Vapor Corp. Reports Third Quarter 2015 Results

Source from:  PR Newswire 11/17/2015

Vapor Corp. (NASDAQ CM: VPCO, VPCOU) ("Vapor" or the "Company"), a leading U.S.-based distributor and retailer of vaporizers, e-liquids and e-cigarettes, today announced its financial and operating results for the third quarter ended September 30, 2015.

Third Quarter 2015 Financial Highlights

Public Offering
On July 29, 2015, the Company closed a public offering for net proceeds of $38.7 million.

Gross Profit Increase

Gross profit grew $370,000 or 57% to $1,018,000 in the third quarter of 2015 compared to $648,000 in the third quarter of 2014. Gross profit from retail stores grew to $640,000 in the third quarter of 2015. The improved operating profit was attributable to the Company's acquisition and opening retail store locations in 2015.

Retail Store Revenue grew to $984,000 in Q3 2015

Retail store revenue represented 34% of the Company's total revenues for the three months ended September 30, 2015.　Retail store revenue grew to $984,000 in the third quarter of 2015.　This increase was primarily due to the Company's retail vape store expansion strategy.　As the Company acquires more stores, management expects retail sales to increase in the future.

Net Loss Reduced by $393,000 or 8% in Q3 2015 vs Q3 2014

Net loss allocable to common shareholders decreased by $393,000 or 8% to $4,443,000 for the third quarter 2015 compared to a net loss of $4,836,000 for the third quarter 2014. Adjusted EBITDA loss, a non-GAAP financial measure, declined to $2,224,800 for the third quarter 2015 compared to an Adjusted EBITDA of $2,253,000 for the third quarter 2014.　This reduction was a result of a benefit from operating more vape stores for the third quarter. Operating loss increased $227,000, or 9%, to $2,878,000 for the third quarter 2015 compared to a net loss of $2,651,000 for the third quarter 2014. The increase was due to higher labor costs for the retail locations acquired and opened in 2015, and the costs for closing retail kiosks.

"We have delivered on our expansion strategy by opening and acquiring 11 additional vape retail stores, further strengthening our position in this vast growing industry.　We currently operate a total of 21 retail locations, with each new store contributing to the growth of our revenue and putting us on the path towards profitability. As we achieved a higher gross profit during the quarter, we are continuing to invest and build out our retail footprint," said Jeff Holman, Chief Executive Officer of Vapor Corp.

Gina Hicks, Chief Financial Officer of Vapor Corp, added, "With effective management of our retail store expansion and cost control, the Company's gross profit has grown during this quarter. Retail store sales represented 52% of our total quarterly net sales, and with the addition of retail stores we anticipate the retail sales will continue to grow".

Recent Business Highlights

The opening and acquisition of 11 new stores across four states is key to the Company's aggressive expansion efforts to develop a national infrastructure throughout the country.

Acquired Vulcan Vape in November 2015, an established three-store retail vape chain with locations in Birmingham, AL., Atlanta, GA., and Nashville, TN. The Vulcan Vape stores opened in Birmingham in May 2011, Atlanta in September 2013, and Nashville in April 2013.

Acquired three established retail stores located in Atlanta, GA. in October 2015. The Atlanta stores opened in February 2014, April 2014 and September 2015.

Acquired an established vape store located in Fort Myers, FL, in September 2015. We now operate seven retail stores in southwest Florida.　

Acquired two established retail vape stores, located in Gainesville, FL in September 2015.

Opened two new retail stores in Orlando, FL in August 2015.

Non-GAAP Financial Measure

This press release includes both financial measures in accordance with Generally Accepted Accounting Principles, or GAAP, as well as a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP financial measures should be viewed as supplemental to, and should not be considered as alternatives to net income (loss), operating income (loss), and cash flows from operating activities, liquidity or any other financial measures. They may not be indicative of the historical operating results of Vapor nor are they intended to be predictive of potential future results. Investors should not consider non-GAAP financial measures in isolation or as substitutes for performance measures calculated in accordance with GAAP.

Our management uses and relies on Adjusted EBITDA, a non-GAAP financial measure, we define as net loss allocable to common shareholders before interest expense, income taxes, depreciation and amortization, stock-based compensation, non-cash change in fair value of derivatives, non-recurring acquisition, offerings, restructuring, or other expenses, loss on debt extinguishment, loss on sale or abandonment of assets, and goodwill impairment, if any. We believe that both management and shareholders benefit from referring to the following non-GAAP financial measure in planning, forecasting and analyzing future periods. Our management uses this non-GAAP financial measure in evaluating its financial and operational decision making and as a means to evaluate period-to-period comparison.　Our management recognizes that the non-GAAP financial measure has inherent limitations because of the excluded items described below.

We have included a reconciliation of our non-GAAP financial measure to the most comparable financial measures calculated in accordance with GAAP. We believe that providing the non-GAAP financial measure, together with the reconciliation to GAAP, helps investors make comparisons between Vapor and other companies. In making any comparisons to other companies, investors need to be aware that companies use different non-GAAP measures to evaluate their financial performance. Investors should pay close attention to the specific definition being used and to the reconciliation between such measure and the corresponding GAAP measure provided by each company under applicable SEC rules. Enditem