GNC Reports 14.8% Increase in Revenues
The increase in revenues was primarily the result of significant domestic comparable store sales growth of 11.5% for company-owned stores and 5.9% for franchise locations.
07/08/06 GNC Corporation the largest global specialty retailer of nutritional supplements has reported its financial results for the second quarter ended June 30, 2006.
The Company reported consolidated revenues of $382.8 million for the quarter, a 14.8% increase over the same quarter in 2005. The increase in revenues was primarily the result of significant domestic comparable store sales growth of 11.5% for company-owned stores and 5.9% for franchise locations.
For the quarter, the Company generated earnings before interest, income taxes, depreciation and amortization (EBITDA) of $40.4 million compared to $31.1 million in the second quarter of 2005, a 29.6% 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 second quarter of 2006 was reduced by $0.6 million of non-cash stock-based compensation expense. There was no non-cash stock-based compensation expense in the second quarter of 2005. Net income for the second quarter of 2006 increased 84.0% to $13.1 million compared to $7.1 million in the second quarter of 2005.
"The results show another strong quarter for GNC and we believe clearly reflect a gain in market share that has been ongoing over the last several quarters" said President and Chief Executive Officer, Joseph Fortunato. "Once again we continue with strong results from corporate operations year over year and strong sales in all categories. Also, franchise locations continue to improve. All fundamentals in the business remain strong and as the leader in the industry we are extremely well positioned for continued growth and other opportunities in the health and wellness sector."
For the six months ended June 30, 2006, consolidated revenue increased by 14.9% to $769.7 million from $669.8 million in the comparable period of 2005. EBITDA for the six months ended June 30, 2006 increased 32.0% from the prior year period to $77.9 million from $59.0 million. EBITDA for the six months ended June 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. Excluding this discretionary $4.8 million payment, Adjusted EBITDA increased to $82.7 million for the six months ended June 30, 2006, compared to $59.0 million in the six months ended June 30, 2005, a 40.1% increase. EBITDA for the six months ended June 30, 2006 was reduced by non-cash stock-based compensation expense of $1.2 million. There was no non-cash stock-based compensation expense in the six months ended June 30, 2005. EBITDA for the six months ended June 30, 2005 included income of $2.5 million from a transaction fee received by the Company following a transfer of its Australian franchise rights to an existing franchisee.
Net income for the six months ended June 30, 2006 increased 149.0% to $24.5 million compared to $9.8 million in the six months ended June 30, 2005. For the six months ended June 30, 2006, the Company generated cash from operating activities of $33.9 million with ending cash on the balance sheet of $57.5 million. For the six months ended June 30, 2006, the Company had capital expenditures of $9.4 million and repaid $1.0 million of outstanding debt. At June 30, 2006, the Company had $472.3 million of total debt outstanding, with its revolving credit facility undrawn.
