GREENWICH, Conn., Dec. 6, 2006 (PRIME NEWSWIRE) -- Blyth, Inc. (NYSE:BTH), a leading designer and marketer of home fragrance and home decor products, today reported that Net Sales for the third quarter ended October 31, 2006 declined 9% to $297.9 million from $328.5 million a year earlier. Included in last year's results was $20.3 million of sales from Impact Plastics, which was sold at the end of the fourth quarter last year. Accordingly, excluding the effect of Impact Plastics, third quarter sales declined 3% versus last year primarily due to lower comparable sales in the North American Direct Selling and Wholesale home fragrance markets. International sales represented 20% of total sales in the third quarter this year versus 16% last year, reflecting strong growth in several of PartyLite's international markets.
Operating Profit for the quarter was $4.7 million versus $19.3 million for the prior year period and reflects the impact of lower sales in the Direct Selling segment, restructuring charges of $5.2 million related to Blyth's North American Wholesale mass channel home fragrance business and the absence this year of $3.6 million of operating profit from Impact Plastics. Higher commodity costs also continue to have a significant negative impact on the Company's operating margin. These factors were partially offset by improved profitability in the Catalog & Internet segment.
North American Wholesale mass channel restructuring charges of $5.2 million recorded in the current fiscal quarter include $4.8 million related primarily to inventory write-downs, equipment impairment and severance, reflected in cost of goods sold. Net Loss for the quarter was $0.2 million versus Net Earnings of $23.0 million a year earlier. This year's results also include $2.2 million of net losses on the sale and discontinued operations of Blyth's European Wholesale businesses.
Diluted Net Earnings Per Share for the quarter were break even compared to $0.56 for the same period last year. Excluding the North American Wholesale mass channel home fragrance business restructuring charges and the loss on the sale and discontinued operations of the European Wholesale businesses, as well as last year's profit from Impact Plastics and discontinued European Wholesale operations, third quarter earnings per share would have been $0.13 this year versus $0.27 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.
Net Sales for the nine months ended October 31, 2006 were $840.8 million versus $873.6 million reported for the same period a year ago. Operating Loss for the nine months was $9.0 million versus Operating Profit of $57.8 million for the same period last year. This year's loss includes a non-cash, pre-tax goodwill impairment charge of $36.8 million recorded in the second quarter arising from a revaluation of goodwill associated with Blyth's North American Wholesale businesses. Also included in the loss is $5.2 million of restructuring charges related to the North American Wholesale mass channel home fragrance business. Included in last year's results was a favorable U.S. state settlement that allowed for a reserve reversal of $5.5 million and Impact Plastics' earnings of $2.4 million. Therefore, excluding the goodwill impairment and restructuring charges this year and the reserve reversal and Impact Plastics last year, Operating Profit for the first nine months would have been $33.0 million this year versus $49.9 million last year.
Net Loss for the first nine months was $120.2 million compared to Net Earnings of $37.2 million for the prior year period. Diluted Net Earnings Per Share was a loss of $3.01 compared to earnings of $0.90 for last year's first nine months. Excluding the aforementioned discontinued operations, restructuring charges and goodwill impairment charge this year, as well as the benefit of the discontinued operations, reserve reversal and Impact Plastics last year, Earnings Per Share for the first nine months would have been $0.46 this year versus $0.71 last year. See attached Non-GAAP earnings and earnings per share reconciliation table previously discussed.
Robert B. Goergen, Blyth's Chairman of the Board and CEO, commented, "Fiscal year 2007 continues to be very challenging for Blyth. While we are disappointed in our third quarter operating performance, numerous initiatives are underway across the Company that we believe are setting the stage for improved results in the future."
Mr. Goergen continued, "Specifically, the restructuring of our North American Wholesale mass channel home fragrance business is underway. The elimination of unprofitable customers, a streamlined SKU base and the pending closure of our Tijuana Mexico manufacturing facility is in progress. Within the Direct Selling segment, additional management talent has joined PartyLite's U.S. team, which remains focused on sales and consultant growth and improved profitability. In the Catalog & Internet segment, new management continues to make good progress in stabilizing core catalog titles and introducing new growth initiatives."
In the Direct Selling segment, third quarter net sales declined 6%, from $154.7 million to $144.9 million for the same period last year. PartyLite's U.S. sales declined 12% versus last year's third quarter, mirroring a lower consultant base, which totals more than 26,000. In PartyLite's Canadian market, sales declined 4%, driven by fewer active independent sales consultants, which still total more than 4,000. PartyLite's European sales increased 14%, and consultant count increased to more than 14,000. Third quarter operating profit in the Direct Selling segment was $4.2 million versus $12.2 million in the same period last year primarily due to the U.S. sales shortfall, continued higher commodity costs and increased European promotional expenses.
