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CST: 20/10/2019 04:25:20   

GNC Holdings, Inc. Reports Second Quarter 2019 Results

89 Days ago

  • Net income of $16.1 million for the second quarter of 2019; Adjusted net income of $18.3 million, an 8.3% increase compared with the second quarter of 2018
  • Domestic same store sales decreased 4.6% compared with the second quarter of 2018; International segment revenue, excluding China, increased 1.3%
  • Adjusted EBITDA of $61.6 million, improved 125 bps as a percentage of revenue compared with the second quarter of 2018

PITTSBURGH, July 22, 2019 (GLOBE NEWSWIRE) -- GNC Holdings, Inc. (NYSE: GNC) (the “Company”) reported consolidated revenue of $534.0 million in the second quarter of 2019, compared with consolidated revenue of $617.9 million in the second quarter of 2018.  The decrease in revenue was primarily a result of the transfer of the Nutra manufacturing and China businesses to the newly formed joint ventures, negative same store sales and the closure of company-owned stores under our store portfolio optimization strategy.

Key Updates

  • U.S. & Canada segment achieved second consecutive quarter year-over-year operating income growth.  Operating income margin increased 150 bps to 10.3% from 8.8% in the second quarter of 2018
  • GNC brand mix increased to 53% compared with 51% in the second quarter of 2018
  • Recently launched Lit AF, an enhanced, next generation pre-workout dietary supplement in the $135 million Beyond Raw GNC brand
  • Reduced debt by an additional $34 million during the second quarter of 2019 to further deleverage the capital structure
  • Ended second quarter with $171 million in liquidity

For the second quarter of 2019, the Company reported net income of $16.1 million compared with net income of $13.3 million in the prior year quarter. Diluted earnings per share ("EPS") was $0.11 in the current quarter compared with diluted EPS of $0.16 in the prior year quarter. Excluding the expenses outlined in the table below, adjusted net income was $18.3 million1 in the current quarter, compared with adjusted net income of $16.9 million1 in the prior year quarter.  Adjusted diluted EPS was $0.131 in the current quarter compared with $0.201 in the prior year quarter. Diluted EPS and Adjusted diluted EPS in the current quarter reflects the impact of convertible preferred stock on an if-converted basis.

Adjusted EBITDA, as defined and reconciled to net income in the table below, was $61.6 million2, or 11.5% of revenue, in the current quarter compared with $63.5 million2, or 10.3% of revenue, in the prior year quarter.

“During the second quarter of 2019, although we experienced some softness in our sales, we delivered meaningful growth in our operating income margins consistent with our long-term strategy,” said Ken Martindale, GNC’s Chairman and CEO.  “The quarter represented solid progress towards our store optimization and cost savings initiatives. Recently, Ryan Ostrom joined us as Chief Brand Officer bringing extensive marketing and digital experience with industry leading brands. We are confident he will expand our omni-channel capabilities, and look forward to his leadership to grow our brand across the globe.”

______________________
1 This Non-GAAP financial measure is reconciled to GAAP below, under the caption "Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted EPS"
2  This Non-GAAP financial measure is reconciled to GAAP below, under the caption "Reconciliation of Net Income to Adjusted EBITDA"


Segment Operating Performance

U.S. & Canada

Revenues in the U.S. and Canada segment decreased $41.2 million, or 8.0%, to $476.1 million for the three months ended June 30, 2019 compared with $517.3 million in the prior year quarter. E-commerce sales comprised 8.1% of U.S. and Canada revenue for the three months ended June 30, 2019 compared with 8.3% in the prior year quarter.

The decrease in revenue compared with the prior year quarter was primarily due to negative same store sales of 4.6%, which resulted in a revenue decrease of $17.5 million, and the closure of company-owned stores under our store portfolio optimization strategy, which contributed a $14.9 million decrease in revenue. In domestic franchise locations, same store sales for the second quarter of 2019 decreased 1.8% over the prior year quarter.

