August 01, 2013
Financial News, August 2013
Avon Products Inc.
Avon Products Inc. (AVP—NYSE) announced that it has entered into a definitive agreement under which Rhinestone Holdings Inc. will acquire Avon’s Silpada Designs jewelry business for $85 million in an all-cash transaction, plus an earn-out of up to $15 million if Silpada achieves specific earnings targets over two years. The transaction was expected to be closed in July.
In February, Avon disclosed that it was reviewing strategic alternatives for the Silpada business. Avon determined as part of this process to divest Silpada because of the timeline and investment required to return the business to historical levels of profitability. Based upon this decision, Avon ran a broad auction process that included financial sponsors and strategic buyers. At the end of the process, Rhinestone, a newly formed entity owned by the founders of Silpada, provided an offer that emerged as the highest bid. Avon received an independent fairness opinion for the price received.
Avon expects to record a non-cash charge of approximately $80 million pre-tax (approximately $50 million net of tax), reflecting the estimated loss on sale, in the second quarter of 2013. Avon expects that the proceeds from the sale will be used for general corporate purposes, including the repayment of outstanding debt, further strengthening Avon’s balance sheet.
Lightyear Network Solutions
Birch Communications, an IP-based communications and cloud services provider to small and medium-sized businesses, announced that it has signed an asset purchase agreement to acquire select customer and network assets from Lightyear Network Solutions Inc. Lightyear (LYNS—OTC.BB) is an established direct seller of data, voice and wireless telecommunication services to business and residential customers throughout North America. This transaction is expected to close in the third quarter of this year.
Vik Grover, CFA and Senior Managing Director for Source Capital Group Inc.—a boutique investment bank based in Westport, Conn.—is serving as an advisor to Birch during this acquisition process.
Blyth Inc. (BTH—NYSE), a direct to consumer company and designer and marketer of health and wellness products, candles and accessories for the home, reported sales and earnings for the first quarter of 2013. Net sales for the three months ended March 31, 2013, decreased approximately 14 percent to $233.1 million, from $270.2 million for the comparable prior year period, primarily due to lower sales at ViSalus and, to a lesser extent, at PartyLite.
Blyth’s operating profit for the first quarter was $6.0 million this year, versus $19.2 million last year, largely driven by the decline in sales. Last year includes a ViSalus Equity Incentive Plan (EIP) charge of $2.9 million related to the EIP that was terminated in January 2013 and PartyLite restructuring charges of $1.1 million. Excluding the impact of these charges, Blyth’s operating profit would have been $23.2 million last year versus $6.0 million this year.
Net Earnings attributable to Blyth Inc. for the first quarter were $2.6 million, compared to $7.5 million for the prior year. Diluted Earnings Per Share attributed to Blyth Inc. for the first quarter were 16 cents this year, compared to 43 cents last year.
During the first quarter, the company repurchased 594,582 shares, or approximately 3.6 percent of its 16.6 million shares outstanding at year-end. The company has 1.0 million shares remaining in its existing repurchase authorization.
In the Health & Wellness segment through ViSalus, first quarter net sales decreased 24 percent to $104.3 million, versus $136.7 million for the same period last year. First quarter operating profit was $4.2 million this year, versus $18.6 million last year.
Candles & Home Decor sales through PartyLite were $91.0 million in the first quarter, versus $99.8 million for the same period last year, a decline of 9 percent. First quarter operating profit for this segment was $3.4 million, versus $2.1 million in last year’s first quarter.
Crius Energy Trust
Crius Energy Trust (KWH-UN.TO—TORONTO), parent company of direct seller Viridian Energy, announced its financial results for the three-month period ended March 31, 2013. The Trust commenced operations on Nov. 13, 2012. Accordingly, no financial results from the previous fiscal first quarter are available for comparative purposes.
Revenue for the period ending March 31, 2013, was $119.0 million. First quarter 2013 gross margin was $20.9 million, representing 17.5 percent of revenue.
Adjusted EBITDA for the first quarter of 2013 was $5.5 million, or 4.7 percent of revenue. For the period ending March 31, 2013, net income was $29.6 million.
CVSL Inc. (CVSL—OTC.BB), parent company of The Longaberger Co., reported financial results for the first quarter ending March 31, 2013, noting that its name change to CVSL Inc. (from Computer Vision Systems Laboratories Corp.) is official.
