GREENWICH, Conn., Aug. 30, 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 that Net Sales for the second quarter ended July 31, 2007 declined approximately 11% to $234.9 million compared to $262.6 million for the prior year period. The sale of the Blyth HomeScents International (BHI) North American mass channel candle business had a 4 percentage point negative impact on second quarter Net Sales.
The second quarter is historically Blyth's smallest quarter for both sales and profits. Lower second quarter sales in PartyLite's U.S. market was the principal factor for the second quarter sales decline. In addition, lower sales in the Company's Wholesale segment were partially offset by sales growth in the Catalog & Internet segment. Foreign exchange had a 2 percentage point favorable impact on second quarter Net Sales. International sales represented 30% of total sales in the second quarter this year and 26% last year.
Second quarter Operating Profit was $7.7 million this year versus an Operating Loss of $27.7 million last year. Last year's loss included a non-cash, pre-tax goodwill impairment charge of $36.8 million from the write-down of goodwill associated with Blyth's North American Wholesale businesses. In addition, the BHI North American mass channel candle business experienced a loss of $5.0 million this year and $3.6 million last year. Excluding the goodwill impairment charge from last year, as well as BHI's losses from both years, Operating Income for the second quarter would have been $12.7 million this year versus $12.7 million last year.
Net Earnings for the second quarter were $3.2 million versus a Net Loss of $89.4 million a year earlier. Last year's Net Loss reflects discontinued operations and impairment charges related to Blyth's Wholesale segment. Net Earnings Per Diluted Share for the second quarter this year were $.08 compared to a loss of $2.24 a year earlier. Excluding last year's goodwill impairment charge and discontinued operations associated with the European Wholesale business, as well as charges and losses related to the BHI North American mass channel candle business this year and last year and a tax provision related to unremitted foreign earnings this year, diluted Earnings Per Share for the quarter would have been $0.18 per share this year compared to $0.19 per share last year.
Net Sales for the six months ending July 31, 2007 declined 7% to $505.2 million from $542.9 million reported for the same period a year ago. The sale of the BHI North American mass channel candle business had a 3 percentage point negative impact on Net Sales for the first six months. Operating Income for the six months was $24.3 million versus an Operating Loss of $13.7 million a year earlier. Excluding (on a pre-tax basis) last year's goodwill impairment charge of $36.8 million, as well as losses experienced by the BHI North American mass channel candle business of $7.5 million this year and $3.7 million last year and PartyLite's restructuring charge of $0.5 million this year, Operating Income for the first six months would have been $32.3 million this year versus $26.8 million last year, an increase of 21%.
Net Income for the first six months was $14.9 million compared to a Net Loss of $120.0 million last year. As previously noted, last year's loss reflects the discontinued operations and the goodwill impairment charges related to Blyth's Wholesale segment. Net Earnings Per Share were $0.37 compared to a loss of $2.98 for last year's first half. The BHI North American mass channel candle business experienced after tax losses of $4.6 million this year and $2.3 million in last year's first half. Excluding these charges from both years, as well as a first quarter after tax charge of $0.3 million related to restructuring activities within PartyLite this year, the goodwill impairment charge, discontinued operations from last year and a tax provision related to unremitted foreign earnings this year, diluted earnings per share for the first six months would have been $0.59 this year versus $0.39 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.
Commenting on the Company's financial results, Robert B. Goergen, Blyth's Chairman of the Board and CEO, said, "During the second quarter, which is typically the smallest quarter for the Company, we were able to control costs aggressively, resulting in improved year-to-date operating profit versus last year. We are seeing the effects of continued weakness in the housing sector, resulting in softness in home decor purchases, as well as overall lower discretionary consumer spending that may relate to higher gasoline prices. We will endeavor to offset the impact of these forces with continued expense management and selective promotional activity."
In the Direct Selling segment, second quarter Net Sales declined 10% to $130.2 million versus $144.0 million for the same period last year principally due to a sales decline of 24% in PartyLite's U.S. market. A lower Consultant base, coupled with lower productivity versus last year, was the primary driver of the sales decline. Active independent sales Consultants total over 20,000 in the U.S. versus over 24,000 in last year's second quarter. Management is focused on selective promotions and leadership development, as well as training and sales initiatives to improve sales momentum for PartyLite sales Consultants.
