July 01, 2012
Financial News, July 2012
Nu Skin Enterprises Inc.
Nu Skin Enterprises Inc. (NUS—NYSE) announced record first quarter results with revenue of $462.0 million, a 17 percent improvement over the prior-year period. Revenue was positively impacted 1 percent from foreign currency fluctuations. Earnings per share for the quarter were 74 cents, compared to 24 cents in the prior year, or 56 cents when excluding first quarter 2011 charges related to a Japan customs ruling.
First quarter revenue in North Asia was $182.2 million, compared to $179.4 million for the same period in 2011. First quarter revenue in Greater China increased 35 percent to $92.6 million, compared to $68.6 million in the prior-year period. Revenue in South Asia/Pacific was $77.3 million, a 55 percent improvement compared to the prior year. The Americas improved 19 percent to $66.3 million, compared to $55.9 million in the prior-year period, including a 14 percent revenue increase in the United States. Revenue in Europe was $43.5 million, a 4 percent improvement over the prior-year period.
The company’s operating margin was 15.5 percent for the quarter, compared to 6.3 percent for the prior-year period, or 14.6 percent when excluding charges related to the Japan customs ruling. Gross margin during the quarter was 83.6 percent, compared to 74.6 percent, or 82.8 percent when excluding the Japan customs expenses.
Nu Skin announced that its board of directors has authorized a $250 million extension to the company’s ongoing share repurchase authorization. The newly authorized funds will be used to repurchase company stock on the open market. The $250 million share repurchase authorization adds to the approximately $80 million remaining from the prior authorizations as of March 31, 2012.
The board of directors has also declared a quarterly dividend of 20 cents per share, which was payable on June 13, 2012, to stockholders of record on May 25, 2012.
Nu Skin Enterprises Inc. demonstrates its tradition of innovation through its comprehensive anti-aging product portfolio, independent business opportunity and corporate social responsibility initiatives.
USANA Health Sciences Inc.
USANA Health Sciences Inc. (USNA—NASDAQ) announced financial results for its fiscal first quarter ended March 31, 2012.
Net sales for the first quarter of 2012 increased by 7.4 percent to $154.1 million, compared with $143.6 million in the prior-year period. The growth in net sales was driven by the company’s Asia Pacific region and was partially offset by a modest decline in the North America region.
Net earnings for the first quarter increased to $13.8 million, or 21.2 percent, compared with the prior-year period. Earnings per share for the quarter increased 28.6 percent to 90 cents, compared with 70 cents in the first quarter of the prior year. The improvement in earnings per share resulted from higher net earnings and a lower number of diluted shares outstanding due to the company’s share repurchases in 2011.
Net sales in the Asia Pacific region increased by 14.3 percent to $95.5 million, compared with $83.5 million for the first quarter of the prior year.
During the first quarter of 2012, net sales in the North America region decreased 2.3 percent to $58.6 million, compared with the first quarter of the prior year.
USANA develops and manufactures high-quality nutritional, personal-care and weight-management products that are sold directly to associates and preferred customers in 18 markets worldwide.
Avon Products Inc.
Avon Products Inc. (AVP—NYSE) reported first quarter 2012 results.
Total revenue of $2.6 billion decreased 2 percent, up 1 percent in constant dollars. First quarter 2012 gross margin was 60.8 percent, 310 basis points lower than the prior-year quarter, primarily due to cost pressures, including commodities and higher labor costs, as well as the negative impact from both foreign exchange and product mix.
In the quarter, the company took actions to enhance its operating model, reduce costs and improve efficiencies. It recorded costs associated with restructuring of $27 million pre-tax, up from $15 million pre-tax in the year-ago period, or 4 cents and 2 cents per diluted share, respectively. Of the $27 million in the quarter, $22 million relates to the actions as described above, with the remaining $5 million associated with the 2005 and 2009 restructuring programs.
Operating profit was $72 million in the quarter and operating margin was 2.8 percent. Adjusted non-GAAP operating profit was $99 million and adjusted non-GAAP operating margin was 3.8 percent, down 610 basis points from the first quarter of 2011.
Income from continuing operations in the first quarter of 2012 was $28 million, or 6 cents per diluted share. Adjusted non-GAAP income from continuing operations was $46 million, or 10 cents per diluted share.
In Latin America first quarter 2012 revenue was up 1 percent year over year, or up 5 percent in constant dollars with strong momentum continuing in Mexico, which was up 2 percent, or up 10 percent in constant dollars. Venezuela grew 26 percent in both reported and constant dollars.
Q4 revenue in Avon’s core U.S. business (which excludes Silpada) was down 2 percent. Silpada sales declined 17 percent.
In Central and Eastern Europe first quarter revenue was down 4 percent or in constant dollars was flat. In Western Europe, Middle East and Africa, revenue in the U.K. and Continental Europe was down 5 percent, or down 1 percent in constant dollars, and Asia Pacific’s revenue was down 2 percent year over year, or 4 percent in constant dollars.
