- Third quarter worldwide volume
growth of 13 percent compared to the prior year period.
- Third quarter adjusted1
EPS of $1.41 increased 44 percent compared to the prior year
period.
- Raising FY’13 guidance and
introducing FY’14 adjusted EPS guidance to a range of $5.45 to
$5.65.
- Generated $226 million in operating
cash flow during the third quarter.
- Board of directors approved a $0.30
per share quarterly dividend.
Herbalife Ltd. (NYSE: HLF) today reported third quarter net
sales of $1.2 billion, reflecting an increase of 19 percent
compared to the same time period in 2012 on volume point growth of
13 percent. Adjusted1 net income for the quarter of $152.1 million,
or $1.41 per diluted share, compares to the third quarter 2012 net
income of $111.9 million and EPS of $0.98, respectively. On an as
reported basis, third quarter 2013 EPS of $1.32 increased 35
percent compared to the $0.98 reported in the comparable quarter
last year.
“We continue to execute on our core strategies and deliver
record financial performance, marking our sixteenth consecutive
quarter of double-digit top-line growth,” said Michael O. Johnson,
Herbalife’s chairman and CEO. “Our initial 2014 guidance
demonstrates our belief that the macro trend of global obesity will
increase worldwide consumer demand for our products.”
For the quarter ended September 30, 2013, the Company generated
cash flow from operations of $225.5 million, an increase of 58
percent compared to 2012, repurchased $110 million in common shares
outstanding under its share repurchase program, paid dividends of
$30.8 million and invested $31.8 million in capital
expenditures.
Third Quarter 2013 Key
Metrics2,3
Regional Volume Point and Average Active Sales Leader
Metrics
Volume Points (Mil) Average Active
Sales Leaders Region 3Q'13 Yr/Yr % Chg
3Q'13 Yr/Yr % Chg North America 314.0 9
% 74,085 9 % Asia Pacific 296.2 -3 % 72,886 10 % EMEA 173.5
19 % 50,720 13 % Mexico 219.4 4 % 64,633 8 % South & Central
America 245.2 32 % 60,007 29 % China 97.4 71 %
15,882 25 %
Worldwide Total
1,345.7 13 %
326,797 13 %
Guidance
Guidance for fully diluted 2013 and 2014 EPS is based on the
average daily exchange rates of the first two weeks of October
2013. The guidance continues to assume a Venezuelan exchange rate
of 10 to 1 for the balance of the year, excludes the impact of the
February devaluation of the bolivar as well as any potential future
devaluation, and excludes the impact of any future repatriation of
existing cash balances in Venezuela. Guidance for the year also
excludes the following which were recognized in the first nine
months of the year: $20.6 million in expenses (post-tax), mostly
legal and advisory services relating to the Company’s response to
information put into the marketplace by a short seller which
information the Company believes to be inaccurate and misleading,
and $7.3 million in expenses (post-tax) incurred for the re-audit
of 2010-2012 financial statements resulting from KPMG LLP’s
resignation, as well as any additional expenses related to these
matters that are expected to be incurred in the remainder of the
year.
2013 Full Year and Fourth Quarter Guidance
Three Months Ending Twelve
Months Ending December 31, 2013 December 31, 2013
Low
High
Low
High
Volume Point Growth vs 2012 10.5 % 12.5 % 12.5 % 13.0 % Net Sales
Growth vs 2012 13.5 % 15.5 % 17.0 % 17.5 % Diluted EPS as adjusted
$ 1.11 $ 1.15 $ 5.19 $ 5.23 Cap Ex ($ millions) $ 80.0 $ 90.0 $
170.0 $ 180.0 Effective Tax Rate 29.0 % 31.0 % 25.0 % 27.0 %
2014 Guidance
Twelve Months Ending December 31, 2014
Low
High
Volume Point Growth vs 2013 6.5 % 8.5 % Net Sales Growth vs 2013
9.0 % 11.0 % Diluted EPS as adjusted $ 5.45 $ 5.65 Cap Ex ($
millions) $ 175.0 $ 195.0 Effective Tax Rate 27.0 % 29.0 %
Announces Quarterly Dividend
The Company reported today that its board of directors has
approved a dividend of $0.30 per share to shareholders of record
November 12, 2013, payable on November 26, 2013.
