December 01, 2011
Financial News, December 2011
AL International Inc.
AL International Inc. (JCOF—PK), a global direct marketer of lifestyle and nutritional products as well as gourmet coffee, released third quarter 2011 financial results. The company reported a 1,400 percent increase in revenues for the quarter, recording net sales of $10.5 million, compared to $719,000 for the same quarter in 2010.
Gross profits grew to $7.7 million in third quarter 2011, compared to $250,000 for the same period in 2010. Third quarter 2011 operating expenses increased to $7.5 million versus $642,000 in 2010. AL International recorded income from operations of $232,000 for third quarter 2011, compared to a $392,000 loss in the same quarter for 2010.
AL International Inc. was formed after the merger of Youngevity® Essential Life Sciences and Javalution Coffee Company in the summer of 2011.
Avon Products Inc.
Avon Products Inc. (AVP—NYSE), the company for women and a leading global beauty company, reported third quarter 2011 total revenue of $2.8 billion, 6 percent higher than that of third quarter 2010. Constant-dollar sales rose 1 percent in the third quarter as foreign exchange contributed 5 percent to growth.
Income from continuing operations in the third quarter of 2011 was $165 million, or 38 cents per diluted share, compared with $167 million, or 38 cents per diluted share, in the year-ago quarter. Adjusted income from continuing operations was $168 million, or 38 cents per diluted share, compared with $178 million, or 41 cents per diluted share, in the year-ago third quarter.
Avon’s Beauty sales increased 8 percent year over year, with gains in all categories; fragrance, color, personal care, and skin care grew 12 percent, 9 percent, 6 percent, and 2 percent, respectively. Constant-dollar growth of 3 percent in Beauty was driven by gains of 9 percent in fragrance, 4 percent in color, and 2 percent in personal care. Skin care was down 3 percent in constant dollars in the quarter.
Third quarter 2011 gross margin of 63.9 percent was 40 basis points lower than the prior-year quarter. On an adjusted basis, it declined by 60 basis points as the negative impact of rising product costs was partially offset by pricing benefits and favorable foreign currency.
Selling, general and administrative expense in the quarter declined as a percent of revenue by 60 basis points versus third quarter 2010, and declined 50 basis points on an adjusted basis.
Third quarter 2011 operating profit of $279 million was up 7 percent compared with the year-ago quarter, and operating margin was 10.1 percent, up 20 basis points year over year. Adjusted operating profit was up 4 percent, and adjusted operating margin was 10.3 percent, down 20 basis points from a year ago due to a sharp decline in Brazil.
Latin America’s third quarter 2011 revenue was up 11 percent year over year, or up 6 percent in constant dollars, as the region’s results were pressured by disruptions in Brazil associated with the Enterprise Resource Planning implementation.
Third quarter revenue in North America was down 7 percent year over year, or down 8 percent in constant dollars. North America’s third quarter operating profit was down 85 percent. Operating margin was 0.9 percent, down 480 basis points versus last year’s quarter. Adjusted operating profit was down 72 percent, with an adjusted operating margin of 1.9 percent, down 450 basis points, reflecting fixed overhead costs with lower revenues as well as lower gross margin driven by higher commodity costs.
In Central and Eastern Europe, third quarter revenue was up 7 percent year over year, or flat in constant dollars.
Western Europe, Middle East and Africa’s third quarter revenue increased 9 percent versus the prior-year quarter, or up 6 percent in constant dollars, with a significant benefit from a Value Added Tax settlement in the United Kingdom.
Asia Pacific’s third quarter revenue was up 1 percent year over year, or down 7 percent in constant dollars. Revenue in the Philippines was up 2 percent, or down 4 percent in constant dollars. China declined 6 percent, or 11 percent in constant dollars.
Herbalife Ltd. (HLF—NYSE), a global network marketing company that sells weight-management, nutrition, and personal care products, reported that third quarter net sales increased 30.0 percent and local currency net sales increased 24.1 percent, compared to the same time period in 2010. Net income for the quarter of $108.0 million, or 87 cents per diluted share, compares to 2010 third quarter adjusted net income and adjusted EPS of $75.7 million and 60 percent, respectively.
For the quarter ended Sept. 30, 2011, the company generated cash flow from operations of $143.0 million, an increase of 42.3 percent compared to the third quarter 2010, paid dividends of $23.5 million, invested $16.9 million in capital expenditures and repurchased $150.0 million in common shares outstanding related to its share repurchase program.
The company also reported that its Board of Directors has approved a dividend of 20 cents per share to shareholders of record effective Nov. 14, 2011, payable on Nov. 28, 2011.
Medifast Inc. (MED—NYSE), a provider of clinically proven portion-controlled weight-loss programs, reported financial results for the third quarter ended Sept. 30, 2011.
