Hot Stock Buzz: Youngevity International Inc. (NASDAQ: YGYI)

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I have been an independent financial adviser for over 11 years in the city and in recent years turned my experience in finance and passion for journalism into a full time role. I perform analysis of Companies and publicize valuable information for shareholder community.

Address: 4437 Yorkshire Circle, Greenville, NC 27834, USA
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Email: chastitymessenger@importtourism.com
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SAN DIEGO, July 19, 2019 – Shares of Youngevity International Inc. (NASDAQ: YGYI) declined -2.51% to $5.04. The stock grabbed the investor’s attention and traded 21.268K shares as compared to its average daily volume of 100.96K shares. The stock’s institutional ownership stands at 4.80%.

Youngevity International, Inc. (YGYI) reported 12.0% decrease in revenues for the fourth quarter ended December 31, 2018 to $36.114M as contrast to $41.041M for the fourth quarter ended December 31, 2017. We derived about 90% of our revenue from our direct sales and about 10% of our revenue from our commercial coffee sales during the quarter. Direct selling segment revenues reduced 9.2% to $32.418M in the current quarter as contrast to $35.716M for the quarter ended December 31, 2017. Commercial coffee segment revenues reduced 30.6% to $3.696M in the current quarter as contrast to $5.325M for the quarter ended December 31, 2017. This decrease was mainly attributed to timing of shipments in our green coffee business.

Gross profit for the fourth quarter ended December 31, 2018 reduced 12.2% to $20.926M as contrast to $23.833M for the fourth quarter ended December 31, 2017. Gross profit in the direct selling segment reduced 10% to $21.466M as contrast to $23.857M for the fourth quarter ended December 31, 2017. Gross Profit in the commercial coffee segment was a loss of $504.0K in the current quarter, contrast to a loss of $24.0K for the fourth quarter ended December 31, 2017. Overall gross profit as a percentage of revenues reduced to 57.9% in the current quarter contrast to 58.1% in the same period last year.

Operating loss for the fourth quarter ended December 31, 2018 increased $919.0K to $1.908M as contrast to $989.0K for the fourth quarter ended December 31, 2017. This increase was mainly because of the lower gross profit and the loss of $975.0K on impairment of intangible assets in the current quarter, offset by decreases in distributor compensation expense, sales and marketing expenses and general and administrative expenses.

Other expense for the fourth quarter ended December 31, 2018 increased to $6.633M as contrast to other expense of $341.0K for the fourth quarter ended December 31, 2017. This increase was mainly because of the loss in debt exchange of $4.706M, the change in the fair value of warrant derivative of negative $11.0K in the current quarter, contrast to a gain of $1.237M for the same period in the prior year and the increase in interest expense by $338.0K in the current quarter.

Income tax provision for the fourth quarter ended December 31, 2018 was $197.0K as contrast to an income tax provision of $5.490M for the fourth quarter ended December 31, 2017. The income tax provision in the fourth quarter ended December 31, 2017included a boost of $3.550M in the deferred tax valuation allowances.

Net loss for the fourth quarter ended December 31, 2018 was $8.738M as contrast to a net loss of $6.820M for the fourth quarter ended December 31, 2017. The increase in net loss is mainly because of the increases in operating loss and other expense discussed above, partially offset by the decrease in income tax provision expense discussed above.

Adjusted EBITDA for the fourth quarter ended December 31, 2018 increased to $620.0Kas contrast to $302.0K for the fourth quarter ended December 31, 2017.

Full Year 2018 Results

Revenues for the year ended December 31, 2018 reduced 2.0% to $162.445M as contrast to $165.696M for the year ended December 31, 2017. During the year ended December 31, 2018, we derived about 85% of our revenue from our direct sales and about 15% of our revenue from our commercial coffee sales. Direct selling segment revenues reduced by $3.595M or 2.5% to $138.855M as contrast to $142.450M for the year ended December 31, 2017. This decrease was mainly attributed to a decrease of $11.002M in revenues from existing business, offset by revenues from new acquisitions of $7.457M. We attribute the decrease from existing business mainly to a general decline in net sales in North America in the direct selling business as well as a decline in new distributors. The Company also changed its promotion strategy by targeting products with higher gross margins and utilized incentives that had less costly impact on profitability. For the year ended December 31, 2018, commercial coffee segment revenues increased by $344.0K or 1.5% to $23.590M as contrast to $23.246M for the year ended December 31, 2017. This increase was mainly attributed to a boost of $1.048M revenues from the Company’s roasted coffee business, offset by a decrease of $704.0K in green coffee business.

For the year ended December 31, 2018, gross profit reduced about 0.6% to $95.032M as contrast to $95.565M for the year ended December 31, 2017. Overall gross profit as a percentage of revenues increased to 58.5%, contrast to 57.7% in the same period last year. Gross profit in the direct selling segment reduced 0.5% to $94.910M from $95.379M in the prior period mainly as a result of the lower revenues in the current year offset by 6.6% decrease in cost of sales. Gross profit as a percentage of revenues in the direct selling segment increased by about 1.4% to 68.4% for the year ended December 31, 2018, contrast to 67.0% in the same period last year. This increase was mainly because of the price increases on certain products that went into effect on January 1, 2018 and changes to our product sales mix. Gross profit in the commercial coffee segment reduced 34.4% to $122.0K contrast to $186.0K in the prior period. The decrease in gross profit in the commercial coffee segment was mainly because of additional costs related to the roasted coffee business and inventory reserve expense. Gross profit as a percentage of revenues in the commercial coffee segment reduced by 0.3% to 0.5% for the year ended December 31, 2018, contrast to 0.8% in the same period last year.

