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June 25, 2014

Financial News

Financial News, July 2014

Avon Products Inc.

Avon Products Inc. (AVP—NYSE) reported first quarter 2014 results for the quarter ended March 31, 2014.

For the first quarter of 2014, total revenue of $2.2 billion decreased 11 percent, or 3 percent in constant dollars. First quarter 2014 gross margin was 56.2 percent. Gross margin included a $116 million charge associated with highly inflationary accounting for Avon Venezuela and the company’s move from the official exchange rate to a new foreign exchange system (SICAD II) rate to remeasure its Venezuelan operations as of March 31, 2014. Adjusted gross margin was 61.5 percent, 120 basis points lower than the prior-year quarter.

Operating loss was $51 million and operating margin was -2.3 percent in the quarter. Adjusted operating profit was $134 million and adjusted operating margin was 6.1 percent, down 240 basis points from the first quarter of 2013.

First quarter 2014’s net loss from continuing operations was $167 million, or a loss of 38 cents per diluted share, compared with net loss from continuing operations of $12 million, or a loss of 3 cents per diluted share, for the first quarter of 2013. First quarter 2014’s adjusted net income from continuing operations was $52 million, or 12 cents per diluted share, compared with net income from continuing operations of $113 million, or 26 cents per diluted share, for the first quarter of 2013.

Latin America’s first quarter 2014 revenue was $1.07 billion, down 7 percent year over year or up 7 percent in constant dollars. Q1 revenue in Europe, Middle East & Africa was $654.8 million, down 11 percent, or down 5 percent in constant dollars. North America’s first quarter revenue was $295.7 million, down 22 percent, or down 21 percent in constant dollars; and Asia Pacific’s revenue was $166.4 million, down 17 percent year over year, or down 10 percent in constant dollars.

Net cash used by operating activities was $113 million for the three months ended March 31, 2014, compared with $117 million for the same period in 2013. The overall net cash used during the three months ended March 31, 2014 was $313 million. This compares with cash provided of $279 million for the same period in 2013.

Avon’s net debt (total debt less cash) for the first quarter of 2014 was $1.9 billion, up $299 million from the year-end 2013 level, and $239 million lower than at March 31, 2013.

During the first quarter of 2014, the company recorded costs to implement restructuring within operating profit of approximately $23 million pre-tax, or 4 cents per diluted share, primarily related to the company’s $400M Cost Savings Initiative.

During the first quarter of 2014, the company recorded an additional accrual related to the previously disclosed government Foreign Corrupt Practices Act investigations of $46 million, or 11 cents per diluted share, within operating profit, bringing the total liability accrued at March 31, 2014 to $135 million.

Avon also declared a regular quarterly dividend on its common stock of 6 cents per share, payable June 2, 2014, to shareholders of record on May 15, 2014.


Blyth Inc.

Blyth Inc. (BTH—NYSE), a direct to consumer company and leading designer and marketer of candles and accessories for the home, as well as health, wellness and beauty products sold through the direct selling and direct marketing channels, reported sales and earnings for the first quarter of 2014. Net sales for the three months ended March 31, 2014, decreased approximately 25 percent to $175.7 million from $233.1 million for the comparable prior-year period.

Blyth’s operating loss for the first quarter was $2.6 million this year versus profit of $6.0 million last year, largely driven by the decline in sales. Net income attributable to Blyth Inc. was a loss of $2.8 million for the three months ended March 31, 2014, compared to income of $2.6 million in the comparable prior-year period. Diluted earnings per share attributable to Blyth Inc. were a loss of 17 cents per share for the three months ended March 31, 2014, compared to earnings of 16 cents per share in the comparable prior-year period.

Net loss attributable to Blyth Inc. common stockholders was $3.3 million in this year’s first quarter, compared to income of $2.6 million last year. Diluted earnings per share attributable to Blyth Inc. common stockholders were a loss of 20 cents per share, compared to income of 16 cents per share in the prior-year period. This year’s results include a charge of $500,000, or 3 cents per share, for an adjustment to the redemption value for ViSalus redeemable preferred stock.

