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NutriSystem Inc. (NTRI) said first-quarter results likely topped expectations as the maker of weight-loss and fitness products set in place a succession that will make President and Chief Operating Officer Joseph Redling the new chief executive on May 1.
In recent pre-market trading, NutriSystem shares were up 18% at $17.55.
The company now expects revenue of about $216 million and adjusted earnings before interest, taxes, depreciation and amortization of $24 million to $27 million. The company in February projected first-quarter earnings on that basis of $18 million to $22 million on revenue of $200 million to $210 million.
The initial revenue outlook was well below analysts' expectations and help send the stock sharply lower. At the time the NutriSystem said it was being "cautious" with its outlook, citing the uncertainty in consumer spending.
"The business is in good shape as we enter the second quarter," stated current Chairman and CEO Michael Hagan, who will step aside as CEO May 1 in favor of Redling but remain chairman. Hagan, who has held the posts since 2002, said he is departing as CEO to spend more time with his family.
Hagan said the company's first-quarter performance was "better than expected as the marketing efficiency in the latter stages of the quarter showed improvement." The company is also seeing "improvement in our customer retention efforts and in the business of reactivating ex-customers," he said.
Regarding the succession, Hagan called Redling a "remarkable leader with tremendous talents in the areas of marketing, operations and product innovation."
Redling said he was "excited to lead the company into its next phase of growth. Continuing to work side-by-side with Mike Hagan provides both a seamless transition and also the ability for me to utilize his talents in the areas of strategy and business development as we expand our product and geographic footprint in the coming years."
Michael DiPiano, a board member who heads NutriSystem's corporate-governance committee, said: "Mike and his team inherited a $20 million business and turned it into an almost $800 million business that is very profitable."
NutriSystem also said it bought back 3.3 million shares, or nearly 10% of its shares outstanding, for $45 million in the quarter.