Legacy Education Alliance, Inc. Announces Second Quarter 2019 Results

  • Revenue of $23.7 Million for the second quarter ended June 30, 2019, a decrease of $1.5 Million or 6% YoY
  • UK and Other Foreign Market Segments Combine for Revenue of $9.7 Million
  • Cash Sales Increase to $27 Million, up $2.4 Million or 9.7% YoY
  • Net loss and loss per share in Q2 2019 of $0.3 million or $0.01 per share compared to Q2 2018, improved $2.1 million
  • Operating Cash Flows Improved to $3.5 Million, an increase of $5.9 Million or 257% YoY

Company to hold Conference Call on Wednesday, August 14, 2019

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 second quarter ended June 30, 2019.

Second Quarter 2019 Overview

  • Net loss was $300,000 or ($0.01) per basic and diluted common share for the three months ended June 30, 2019, compared to a net loss of $2.4 million or ($0.10) per basic and diluted common share for the three months ended June 30, 2018, a decrease in net loss of $2.1 million or $0.09 per basic and diluted common share.
  • Revenue for the second quarter of 2019 was $23.7 million compared to $25.2 million for the same period in 2018, a decrease of 6%.
  • Revenues from our North American segment increased $700,000 and U.K. and Other International segments decreased $2.2 million.
  • Cash sales were $27 million for the three months ended June 30, 2019 compared to $24.7 million for the three months ended June 30, 2018, an increase of $2.4 million or 9.7%.
  • Total operating costs and expenses were $24.3 million for the three months ended June 30, 2019 compared to $28.2 million for the three months ended June 30, 2018, a decrease of $3.9 million or 13.8%.
  • Net cash provided by operating activities was $3.6 million in the six months ended June 30, 2019 compared to net cash used in operating activities of $2.3 million in the six months ended June 30, 2018, representing a period-over-period increase of $5.9 million.
  • Funds previously held in reserve by merchant processors released totaling $2.3 million. On July 18, 2019, the Company received funds totaling $1.9 million from a former merchant processor. Additionally, during the second quarter we received a distribution from bankruptcy from another former merchant processor totaling $400,000.

“The cost savings initiatives that we have put in place have improved our financial performance and we are seeing incremental improvements in cash sales, especially in the UK and US,” said James May CEO. “In this quarter our cash sales increased to $27 million, up $2.4 million or 9.7% year over year and our liquidity profile has improved with the release of $2.3 million reserve funds.”

SECOND QUARTER 2019 VERSUS SECOND QUARTER 2018 RESULTS

Revenue was $23.7 million for the three months ended June 30, 2019 compared to $25.2 million for the three months ended June 30, 2018. Revenue decreased $1.5 million or 6.0% during the three months ended June 30, 2019 compared to the same period in 2018. The decrease in revenue was mainly due to a decreased attendance (what we refer to as fulfillment) of $1.5 million or 8.0% in the UK and Other International business segments.

Total operating costs and expenses were $24.3 million for the three months ended June 30, 2019 compared to $28.2 million for the three months ended June 30, 2018, a decrease of $3.9 million or 13.8%. The decrease was primarily due to a $3.0 million decrease in direct course expenses, a $500,000 decrease in advertising and sales expenses, a $300,000 decrease in royalty expenses and $100,000 decrease in general and administrative expenses.

Net loss was $300,000 or ($0.01) per basic and diluted common share for the three months ended June 30, 2019, compared to a net loss of $2.4 million or ($0.10) per basic and diluted common share for the three months ended June 30, 2018, a decrease in net loss of $2.1 million or $0.09 per basic and diluted common share.

YTD 2019 VERSUS YTD 2018 RESULTS

Revenue was $48.3 million for the six months ended June 30, 2019 compared to $51.0 million for the six months ended June 30, 2018. Revenue decreased $2.7 million or 5.3% during the six months ended June 30, 2019 compared to the same period in 2018. The decrease in revenue was due to a decreased attendance (fulfillment) of $4.6 million or 11.3%, partially offset by an increase in revenue from expired contracts of $1.9 million or 19.7%.

Total operating costs and expenses were $48.8 million for the six months ended June 30, 2019 compared to $54.5 million for the six months ended June 30, 2018, a decrease of $5.7 million or 10.5%. The decrease was primarily due to a $4.5 million decrease in direct course expenses, a $700,000 decrease in advertising and sales expenses, a $400,000 decrease in general and administrative expenses, and a $100,000 decrease in royalty expenses.