Third Quarter 2013 Earnings Conference Call
Herbalife senior management will host an investor conference
call to discuss its recent financial results and provide an update
on current business trends on Tuesday, October 29, 2013 at 8 a.m.
PST (11 a.m. EST).
The dial-in number for this conference call for domestic callers
is (877) 317-1296 and (706) 634-5671 for international callers
(conference ID 70985478). Live audio of the conference call will be
simultaneously webcast in the investor relations section of the
company's website at http://ir.herbalife.com.
An audio replay will be available following the completion of
the conference call in MP3 format or by dialing (855) 859-2056 for
domestic callers or (404) 537-3406 for international callers
(conference ID 70985478). The webcast of the teleconference will be
archived and available on Herbalife's website.
About Herbalife Ltd.
Herbalife Ltd. (NYSE:HLF) is a global nutrition company
that sells weight-management, nutrition, and personal care products
intended to support a healthy lifestyle. Herbalife products
are sold in over 80 countries through and to a network of
independent distributors. The company supports the Herbalife
Family Foundation and its Casa Herbalife program to help bring
good nutrition to children. Herbalife's website contains
a significant amount of information about Herbalife, including
financial and other information for investors
at http://ir.Herbalife.com. The company encourages investors
to visit its website from time to time, as information is updated
and new information is posted.
FORWARD-LOOKING STATEMENTS
Although we believe that the expectations reflected in any of
our forward-looking statements are reasonable, actual results could
differ materially from those projected or assumed in any of our
forward-looking statements. Our future financial condition and
results of operations, as well as any forward-looking statements,
are subject to change and to inherent risks and uncertainties, such
as those disclosed or incorporated by reference in our filings with
the Securities and Exchange Commission. Important factors that
could cause our actual results, performance and achievements, or
industry results to differ materially from estimates or projections
contained in our forward-looking statements include, among others,
the following:
• the resignation of our former independent
registered public accounting firm, its withdrawal of its audit
reports with respect to certain of our historical financial
statements, and any difficulties PricewaterhouseCoopers LLP, our
successor accounting firm encounters in the re-audits of such
relevant historical financial statements or any material
modifications to such historical financial statements
PricewaterhouseCoopers LLP believes should be made as a result of
such re-audits;
• any collateral impact resulting from the
ongoing worldwide financial environment, including the availability
of liquidity to us, our customers and our suppliers or the
willingness of our customers to purchase products in a difficult
economic environment;
• our relationship with, and our ability to
influence the actions of, our distributors;
• improper action by our employees or
distributors in violation of applicable law;
• adverse publicity associated with our
products or network marketing organization, including our ability
to comfort the marketplace and regulators regarding our compliance
with applicable laws;
• changing consumer preferences and
demands;
• our reliance upon, or the loss or departure
of any member of, our senior management team which could negatively
impact our distributor relations and operating results;
• the competitive nature of our business;
• regulatory matters governing our products,
including potential governmental or regulatory actions concerning
the safety or efficacy of our products and network marketing
program, including the direct selling market in which we
operate;
• legal challenges to our network marketing
program;
• risks associated with operating
internationally and the effect of economic factors, including
foreign exchange, inflation, disruptions or conflicts with our
third party importers, pricing and currency devaluation risks,
especially in countries such as Venezuela;
• uncertainties relating to the application
of transfer pricing, duties, value added taxes, and other tax
regulations, and changes thereto;
• uncertainties relating to interpretation
and enforcement of legislation in China governing direct
selling;
• uncertainties relating to the
interpretation, enforcement or amendment of legislation in India
governing direct selling;
• our inability to obtain the necessary
licenses to expand our direct selling business in China;
• adverse changes in the Chinese economy,
Chinese legal system or Chinese governmental policies;
• our dependence on increased penetration of
existing markets;
• contractual limitations on our ability to
expand our business;
• our reliance on our information technology
infrastructure and outside manufacturers;
• the sufficiency of trademarks and other
intellectual property rights;
• product concentration;
• changes in tax laws, treaties or
regulations, or their interpretation;
• taxation relating to our distributors;
• product liability claims;
• whether we will purchase any of our shares
in the open markets or otherwise; and
• share price volatility related to, among
other things, speculative trading and certain traders shorting our
common shares.