In Candles & Home Décor, PartyLite sales were $80.9 million in the first quarter, versus $91.0 million for the same period last year, a decline of 11 percent. PartyLite’s European sales during the quarter decreased 8 percent in U.S. dollars, or an 11 percent decline in local currency. PartyLite’s North American sales, comprising the U.S. and Canada, declined 19 percent versus the prior year period.

First quarter operating profit for the Candles & Home Décor segment was $2.1 million, versus $3.4 million in last year’s first quarter. Excluding allocated corporate expenses of $1.9 million this year and $1.5 million last year, PartyLite’s operating profit was $4.0 million this year, versus $4.9 million last year, with the decrease being driven by lower sales.

In the Health & Wellness segment, ViSalus’ first quarter net sales were $57.4 million, versus $104.3 million for the same period last year, a decline of 45 percent, largely reflecting the reduced promoter base in North America. Health & Wellness first quarter segment operating loss was $3.7 million this year, versus operating profit of $4.2 million last year. Excluding allocated corporate expenses of $1.2 million this year and $2.2 million last year, first quarter operating loss for ViSalus was $2.5 million this year, versus $6.4 million operating profit in the first quarter of 2013.


Herbalife Ltd.

Herbalife Ltd. (HLF—NYSE) reported first quarter net sales of $1.3 billion, reflecting an increase of 12 percent compared to the same period in 2013 on volume point growth of 9 percent. Adjusted net income for the quarter was $151.1 million, or $1.50 per diluted share, as compared to 2013 first quarter adjusted net income of $137.4 million, or $1.27 per diluted share. GAAP net income for the quarter was $74.6 million, or 74 cents per diluted share, compared to $118.9 million, or $1.10 per diluted share for the same period in 2013, primarily due to a foreign exchange loss for Venezuela during the quarter ended March 31, 2014.

For the quarter ended March 31, 2014, the company generated cash flow from operations of $190.6 million, an increase of 39 percent compared to 2013; paid cash dividends of $30.4 million; invested $49.7 million in capital expenditures; and spent $685.8 million for approximately 9.9 million outstanding common shares under its prepaid forward share repurchase agreement. As of April 25, 2014, the company has spent $255 million during the month of April to repurchase approximately 4.5 million outstanding common shares under the existing repurchase program and pursuant to a Rule 10b5-1 trading plan.

As of March 31, 2014, the company moved to the SICAD I rate of 10.7 Venezuelan bolivar per U.S. dollar for US GAAP remeasurement purposes. This change impacted its 2014 Q1 reported results by $89.3 million before tax and the company has normalized this impact out of its adjusted results.

In regional results, net sales in North America were $247.9 million, compared to $221.5 million for the same time period the previous year. Mexico net sales of $142.7 million were an increase over $132.9 million in the same period of 2013. South and Central America sales were $244.6 million, also an increase over the prior-year sales of $219.5 million. EMEA sales were $211.1 million, compared to $169.6 million. Asia Pacific sales of $280.5 million dropped from $311.7 million in 2013. China sales were up at $135.9 million, compared to $68.4 million in the prior year.

The company’s board of directors also announced that, as part of its goal to accelerate cash returns to shareholders, it has approved terminating the company’s quarterly cash dividend and instead utilizing the cash to repurchase additional shares of the company’s outstanding common stock during the second quarter of 2014.

The company now expects to repurchase a total of $581 million of its outstanding common stock during the second quarter of 2014 as part of its previously announced $1.5 billion share repurchase program.


Mannatech Inc.

Mannatech Inc. (MTEX—NASDAQ), a leading innovator of naturally sourced supplements based on Real Food Technology® solutions, and creator of the M5MSM (Mission 5 MillionSM) social entrepreneurial movement, announced financial results for its first quarter 2014.

First quarter net sales for 2014 were $43.0 million, an increase of 3.1 percent compared to $41.7 million in the first quarter of 2013. Net sales increased 6.0 percent in constant dollars.

Net income was $200,000, or 8 cents per diluted share, for the first quarter 2014, compared to net income of $600,000, or 24 cents per diluted share, for the first quarter 2013.

During the quarter, the company suspended its operations in Ukraine and took charges to earnings of $500,000, consisting of $200,000 related to operations and $300,000 in inventory reserves due to the reduction in projected demand for Ukraine and European countries.

