Consumer Products

Herbalife Thumps Ackman on Earnings

Herbalife Logo
Source: Courtesy Herbalife Ltd.
Herbalife Ltd. (NYSE: HLF) reported its first-quarter financial results after the markets closed Tuesday. The company had $1.29 in earnings per share (EPS) on $1.1 billion in revenue, versus Thomson Reuters consensus estimates of $1.01 in EPS on $1.09 billion in revenue. The same period from the previous year had $1.50 in EPS on $1.26 billion in revenue.

Note that worldwide sales declined 12% due to macroeconomic headwinds. Net sales excluding the currency impact grew 4% compared to the prior year period.

The company gave guidance for the second quarter taking into account the unfavorable impact of $0.40 per share related to currency exchange rates. In terms of adjusted diluted EPS, Herbalife expects a range of $1.05 to $1.15, not including currency exchange effects, and the company expects a drop of between 13.5% and 10.5% in net sales compared to the second quarter of 2014. The consensus estimates are $1.06 in EPS on $1.16 billion in revenue for the second quarter.

In terms of its regional sales Herbalife reported:

  • North America had $226.7 million in revenue.
  • Mexico had $123.6 million in revenue.
  • South and Central America had $161.7 million in revenue.
  • EMEA had $186.4 million in revenue.
  • Asia Pacific had $242.8 million in revenue.
  • China had $164.2 million in revenue.

Michael Johnson, chairman and CEO of Herbalife, commented on earnings:

Our performance this quarter was above our expectations and has resulted in us increasing our full year 2015 guidance.

As reflected in our record sales leader retention results, we remain confident that we are building a stable foundation for volume and sales growth, driving long-term shareholder value creation, and providing an even better experience for our millions of Members and our customers throughout the world.

Herbalife had cash and cash equivalents totaling $715.5 million at the end of the first quarter of 2015, compared to $645.4 million in the same period last year. Also in the first quarter, the company generated $161.1 million in net operating cash flow and invested $15.4 million in capital expenditures.

Shares of Herbalife closed Tuesday down 4.7% at $40.09. In after-hours trading when the financial results were released, shares were up 16% at $46.51. The stock has a consensus analyst price target of $58.50 and a 52-week trading range of $27.60 to $69.69.

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