We do not undertake any obligation to update or release any
revisions to any forward-looking statement or to report any events
or circumstances after the date hereof or to reflect the occurrence
of unanticipated events, except as required by law.
RESULTS OF OPERATIONS:
Herbalife Ltd. and Subsidiaries Condensed Consolidated Statements
of Income (In thousands, except per share amounts) (Unaudited and
Unreviewed) (1) Three
Months Ended Nine Months Ended
9/30/2013
9/30/2012 (2)
9/30/2013
9/30/2012 (2)
North America $ 228,660 $ 208,819 $ 697,697 $ 644,191 Mexico
141,243 127,473 419,770 364,031 South and Central America 241,235
167,493 683,112 485,547 EMEA 181,738 147,490 537,609 463,117 Asia
Pacific 284,017 288,205 895,003 844,701 China 136,650
77,407 323,238 211,423 Worldwide net
sales 1,213,543 1,016,887 3,556,429 3,013,010 Cost of Sales
238,415 201,597 711,616 601,478
Gross Profit 975,128 815,290 2,844,813 2,411,532 Royalty Overrides
373,241 330,247 1,116,821 982,975 SGA 409,747 324,200
1,174,574 926,903 Operating Income
192,140 160,843 553,418 501,654 Interest Expense - net 4,726
3,546 15,658 8,088 Income before
income taxes 187,414 157,297 537,760 493,566 Income Taxes
45,464 45,424 133,775 141,811
Net Income 141,950 111,873 403,985
351,755 Basic Shares 102,200 108,816 103,096
113,838 Diluted Shares 107,777 113,646 107,759 119,376 Basic
EPS $ 1.39 $ 1.03 $ 3.92 $ 3.09 Diluted EPS $ 1.32 $
0.98 $ 3.75 $ 2.95 Dividends declared per
share $ 0.30 $ 0.30 $ 0.90 $ 0.90
(1) As a result of the resignation of
KPMG, the unaudited interim financial information presented has not
been reviewed by an outside independent accounting firm. See Note 2
of the quarterly report on Form 10-Q for the quarter ended
September 30, 2013.
(2) As discussed in Note 2 of the
quarterly report on Form 10-Q for the quarter ended September 30,
2013, prior year amounts have been revised for income tax errors
that were considered not material, individually or in the
aggregate, to any of the prior reporting periods.
Herbalife Ltd. and Subsidiaries Condensed Consolidated
Balance Sheets (In thousands) (Unaudited and Unreviewed) (1)
Sep 30, Dec 31,
2013
2012 (2)
ASSETS Current Assets: Cash & cash equivalents $ 892,548
$ 333,534 Receivables, net 109,830 116,139 Inventories 347,735
339,411 Prepaid expenses and other current assets 174,840 145,624
Deferred income taxes 53,880 49,339
Total Current Assets 1,578,833 984,047 Property, plant and
equipment, net 267,850 242,886 Deferred compensation plan assets
25,843 24,267 Deferred financing cost, net 5,528 7,462 Other assets
49,006 48,805 Marketing related intangibles and other intangible
assets, net 310,897 311,186 Goodwill 105,490
105,490 Total Assets $ 2,343,447 $ 1,724,143
LIABILITIES AND SHAREHOLDERS' EQUITY Current
Liabilities: Accounts payable $ 82,989 $ 75,209 Royalty overrides
252,677 243,351 Accrued compensation 99,765 95,220 Accrued expenses
241,359 181,523 Current portion of long term debt 75,061 56,302
Advance sales deposits 73,618 49,432 Income taxes payable
42,494 61,325 Total Current Liabilities
867,963 762,362 Non-current liabilities Long-term debt, net
of current portion 875,018 431,305 Deferred compensation plan
liability 35,049 29,454 Deferred income taxes 64,500 62,982 Other
non-current liabilities 45,326 42,557
Total Liabilities 1,887,856 1,328,660 Contingencies
Shareholders' equity: Common shares 101 107 Paid-in capital in
excess of par value 304,638 303,975 Accumulated other comprehensive
loss (27,371 ) (31,695 ) Retained earnings 178,223
123,096 Total Shareholders' Equity 455,591
395,483 Total Liabilities and
Shareholders' Equity $ 2,343,447 $ 1,724,143
(1) As a result of the resignation of
KPMG, the unaudited interim financial information presented has not
been reviewed by an outside independent accounting firm. See Note 2
of the quarterly report on Form 10-Q for the quarter ended
September 30, 2013.
