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Legacy Education Alliance, Inc. Announces Third Quarter 2019 Results

CAPE CORAL, Fla.--(BUSINESS WIRE)--

  • Revenue of $25.9 million for the third quarter ended September 30, 2019, an increase of $3.3 million or 14.6% YoY
  • UK and Other Foreign Market Segments Combine for Revenue of $11.5 million
  • Cash Sales Increase to $28 million, up $4.7 million or 20.2% YoY
  • Net income in Q3 2019 of $1.6 million or $0.07 income per share compared to Q3 2018’s net loss of $1.2 million or $0.05 loss per share
  • Operating Cash Flows improved to $6.3 million, an improvement of $7.9 million or 125% YoY

Legacy Education Alliance, Inc. (LEAI) (www.legacyeducationalliance.com), a leading international marketer of practical, high-quality, and value-based educational training on the topics of personal finance, entrepreneurship, real estate, and financial markets investing strategies and techniques, yesterday announced financial results for the third quarter ended September 30, 2019.

Third Quarter 2019 Overview

  • Net income was 1.6 million or $0.07 per basic and diluted common share for the three months ended September 30, 2019, compared to a net loss of $1.2 million or ($0.05) per basic and diluted common share for the three months ended September 30, 2018, an increase in net income of $2.8 million or $0.12 per basic and diluted common share.
  • Revenue was $25.9 million for the three months ended September 30, 2019 compared to $22.6 million for the same period in 2018, an increase of $3.3 million or 14.6%.
  • Revenues from our North American segment increased $1.8 million, and U.K. and Other International segments increased $1.6 million combined.
  • Cash sales were $28.0 million for the three months ended September 30, 2019 compared to $23.3 million for the same period in 2018, an increase of $4.7 million or 20.2%.
  • Total operating costs and expenses were $24.3 million for the three months ended September 30, 2019 compared to $24.4 million for the same period in 2018, a decrease of $0.1 million or 0.4%.
  • Net cash provided by operating activities was $6.3 million in the nine months ended September 30, 2019 compared to net cash used in operating activities of $1.6 million in the nine months ended September 30, 2018, representing a period-over-period increase of $7.9 million.

“We are encouraged by our return to profitability this quarter,” said James May, CEO. “We believe this is evidence that our strategy of driving cash sales and improving expense management, including leveraging our digital fulfillment capabilities is gaining traction.”

THIRD QUARTER 2019 VERSUS THIRD QUARTER 2018 RESULTS

Revenue was $25.9 million for the three months ended September 30, 2019 compared to $23.3 million for the three months ended September 30, 2018. Revenue increased $3.3 million or 14.6% during the three months ended September 30, 2019 compared to the same period in 2018. The increase in revenue was mainly due to an increased attendance (i.e. fulfillment) of $2.3 million or 48.8% and an increase in recognition of revenue from increased attendance (i.e. fulfillment) of $1.0 million or 6.3%.

Cash sales were $28.0 million for the three months ended September 30, 2019 compared to $23.3 million for the three months ended September 30, 2018, an increase of $4.7 million or 20.2%. The increase was driven by a $3.0 million increase in our North American segment, a $1.3 million increase in our U.K. segment and a $0.4 million increase in our Other Foreign Markets segment.

Total operating costs and expenses were $24.3 million for the three months ended September 30, 2019 compared to $24.4 million for the three months ended September 30, 2018, a decrease of $0.1 million or 0.4%. The decrease was primarily due to a $0.7 million decrease in general and administrative expenses and a $0.5 million decrease in advertising and sales expenses, which was partially offset by a $0.6 million increase in direct course expenses and a $0.5 million increase in royalty expenses.

Net income was $1.6 million or $0.07 per basic and diluted common share for the three months ended September 30, 2019, compared to a net loss of $1.2 million or ($0.05) per basic and diluted common share for the three months ended September 30, 2018, an increase in net income of $2.8 million or $0.12 per basic and diluted common share.

YTD 2019 VERSUS YTD 2018 RESULTS

Revenue was $74.2 million for the nine months ended September 30, 2019 compared to $73.5 million for the nine months ended September 30, 2018. Revenue increased $0.7 million or 1.0% during the nine months ended September 30, 2019 compared to the same period in 2018. The increase in revenue was due to an increase in revenue from expired contracts of $4.2 million or 29.0%, partially offset by a decreased attendance (i.e. fulfillment) of $3.5 million or 5.9%.