In PartyLite Canada, sales declined 6% in local currency during the quarter, which translated into a 3% sales decline on a U.S. Dollar reported basis, with active independent sales Consultants totaling more than 4,000 this year and last year. PartyLite Europe's sales declined 5% in local currencies during the quarter, which translated into a sales growth of 2% on a U.S. Dollar reported basis. Strong sales growth in PartyLite's newest European markets partially offset sales declines in more mature markets, which resulted from lower promotional activity versus prior year. PartyLite's European active independent sales Consultants total more than 16,000 this year and last year.
Second quarter operating profit in the Direct Selling segment increased to $15.4 million from $14.4 million in the same period last year and was driven by gross margin improvement and the aforementioned reduction in promotional activity, partially offset by higher commodity costs versus prior year.
In the Catalog & Internet segment, second quarter Net Sales increased 5% to $40.2 million due to increased sales for Boca Java, an on-line premium gourmet coffee and tea retailer, and year over year growth within the core catalogs of the Miles Kimball Company. Second quarter operating loss in this segment was $2.9 million versus an operating loss of $2.3 million in the same period last year. This segment's higher operating loss reflects increased advertising spending in the Boca Java business.
In the Wholesale segment, second quarter Net Sales declined 20% to $64.5 million versus $80.2 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, as well as soft home decor sales. Excluding BHI, second quarter Wholesale segment Net Sales declined 8% versus the prior year.
Second quarter operating loss in the Wholesale segment was $4.8 million compared to last year's second quarter operating loss of $39.8 million. Included in the segment results are the aforementioned BHI loss on operations, and restructuring and impairment charges of $5.0 million this year and $3.6 million last year. Also included in last year's results was a $36.8 million goodwill impairment charge. Therefore, excluding the charges and losses from both years, operating profit would have been $0.2 million this year versus $0.6 million last year. Gross margin improvement within certain Wholesale segment business units was offset by the impact of sales volume declines, a mix shift towards close-out home decor products and higher commodity costs than in last year's second quarter.
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 August 31st at 2:00 pm EDT. 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.
Condensed Consolidated Statements of Earnings
(In thousands except per share data)
(Unaudited)
Three Months Ended Six Months Ended
July 31, July 31,
2007 2006 2007 2006
--------- --------- --------- ---------
Net sales $ 234,871 $ 262,617 $ 505,238 $ 542,864
Cost of goods sold 113,501 134,571 242,164 273,484
--------- --------- --------- ---------
Gross profit 121,370 128,046 263,074 269,380
Selling 78,996 86,744 172,645 183,856
Administrative and other 34,704 32,258 66,103 62,417
Goodwill impairment -- 36,769 -- 36,769
--------- --------- --------- ---------
113,700 155,771 238,748 283,042
--------- --------- --------- ---------
Operating profit
(loss) 7,670 (27,725) 24,326 (13,662)
--------- --------- --------- ---------
Other expense (income)
Interest expense 3,625 5,288 7,346 9,989
Interest income (2,061) (1,747) (4,050) (3,533)
Foreign exchange and
other 397 (103) (151) (592)
--------- --------- --------- ---------
1,961 3,438 3,145 5,864
--------- --------- --------- ---------
Earnings (loss) from
continuing operations
before income taxes
and minority
interest 5,709 (31,163) 21,181 (19,526)
Income tax expense
(benefit) 2,510 (10,434) 6,223 (6,975)
--------- --------- --------- ---------
Earnings (loss) from
continuing operations
before minority
interest 3,199 (20,729) 14,958 (12,551)
Minority interest 27 40 54 74
--------- --------- --------- ---------
Earnings (loss) from
continuing operations 3,172 (20,769) 14,904 (12,625)
Loss from discontinued
operations (net of income
