July 23, 2014
Financial News, August 2014
A.M. Best Affirms Primerica’s Strong Credit Ratings
Primerica Life Insurance Co. has received another round of superior ratings from global credit rating agency A.M. Best. The agency affirmed its A+ financial strength rating and aa- issuer credit rating (ICR) of Primerica Life and its affiliates in New York and Canada.
Declaring a stable outlook for all ratings, A.M. Best also affirmed the strong a- ICR of holding company Primerica Inc. and positive ratings of the company’s debt and preferred stock. Primerica (PRI—NYSE) met earnings expectations for 2013 with annual GAAP net income of $163 million.
On the Canadian side of the business, Primerica recently expressed opposition to the government’s proposed overhaul of the country’s life insurance licensing program. Canada represents approximately 10 percent of Primerica’s total life-licensed representatives.
The implementation, which would take place in early 2016, would “create unnecessary barriers” and “negatively affect access to life insurance products by middle-income Canadians,” Primerica told the Atlanta Business Chronicle.
ForeverGreen Sales Growth Increases over 300%
ForeverGreen Worldwide Corp. (FVRG—OTC.BB), a provider of nutritional foods and other healthy products, announced that June 2014 revenue exceeded June 2013 sales by more than 300 percent.
“During June 2014, we had another record sales month,” said Jack Eldridge, CFO. “We remain on track to meet or exceed our previously announced revenue guidance of $13 million to $15 million. While many companies are experiencing sluggish sales during the summer months, we continue to grow our revenues for the summer and the remainder of 2014. We are very pleased at how our company message is being received in the marketplace.”
In other company news, ForeverGreen recently opened its new global headquarters in Pleasant Grove, Utah, known as “Utah’s City of Trees.” The company’s new 50,000-square-foot facility combines offices with space for warehousing and manufacturing the company’s health, wellness and home-care products. The headquarters also includes film and recording studios, and a “family room” that allows the company to host up to 300 people at a time.
“This new building allows us to bond in an unprecedented way with our employees, customers, distributors and the community,” CEO and Founder Ron Williams said. “This milestone provides a platform to grow into the company we have always envisioned.”
In a congratulatory letter marking the grand opening, Utah Governor Gary R. Herbert commended ForeverGreen Worldwide for raising the bar of corporate citizenship through its generous giving and involvement in community projects.
Crius Energy Trust Announces Partnership
Crius Energy Trust (KWH-UN.TO—TORONTO) announced that Crius Energy LLC and Frontier Communications Corp. (FTR—NASDAQ) have further expanded their strategic marketing partnership to offer natural gas to Frontier residential and commercial customers in California. The natural gas offering, through FTR Energy Services, one of Crius Energy’s best-in-class energy brands, extends its current energy offerings in California of solar energy products.
“The addition of natural gas in California through FTR Energy Services—the first Crius Energy brand to offer natural gas in the state—further demonstrates the significant potential of our strategic marketing partnership channel,” said Michael Fallquist, CEO of Crius Energy. “Importantly, our new gas offering, like all of our FTR Energy Services offerings, is expected to benefit from the efforts of hundreds of Frontier call center agents who are actively selling FTR Energy Services products.”
The new offering will contribute to the increased diversification of Crius Energy’s business by both product and geography. Recently, Crius Energy began offering Frontier customers in California solar energy products through its Citra Solar™ brand.
“In addition to our recently announced acquisitions, we continue to execute on our multi-channel strategy to grow organically,” added Fallquist. “Unique to Crius, our strategic marketing partnership channel, which also includes relationships with Cincinnati Bell and FairPoint Communications, provides us with access to large customer bases that have established, trusted relationships with their telecom providers. These are customers that tend to use more energy and stay with us longer, providing more value to Crius Energy over their lifetimes.”
FTR Energy Services will provide natural gas at affordable rates plus 5 percent cash back on customers’ energy use. Frontier Communications customers can make their choice using either an easy online tool or by speaking to a trained FTR Energy Services customer representative who will help guide them through the enrollment process.
