CAPE CORAL, Fla.--(BUSINESS WIRE)--Legacy Education Alliance, Inc. (OTCQB:LEAI) (www.legacyeducationalliance.com), a leading international provider 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, today announced financial results for the fiscal year ended December 31, 2018.
Fiscal Year 2018 Overview
- Net loss was $10.0 million or $0.43 per basic and diluted common share for the year ended December 31, 2018, compared to net income of $4.3 million or $0.19 per basic common share and $0.18 per diluted common share for the year ended December 31, 2017. This was a decrease in net income of $14.3 million or $0.62 per basic common share and $0.61 per diluted common share.
- Revenue was $93.4 million for the year ended December 31, 2018 compared to $97.7 million for the year ended December 31, 2017, a decrease of $4.3 million or 4.4%.
- Combined UK and Other Foreign Market Segments revenue was $40.4 million for the year ended December 31, 2018 compared to $40.5 million for the year ended December 31, 2017, a decrease of $100 thousand.
- Cash sales were $96.8 million for the year ended December 31, 2018 compared to $99.2 million for the year ended December 31, 2017, a decrease of $2.4 million or 2.4%.
- Total operating costs and expenses were $102.5 million for the year ended December 31, 2018 compared to $95.9 million for the year ended December 31, 2017, an increase of $6.5 million or 6.8%.
- Net cash used in operating activities was $1.7 million in the year ended December 31, 2018 compared to net cash provided by operating activities of $5.1 million in the year ended December 31, 2017, representing a period-over-period decrease of $6.8 million.
“Our 2018 financial results were negatively impacted by a variety of factors, many of which we believe occurred outside the course of normal business operation,” said James May, Interim CEO. “We feel that the bulk of these expense increases are behind us and that the investment in our business was necessary to sustain future growth.”
FY 2018 VERSUS FY 2017 RESULTS
Revenue was $93.4 million for the year ended December 31, 2018 compared to $97.7 million for the year ended December 31, 2017, a decrease of $4.3 million or 4.4%. The decrease was due to decreased fulfillment of $7.8 million or 9.5%, partially offset by the increase in recognition of revenue from expired contracts of $3.4 million or 21.0%. Cash sales were $96.8 million for the year ended December 31, 2018 compared to $99.2 million for the year ended December 31, 2017, a decrease of $2.4 million or 2.4%. The decrease was driven primarily by a $4.0 million decrease in our Other Foreign Markets segment and a $1.2 million decrease in our U.K. segment partially offset by a $2.8 million increase in our North America segment.
Total operating costs and expenses were $102.5 million for the year ended December 31, 2018 compared to $95.9 million for the year ended December 31, 2017, an increase of $6.5 million or 6.8%. The increase was due to a $1.8 million increase in direct course expenses, a $1.8 million increase in general and administrative expenses, and a $2.9 million increase in advertising and sales expenses.
Net loss was $10.0 million or $0.43 per basic and diluted common share for the year ended December 31, 2018, compared to net income of $4.3 million or $0.19 per basic common share and $0.18 per diluted common share for the year ended December 31, 2017, a decrease in net income of $14.3 million or $0.62 per basic common share and $0.61 per diluted common share. Note that the net loss for the year ended December 31, 2018 was negatively impacted by the decrease in revenue of $4.3 million, the increase in operating costs of $6.5 million, and the decrease in other income of $4.5 million.
CASH FLOW AND CAPITAL STRUCTURE
Net cash used in operating activities was $1.7 million in the year ended December 31, 2018 compared to net cash provided by operating activities of $5.1 million in the year ended December 31, 2017, representing a period-over-period decrease of $6.8 million. This decrease was primarily the result of decreased earnings.
Our consolidated capital structure as of December 31, 2018 and December 31, 2017 was 100.0% equity.
CONFERENCE CALL
Legacy Education Inc. will hold a conference call on Wednesday, April 24, 2019 at 4:30 p.m. EDT to discuss its financial results for the fiscal year ended December 31, 2018.
To listen to the conference call, interested parties within the U.S. should dial 1-866-548-4713 or 1-323-794-2093 for international calls, approximately 10 minutes prior to the scheduled start time. Conference ID: 6288024. The conference call will also be available through a live webcast, which can be accessed at http://public.viavid.com/index.php?id=134044 or through the company’s website at http://ir.legacyeducationalliance.com/ir-calendar.
