MusclePharm Reports 2012 First Quarter Financial Results
--Net sales, reflecting new revenue recognition model, increase more than fivefold to $16.6 million-
DENVER, May 24, 2012 /PRNewswire/ -- MusclePharm Corporation (OTCBB: MSLP) (the "company"), a nutritional supplement company focusing on active lifestyles, today reported an increase in its unaudited sales and a reduction in its unaudited operating loss for the first quarter ended March 31, 2012 as compared to March 31, 2011.
As previously announced the Company recently changed its methodology for reporting net sales, which it believes will more accurately portray its operations. After analysis and review management has determined to net certain advertising (not specifically identifiable), credits and promotions directly against gross sales. Accordingly, net sales reported in this press release are lower than the $19 million in gross sales reported in the previously issued preliminary financial results for the 2012 first quarter. Prior to the change, the company deducted certain advertising, credits and promotions as general and administrative expenses.
Net sales for the three months ending March 31, 2012, increased more than fivefold to approximately $16.6 million from approximately $3.0 million for 2011 first quarter. International sales grew 225 percent to approximately $3.0 million in the first quarter of 2012, from approximately $924,000 in the first quarter 2011. General and administrative expenses were approximately $4.4 million, or 27 percent of net sales during the first quarter of 2012, compared with $1.7 million, or 57 percent of net sales, for the same quarter in 2011. Loss from operations narrowed to approximately $727,000 during the first quarter of 2012, from $1.1 million for the 2011 first quarter. Net loss was approximately $16.0 million, which included derivative expense of approximately $1.5 million, change in fair value of derivative liabilities of approximately $8.4 million, loss on settlement of accounts payable and debt of approximately $2.9 million and interest expense of approximately $2.6 million. This compares to net loss for the 2011 first quarter of approximately $5.0 million, which included derivative expense of approximately $1.4 million, change in fair value of derivative liabilities of $132,000, loss on settlement of accounts payable and debt of $1.9 million and interest expense of $519,000.
The Company attributed the sales increase to significantly greater units sold 629,000 vs. 78,000 of its two leading products, Assault and Combat, along with several new product launches that had a combined total of 300,000 units sold.
"We are continuing to expand our distribution channels and enter new doors, as well as introduce a steady stream of new products," said Brad Pyatt, chief executive officer of MusclePharm. "Combined with steady demand, we believe the Company remains on track to achieve net sales of $75 million for the full 2012 year, even with the change in presentation of net sales and advertising. We have a lot of expansion to fund, but also believe we can generate $4 million of EBITDA in the final two quarters of 2012."
Chief Operating Officer John H. Bluher stated, "Management is working diligently to clean up a number of financial and capitalization items from 2010 and 2011 as part of our restructuring plan. The Company is making excellent traction, as we continue to invest heavily in our brand and in marketing and focus on funding the launch of several innovative new products. We also will continue to devote capital to international expansion opportunities, while addressing costs and expenses."
ABOUT MUSCLEPHARM CORPORATION
MusclePharm is a healthy life-style company that develops and manufactures a full line of NSF International and Informed Choice approved nutritional supplements that are free of banned substances. Based on years of research at the MusclePharm Sports Science Center, the products are created through an advanced six-stage research protocol involving the expertise of top nutritional scientists and field tested by more than one hundred elite professional athletes from various professional sports leagues including the National Football League, Mixed Martial Arts and Major League Baseball. The Company's products address all categories of an active lifestyle, including muscle building, weight loss and maintaining general fitness through a daily nutritional supplement regimen. MusclePharm is sold in more than 120 countries and available in over 10,000 U.S. retail outlets, including Dick's Sporting Goods, GNC, Vitamin Shoppe, Vitamin World and Walmart. MusclePharm products also are sold through more than 100 online stores, including bodybuilding.com, Amazon.com and Vitacost.com. For more information, please visit www.musclepharm.com.
FORWARD LOOKING STATEMENTS
The information contained herein includes forward-looking statements. These statements include, but are not limited to, future events or to future financial performance, including net sales projections for 2012 of $75 million, the launch of new products, and challenges which may be faced in connection with the Company's growth, involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Undue reliance should not be placed on forward-looking statements, since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company's control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects the Company's current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations, growth strategy and liquidity. Readers are encouraged to read the Company's reports filed with the SEC, including its Form 10-K for the year ended December 31, 2011, for a description of these uncertainties. MusclePharm assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
For more information, contact:
Roger Pondel/Robert Jaffe
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