(2) As discussed in Note 2 of the
quarterly report on Form 10-Q for the quarter ended September 30,
2013, prior year amounts have been revised for income tax errors
that were considered not material, individually or in the
aggregate, to any of the prior reporting periods.
Herbalife Ltd. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (In thousands)
(Unaudited and Unreviewed)(1) Nine Months Ended
9/30/2013
9/30/2012 (2)
CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 403,985 $ 351,755
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 63,207 55,402 Deficiency in (excess)
tax benefits from share-based payment arrangements 2,586 (28,073 )
Share based compensation expenses 21,882 20,850 Amortization of
deferred financing costs 1,937 1,135 Deferred income taxes (7,532 )
(8,249 ) Unrealized foreign exchange transaction (gain) loss 585
(3,529 ) Foreign exchange loss from Venezuela currency devaluation
15,116 - Other 1,661 172 Changes in operating assets and
liabilities: Receivables 1,624 (26,444 ) Inventories (19,775 )
(58,705 ) Prepaid expenses and other current assets (15,330 )
(7,977 ) Other assets (678 ) (3,098 ) Accounts payable 8,569 22,674
Royalty overrides 13,959 22,432 Accrued expenses and accrued
compensation 65,868 20,028 Advance sales deposits 27,038 7,384
Income taxes (13,313 ) 29,118 Deferred compensation plan liability
5,595 5,015 NET CASH PROVIDED BY
OPERATING ACTIVITIES 576,984 399,890
CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant
and equipment (91,782 ) (59,229 ) Proceeds from sale of property,
plant and equipment 121 243 Deferred compensation plan assets
- (3,466 ) NET CASH USED IN INVESTING
ACTIVITIES (91,661 ) (62,452 ) CASH FLOWS FROM
FINANCING ACTIVITIES Dividends paid (92,651 ) (102,687 ) Borrowings
from long-term debt 763,232 1,387,557 Principal payments on
long-term debt (300,733 ) (1,090,748 ) Deferred financing costs -
(4,460 ) Share repurchases (275,821 ) (506,331 ) (Deficiency in)
excess tax benefits from share-based payment arrangements (2,586 )
28,073
Proceeds from exercise of stock options
and sale of stock under employee stock purchase plan
975 10,819 NET CASH PROVIDED BY (USED
IN) FINANCING ACTIVITIES 92,416 (277,777 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH (18,725 )
3,286 NET CHANGE IN CASH AND CASH EQUIVALENTS 559,014 62,947
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 333,534
258,775 CASH AND CASH EQUIVALENTS, END OF
PERIOD 892,548 321,722 CASH PAID DURING
THE YEAR Interest paid $ 18,005 $ 10,263 Income taxes
paid $ 163,843 $ 123,063
(1) As a result of the resignation of
KPMG, the unaudited interim financial information presented has not
been reviewed by an outside independent accounting firm. See Note 2
of the quarterly report on Form 10-Q for the quarter ended
September 30, 2013.
(2) As discussed in Note 2 of the
quarterly report on Form 10-Q for the quarter ended September 30,
2013, prior year amounts have been revised for income tax errors
that were considered not material, individually or in the
aggregate, to any of the prior reporting periods.
SUPPLEMENTAL INFORMATION
SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES(unaudited and unreviewed), (dollars in thousands,
except per share data)
In addition to its reported results, the Company has included
in the tables below adjusted results that the Securities and
Exchange Commission defines as “non-GAAP financial measures.”