Operating income increased $3.6 million to $49.2 million, or 10.3% of segment revenue, for the three months ended June 30, 2019 compared with $45.6 million, or 8.8% of segment revenue, for the same period in 2018. The increase in operating income was primarily due to lower occupancy, salaries and benefits, marketing, and distribution and transportation costs as compared to the same period in 2018. The increase in operating income percentage was driven by lower occupancy expense partially offset by expense deleverage in salaries and benefits associated with a decrease in company-owned same store sales.

International

Revenues in the International segment decreased $9.2 million, or 18.9%, to $39.4 million for the three months ended June 30, 2019 compared with $48.6 million in the prior year quarter mostly due to the transfer of the China business to the newly formed joint venture, effective February 13, 2019.  The decline was partially offset by a $0.7 million increase in sales to our international franchisees.

Operating income decreased $1.4 million to $14.3 million, or 36.2% of segment revenue, for the three months ended June 30, 2019 compared with $15.7 million, or 32.3% of segment revenue, for the same period in 2018.  The increase in operating income percentage was primarily a result of the transfer of the China business to the newly formed joint venture.

Manufacturing / Wholesale

Revenues in the Manufacturing / Wholesale segment, excluding intersegment sales, decreased $33.5 million, or 64.4%, to $18.5 million for the three months ended June 30, 2019 compared with $52.0 million in the prior year quarter primarily due to the transfer of the Nutra manufacturing business to the newly formed manufacturing joint venture with International Vitamin Corporation, effective March 1, 2019.

Operating income decreased $3.8 million to $12.1 million, or 65.5% of segment revenue, for the three months ended June 30, 2019 compared with $15.9 million, or 13.6% of segment revenue, in the prior year quarter.  Revenue decreased as a result of the transfer of the Nutra manufacturing business to the newly formed joined venture. However, operating income margins were positively impacted as the Manufacturing / Wholesale segment recognized profit margin that resulted from maintaining consistent pricing to what was charged to our other operating segments prior to the inception of the manufacturing joint venture, and recorded profit on intersegment sales associated with inventory produced prior to the transfer of the Nutra manufacturing business to the joint venture.

Year-to-Date Performance

For the first six months of 2019, the Company reported consolidated revenue of $1,098.8 million, a decrease of $126.7 million compared with consolidated revenue of $1,225.5 million for the first six months of 2018. The decrease in revenue during the first six months of 2019 compared to the prior year period was primarily due to the transfer of the Nutra manufacturing and China e-commerce businesses to the newly formed joint ventures, which resulted in an approximate $61 million decrease in revenue, the closure of company-owned stores under our store portfolio optimization strategy, which resulted in an approximate $29 million decrease in revenue, and negative same store sales of 3.1%.

For the first six months of 2019, the Company reported net income of $0.8 million and diluted loss per share of $0.09, which included the reduction to net income for the cumulative undeclared dividends of $8.7 million, compared with net income of $19.5 million and diluted EPS of $0.23 for the first six months of 2018. Excluding the expenses outlined in the reconciliation table below, adjusted EPS was $0.28 and $0.44 in the first six months of 2019 and 2018, respectively. Adjusted Diluted EPS in the current year reflects the impact of the convertible preferred stock on an if-converted basis

Cash Flow and Liquidity Metrics

For the six months ended June 30, 2019, the Company generated net cash from operating activities of $65.3 million compared with $49.1 million for the six months ended June 30, 2018. The increase was driven by favorable working capital changes primarily due to an increase in accounts payable as a result of the Company's cash management efforts as well as the establishment of the manufacturing joint venture.

For the six months ended June 30, 2019, the Company generated $58.9 million3 in free cash flow compared with $40.8 million3 for the six months ended June 30, 2018. The Company defines free cash flow as cash provided by operating activities less capital expenditures. At June 30, 2019, the Company’s cash and cash equivalents were $95.9 million and debt was $854.7 million. No borrowings were outstanding on the Company's Revolving Credit Facility at the end of the second quarter of 2019.

