Last week I started to receive emails and calls about the fact Moody’s was wary of IPO plan for FVA Ventures Inc. aka ViSalus Sciences. I held off on reporting until we had heard from Blyth on this matter. Today they did hold an emergency Investor’s Conference Call to help clear up what was taking place.
For those who are interested to better understand the original filing you can review it at the SEC website by clicking here.
News Releases
Blyth, Inc. Subsidiary, ViSalus, Withdraws Initial Public Offering
GREENWICH, Conn., Sept. 26, 2012 /PRNewswire/ — ViSalus, a subsidiary of Blyth, Inc. (NYSE:BTH), today withdrew its initial public offering due to uncertain market conditions. ViSalus has achieved Net Sales growth in excess of 450% in the first half of 2012; however, management believes that current market conditions are not conducive to recognizing this level of achievement. As such, Blyth management supports fully this decision.
Commenting on the ViSalus decision, Robert B. Goergen, Chairman & CEO of Blyth noted, “we are extremely confident in the long-term growth prospects of ViSalus. Over the past year, Ryan Blair, ViSalus’ CEO, has worked with ViSalus’ other Founders to put in place a first class management team and the processes and programs necessary to bring ViSalus to the next level of achievement. We look forward to working with the ViSalus team to continue to build long-term value for Blyth’s shareholders.”
Blyth, Inc., headquartered in Greenwich, CT, USA, is a direct to consumer business focused on direct selling and direct marketing channels. We design and market home fragrance products and decorative accessories, as well as weight management products, nutritional supplements and energy drink mixes. These products are sold through Direct Selling from the home party plan method and network marketing. The Company also designs and markets household convenience items and personalized gifts through the catalog/internet channel, as well as tabletop lighting and chafing fuel for the 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 consumers in the catalog/Internet channel under the As We Change®, Miles Kimball®, Exposures®, Walter Drake® and Easy Comforts®, 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.
SOURCE Blyth, Inc.
Herb Greenberg of CNBC, who is a skeptic of Direct Selling talked today about both Herbalife and the ViSalus IPO. Although, I do not agree with Mr. Greenberg’s overall opinion of Direct Selling, I do believe him to provide some valuable information from time to time.
In reviewing the Blyth most current Form 10-Q we can see some exciting information on the company. Although attrition of promoters (distributors) is higher, than most would like to admit, the revenues are continuing to rise which seems to say, that ViSalus customers are staying on the products, even after the promoters leave the company.
Here are some highlights from the Form 10-Q. You can click the link above to read the full document.
Business Acquisitions
In August 2008, the Company signed a definitive agreement to purchase ViSalus, a direct seller of weight management products, nutritional supplements and energy drinks, through a series of investments.
In October 2008, the Company completed its initial investment and acquired a 43.6% equity interest in ViSalus for $13.0 million in cash and incurred acquisition costs of $1.0 million for a total cash acquisition cost of $14.0 million.
In April 2011, the Company completed the second phase of its acquisition of ViSalus for approximately $2.5 million, increasing its ownership to 57.5%.
In January 2012, the Company completed the third phase of its acquisition of ViSalus and increased its ownership to 72.7% for approximately $22.5 million in cash and the issuance of 681,324 unregistered shares of the Company’s common stock valued at $14.6 million, of which 340,662 shares may not be sold or transferred prior to January 12, 2014. Due to the restrictions on transfer, the common stock was issued at a discount to its trading price. The payments in the third closing were based upon an estimate of the 2011 EBITDA pursuant to the formula in the original purchase agreement, and were subsequently adjusted in April 2012 for the difference between the actual 2011 EBITDA and the estimate used in the third closing. The Company paid an additional $6.2 million in April 2012 after final determination of the actual 2011 EBITDA, bringing the total third phase acquisition cost to $43.3 million.
