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September 01, 2011

Financial News

Financial News, September 2011

Herbalife Ltd. Has a Blowout Second Quarter

Herbalife Ltd. (HLF—NYSE) reported that second quarter net sales increased 27.7 percent with revenue up $879.6 million worldwide, and local currency net sales increased 19.9 percent compared to the same time period in 2010. Net income for the quarter of $111.2 million, or 88 cents per diluted share compares to 2010 second quarter net income and EPS of $82.2 million and 65 cents, respectively. The company also raises its fiscal year 2011 EPS guidance to a range of $2.97 to $3.07.

The positive results were driven by a strong performance in South and Central America, with sales up 57 percent from last year to $130 million, as well as Asia Pacific, where sales were up 38 percent from last year to $237 million. North American sales increased 11 percent to $185.1 million.

For the quarter ended June 30, the company generated cash flow from operations of $142.7 million, an increase of 71.5 percent compared to the second quarter 2010, paid dividends of $23.9 million, invested $16.1 million in capital expenditures, and repurchased $98.8 million in common shares 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 Aug. 15, payable on Aug. 29.

Nu Skin Enterprises

Nu Skin Enterprises Inc. (NUS—NYSE) announced record second quarter 2011 results, with revenue of $424.4 million, a 9 percent improvement over the prior-year period. Quarterly revenue was positively impacted 8 percent by foreign currency fluctuations. Earnings per share for the quarter were 65 cents, a 30 percent improvement over the prior year.

There was a strong showing in South Asia/Pacific, with revenue at $59.2 million for the second quarter, a 29 percent improvement over the prior year. Strong performances were also found in Europe with quarterly revenue of $42.9 million, a 22 percent improvement over the prior-year period, as well as North Asia, which grew 12 percent to $183.1 million, compared to $164.1 million for the same period in 2010. Second-quarter revenue in the Americas was $59.8 million, compared to $62.4 million for the prior-year period. Revenue in the United States and Canada declined 6 and 14 percent.

The company’s operating margin improved to a record level of 15.6 percent, compared to 15.2 percent in the prior year. The company’s gross margin in the second quarter was 83.2 percent, a 70 basis-point improvement as a result of foreign currency benefits and supply chain efficiencies.

Dividend payments during the quarter were $8.4 million and the company repurchased $11.8 million of its outstanding shares.

Nu Skin also announced that its board of directors has declared a 19 percent increase in the quarterly cash dividend to 16 cents per share, compared to the previous dividend of 14 cents per share. This 10 cent per year increase begins in the third quarter and will be paid on Sept. 14, to shareholders of record as of Aug. 26.  

Nature’s Sunshine Products Inc.

Nature’s Sunshine Products Inc. (NATR—NASDAQ), a natural health and wellness company, reported consolidated financial results for the second quarter ended June 30.

For the second quarter of 2011 net sales were $91.8 million, compared with $87.1 million in the same quarter a year ago, an increase of 5.4 percent.

Operating income from continuing operations was $8.1 million, compared with $3.3 million in the same quarter a year ago, an increase of 146.0 percent.

EBITDA, defined here as net income before taxes, depreciation and amortization, other income and adjusted to exclude share-based compensation expense, was $10.2 million, compared with $4.5 million in the same quarter a year ago, an increase of 128.3 percent. Net income from continuing operations was $5.6 million, compared with net income of $1.4 million in the same quarter a year ago, an increase of 299.3 percent. Basic and diluted net income per share from continuing operations was 36 cents compared with earnings per share of 9 cents, for the same quarter a year ago.

As of June 30, shareholders’ equity was $83.6 million, compared to $68.4 million on Dec. 31, 2010, an increase of 22.2 percent.

United States segment results for the second quarter: Net sales were $35.9 million, compared with $36.2 million in the same quarter a year ago, a decrease of 0.9 percent. Net sales revenue also decreased compared to the same period in the prior year due to changes to some promotional programs.

Operating income was $3.7 million, compared with $2.2 million in the same quarter a year ago, an increase of 68.4 percent. The increase in operating income is primarily the result of significant cost reductions in or selling, general and administrative expenses and improvements in cost of goods sold.

Second quarter results for Synergy Worldwide, the wholly owned subsidiary of Nature’s Sunshine: Net sales were $22.9 million, compared with $16.6 million in the same quarter a year ago, an increase of 37.7 percent. In local currencies, net sales increased 29.5 percent compared to the same quarter a year ago. The increase in net sales was primarily due to strong growth in the United States, Korean and European markets.

Operating income was $2.5 million, compared with just above break-even for the same quarter in the prior year. This increase was primarily due to significant sales growth and managing expenses.