Nature’s Sunshine Products Inc.
Nature’s Sunshine Products Inc. (NATR—NASDAQ), a leading 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 ended March 31, 2014.
Net sales revenue decreased 0.8 percent to $95.8 million, compared to $96.5 million in the first quarter of 2013. In local currencies, net sales revenue increased by 0.3 percent.
Operating income increased 3.3 percent to $7.2 million, compared to $6.9 million in the first quarter of 2013. Adjusted EBITDA increased 3.5 percent to $9.5 million, compared to $9.2 million in the first quarter of 2013.
Net income was $9.7 million, or 58 cents per diluted common share, compared to $4.9 million, or 30 cents per diluted common share in the first quarter of 2013, reflecting a one-time tax benefit related to intercompany dividends.
Cash and cash equivalents as of March 31, 2014, were $71.5 million, compared to $77.2 million as of Dec. 31, 2013. Shareholders’ equity as of March 31, 2014, was $114.6 million, compared to $105.3 million as of Dec. 31, 2013.
For NSP Americas, Asia Pacific and Europe net sales revenue for the first quarter decreased 4.6 percent to $50.7 million, compared to $53.1 million in the first quarter of 2013. For NSP Russia, Central and Eastern Europe net sales revenue decreased 6.8 percent to $15.0 million, compared to $16.1 million in the first quarter of 2013. For Synergy WorldWide net sales revenue increased 10.4 percent to $30.0 million, compared to $27.2 million in the first quarter of 2013.
The company’s board of directors approved a quarterly cash dividend of 10 cents per share, payable on June 2, 2014, to shareholders of record as of the close of business on May 21, 2014. On Aug. 8, 2013, the board of directors authorized a $10 million share repurchase program to be implemented over two years.
Medifast Inc. (MED—NYSE), a U.S. manufacturer and provider of clinically proven, portion-controlled weight-loss products and programs, reported financial results for the first quarter ended March 31, 2014.
Operating income was $8.7 million, or 10.0 percent as a percent of net revenue, compared to $8.6 million or 8.9 percent as a percent of net revenue in the first quarter of 2013.
Net income was $6.0 million, or 45 cents per diluted share, compared to net income of $5.9 million, or 43 cents per diluted share for the first quarter of 2013.
For the first quarter ended March 31, 2014, Medifast net revenue decreased 10 percent to $86.5 million from net revenue of $96.0 million in the first quarter of the prior year. Revenue in the direct sales channel, Take Shape For Life, decreased 4 percent to $57.0 million in the first quarter of 2014, compared to $59.4 million in the same period last year. The decrease in revenue for Take Shape For Life was driven by a slight decrease in the number of health coaches and revenue per health coach.
Gross profit for the first quarter of 2014 decreased 12 percent to $63.9 million, compared to $72.4 million in the first quarter of the prior year. The company’s gross profit margin decreased 150 basis points to 73.9 percent in the first quarter versus 75.4 percent in the first quarter of 2013.
The company’s balance sheet remains strong with stockholders’ equity of $105.2 million and working capital of approximately $72.8 million as of March 31, 2014. Cash, cash equivalents, and investment securities for the first quarter of 2014 increased $9.6 million to $77.4 million, compared to $67.8 million at Dec. 31, 2013.
LifeVantage Corp. (LFVN—NASDAQ), a company dedicated to helping people achieve healthy living through a combination of a compelling business opportunity and scientifically validated products, reported financial results for its fiscal 2014 third quarter ended March 31, 2014.
For the third fiscal quarter, the company reported net revenue of $55.1 million, an increase of 9.3 percent compared to $50.4 million for the same period in fiscal 2013. Revenue reflects a slight decline of 1.4 percent in sales in the America region, offset by an increase of 29.8 percent in the Asia/Pacific region due to growth in Japan and Hong Kong. Revenue for the quarter was negatively impacted $2.3 million, or 4.6 percent, by foreign currency fluctuation.