Net loss was $400,000 or ($0.02) per basic and diluted common share for the six months ended June 30, 2019, compared to a net loss of $3.3 million or ($0.14) per basic and diluted common share for the six months ended June 30, 2018, a decrease in net loss of $2.9 million or $0.12 per basic and diluted common share.

CASH FLOW AND CAPITAL STRUCTURE

Net cash provided by operating activities was $3.6 million in the six months ended June 30, 2019 compared to net cash used in operating activities of $2.3 million in the six months ended June 30, 2018, representing a period-over-period increase of $5.9 million. This increase was primarily attributable to an improvement in earnings and cash sales for the period.

Our consolidated capital structure as of March 31, 2019 and December 31, 2017 was 100.0% equity.

CONFERENCE CALL

Management will host a conference call on Wednesday, August 14, 2019 at 4:30 p.m. ET to discuss its financial results for the second quarter ended June 30, 2019 and provide a corporate update. To listen to the conference call, interested parties within the U.S. should dial 1-800-263-0877 or 1-646-828-8143 for international calls, approximately 10 minutes prior to the scheduled start time. Conference ID:4667642. The conference call will also be available through a live webcast, which can be accessed at http://public.viavid.com/player/index.php?id=135802 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 [email protected].

A replay of the call will be available from 7:30 PM ET on August 14, 2019 thorough 11:59 PM ET on August 28, 2019. The number for the replay is (844) 512-2921 (US), or (412) 317-6671 for international calls; the passcode for the replay is 4667642.

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.

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)

 

 

 

June 30,

 

 

December 31,

 

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,542

 

 

$

1,557

 

Restricted cash

 

 

6,476

 

 

 

5,080

 

Deferred course expenses

 

 

9,474

 

 

 

8,547

 

Prepaid expenses and other current assets

 

 

3,708

 

 

 

3,132

 

Inventory

 

 

69

 

 

 

89

 

Total current assets

 

 

24,269

 

 

 

18,405

 

Property and equipment, net

 

 

1,703

 

 

 

1,880

 

Right-of-use assets

 

 

1,038

 

 

 

 

Deferred tax asset, net

 

 

235

 

 

 

97

 

Other assets

 

 

290

 

 

 

178

 

Total assets

 

$

27,535

 

 

$

20,560

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,086

 

 

$

4,962

 

Royalties payable

 

 

374

 

 

 

210

 

Accrued course expenses

 

 

2,535

 

 

 

1,483

 

Accrued salaries, wages and benefits

 

 

694

 

 

 

748

 

Operating lease liability, current portion

 

 

493

 

 

 

 

Other accrued expenses

 

 

4,042

 

 

 

2,614

 

Long-term debt, current portion

 

 

881

 

 

 

512

 

Deferred revenue, current portion

 

 

60,588

 

 

 

57,353

 

Total current liabilities

 

 

74,693

 

 

 

67,882

 

Long-term debt, net of current portion

 

 

 

 

 

8

 

Operating lease liability, net of current portion

 

 

545

 

 

 

 

Other liabilities

 

 

1,332

 

 

 

1,331

 

Total liabilities

 

 

76,570

 

 

 

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; 23,162,502 and 23,120,852 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

11,527

 

 

 

11,470

 

Cumulative foreign currency translation adjustment

 

 

1,393

 

 

 

1,444

 

Accumulated deficit

 

 

(61,957

)

 

 

(61,577

)

Total stockholders’ deficit

 

 

(49,035

)

 

 

(48,661

)

Total liabilities and stockholders’ deficit

 

$

27,535

 

 

$

20,560

 

 

LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share data)

 

 

 

Three Months Ended

June 30,

 

 

Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

$

23,698

 

 

$

25,222

 

 

$

48,274

 

 

$

50,977

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct course expenses

 

 

12,383

 

 

 

15,397

 

 

 

25,464

 

 

 

30,011

 

Advertising and sales expenses

 

 

5,495

 

 

 

5,998

 

 

 

10,933

 

 

 

11,570

 

Royalty expenses

 

 

1,332

 

 

 

1,653

 

 

 

2,692

 

