Margin Improvement Drives Higher Operating Profit
Restructuring On Track Following First Quarter Mass
Channel Divestiture
GREENWICH, Conn., Dec. 5, 2007 (PRIME NEWSWIRE) -- Blyth, Inc. (NYSE:BTH), a leading multi-channel designer and marketer of home fragrance products, home decor products and household convenience items, today reported Net Sales for the third quarter ended October 31, 2007 declined approximately 4% to $285.9 million compared to $297.9 million for the prior year period. Excluding the impact of the sale of the Blyth HomeScents International (BHI) North American mass channel candle business divested earlier this year, third quarter Net Sales increased 2%. Foreign exchange had a 2 percentage point favorable impact on third quarter Net Sales.
Strong sales growth in PartyLite's international markets during the third quarter more than offset a decline in sales in PartyLite's U.S. market. In the Company's Wholesale segment, excluding the BHI North American mass channel candle business, third quarter sales increased approximately 3%. Sales were flat as compared to prior year in the Catalog & Internet segment. International sales represented 24% of total sales in the third quarter this year and 20% last year, representing both overall sales growth in PartyLite Europe and favorable foreign exchange rates.
Third quarter Operating Profit was $10.4 million this year versus $4.7 million last year. The BHI North American mass channel candle business experienced a loss of $4.5 million this year and $6.2 million last year. Excluding BHI's losses from both years, Operating Income for the third quarter would have been $14.9 million this year versus $10.9 million last year, an increase of approximately 37%. This increase is attributed to profit improvements in the PartyLite, Midwest and Sterno businesses.
Net Earnings for the third quarter were $6.6 million versus a Net Loss of $0.2 million a year earlier. Net Earnings Per Diluted Share for the third quarter this year were $0.17 compared to break even net earnings per diluted share a year earlier. Excluding the discontinued operations associated with the European Wholesale business last year of $0.05, as well as charges and losses related to the BHI North American mass channel candle business of $0.07 this year and $0.10 last year, diluted Earnings Per Share for the quarter were $0.24 this year compared to $0.15 last year. This increase was principally attributable to gross margin improvements, lower net interest expense, and reduced weighted average shares outstanding as a result of share repurchases.
Commenting on the Company's financial results, Robert B. Goergen, Blyth's Chairman of the Board and CEO, said, "We continue to make excellent progress improving profitability following our 2006 and early 2007 divestitures despite a soft sales environment and the ongoing impact of higher commodity costs. Management has worked within and across business units to identify innovative ways to control costs while delivering consistently high quality to our customers."
In the Direct Selling segment, third quarter Net Sales increased 2% to $147.5 million versus $144.9 million for the same period last year principally due to sales growth in PartyLite Europe and Canada. PartyLite Europe's sales increased 2% in local currencies during the quarter, which translated into sales growth of 11% on a U.S. Dollar reported basis. Strong sales growth in PartyLite's French and Nordic markets more than offset sales declines in more mature markets. PartyLite's European active independent sales Consultants total more than 15,000 this year versus over 14,000 last year.
In PartyLite Canada, sales increased 22% in local currency during the quarter, which translated into a 36% sales increase on a U.S. Dollar reported basis. Sales growth was driven by both an increase in active independent Consultants, as well as increased levels of activity among existing consultants, which management attributes to training initiatives implemented last year. PartyLite Canada's active independent sales Consultants total more than 5,000 this year versus more than 4,000 last year.
In the U.S., PartyLite's third quarter sales declined 8%, which is a favorable trend versus sales declines in the first two quarters of this year. This improvement was driven by activity among existing PartyLite Leaders and Consultants, as well as a particularly popular candle promotion during the quarter. Active independent sales Consultants total over 23,000 in the U.S. versus over 26,000 in last year's third quarter.
Third quarter operating profit in the Direct Selling segment increased to $8.1 million from $4.2 million in the same period last year and was driven by the impact of higher sales, gross margin improvement and lower general and administrative costs.