Conference Call

GNC has scheduled a live webcast to report its second quarter 2019 financial results on July 22, 2019 at 8:30 a.m. ET. To participate on the live call, listeners in North America may dial 1-888-882-4478 and international listeners may dial 1-323-794-2590.  In addition, a live webcast of the call will be available on www.gnc.com via the Investor Relations section under “About GNC.”  A replay of this webcast will be available through August 5, 2019.

About Us

GNC Holdings, Inc.  (NYSE: GNC) - is a global health and wellness brand that helps people live well. The company is known and trusted for quality performance and nutritional supplements, and its broad assortment features innovative private-label products as well as nationally recognized third-party brands, many of which are exclusive to GNC.

GNC’s diversified, omni-channel business model has global reach and a well-recognized, trusted brand that provides customers with excellent service, product knowledge and solutions. The company serves consumers worldwide through company-owned retail locations, domestic and international franchise activities, and e-commerce. GNC also has exceptional innovation and product development capabilities and generates revenue through corporate partnerships. As of June 30, 2019, GNC had approximately 8,000 locations, of which approximately 5,900 retail locations are in the United States (including approximately 2,000 Rite Aid licensed store-within-a-store locations) and the remainder are locations in approximately 50 countries.

______________________
3 This Non-GAAP financial measure is reconciled to GAAP below, under the caption "Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow".


Forward-Looking Statements Involving Known and Unknown Risks and Uncertainties

This release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the Company’s financial condition, results of operations and business that is not historical information. Forward-looking statements can be identified by the use of terminology such as “subject to,” “believes,” “anticipates,” “plans,” “expects,” “intends,” “estimates,” “projects,” “may,” “will,” “should,” “can,” the negatives thereof, variations thereon and similar expressions, or by discussions regarding dividend, share repurchase plan, strategy and outlook. While GNC believes there is a reasonable basis for its expectations and beliefs, they are inherently uncertain. The Company may not realize its expectations and its beliefs may not prove correct. Many factors could affect future performance and cause actual results to differ materially from those matters expressed in or implied by forward-looking statements, including but not limited to competition; our ability execute on, or realize the expected benefit from the implementation of, our strategic initiatives; resources devoted to product innovation may not yield new products that achieve commercial success; difficulties with our vendors; failure to maintain and/or upgrade our information technology systems, including electronic payments systems; risks and costs associated with security breaches, data loss, credit card fraud and identity theft; risks associated with our international operations; impact of our current debt profile and obligations under our debt instruments; deployment of real estate strategy and significant lease obligation; successful development and maintenance of a relevant omni-channel experience for our customers; disruptions in our manufacturing system; unfavorable publicity or consumer perception of our products; any significant disruption to our distribution network, inventory management system, or to the timely receipt of inventory; issues with franchisees; material product liability claims, or product recalls; any increase in the price and shortage of supply of key raw materials; general economic conditions, including a prolonged weakness in the economy; compliance with new and existing laws and governmental regulations; failure to comply with FTC regulations; failure  to protect our brand name and intellectual property; potential impact of issuance of Series A Convertible Preferred Stock including dividend and repurchase obligations; the terms and features of our current Notes may have a negative impact on our liquidity, dilution or reported financial results; issues related to joint ventures; failure to attract or retain key employees; not being insured for a significant portion of our claims exposure; our use of derivative instruments for hedging purposes; impact of potential future impairment charges; our holding company structure; historic volatility of our common stock price; and the impact of natural disasters (whether or not caused by climate change), unusually adverse weather conditions, pandemic outbreaks, terrorist acts and global politics.