Tupperware Brands Corp.

Tupperware Brands Corp. (TUP—NYSE) reported record second quarter 2011 sales and profit for quarter ended July 2, with a sales increase in local currency of 9 percent before a positive impact from foreign exchange rates of 10 percent. This resulted in record reported sales of $66.9 million, which were 19 percent above the second quarter of 2010.

Diluted GAAP earnings per share of $1.03 for the second quarter of 2011 was up 13 cents, or 14 percent, versus last year. The 2011 second quarter included net negative 22 cents from items impacting comparability, while 2010 had net negative 3 cents from those items. There was also a positive 11 cent impact versus 2010 from stronger foreign currencies.

Adjusted diluted earnings per share of $1.25 in the quarter was 32 cents better than 2010, including the positive foreign currency impact of 11 cents. The $1.25 of adjusted diluted earnings per share was 7 cents above the high end of the guidance range given by the company in April, reflecting better than expected profit in South America and lower than expected profit in the North America segments, along with lower than expected net interest expense and a lower tax rate.

Tupperware North America sales were up 4 percent in local currency (up 8 percent reported) versus prior year. Sales in Mexico declined 2 percent in local currency (up 5 percent reported), reflecting a promotional shift of sales into the first quarter from the second quarter, due to the extra week in the first quarter.

Tupperware United States and Canada had an 8 percent increase in the quarter (up 9 percent reported). Second quarter pretax profit for the segment was down 19 percent in local currency (down 16 percent reported), reflecting investment in the United States and Canada business for recruiting and salesforce leadership development, as well as lower gross margin realization.

Beauty North America sales were down 8 percent in local currency (down 3 percent reported). In the large Fuller Mexico business, local currency sales were down 9 percent compared with last year (down 2 percent reported), driven by challenges in salesforce recruiting through most of the quarter. BeautiControl had an 11 percent decrease in sales (down 10 percent reported), reflecting a continued improvement in trend, excluding the extra week in the first quarter. The segment’s pretax profit in the quarter decreased 24 percent in local currency (down 18 percent reported), driven by lower gross margin realization and promotional investment in salesforce growth initiatives by BeautiControl.

USANA Health Sciences

USANA Health Sciences Inc. (USANA—NYSE) reported financial results for its fiscal second quarter ended July 2, which were stronger than the preliminary results announced on June 29.

Net sales in the second quarter of 2011 increased by 18.2 percent to $148.9 million, compared with $126.0 million in the second quarter of the prior year. Higher product sales and an increased number of active Associates in the company’s Asia Pacific region were the primary drivers of this growth. Favorable changes in currency exchange rates added $5.9 million to sales during the quarter.

Net earnings in the second quarter increased by 28.7 percent to $13.9 million, or 88 cents per share, compared with 69 cents per share in the second quarter of the prior year. Net earnings growth resulted from improved gross profit margins on higher net sales and lower relative selling, general and administrative expenses. Earnings per share for the period benefited by 6 cents due to the recapture of unvested equity compensation expense related to the departure of certain executives from the company.

During the second quarter of 2011, net sales in the North America region decreased by three percent to $60.3 million, compared with the second quarter of the prior year. On a sequential quarter basis, sales in this region were up slightly.

Avon Products Inc.

Avon Products Inc. (AVP—NYSE) reported second quarter 2011 total revenue of $2.9 billion, 9 percent higher than that of second quarter 2010. Constant-dollar sales rose 2 percent in the second quarter as foreign exchange contributed 7 percent to growth. Total units declined 3 percent while price/mix rose 5 percent during the quarter. The acquisition of Silpada Designs Inc. contributed 150 basis points to revenue.

Avon’s Beauty sales increased 8 percent year over year, or up 1 percent in constant dollars, in the second quarter. On a reported basis, fragrance and personal care grew 11 percent, color grew 8 percent, and skin care grew 3 percent. On a constant-dollar basis, fragrance and personal care grew 4 percent, color was flat, and skin care declined 4 percent.

Second quarter 2011 gross margin of 64.4 percent was 100 basis points above that of the prior-year quarter. On an adjusted basis, it declined by 30 basis points as the negative impact of rising product costs was partially offset by pricing benefits and favorable foreign currency.

Second quarter 2011 operating profit of $317 million was up 19 percent compared with the year-ago quarter, and operating margin was 11.1 percent, up 100 basis points year over year. Adjusted operating profit was up 6 percent, and adjusted operating margin was 11.5 percent, down 30 basis points from a year ago due to the lower gross margin.

