Sales & Earnings Roundup: Herbalife, MusclePharm, USANA
This article was originally published in The Tan Sheet
Executive Summary
Herbalife expects FTC settlement; currency exchange slams Mannatech; USANA overcomes currency impact; and more news in brief.
Herbalife expects FTC settlement
Weight loss and nutritional supplement direct seller Herbalife Ltd. reports 23% net income growth and that it expects to reach a settlement on the Federal Trade Commission's investigation of allegations that the firm operated as a pyramid scheme. The Los Angeles-based firm on May 5 said North America generated the largest sales total in the first quarter at $246m, up 9%, while sales in China jumped 32% to $217.4m. Sales in the January-March period were off 9% to $221.1m in the rest of the Asian-Pacific region, down 21% in South and Central America to $127m and down 11% to $109.7m while growing 6% in Europe, the Middle East and Africa to $198.4m, according to Herbalife's earnings release. Net income of $95.8 million was up 23% and $1.12 earnings per diluted share increased grew 22%, though due to currency fluctuations net income shrunk $27.5m and diluted EPS lost 32.2 cents. On May 6, Herbalife said in a statement that a "possible settlement with the FTC would likely include a monetary payment" of $200 million in addition to an injunction against the firm (Also see "Herbalife Hooks Growth To More Members And Product Categories" - Pink Sheet, 5 Nov, 2015.).
MusclePharm trims loss
Sports nutrition firm MusclePharm Corp. has not "completely turned the corner," reporting its net loss dropped more than $3m from the 2015 fourth quarter to $6.6m, which included severance benefits for the CEO who left after current company head Ryan Drexler invested in the firm and began maneuvering a turnaround. The Denver firm on May 10 said net revenues for the first quarter 4.5% to $42.9m while operating expenses decreased to $21m from $23.6m in the previous quarter. The restructuring plan implemented in August 2015 has included agreeing to sell its subsidiary BioZone Laboratories Inc. for around $9.8m, subject to post-closing adjustments (Also see "Industry Roundup: Children's Rhinocort, MusclePharm Restructuring" - HBW Insight, 2 May, 2016.).
Currency exchange slams Mannatech
Direct seller [Mannatech Inc.] reports net sales of its weight loss and nutritional supplements in the first quarter dropped in all its regions and slipped 8.3% from the year-ago quarter to $40.7m as unfavorable foreign exchange caused a $2.1m decline. The Coppell, Texas-based firm said net income was $600,000, 21 cents per diluted share, for the January-March period, compared to $1.1m, or 40 cents per diluted share in the year-ago quarter. Regional declines were 5.7% in the Asia/Pacific to $21.4m, 8.3% in Europe, the Middle East and Africa to $3.3m and 11.6% in the Americas to $16m. In addition to losses to exchange rates internationally, in the Americas the number of active independent associates who have purchased products or a pack during the past 12 months has dropped, though recruiting of associates in the region increased 13.6% during the January-March period.
Light cold season hard on ProPhase
Cold-EEZE homeopathic brand firm ProPhase Labs Inc. notes a light cold season in reporting a first-quarter net loss of $1.3m, 8 cents per share, down slightly from a net loss of $1.4m, 9 cents per share, in the year-ago period. Net sales also were down, $5.4m from $5.9m, the Doylestown, Pa., firm said on May 10. ProPhase also noted to offset the seasonality of its revenues and dependence on the severity of the cold season, it is launching a line of dietary supplements starting with Legendz XL "in the male enhancement category" to be followed by other supplements .
USANA overcomes currency impact
Nutritional and weight loss supplement direct seller USANA Health Sciences Inc. reports net sales up 9.6% to a record $240.4m despite a $14.2m impact from the stronger US dollar in the first quarter. The Salt Lake City firm on May 3 said a constant-currency basis net sales increased 16.1% as sales growth was driven by 16.2% growth in the number of active associates and 9.3% growth in preferred customers. Net earnings for the January-March period increased 13.3% to $22.3m driven by lower relative associate incentives expense and a lower effective tax rate in addition to higher net sales. Earnings per diluted share for the quarter increased 18% to $1.77, partly due to fewer shares outstanding as the firm repurchased shares over the previous six months.
Separately, USANA on May 12 said its China subsidiary, [BabyCare Ltd.], received approval from the country's Ministry of Commerce to expand direct selling activities in five additional provinces – Liaoning, Shandong, Shanxi, Sichuan and Guangdong – and the cities of Dalian, Qingdao and Shenzhen. BabyCare already operates in Beijing, Jiangsu, Shanxi and Tianjin.