million or 11.3% to $214.8 million in 2008, compared to $193.0 million in 2007.
EBITDA and adjusted EBITDA are non-GAAP financial measures 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.
GNC, headquartered in Pittsburgh, Pa., is the largest global specialty retailer of nutritional products; including vitamin, mineral, herbal and other specialty supplements and sports nutrition, diet and energy products. As of December 31, 2008, GNC has more than 5,200 retail locations throughout the United States (including 954 franchise and 1,712 Rite Aid store-within-a-store locations) and franchise operations in 44 international markets. 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 and full year 2008 financial results on Thursday, March 19, 2009 at 11:00 am EDT. To listen to this call dial 1-866-468-1032 inside the U.S. and dial 1-832-445-1665 outside the U.S. The conference identification number for all callers is 88543953. A webcast of the call will also be available through the "About GNC" link on www.gnc.com.
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.