For the third quarter, Medifast reported net revenue increased 13 percent to $76.1 million from net revenue of $67.3 million in the third quarter of the prior year. Each of the company’s three primary distribution channels, Take Shape for Life, Direct Response Marketing, and Medifast Weight Control Centers and Wholesale Physicians, contributed to this year-over-year revenue increase.
Revenue in the direct sales channel, Take Shape for Life, increased 6 percent to $46.4 million in the third quarter of 2011, compared to $43.7 million in the same period last year. Growth in revenue for Take Shape for Life was driven by increased customer product sales as a result of an increase in the number of active health coaches.
Gross profit for the third quarter of 2011 increased 12 percent to $56.4 million, compared to $50.5 million in the third quarter of the prior year. The company’s gross profit margin decreased 80 basis points to 74.2 percent in the third quarter, versus 75 percent in the third quarter of 2010.
Operating income for the third quarter of 2011 decreased 26 percent to $6.7 million, compared to $9 million in the same period a year ago. The operating margin decreased 460 basis points to 8.8 percent, compared to 13.4 percent last year. The decrease in operating income is due to the increased selling, general and administrative expenses as well as the decrease in gross margin as a result of the company opening 14 new Medifast Weight Control Centers in the third quarter, for a total of 60 corporate and 26 franchise centers.
Net income for the third quarter of 2011 was $5.1 million, or 36 cents per diluted share, compared to net income of $5.8 million or 39 cents per diluted share for the comparable period last year.
Nu Skin Enterprises Inc.
Nu Skin Enterprises Inc. (NUS—NYSE), an anti-aging company, announced record third quarter results with revenue of $428 million, a 12 percent improvement over the prior-year period. Revenue benefited 8 percent from foreign currency fluctuations. Earnings per share for the quarter were 72 cents, a 31 percent year-over-year improvement. Earnings were impacted by an income tax benefit of $7.7 million, offset by $6.2 million of unrealized foreign currency losses.
There was a strong showing in Greater China, with $83.4 million, a 32 percent increase compared to $63.3 million in the prior-year period. A strong performance was also found in South Asia/Pacific, which grew 23 percent to $61.8 million, compared to 2010. Revenue in Europe was $39.5 million, an 11 percent improvement over the prior-year period, and revenue in North Asia came in at $184.3 million, compared to $170.5 million for the same period in 2010.
Third quarter revenue in the Americas declined 7 percent to $59.4 million, compared to $63.7 million in the prior-year period. The United States posted a 10 percent decrease during the quarter, while Canada declined 20 percent in local-currency revenue.
The company’s operating margin improved 190 basis points to 15.7 percent for the quarter. Gross margin during the quarter was 83.5 percent, a 140 basis-point improvement compared to the prior year, primarily as a result of supply chain efficiencies and foreign currency benefits.
Nu Skin also announced the Board of Directors has declared a quarterly dividend of 16 cents per share, which will be paid on Dec. 14, 2011, to stockholders of record on Nov. 25, 2011.
In other company news, Nu Skin announced it has executed a letter of intent to acquire LifeGen Technologies, LLC, a genomics company based in Madison, Wis., for $11.6 million.
Primerica Inc. (PRI—NYSE), a distributor of financial products to middle-income families in North America, announced financial results for the third quarter ended Sept. 30, 2011. Total revenues increased by 14 percent to $275.8 million in the third quarter of 2011, compared with $241.2 million in the third quarter of 2010. Net income was up 3 percent to $40.6 million for the third quarter of 2011, or 53 cents per diluted share, compared with $39.6 million, or 52 cents per diluted share, in the third quarter of 2010.
Operating revenues increased by 15 percent to $276.0 million in the third quarter of 2011, compared with $240.2 million in the third quarter of 2010. Net operating income was up 5 percent to $42.8 million, or 56 cents per diluted share, in the third quarter of 2011, compared with $40.9 million, or 54 cents per diluted share, in the third quarter of 2010.
Investments and cash totaled $2.32 billion as of Sept. 30, 2011. The company’s invested asset portfolio had a net unrealized gain of $152.7 million (net of unrealized losses of $12.5 million) at Sept. 30, 2011, down from a net unrealized gain of $171.1 million (net of unrealized losses of $5.0 million) at June 30, 2011. Net realized losses for the quarter were $0.2 million, which included $1.0 million of other-than-temporary impairments.
The Massachusetts Division of Insurance has approved Primerica Life Insurance Company’s (PLIC) request to pay a $200 million dividend to Primerica Inc. After payment of the dividend, PLIC’s estimated statutory risk-based capital ratio will be reduced from greater than 600 percent as of Sept. 30, 2011 to approximately 420 percent. The company will continue to be well positioned to support existing operations and fund future growth. Primerica Inc. intends to use the proceeds to fund the stock purchase of 8.9 million shares of Primerica Inc. common stock from Citi at a price of $22.42 per share. The transaction is expected to close later this month.
