General Nutrition Centers fourth quarter net income increases 56.3% to $19.8 million

General Nutrition Centers, Inc. ("GNC" or the "Company"), a leading global specialty retailer of nutritional products, today reported its financial results for the year and quarter ended December 31, 2010.

For the fourth quarter of 2010, the Company reported net income of $19.8 million, a $7.1 million, or 56.3%, increase over net income of $12.7 million for the fourth quarter of 2009.  Net income as a percentage of revenue was 4.6% in the fourth quarter of 2010, as compared to 3.1% in the fourth quarter of 2009.  

For the fourth quarter of 2010, the Company reported consolidated revenue of $435.7 million, an increase of 7.9% over the consolidated revenue of $403.9 million for the fourth quarter of 2009.  Revenue increased in each of the Company's segments: retail by 6.4%, franchise by 12.8%, and manufacturing/wholesale by 10.7%.  Same store sales improved 5.8% in domestic company-owned stores (including e-commerce sales), representing the 22nd consecutive quarter of positive same store sales.

Earnings before interest, income taxes, depreciation, amortization, non-cash stock-based compensation, and strategic alternative costs, ("Adjusted EBITDA") for the fourth quarter of 2010 was $58.4 million, a $7.8 million, or 15.3%, increase over the Adjusted EBITDA of $50.6 million for the fourth quarter of 2009.  Adjusted EBITDA was 13.4% as a percentage of revenue in the fourth quarter of 2010, compared to 12.5% in the fourth quarter of 2009.  

The Company recognized $4.9 million of income tax expense during the fourth quarter of 2010.  This represented 19.8% of pre-tax income and was affected by non-recurring income tax benefits related principally to an adjustment to the Company's valuation allowance.

For the fourth quarter of 2010, the Company generated net cash from operations of $44.2 million, incurred capital expenditures of approximately $11.6 million, and paid approximately $0.4 million in principal on outstanding debt.  At December 31, 2010, the Company's cash balance was $150.6 million.  

In the fourth quarter of 2010, the Company opened 46 net new domestic company-owned stores, six net new domestic franchise locations, 36 net new international franchise locations and 20 net new franchise store-within-a-store Rite Aid locations.

Joe Fortunato, Chief Executive Officer, said, "Our fourth quarter concluded another strong year for GNC.  Our leadership in health and wellness, particularly in our core vitamin and sports categories, continues to position us to drive retail segment revenue and profit growth, provides opportunities for unique partnerships like Pepsi and PetSmart, and establishes a platform for long term expansion, both domestically and internationally."

For the year ended December 31, 2010, the Company reported net income of $98.2 million, a $28.6 million, or 41.0%, increase over net income of $69.6 million for the year ended December 31, 2009.  Net income as a percentage of revenue was 5.4% for the year ended December 31, 2010, compared to 4.1% for the year ended December 31, 2009.

For the year ended December 31, 2010, the Company reported consolidated revenue of $1,822.4 million, an increase of $115.4 million, or 6.8%, over the consolidated revenue of $1,707.0 million for the year ended December 31, 2009.  Revenue increased in the Company's retail and franchise segments by 7.0% and 11.2%, respectively, and declined in the manufacturing/wholesale segment by 1.2%.  For the year ended December 31, 2010, same store sales improved 5.6% in domestic company-owned stores (including e-commerce sales).

Adjusted EBITDA was $268.2 million for the year ended December 31, 2010, a $37.5 million, or 16.3%, increase over the Adjusted EBITDA of $230.7 million for the year ended December 31, 2009.  Adjusted EBITDA improved to 14.7% as a percentage of revenue for the year ended December 31, 2010, compared to 13.5% for the year ended December 31, 2009.

For the year ended December 31, 2010, the Company generated net cash from operations of $141.7 million, incurred capital expenditures of $32.5 million and paid approximately $1.7 million in principal on outstanding debt.  

For the year ended December 31, 2010, the Company opened 83 net new domestic Company-owned stores, two net new Company-owned stores in Canada, 130 net new international franchise locations and 134 net new franchise store-within-a-store Rite Aid locations, and closed six net domestic franchise locations.

SOURCE General Nutrition Centers, Inc.