In the Catalog & Internet segment, third quarter Net Sales were flat at $52.6 million versus $52.7 million in last year's third quarter. Third quarter operating loss in this segment was $0.2 million versus an operating income of $2.5 million in the same period last year. This segment's third quarter operating loss reflects higher postage costs and a shift in circulation into the fourth quarter for the Miles Kimball Company, as well as increased advertising spending in the Boca Java business.
In the Wholesale segment, third quarter Net Sales declined 15% to $85.7 million versus $100.3 million for the same period last year principally due to the sale of the BHI North American mass channel candle business in the first quarter of this year. Excluding BHI, third quarter Wholesale segment Net Sales increased approximately 3% versus the prior year, driven by higher sales of seasonal decorations and premium channel candles in the Midwest business.
Third quarter operating income in the Wholesale segment was $2.6 million compared to last year's third quarter operating loss of $2.0 million. Included in the segment results are the aforementioned BHI loss on operations in both years, as well as restructuring and impairment charges of $4.5 million this year and $6.2 million last year. Therefore, excluding the charges and losses from both years, operating profit would have been $7.1 million this year versus $4.2 million last year. Sales increases and gross margin improvement within seasonal decor and foodservice were partially offset by the impact of high levels of close-out home decor products in the market, which negatively affected Blyth's home decor business. Higher commodity costs this year versus last year also negatively impacted the Wholesale segment Operating Profit.
Net Sales for the nine months ending October 31, 2007 declined 6% to $791.1 million from $840.8 million reported for the same period a year ago. Excluding the sale of the BHI North American mass channel candle business, Net Sales for the first nine months would have declined 2%. Operating Income for the nine months was $34.8 million versus an Operating Loss of $9.0 million a year earlier. Excluding last year's pre-tax goodwill impairment charge of $36.8 million, as well as losses experienced by the BHI North American mass channel candle business of $11.9 million this year and $10.0 million last year, and restructuring charges at PartyLite of $0.5 million this year, Operating Income for the first nine months would have been $47.2 million this year versus $37.8 million last year, an increase of 25%.
Net Income for the first nine months was $21.5 million compared to a Net Loss of $120.2 million last year. Net Earnings Per Share were $0.54 compared to a loss of $3.01 for last year's first nine months. The BHI North American mass channel candle business experienced after tax losses of $7.4 million this year, or $0.19, and $6.2 million, or $0.16, in last year's first nine months. Excluding these charges from both years, as well as PartyLite's restructuring charge this year of $0.01, a goodwill impairment charge last year of $0.65 and discontinued operations from last year of $2.74, diluted earnings per share for the first nine months would have been $0.74 this year versus $0.54 last year.
A summary reconciliation of Generally Accepted Accounting Principles (GAAP) earnings and earnings per share to Non-GAAP earnings and earnings per share is presented in the attached table. This table is included as an additional reference to assist investors in analyzing the Company's performance and should be considered in addition to, not a substitute for, measures of financial performance prepared in accordance with GAAP.
The sum of the segment amounts does not necessarily equal that reported for the quarter for Blyth overall due to rounding.
In lieu of quarterly teleconferences, management conducts informal Question and Answer sessions periodically via dial-in calls, the next of which will take place on December 6th at 2:00 pm EST. The date, time and dial-in information will be available in the "Investor Relations" section of the Company's website, www.blyth.com, no later than one week prior to the next scheduled session. Management will not present prepared remarks during such calls and will cover no material, non-public information.