Avon also declared a regular quarterly dividend on its common stock of 23 cents per share, payable June 1, 2012, to shareholders of record on May 17, 2012.
Avon, the company for women, is a leading global beauty company, with over $11 billion in annual revenue. As the world’s largest direct seller, Avon markets to women in more than 100 countries through approximately 6.4 million active independent Avon sales representatives.
Tupperware Brands Corp.
Tupperware Brands Corp. (TUP—NYSE) reported first quarter 2012 sales and profit, with sales up slightly in dollars and 3 percent in local currency. The first quarter sales comparison versus last year was impacted by one less week in the quarter that overall had an estimated 5 percentage point negative impact on the local currency sales comparison, and impacts on the segment comparisons of 4 to 8 percentage points.
GAAP net income for the quarter was $58.3 million, or $1.02 per diluted share, compared with 2011 first quarter GAAP net income and E.P.S. of $55.8 million and 88 cents per share, respectively. Adjusted diluted earnings per share of $1.03 in the quarter were 13 cents, or 14 percent, better than 2011 in U.S. dollars, including a negative foreign currency impact of 6 cents. Excluding the impact of foreign exchange on the comparison, adjusted diluted earnings per share were up 19 cents, or 23 percent.
According to Chairman and CEO Rick Goings, emerging markets generated 59 percent of sales in the first quarter and were up 4 percent in dollars and 8 percent in local currency, while established markets were down 3 percent.
In the first quarter of 2012 the company repurchased for $50 million in the open market 819,000 shares, or 1.5 percent of 2011 year-end outstanding shares. Since 2007, the company has repurchased 13 million shares for $678 million and can repurchase up to an additional $522 million of shares under its current authorization that runs until Feb. 1, 2015. The company expects to repurchase $25 million worth of shares in the second quarter of 2012.
Tupperware also announced that its board of directors declared the company’s regular quarterly dividend of 36 cents per share, payable on July 6, 2012, to shareholders of record as of June 20, 2012.
Tupperware Brands Corp. is a portfolio of global direct selling companies, selling innovative, premium products across multiple brands and categories through an independent salesforce of 2.7 million.
On May 2, 2012 Herbalife Ltd. (HLF—NYSE) entered into an agreement with Merrill Lynch International to repurchase $427.9 million of Herbalife’s common shares. This will complete its current $1 billion buyback authorization.
Under the terms of the repurchase agreement, Herbalife paid $427.9 million on May 4, 2012, from the company’s cash on hand and from borrowings under the company’s senior secured revolving credit facility, and will receive a portion of the shares on a predetermined date and the remainder upon completion of the program.
The total number of shares ultimately repurchased under the agreement will be determined based generally upon the volume-weighted average share price over the course of the program. The transaction is currently expected to be completed no later than July 2012. Shares that are repurchased will be retired.
Herbalife just reported its best quarter in its 32-year history. The company executed this share repurchase agreement because it believes its share price is currently undervalued.
Herbalife Ltd. is a global nutrition company that sells weight-management, nutritional and personal-care products intended to support a healthy lifestyle. Herbalife products are sold in 81 countries through a network of independent distributors.
Primerica Inc. (PRI—NYSE), the largest independent financial services marketing company in North America, announced that it has closed a redundant reserve financing transaction. Peach Re Inc., a special purpose financial captive insurance company and indirect wholly owned subsidiary of the company, entered into an approximately 14-year letter of credit facility with Deutsche Bank AG New York Branch for a maximum amount of $510 million to support certain obligations of Peach Re for a portion of reserves (commonly referred to as Regulation XXX reserves) related to level premium term life insurance policies reinsured by Peach Re from Primerica Life under a new coinsurance agreement. In connection with the transaction, Primerica Life obtained regulatory approval for the payment of an extraordinary dividend of $150 million to Primerica Inc. Had the transaction occurred as of Dec. 31, 2011, and giving effect to payment of the extraordinary dividend and the redundant reserve transaction, Primerica Life’s statutory risk-based capital (RBC) ratio would have been in excess of 540 percent.
As a result Primerica Inc. has entered into an agreement to repurchase 5,736,137 shares of Primerica common stock beneficially owned by Warburg Pincus Private Equity X L.P. and Warburg Pincus X Partners L.P. at a purchase price of $26.15 per share. The purchase price was determined based on the closing price of Primerica common stock on April 17, 2012. Following the repurchase transaction, Warburg will own approximately 17.9 percent of Primerica’s outstanding common stock on a primary basis, and approximately 23.2 percent including the warrants to purchase Primerica common stock currently held by Warburg Pincus.
Primerica Inc., headquartered in Duluth, Ga., is a distributor of financial products to middle-income families in North America.
Just Energy Group Inc.