tax expense (benefit)
for the three and six
month periods ended July
31, 2006 of $892 and
$(1,041), respectively) -- (68,598) -- (107,351)
--------- --------- --------- ---------
Net earnings (loss) $ 3,172 $ (89,367) $ 14,904 $(119,976)
========= ========= ========= =========
Basic:
Earnings (loss) from
continuing operations
per common share $ 0.08 $ (0.52) $ 0.38 $ (0.31)
Loss from discontinued
operations per common
share -- (1.72) -- (2.66)
--------- --------- --------- ---------
Net earnings (loss) per
common share $ 0.08 $ (2.24) $ 0.38 $ (2.98)
========= ========= ========= =========
Weighted average number
of shares outstanding 39,488 39,821 39,400 40,312
Diluted:
Earnings (loss) from
continuing operations
per common share $ 0.08 $ (0.52) $ 0.37 $ (0.31)
Loss from discontinued
operations per common
share -- (1.72) -- (2.66)
--------- --------- --------- ---------
Net earnings (loss) per
common share $ 0.08 $ (2.24) $ 0.37 $ (2.98)
========= ========= ========= =========
Weighted average number
of shares outstanding 39,835 39,821 39,751 40,312
Blyth, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited))
July 31, July 31,
2007 2006
--------- ---------
Assets
Cash and Cash Equivalents $ 90,833 $ 83,586
Short Term Investments 125,985 73,135
Accounts Receivable, Net 56,822 59,413
Inventories 143,652 199,891
Current Assets -
Discontinued Operations -- 49,176
Property, Plant &
Equipment, Net 149,368 166,735
Other Assets 201,984 200,708
--------- ---------
$ 768,644 $ 832,644
========= =========
Liabilities and
Stockholders' Equity
Bank and Other Debt $ 13,982 $ 42,104
Bond Debt 197,615 224,492
Current Liabilities -
Discontinued Operations -- 48,280
Other Liabilities 185,434 173,527
Stockholders' Equity 371,613 344,241
--------- ---------
$ 768,644 $ 832,644
========= =========
Blyth, Inc.
Supplemental Non-GAAP Earnings (Loss) Per Share Measures
(In thousands, except per share data)
(Unaudited)
Three Months Ended Three Months Ended
July 31, 2007 July 31, 2006
Dollars EPS Dollars EPS
-------- -------- -------- --------
Non-GAAP earnings from
continuing operations
excluding tax on unremitted
foreign earnings of
subsidiaries, loss from
operations of Blyth
HomeScents International
("BHI"), restructuring
charges of BHI and
restructuring charges of
PartyLite $ 7,255 $ 0.18 $ 7,568 $ 0.19
Non-GAAP tax on unremitted
foreign earnings of
subsidiaries (964) (0.02) -- --
-------- -------- -------- --------
Non-GAAP ongoing earnings 6,291 0.16 7,568 0.19
Non-GAAP goodwill impairment -- -- (26,132) (0.66)
Non-GAAP BHI loss from
operations and
restructuring (3,119) (0.08) (2,205) (0.06)
-------- -------- -------- --------
GAAP Earnings from
continuing operations 3,172 0.08 (20,769) (0.52)
GAAP Earnings (loss) from
discontinued operations net
of income taxes -- -- (68,598) (1.72)
-------- -------- -------- --------
GAAP Net earnings/(loss) $ 3,172 $ 0.08 $(89,367) $ (2.24)
======== ======== ======== ========
Blyth, Inc.
Supplemental Non-GAAP Earnings (Loss) Per Share Measures
(In thousands, except per share data)
(Unaudited)
Six Months Ended Six Months Ended
July 31, 2007 July 31, 2006
Dollars EPS Dollars EPS
--------- --------- --------- ---------
Non-GAAP earnings from
continuing operations
excluding tax on
unremitted foreign
earnings of
subsidiaries, loss from
operations of Blyth
HomeScents International
("BHI"), restructuring
charges of BHI and
restructuring charges
of PartyLite $ 23,284 $ 0.59 $ 15,825 $ 0.39
Non-GAAP tax on
unremitted foreign
earnings of subsidiaries (3,413) (0.09) -- --
--------- --------- --------- ---------
Non-GAAP ongoing earnings 19,871 0.50 15,825 0.39
Non-GAAP goodwill
impairment -- -- (26,132) (0.65)
Non-GAAP BHI loss from
operations and
restructuring (4,632) (0.12) (2,318) (0.06)
Non-GAAP restructuring
charges PartyLite (335) (0.01) -- --
--------- --------- --------- ---------
GAAP Earnings from
continuing operations 14,904 0.37 (12,625) (0.31)
GAAP Earnings (loss) from
discontinued operations
net of income taxes -- -- (107,351) (2.66)
--------- --------- --------- ---------
GAAP Net earnings/(loss) $ 14,904 $ 0.37 $(119,976) $ (2.98)
========= ========= ========= =========