Blyth, Inc., headquartered in Greenwich, CT, USA, is a Home Expressions company that markets an extensive array of home fragrance products, decorative accessories, seasonal decorations and household convenience items. The Company sells its products through multiple channels of distribution, including the home party plan method of direct selling, as well as through the wholesale and catalog/Internet channels. Blyth also markets tabletop lighting and chafing fuel for the Away From Home or foodservice trade. The Company manufactures most of its candles and chafing fuel and sources nearly all of its other products. Its products are sold direct to the consumer under the PartyLite(r) and Two Sisters Gourmet(tm) brands, to consumers in the catalog and Internet channel under the Miles Kimball(r), Exposures(r), Walter Drake(r), The Home Marketplace(r), Easy Comforts(tm) and Boca Java(tm) brands, to retailers in the premium and specialty retail channels under the Colonial Candle(tm), CBK(r) and Seasons of Cannon Falls(r) brands, to retailers in the mass retail channel under the Sterno(r) brand, and to the Foodservice industry under the Sterno(r), Ambria(r) and HandyFuel(r) brands. In Europe, Blyth's products are also sold under the PartyLite(r) brand.
Blyth, Inc. may be found on the Internet at www.blyth.com.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are other than statements of historical facts. Actual results could differ materially due to various factors, including the slowing of the United States or European economies or retail environments, the risk that we will be unable to maintain our historic growth rate, our ability to respond appropriately to changes in product demand, the risk that we will be unable to integrate the businesses that we acquire into our existing operations, the risks (including foreign currency fluctuations, economic and political instability, transportation delays, difficulty in maintaining quality control, trade and foreign tax laws and others) associated with international sales and foreign sourced products, risks associated with our ability to recruit new independent sales consultants, our dependence on key corporate management personnel, risks associated with the sourcing of raw materials for our products, competition in terms of price and new product introductions, risks associated with our information technology systems (including, susceptibility to outages due to fire, floods, power loss, telecommunications failures, computer viruses, break-ins and similar events), risks associated with regulations proposed by the Federal Trade Commission and other factors described in this press release and in the Company's Annual Report on Form 10-K for the year ended January 31, 2007.
BLYTH, INC.
Consolidated Statements of Earnings
(In thousands except per share data)
(Unaudited)
Three Months Nine Months
Ended October 31 Ended October 31,
2007 2006 2007 2006
-------- -------- -------- --------
Net sales $285,869 $297,911 $791,107 $840,775
Cost of goods sold 141,704 160,563 383,868 434,047
-------- -------- -------- --------
Gross profit 144,165 137,348 407,239 406,728
Selling 100,477 99,579 273,122 283,435
Administrative and
other 33,247 33,084 99,351 95,501
Goodwill impairment -- -- -- 36,769
-------- -------- -------- --------
133,724 132,663 372,473 415,705
-------- -------- -------- --------
Operating profit
(loss) 10,441 4,685 34,766 (8,977)
-------- -------- -------- --------
Other expense (income)
Interest expense 3,587 4,587 10,933 14,576
Interest income (1,953) (1,819) (6,003) (5,352)
Foreign exchange
and other 485 (22) 334 (614)
-------- -------- -------- --------
2,119 2,746 5,264 8,610
-------- -------- -------- --------
Earnings (loss) from
continuing operations
before income taxes
and minority interest 8,322 1,939 29,502 (17,587)
Income tax expense
(benefit) 1,717 (33) 7,940 (7,008)
