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Looks like they paid Pyatt $1.25m to leave the company... Not bad compared to what I thought it would take.
Yes I know they've been wanting to. The timing is just very...timely. Q1 report is going to be released within a few weeks.
I'm guessing the cash flow numbers will be quite concerning and this need release is going to be used to offset some the fears. They will be very negative once again. Hopefully, there will be some guidance on cost savings and when profitability will occur.
Remember they did the same prior to year end release with the loans and accts receivable deal.
Hope this isn't smoke screen for a bad Q1.
I really do expect it to be a high revenue quarter with margins taking a slight hit.
Not expecting profitability but very interested to see their cash position.
I wonder what the true sales price is and how much cash they really received.
Working capital and other adjustments can be anything.
+1.5m conditional based on earn out.
Nor paid him
I think drex is being smart about it
Q1 margins might be squeezed. They are discounting heavily to get the volume sales. This is a scary quarter.
Need to hit $50m+ with 33%+ margins and have $5m+ of cash.
I can't see all three happening. If it does, then that bodes well. If it doesn't, dilution is coming.
The 10k was a massive cleanup of all the BS that Pyatt put on the company. Yeesh. MSLP was a trash heap prior to Drexler. Anyone invested in MSLP has to thank their lucky stars that Drex stepped in....maybe. Let's see if he does the shareholders right.
Below was an interesting tidbit on bb.com sales. I think we can already see sales turning around there in Q1. If they can get back to $25M/yr, that would be good recovery. Sales essentially cut in half there over the past years.
Also, US sales actually increased by $10M yoy 2015 from 2014 ($120M v $110M). It was international sales that killed revenue (down $20M). If they can keep margins up to 36%+ like Q4'15, in Q1 and hit $50M+ in sales...that would be a very encouraging change.
Net revenue from products sales to Bodybuilding.com were $16.9 million, $24.0 million and $29.8 million for the years ended December 31, 2015, 2014 and 2013, respectively. The Company had $1.5 million and $1.9 million in trade receivables with Bodybuilding.com as of December 31, 2015 and 2014, respectively. The Company purchased marketing services from Bodybuilding.com of $0.4 million and $1.4 million for the years ended December 31, 2015 and 2014, respectively.
Bakery Barn was 11% of MSLP mfg. I'm assuming they only make Combat Crunch for MSLP. I'm estimating Combat Crunch sales in 2015 to be ~$10-15M with their expectations for 2016 to be $22-$30M range.
http://triblive.com/business/headlines/8968689-74/bars-bakery-barn?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TopTribliveStories+%28Top+Stories%29
If there was a supplier that I wanted them to buy out...it'd probably be them.
Our cash provided by operating activities is driven primarily by sales of our products and vendor provided credit. During the year ended December 31, 2015, our trade accounts payable increased $14.2 million. Our primary uses of cash from operating activities have been for inventory purchases, advertising and promotion expenses, personnel-related expenditures, manufacturing costs, professional fees, costs related to our facilities and legal related fees. Our cash flows from operating activities will continue to be affected principally by the results of operations and the extent to which we increase spending on personnel expenditures, sales and marketing activities, and our working capital requirements.
During the year ended December 31, 2015, cash provided by operating activities was $5.5 million, which differs from our net loss of $51.9 million primarily because of non-cash charges of $38.3 million, and a net change in our net operating assets and liabilities of $19.1 million. The non-cash charges primarily consisted of $9.5 million for non-cash restructuring and other charges, $2.6 million for inventory write down related to corporate restructuring, $12.7 million for stock-based compensation, $6.3 million for amortization of prepaid sponsorship and endorsement fees, $3.9 million for amortization of prepaid stock compensation, and $2.8 million for depreciation of our property and equipment and amortization of our intangible assets. The primary drivers of the changes in operating assets and liabilities were a $14.2 million increase in accounts payable primarily attributable to the timing of payments to vendors, a $5.9 million decrease in inventory primarily related to supply chain issues and our focus on aligning inventory with customer sales orders, a $5.4 million increase in accrued liabilities due primarily to the increase in accrued accounts payable for inventories received but not billed, and a $7.3 million increase in accrued restructuring charges, partially offset by a $6.8 million increase in prepaid sponsorship and endorsement fees due to an increase in advertising, a $5.6 million increase in accounts receivable primarily due to strong revenue growth in the fourth quarter of 2015, and a $2.2 million increase in prepaid expenses and other current assets due primarily to prepayment related to the manufacturing agreement with Capstone.