Gross profit for the third fiscal quarter ended March 31, 2014, was $46.6 million, compared to $43.5 million for the same period last year. Gross margin for the third fiscal quarter of 2014 was 84.6 percent, compared to 86.4 percent in the prior year period. The year-over-year decline in gross margin was primarily due to a $500,000 insurance claim benefit in the prior year related to the company’s 2012 product recall.
Operating income for the third fiscal quarter of 2014 was $4.5 million, for an operating margin of 8.1 percent, compared to $3.9 million, or 7.8 percent in the same period last year.
Interest and other expense in the third fiscal quarter of 2014 was $1.3 million, compared to interest and other income of $100,000 in the same period last year. The expense incurred in the current quarter is due to interest payments made on the company’s term loan, which did not exist this time last year.
Net income for the third fiscal quarter of 2014 was $2.5 million, or 2 cents per diluted share, calculated on 107 million shares outstanding. This compares to net income in the third fiscal quarter of 2013 of $3.4 million, or 3 cents per diluted share, calculated on 125 million shares outstanding.
The company’s board of directors has approved up to $4 million in stock repurchases in combination with a $12 million accelerated debt repayment. It expects to fund the $16 million through cash on hand and future cash flow from operations. The company recently completed the $6 million program it previously announced by using $3 million to repurchase 2.1 million shares.
CVSL Inc. (CVSL—OTC.QX) reported financial results for the first quarter ending March 31, 2014. For the quarter, CVSL’s gross revenue was $26.7 million, compared to $4.3 million in the same quarter a year ago, more than a sixfold increase.
In the first quarter the company paid down its existing lines of credit from $9.8 million to $8.4 million. CVSL sold a manufacturing building in Ohio for nearly $1.4 million and paid off its term debt entirely.
The company noted that costs related to its ongoing integration of its acquired companies, as well as work related to potential future acquisitions, is a significant cost category and that it believes both represent a crucial investment in CVSL’s future growth.
CVSL said it continued to make good progress reducing excess inventory levels. The company’s overall inventory balance at the end of the first quarter was $1.2 million less than at the start of the quarter.
CVSL acquired its seventh micro-enterprise company during the quarter, signing a definitive agreement to acquire Uppercase Living. Salt Lake City-based Uppercase Living offers an extensive line of customizable vinyl expressions for display on walls. Its independent salesforce sells throughout the United States.
Youngevity International Inc.
Youngevity International Inc. (YGYI—OTC.QX), a global direct marketer of nutritional and lifestyle products and also a vertically integrated producer of gourmet coffees for the commercial, retail and direct sales channels, reported financial results for the first quarter of 2014.
For the three months ended March 31, 2014, the company reported net revenue of $26.4 million, compared to $20.8 million for the same period in 2013, an increase of 26.8 percent. Gross profit for the first quarter ended March 31, 2014, increased to $15.8 million, compared to $12.4 million for the same period last year, an increase of 27.5 percent.
Net Income for the first quarter of 2014 was $427,000, compared to a net income of $993,000 for the first quarter of 2013. Adjusted EBITDA was $1.7 million for the three months ended March 31, 2014, compared to $2.2 million in the same period for the prior year.
Cash and cash equivalents increased to $6.7 million as of March 31, 2014, compared to $4.3 million as of Dec. 31, 2013. Net cash provided by operating activities increased 45.0 percent to $2.7 million, compared to $1.8 million for the three months ended March 31, 2013.
Educational Development Corp.
Educational Development Corp. (EDUC—NASDAQ) reported results for the fiscal year ended Feb. 28, 2014, along with their quarterly cash dividend.
For the fiscal year 2014, the company reports net revenue of $26 million, an increase of $609,500 when compared to $25.5 million for the previous year, and net earnings of $357,600, compared to $802,900. Earnings per share were 9 cents, compared to 20 cents the previous year on a fully diluted basis.