The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Actual results could differ materially from those described or implied by such forward-looking statements. For a listing of factors that may materially affect such forward-looking statements, please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Non-GAAP Measures

Management has included non-GAAP financial measures in this press release, including adjusted net income, adjusted EPS, adjusted EBITDA, segment operating income, segment operating income as a percentage of segment revenue, adjusted as reflected in this release, free cash flow and comparable same store sales, because it believes they represent an effective supplemental means by which to measure the Company’s operating performance.

Management believes that these measures are useful to investors as they enable the Company and its investors to evaluate and compare the Company’s results from operations in a more meaningful and consistent manner by excluding specific items which are not reflective of ongoing operating results and that can differ significantly from company to company depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments.

However, these measures are not measurements of the Company’s performance under GAAP and should not be considered as alternatives to earnings per share, net income or any other performance measures derived in accordance with GAAP, or as an alternative to GAAP cash flow from operating activities, or as a measure of the Company’s profitability or liquidity.  For more information, see the attached reconciliations of non-GAAP financial measures.



GNC HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(in thousands, except per share amounts)

  Three months ended
June 30,
  Six months ended
June 30,
  2019   2018   2019   2018
   
  (unaudited)
Revenue $ 533,997     $ 617,944     $ 1,098,760     $ 1,225,477  
Cost of sales, including warehousing, distribution and occupancy 340,253     410,209     701,925     810,868  
Gross profit 193,744     207,735     396,835     414,609  
Selling, general, and administrative 143,840     158,531     292,143     319,261  
Loss on net asset exchange for the formation of the joint ventures 1,779         21,293      
Other (income) loss, net (593 )   320     (801 )   75  
Operating income 48,718     48,884     84,200     95,273  
Interest expense, net 24,964     32,943     57,920     54,716  
Loss on debt refinancing             16,740  
Loss on forward contracts for the issuance of convertible preferred stock         16,787      
Gain on convertible debt repurchase (3,214 )       (3,214 )    
Income before income taxes 26,968     15,941     12,707     23,817  
Income tax expense 13,030     2,600     14,986     4,286  
Income (loss) before income from equity method investments 13,938     13,341     (2,279 )   19,531  
Income from equity method investments 2,120         3,075      
Net income $ 16,058     $ 13,341     $ 796     $ 19,531  
Earnings (loss) per share:              
Basic $ 0.13     $ 0.16     $ (0.09 )   $ 0.23  
Diluted $ 0.11     $ 0.16     $ (0.09 )   $ 0.23  
Weighted average common shares outstanding:              
Basic 83,663     83,332     83,587     83,282  
Diluted 140,942     83,409     83,587     83,389  
                       


GNC HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted EPS
(in thousands, except per share data)

  Three months ended June 30,   Six months ended June 30
  2019   2018   2019   2018
  Net
Income
  Diluted
EPS
  Net
Income
  Diluted
EPS
  Net
Income
  Diluted
EPS (1)
  Net
Income
  Diluted
EPS
   
  (unaudited)
Reported $ 16,058     $ 0.11     $ 13,341     $ 0.16     $ 796     $ (0.09 )   $ 19,531     $ 0.23  
Loss on net asset exchange for the formation of the joint ventures 1,779     0.01             21,293     0.16          
Gain on convertible notes repurchase (3,214 )   (0.02 )           (3,214 )   (0.02 )        
Amortization of discount in connection with early debt payment                 3,119     0.02          
Loss on forward contracts related to the issuance of convertible preferred stock                 16,787     0.13          
Loss on debt refinancing                         16,740     0.20  
Other (2) 464         2,655         1,177     0.01     3,463     0.04  
Tax effect of items above(3) 3,219     0.02     943     0.01     (2,617 )   (0.02 )   (2,711 )   (0.03 )
Adjusted $ 18,306     $ 0.13     $ 16,939     $ 0.20     $ 37,341     $ 0.28     $ 37,023     $ 0.44  
                               
Weighted average diluted common shares outstanding 140,942         83,409         133,787       83,389    
                                   


Reconciliation of Net Income to Adjusted EBITDA
(in thousands)

