Cash Flow From Operations Remains Strong With Year-to-Date
Improvement of $74 Million Over Last Year GREENWICH, Conn., Dec. 7
/PRNewswire-FirstCall/ -- 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 third quarter ended October 31, 2009
declined approximately 10% on a local currency basis, with reported
sales down 12% to $221.6 million compared to $250.8 million for the
prior year period. Sales growth in PartyLite Europe, Mexico and
Australia was more than offset by lower sales volume across all of
Blyth's North American business units, as North American consumer
discretionary spending continued to contract. International sales
represented 36% of total sales in the third quarter this year
versus 31% in last year's third quarter. Commenting on the
Company's financial results, Robert B. Goergen, Blyth's Chairman of
the Board and CEO, said, "The North American sales environment for
consumer discretionary products remained very challenging during
the third quarter, despite our continued promotional and marketing
investments intended to drive sales. In Europe, Mexico and
Australia however, PartyLite management implemented a mix of
consumer and hostess incentives that resonated with our audience
and drove strong sales and profit increases in Germany and France."
Mr. Goergen continued, "We remained focused on our working capital
initiatives, which resulted in a substantial improvement in
operating cash flow. Management has also maintained rigorous cost
controls while identifying areas of investment opportunity to
position the Company for sales and profit growth as the economic
environment improves." The following paragraphs discuss third
quarter and first nine months profitability as compared to last
year. In an effort to assist the reader, 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. In presenting comparable results, the Company
discloses non-GAAP financial measures when it believes such
measures will be useful to investors in evaluating the Company's
underlying business performance. Management internally reviews the
results of the Company excluding the impact of certain items as it
believes that these non-GAAP financial measures are useful for
evaluating the Company's core operating results and facilitating
comparison across reporting periods. Third Quarter Performance
Operating Profit for the third quarter was $3.0 million this year
versus an Operating Loss of $39.4 million last year. Included are
pre-tax charges of $0.8 million this year and $1.0 million last
year resulting from restructuring in the Wholesale segment. This
year's charge principally relates to the merger of Blyth's
wholesale seasonal and home decor businesses into a new company,
Midwest-CBK. Last year's charge related to exiting the Blyth
Homescents International (BHI) North American mass channel candle
business. In addition, last year's third quarter results included a
non-cash pre-tax goodwill and other intangibles impairment charge
of $45.9 million resulting from a revaluation of goodwill and other
intangibles associated with Blyth's Catalog & Internet
businesses. Excluding the restructuring charges this year and last
year, and the goodwill and other intangibles impairment charges
last year, third quarter operating profit would have been $3.8
million this year and $7.5 million last year. The decline in
normalized operating profit reflects the impact of lower sales
volume and increased promotional spending across many of Blyth's
business units. Foreign exchange had a $0.2 million negative impact
on this year's third quarter operating profit. Net Loss
attributable to Blyth, Inc. for the quarter was $1.0 million
compared to a net loss of $32.9 million for the prior year. Diluted
Earnings Per Share for the third quarter was a loss of $0.11
compared to a loss of $3.70 a year earlier. Included in this year's
results are the aforementioned restructuring charges of $0.8
million pre-tax, equating to $0.5 million after tax, or $0.06 per
share. Included in last year's results are the goodwill and other
intangibles impairment charge of $45.9 million pre-tax, equating to
$39.3 million after tax, or $4.42 per share, and restructuring
charges of $1.0 million pre-tax last year, equating to $0.6 million
after tax, or $0.07 per share. Excluding the aforementioned items,
earnings per share would have been a loss of $0.05 this year and
income of $0.79 last year. Third Quarter Segment Performance In the
Direct Selling segment, third quarter net sales declined 3% on a
local currency basis with reported U.S. dollar sales down 6% to
$131.1 million versus $139.2 million for the same period last year.
PartyLite's U.S. sales declined 21% versus prior year, and active
independent sales Consultants now total over 23,000 in the U.S.
versus over 25,000 in last year's third quarter. In PartyLite
Canada, sales decreased 16% in local currency during the quarter,
which translated into a decline of 13% in U.S. Dollars, with active
independent sales Consultants totaling more than 5,000 this year
versus over 6,000 last year. The sales declines in both markets
resulted from lower consultant activity as booking and holding
shows continued to be very challenging in the current recessionary
environment. PartyLite Europe's third quarter sales increased 14%
in local currencies, which translated into a sales increase of 9%
in U.S. Dollars, driven by strong sales growth in Germany and
France. PartyLite Europe's active independent sales Consultants
increased to over 28,000 in this year's third quarter versus over
24,000 in last year's third quarter. Third quarter operating income
in the Direct Selling segment was $1.4 million versus $4.8 million
in the same period last year. This year's decline was driven by
lower sales in the U.S. and Canada and higher promotional expenses.