For the three months ended March 31, 2014, operations outside of North America accounted for approximately 52.8 percent of consolidated net sales, whereas in the same period in 2013, operations outside of North America accounted for approximately 50.8 percent of consolidated net sales.

For the three months ended March 31, 2014, Asia/Pacific net sales increased by $1.2 million, or 6.7 percent, to $19.0 million, compared to $17.8 million for the same period in 2013. In constant dollars, net sales would have increased 11.2 percent to $19.8 million.

For the three months ended March 31, 2014, EMEA net sales increased by $300,000, or 8.8 percent, to $3.7 million, compared to $3.4 million for the same period in 2013. In constant dollars, net sales would have increased 17.6 percent to $4.0 million.

North American net sales decreased by $200,000, or 1.0 percent, to $20.3 million, compared to $20.5 million for the same period in 2013.


Nu Skin Enterprises Inc.

Nu Skin Enterprises Inc. (NUS—NYSE) announced record first quarter results with revenue of $671.1 million, a 24 percent improvement over the prior-year period. Revenue was negatively impacted 4 percent by foreign currency fluctuations. Earnings per share for the quarter were $1.05, representing a 17 percent year-over-year improvement.

In Greater China, first quarter revenue increased 63 percent to $278.9 million, compared to $170.8 million in the prior-year period. The region’s results were positively impacted 2 percent by foreign currency fluctuations. First quarter revenue in North Asia increased 5 percent to $195.5 million, compared to $185.9 million for the same period in 2013. The region’s results were negatively impacted 4 percent by foreign currency fluctuations. Revenue in the Americas improved 6 percent to $79.9 million, compared to $75.7 million in the prior-year period. The region’s results were negatively impacted 12 percent by foreign currency fluctuations. Revenue in South Asia/Pacific was $71.2 million, a 6 percent increase compared to the prior year. The region’s results were negatively impacted 10 percent by foreign currency fluctuations. Revenue in the EMEA region was $45.6 million, a 9 percent improvement over the prior-year period. The region’s results were negatively impacted 2 percent by foreign currency fluctuations.

The company’s operating margin was 15.1 percent for the quarter, compared to 15.3 percent in the first quarter of 2013. Gross margin during the quarter was 84.1 percent, up 70 basis points over the prior-year period. Selling expenses, as a percent of revenue, were 46.7 percent in the first quarter, compared to 43.1 percent in the prior year. General and administrative expenses, as a percent of revenue, were 22.4 percent, compared to 25.0 percent in the prior-year period. Other income (expense), net reflected a loss of $3.6 million compared to a gain of $0.1 million in the prior year.

The company’s cash position at the end of the quarter was $284.6 million. Dividend payments during the quarter were $20.1 million, and the company repurchased $25.0 million of its outstanding shares.

Nu Skin also announced that its board of directors has declared a quarterly dividend of 35 cents per share, which was payable on June 11, 2014, to stockholders of record on May 23, 2014.


Primerica Inc.

Primerica Inc. (PRI—NYSE) announced financial results for the quarter ended March 31, 2014. Total revenues were $324.3 million in the first quarter of 2014 and net income was $45.1 million, or 81 cents per diluted share.

Operating revenues increased by 9 percent to $324.1 million and net operating income increased by 12 percent to $43.3 million, compared with $296.2 million and $38.6 million, respectively, in the prior-year quarter. Net operating income per diluted share increased 20 percent to 77 cents and ROAE was 14.9 percent in the first quarter of 2014.

In conjunction with its plan to deploy $150 million of capital in 2014, during the first quarter the company repurchased 283,000 shares of Primerica common stock for $13.1 million, with the majority of the year’s capital deployment anticipated in the second half of the year, subject to the regulatory approval of a reserve financing transaction. As of March 31, 2014, investments and cash totaled $2.01 billion, compared with $1.98 billion as of Dec. 31, 2013.

The board of directors of Primerica also approved payment of a quarterly dividend of 12 cents per share for the first quarter of 2014. The dividend was payable on June 16, 2014, to stockholders of record as of May 20, 2014.


Relìv International Inc.

Relìv International Inc. (RELV—NASDAQ), a maker of nutritional supplements that promote optimal health, reported its financial results for the first quarter of 2014.

