EX-99.1 3 a08-16089_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

CONTACT:

FOR IMMEDIATE RELEASE

 

Robert H. Barghaus

Chief Financial Officer

(203) 661-1926, ext. 6668

 

Tyler P. Schuessler

Vice President,

Organizational Development and

Investor Relations

(203) 661-1926, ext. 6643

 

BLYTH, INC. REPORTS 1st QUARTER SALES AND EARNINGS

 

GREENWICH, CT, USA, June 5, 2008: Blyth, Inc. (NYSE: BTH), a leading multi-channel designer and marketer of home fragrance products, home décor products and household convenience items, today reported that Net Sales for the first quarter ended April 30, 2008 declined approximately 8% to $249.8 million compared to $270.4 million for the prior year period.  Excluding the sales of the Blyth HomeScents International (BHI) North American mass channel candle business, divested in the first quarter of last year, first quarter Net Sales declined 1%.  International sales represented 41% of total sales in the first quarter this year and 32% last year, reflecting strong growth overall in PartyLite’s international markets, lower sales within PartyLite U.S. and the BHI divestiture.  Foreign exchange had a 5 percentage point favorable impact on first quarter Net Sales.

 

Operating Profit for the first quarter was $10.0 million this year versus $16.7 million last year, reflecting lower sales and profits within PartyLite U.S. and higher seasonal losses from most of Blyth’s Wholesale and Catalog/Internet businesses.  Net earnings for the quarter were $1.2 million compared to $11.7 million for the prior year.

 

Commenting on the Company’s financial results, Robert B. Goergen, Blyth’s Chairman of the Board and CEO, said, “The continued deterioration of the macroeconomic environment and its impact on consumer spending had an immediate and decisive impact on sales across Blyth’s U.S. businesses.  Moreover, cost increases for commodities such as wax and increased paper, postage and freight expenses made achieving our first quarter profit targets very challenging.”

 

Mr. Goergen continued, “Despite these obstacles, we are very pleased that PartyLite Europe continues to grow, with the French and Nordic markets being particular bright spots.  Moreover, our Sterno business turnaround is well under way, and they are on track to report a strong year.”

 



 

Diluted Earnings Per Share for the first quarter were $0.03 compared to $0.30 a year earlier.  The company recorded a charge of $5.2 million (pre-tax and after tax), or $0.14 per share, in the first quarter related to the write-off of its investment in RedEnvelope.  Also included in this year’s first quarter are costs associated with the relocation of the Elkin, North Carolina distribution center into the manufacturing facility.  Included in last year’s results were losses and charges related to BHI totaling $2.4 million pre-tax, equating to $1.5 million after tax or $0.04 per share.  Also included in last year’s first quarter was a pre-tax charge for PartyLite restructuring of $0.5 million, equating to $0.3 million after tax or $0.01 per share.  Excluding the aforementioned items, earnings per share would have been $0.18 this year and $0.34 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.

 

In the Direct Selling segment, first quarter net sales increased 5% to $168.7 million versus $160.2 million for the same period last year.  Sales increases in Europe and Canada more than offset a sales decline of 17% in PartyLite’s U.S. market.  Active independent sales Consultants (measured on a 60-day basis – please see paragraph below) now total over 28,000 in the U.S. versus over 30,000 in last year’s first quarter.  Management noted that the decline in active independent sales consultants slowed considerably during the first quarter due to an increase in new consultants joining PartyLite and that a sales lag is to be expected while new consultants establish their businesses.

 

In PartyLite Canada, sales decreased 7% in local currency during the quarter, which translated into 7% sales growth in U.S. Dollars, with active independent sales Consultants totaling more than 6,000 this year versus over 5,000 last year.  PartyLite Europe’s sales increased 4% in local currencies during the quarter, which translated into a sales growth of 19% in U.S. Dollars.  PartyLite’s European active independent sales Consultants increased to over 27,000 in this year’s first quarter versus over 25,000 in last year’s first quarter.

 

Management noted that it has updated its approach in calculating active independent sales Consultants and is now reflecting the number of Consultants who have placed an order within the past 60 days.  This change is in keeping with PartyLite’s promotional strategy, which is utilizing multi-month performance metrics in addition to monthly promotions with the intent to keep new Consultants engaged for a longer period and thus have success in establishing their business.  Prior year Consultant figures have also been updated to reflect the new calculation.

 

First quarter operating profit in the Direct Selling segment was $19.8 million versus $26.9 million in the same period last year and was driven by lower sales and higher promotional activity within PartyLite U.S.

