December 01, 2013
Financial News, December 2013
Avon Products Inc.
Avon Products Inc. (AVP—NYSE), a leading global beauty company, reported third quarter 2013 results. For the third quarter of 2013, total revenue of $2.3 billion decreased 7 percent, or 1 percent in constant dollars. Constant-dollar revenue was favorably impacted by approximately one point as a result of the recognition of tax credits of $22 million in the third quarter of 2013 associated with a change in estimate of expected recoveries of Value Added Taxes in Brazil.
Third quarter 2013 gross margin was 62.5 percent. Gross margin included a $15 million charge associated with highly inflationary accounting for the 32 percent devaluation of the Venezuelan currency that occurred in the first quarter of 2013. Adjusted gross margin was 63.1 percent, 180 basis points higher than the prior-year quarter.
Operating profit was $68 million, and operating margin was 2.9 percent in the quarter. Operating profit included a $42 million non-cash impairment charge associated with China. Adjusted operating profit was $125 million, and adjusted operating margin was 5.4 percent, down 80 basis points from the third quarter of 2012. This included a benefit of 80 basis points due to the Brazil VAT credits.
Third quarter 2013’s net loss from continuing operations was $6 million, or 1 cent per diluted share. Adjusted net income from continuing operations was $60 million, or 14 cents per diluted share.
Net cash provided by operating activities was $96 million for the nine months ended Sept. 30, 2013, compared with $208 million in the prior-year period, unfavorably impacted by the make-whole premiums of $90 million paid in connection with the prepayment of the Private Notes and the 2014 Notes. The overall net cash used during the nine months ended Sept. 30, 2013, was $401 million, which compares with cash used of $148 million in the prior-year period.
Avon’s net debt (total debt less cash) for the third quarter of 2013 was $2.0 billion, relatively unchanged from the year-end 2012 level, and $246 million lower than in the period ended Sept. 30, 2012. For the nine months ended Sept. 30, 2013, the company reduced the overall debt balance by $412 million, of which $114 million was reduced in the third quarter of 2013.
Third quarter 2013 revenue in Latin America was $1.21 billion, down 5 percent year over year, or up 6 percent in constant dollars. Q3 revenue in Europe, Middle East and Africa was $619.2 million, unchanged from the previous year, or up 2 percent in constant dollars. North America’s third quarter revenue was $328.6 million, down 19 percent year over year, or down 18 percent in constant dollars.
Asia Pacific’s revenue was $167.4 million, down 22 percent, or down 19 percent in constant dollars.
In other company news, Avon declared a regular quarterly dividend on its common stock of 6 cents per share, payable Dec. 2, 2013, to shareholders of record on Nov. 15, 2013.
Blyth Inc. (BTH—NYSE), a designer and marketer of health and wellness and beauty products, as well as candles and accessories for the home, reported sales and earnings for the third quarter of 2013. Net sales for the three months ended Sept. 30, 2013, decreased approximately 33 percent to $179.5 million from $268.8 million for the comparable prior year period, primarily due to lower sales at ViSalus.
Blyth’s operating loss for the third quarter was $10.1 million this year versus income of $7.8 million last year, largely driven by the decline in sales. Excluding the impact of charges and credits in the previous year, Blyth’s operating loss of $10.1 million in 2013’s third quarter compares to an operating profit of $10.6 million in the year-earlier period.
Net loss attributable to Blyth Inc. was $8.5 million for the three months ended Sept. 30, 2013, compared to earnings of $0.7 Million in the comparable prior-year period. Diluted earnings per share attributable to Blyth Inc. were a loss of 53 cents for the three months ended Sept. 30, 2013, compared to earnings per share of 4 cents in the comparable prior-year period. Excluding unusual items from last year, normalized earnings per share for the third quarter were a loss of 53 cents versus earnings of 13 cents last year.
Net loss attributable to Blyth Inc. common stockholders was $11.2 million for the three months ended Sept. 30, 2013, which includes a downward adjustment of $2.7 million related to dividends paid to the non-controlling interest holders of ViSalus in excess of their allocable share of the income earned by ViSalus. Giving effect to this adjustment, diluted earnings per share attributable to Blyth Inc. common stockholders were a loss of 70 cents for the three months ended Sept. 30, 2013, compared to earnings per share of 4 cents in the comparable prior-year period.
In the Health and Wellness segment, ViSalus’ third quarter net sales decreased 52 percent to $82.4 million versus $169.9 million for the same period last year, largely reflecting the reduced Promoter base in North America. Health and Wellness third quarter segment operating loss was $0.3 million this year versus operating income of $23.2 million last year. Excluding previously mentioned items last year, third quarter operating income for ViSalus was $1.5 million this year versus $27.4 million in the third quarter of 2012.
In Candles and Home Decor, PartyLite sales were $67.5 million in the third quarter versus $69.5 million for the same period last year, a decline of 3 percent. PartyLite’s European sales during the quarter increased 4 percent in U.S. dollars, or a 2 percent decline in local currency. PartyLite’s North American sales, comprising the U.S. and Canada, declined 15 percent versus the prior-year period.
Third quarter operating loss for the Candles and Home Decor segment was $9.6 million versus a loss of $13.3 million in last year’s third quarter. Excluding expenses and other charges this year and last year, PartyLite’s operating loss was $8.4 million this year versus $10.7 million last year.
Herbalife Ltd. (HLF—NYSE), a global nutrition company, reported third quarter net sales of $1.2 billion, reflecting an increase of 19 percent compared to the same time period in 2012 on volume point growth of 13 percent. Adjusted net income for the quarter of $152.1 million, or $1.41 per diluted share, compares to the third quarter 2012 net income of $111.9 million and EPS of 98 cents, respectively. On an as reported basis, third quarter 2013 EPS of $1.32 increased 35 percent compared to the 98 cents reported in the comparable quarter last year.