Management will answer pre-submitted questions gathered prior to the earnings conference call in the Question and Answer period of the call. Interested parties may submit questions for Management’s consideration prior to the call by submitting them in writing to Legacy Education Alliance Investor Relations at scottg@coreir.com.
A replay of the call will be available approximately one hour after the conclusion of the call through May 8, 2019. The number for the replay is (844) 512-2921 (US), or (412) 317-6671 for international calls; the passcode for the replay is 6288024.
About Legacy Education Alliance Inc.
Legacy Education Alliance, Inc. (http://www.legacyeducationalliance.com) is a leading international provider 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 Rich Dad® Education; Rich Dad® Stock 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.
| LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES | ||||||||
| Consolidated Balance Sheets | ||||||||
| (In thousands, except share data) | ||||||||
| December 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,557 | $ | 6,005 | ||||
| Restricted cash | 5,080 | 2,899 | ||||||
| Deferred course expenses | 8,547 | 9,417 | ||||||
| Prepaid expenses and other current assets | 3,132 | 6,408 | ||||||
| Inventory | 89 | 330 | ||||||
| Total current assets | 18,405 | 25,059 | ||||||
| Property and equipment, net | 1,880 | 1,187 | ||||||
| Deferred tax asset, net | 97 | 441 | ||||||
| Other assets | 178 | 333 | ||||||
| Total assets | $ | 20,560 | $ | 27,020 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 4,962 | $ | 2,860 | ||||
| Royalties payable | 210 | 188 | ||||||
| Accrued course expenses | 1,483 | 1,829 | ||||||
| Accrued salaries, wages and benefits | 748 | 1,506 | ||||||
| Other accrued expenses | 2,614 | 2,430 | ||||||
| Long-term debt, current portion | 512 | 11 | ||||||
| Deferred revenue, current portion | 57,353 | 57,151 | ||||||
| Total current liabilities | 67,882 | 65,975 | ||||||
| Long-term debt, net of current portion | 8 | 20 | ||||||
| Deferred revenue, net of current portion | — | 602 | ||||||
| Other liabilities | 1,331 | 1,188 | ||||||
| Total liabilities | 69,221 | 67,785 | ||||||
| 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 shares authorized, 23,120,852 and | ||||||||
| 23,007,519 shares issued and outstanding at December 31, 2018 and 2017, | ||||||||
| respectively | 2 | 2 | ||||||
| Additional paid-in capital | 11,470 | 11,299 | ||||||
| Cumulative foreign currency translation adjustment | 1,444 | (445 | ) | |||||
| Accumulated deficit | (61,577 | ) | (51,621 | ) | ||||
| Total stockholders’ deficit | (48,661 | ) | (40,765 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 20,560 | $ | 27,020 | ||||
| LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES | ||||||||||
| Consolidated Statements of Operations and Comprehensive Income (Loss) | ||||||||||
| (In thousands, except per share data) | ||||||||||
|
Years Ended December 31, |
||||||||||
| 2018 | 2017 | |||||||||
| Revenue | $ | 93,409 | $ | 97,730 | ||||||
| Operating costs and expenses: | ||||||||||
| Direct course expenses | 55,800 | 53,972 | ||||||||
| Advertising and sales expenses | 22,740 | 19,790 | ||||||||
| Royalty expenses | 4,698 | 4,746 | ||||||||
| General and administrative expenses | 19,250 | 17,408 | ||||||||
| Total operating costs and expenses | 102,488 | 95,916 | ||||||||
| Income (loss) from operations | (9,079 | ) | 1,814 | |||||||
| Other income (expense): | ||||||||||
| Interest expense | (40 | ) | (9 | ) | ||||||
| Other income (expense), net | (368 | ) | 4,480 | |||||||
| Total other income (expense), net | (408 | ) | 4,471 | |||||||
| Income (loss) before income taxes | (9,487 | ) | 6,285 | |||||||
| Income tax expense | (469 | ) | (1,989 | ) | ||||||
| Net income (loss) | $ | (9,956 | ) | $ | 4,296 | |||||
| Basic earnings (loss) per common share | $ | (0.43 | ) | $ | 0.19 | |||||
| Diluted earnings (loss) per common share | $ | (0.43 | ) | $ | 0.18 | |||||
| Basic weighted average common shares outstanding | 23,014 | 21,510 | ||||||||
| Diluted weighted average common shares outstanding | 23,014 | 22,857 | ||||||||