Total operating costs and expenses were $73.1 million for the nine months ended September 30, 2019 compared to $78.9 million for the nine months ended September 30, 2018, a decrease of $5.8 million or 7.9%. The decrease was primarily due to a $4 million decrease in direct course expenses, a $1.2 million decrease in advertising and sales expenses, a $1.0 million decrease in general and administrative expenses, partially offset by a $0.4 million increase in royalty expenses.

Net income was $1.3 million or $0.05 per basic and diluted common share for the nine months ended September 30, 2019, compared to a net loss of $4.5 million or ($0.20) per basic and diluted common share for the nine months ended September 30, 2018, an increase in net income of $5.8 million or $0.25 per basic and diluted common share.

CASH FLOW AND CAPITAL STRUCTURE

Net cash provided by operating activities was $6.3 million in the nine months ended September 30, 2019 compared to net cash used in operating activities of ($1.6 million) in the nine months ended June 30, 2018, representing a period-over-period increase of $7.9 million. This increase was primarily the result of increased earnings and decrease in current liabilities for deferred revenue.

Our consolidated capital structure as of September 30, 2019 and December 31, 2018 was 100.0% equity.

About Legacy Education Alliance Inc.

Legacy Education Alliance, Inc. (http://www.legacyeducationalliance.com) is a leading international marketer of practical, high-quality, and value-based educational training on the topics of personal finance, entrepreneurship, real estate, and financial markets investing strategies and techniques. Legacy Education Alliance was founded in 1996, today we are a global company with approximately 165 full-time employees that has cumulatively served more than two million students from more than 150 countries and territories over the course of our operating history.

We offer our training through a variety of brands including Legacy Education™, Making Money from Property with Martin Roberts™; Brick Buy Brick™; Building Wealth; Robbie Fowler Property Academy™; Women in Wealth™; Perform in Property™ and Teach Me to Trade™. For more information, please visit our website at: www.legacyeducationalliance.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") (which Sections were adopted as part of the Private Securities Litigation Reform Act of 1995). Statements preceded by, followed by or that otherwise include the words “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” “project,” “prospects,” “outlook,” and similar words or expressions, or future or conditional verbs such as “will,” “should,” “would,” “may,” and “could” are generally forward-looking in nature and not historical facts. These forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any anticipated results, performance or achievements. The Company disclaims any intention to, and undertakes no obligation to, revise any forward-looking statements, whether as a result of new information, a future event, or otherwise. For additional risks and uncertainties that could impact the Company’s forward-looking statements, please see the Company’s Annual Report on Form 10-K (including but not limited to the discussion under “Risk Factors” therein) filed with the SEC on April 15, 2019 and which may be viewed at http://www.sec.gov.

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.

LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share data)

 

 

 

September 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

7,718

 

 

$

1,557

 

Restricted cash

 

 

5,411

 

 

 

5,080

 

Deferred course expenses

 

 

9,490

 

 

 

8,547

 

Prepaid expenses and other current assets

 

 

2,920

 

 

 

3,132

 

Inventory

 

 

70

 

 

 

89

 

Total current assets

 

 

25,609

 

 

 

18,405

 

Property and equipment, net

 

 

1,832

 

 

 

1,880

 

Right-of-use assets

 

 

1,788

 

 

 

 

Deferred tax asset, net

 

 

277

 

 

 

97

 

Other assets

 

 

304

 

 

 

178

 

Total assets

 

$

29,810

 

 

$

20,560

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

4,498

 

 

$

4,962

 

Royalties payable

 

 

421

 

 

 

210

 

Accrued course expenses

 

 

2,889

 

 

 

1,483

 

Accrued salaries, wages and benefits

 

 

512

 

 

 

748

 

Operating lease liability, current portion

 

 

894

 

 

 

 

Other accrued expenses

 

 

3,305

 

 

 

2,614

 

Long-term debt, current portion

 

 

500

 

 

 

512

 

Deferred revenue, current portion

 

 

61,171

 

 

 

57,353

 

Total current liabilities

 

 

74,190

 

 

 

67,882

 

Long-term debt, net of current portion

 

 

 

 

 

8

 

Operating lease liability, net of current portion

 

 

832

 

 

 

 

Other liabilities

 

 

1,333

 

 

 

1,331

 

Total liabilities

 

 

76,355

 

 

 

69,221

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

Stockholders’ deficit:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value, 20,000,000 shares authorized, none issued

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 authorized; 23,162,352 and

 

 

2

 

 

 

2

 

23,120,852 shares issued and outstanding as of September 30, 2019 and

December 31, 2018, respectively

Additional paid-in capital

 

 