-------- -------- -------- --------
Earnings (loss)
from continuing
operations before
minority interest 6,605 1,972 21,562 (10,579)
Minority interest 28 40 81 114
-------- -------- -------- --------
Earnings (loss)
from continuing
operations 6,577 1,932 21,481 (10,693)
Loss from discontinued
operations (net of
income tax benefit of
$(237), and $(1,278)
in 2006, respectively) -- (2,153) -- 109,504)
-------- -------- -------- ---------
Net earnings (loss) $ 6,577 $ (221) $ 21,481 $(120,197)
======== ======== ======== =========
Basic:
Earnings (loss)
from continuing
operations per
common share $ 0.17 $ 0.05 $ 0.55 $ (0.27)
Earnings (loss)
from discontinued
operations per
common share -- (0.05) -- (2.74)
-------- -------- -------- --------
Net earnings (loss)
per common share $ 0.17 $ (0.00) $ 0.55 $ (3.01)
======== ======== ======== ========
Weighted average
number of shares
outstanding 38,748 39,211 39,183 39,945
Diluted:
Earnings (loss)
from continuing
operations per
common share $ 0.17 $ 0.05 $ 0.54 $ (0.27)
Earnings (loss)
from discontinued
operations per
common share -- (0.05) -- (2.74)
-------- -------- -------- --------
Net earnings (loss)
per common share $ 0.17 $ (0.00) $ 0.54 $ (3.01)
======== ======== ======== ========
Weighted average
number of shares
outstanding 39,067 39,531 39,525 39,945
Consolidated Balance Sheets
(In thousands)
(Unaudited)
October 31,
2007 2006
---------------------
Assets
Cash and Cash
Equivalents $ 110,113 $ 80,615
Short Term
Investments 84,806 95,000
Accounts Receivable,
Net 90,223 88,864
Inventories 136,309 180,847
Current Assets --
Discontinued
Operations -- 2,997
Property, Plant &
Equipment, Net 146,196 163,793
Other Assets 202,812 198,615
--------- ---------
$ 770,459 $ 810,731
========= =========
Liabilities and
Stockholders' Equity
Bank Debt $ 13,771 $ 44,790
Bond Debt 197,643 224,534
Current Liabilities
-- Discontinued
Operations -- 6,619
Other Liabilities 218,323 193,944
Stockholders' Equity 340,722 340,844
--------- ---------
$ 770,459 $ 810,731
========= =========
Blyth, Inc.
Supplemental Non-GAAP Earnings (Loss) Per Share Measures
(In thousands, except per share data)
(Unaudited)
Three Three
Months Ended Months Ended
October 31, 2007 October 31, 2006
Dollars EPS Dollars EPS
--------- ----- --------- -----
Non-GAAP earnings from
continuing operations
excluding loss
from operations of
Blyth HomeScents
International ("BHI")
and restructuring
charges from BHI $ 9,343 $ 0.24 $ 5,805 $ 0.15
Non-GAAP BHI loss from
operations and
restructuring charges (2,766) (0.07) (3,873) (0.10)
-------- ------- -------- -------
GAAP Earnings from
continuing operations 6,577 0.17 1,932 0.05
GAAP Loss from
discontinued operations
net of income taxes -- -- (2,153) (0.05)
-------- ------- -------- -------
GAAP Net earnings/(loss) $ 6,577 $ 0.17 $ (221) $ --
======== ======= ======== =======
Blyth, Inc.
Supplemental Non-GAAP Earnings (Loss) Per Share Measures
(In thousands, except per share data)
(Unaudited)
Nine Months Ended Nine Months Ended
October 31, 2007 October 31, 2006
Dollars EPS Dollars EPS
-------- ------ -------- ------
Non-GAAP earnings from
continuing operations
excluding goodwill
impairment charge, loss
from operations of Blyth
HomeScents International
("BHI"), gain on sale of
BHI and restructuring
charges from BHI and
PartyLite $29,217 $ 0.74 $ 21,629 $ 0.54
Non-GAAP goodwill
impairment -- -- (26,132) (0.65)
Non-GAAP BHI loss from
operations, gain on sale
of BHI and restructuring
charges (7,401) (0.19) (6,190) (0.16)
Non-GAAP restructuring
charges PartyLite (335) (0.01) -- --
------- ------- --------- ------
GAAP Earnings/(loss) from
continuing operations 21,481 0.54 (10,693) (0.27)
GAAP Loss from discontinued
operations net of income
taxes -- -- (109,504) (2.74)
------- ------- --------- ------
GAAP Net earnings/(loss) $21,481 $ 0.54 $(120,197) $(3.01)
======= ======= ========= ======