In the Catalog & Internet segment, third quarter net sales
decreased 22% to $38.7 million versus $49.7 million last year due
to reduced consumer discretionary spending and a planned catalog
circulation reduction for the Miles Kimball Company brands. This
segment's third quarter operating loss was $1.1 million versus last
year's operating loss of $47.7 million. The segment operating loss
last year reflects the aforementioned $45.9 million goodwill and
other intangibles impairment charge. Excluding these charges, last
year's third quarter operating loss would have been $1.8 million.
An ERP implementation at the Miles Kimball Company has created
operational efficiencies that are reflected in this year's results,
offsetting lower sales. In the Wholesale segment, third quarter net
sales declined 16% to $51.8 million versus $61.9 million last year
driven by lower sales of seasonal decorations, home decor products
and foodservice products. Third quarter operating income in the
Wholesale segment was $2.8 million compared to $3.5 million last
year. Included in these amounts is $0.8 million of restructuring
this year and $1.0 million last year. Excluding restructuring, the
operating income would have been $3.6 million this year versus $4.5
million last year. Lower profits in Blyth's Wholesale businesses
were due to the overall sales decline and an increase in
promotional activity to drive sales. First Nine Months Fiscal 2010
Performance Net Sales for the nine months ending October 31, 2009
declined approximately 14% to $635.7 million from $737.4 million
reported for the same period a year ago. Operating Loss for the
nine months this year was $5.9 million versus a loss of $21.4
million a year earlier. This year includes a non-cash, pre-tax
goodwill and other intangibles impairment charge of $16.5 million,
resulting from a revaluation of goodwill and other intangibles
associated with the Company's investment in ViSalus Sciences,
recorded in the second quarter. Last year includes the
aforementioned $45.9 million goodwill and other intangibles
impairment charges. Excluding the charges for goodwill and other
intangibles impairment this year and last year and restructuring
charges of $1.7 million this year and $1.5 million last year, which
relate to the aforementioned Wholesale merger and divestiture,
respectively, operating profit for the first nine months would have
been $12.3 million this year versus $26.0 million last year,
largely due to the overall soft sales, as well as promotional
spending. Net Loss attributable to Blyth, Inc. for the nine months
was $14.1 million compared to a net loss of $28.7 million last
year. Diluted Earnings Per Share was a loss of $1.58 compared to a
loss of $3.20 for last year's first nine months. Included in this
year is the goodwill and other intangibles charge of $16.5 million
pre-tax, equating to $15.3 million after tax, or $1.71 per share.
Also included in this year are Wholesale restructuring costs
totaling $1.7 million pre-tax, equating to $1.1 million after tax,
or $0.12 per share. Included in last year's results were the
goodwill and other intangibles charge of $45.9 million pre-tax,
equating to $39.3 million after tax, or $4.38 per share and charges
related to exiting BHI totaling $1.5 million pre-tax, equating to
$0.9 million after tax, or $0.10 per share. Also included in last
year is a charge of $5.2 million (pre-tax and after tax), or $0.58
per share, in the first quarter related to the write-off of the
Company's investment in RedEnvelope. Excluding the aforementioned
items, earnings per share for the nine month period would have been
$0.26 this year and $1.86 last year. The sum of the individual
amounts may not equal the reported amounts for the quarter for
Blyth overall due to rounding. Management noted that the Company
retired approximately $25 million remaining from the original
offering of $150 million 7.90% senior notes during the third
quarter. The notes were repaid with cash from operations.
Management will conduct an informal Question and Answer session via
dial-in call on December 7th at 2:00 pm EST. The date, time and
dial-in information of future calls will be available in the
"Investor Relations" section of the Company's website,
http://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 and one-on-one 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®, Two Sisters Gourmet® by PartyLite and ViSalus Sciences®
brands, to retailers in the premium and specialty retail channels
under the Colonial Candle®, CBK® and Seasons of Cannon Falls®
brands, to retailers in the mass retail channel under the Sterno®
brand, to consumers in the catalog/Internet channel under the As We
Change®, Miles Kimball®, Exposures®, Walter Drake®, The Home
Marketplace®, Easy Comforts® and Boca Java® brands, and to the
Foodservice industry under the Sterno®, Ambria® and HandyFuel®
brands. In Europe, Blyth's products are also sold under the
PartyLite brand. Blyth, Inc. may be found on the Internet at
http://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) 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, 2009. BLYTH,
INC. Condensed Consolidated Statements of Operations (In thousands
except per share data) (Unaudited) Three Months Three Months Nine
Months Nine Months Ended Ended Ended Ended October 31, October 31,
October 31, October 31, 2009 2008 2009 2008 -------- --------
-------- -------- Net sales $221,578 $250,805 $635,656 $737,439
Cost of goods sold 106,545 118,555 296,902 337,751 ------- -------
------- ------- Gross profit 115,033 132,250 338,754 399,688
------- ------- ------- ------- Selling 83,557 95,838 245,707
282,203 Administrative and other 28,491 29,971 82,425 93,019
Goodwill and other intangibles impairment - 45,851 16,498 45,851
--- ------ ------ ------ Total operating expense 112,048 171,660
344,630 421,073 ------- ------- ------- ------- Operating profit
(loss) 2,985 (39,410) (5,876) (21,385) ----- ------- ------ -------
Other expense (income): Interest expense 1,905 2,547 6,140 7,419
Interest income (206) (897) (1,092) (3,252) Foreign exchange and
other 1,663 1,770 981 6,007 ----- ----- --- ----- Total other
expense 3,362 3,420 6,029 10,174 ----- ----- ----- ------ Loss
before income taxes (377) (42,830) (11,905) (31,559) Income tax
expense (benefit) 1,062 (9,948) 2,940 (2,900) ----- ------ -----
------ Net loss (1,439) (32,882) (14,845) (28,659) Less: Net
earnings (loss) attributable to the noncontrolling interests (469)
30 (748) 88 ---- -- ---- -- Net loss attributable to Blyth, Inc.