The increase in net revenues for the company represents a significant turnaround. The publishing division, EDC Publishing, registered its largest sales year in history, even after sales to Amazon were discontinued. The sales increase came from existing and new customers who have shown support of this decision.
The home business division, Usborne Books & More, has also greatly benefited from that decision. The Usborne Books & More division responded by posting an annual net sales increase, reversing nine years of sales decline, and has now recorded 12 consecutive months of sales increases compared to the previous year.
The earnings per share were impacted by two significant items, an additional reserve to recognize potential losses in consignment inventory, and to completely reserve nonperforming assets. With these reserves, overhead reductions made during the year, and the anticipated continuation of the sales increase, fiscal year 2015 has begun on a stronger note.
The company continues to operate with minimal debt, has not had a losing quarter in 27 years, and fully expects to maintain its historical dividend.
The board of directors has authorized an 8-cents-per-share cash dividend. The dividend was payable on June 20, 2014, to shareholders of record June 13, 2014.
Natural Health Trends Corp.
Natural Health Trends Corp. (NHTC—OTC.BB), a direct selling company that markets premium quality personal care and wellness products under the NHT Global brand, announced record financial results for the quarter ended March 31, 2014.
Total revenues were $23.2 million, up 168 percent compared to $8.7 million in the first quarter last year and up 21 percent sequentially compared to $19.1 million for the fourth quarter last year. This was the fifth consecutive sequential quarterly increase in revenues.
Operating income was $3.1 million, up 968 percent compared to $292,000 last year, and up 88 percent sequentially from $1.7 million for the fourth quarter last year.
Net income was $3.1 million, or 26 cents per diluted share, compared to $283,000, or 3 cents per diluted share, last year and $1.6 million, or 14 cents per diluted share, for the fourth quarter last year.
Cash and cash equivalents increased to $23.3 million as of March 31, 2014, from $14.6 million at Dec. 31, 2013.
The board of directors also declared its second consecutive quarterly dividend. The declared dividend included a cash dividend of 2 cents per share on outstanding Series A preferred stock, which represents the accrued unpaid dividends through the declaration date, and a cash dividend of one-half cent per share on common stock outstanding, totaling aggregate dividends of $60,000, payable in cash on June 4, 2014, to stockholders of record on May 27, 2014.
Immunotec Inc. (IMM—TSX VENTURE), a Canadian wellness company, reported second quarter revenues for the three-month period ended April 30, 2014, reaching CAN$19.1 million (US$17.8 million), reflecting an increase of 50.9 percent as compared to the same period in the previous year. Net profit for the three-month period was CAN$800,000 (US$745,500) compared to CAN$700,000 (US$652,300), reflecting an increase of 16.8 percent, as compared to the same period in the previous year. Total basic and fully diluted profit per common share was 1 cent.
Adjusted EBITDA for the second quarter was CAN$1.4 million (US$1.32 million) or 7.4 percent of revenues, versus CAN$900,000 (US$838,600) or 7.4 percent for the same period in the previous year.
Mexico is the company’s largest geographic market, representing 54.6 percent of total revenue for the six-month period ended April 30, 2014. Mexican Network sales for the three- and six-month periods ended April 30, 2014, reached MXP 125.2 million (US$9.6 million) and MXP 224.1 million (US$17.5 million) increases of 98.2 percent and 72.8 percent compared to the same periods in the previous year.
The United States is now the company’s second largest geographic market, representing 24.1 percent of network sales after six-month period ended April 30, 2014. United States Network sales reached US$3.8 million and US$7.2 million, increases of 32.4 percent and 26.9 percent, compared to the same periods in the previous year.
Canada is now the company’s third largest geographic market, representing 17.3 percent of total revenue after the six-month period ended April 30, 2014. Canadian Network sales for the three- and six-month periods ended April 30, 2014, accounted for CAN$2.8 million (US$2.6 million) and CAN$5.7 million (US$5.3 million) or decreases of 8.7 percent and 8.5 percent of total revenues.
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.