Income from continuing operations in the second quarter of 2011 was $209 million, or 47 cents per diluted share, compared with $165 million, or 38 cents per diluted share, in the year-ago quarter. Adjusted income from continuing operations was $217 million, or 49 cents per diluted share, compared with $205 million, or 47 cents per diluted share, in the year-ago second quarter.

Second-quarter revenue in North America was down 7 percent year over year, or down 8 percent in constant dollars. Silpada had a favorable impact of approximately 7 percentage points on second-quarter revenue. North America’s second-quarter operating profit was down 31 percent. Operating margin was 4.9 percent, down 170 basis points versus last year’s quarter. Adjusted operating profit was down 28 percent, with an adjusted operating margin of 6.5 percent, down 180 basis points, primarily reflecting fixed overhead costs with lower revenues. Silpada added 120 basis points to North America’s adjusted operating margin.

Avon Products, Inc. has also declared a regular quarterly dividend on its common stock of 23 cents per share, payable Sept. 1, to shareholders of record Aug. 15.

Relìv International Inc.

Relìv International Inc. (RELV—NASDAQ), a maker of nutritional supplements that promote optimal health, reported its financial results for the second quarter of 2011.

Net sales for the quarter were $18.0 million, a 4.4 percent decrease from the second quarter last year. Net U.S. sales totaled $14.8 million, representing a 7.0 percent decline from the same quarter in 2010. Net sales outside of the United States increased 10.1 percent to $3.2 million, led by a 47.3 percent increase in European net sales, compared to the second quarter 2010.

Net income for the second quarter was $69,000 or 1 cent per diluted share, compared to $206,000 or 2 cents per diluted share in the 2010 second quarter. Earnings declined due to the decrease in U.S. net sales coupled with increases in several of Relìv’s components of cost of goods sold. The company experienced increases in production costs and higher order shipping costs due to general rate increases and higher fuel surcharges.

Net cash generated from operating activities totaled $1.8 million, equal to the amount reported in the second quarter of 2010. Relìv had cash and cash equivalents of $7.0 million as of June 30, a 7.3 percent increase over the same date in 2010.

Using an existing stock buyback authorization, Relìv bought back 27,134 shares at an average share price of $2.02 per share during the second quarter.

Primerica Inc.

Primerica Inc. (PRI—NYSE) announced financial results for the second quarter ended June 30. Operating revenues increased by 17 percent to $273.1 million in the second quarter of 2011, compared with $233.9 million in the second quarter of 2010. Net operating income was up 21 percent to $45.0 million, or 59 cents per diluted share, in the second quarter of 2011, compared with $37.2 million, or 49 cents per diluted share, in the second quarter of 2010. Results were driven by continued growth in New Term premium and strong Investment and Savings Products performance as well as a lower income tax rate partially offset by higher expenses.

John Addison, Chairman of Primerica Distribution and Co-CEO, said June was the best recruiting month in the history of the company.

Primerica continues to be well capitalized, with a high-quality invested asset portfolio. Investments and cash totaled $2.30 billion as of June 30. The company’s invested asset portfolio had a net unrealized gain of $171.1 million (net of unrealized losses of $5.0 million) at June 30, an increase from a net unrealized gain of $156.1 million at March 31. Net realized gains for the quarter were $2.0 million, which included $100,000 of other-than-temporary impairments.

Primerica Life Insurance Co., its primary underwriter, had statutory capital in excess of the applicable statutory requirements to support existing operations and to fund future growth. With a statutory risk-based capital (RBC) ratio estimated to be in excess of 600 percent as of June 30, the company continues to be well positioned to support anticipated future growth.

Medifast Inc.

Medifast Inc. (MED—NYSE), a provider of clinically proven portion-controlled weight-loss programs, reported financial results for the second quarter ended June 30.

For the second quarter, Medifast reported net revenue increased 17 percent to $78.3 million from net revenue of $66.7 million in the second quarter of the prior year.  

Revenue in the direct sales channel, Take Shape for Life, increased 17 percent to $49.3 million in the second quarter of 2011 compared to $42.0 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 second quarter of 2011 increased 19 percent to $59.0 million, compared to $49.5 million in the second quarter of the prior year. The company’s gross profit margin increased 120 basis points to 75.4 percent in the second quarter versus 74.2 percent in the second quarter of 2010.

Net income for the second quarter of 2011 was $5.9 million or 41 cents per diluted share, compared to net income of $5.5 million or 38 cents per diluted share for the comparable period last year.

On July 21 the Medifast, Inc. Board of Directors increased the total number of shares authorized for repurchase to one million shares from 500,000 shares previously approved. On June 16 and 17, the company purchased 225,000 shares at an average price of $22.00. There are now 775,000 shares remaining under the authorization, which may be purchased through July 21, 2012.


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.