In Blyth's other direct to consumer business, the Catalog & Internet segment, third quarter net sales increased 2% to $52.7 million. Increased sales resulted from growth in the Walter Drake and Easy Comforts brands, as well as the addition of Boca Java, which was acquired in last year's third quarter. Operating Profit was $2.5 million this year versus a breakeven operating profit in last year's third quarter. Last year's operating profit included a $1.2 million write down of a Colorado Springs facility.
In the Wholesale segment, third quarter net sales declined approximately 18% to $100.3 million, principally due to the absence this year of Impact Plastics, as well as lower mass channel home fragrance sales. Sales growth was experienced in foodservice and premium seasonal and home decor products. Third quarter operating loss in the Wholesale segment was $2.0 million compared to last year's operating profit of $7.1 million. This decline was driven by the aforementioned restructuring charges of $5.2 million in the North American Wholesale mass channel home fragrance business this year and the absence of Impact Plastics, which earned approximately $3.6 million in last year's third 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 will conduct informal Question and Answer sessions periodically via dial-in calls, the next of which will take place on December 7th. 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 competing primarily in the home fragrance, home decor, seasonal decorations and gift industry. The Company designs, markets and distributes an extensive array of candles, home fragrance products, decorative accessories, seasonal decorations and household convenience items, as well as tabletop lighting and chafing fuel for the Away From Home or foodservice trade. Blyth manufactures most of its candles 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 retailers in the premium and specialty retail channels under the Colonial Candle(TM), Carolina(r), CBK(r) and Seasons of Cannon Falls(r) brands, to retailers in the mass retail channel under the Florasense(r), Ambria(r), FilterMate(r) and Sterno(r) 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, 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 legislation 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, 2006.
BLYTH, INC.
Consolidated Statements of Earnings
(In thousands except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
October 31, October 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Net sales $ 297,911 $ 328,458 $ 840,775 $ 873,556
Cost of goods sold 160,563 174,838 434,047 436,306
--------- --------- --------- ---------
Gross profit 137,348 153,620 406,728 437,250
Selling 99,579 102,455 283,435 284,762
Administrative 33,084 31,879 95,501 94,673
Goodwill impairment -- -- 36,769 --
--------- --------- --------- ---------
132,663 134,334 415,705 379,435
--------- --------- --------- ---------
Operating profit 4,685 19,286 (8,977) 57,815
--------- --------- --------- ---------
Other expense (income)
Interest expense 4,587 5,030 14,576 14,287
Interest income (1,819) (706) (5,352) (1,446)
Foreign exchange
and other (22) 85 (614) 959
--------- --------- --------- ---------
2,746 4,409 8,610 13,800
--------- --------- --------- ---------
Earnings (loss) from
continuing operations
before income taxes
and minority interest 1,939 14,877 (17,587) 44,015
Income tax expense
(benefit) (33) 1,066 (7,008) 9,493
--------- --------- --------- ---------
Earnings (loss)
from continuing
operations before
minority interest 1,972 13,811 (10,579) 34,522
Minority interest 40 54 114 (506)
--------- --------- --------- ---------
Earnings (loss)
from continuing
operations 1,932 13,757 (10,693) 35,028
Earnings (loss)
from discontinued
operations (net of
income tax expense
(benefit) of $(237),
$4,222, $(1,278) and
$295, respectively) (2,153) 9,284 (109,504) 2,128
--------- --------- --------- ---------
Net earnings (loss) $ (221) $ 23,041 $(120,197) $ 37,156
========= ========= ========= =========
Basic:
Earnings (loss)
from continuing
operations per
common share $ 0.05 $ 0.33 $ (0.27) $ 0.86
Earnings (loss)
from discontinued
operations per
common share (0.05) 0.23 (2.74) 0.05
--------- --------- --------- ---------
Net earnings (loss)
per common share $ -- $ 0.56 $ (3.01) $ 0.91
========= ========= ========= =========
Weighted average
number of shares
outstanding 39,211 40,978 39,945 40,948
Diluted:
Earnings (loss)
from continuing
operations per
common share $ 0.05 $ 0.33 $ (0.27) $ 0.85
Earnings (loss)
from discontinued
operations per
common share (0.05) 0.23 (2.74) 0.05
--------- --------- --------- ---------
Net earnings (loss)
per common share $ -- $ 0.56 $ (3.01) $ 0.90
========= ========= ========= =========
Weighted average
number of shares
outstanding 39,531 41,141 39,945 41,190
Consolidated Balance Sheets
(In thousands)
(Unaudited)
October 31,
2006 2005
---------- ----------
Assets
Cash and Cash Equivalents $ 80,615 $ 44,820
Short Term Investments 95,000 --
Accounts Receivable, Net 88,864 194,291
Inventories 180,847 280,655
Current Assets - Discontinued Operations 2,997 --
Property, Plant & Equipment, Net 163,793 233,100
Other Assets 198,615 375,181
---------- ----------
$ 810,731 $1,128,047
========== ==========
Liabilities and Stockholders' Equity
Bank Debt $ 44,790 $ 101,965
Bond Debt 224,534 249,430
Current Liabilities - Discontinued
Operations 6,619 --
Other Liabilities 193,944 260,798
Stockholders' Equity 340,844 515,854
---------- ----------
$ 810,731 $1,128,047
========== ==========
Blyth, Inc.