Yes, I understand they are inflating cash flow due to Acct Payable exploding. But they are not burning $5M cash a month...
If you take out the increase in Accts Payable...they are ~-$10M cash from operating activities for last year.
Need to look at cash flow...
Imagine if they won the lawsuit against insurance company and arbitration against Tiger.
Nope he's dead set focused on selling it
Manziel got paid nothing. His was all options, I thought, with a strike price >$11.
I don't think Pyatt got what he had outlined in his contract.
The official wording is that he resigned. He was not terminated.
I'm sure they came to an agreement of some sort but not nearly as much as what his contract called for.
Additionally, he probably realized that if the company became a successes without him... He'd still profit greatly.
Wynnefield buying it up...
The losses will be huge. But as long as they have cash to continue to execute, I see potential. Not even close to out of the woods, but trending in the right direction.
Look @ bb.com. Combat bars & the new 100% Whey Protein are doing really well.
@M&S same story across all MSLP products
The reduction of skus and focus on inventory, production, & fill-rates seem to be a winning strategy.
More optimistic than before. I didn't add to my position in these low prices...but I didn't sell much either (25% for tax loss purposes).
Here's to Drex figuring it out. I won't add back unless I see something really encouraging in this upcoming 10k.
Q1 revenue should be much higher than Q4. I could see it being a $50M+ quarter.
Bb.com (top 10) and m&s.com (#1) have combat crunch bars selling well. It seems like they held their promise of fixing supply.
All about how much SG&A they can cut.
Hope they release 10k next week.
Did he? I missed that. When did he say that?
All are very valid and important concerns.
That still doesn't mean you shouldn't be happy that they were able to increase revenues above $40M and increase fill-rates. Both are still positive actions that one would hope carries through to 2016. We've seen the company rise up bb.com top 50 list with several products. It'll be interesting to hear guidance for the quarter which will be almost done.
You are correct that the company's future is still very much in doubt and it's cash position is extremely tenuous.
This was just a pre-release to temper fear and show progress.
Their real numbers come out in a couple weeks and which then they'll do a conference call.
The call should be enlightening on what their goals for the year are and how they plan on achieving it.
It shows top line growth and improvement.
They know they will be taking massive restructuring cost his this quarter.
They'll be hugely negative.
The idea is that they've hope to cut enough fat from SG&A that top line growth and margin improvement means this company can get to profitability.
The question will be when and will they have enough cash runway to get there. Also, is this top line growth sustainable. Any room for error or will the cash burn kill the company?
Drexler is saying they doubled Combat Crunch production in Q1. Supply fill rates are up to 85%. These are both huge improvements if sustainable.
Still think Drexler is trying to bankrupt the company?
Working hard to increase fill rates and margin.
Although they will be highly negative from a profit standpoint due to restructuring costs, 1H'16 will be impressive imo.
I do hate that he's paying himself $550k, but I can see why with the amount of risk he's taking on.
5 products crack top 50 on bb.com. CC bars crack top 10. It's been a long while for this type of news.
I dont think they'll report until March. Maybe second week. They have an extended deadline for year-end.
Ah, maybe they didn't join Team Elevation but were just visiting...
MSLP signed 2 more to Team Elevation. I think they poached another Team AlphaMale fighter.
It's too bad MSLP is terrible at controlling the message. There is a lot of hatred towards Team Elevation for poaching these fighters. Long-term it won't matter, but short-term...negative pub/sentiment.