  Three months ended
June 30,
  Six months ended
June 30,
  2019   2018   2019   2018
   
  (unaudited)
Net income $ 16,058     $ 13,341     $ 796     $ 19,531  
Income tax expense 13,030     2,600     14,986     4,286  
Interest expense, net 24,964     32,943     57,920     54,716  
Loss on debt refinancing             16,740  
Depreciation and amortization 8,514     12,001     18,704     24,106  
Loss on net asset exchange for the formation of the joint ventures 1,779         21,293      
Loss on forward contract related to the issuance of convertible preferred stock         16,787      
Gain on convertible notes repurchase (3,214 )       (3,214 )    
Other (2) 464     2,655     1,177     3,463  
Adjusted EBITDA $ 61,595     $ 63,540     $ 128,449     $ 122,842  

(1) The Company applies the if-converted method to calculate dilution impact of the convertible senior notes and the convertible preferred stock. For diluted EPS, the underlying shares of the convertible preferred stock and the convertible senior notes are anti-dilutive.  Therefore, diluted EPS includes the reduction to net income for the cumulative undeclared dividends of $8.7 million. For Adjusted diluted EPS, the underlying shares of the convertible preferred stock are dilutive and the convertible senior notes are anti-dilutive. As a result of the differences in the calculation for diluted EPS and adjusted diluted EPS, amounts do not sum.

(2) The three and six months ended June 30, 2019 includes retention of $0.8 million and $1.6 million, respectively and immaterial refranchising gains. The three and six months ended June 30, 2018 includes retention of $2.2 million and $3.0 million, respectively, $0.6 million in joint venture start-up costs incurred in connection with the Harbin transaction and  immaterial refranchising gains. The retention expense recognized in 2019 and 2018 relates to an incentive program to retain senior executives and certain other key personnel who are critical to the execution and success of the Company's strategy.  The total amount awarded was approximately $10 million, of which approximately $1 million has been forfeited, which vests in four installments of 25% each on November 2018, February 2019, August 2019 and February 2020.

(3)  For the three and six months ended June 30, 2019, the Company generally utilizes a blended federal rate plus a net state rate that excludes the impact of certain state NOL's, state credits and valuation allowance to calculate the impact of adjusted items.  In connection with the transfer of the Nutra manufacturing net assets to the newly formed manufacturing joint venture, the Company recorded a gain for tax purposes which was treated as ordinary and impacts the Company’s annual effective tax rate.  Therefore, for adjusted diluted EPS, the tax effect for the impact of the loss on net asset exchange for equity method investments related to the manufacturing joint venture transaction was adjusted consistent with the annual treatment for tax purposes.  For the three and six months ended June 30, 2018,  the Company utilized an annual effective tax rate, adjusted to exclude discrete items and the tax impact of loss on debt financing.



GNC HOLDINGS, INC. AND SUBSIDIARIES
U.S. Company-Owned Same Store Sales (including GNC.com)

  2019   2018
  Q1
3/31
  Q2
6/30
  Q1
3/31
  Q2
6/30
Contribution to same store sales:              
Domestic retail same store sales (1.9 )%   (3.9 )%   (1.2 )%   (4.2 )%
GNC.com contribution to same store sales 0.3  %   (0.7 )%   1.7  %   3.8  %
Total same store sales (1.6 )%   (4.6 )%   0.5  %   (0.4 )%
                       


GNC HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands)

