GREENWICH, Conn., August 30, 2000 -- Blyth, Inc. (NYSE:BTH) reported today that second quarter Net Sales increased by 2.4 percent to $235,408,000 compared with $229,863,000 a year earlier. Operating Profit rose 4.0 percent to $31,288,000 when compared to $30,086,000 in the prior year period. Net Earnings for the quarter increased 10.5 percent to $18,158,000 from $16,430,000 a year earlier. Diluted Net Earnings Per Share for the first quarter were $0.38 per share, up 11.8 percent from $0.34 per share during the same period last year.
Net sales for the six months ended July 31, 2000 totaled $510,288 000 a 7.6 percent increase over the $474,136,000 reported a year ago. Operating profit for the six months increased 9.8 percent from $62,681,000 to $68,821,000. Net earnings of $39,179,000 increased 12.0 percent compared to $34,967,000 for the prior year period. Diluted Net Earnings Per Share were $0.81, up 14.1 percent compared to $0.71 for last year's first half.
Commenting on the second quarter results, Robert B. Goergen, Chairman of the Board and CEO, said "We are pleased to report continued solid earnings growth for the second quarter despite the slower than expected sales growth. The fundamentals of our business are firmly in place. We look forward to returning to stronger sales growth during the second half."
Several factors were noted with respect to sales growth in the second quarter. On an annualized basis, approximately 26 percent of Blyth's sales are outside the U.S. While Blyth has continued to experience double-digit sales growth as measured in local European currencies, a significant portion of these sales were made in euro-based countries where the average currency value during the second quarter declined approximately 11 percent year-to-year versus the U.S. dollar.
Secondly, while the majority of productivity measures for the direct sales channel were largely on target, the recruiting efforts for new independent sales consultants in the United States fell below expectations during the first half. This result may reflect the overall strength of the employment market, but, in any event, led to lower sales in the United States in the second quarter. Based on early indications from several recently implemented programs, management believes that renewed growth in sales will occur in the second half.
Finally, Blyth has chosen to de-emphasize and, in some cases, exit low margin product lines. Some of these product lines, such as citronella candles that were down over 50 percent year-to-year, traditionally experience their strongest sales levels in the second quarter. In addition, Blyth sold a significant portion of its Cultural Heritage business, resulting in a 28 percent decline in that business' sales, year-to-year. Lastly, in Europe, the Company also de-emphasized certain low margin product lines in its recently acquired consumer retail businesses.
Higher EPS growth was achieved despite slower than anticipated sales
for the following reasons:
-- investments in global sourcing and technology, as well as further
leveraging of administrative expenses, resulted in higher gross
and operating margins,
-- the continued globalization of the business resulted in a
decreased tax rate from 38.4 percent to 37.2 percent in this
year's second quarter, and
-- the long-term growth strategy of de-emphasizing certain low margin
product lines does not adversely affect earnings in the same way
that it does sales.
Mr. Goergen also noted that, "We remain very encouraged about our growth prospects worldwide. For example, despite the challenges of re-focusing the German direct selling business, which was disrupted by legislative tax proposals in calendar 1999, our European expansion continues to yield solid sales growth, as measured in local currencies. We continue to outperform both the category and our larger competitors in the U.S mass channel, as measured by IRI, and we believe that our strategy to build the premium retail market while de-emphasizing less profitable areas will result in increased shareholder value over the intermediate term."
Blyth, Inc., headquartered in Greenwich, designs, manufactures and markets an extensive line of candles and home fragrance products including scented candles, potpourri and environmental fragrance products, and markets a broad range of related candle accessories and decorative seasonal products. Its products are sold in the United States under various brand names, including Colonial Candle of Cape Cod(R), PartyLite Gifts(R), Kate's Original Recipe(TM), Carolina Designs(R), Ambria(TM), Florasense(R), Jeanmarie(R) and FilterMate(R) and in Europe under the Gies, Liljeholmens and Colony brands. It is also a leading producer of portable heating fuel products sold under the Sterno(R) and Handy Fuel(R) brand names. Net Sales for the twelve months ended July 31, 2000 totaled $1,133,602,000.
Blyth, Inc. can be found on the Internet at www.blythinc.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 which are other than statements of historical facts. Actual results could differ materially due to various factors, including the risk of maintaining the Company's growth rate, the Company's ability to respond to increased product demand, the risks (including foreign currency fluctuations) associated with international sales and foreign products, the risks of being able to recruit new independent sales consultants in North America, dependence on key management personnel, competition in terms of price and new product introductions, and other factors described in this press release, and in the Company's Quarterly Report on Form 10-Q for the quarter ended April 30, 2000, and in the Company's Annual Report on Form 10-K for the year ended January 31, 2000.
BLYTH, INC.
Consolidated Statement of Earnings
(In thousands except per share data)
(Unaudited)
3 Months 3 Months 6 Months 6 Months
Ended Ended Ended Ended
July 31, July 31, July 31, July 31,
2000 1999 2000 1999
------ ------ ------ ------
Net sales $ 235,408 $ 229,863 $ 510,288 $ 474,136
Cost of goods
sold 99,329 98,198 210,889 201,991
----------- ----------- ----------- -----------
Gross
profit 136,079 131,665 299,399 272,145
Selling and
shipping 81,108 78,405 181,777 163,790
Administrative 22,635 22,535 46,705 44,399
Amortization
of goodwill 1,048 639 2,096 1,275
----------- ----------- ----------- -----------
104,791 101,579 230,578 209,464
----------- ----------- ----------- -----------
Operating
profit 31,288 30,086 68,821 62,681
----------- ----------- ----------- -----------
Other expense
(income)
Interest
expense 4,188 2,492 8,341 4,376
Interest
income/other (585) (64) (1,164) (184)
Equity in
earnings of
investees (64) 863 787 1,276
----------- ----------- ----------- -----------
3,539 3,291 7,964 5,468
----------- ----------- ----------- -----------
Earnings before
income taxes and
minority
interest 27,749 26,795 60,857 57,213
Income tax
expense 10,323 10,287 22,762 21,970
----------- ----------- ----------- -----------
Earnings
before
minority
interest 17,426 16,508 38,095 35,243
Minority interest (732) 78 (1,084) 276
----------- ----------- ----------- -----------
Net
earnings $ 18,158 $ 16,430 $ 39,179 $ 34,967
=========== =========== =========== ===========
Basic:
Net earnings
per common
share $ 0.38 $ 0.34 $ 0.82 $ 0.72
Weighted average
number of shares
outstanding 47,940 48,488 47,959 48,714
Diluted:
Net earnings
per common
share $ 0.38 $ 0.34 $ 0.81 $ 0.71
Weighted average
number of shares
outstanding 48,317 48,893 48,288 49,076
Consolidated Balance Sheets
(In thousands)
(Unaudited)
July 31, 2000 July 31, 1999
--------------- ---------------
Assets
Cash and Cash Equivalents $ 35,302 $ 20,172
Accounts Receivable, Net 77,569 75,081
Inventories 236,782 234,093
Property, Plant & Equipment, Net 270,764 252,317
Other Assets 129,765 109,422
----------- -----------
=========== ===========
$ 750,182 $ 691,085
=========== ===========
Liabilities and Stockholders' Equity
Bank Debt $ 49,371 $ 215,813
Senior Notes 17,857 21,429
Bond Debt 150,000 -
Other Liabilities 125,615 118,719
Stockholders' Equity 407,339 335,124
----------- -----------
=========== ===========
$ 750,182 $ 691,085
=========== ===========