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December 01, 2016

Financial News

Public Companies Post Strong Third Quarter Results

by Andrea Tortora

Click here to order the December 2016 issue in which this article appeared or click here to download it to your mobile device.

The largest publicly traded direct selling companies continue to post mostly solid financial results despite unrest in some world markets and the ongoing impact of foreign exchange rates. A few companies even surprised investors by beating their own—and the market’s—earnings estimates.

Avon Products Inc. (AVP—NYSE) continues to bolster its transformation plan.  The company cleared a profit of $35.6 million, up from a year-earlier loss of $697 million. Earnings rose to 7 cents a share from a loss of $1.58 a share. Adjusted earnings were 2 cents a share, up from a loss of 11 cents a year ago, but falling short of the 3 cents estimated by analysts.

In the quarter ended Sept. 30, revenue dipped 2 percent year-over-year to $1.4 billion. Barring the impact of currency exchange, revenue was up 4 percent. Analysts polled by Thomson Reuters had predicted quarterly revenue of $1.42 billion.

CEO Sheri McCoy says the company is seeing the results of cutting about 7 percent of its workforce and moving its corporate headquarters to the United Kingdom.

“We have also taken actions to significantly improve our balance sheet and have accelerated the pace of our 2016 cost savings initiatives.”

Tupperware (TUP—NYSE) surprised investors by posting better-than-expected third quarter earnings.
The Florida maker of household goods cleared a profit of $48.8 million, or 96 cents a share. That’s a 35 percent jump from $36.2 million, or 72 cents a share, a year ago. Analysts polled by Thomson Reuters had expected earnings of 80 cents. Tupperware’s bottom line was boosted by $24.2 million in pre-tax gains from a real estate development adjacent to its Orlando headquarters.

Quarterly revenue was $521.8 million, edging above the prior year’s $521 million but missing the $528.1 million predicted by analysts. Emerging markets accounted for 71 percent of overall sales.

Rick Goings, Chairman and CEO, said sales came in at the low end of company guidance, but “we once again delivered adjusted earnings above the high-end of our range.”

Primerica (PRI—NYSE) beat analysts’ expectations again in the third quarter, with quarterly earnings of $1.22 per share. That topped the Zacks consensus estimate of $1.13.

The Georgia firm said sales rose 8 percent in the quarter to $383.6 million, in comparison to the $378.6 million predicted by analysts. Revenue in the term life insurance segment was up 13 percent from a year ago, while sales of the company’s investment and savings products edged up 1 percent.

“We delivered double-digit increases in the size of our life insurance licensed sales force and term life insurance policies issued year-over-year,” said Glenn Williams, Primerica CEO.

Nu Skin Enterprises Inc. (NUS—NYSE) boosted its full-year revenue guidance on the back of a strong third quarter.

Management said sales of the company’s beauty and wellness products totaled $604.2 million in the quarter, up 6 percent from the year-earlier $571.3 million. Factoring out currency exchange, sales were up 4 percent. Revenue outstripped the $585.1 million estimate from analysts polled by Thomson Reuters.

Truman Hunt, Nu Skin President and CEO, said the company produced double-digit gains in North Asia and Greater China and posted growth in every region except the South Asia-Pacific.

For the quarter ended Sept. 30, the Utah company posted per-share earnings of 98 cents, compared with 28 cents a year ago.

USANA Health Sciences Inc. (USNA—NYSE) reported a softer-than-expected third quarter, in which overall sales rose 9 percent to $254.2 million, compared with $233.3 million a year ago. Analysts polled by Thomson Reuters had predicted sales of $263.4 million.

Earnings were $2.40 per share, up 25 percent from a year ago, largely due to the company’s adoption of a new accounting standard, resulting in a lower effective tax rate. By comparison, analysts had expected to see earnings of $2.13 a share.

USANA is in the midst of upgrading its global IT infrastructure and building a new production facility in Beijing, which should be operational by year’s end.

“We continue to believe that we will be in a better position to fully drive growth in China and our other markets when the improvements to our IT infrastructure are complete,” said Dave Wentz, Co-CEO of USANA.

Medifast (MED—NYSE), a Maryland healthy lifestyle company, posted third-quarter financials that exceeded expectations. Quarterly earnings were $6.1 million, or 51 cents a share, up from $5.4 million or 45 cents a share in the same period a year ago.

Net income for the quarter was $6 million, up from $5.5 million in the third quarter in 2015.

Overall revenue increased 4.1 percent to $68.6 million up from $65.9 million in the third quarter of 2015. A majority (80 percent) of Medifast’s revenue came from Take Shape For Life, the direct sales segment of the company.

Take Shape For Life revenue was up 13 percent to $56.5 million, compared to $49.9 million a year ago, marking seven straight quarters of growth.

Daniel R. Chard, Medifast CEO, says, “We will continue to accelerate the activities required as we create sustainable and long-term revenue and profitability growth.”

Natural Health Trends Corp (NHTC—NASDAQ) saw its growth slow in the third quarter. The marketer of personal-care and wellness products under the NHT Global brand reported profit of $12.6 million, or $1.12 a share, compared with $14.5 million, or $1.18 a share, a year ago. The board approved a quarterly dividend of 8 cents a share, up 14 percent from the prior quarter, and a special cash dividend of 35 cents a share to be paid out in November.

Overall revenue fell 13 percent to $70.7 million, reflecting a 13 percent sales drop in Hong Kong, where the company derives more than 90 percent of revenue. Management said the depreciation of the Chinese yuan also impacted sales.

Chris Sharng, President of Natural Health Trends Corp, said the company is increasing revenue and achieving record operating profits despite these factors.

Nature’s Sunshine Products Inc. (NATR—NASDAQ) saw growth in its Synergy Worldwide segment boost third-quarter results.

For the quarter ended Sept. 30, overall sales were up 7 percent from a year earlier to $85.4 million, driven by 20 percent higher sales in the Synergy Asia Pacific business. A 16 percent drop in sales at Nature’s Sunshine Products (NSP) Latin America offset the gains. The company’s NSP United States and NSP Canada units each logged nine consecutive quarters of growth.

“We made good progress with our key product and new market initiatives,” said Gregory L. Probert, Chairman and CEO.

Management said net income from continuing operations was $3.9 million, or 22 cents a share, up from $1.6 million, or 8 cents a share, in the third quarter of 2015.

Mannatech (MTX—NASDAQ) recovered from a second quarter loss to post third quarter earnings of $48.1 million, up 9.8 percent from the same quarter in 2015.

Net income for the Texas-based health company was $1.3 million or 46 cents a share, up from $100,000 or 3 cents a share a year ago.

In the Asia-Pacific net sales increased by $3.5 million, or 15.9 percent, to $25.5 million. In the Americas, net sales jumped $1.2 million, or 6.7 percent, to $19.0 million.

Sales dropped for the quarter in Europe, the Middle East and Africa by $500,000 to $3.6 million.