- Fourth quarter worldwide volume
growth of 13 percent compared to the prior year period.
- Fourth quarter EPS of $1.15
increased 15 percent, and adjusted1 EPS of $1.28
increased 28 percent, both as compared to the prior year
period.
- Raises FY'14 adjusted2
diluted EPS guidance to a range of $5.85 to $6.05, reflecting
the impact of the recent financial transactions and subsequent
share repurchase.
- Annual sales leader retention of
approximately 51.8 percent.
- Generated $773 million in operating
cash flow in fiscal 2013.
- Board of Directors approved a $0.30
per share quarterly dividend.
Herbalife Ltd. (NYSE: HLF) today reported fourth quarter net
sales of $1.3 billion, reflecting an increase of 20 percent
compared to the same period in 2012, on volume point growth of 13
percent. Net income for the quarter was $123.5 million, or $1.15
per diluted share. On an adjusted basis, adjusted1 net income for
the quarter was $137.2 million, or $1.28 per diluted share, as
compared to 2012 fourth quarter net income3 of $112.2 million and
EPS of $1.00.
For the twelve months ended December 31, 2013, the company
reported record net sales of $4.8 billion, an 18 percent increase,
on 13 percent growth in volume compared to 2012. For the same
period, the company reported net income of $527.5 million, or $4.91
per diluted share. On an adjusted basis, adjusted1 net income of
$577.4 million, or $5.37 per diluted share, reflected increases of
24 percent and 36 percent respectively, over 2012 net income3 of
$464.0 million and EPS of $3.94.
"Herbalife delivered another year of record financial
performance achieved through the consistent execution of key
strategies to expand daily consumption of our products," said
Michael O. Johnson, Herbalife's chairman and CEO. "The global
obesity epidemic continues to expand around the world, having an
adverse impact on community health. Our independent Members are
uniquely positioned, with education, coaching, and nutritious,
industry-leading products to help their customers live healthier
lives."
For the year ended December 31, 2013, Herbalife generated cash
flow from operations of $772.9 million, an increase of 36 percent
compared to 2012; paid dividends of $123.1 million; invested $162.5
million in capital expenditures; and repurchased $297.4 million in
common shares outstanding under our previous share repurchase
program.
Herbalife recently announced that the Board of Directors
approved an increase in its share repurchase authorization to $1.5
billion. Following repurchases made in connection with the
company’s recent financing transaction on February 7, 2014, the
remaining authorized capacity under the repurchase program is $814
million.
Fourth Quarter and Fiscal 2013 Key
Metrics4,5
Regional Volume Point and Average Active Sales Leader
Metrics
Volume Points
(Mil) Average Active Sales Leaders Region
4Q'13 Yr/Yr % Chg 4Q'13 Yr/Yr % Chg
North America 287.0 7% 73,511 8% Asia Pacific 292.4
-4% 73,792 6% EMEA 183.9 17% 53,776 14% Mexico 218.7 5% 66,535 8%
South & Central America 278.6 25% 65,690 29% China 102.7
103% 17,416 39%
Worldwide Total
1,363.3 13% 339,744
13% Volume
Points (Mil) Average Active Sales Leaders
Region FY 2013 Yr/Yr % Chg FY 2013
Yr/Yr % Chg North America 1,249.9 8% 72,058 9%
Asia Pacific 1,225.4 2% 71,542 13% EMEA 698.0 16% 49,650 13% Mexico
864.3 6% 63,581 10% South & Central America 966.2 31% 58,090
29% China 333.6 62% 14,808 27%
Worldwide Total 5,337.4 13%
318,740 15%
2013 Annual Sales Leader Requalification
By the end of January of each year, sales leaders are required
to re-qualify to retain their sales leader status. A record number
of sales leaders were retained in 2013. The overall pool of sales
leaders needing to re-qualify increased by approximately 10%
compared to the prior year and we retained 10% more of them than in
the prior year. While size of the group needing to re-qualify
increased for the year, our overall retention rate remained fairly
constant at 51.8%.
2014 First Quarter and Full Year Guidance
Forward guidance excludes the impact of expenses (primarily for
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 the impact of non-cash interest costs associated with the
company’s Convertible Notes. Forward guidance is based on the
average daily exchange rates of the first two weeks of January.
Included in the guidance is the use of the GAAP rate for Venezuela
of 6.3 to 1 for January results and 10 to 1 for the balance of the
year and excludes the potential impact of future devaluation of the
Venezuelan bolivar and any future repatriation of existing cash
balances in Venezuela.