 

 

2,809

 

General and administrative expenses

 

 

5,041

 

 

 

5,198

 

 

 

9,736

 

 

 

10,046

 

Total operating costs and expenses

 

 

24,251

 

 

 

28,246

 

 

 

48,825

 

 

 

54,436

 

Income/(loss) from operations

 

 

(553

)

 

 

(3,024

)

 

 

(551

)

 

 

(3,459

)

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(74

)

 

 

(4

)

 

 

(115

)

 

 

(8

)

Other income (expense), net

 

 

352

 

 

 

(27

)

 

 

226

 

 

 

(48

)

Total other income (expense), net

 

 

278

 

 

 

(31

)

 

 

111

 

 

 

(56

)

Loss before income taxes

 

 

(275

)

 

 

(3,055

)

 

 

(440

)

 

 

(3,515

)

Income tax (expense) benefit

 

 

 

 

 

640

 

 

 

60

 

 

 

243

 

Net loss

 

$

(275

)

 

$

(2,415

)

 

$

(380

)

 

$

(3,272

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic loss per common share

 

$

(0.01

)

 

$

(0.10

)

 

$

(0.02

)

 

$

(0.14

)

Diluted loss per common share

 

$

(0.01

)

 

$

(0.10

)

 

$

(0.02

)

 

$

(0.14

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

 

23,123

 

 

 

23,008

 

 

 

23,120

 

 

 

23,008

 

Diluted weighted average common shares outstanding

 

 

23,123

 

 

 

23,008

 

 

 

23,120

 

 

 

23,008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(275

)

 

$

(2,415

)

 

$

(380

)

 

$

(3,272

)

Foreign currency translation adjustments, net of tax of $0

 

 

341

 

 

 

1,407

 

 

 

(51

)

 

 

986

 

Total comprehensive income (loss)

 

$

66

 

 

$

(1,008

)

 

$

(431

)

 

$

(2,286

)

 

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

)

 

 

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

 

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

 

 

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

)

 

LEGACY EDUCATION ALLIANCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

Six Months Ended

June 30,

 

 

 

2019

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$

(380

)

 

$

(3,272

)

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

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

102

 

 

 

70

 

Non-cash lease expense

 

 

337

 

 

 

 

Gain on the sale of fixed assets

 

 

(40

)

 

 

 

Gain on change in fair value of derivatives

 

 

 

 

 

(24

)

Share-based compensation

 

 

57

 

 

 

114

 

Deferred income taxes

 

 

(139

)

 

 

(270

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Deferred course expenses

 

 

(925

)

 

 

514

 

Prepaid expenses and other receivable

 

 

(577

)

 

 

1,109

 

Inventory

 

 

20

 

 

 

(126

)

Other assets

 

 

(161

)

 

 

(8

)

Accounts payable-trade

 

 

125

 

 

 

(18

)

Royalties payable

 

 

164

 

 

 

106

 

Accrued course expenses

 

 

1,053

 

 

 

203

 

Accrued salaries, wages and benefits

 

 

(54

)

 

 

(607

)

Operating lease liability

 

 

(337

)

 

 

 

Other accrued expenses

 

 

1,132

 

 

 

1,627

 

Deferred revenue

 

 

3,200

 

 

 

(1,708

)

Net cash provided by (used in) operating activities

 

 

3,577

 

 

 

(2,290

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(13

)

 

 

(480

)

Proceeds from sales of property and equipment

 

 

165

 

 

 

 

Net cash provided by (used in) investing activities

 

 

152

 

 

 

(480

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Principal payments on debt

 

 

(18

)

 

 

(6

)

Proceeds from issuance of debt

 

 

395

 

 

 

 

Net cash provided by (used in) financing activities

 

 

377

 

 

 

(6

)

Effect of exchange rate differences on cash

 

 

275

 

 

 

(39

)

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

 

 

4,381

 

 

 

(2,815

)

Cash and cash equivalents and restricted cash, beginning of period

 

$

6,637

 

 

$

8,904

 

Cash and cash equivalents and restricted cash, end of period

 

$

11,018

 

 

$

6,089

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

75

 

 

$

8

 

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

 

$

(120

)

 

$

(774

)

 

Contacts

Investor Contact:

CORE IR

Scott Gordon

516 222 2560

[email protected]

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