The Company intends to and may be required to purchase the remaining interest in ViSalus to increase its ownership to 100%. The fourth phase and final purchase of ViSalus is conditioned upon ViSalus meeting its original purchase agreement’s 2012 operating target. The Company has the option, but is not required, to acquire the remaining interest in ViSalus if it does not meet this operating target. However, as of June 30, 2012, the operating target for 2012 requiring the additional purchase is anticipated to be met. If ViSalus meets its current projected 2012 EBITDA forecast, the total expected redemption cost of the fourth and final phase will be approximately $271 million to be paid in 2013. The purchase price of the additional investment is equal to a multiple of ViSalus’s EBITDA, exclusive of certain unusual items. The payment, if any, may be funded in part using existing cash balances from both domestic and international sources, expected future cash flows from operations and the issuance of common stock and may require the Company to obtain additional sources of external financing.
Segment Information
Blyth designs and markets home fragrance products and decorative accessories, as well as weight management products, nutritional supplements and energy drinks. The Company’s products include an extensive array of decorative and functional household products such as candles, accessories, seasonal decorations, household convenience items and personalized gifts, meal replacement shakes, vitamins and energy mixes, as well as products for the foodservice trade. The Company’s products can be found throughout North America, Europe and Australia. Our financial results are reported in three segments: the Direct Selling segment, the Catalog & Internet segment and the Wholesale segment.
Within the Direct Selling segment, we design, manufacture or source, market and distribute an extensive line of products including scented candles, candle-related accessories and other fragranced products under the PartyLite ® brand. PartyLite also offers gourmet foods under the Two Sisters Gourmet by PartyLite brand name. PartyLite brand products are sold in North America, Europe and Australia. We also operate ViSalus Sciences ® , which is focused on selling meal replacement shakes, nutritional supplements, nutritional cookies and energy drinks. Products in this segment are sold through networks of independent sales Consultants and Promoters. ViSalus brand products are sold in North America. The Company has aggregated these two businesses to form the Direct Selling segment based upon similarities in distribution channels, customers, operating metrics and management oversight.
Net Sales
Net sales for the six months ended June 30, 2012 increased $235.3 million, or 63% to $607.9 million, from $372.6 million in the comparable prior year period due to strong sales growth in the direct selling segment.
Net sales for the three months ended June 30, 2012 increased $133.3 million, or 70% to $324.8 million, from $191.5 million in the comparable prior year period due to strong sales growth in the direct selling segment.
Net Sales – Direct Selling Segment
Net sales in the Direct Selling segment for the six months ended June 30, 2012 increased $243.7 million, or 90%, to $514.7 million from $271.0 million in the comparable prior year period. ViSalus’ Net sales increased $266.4 million, or 440% to $327.0 million from $60.6 million last year. This growth is a result of an increase in the number of promoters to over 114,000 as of June 30, 2012 from over 28,000 in the comparable prior year period.
PartyLite’s Net sales decreased $25.6 million, to $188.2 million from $213.8 million last year. Net sales of PartyLite Europe and Canada were negatively impacted by foreign exchange rate fluctuations, therefore, excluding the impact of foreign currency, sales in PartyLite Europe and Canada declined 8% and 12%, respectively. Net sales for PartyLite U.S., Europe and Canada declined on a U.S. dollar basis by 9%, 14% and 15%, respectively, primarily due to lower active independent consultants, as well as fewer shows, resulting in less opportunity to promote our products and recruit new consultants.
Net sales in the Direct Selling segment for the three months ended June 30, 2012 increased $137.4 million, or 98%, to $278.3 million from $140.9 million in the comparable prior year period. ViSalus’ Net sales increased $149.8 million, or 369% to $190.4 million from $40.6 million last year. As mentioned above, this growth is a result of an increase in promoters over last year, as well as increased demand for its products due to a growing customer base.
PartyLite’s Net sales decreased $13.3 million, or 13%, to $86.8 million from $100.1 million last year. Net sales of PartyLite Europe and Canada were negatively impacted by foreign exchange rate fluctuations, therefore, excluding the impact of foreign currency sales in PartyLite Europe and Canada declined 6% and 10%, respectively. Net sales for PartyLite U.S., Europe and Canada declined on a U.S. dollar basis by 11%, 16% and 14%, respectively, primarily due to lower active independent consultants, as well as fewer shows, resulting in less opportunity to promote our products and recruit new consultants.