Management believes that such non-GAAP financial measures, when
read in conjunction with the Company’s reported results, can
provide useful supplemental information for investors in analyzing
period to period comparisons of the Company’s results.
The following is a reconciliation of net
income, presented and reported in accordance with U.S. generally
accepted accounting principles, to net income adjusted for certain
items:
Three Months Ended Nine Months Ended
9/30/2013
9/30/2012 (3)
9/30/2013
9/30/2012 (3)
(in thousands) Net income, as reported $ 141,950 $ 111,873 $
403,985 $ 351,755 Venezuela devaluation impact (net of ($12) and
$6,796 tax benefit for the three and nine months ended September
30, 2013, respectively) (1)(2) 12 - 8,319 - Expenses incurred
responding to attacks on the Company's business model (net of $773
and $3,241 tax benefit for the three and nine months ended
September 30, 2013, respectively)(1) 5,485 - 20,589 - Expenses
incurred for the re-audit of 2010 to 2012 financial statements due
to resignation of KPMG (net of $1,533 and $2,329 tax benefit for
the three and nine months ended September 30, 2013)(1) 4,640
- 7,301 - Net income, as
adjusted $ 152,087 $ 111,873 $ 440,194 $ 351,755
The following is a reconciliation of
diluted earnings per share, presented and reported in accordance
with U.S. generally accepted accounting principles, to diluted
earnings per share adjusted for certain items:
Three Months Ended Six Months
Ended 9/30/2013
9/30/2012 (3)
9/30/2013
9/30/2012 (3)
Diluted earnings per share, as reported $ 1.32 $ 0.98 $ 3.75
$ 2.95 Venezuela devaluation impact (net of ($12) and $6,796 tax
benefit for the three and nine months ended September 30, 2013,
respectively) (1) - - 0.08 - Expenses incurred responding to
attacks on the Company's business model (net of $773 and $3,241 tax
benefit for the three and nine months ended September 30, 2013,
respectively)(1) 0.05 - 0.19 - Expenses incurred for the re-audit
of 2010 to 2012 financial statements due to resignation of KPMG
(net of $1,533 and $2,329 tax benefit for the three and nine months
ended September 30, 2013)(1) 0.04 -
0.07 - Diluted earnings per share, as adjusted (4) $
1.41 $ 0.98 $ 4.08 $ 2.95
(1) The income tax impact of the non-GAAP
adjustments is based on forecasted items affecting the Company's
2013 full year GAAP effective tax rate. Adjustments to forecasted
items unrelated to these non-GAAP adjustments may have an effect on
the income tax impact of the non-GAAP adjustments in subsequent
periods.
(2) The amount for the three months ended
September 30, 2013 relates to the change in tax benefit, as
explained in note 1, for the Venezuela devaluation that was
recorded in the first quarter.
(3) As discussed in Note 2 of the
quarterly report on Form 10-Q for the quarter ended September 30,
2013, prior year amounts have been revised for income tax errors
that were considered not material, individually or in the
aggregate, to any of the prior reporting periods.
(4) Amounts may not total due to rounding.
The following is a reconciliation of total long-term debt to net
debt:
9/30/2013 12/31/2012 Total long-term
debt (current and long-term portion) $ 950,079 $ 487,607 Less: Cash
and cash equivalents 892,548 333,534 Net debt
$ 57,531 $ 154,073
1 See Schedule A – “Reconciliation of Non-GAAP Financial
Measures” for more detail.
2 Supplemental tables that include additional business metrics
can be found at http://www.ir.herbalife.com.
3 Worldwide Average Active Sales Leaders may not equal the sum
of the Average Active Sales Leaders in each region due to the
calculation being an average of Sales Leaders active in a period,
not a summation, and the fact that some sales leaders are active in
more than one region but are counted only once in the worldwide
amount.
Herbalife Ltd.Media Contact:Barbara
HendersonSVP, Worldwide Corp. Comm.213.745.0517orInvestor Contact:Amy GreeneVP, Investor
Relations213.745.0474
Herbalife (NYSE:HLF)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Herbalife (NYSE:HLF)
Historical Stock Chart
Von Jul 2023 bis Jul 2024