Relìv reported net sales of $14.5 million for the first quarter of 2014, compared to net sales of $18.9 million for the first quarter of 2013. Net sales in the United States declined by 29.2 percent for the quarter compared to the same quarter in 2013. International net sales for the 2014 first quarter increased 0.7 percent, with growth in Europe of 15.3 percent and in Asia of 10.9 percent offset by declines in other regions, primarily Canada.

The company reported a net loss of $151,000, or 1 cent per diluted share, for the first quarter of 2014, compared to net income of $195,000, or 2 cents per diluted share, for the first quarter of 2013. The loss from operations for the first quarter of 2014 was $170,000 compared to income from operations of $435,000 in the same quarter of 2013.

Relìv had cash and cash equivalents of $4.88 million as of March 31, 2014, compared to $6.66 million on Dec. 31, 2013.


Tupperware Brands Corp.

Tupperware Brands Corp. (TUP—NYSE) announced first quarter 2014 operating results. First quarter 2014 net sales were $663 million. Emerging markets, accounting for 64 percent of sales, achieved a 14 percent increase in local currency. Established markets were down 4 percent in local currency, a 1 percentage point improvement over fourth quarter 2013.

GAAP net income of $52.2 million versus $58.2 million in the prior year, which included $12 million pretax more of net expense items primarily related to the impact from amounts on the balance sheet of the devaluation of the Venezuelan bolivar, was down 10 percent in dollars and up 1 percent in local currency. Adjusted diluted EPS of $1.31 included 12 cents of negative impact, versus 2013 from changes in foreign exchange rates.

Cash outflow from operating and investing activities was $29 million, versus an inflow of $5 million in 2013 that included $9 million associated with premiums and accrued interest on the sale of senior notes, and a much lower outflow from tax payments due to timing.

In the first quarter, the company returned $43 million to shareholders through a dividend payout of $33 million and the repurchase of 130,000 shares for $10 million. Since 2007, 20 million shares have been repurchased for $1.2 billion, with $800 million left under an authorization that runs until February 2017.

In Europe, segment sales were down 1 percent versus last year reported and up 1 percent in local currency, a sequential improvement from -2 percent in local currency in the fourth quarter of 2013. In Asia Pacific, sales for the segment were down 2 percent reported and up 9 percent in local currency, driven by the emerging markets up 12 percent in local currency.

In Tupperware North America, segment sales were down 2 percent reported and up 2 percent in local currency. In Beauty North America, sales for the segment were down 14 percent reported and 11 percent in local currency. Fuller Mexico sales were down 9 percent, but reflected a 2-point improvement versus prior quarter. In South America, sales were up 24 percent reported and 47 percent in local currency, driven by Brazil and Venezuela.


USANA Health Sciences Inc.

USANA Health Sciences Inc. (USNA—NYSE) announced financial results for its fiscal first quarter ended March 29, 2014.

For the first quarter of 2014, net sales increased by 7.9 percent to $182.4 million, compared with $169.1 million in the prior-year period. Net sales growth, however, was negatively impacted by unfavorable changes in currency exchange rates, which reduced net sales for the quarter by $5.0 million, as approximately 80 percent of the company’s sales are outside of the U.S. The challenging media and regulatory environment that emerged in China during the quarter also negatively impacted net sales.

Net earnings for the first quarter were $16.5 million, a 7.0 percent decrease, compared with the prior-year period. Earnings per share for the quarter decreased 10.2 percent to $1.15, compared with $1.28 in the first quarter of the prior year. Weighted average diluted shares outstanding were 14.4 million in the first quarter of 2014, compared with 13.9 million in the prior-year period. Additionally, the company ended the quarter debt-free.

Net sales in the Asia Pacific region increased by 13.0 percent to $118.6 million, compared with $104.9 million for the first quarter of the prior year. Net sales in the Americas/Europe region were essentially flat at $63.8 million, compared with $64.1 million in the prior-year period.

The board of directors has authorized up to $200 million in funding for share repurchases by the company of its outstanding common stock. This authorization is inclusive of the approximately $13.6 million that was remaining under the prior authorization as of the end of the first quarter of 2014.


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.