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- Taking important steps toward growth.
- A good result among all poor results of the first quarter
- A strong ownership by Consac LLC (7.42%).
MusclePharm Corp (MSLP) lost over 50% of its value in March after weaker-than-expected fourth-quarter results.
Net revenue dropped by 17% while over the last 12 months the drop was 6%. Cash balance is extremely low, and the company started to take some more debts in recent quarters (total debt increased from $0.2m in June 2014 to $12.2m in March 2015). The last fiscal quarter closed with a cash to debt of 0.40 while MSLP’s industry median was 0.70. Gross profit dropped by 3.19%, operating expenses rose by 40% and adjusted EBITDA tanked by 80%.
The reported weak results can be related to the poor management whose growth performance didn’t match both market and shareholders expectations. The company had $8 million line of credit and they signed a loan for an additional $4 millions. All this money was used to pay MusclePharm's bills and employees in Q4 2014 but was not used in a concerted and carefully planned long-term project and it seems the CEO even was not confident about the three-year plan for his company.
Improvements for a bright future
To exit from this negative trend, the company recently announced that the fitness and nutrition executive appointed a new chairman, and it looks forward to starting a fresh journey with him. The new CEO represent the efforts of the company to fulfill its commitment to separate the roles of CEO and chairman. The new CEO has a long and successful history in the nutritional and fitness industries and his skills and experience will help the company to achieve its goals. Also the company has announced that it will increase the number of directors to seven, with five independent directors.
MSLP developed more than 180 new items including new products, new flavors and new sizes. Regarding the U.S. but even the international markets, in 2014 the Performance Lifestyle Sports Nutrition Company announced a multi-year partnership with City Football Group and its four clubs, Manchester City, Melbourne City Football Club, New York City Football Club and Yokohama F. Marinos. This partnership is a great opportunity to work with the world’s largest and most popular sport and sharply raise the company’s global brand exposure.
City Football Group is a holding created with the goal of managing a network of football clubs and other footballing operations. It is home to some of the most well-known and exciting football clubs in the world and this partnership will have mutual benefits since many fans around the globe will be introduced to science-based, quality and effective products.
Later in May, Consac announced that owns 7.42% of the MSLP. This most probably shows Consac’s confidence and optimism in the future of the company also sales backlog of $17.1 million compared to $5.1 million at the end of 2014 shows a good result among week results of Q1.
Looking forward
After it nominated a new CEO, and it started a new partnership with the world’s largest and most popular sport holding, City Football Group. MusclePharm hopes to earn revenues of $150 million to $200 million by the end of 2015,
About MusclePharm Corp
The Company is a scientifically driven, performance lifestyle company that develops, manufactures, markets and distributes branded nutritional supplements. It offers various powders, capsules, tablets and gels. The company owns or has filed for 115 patents and trademarks registered with the United States Patent and Trademark Office for its MusclePharm brands and certain of its products and slogans.
The price of the stock declined by 49% since one year back and is now trading with a forward P/E of 4.99, a P/B of 4.00 and a P/S of 0.43.