According to CVSL Chairman John Rochon, CVSL first quarter results include only 13 days of its first direct selling acquisition, Longaberger. He said, “…On a pro forma basis we would have reported over $20 million in gross sales for the quarter if the Longaberger acquisition had occurred on Jan. 1, 2013.
“Because of seasonality at The Longaberger Company, we have presented to investors its gross sales by quarter for the trailing four quarters, which aggregates to $109 million.”
“While we are in the early stages of our acquisition strategy, I’m pleased that investors now can begin to see the impact of our plan,” said Rochon.
For the quarter ending March 31, 2013, CVSL gross sales were $4.2 million, compared to $238,674 in the same quarter a year ago.
First quarter 2013 gross profit was $1.2 million, compared to $171,586 in the first quarter of 2012.
Selling, general and administrative costs in the first quarter were $2.2 million, compared to $160,277 for the same quarter a year ago, due to SG&A costs associated with the Longaberger acquisition. This resulted in a first quarter 2013 net loss of $1.2 million, or zero cents per share.
“A full quarter of results for The Longaberger Company will be included in our second quarter results ... ,” Rochon said. “We are continuing to pursue acquisitions in the direct selling space as we outlined in our May 1, 2013 investors’ conference call.”
As a result of the Longaberger acquisition, CVSL’s total assets have increased from $19.2 million at Dec. 31, 2012, to over $68.1 million at March 31, 2013, a 355 percent increase in total assets.
Just Energy Group Inc.
Just Energy Group Inc. (JE.TO—TORONTO)(JE—NYSE), a competitive retailer of natural gas and electricity and parent company of direct seller Momentis, announced results for its fiscal 2013 fourth quarter and year-end.
Fiscal 2013 Results
For fiscal year ended March 31, 2013, sales were $2.88 billion, compared to $2.65 billion the previous year. Gross margin was $525.9 million, which increased 5 percent year over year, from $499.7 million. Embedded gross margin was $2.27 billion ($15.77 per share), an increase of 15 percent year over year compared to $1.98 billion. Base EBITDA from continuing operations of $163.1 million was down 16 percent, versus $193.3 million in fiscal 2012. Adjusted EBITDA from continuing operations was $248.3 million, down 7 percent versus $267.7 million in fiscal 2012. Net income from continuing operations was $601.7 million ($4.30 per share basic) versus a loss of $128.5 million (93 cents per share basic).
Fourth Quarter Results
Sales increased by 11 percent quarter over quarter to $877.5 million from $794.0 million. Gross margin was $157.7 million, down 8 percent from $170.7 million a year earlier.
Base EBITDA from continuing operations (after all selling and marketing costs) decreased 7 percent to $69.6 million for the fourth quarter of fiscal 2013, down from $74.7 million in the prior comparable quarter. Adjusted EBITDA from continuing operations was $87.5 million for fourth quarter of fiscal 2013, an 18 percent decrease from $107.1 million in the prior comparable quarter. Despite lower quarterly EBITDA, strong net customer additions led to a 3 percent increase in embedded gross margin over the quarter. Net income from continuing operations was $203.4 million versus a loss of $75.6 million.
Dividends/distributions paid amounted to $45.0 million, an increase of 2 percent over the prior comparable quarter as a result of a higher number of shares outstanding.
Mannatech Inc. (MTEX—NASDAQ), a developer and provider of nutritional supplements and skincare products based on Real Food Technology® solutions, announced financial results for the first quarter of 2013. Net sales for the quarter ending March 31, 2013, were $41.7 million, a decrease of 6.3 percent as compared to $44.5 million in the first quarter of 2012. Net income was $0.6 million, or 24 cents per diluted share, for the first quarter, as compared to a net loss of $1.4 million, or 53 cents per diluted share, for the first quarter of 2012.
Net sales for North America declined 8.9 percent to $20.5 million as compared to $22.5 million in the first quarter of 2012. This decline was primarily due to the reduction in the average revenue per order.
Net sales for Asia/Pacific declined 1.7 percent to $17.8 million as compared to $18.1 million in the first quarter 2012. Excluding a fluctuation in foreign currency exchange rates, Asia/ Pacific net sales increased by 1.1 percent.