Three Months Ending Twelve Months Ending March 31,
2014 December 31, 2014
Low High
Low High Volume Point Growth vs
2013 6.5% 8.5% 6.5% 8.5% Net Sales Growth vs 2013 8.0% 10.0% 7.5%
9.5% Diluted EPS as adjusted $1.25 $1.29 $5.85 $6.05 Cap Ex ($
millions) $35.0 $45.0 $165.0 $185.0 Effective Tax Rate 27.5% 29.5%
28.0% 30.0%
Announces Quarterly Dividend
Herbalife reported today that its Board of Directors has
approved a dividend of $0.30 per share to shareholders of record
March 4, 2014, payable on March 18, 2014.
Fourth Quarter and Fiscal 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 Wednesday, February 19, 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 31194371). 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 31194371). 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 more than 90 countries to and through a network of
independent members. 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 financial and other information about the company 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.
1 See Schedule A – “Reconciliation of Non-GAAP Financial
Measures” for more detail.
2 Adjusted diluted EPS excludes non-cash interest expense
associated with the company’s Convertible Notes.
3 There were no non-GAAP adjustments reported against the
company’s 2012 fourth quarter or full-year U.S. GAAP results.
4 Supplemental tables that include additional business metrics
can be found at http://www.ir.herbalife.com.
5 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.
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:
- 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 Members;
- improper action by our employees or
Members 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 Member 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 Members;
- 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)
Three
Months Ended Twelve Months Ended
12/31/2013
12/31/2012 12/31/2013
12/31/2012 North America $ 210,302 $ 197,052 $
907,999 $ 841,243 Mexico 142,599 132,070 562,369 496,101 South and
Central America 290,344 203,252 973,456 688,799 EMEA 197,644
164,684 735,253 627,801 Asia Pacific 279,603 295,166 1,174,607
1,139,867 China 148,387 67,096 471,624
278,519 Worldwide net sales 1,268,879 1,059,320 4,825,308 4,072,330
Cost of Sales 251,807 211,105 963,423
812,583 Gross Profit 1,017,072 848,215 3,861,885 3,259,747 Royalty
Overrides 380,735 355,658 1,497,556 1,338,633 Selling, General and
Administrative Expenses 454,478 332,764
1,629,052 1,259,667 Operating Income 181,859 159,793 735,277
661,447 Interest Expense - net 2,902 2,453
18,560 10,541 Income before income taxes 178,957 157,340
716,717 650,906 Income Taxes 55,417 45,133
189,192 186,944 Net Income 123,540 112,207
527,525 463,962 Basic Shares 101,211 107,444
102,620 112,359 Diluted Shares 107,234 112,230 107,445 117,856
Basic EPS $ 1.22 $ 1.04 $ 5.14 $ 4.13 Diluted EPS $ 1.15 $
1.00 $ 4.91 $ 3.94 Dividends declared per share $ 0.30 $
0.30 $ 1.20 $ 1.20 Herbalife Ltd. and Subsidiaries Condensed
Consolidated Balance Sheets (In thousands) (Unaudited) Dec
31, Dec 31,
2013
2012 ASSETS Current Assets: Cash &
cash equivalents $ 972,974 $ 333,534 Receivables, net 100,326
116,139 Inventories 351,201 339,411 Prepaid expenses and other
current assets 148,774 145,624 Deferred income taxes 69,845
49,339 Total Current Assets 1,643,120 984,047
Net Property, plant and equipment 318,860 242,886 Deferred
compensation plan assets 26,821 24,267 Other assets 63,713 48,805
Deferred financing cost, net 4,896 7,462 Marketing related
intangibles and other intangible assets, net 310,801 311,186
Goodwill 105,490 105,490 Total Assets $
2,473,701 $ 1,724,143 LIABILITIES AND
SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 82,665
$ 75,209 Royalty overrides 266,952 243,351 Accrued compensation
111,905 95,220 Accrued expenses 267,501 181,523 Current portion of
long-term debt 81,250 56,302 Advance sales deposits 68,079 49,432
Income taxes payable 43,826 61,325
Total Current Liabilities 922,178 762,362 Non-current
liabilities Long-term debt, net of current portion 850,019 431,305
Deferred compensation plan liability 37,226 29,454 Deferred income
taxes 66,026 62,982 Other non-current liabilities 46,806
42,557 Total Liabilities 1,922,255 1,328,660
Commitments and Contingencies Shareholders' equity:
Common shares 101 107 Paid-in capital in excess of par value
323,860 303,975 Accumulated other comprehensive loss (19,794 )
(31,695 ) Retained earnings 247,279 123,096
Total Shareholders' Equity 551,446
395,483 Total Liabilities and Shareholders'
Equity $ 2,473,701 $ 1,724,143 Herbalife Ltd.