ClimeCo America Corp. and Rentech Nitrogen Partners L.P. (RNF—NYSE) jointly announced that ClimeCo America will deliver 120,000 Climate Reserve Tonnes (CRT) to Just Energy (JE—NYSE and JE—TSX), a competitive North American green energy retailer and the parent company of direct seller Momentis. Measured as a unit of offset credits used by the Climate Action Reserve (CAR), one CRT is equal to one metric ton of greenhouse gases reduced or sequestered. The carbon credits will be delivered to Just Energy by ClimeCo America over a five-year period.
The carbon credits will be generated by Rentech Nitrogen as part of North America’s first voluntary tertiary nitrous oxide (N2O) abatement system constructed at the plant in East Dubuque, Ill., in the summer of 2011 under the leadership of ClimeCo America and Rentech Nitrogen. Nitrous oxide has a Global Warming Potential (GWP) of 310 versus carbon dioxide, with a GWP of one. Every ton of N2O destroyed by Rentech Nitrogen’s abatement system generates 310 tons of carbon dioxide equivalent credits (carbon credits).
Just Energy will incorporate the carbon credits as part of their carbon offset programs for residential and commercial customers. The company offers green energy solutions through their JustGreen™ and JustClean™ programs that enable customers to offset up to 100 percent of the emissions associated with their everyday energy use through carbon offsets as well as renewable energy projects.
In related news Just Energy filed notice with the Toronto Stock Exchange and the New York Stock Exchange announcing its April dividend. A dividend of CAN$0.10333/common share (CAN$1.24 annually) was payable on April 30, 2012, to shareholders of record at the close of business on April 16, 2012. This dividend is designated as an “eligible dividend” for Canadian income tax purposes. The common shares trade on the Toronto Stock Exchange and the New York Stock Exchange under the symbol JE.
Just Energy also reports that as of March 31, 2012, the conversion price for each CAN$1,000 of its outstanding 6 percent convertible unsecured subordinated debenture issued on Oct. 2, 2007, has been adjusted in accordance with the Trust Indenture dated Oct. 2, 2007, as supplemented from time to time, to CAN$29.33 convertible into 34.09 common shares of Just Energy Group Inc.
Just Energy is a competitive North American retailer of natural gas, electricity and green energy. Established in 1997 and with regional offices across Canada and the United States, Just Energy serves 1.8 million residential and commercial customers through a wide range of energy programs and home comfort services.
Blyth Inc. (BTH—NYSE) reported earnings for the first quarter. Net Sales for the three months ended March 31, 2012 increased 56 percent to $283.1 million versus $181.0 million for the comparable prior year period primarily due to significant year-over-year sales growth at ViSalus. International sales represented 29 percent of first quarter sales this year compared to 49 percent last year, driven by ViSalus’ strong domestic sales growth.
Operating Profit for the first quarter was $19.6 million this year versus $3.3 million last year and includes a pre-tax ViSalus equity incentive charge of $2.9 million this year and $2.2 million last year. The company also incurred pre-tax restructuring charges of $1.1 million for PartyLite this year. Excluding the impact of these charges, operating profit would have been $23.7 million this year versus $5.5 million last year.
Net Earnings for the first quarter were $7.5 million compared to a loss of $1.0 million for the prior year. Diluted earnings per share for the first quarter were 87 cents this year compared to a loss of 12 cents last year. Normalized earnings per share before ViSalus’ equity incentive charges, PartyLite restructuring and discontinued operations were $1.10 this year versus 18 cents in last year’s comparable quarter.
In the Direct Selling segment, first quarter net sales increased 82 percent to $236.4 million versus $130.1 million for the same period last year due to significant sales growth at ViSalus.
Sales at ViSalus were $136.7 million in this year’s first quarter versus $20.0 million for the same period last year.
Total PartyLite sales for the first quarter declined 11 percent to $101.4 million from $113.6 million last year. PartyLite’s European sales declined 9 percent in local currency, translating into a decline of 13 percent in U.S. dollars. PartyLite’s U.S. sales declined 6 percent versus the prior year period. In PartyLite Canada, sales declined 15 percent in U.S. dollars during the quarter.
First quarter operating profit in the Direct Selling segment was $21.1 million versus $3.8 million in the same period last year. Excluding the aforementioned $2.9 million ViSalus equity incentive charge this year and $2.2 million last year, as well as the PartyLite restructuring charge of $1.1 million this year, the segment’s first quarter operating profit would have been $25.1 million this year versus $6.0 million last year. Strong sales and profit growth at ViSalus more than offset lower sales and profits at PartyLite versus last year.
Blyth, Inc., headquartered in Greenwich, Conn., is a multi-channel company primarily focused on direct selling, offering its products directly to the consumer through PartyLite and ViSalus.
Educational Development Corp.
Educational Development Corp. (EDUC—NASDAQ) announced their quarterly cash dividend.
The Board of Directors has authorized a 12 cents per share cash dividend. The dividend was payable on March 16, 2012, to shareholders of record March 9, 2012.
Educational Development Corp. sells children’s books, including Usborne Books and the Kane/Miller line of international children’s titles through a multi-level sales organization of independent consultants, through 5,000 retail stores and over the Internet.
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.