$(970) $(32,912) $(14,097) $(28,747) ----- -------- --------
-------- Basic: Net loss attributable per Blyth, Inc. common share
$(0.11) $(3.70) $(1.58) $(3.20) ====== ====== ====== ======
Weighted average number of shares outstanding 8,930 8,891 8,922
8,984 Diluted: Net loss attributable per Blyth, Inc. common share
$(0.11) $(3.70) $(1.58) $(3.20) ====== ====== ====== ======
Weighted average number of shares outstanding 8,930 8,891 8,922
8,984 Condensed Consolidated Balance Sheets (In thousands)
(Unaudited) October 31, 2009 October 31, 2008 ----------------
---------------- Assets Cash and Cash Equivalents $128,656 $62,409
Short Term Investments - 9,650 Accounts Receivable, Net 46,775
65,699 Inventories 122,433 172,180 Property, Plant & Equipment,
Net 111,001 124,754 Other Assets 103,429 151,294 ------- -------
$512,294 $585,986 ======== ======== Liabilities and Stockholders'
Equity Bank and Other Debt $8,083 $8,753 Bond Debt 99,913 138,574
Other Liabilities 163,103 202,778 Equity 241,195 235,881 -------
------- $512,294 $585,986 ======== ======== Blyth, Inc.
Supplemental Non-GAAP Earnings (Loss) Per Share Measures (In
thousands, except per share data) (Unaudited) Three Months Three
Months Ended Ended October 31, 2009 October 31, 2008 Dollars EPS
Dollars EPS ------- ----- ------- ----- Non-GAAP normalized
earnings (loss) $(442) $(0.05) $7,034 $0.79 Non-GAAP Adjustments:
---------------------- Goodwill and other intangibles impairment -
- (39,328) (4.42) Restructuring charges (1) (528) (0.06) (618)
(0.07) ---- ----- ---- ----- GAAP Net earnings (loss) attributable
to Blyth, Inc. Common Shareholders $(970) $(0.11) $(32,912) $(3.70)
===== ====== ======== ====== 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. (1) Restructuring charges include Midwest-CBK
merger related expenses incurred in the current year and costs
associated with exiting the Blyth Homescents International mass
channel candle business in the prior year. The sum of the
individual amounts may not necessarily equal to the totals due to
rounding. 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, 2009 October 31,
2008 Dollars EPS Dollars EPS ------- ----- ------- ----- Non-GAAP
normalized earnings $2,302 $0.26 $16,682 $1.86 Non-GAAP
Adjustments: ---------------------- Goodwill and other intangibles
impairment (15,297) (1.71) (39,328) (4.38) Write-off of RedEnvelope
investment - - (5,186) (0.58) Restructuring charges (1) (1,102)
(0.12) (915) (0.10) ------ ----- ---- ----- GAAP Net earnings
(loss) attributable to Blyth, Inc. Common Shareholders $(14,097)
$(1.58) $(28,747) $(3.20) ======== ====== ======== ====== 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. (1) Restructuring
charges include Midwest-CBK merger related expenses incurred in the
current year and costs associated with exiting the Blyth Homescents
International mass channel candle business in the prior year. The
sum of the individual amounts may not necessarily equal to the
totals due to rounding. DATASOURCE: Blyth, Inc. CONTACT: Robert H.
Barghaus, Chief Financial Officer, +1-203-661-1926, ext. 6668, or
Tyler P. Schuessler, Vice President, Organizational Development and
Investor Relations, +1-203-661-1926, ext. 6643 Web Site:
http://www.blyth.com/
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