Net operating income return on adjusted stockholders’ equity (ROAE) was 11.7 percent for the quarter ended Sept. 30, 2011, down from 12.7 percent in the second quarter of 2011. Net income return on stockholders’ equity was 10.4 percent for the third quarter of 2011. After giving effect to the $200 million repurchase of Citi’s shares, estimates show that pro forma ROAE and net operating income per diluted share for the third quarter of 2011 would have been 13.1 percent and 61 cents, respectively.
Primerica also announced that it had entered into an agreement to repurchase 8,920,606 shares of Primerica common stock beneficially owned by an affiliate of Citigroup Inc. at a purchase price of $22.42 per share. The purchase price was determined based on the volume weighted average price of the shares of Primerica common stock since Oct. 24, 2011. Following the repurchase transaction, Citi will own approximately 12.5 percent of Primerica’s outstanding common stock and, in connection with the repurchase transaction, Citi has agreed to a 30-day lockup of its remaining shares (subject to certain limited exceptions).
Relìv International Inc.
Relìv International Inc. (RELV—NASDAQ), a maker of nutritional supplements that promote optimal health, reported its financial results for the third quarter of 2011.
Net sales for the quarter were $17.3 million, a 7.3 percent decrease from the third quarter last year. Net U.S. sales totaled $14.1 million, down from third quarter 2010 net sales of $16.0 million.
Net sales outside of the United States rose 17.7 percent in the third quarter of 2011 compared to the prior-year quarter, led by the European market, where net sales more than doubled.
Net income for the third quarter of 2011 was $49,000 or 0 cents per diluted share, compared to $172,000 or 1 cent per diluted share in the 2010 third quarter. The decline in net income is primarily due to the decrease in U.S. net sales.
Relìv also announced that the Board of Directors has declared a dividend of 1 cent per share to all shareholders of record as of Nov. 18, 2011, payable on or about Nov. 29, 2011.
Relìv currently pays dividends twice a year, and this represents the company’s second dividend in 2011.
Tupperware Brands Corp.
Tupperware Brands Corp. (TUP—NYSE), a portfolio of global direct selling companies, selling innovative, premium products, reported third quarter 2011 sales and profit, with a sales increase in dollars of 15 percent and 10 percent in local currency.
GAAP net income for the quarter was $10.5 million, or 17 cents per diluted share, compared with 2010 third quarter GAAP net income and EPS of $39.9 million and 62 cents per share. The 2011 amounts included $36.1 million, or 60 cents per share, for non-cash impairment charges.
Adjusted diluted earnings per share of 83 cents in the quarter were 19 cents, or 30 percent, better than 2010, including a positive foreign currency impact of 4 cents.
The company repurchased in the third quarter 3.2 million of its shares for $195.7 million, or $61.98 per share. This included $100 million of opportunistic repurchases that were above and beyond repurchases planned going into the quarter. Also, the company’s Board approved a doubling of its repurchase authorization to $1.2 billion. Under the authorization, which continues to run until Feb. 1, 2015, the company has repurchased, since 2007 through the end of fiscal September 2011, 10.6 million shares for $538 million.
USANA Health Sciences Inc.
USANA Health Sciences Inc. (USNA—NYSE), a developer and manufacturer of high-quality nutritional, personal care, and weight-management products, reported financial results for its fiscal third quarter ended Oct. 1, 2011.
Net sales in the third quarter of 2011 increased by 6.3 percent to $143.5 million, compared with $135.0 million in the prior-year period. This net sales growth was driven by higher product sales in the company’s Asia Pacific region. In addition, favorable currency exchange rates added $5.1 million to the quarter’s net sales growth. Net earnings in the third quarter decreased as compared with the prior year period by 3.6 percent to $12.4 million due to a 172 basis point increase in operating expenses, which was partially offset by improved gross profit margins. The increased operating expenses were predominantly due to an increase in Associate Incentives. Earnings per share for the quarter increased 2.5 percent to 81 cents, compared with 79 cents in the third quarter of the prior year. This increase resulted from a decreased number of diluted shares outstanding from share repurchases over the last 12 months and was partially offset by lower net earnings.
Net sales in the Asia Pacific region increased by 12.6 percent to $84.5 million, compared with $75.0 million for the third quarter of the prior year. This improvement was due to strong sales growth in the Philippines, South Korea and BabyCare, the company’s operating entity in China. BabyCare’s sales increased $2.7 million during the quarter, in comparison with partial third quarter 2010 operating results.
During the third quarter of 2011, net sales in the North America region decreased by 1.6 percent to $59.0 million, compared with the third quarter of the prior year.
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