Net sales for Europe, the Middle East and Africa (EMEA) declined 12.8 percent to $3.4 million as compared to $3.9 million in the first quarter of 2012. Excluding a fluctuation in foreign currency exchange rates, EMEA net sales declined by 5.1 percent in the first quarter of 2013, as compared to the net sales for the first quarter of 2012.
LifeVantage Corp. (LFVN—NASDAQ), a science-based nutraceutical company and the maker of Protandim®, the Nrf2 Synergizer® patented dietary supplement, reported financial results for the fiscal 2013 third quarter ended March 31, 2013.
For the third quarter, the company reported net revenue of $50.4 million, compared to $36.2 million for the same period in fiscal 2012, an increase of 39.1 percent. In local currency net revenue for the period increased by 43.5 percent.
Gross profit for the third fiscal quarter ended March 31, 2013, increased to $43.5 million, compared to $31.2 million for the same period last year, delivering a gross margin of 86.4 percent, compared to 86.2 percent in the prior year period.
Operating income for the third fiscal quarter of 2013 was $3.9 million, compared to $6.4 million in the same period last year. Operating income margin was 7.8 percent in the third fiscal quarter, compared to 17.7 percent in the same period last year.
Net income for the third quarter of fiscal year 2013 was $3.4 million, or 3 cents per diluted share. This compares to a net loss in the third quarter of fiscal year 2012 of $4.8 million, or (5 cents) per diluted share, which included a $10.7 million non-cash expense associated with a change in fair value of derivative warrant liabilities.
During the third quarter of fiscal year 2013, the company completed its previously authorized $5 million stock repurchase program. In total, 2 million shares of its common stock were repurchased as part of its program announced on Dec. 14, 2012.
Nature’s Sunshine Products Inc.
Nature’s Sunshine Products Inc. (NATR—NASDAQ), a natural health and wellness company engaged in the manufacture and direct selling of nutritional and personal-care products, reported its consolidated financial results for the first quarter.
Net sales were $96.5 million, compared with $92.9 million in the same quarter a year ago, an increase of 3.9 percent, and net sales increased 4.2 percent in local currencies.
Operating income was $6.9 million, compared with $9.2 million in the same quarter a year ago, a decrease of 24.3 percent. Operating income decreased by $2.2 million due to a $3.7 million increase in selling, general and administrative expenses.
Adjusted EBITDA was $9.2 million, compared with $10.9 million in the same quarter a year ago, a decrease of 15.8 percent.
Net income was $4.9 million, compared with $7.2 million in the same quarter a year ago, a decrease of 32.7 percent. Basic and diluted net income per share were 31 cents and 30 cents, respectively, compared to 46 cents for basic and diluted for the same quarter a year ago.
Net sales for the Americas, Asia Pacific and Europe were $53.1 million, compared with $53.9 million in the same quarter a year ago, a decrease of 1.5 percent. In local currencies, net sales decreased by 1.0 percent compared to the same quarter a year ago.
Net sales for Russia, Central and Eastern Europe were $16.1 million, compared with $15.6 million in the same quarter a year ago, an increase of 3.5 percent.
Net sales for Synergy WorldWide were $27.2 million, compared with $23.3 million in the same quarter a year ago, an increase of 16.5 percent.
The company’s board also declared a regular quarterly cash dividend of 10 cents per share payable on May 30, 2013, to shareholders of record as of the close of business on May 20, 2013.
Primerica Inc. (PRI—NYSE), a distributor of financial products to middle-income families in North America, announced financial results for the first quarter ended March 31, 2013. Total revenues were $308.4 million in the first quarter of 2013 and net income was $38.8 million, or 65 cents per diluted share.
In the first quarter of 2013 operating revenues increased by 8 percent to $306.2 million, compared with $284.5 million in the first quarter of 2012.
Net operating income was $39.3 million, or 66 cents per diluted share, in the first quarter of 2013, compared with $42.4 million, or 62 cents per diluted share, in the prior year period.
As of March 31, 2013, investments and cash totaled $2.12 billion, compared with $2.07 billion as of Dec. 31, 2012.
The board of directors also approved payment of a quarterly dividend of 11 cents per share for the first quarter of 2013. The dividend was payable on June 10, 2013, to stockholders of record as of May 24, 2013.
Direct Selling News has accumulated this information from public sources, including press releases and SEC filings. The information is presumed accurate and reliable. However, it is not an endorsement of any investment opportunity. Proper and considerable due diligence should be completed before making any investment.