Additionally, I do see MSLP products rising on bb.com. Combat Crunch is higher on the list than Quest. It hasn't been that way in a long time. 4 products in the top 50 and rising.
Hopefully, they have solved some supply chain issues and prioritized high-selling channels over lower-selling channels. Maybe even reduce some of the mom & pop nutrition shops if needed to free up supply. Focus on 2 or 3 key countries. Switch to scale deep (expand existing relationships) vs. scale wide (chasing new biz).
I like all the moves. Hopefully it isn't a scenario of happening too late. Drexler may not be eloquent, but it seems he's making the right moves.
One thing they said is that they swapped out RSUs as bonuses for stock options (I had emailed Drexler about doing this the second he joined - I'll take partial credit..haha). I hope they talk more about that @ the next call or have more info in the 10k.
Don't they have $6m in cash from the convertible debt offering?
Looks like Dexler will get the board seats right? With Estella stepping down that opens one. Then I think in his agreement for the $6m loan he gets two.
Any lawyers in here? What are the chances MSLP wins against Liberty? $3M could go a long way for MSLP...even if they settle for $1M-2M that would be really helpful.
Law360, Los Angeles (January 14, 2016, 6:37 PM ET) -- A Liberty Mutual unit told a Colorado federal judge Wednesday that it doesn't owe sports nutrition company MusclePharm $3 million for the costs of complying with a U.S. Securities and Exchange Commission investigation because its coverage obligation didn't kick in until the supplement maker's executives received official notices of impending legal action.
Both MusclePharm Corp. and Liberty Insurance Underwriters Inc. filed motions for partial summary judgment in Colorado federal court Wednesday. MusclePharm asserted that Liberty must cover all the legal expenses it incurred in connection with the SEC investigation into possible securities violations by some of its current and former directors and officers, while Liberty said MusclePharm's policy didn't provide coverage until company executives received Wells notices indicating that the SEC was planning to bring enforcement actions against them.
"[T]he record establishes that the SEC investigation of MusclePharm did not constitute a claim for a wrongful act prior to MusclePharm executives' receipt of the SEC Wells notices," Liberty's attorneys wrote in the insurer's brief.
MusclePharm countered that its coverage claim falls "squarely within" two insuring agreements under the policy.
MusclePharm's D&O policy with Liberty covered a period spanning from January 2013 through January 2014, according to court papers.
In July 2013, the SEC issued MusclePharm a formal order of investigation and sent subpoenas to the company and several former and current directors and officers, seeking documents and witness depositions. MusclePharm itself incurred $1.3 million in legal expenses related to the probe, and it also indemnified the directors and officers $1.7 million for their response costs, according to MusclePharm's brief.
Liberty denied MusclePharm's request for coverage of those expenses, asserting that the SEC proceeding was not a claim as defined in the policy, and that no claim would arise unless a Wells notice or target letter was issued to an individual insured under the policy.
The SEC issued Wells notices to two former MusclePharm executives in February 2015. Seven months later, MusclePharm and the officers settled the SEC's charges, which the commission revealed dealt with unreported executive compensation, among other things. MusclePharm and the executives together agreed to pay $910,000 in penalties, and the company employed an independent monitor for a year.
Liberty agreed pursuant to a reservation of rights to reimburse MusclePharm for the former executives' reasonable defense costs from the date of the Wells notices forward, according to court papers. The insurer has not yet done so, although Liberty said in its summary judgment brief that it is still calculating which of MusclePharm's expenses after that date are covered under the policy.
MusclePharm argued in its brief that the entirety of the SEC investigation meets the Liberty policy's definition of a claim, which is "a written demand for monetary or nonmonetary relief against an insured person or organization."
The subpoenas MusclePharm received from the SEC qualify as demands for nonmonetary relief, according to the company.