  June 30,   December 31,
  2019   2018
   
  (unaudited)
Current assets:      
Cash and cash equivalents $ 95,893     $ 67,224  
Receivables, net 110,996     127,317  
Inventory 405,426     465,572  
Forward contracts for the issuance of convertible preferred stock     88,942  
Prepaid and other current assets 15,746     55,109  
Total current assets 628,061     804,164  
Long-term assets:      
Goodwill 79,266     140,764  
Brand name 300,720     300,720  
Other intangible assets, net 74,128     92,727  
Property, plant and equipment, net 91,966     155,095  
Right-of-use assets 379,954      
Equity method investments 99,709      
Other long-term assets 34,403     34,380  
Total long-term assets 1,060,146     723,686  
Total assets $ 1,688,207     $ 1,527,850  
Current liabilities:      
Accounts payable $ 144,726     $ 148,782  
Current portion of long-term debt     158,756  
Current portion of lease liabilities 113,919      
Deferred revenue and other current liabilities 104,502     120,169  
Total current liabilities 363,147     427,707  
Long-term liabilities:      
Long-term debt 854,740     993,566  
Deferred income taxes 13,929     39,834  
Lease liabilities 373,219      
Other long-term liabilities 45,629     82,249  
Total long-term liabilities 1,287,517     1,115,649  
Total liabilities 1,650,664     1,543,356  
       
Mezzanine equity:      
Convertible preferred stock 211,395     98,804  
       
Stockholders’ deficit:      
Common stock 130     130  
Additional paid-in capital 1,010,591     1,007,827  
Retained earnings 554,497     613,637  
Treasury stock, at cost (1,725,349 )   (1,725,349 )
Accumulated other comprehensive loss (13,721 )   (10,555 )
Total stockholders’ deficit (173,852 )   (114,310 )
Total liabilities, mezzanine equity and stockholders’ deficit $ 1,688,207     $ 1,527,850  
               


GNC HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)

  Six months ended June 30,
  2019   2018
   
  (unaudited)
Cash flows from operating activities:      
Net income $ 796     $ 19,531  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization expense 18,704     24,106  
Income from equity method investments (3,075 )    
Amortization of debt costs 12,364     9,025  
Stock-based compensation 2,992     3,474  
Loss on forward contracts related to the issuance of convertible preferred stock 16,787      
Loss on net asset exchange for the formation of the joint ventures1 21,293      
Gain on convertible notes repurchase (3,214 )    
Gains on refranchising (398 )   (208 )
Loss on debt refinancing     16,740  
Third-party fees associated with refinancing     (16,322 )
Changes in assets and liabilities1:      
(Increase) decrease in receivables (4,400 )   2,112  
Increase in inventory (706 )   (9,201 )
(Increase) decrease in prepaid and other current assets 874     (3,175 )
Increase in accounts payable 24,886     6,751  
Decrease in deferred revenue and accrued liabilities (6,081 )   (1,017 )
Decrease in net lease liabilities (18,556 )    
Other operating activities 3,057     (2,674 )
Net cash provided by operating activities 65,323     49,142  
       
Cash flows from investing activities:      
Capital expenditures (6,460 )   (8,333 )
Refranchising proceeds 1,710     1,175  
Store acquisition costs (190 )   (118 )
Proceeds from net asset exchange 101,000      
Capital contribution to the newly formed joint ventures (13,079 )    
Net cash provided by (used in) investing activities 82,981     (7,276 )
       
Cash flows from financing activities:      
Borrowings under revolving credit facility 22,000     104,000  
Payments on revolving credit facility (22,000 )   (104,000 )
Proceeds from the issuance of convertible preferred stock 199,950      
Payments on Tranche B-1 Term Loan (147,312 )   (2,275 )
Payments on Tranche B-2 Term Loan (123,774 )   (21,400 )
Convertible notes repurchase (24,708 )    
Original Issuance Discount and revolving credit facility fees (10,365 )   (35,235 )
Fees associated with the issuance of convertible preferred stock (12,814 )   (3,014 )
Minimum tax withholding requirements (228 )   (226 )
Net cash used in financing activities (119,251 )   (62,150 )
       
Effect of exchange rate changes on cash and cash equivalents (384 )   (364 )
Net increase (decrease) in cash and cash equivalents 28,669     (20,648 )
Beginning balance, cash and cash equivalents 67,224     64,001  
Ending balance, cash and cash equivalents $ 95,893     $ 43,353  

(1) Change in working capital amounts related to the transfer of net assets to the newly formed joint ventures are included in the caption "Loss on net asset exchange for the formation of joint ventures".