 

In the Catalog & Internet segment, first quarter net sales decreased 8% to $36.7 million versus $39.9 million last year due to soft sales for certain of the Miles Kimball Company brands, as well as the impact of a first quarter Enterprise Resource Planning (ERP) system implementation that resulted in shipments being delayed into the second quarter.  First

 



 

quarter operating loss in this segment was $4.0 million versus an operating loss of $2.2 million in the prior year.  The segment operating loss reflects increased postage and paper costs over the prior year, the impact of delayed sales associated with the ERP system implementation and the seasonality of the Miles Kimball Company.

 

In the Wholesale segment, first quarter net sales were $44.5 million versus $70.2 million for the prior year and reflect the inclusion of sales from the BHI North American mass channel candle business in last year’s first quarter. Excluding BHI, first quarter Wholesale segment Net Sales would have declined 14% versus the prior year, driven by lower sales of seasonal decorations as well as lower sales of home décor products.  First quarter operating loss in the Wholesale segment was $5.9 million compared to last year’s operating loss of $8.1 million. Excluding the effect of the aforementioned pre-tax charge of $0.2 million this year and pre-tax losses and charges of $2.4 million last year, this segment’s operating loss would have been $5.6 million this year and $5.7 million last year.  Gross margin improvements in foodservice were partially offset by the effect of the aforementioned sales decline in seasonal decorations, premium candles and home décor.

 

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 June 5th at 3:00 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® and Two Sisters GourmetTM brands, to retailers in the premium and specialty retail channels under the Colonial CandleTM, CBK® and Seasons of Cannon Falls® brands, to retailers in the mass retail channel under the  Sterno® brand, to consumers in the catalog and Internet channel under the Miles Kimball®, Exposures®, Walter Drake®, The Home Marketplace®, Easy ComfortsTM and Boca JavaTM 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 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, 2008.

 

###

 



 

BLYTH, INC.

Consolidated Statements of Earnings (Loss)

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months

 

Three Months

 

 

 

Ended April 30,

 

Ended April 30,

 

 

 

2008

 

2007

 

 

 

 

 

 

 

Net sales

 

$

249,848

 

$

270,367

 

Cost of goods sold

 

110,417

 

128,663

 

Gross profit

 

139,431

 

141,704

 

Selling

 

98,674

 

93,649

 

Administrative and other

 

30,796

 

31,399

 

 

 

129,470

 

125,048

 

Operating profit

 

9,961

 

16,656

 

 

 

 

 

 

 

Other expense (income)

 

 

 

 

 

Interest expense

 

2,423

 

3,721

 

Interest income

 

(1,312

)

(1,989

)

Foreign exchange and other

 

3,681

 

(548

)

 

 

4,792

 

1,184

 

Earnings before income taxes and minority interest

 

5,169

 

15,472

 

Income tax expense

 

3,980

 

3,713

 

Earnings before minority interest

 

1,189

 

11,759

 

Minority interest

 

29

 

27

 

Net earnings

 

$

1,160

 

$

11,732

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

Net earnings per common share

 

$

0.03

 

$

0.30

 

Weighted average number of shares outstanding

 

36,276

 

39,313

 

 

 

 

 

 

 

Diluted:

 

 

 

 

 

Net earnings per common share

 

$

0.03

 

$

0.30

 

Weighted average number of shares outstanding

 

36,608

 

39,672

 

 

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

April 30, 2008

 

April 30, 2007

 

Assets

 

 

 

 

 

Cash and Cash Equivalents

 

$

147,494

 

$

125,217

 

Short Term Investments

 

15,022

 

126,300

 

Accounts Receivable, Net

 

37,551

 

45,986

 

Inventories

 

140,939

 

125,774

 

Property, Plant & Equipment, Net

 

140,132

 

154,370

 

Other Assets

 

168,550

 

204,210

 

 

 

$

649,688

 

$

781,857

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Bank and Other Debt

 

$

9,213

 

$

14,190

 

Bond Debt

 

146,947

 

197,586

 

Other Liabilities

 

202,068

 

205,377

 

Stockholders’ Equity

 

291,460

 

364,704

 

 

 

$

649,688

 

$

781,857

 

 



 

Blyth, Inc.

Supplemental Non-GAAP Earnings (Loss) Per Share Measures

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

Three Months Ended

 

 

 

April 30, 2008

 

April 30, 2007

 

 

 

Dollars

 

EPS

 

Dollars

 

EPS

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP normalized earnings

 

$

6,487

 

$

0.18

 

$

13,579

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BHI restructuring, loss from operations and loss on sale

 

(141

)

(0.00

)

(1,512

)

(0.04

)

 

 

 

 

 

 

 

 

 

 

PartyLite restructuring charges

 

 

 

(335

)

(0.01

)

 

 

 

 

 

 

 

 

 

 

Write-off of RedEnvelope investment

 

(5,186

)

(0.14

)

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net earnings

 

$

1,160

 

$

0.03

 

$

11,732

 

$

0.30

 

 

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 individual amounts does not necessarily equal to the totals due to rounding.