and Subsidiaries Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Twelve Months Ended
12/31/2013
12/31/2012 CASH FLOWS FROM
OPERATING ACTIVITIES Net income $ 527,525 $ 463,962
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 84,739 74,384 Excess tax benefits
from share-based payment arrangements (15,566 ) (29,684 ) Share
based compensation expenses 29,492 27,906 Amortization of discount
and deferred financing costs 2,579 1,797 Deferred income taxes
(24,910 ) (7,758 ) Unrealized foreign exchange transaction loss
(gain) 5,757 2,121 Foreign exchange loss from Venezuela currency
devaluation 15,116 - Other 15,410 532 Changes in operating assets
and liabilities: Receivables 9,224 (28,186 ) Inventories (39,878 )
(82,177 ) Prepaid expenses and other current assets (9,405 ) 249
Other assets (9,408 ) (5,288 ) Accounts payable 10,844 17,034
Royalty overrides 28,765 41,868 Accrued expenses and accrued
compensation 86,039 39,440 Advance sales deposits 21,959 17,790
Income taxes 26,821 28,042 Deferred compensation plan liability
7,772 5,752 NET CASH PROVIDED BY
OPERATING ACTIVITIES 772,875 567,784
CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant
and equipment (146,958 ) (121,524 ) Proceeds from sale of property,
plant and equipment 186 280 Investments in Venezuelan bonds (4,050
) - Deferred compensation plan assets - (3,756
) NET CASH USED IN INVESTING ACTIVITIES (150,822 )
(125,000 ) CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid
(123,055 ) (135,091 ) Borrowings from long-term debt 763,180
1,430,560 Principal payments on long-term debt (319,483 )
(1,146,580 ) Deferred financing costs - (4,460 ) Share repurchases
(306,441 ) (556,727 ) Excess tax benefits from share-based payment
arrangements 15,566 29,684
Proceeds from exercise of stock options
and sale of stock under employee stock purchase plan
975 11,373 NET CASH PROVIDED BY (USED
IN) FINANCING ACTIVITIES 30,742 (371,241 )
EFFECT OF EXCHANGE RATE CHANGES ON CASH (13,355 )
3,216 NET CHANGE IN CASH AND CASH EQUIVALENTS 639,440 74,759
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 333,534
258,775 CASH AND CASH EQUIVALENTS, END OF YEAR
972,974 333,534 CASH PAID DURING THE YEAR
Interest paid $ 23,046 $ 14,268 Income taxes paid $
197,078 $ 169,725 NON CASH ACTIVITIES Accrued capital
expenditures $ 29,625 $ 15,310
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 Twelve Months
Ended 12/31/2013 12/31/2012 12/31/2013 12/31/2012 (in thousands)
Net income, as reported $ 123,540 $ 112,207 $ 527,525 $
463,962
Venezuela devaluation impact (net of
($1,442) and $5,354 tax benefit for the three and twelve months
ended December 31, 2013, respectively) (1)(2)
1,442 - 9,761 -
Expenses incurred responding to attacks on
the Company's business model (net of $1,372 and $4,613 tax benefit
for the three and twelve months ended December 31, 2013,
respectively)(1)
3,938 - 24,527 -
Expenses incurred for the re-audit of 2010
to 2012 financial statements due to resignation of KPMG (net of
$2,524 and $4,853 tax benefit for the three and twelve months ended
December 31, 2013)(1)
8,269 - 15,570 - Net income, as
adjusted $ 137,189 $ 112,207 $ 577,383 $ 463,962
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 Twelve Months Ended 12/31/2013
12/31/2012 12/31/2013 12/31/2012 Diluted earnings per share,
as reported $ 1.15 $ 1.00 $ 4.91 $ 3.94
Venezuela devaluation impact (net of
($1,442) and $5,354 tax benefit for the three and twelve months
ended December 31, 2013, respectively) (1)(2)
0.01 - 0.09 -
Expenses incurred responding to attacks on
the Company's business model (net of $1,372 and $4,613 tax benefit
for the three and twelve months ended December 31, 2013,
respectively)(1)
0.04 - 0.23 -
Expenses incurred for the re-audit of 2010
to 2012 financial statements due to resignation of KPMG (net of
$2,524 and $4,853 tax benefit for the three and twelve months ended
December 31, 2013)(1)
0.08 - 0.14 - Diluted earnings per
share, as adjusted $ 1.28 $ 1.00 $ 5.37 $ 3.94
(1) The income tax impact of the non-GAAP
adjustments is based on items affecting the Company's 2013 full
year GAAP effective tax rate. Adjustments to items unrelated to
these non-GAAP adjustments have had an effect on the income tax
impact of the non-GAAP adjustments in periods subsequent to the
underlying non-GAAP adjustments.
(2) The amount for the three months ended
December 31, 2013 relates to the change in tax benefit, as
explained in note 1, for the Venezuela devaluation that was
recorded in the first quarter.
The following is a reconciliation of total long-term debt to net
debt:
12/31/2013 12/31/2012 Total
long-term debt (current and long-term portion) $ 931,269 $ 487,607
Less: Cash and cash equivalents 972,974
333,534 Net debt $ (41,705 ) $ 154,073
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