11,545

 

 

 

11,470

 

Cumulative foreign currency translation adjustment

 

 

2,218

 

 

 

1,444

 

Accumulated deficit

 

 

(60,310

)

 

 

(61,577

)

Total stockholders’ deficit

 

 

(46,545

)

 

 

(48,661

)

Total liabilities and stockholders’ deficit

 

$

29,810

 

 

$

20,560

 

 

LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

INCOME/(LOSS)

(Unaudited)

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

$

25,936

 

 

$

22,557

 

 

$

74,210

 

 

$

73,534

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct course expenses

 

 

13,461

 

 

 

12,929

 

 

 

38,925

 

 

 

42,940

 

Advertising and sales expenses

 

 

5,208

 

 

 

5,691

 

 

 

16,141

 

 

 

17,261

 

Royalty expenses

 

 

1,719

 

 

 

1,172

 

 

 

4,411

 

 

 

3,981

 

General and administrative expenses

 

 

3,870

 

 

 

4,584

 

 

 

13,606

 

 

 

14,630

 

Total operating costs and expenses

 

 

24,258

 

 

 

24,376

 

 

 

73,083

 

 

 

78,812

 

Income/(loss) from operations

 

 

1,678

 

 

 

(1,819

)

 

 

1,127

 

 

 

(5,278

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income/(expense)

 

 

29

 

 

 

(5

)

 

 

(86

)

 

 

(13

)

Other income (expense), net

 

 

(111

)

 

 

(194

)

 

 

115

 

 

 

(242

)

Total other income (expense), net

 

 

(82

)

 

 

(199

)

 

 

29

 

 

 

(255

)

Income/(loss) before income taxes

 

 

1,596

 

 

 

(2,018

)

 

 

1,156

 

 

 

(5,533

)

Income tax (expense) benefit

 

 

51

 

 

 

797

 

 

 

111

 

 

 

1,040

 

Net income/(loss)

 

$

1,647

 

 

$

(1,221

)

 

$

1,267

 

 

$

(4,493

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income/(loss) per common share

 

$

0.07

 

 

$

(0.05

)

 

$

0.05

 

 

$

(0.20

)

Diluted income/(loss) per common share

 

$

0.07

 

 

$

(0.05

)

 

$

0.05

 

 

$

(0.20

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

22,799

 

 

 

23,005

 

 

 

22,641

 

 

 

23,007

 

Diluted weighted average common shares outstanding

 

 

23,163

 

 

 

23,005

 

 

 

23,134

 

 

 

23,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income/(loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss)

 

$

1,647

 

 

$

(1,221

)

 

$

1,267

 

 

$

(4,493

)

Foreign currency translation adjustments, net of tax of $0

 

 

825

 

 

 

334

 

 

 

774

 

 

 

1,320

 

Total comprehensive income/(loss)

 

$

2,472

 

 

$

(887

)

 

$

2,041

 

 

$

(3,173

)

 

LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)

(In thousands)

 

 

 

Common stock

 

 

Additional
paid-in

 

 

Cumulative
foreign
currency
translation

 

 

Accumulated

 

 

Total
stockholders’

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

adjustment

 

 

deficit

 

 

deficit

 

Balance at December 31, 2017

 

 

23,008

 

 

$

2

 

 

$

11,299

 

 

$

(445

)

 

$

(51,621

)

 

$

(40,765

)

Share-based compensation expense

 

 

 

 

 

 

 

 

57

 

 

 

 

 

 

 

 

 

57

 

Foreign currency translation adjustment, net of tax of $0

 

 

 

 

 

 

 

 

 

 

 

(421

)

 

 

 

 

 

(421

)

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(857

)

 

 

(857

)

Balance at March 31, 2018

 

 

23,008

 

 

$

2

 

 

$

11,356

 

 

$

(866

)

 

$

(52,478

)

 

$

(41,986

)

Share-based compensation expense

 

 

 

 

 

 

 

 

57

 

 

 

 

 

 

 

 

 

57

 

Foreign currency translation adjustment, net of tax of $0

 

 

 

 

 

 

 

 

 

 

 

1,407

 

 

 

 

 

 

1,407

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,415

)

 

 

(2,415

)

Balance at June 30, 2018

 

 

23,008

 

 

$

2

 

 

$

11,413

 

 

$

541

 

 

$

(54,893

)

 

$

(42,937

)

Share-based compensation expense

 

 

 

 

 

 

 

 

31

 

 

 

 

 

 

 

 

 

31

 

Cancellation of common stock

 

 

