September 02, 2014
Financial News, September 2014
Herbalife Ltd. (HLF—NYSE) announced second quarter 2014 results, with earnings falling a penny short of expectations—adjusted earnings per share of $1.55 versus estimates of $1.56. This was the first time since 2008 that Herbalife missed estimates. Despite this difference, earnings increased 10 percent compared to the prior year.
The global nutrition company reported net sales for the quarter ended June 30, 2014, at $1.3 billion, reflecting an increase of 7 percent compared to 2013. Estimates had been $1.35 billion. Second quarter worldwide volume growth was 5 percent compared to the prior year period.
Adjusted net income for the quarter was $141.4 million, compared to 2013 second quarter adjusted net income of $150.7 million. On a reported basis, second quarter 2014 net income was $119.5 million, or $1.31 per diluted share, compared to $143.2 million, or $1.34 per diluted share for the same period in 2013.
For the quarter ended June 30, 2014, the company generated cash flow from operations of $156.9 million, invested $39.6 million in capital expenditures and repurchased $581.3 million in common shares outstanding under its share repurchase program.
During the second quarter the company repurchased 9.8 million shares at an average cost of $59.41. There is currently $232.9 million remaining on the existing $1.5 billion share repurchase authorization.
Tupperware Brands Corp.
Tupperware Brands Corp. (TUP—NYSE) announced its second quarter results, reporting that sales for the quarter were $674 million, down from $688 million for the same period last year. While sales were down 2 percent (up 3 percent in local currency) versus the previous year, emerging markets achieved a 10 percent increase in local currency, accounting for 66 percent of sales. Established markets were down 7 percent in local currency, largely driven by poor results in Germany.
GAAP net income of $47.6 million for the second quarter ended June 28, 2014, includes $22.2 million from the impact of currency devaluations in Venezuela. Net income of $47.6 million was down 38 percent, or 93 cents per diluted share, from the previous year’s $76.3 million, or $1.43 per diluted share. Excluding foreign currency, net income was down 31 percent versus the prior year. GAAP diluted EPS was 93 cents, versus $1.43 last year with adjusted diluted EPS of $1.47, up 11 percent in local currency.
Second quarter cash flow from operating and investing activities was $45 million, versus $49 million in the prior year, primarily reflecting planned higher capital spending.
In the second quarter the company returned $47 million to shareholders through a dividend payout of $33 million and the repurchase of 171,000 shares for $14 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.
USANA Health Sciences Inc.
USANA Health Sciences Inc. (USNA—NYSE) reported financial results for its fiscal second quarter 2014, missing earnings estimates by 14 cents at $1.36 per share (according to Briefing.com the Capital IQ Consensus Estimate was $1.50).
For the second quarter ended June 28, 2014, net sales decreased to $188.3 million, down 0.4 percent compared with $189.1 million in the prior-year period. Net sales, on a comparative basis, were negatively impacted by: $7.0 million of incremental sales in the second quarter of 2013 that occurred ahead of policy changes, which included restricting Associate purchases to their country of residence; $3.3 million from unfavorable changes in currency exchange rates; and price discounts that the company implemented in 2013.
Net earnings for the second quarter were $19.3 million, compared with $24.2 million during the prior-year period. Earnings per share for the quarter were $1.36, compared with $1.72 in the second quarter of the prior year. Weighted average diluted shares outstanding were 14.2 million in the second quarter of 2014, compared with 14.1 million in the prior-year period.
During the quarter, the company accelerated its share repurchase activity by repurchasing approximately 682,000 shares under its authorized repurchase program, for a total investment of $49.1 million. Additionally, as of July 25, 2014, the company has spent $21.4 million during the month of July to repurchase approximately 285,000 shares.
Avon Products Inc.
(AVP—NYSE) Avon Products Inc.’s second quarter 2014 results still show a struggle for the beauty company, but its ongoing turnaround plan is slowly making itself known as sales improve in key regions. Avon’s revenue came in at $2.2 billion, falling 13 percent (or 3 percent in constant dollars). Adjusted earnings were 20 cents per share, a penny below the Zacks Consensus Estimate, dropping 31 percent from 29 cents the previous year.
While the volume of products sold dropped 6 percent and active representatives worldwide were also in decline, average orders went up by 3 percent in the quarter. The company also reported that quarterly sales grew in the U.K. for the first time since 2010, up 11 percent, or 1 percent in constant dollars, primarily due to higher average order.
Second quarter 2014 gross margin and adjusted gross margin were 63.0 percent. Adjusted gross margin was 30 basis points lower than the prior-year quarter, primarily due to the unfavorable impact of foreign exchange driven by Latin America and Europe, Middle East & Africa.
Operating profit was $93 million and operating margin was 4.3 percent in the quarter. Adjusted operating profit was $186 million and adjusted operating margin was 8.5 percent, down 100 basis points from the second quarter of 2013.
Second quarter 2014’s net income from continuing operations was $20 million, or 4 cents per diluted share, compared with net income from continuing operations of $85 million, or 19 cents per diluted share, for the second quarter of 2013. Second quarter 2014’s adjusted net income from continuing operations was $91 million, or 20 cents per diluted share, compared with adjusted net income from continuing operations of $127 million, or 29 cents per diluted share, for the second quarter of 2013.