Supplemental Non-GAAP Earnings Per Share Measures
(Unaudited)
Three Months Ended
-----------------------------------
October 31, 2006 October 31, 2005
Dollars EPS Dollars EPS
------- ----- ------- -----
Non-GAAP earnings from con-
tinuing operations excluding
Impact earnings, restructuring
charge and reserve reversal $ 5,152 $0.13 $11,442 $0.27
Non-GAAP Impact Plastics earnings -- -- 2,315 0.06
Non-GAAP restructuring charge (3,220) (0.08) -- --
------- ----- ------- -----
GAAP Earnings from continuing
operations 1,932 0.05 13,757 0.33
GAAP Earnings (loss) from
discontinued operations
net of income taxes (2,153) (0.05) 9,284 0.23
------- ----- ------- -----
GAAP Net earnings $ (221) $ -- $23,041 $0.56
======= ===== ======= =====
Nine Months Ended
-----------------------------------
October 31, 2006 October 31, 2005
Dollars EPS Dollars EPS
------- ----- ------- -----
Non-GAAP earnings from con-
tinuing operations excluding
Impact earnings, goodwill
impairment, restructuring
charge and reserve reversal $18,659 $0.46 $29,338 $0.71
Non-GAAP Impact Plastics
earnings -- -- 1,565 0.04
Non-GAAP state settlement
reserve reversal -- -- 4,125 0.10
Non-GAAP restructuring charge (3,220) (0.08) -- --
Non-GAAP goodwill impairment (26,132) (0.65) -- --
------- ----- ------- -----
GAAP Earnings (loss) from
continuing operations (10,693) (0.27) 35,028 0.85
GAAP Earnings (loss) from
discontinued operations net
of income taxes (109,504) (2.74) 2,128 0.05
------- ----- ------- -----
GAAP Net earnings (loss) $(120,197) $(3.01) $37,156 $0.90
========= ====== ======= =====
Blyth, Inc.
Supplemental Non-GAAP Earnings Per Share Measures
(Unaudited)
Three Months Ended
--------------------------------------
July 31, 2006 July 31, 2005
Dollars EPS Dollars EPS
-------- ----- -------- -----
Non-GAAP earnings from con-
tinuing operations excluding
goodwill impairment and
reserve reversal $ 5,363 $0.13 $ 4,539 $0.11
Non-GAAP state settlement
reserve reversal -- -- 4,125 0.10
Non-GAAP goodwill impairment (26,132) (0.66) -- --
-------- ----- -------- -----
GAAP Earnings (loss) from
continuing operations (20,769) (0.52) 8,664 0.21
GAAP Loss from discontinued
operations net of income
taxes (68,598) (1.72) (4,511) (0.11)
-------- ----- -------- -----
GAAP Net earnings (loss) $(89,367) $(2.24) $ 4,153 $0.10
======== ====== ======== =====
Six Months Ended
--------------------------------------
July 31, 2006 July 31, 2005
Dollars EPS Dollars EPS
-------- ----- -------- -----
Non-GAAP earnings from con-
tinuing operations excluding
goodwill impairment and
reserve reversal $ 13,507 $0.34 $ 17,145 $0.42
Non-GAAP state settlement
reserve reversal -- -- 4,125 0.10
Non-GAAP goodwill impairment (26,132) (0.65) -- --
--------- ----- -------- -----
GAAP Earnings (loss) from
continuing operations (12,625) (0.31) 21,270 0.52
GAAP Loss from discontinued
operations net of income
taxes (107,351) (2.66) (7,156) (0.17)
--------- ----- -------- -----
GAAP Net earnings (loss) $(119,976) $(2.98) $ 14,114 $0.34
========= ====== ======== =====