(7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment, net of tax of $0

 

 

 

 

 

 

 

 

 

 

 

334

 

 

 

 

 

 

334

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,221

)

 

 

(1,221

)

Balance at September 30, 2018

 

 

23,001

 

 

$

2

 

 

$

11,444

 

 

$

875

 

 

$

(56,114

)

 

$

(43,793

)

 

 

Common stock

 

 

Additional
paid-in

 

 

Cumulative
foreign
currency
translation

 

 

Accumulated

 

 

Total
stockholders’

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

adjustment

 

 

deficit

 

 

deficit

 

Balance at December 31, 2018

 

 

23,121

 

 

$

2

 

 

$

11,470

 

 

$

1,444

 

 

$

(61,577

)

 

$

(48,661

)

Share-based compensation expense

 

 

 

 

 

 

 

 

28

 

 

 

 

 

 

 

 

 

28

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cancellation of common stock

 

 

(13

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment, net of tax of $0

 

 

 

 

 

 

 

 

 

 

 

(392

)

 

 

 

 

 

(392

)

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(105

)

 

 

(105

)

Balance at March 31, 2019

 

 

23,108

 

 

$

2

 

 

$

11,498

 

 

$

1,052

 

 

$

(61,682

)

 

$

(49,130

)

Share-based compensation expense

 

 

 

 

 

 

 

 

29

 

 

 

 

 

 

 

 

 

29

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment, net of tax of $0

 

 

 

 

 

 

 

 

 

 

 

341

 

 

 

 

 

 

341

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(275

)

 

 

(275

)

Balance at June 30, 2019

 

 

23,163

 

 

$

2

 

 

$

11,527

 

 

$

1,393

 

 

$

(61,957

)

 

$

(49,035

)

Share-based compensation expense

 

 

 

 

 

 

 

 

18

 

 

 

 

 

 

 

 

 

18

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment, net of tax of $0

 

 

 

 

 

 

 

 

 

 

 

825

 

 

 

 

 

 

825

 

Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,647

 

 

 

1,647

 

Balance at September 30, 2019

 

 

23,163

 

 

$

2

 

 

$

11,545

 

 

$

2,218

 

 

$

(60,310

)

 

$

(46,545

)

 

LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

Nine Months Ended
September 30,

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net income/(loss)

 

$

1,267

 

 

$

(4,493

)

Adjustments to reconcile net income/(loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

140

 

 

 

108

 

Non-cash lease expense

 

 

578

 

 

 

 

Gain on the sale of fixed assets

 

 

(41

)

 

 

 

Gain on change in fair value of derivatives

 

 

 

 

 

(24

)

Share-based compensation

 

 

75

 

 

 

145

 

Deferred income taxes

 

 

(189

)

 

 

(1,072

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Deferred course expenses

 

 

(1,080

)

 

 

577

 

Prepaid expenses and other receivable

 

 

158

 

 

 

622

 

Inventory

 

 

18

 

 

 

51

 

Other assets

 

 

(193

)

 

 

(5

)

Accounts payable-trade

 

 

(348

)

 

 

37

 

Royalties payable

 

 

211

 

 

 

120

 

Accrued course expenses

 

 

1,430

 

 

 

619

 

Accrued salaries, wages and benefits

 

 

(230

)

 

 

(832

)

Operating lease liability

 

 

(640

)

 

 

 

Other accrued expenses

 

 

284

 

 

 

868

 

Deferred revenue

 

 

4,817

 

 

 

1,636

 

Net cash provided by (used in) operating activities

 

 

6,257

 

 

 

(1,643

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(192

)

 

 

(839

)

Proceeds from sales of property and equipment

 

 

165

 

 

 

 

Net cash used in investing activities

 

 

(27

)

 

 

(839

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Principal payments on debt

 

 

(402

)

 

 

(9

)

Proceeds from issuance of debt

 

 

395

 

 

 

500

 

Net cash (used in) provided by financing activities

 

 

(7

)

 

 

491

 

Effect of exchange rate differences on cash

 

 

269

 

 

 

157

 

Net increase (decrease) in cash and cash equivalents and restricted cash

 

 

6,492

 

 

 

(1,834

)

Cash and cash equivalents and restricted cash, beginning of period

 

$

6,637

 

 

$

8,904

 

Cash and cash equivalents and restricted cash, end of period

 

$

13,129

 

 

$

7,070

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

25

 

 

$

13

 

Cash paid during the period for income taxes, net of refunds received

 

$

(66

)

 

$

(774

)

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20191114005867/en/