Net cash used by operating activities was $7 million for the six months ended June 30, 2014, compared with net cash provided of $70 million for the same period in 2013, unfavorably impacted primarily by lower earnings. The overall net cash used during the six months ended June 30, 2014, was $330 million, which was comparable with the same period in 2013.
Avon’s net debt (total debt less cash) at June 30, 2014, was $1.9 billion, up $240 million from the year-end 2013 level, and $170 million lower than at June 30, 2013.
Avon also declared a regular quarterly dividend on its common stock of 6 cents per share, payable Sept. 2, 2014, to shareholders of record on Aug. 14, 2014.
Blyth Inc. (BTH—NYSE) reported sales and earnings for the second quarter of 2014 with net sales for the three months ended June 30, 2014, decreasing approximately 25 percent to $157.8 million from $211.7 million for the comparable prior year period.
The results were significantly impacted by the company’s Health & Wellness segment, ViSalus, which had second quarter net sales of $53.6 million versus $101.5 million for the same period last year, a decline of 47 percent, largely reflecting the reduced promoter base in North America. At the end of the second quarter, qualified independent North American promoters totaled approximately 28,700 versus approximately 57,200 at the end of the prior year’s second. In the company’s Candles & Home Décor segment, PartyLite, sales were $72.7 million in the second quarter versus $77.8 million for the same period last year, a decline of 6 percent.
Blyth’s operating loss for the second quarter was $2.8 million this year versus profit of $1.2 million last year, largely driven by the decline in sales. Net income attributable to Blyth Inc. was a loss of $4.4 million for the three months ended June 30, 2014, compared to a loss of $1.4 million in the prior year period. Diluted earnings per share attributable to Blyth Inc. were a loss of 28 cents per share for the three months ended June 30, 2014, compared to a loss of 8 cents per share in the prior year period. Net loss attributable to Blyth Inc. common stockholders was $4.9 million in this year’s second quarter compared to a loss of $3.2 million last year. Diluted earnings per share attributable to Blyth Inc. common stockholders were a loss of 30 cents per share compared to a loss of 20 cents per share in the prior year period.
Second quarter operating loss for the Candles & Home Decor segment was $0.7 million versus a loss of $0.3 million in last year’s second quarter. Excluding allocated corporate expenses of $1.8 million this year and $1.6 million last year, PartyLite’s operating profit was $1.1 million this year versus $1.3 million last year.
Health & Wellness second quarter segment operating loss was $1.3 million this year versus operating profit of $2.8 million last year. Excluding allocated corporate expenses of $0.7 million this year and $2.4 million last year, second quarter operating loss for ViSalus was $0.6 million this year versus $5.2 million operating profit in the second quarter of 2013.
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 2014.
Net sales for the quarter were $14.5 million, a 6.2 percent decrease from the second quarter last year. Net U.S. sales totaled $10.8 million, down from second-quarter 2013 net sales of $11.8 million. Net sales outside of the United States increased 1.8 percent in the second quarter of 2014 compared to the prior-year quarter, buoyed by a sales increase of 14.5 percent in Europe.
The net loss for the second quarter of 2014 was $289,000 or 2 cents per diluted share, compared to a net loss of $214,000 or 2 cents per diluted share in the 2013 second quarter. The loss from operations for the second quarter of 2014 was $475,000 compared to a loss of $222,000 in the same quarter of 2013.
Net sales in Europe increased to $2.24 million in the second quarter of 2014 compared to $1.96 million in the prior-year second quarter.
Net sales for the first six months of 2014 were $28.9 million, which represents a 15.6 percent decrease from the same period in 2013. Relìv’s international net sales increased 1.2 percent in the first half of 2014 compared with the first half of last year. In the United States, net sales declined 20.2 percent.
Relìv reported a net loss of $440,000, or 3 cents per diluted share in the first six months of 2014, compared to net loss of $19,000, or zero cents per diluted share, in the same period of 2013.
Relìv had cash and cash equivalents of $4.93 million as of June 30, 2014. This amount compares to $6.66 million as of Dec. 31, 2013, and $4.26 million as of this date last year.
Educational Development Corp.
Educational Development Corp. (EDUC—NADSAQ) reported results for the fiscal first quarter ended May 31, 2014.
For the first quarter of fiscal 2015, EDC announced net revenues of $7.2 million, a 20 percent increase compared to $6 million for the same period last year and net earnings of $239,700 compared to $66,600. Earnings per share were 6 cents compared to 2 cents the previous year on a fully diluted basis.
The company made the decision in January 2012 to eliminate sales to large Internet sellers and most wholesale accounts in an effort to support its base of retail outlets and its home business division, Usborne Books & More. This decision has proven very successful as EDC Publishing finished fiscal year Feb. 28, 2014, with a record year of net revenues and the first quarter ending May 31, 2014, with a 17 percent increase in net revenues.
Usborne Books & More has also significantly benefited from this decision. This division has now recorded 13 consecutive months of revenue growth after nine years of decline. Net revenues for the last four months—February, March, April and May—have shown 20 percent plus gains year over year and the trend has continued in June with a 23 percent net revenue gain. The company has not recorded a losing quarter in 27 years and fully expects to maintain its historical dividend.
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