GNC HOLDINGS, INC. AND SUBSIDIARIES
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow
(in thousands)

  Six months ended
June 30,
  2019   2018
   
  (unaudited)
       
Net cash provided by operating activities $ 65,323     $ 49,142  
Capital expenditures (6,460 )   (8,333 )
Free cash flow $ 58,863     $ 40,809  
       


GNC HOLDINGS, INC. AND SUBSIDIARIES
Segment Financial Data
 (in thousands)

  Three months ended
June 30,
  Six months ended
June 30,
  2019   2018   2019   2018
   
  (unaudited)
Revenue:              
U.S. and Canada $ 476,060     $ 517,317     $ 965,216     $ 1,029,731  
International 39,448     48,635     80,371     88,700  
Manufacturing / Wholesale:              
Intersegment revenues     65,238     35,505     129,901  
Third-party 18,489     51,992     53,173     107,046  
Subtotal Manufacturing / Wholesale 18,489     117,230     88,678     236,947  
Total reportable segment revenues 533,997     683,182     1,134,265     1,355,378  
Elimination of intersegment revenues     (65,238 )   (35,505 )   (129,901 )
Total revenue $ 533,997     $ 617,944     $ 1,098,760     $ 1,225,477  
Operating income:              
U.S. and Canada $ 49,202     $ 45,603     $ 101,302     $ 89,093  
International 14,269     15,692     28,319     30,156  
Manufacturing / Wholesale 12,118     15,889     27,462     30,853  
Total reportable segment operating income 75,589     77,184     157,083     150,102  
Corporate costs (25,079 )   (28,300 )   (51,340 )   (54,779 )
Loss on net asset exchange for the formation of the joint ventures (1,779 )       (21,293 )    
Other (13 )       (250 )   (50 )
Unallocated corporate costs, loss on net asset exchange and other (26,871 )   (28,300 )   (72,883 )   (54,829 )
Total operating income $ 48,718     $ 48,884     $ 84,200     $ 95,273  
                               


GNC HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Store Count Activity

  Six months ended June 30,
  2019   2018
U.S. & Canada      
Company-owned(1):      
Beginning of period balance 3,206     3,423  
Openings 13     11  
Acquired franchise locations(2) 14     12  
Franchise conversions(3) (4 )   (3 )
Closings (159 )   (115 )
End of period balance 3,070     3,328  
Domestic Franchise:      
Beginning of period balance 1,037     1,099  
Openings 3     9  
Acquired franchise locations(2) (11 )   (12 )
Franchise conversions(3) 4     3  
Closings (33 )   (27 )
End of period balance 1,000     1,072  
International(4):      
Beginning of period balance 1,957     2,015  
Openings 50     36  
Closings (53 )   (43 )
  China locations contributed to the China joint venture (5 )    
End of period balance 1,949     2,008  
Store-within-a-store (Rite Aid):      
Beginning of period balance 2,183     2,418  
Openings 19     21  
Closings (201 )   (78 )
End of period balance 2,001     2,361  
Total Locations 8,020     8,769  

_______________________________________________________________________________

(1) Includes Canada.

(2) Stores that were acquired from franchisees and subsequently converted into company-owned store locations.

(3) Company-owned store locations sold to franchisees.

(4) Includes franchise locations in approximately 50 countries (including distribution centers where sales are made) and company-owned locations in Ireland. Prior year also includes company-owned locations in China.


Contacts:    
     
Investors:   Matt Milanovich, VP- Investor Relations & Treasury, (412) 402-7260; or
    John Mills, Partner - ICR, (646) 277-1254
     
SOURCE:   GNC Holdings, Inc.
     
Web site:   http://www.gnc.com

 

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