GNC Corporation Reports Third Quarter 2006 Financial Results

PITTSBURGH, Oct 27, 2006 /PRNewswire via COMTEX/ -- GNC Corporation ("GNC" or the "Company"), the largest global specialty retailer of nutritional supplements, today reported its financial results for the third quarter ended September 30, 2006.

The Company reported consolidated revenues of $367.7 million for the quarter, a 14.0% increase over the same quarter in 2005. The increase in revenues was primarily the result of significant domestic comparable store sales growth of 11.7% for company-owned stores and 7.0% for franchise locations.

For the quarter, the Company generated earnings before interest, income taxes, depreciation and amortization (EBITDA) of $41.8 million compared to $25.5 million in the third quarter of 2005, a 64.1% increase. The increase in EBITDA was primarily generated by significant improvements in the retail and franchising businesses driven by the growth in comparable store sales. EBITDA for the third quarter of 2006 included a charge of $1.1 million associated with the loss on the pending sale of the Company's Australian manufacturing facility, which is expected to close in the fourth quarter of 2006. Excluding this charge, Adjusted EBITDA would have been $42.9 million in the third quarter of 2006 compared to $25.5 million in the same quarter of 2005, a 68.3% increase. In addition, EBITDA for the third quarter of 2006 was reduced by $0.7 million of non-cash stock-based compensation expense. There was no non- cash stock-based compensation expense in the third quarter of 2005.

Net income for the third quarter of 2006 increased 336.8% to $13.9 million compared to $3.2 million in the third quarter of 2005.

"I am extremely pleased with the continued strong sales performance we are seeing across every major category and in all store formats. This quarter is especially encouraging since it not only represents the fourth consecutive quarter of strong single- to double-digit same store sales growth, but also double-digit same store sales growth against positive growth from last year," said President and Chief Executive Officer Joseph Fortunato.
"Overall, results reflect our strongest EBITDA quarter of the year with all critical financial and operating areas meeting or exceeding expectations."

For the nine months ended September 30, 2006, consolidated revenue increased by 14.6% to $1,137.4 million from $992.3 million in the comparable period of 2005. EBITDA for the nine months ended September 30, 2006 increased 41.6% to $119.7 million from $84.5 million in the prior year period. EBITDA for the nine months ended September 30, 2006 included a $4.8 million discretionary payment to GNC Corporation stock option holders in conjunction with the previously reported March 2006 payments to GNC Corporation common stockholders and a charge of $1.1 million associated with the loss on the sale of the Company's Australian manufacturing facility, which is expected to close in the fourth quarter of 2006. Excluding these charges, Adjusted EBITDA for the nine months ended September 30, 2006 would have been $125.6 million compared to $84.5 million for the nine months ended September 30, 2005, a 48.6% increase. EBITDA for the nine months ended September 30, 2006 was reduced by non-cash stock-based compensation expense of $1.9 million. There was no non-cash stock-based compensation expense in the nine months ended September 30, 2005. EBITDA for the nine months ended September 30, 2005 included income of $2.5 million from a transaction fee received by the Company as a result of transferring its Australian franchise rights to an existing franchisee.

Net income for the nine months ended September 30, 2006 increased 194.8% to $38.4 million compared to $13.0 million in the nine months ended September 30, 2005.

For the nine months ended September 30, 2006, the Company generated cash from operating activities of $68.9 million with ending cash on the balance sheet of $87.4 million. For the nine months ended September 30, 2006, the Company had capital expenditures of $16.1 million and repaid $1.6 million of outstanding debt. At September 30, 2006, the Company had $471.8 million of total debt outstanding, with its revolving credit facility undrawn.

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. GNC has more than 4,800 retail locations throughout the United States (including more than 1,000 franchise and 1,160 Rite Aid store-within-a-store locations) and franchise operations in 47 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 third quarter 2006 financial results on Thursday, November 2, at 11:00 am eastern time. Please note that there will be no question and answer session on this call due to the Company's pending registration statement on Form S-1. To listen to this call inside the U.S., dial 1-800-447-0521, and outside the U.S. dial 1-847-413-3238. A webcast of the call will be available through the "About GNC" link on GNC.com. Following the completion of the call, a replay will be available until November 16, 2006 by dialing 1-888-843-8996 inside the U.S. and 1-630-652-3044 outside the U.S. The conference identification number for all callers is 15995177#.
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. GNC believes there is a reasonable basis for our expectations and beliefs, but they are inherently uncertain, we may not realize our expectations and our beliefs may not prove correct. We undertake 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.

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