| Comprehensive income (loss): | ||||||||||
| Net income (loss) | $ | (9,956 | ) | $ | 4,296 | |||||
| Foreign currency translation adjustments, net of tax of $0 | 1,889 | (3,113 | ) | |||||||
| Total comprehensive income | $ | (8,067 | ) | $ | 1,183 | |||||
| LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||
| Consolidated Statements of Changes in Stockholders’ Deficit | ||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||
| Common stock |
Additional paid-in |
Cumulative foreign currency translation |
Accumulated |
Total stockholders’ |
||||||||||||||||||||
| Shares | Amount | capital | adjustment | deficit | deficit | |||||||||||||||||||
| Balance at December 31, 2016 | 22,631 | 2 | 11,073 | 2,668 | (55,917 | ) | (42,174 | ) | ||||||||||||||||
| Issuance of common stock for | ||||||||||||||||||||||||
| services | 400 | — | — | — | — | — | ||||||||||||||||||
| Share-based compensation | ||||||||||||||||||||||||
| expense | — | — | 226 | — | — | 226 | ||||||||||||||||||
| Cancellation of common stock | (23 | ) | — | — | — | — | — | |||||||||||||||||
| Foreign currency | ||||||||||||||||||||||||
| translation adjustment, net | ||||||||||||||||||||||||
| of tax of $0 | — | — | — | (3,113 | ) | — | (3,113 | ) | ||||||||||||||||
| Net Income | — | — | — | — | 4,296 | 4,296 | ||||||||||||||||||
| Balance at December 31, 2017 | 23,008 | $ | 2 | $ | 11,299 | $ | (445 | ) | $ | (51,621 | ) | $ | (40,765 | ) | ||||||||||
| Share-based compensation expense | — | — | 171 | — | — | 171 | ||||||||||||||||||
| Issuance of common stock | 120 | — | — | — | — | — | ||||||||||||||||||
| Cancellation of common stock | (7 | ) | — | — | — | — | — | |||||||||||||||||
| Foreign currency | ||||||||||||||||||||||||
| translation adjustment, net | ||||||||||||||||||||||||
| of tax of $0 | — | — | — | 1,889 | — | 1,889 | ||||||||||||||||||
| Net Loss | — | — | — | — | (9,956 | ) | (9,956 | ) | ||||||||||||||||
| Balance at December 31, 2018 | 23,121 | $ | 2 | $ | 11,470 | $ | 1,444 | $ | (61,577 | ) | $ | (48,661 | ) | |||||||||||
| LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES | ||||||||
| Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
|
Years Ended December 31, |
||||||||
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income (loss) | $ | (9,956 | ) | $ | 4,296 | |||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating | ||||||||
| activities: | ||||||||
| Depreciation and amortization | 146 | 125 | ||||||
| Gain on change in fair value of derivatives | (24 | ) | (85 | ) | ||||
| Share-based compensation | 170 | 226 | ||||||
| Deferred income taxes | 487 | 1,667 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Deferred course expenses | 703 | (49 | ) | |||||
| Prepaid expenses and other receivable | 3,084 | (2,813 | ) | |||||
| Inventory | 236 | 34 | ||||||
| Other assets | 26 | (42 | ) | |||||
| Accounts payable-trade | 2,248 | (675 | ) | |||||
| Royalties payable | 23 | 12 | ||||||
| Accrued course expenses | (290 | ) | 699 | |||||
| Accrued salaries, wages and benefits | (751 | ) | 657 | |||||
| Other accrued expenses | 611 | 516 | ||||||
| Deferred revenue | 1,581 | 496 | ||||||
| Net cash provided by (used in) operating activities | (1,706 | ) | 5,064 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property and equipment | (858 | ) | (181 | ) | ||||
| Net cash used in investing activities | (858 | ) | (181 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Principal payments on debt | (11 | ) | (11 | ) | ||||
| Proceeds from issuance debt | 500 | — | ||||||
| Net cash provided by (used in) financing activities | 489 | (11 | ) | |||||
| Effect of exchange rate differences on cash | (192 | ) | (908 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | (2,267 | ) | 4,045 | |||||
| Cash and cash equivalents and restricted cash, beginning of period | $ | 8,904 | $ | 4,859 | ||||
| Cash and cash equivalents and restricted cash, end of period | $ | 6,637 | $ | 8,904 | ||||
| Supplemental disclosures: | ||||||||
| Cash paid during the period for interest | $ | 40 | $ | 10 | ||||
| Cash paid during the period for income taxes, net of refunds received | $ | (924 | ) | $ | 1,240 | |||