Operating expenses for the year ended December 31, 2018 reduced 3.7% to $97.669M as contrast to $101.447M for the year ended December 31, 2017. Distributor compensation as a percentage of direct selling revenues reduced to 44.0% for the year ended December 31, 2018 as contrast to 46.2% for the year ended December 31, 2017. This decrease was mainly attributable to the price increases reflected in 2018 revenues, which did not impact commissionable base revenues. Sales and marketing expense reduced by $310.0K to $13.398M from $13.708M for the year ended December 31, 2017. This was mainly because of reduction in compensation expense, distributor events and convention costs for the year ended December 31, 2018 as contrast to the same period last year, offset by a boost in advertising and promotion costs in the commercial coffee segment. General and administrative expense reduced 8.6% to $20.009M from $21.883M for the year ended December 31, 2017 mainly because of a benefit of $6.600M from the contingent liability revaluation for the year ended December 31, 2018contrast to a benefit of $1.664M for the year ended December 31, 2017. Legal expense, IT related costs and consulting costs also reduced for the year ended December 31, 2018. These decreases were offset by increases in depreciation and amortization costs, repairs and maintenance costs, shareholder relations, stock-based compensation, accounting costs and increases in costs related to operations in Mexico, Russia, New Zealand, Taiwan and Colombia as well as increased bad debt expense and repairs and maintenance costs, and compensation and finance costs in the commercial coffee segment. For the year ended December 31, 2018, we recorded a loss on impairment of intangible assets of about $2.550M and $625.0K related to our acquisitions of BeautiControl and Future Global Vision, Inc., respectively.

For the year ended December 31, 2018, operating loss reduced by $3.245M to an operating loss of $2.637M as contrast to an operating loss of $5.882M for the year ended December 31, 2017. This was mainly because of the decrease in operating expenses of $3.778M offset by the decrease in gross profit of $533.0K discussed above.

For the year ended December 31, 2018, total other expense increased by $12.949M to $17.017M as contrast to $4.068M for the year ended December 31, 2017. Net interest expense increased by $799.0K for the year ended December 31, 2018 to $6.584M contrast to $5.785M for the year ended December 31, 2017. Change in fair value of derivative liabilities increased by $6.670M for the year ended December 31, 2018 to a $4.645M expense contrast to a benefit of $2.025M for the year ended December 31, 2017, as a result of the change in our stock price when contrast to the prior period. We recorded a non-cash extinguishment loss on debt of $1.082M for the year ended December 31, 2018 as a result of the triggering of the automatic conversion of the 2017 notes associated with our July 2017 Private Placement to common stock. We also recorded a non-cash loss on debt conversion of $4.706M as a result of one of the shareholders in our July 2014 private placement having conversion their 2014 note for shares of common stock.

Income tax provision for the year ended December 31, 2018 was $416.0K as contrast to an income tax provision of $2.727M for the year ended December 31, 2017. The income tax provision in the fourth quarter ended December 31, 2017 included a boost of $3.550M in the deferred tax valuation allowance.

For the year ended December 31, 2018, the Company reported a net loss of $20.070M as contrast to net loss of $12.677M for the year ended December 31, 2017. The primary reason for the increase in net loss when contrast to the prior period was because of the non-cash increase in Change in fair value of derivative liabilities by $6.670M, the non-cash loss on debt exchange of $4.706M, increase of $774.0K in non-cash loss on extinguishment of debt and the increase of $799.0K in interest expense, offset by the decrease of $3.245M in operating expenses and the decrease of $2.311M in income tax expense.

BALANCE SHEET HIGHLIGHTS

Cash & cash equivalents were $2.879M at December 31, 2018 as compared to $673.0K at December 31, 2017

Total assets were $75.973M at December 31, 2018 as compared to $72.389M at December 31, 2017

Total liabilities were $52.998M at December 31, 2018 as compared to $64.938M at December 31, 2017

Total stockholders’ equity was $22.975M at December 31, 2018 as compared to $7.451M at December 31, 2017

YGYI has a market value of $152.00M while its EPS was booked as $-1.39 in the last 12 months. The stock has 29.40M shares outstanding. In the profitability analysis, the company has gross profit margin of 55.10% while net profit margin was 2.20%. Beta value of the company was 0.57; beta is used to measure riskiness of the security.

Chastity Messenger

Chastity Messenger

I am Chastity Messenger and I give “Import Tourism” an insight into the most recent news hitting the “Consumer Goods” sector in Wall Street. I have been an independent financial adviser for over 11 years in the city and in recent years turned my experience in finance and passion for journalism into a full time role. I perform analysis of Companies and publicize valuable information for shareholder community. Address: 4437 Yorkshire Circle, Greenville, NC 27834, USA Phone: (+1) 252-274-1912 Email: chastitymessenger@importtourism.com