"An ordinary reader of the policy, particularly an ordinary public entity, would understand that term to encompass SEC subpoenas and the requests for documents and testimony contained therein," MusclePharm's attorneys wrote. "This is particularly true since regulatory proceedings such as that initiated by the SEC are a key risk public companies and their officers and directors face and for which they expect protection from their insurers."
Liberty, meanwhile, contended that it properly determined it didn't have to reimburse MusclePharm for any expenses the company incurred prior to the SEC's issuance of the Wells notices in February.
According to Liberty, the SEC's formal order of investigation didn't equate to a claim because it didn't specifically target any particular MusclePharm directors or officers.
The insurer also asserted that MusclePharm isn't entitled to coverage for any of its own legal expenses under any part of the policy. Rather, MusclePharm can only seek coverage for its costs to fund the former executives' defense after they received the SEC's Wells notices, according to the insurer's brief.
"[B]ecause the SEC investigation constituted a generic investigation of MusclePharm rather than a formal investigation against an insured person, summary judgment should enter in Liberty's favor," Liberty's attorneys wrote.
MusclePharm is represented by Christopher R. Mosley and Adrian J. Leonard IV of Sherman & Howard LLC.
Liberty is represented by Kevin M. Mattessich and Christopher Bays of Kaufman Dolowich & Voluck LLP, and Chanda M. Feldkamp of Kelly & Walker LLC.
The case is MusclePharm Corp. v. Liberty Insurance Underwriters Inc., case number 1:15-cv-00555, in the U.S. District Court for the District of Colorado.
--Additional reporting by Cara Salvatore. Editing by Aaron Pelc.
I would also like to understand Wynnefield's position about these moves. Anyone have access to him?
While I agree this is a very real risk and potential play by Ryan.
Walk me through the upside of acquiring MSLP after bankruptcy for the $6M in debt + stock purshase he's already spent? How much total is it $10M+? Which is ~1/3rd of it's current market cap...
The company would get negative press ruining the image (i.e. "We're a marketing and sales company").
Customers/consumers + Walmart + CostCo + online retailers would all abandon ship.
Suppliers would be PISSED. Who would manufacture for them? He'd have killed all supply chain options.
I'm not saying you're wrong, but would like to see the continuation of the thought of why this would be a profitable move for him.
The debt they retired was toxic. This is a huge step in the right direction.
Are they going to hire someone else? Drex can't do this all by himself...
Apparently Rogan is an co-investor in a competitor of MSLP...Onnit. TJ Dillashaw is (was?) signed to them. Rogan has had guest come on to talk shit about MSLP and promote Onnit, but he himself can't do it due to his ties with UFC. With TJ leaving for MSLP, I'm guessing he's not a fan of the move.
He's mentioned MSLP quite a few times in the past...never in a positive light though.
I'm guessing this was more of the same.
In what context is he mentioning them?
I guess I was off. Looks like they only needed $6m.
Look at their financials. They only need cash to pay their monthly lines of credit and start paying down their accounts payable line. All depends on if they can become cash flow positive, which shouldn't be hard.
All they need to do is cut their SG&A considerably to sustain a set amount of base minimum recurring revenue which was built by the brand. These are sales that would happen based on rep that you don't need marketing for.
Investing in Combat crunch was a no brainer. It was the one product line that is successful. You use the powder lines @ minimum headcount and marketing to be cash flow generator for your growth protein bar line. I honestly don't care if their revenue is down. My number one metric is how much they cut sga.
What's really lucky is that Drexler is a shareholder vs activist. He easily could've waited for this company to self destruct. Count your blessings if you stayed in this stock. It would be over by now otherwise.
Anyone speak to Drexler recently?
Any insight into his thoughts on cash flow, financing, restructuring progress, etc would be really great to have. Or just his general sentiment after being involved for months now.
I've emailed him a couple times with no response...hoping others have access.
All they need is ~$10m long-term loan and they'd be fine through this transition. Drexler would probably do that himself through Consac before declaring bankruptcy.
I think we get one more quarter of hurt before things start improving. I think revenue will actually be up this quarter vs. last quarter.
We shall see.