DENVER-- 25th August 2015-- MusclePharm Corporation (MSLP) today announced plans to better focus and align the company’s resources toward profitable growth. The company believes this initiative could yield cost savings in excess of $20 million on an annual basis going forward, and profitability in 2016 and beyond. MusclePharm will be working to increase operating profit margins to 10 percent and earnings before interest, taxes, depreciation and amortization (EBITDA) margins to 15 percent by 2020.
Today’s announcement follows recent moves by MusclePharm to build on the company’s core strengths as a leading sports nutrition brand. As detailed in the company’s second quarter results ended June 30, 2015, recent highlights include:
• Net quarterly revenue of a record $50.5 million
• $3.5 million operating cash flow positive for Q2 with $4.2 million in cash on hand
• $8.5 million sales backlog
• Gross margin was 34.7%, up 3.1 percentage points versus 2014 full year results
In addition, the company continues to focus on instituting best practices in corporate governance at the Board level. Ryan Drexler, an experienced nutrition and fitness executive and investment manager, was recently appointed as the new Chairman of the Board who will also play an executive role in the company. The company also recently appointed three additional independent Directors to the MusclePharm Board, thereby expanding the total Board to seven Directors.
“I joined the board to help position the company as it continues pursuing future growth opportunities, while also providing an investor perspective to the management of our growth," said Mr. Drexler. “I believe this is the first in many steps we are taking to position the company for profitability and success.”
As a result of today’s restructuring announcement, MusclePharm anticipates the closure of certain facilities, employee reductions and the termination of contracts which could result in a one-time charge of up to $20 million to $30 million. The amount of the anticipated charge is under review and preliminary and therefore is subject to change.
“Reducing costs will unfortunately include the elimination of some positions throughout the company,” said Brad Pyatt, MusclePharm's CEO. “These staffing reductions are intended to rightsize our business and reduce related costs as we work toward profitability and long-term shareholder value creation."
Although MusclePharm does not expect these cost savings initiatives to affect top line revenue, the company is adjusting its full year projected revenue range to between $190 million and $200 million.
MusclePharm expects to make further announcements as details of the restructuring are implemented. At this time, the company is not able to make a more precise determination of the estimated amount or range of amounts to be incurred for each major type of cost reduction, nor the exact charges and future cash expenditures.