For the quarter ended Sept. 30, 2013, the company generated cash flow from operations of $225.5 million, an increase of 58 percent compared to 2012, repurchased $110 million in common shares outstanding under its share repurchase program, paid dividends of $30.8 million and invested $31.8 million in capital expenditures.
For the second quarter, revenue in North America was $228.66 million compared to $208.82 million a year ago. In Mexico, revenue was $141.24 million compared to $127.47 million in 2012. Q3 revenue in South and Central America was $241.24 million compared to $167.49 million. In the EMEA, revenue was $181.74 million compared to $147.49 million the previous year. In Asia Pacific, revenue was $284.02 million compared to $288.21 million. China’s revenue was $136.65 million compared to $77.41 million a year ago.
The company also reported that its board of directors has approved a dividend of 30 cents per share to shareholders of record on Nov. 12, 2013, payable on Nov. 26, 2013.
USANA Health Sciences Inc.
USANA Health Sciences Inc. (USNA—NYSE) announced financial results for its fiscal third quarter ended Sept. 28, 2013.
For the third quarter of 2013, net sales increased by 5.2 percent to $173.7 million, compared with $165.2 million in the prior-year period. The growth in net sales was driven by increases in both the company’s Asia Pacific and North America/Europe regions.
Net earnings for the third quarter decreased by 4.2 percent to $16.8 million, compared with the prior-year period. Earnings per share for the quarter decreased by 1.7 percent to $1.16, compared with $1.18 in the third quarter of the prior year. Total diluted common shares outstanding as of Sept. 28, 2013, were 14.4 million, compared with 14.9 million as of Sept. 29, 2012.
Net sales in Asia Pacific increased by 4.6 percent to $107.4 million, compared with $102.7 million for the third quarter of the prior year. Net sales in North America/Europe increased by 6.1 percent to $66.3 million, compared with $62.5 million in the prior-year period.
The company ended the quarter with $115.3 million in cash and cash equivalents. For the third quarter, cash generated from operations totaled $17.3 million.
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 third quarter ended Sept. 30, 2013.
For the third quarter ended Sept. 30, 2013, Medifast net revenue decreased 5 percent to $86.5 million from net revenue of $91.0 million in the third quarter of 2012.
Revenue in the direct sales channel, Take Shape for Life, increased 1 percent to $56.2 million in the third quarter of 2013, compared to $55.6 million in the same period last year.
Gross profit for the third quarter of 2013 decreased 5 percent to $64.9 million, compared to $68.3 million in the third quarter of the prior year. The company’s gross profit margin decreased 10 basis points to 75.0 percent in the third quarter versus 75.1 percent in the third quarter of 2012.
Operating income was $7.3 million, or 8.5 percent of net revenue, compared to $8.9 million, or 9.8 percent of net revenue in the third quarter of 2012.
Net income was $5.7 million, or 41 cents per diluted share, based on approximately 13.9 million shares outstanding, compared to net income last year of $7.2 million, or 52 cents per diluted share.
Stockholders’ equity is $111.3 million and working capital is approximately $76.3 million as of Sept. 30, 2013. Cash, cash equivalents, and investment securities as of Sept. 30, 2013, increased $22.0 million to $82.0 million, compared to $60.0 million as of Dec. 31, 2012.
Nu Skin Enterprises Inc.
Nu Skin Enterprises Inc. (NUS—NYSE), a global anti-aging company, announced record third quarter results with revenue of $927.6 million, a 76 percent increase over the prior-year period. Revenue was negatively impacted 3 percent by foreign currency fluctuations. Earnings per share for the quarter were $1.80, a 107 percent year-over-year improvement.
In Greater China, third quarter revenue increased 240 percent to $464.6 million, compared to $136.6 million in the prior-year period. Third quarter revenue in North Asia increased 11 percent to $204.7 million, compared to $184.7 million for the same period in 2012. Revenue in South Asia/Pacific was $127.5 million, a 40 percent improvement compared to the prior year. Revenue in the Americas improved 22 percent over the prior-year period to $85.7 million. Revenue in the EMEA region increased 4 percent to $45.1 million, primarily as a result of foreign currency fluctuations.
The company’s operating margin improved to 18.1 percent for the quarter, compared to 15.7 percent in the prior year. Gross margin during the quarter was 84.9 percent, 140 basis points above the prior year, due primarily to the TR90 launch in Greater China and South Asia/Pacific.
The company’s cash and short-term investment position at the end of the quarter was $566 million. Dividend payments during the quarter were $17.8 million, and the company repurchased $76 million of its outstanding shares.
The company also announced its board of directors has declared a quarterly dividend of 30 cents per share, which will be paid on Dec. 4, 2013, to stockholders of record on Nov. 22, 2013.
CVSL Inc. (CVSL—OTC.BB), a public company pursuing a strategy of gathering together multiple companies in the direct selling sector, and Paperly LLC announced that they have signed a letter of intent for Paperly to become part of CVSL’s family of direct selling companies.
Chicago-based Paperly is a direct selling company that allows its independent sales consultants to work with customers to design and create custom stationery through home parties, events and individual appointments. The company was founded five years ago by Jay and Cindy Rudman.
In addition to custom stationery, Paperly’s brand has expanded over the five years since its founding to encompass a wide range of personalized products, including clipboards, cutting boards, iPhone cases and more.
Paperly was awarded two prestigious Direct Selling Association Ethos Awards for product innovation in 2012 and continues to expand its portfolio of personalized products.
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.