Incoming CEO John Agwunobi to Become
Chairman of the Board
Herbalife Nutrition Ltd. (NYSE: HLF) today reported financial
results for the fourth quarter and full year ended December 31,
2019.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20200218005996/en/
Fourth Quarter and Full Year 2019
Earnings Infographic (Graphic: Business Wire)
“As I close out my tenure as Chairman and CEO and prepare to
hand off both of these positions to John Agwunobi, I want to
express my sincere gratitude to our distributors and employees who
have worked so hard to advance our mission to change lives and
communities around the world. It has been an honor to serve and see
the growth of this great company over the last 17 years. This
growth and momentum continued in 2019 resulting in record volume
points for the full year; and in the fourth quarter, nine of our
top ten countries achieved net sales growth,” said Michael Johnson,
Chairman and CEO of Herbalife Nutrition.
QUARTER AND FULL YEAR HIGHLIGHTS
- Full year 2019 volume points of 6.1 billion increased 3.0%
compared to full year 2018, representing the largest annual volume
point result in Company history. Excluding China, volume points
increased 6.7% compared to the prior year. 1
- Fourth quarter volume points increased 3.8% compared to the
fourth quarter 2018.
- Reported net sales of $4.9 billion for the full year 2019 were
relatively flat compared to full year 2018. Fourth quarter reported
net sales of $1.2 billion increased 2.8% compared to the prior year
period.
- Full year 2019 reported diluted EPS of $2.20 and adjusted2
earnings of $2.82 per adjusted3 diluted share, compared to $1.98
and $2.88 respectively, for the full year 2018, which were
negatively impacted in 2019 by expenses of approximately $19.4
million, or $0.10 per diluted share, and in 2018 of $14.1 million,
or $0.07 per diluted share, related to the China Growth and Impact
Investment Program.
- Fourth quarter reported diluted EPS of $0.40 and adjusted2
earnings of $0.74 per diluted share, both of which were negatively
impacted by expenses of approximately $9.0 million, or $0.05 per
diluted share, related to the China Growth and Impact Investment
Program.
- The extent and duration of business disruption and related
financial impact from the Coronavirus cannot be reasonably
estimated at this time but could materially impact our consolidated
results for the first quarter and full year 2020. The Company will
update its guidance for full year 2020 when we can reasonably
estimate the impact.
_________________________________
1 Excluding adjustments to volume point values in 2018, the
year-over-year change would have been an increase of 2.8% and an
increase of 6.5% excluding China. See Regional Volume Point Metrics
below. 2 Adjusted diluted EPS is a non-GAAP measure and excludes
the impact of: non-cash interest expense associated with the
Company’s convertible notes, expenses related to regulatory
inquiries and legal accrual, China grant income, contingent value
rights revaluation, income related to finalization of insurance
recoveries, loss on extinguishment of convertible debt, loss on
extinguishment of 2017 senior secured credit facility, Mexico VAT
assessment, Venezuela devaluation, debt issuance costs related to
the senior secured credit facility amendment, and U.S. tax reform
impact. See Schedule A – “Reconciliation of Non-GAAP Financial
Measures” for a detailed reconciliation of adjusted net income to
net income calculated in accordance with GAAP and a reconciliation
of adjusted diluted EPS to diluted EPS calculated in accordance
with GAAP and a discussion of why we believe these non-GAAP
measures are useful. 3 See Schedule A - “Reconciliation of Non-GAAP
Financial Measures” for a reconciliation of adjusted diluted share
count to reported diluted share count and a discussion of why the
share count has been adjusted for purposes of calculating adjusted
diluted EPS for the fourth quarter of 2018, and full year 2018 and
2019.
Fourth Quarter and Full Year 2019
Key Metrics4
Regional Volume Point
Metrics
Volume Points
Volume Points
Region
Q4 '19 (mil)
Yr/Yr % Chg
FY '19 (mil)
Yr/Yr % Chg
Asia Pacific
417.9
17.6%
1,565.0
21.2%
EMEA
313.1
3.5%
1,290.1
5.8%
North America
299.9
6.9%
1,317.0
7.1%
Mexico
219.8
(3.8%)
882.8
(4.1%)
China
135.6
(12.6%)
497.2
(25.7%)
South & Central America
130.3
(6.0%)
516.5
(8.0%)
Worldwide Total (a)
1,516.6
3.8%
6,068.6
3.0%
Worldwide Total excl. China (a)
1,381.0
5.8%
5,571.4
6.7%
(a) During 2018, the Company adjusted volume point values for
certain products in North America and South & Central America.
Excluding these adjustments, the worldwide total year-over-year
change in volume points for the full year would have been an
increase of 2.8% and an increase of 6.5% for the full year
excluding China. These adjustments did not have a material impact
on the fourth quarter comparison. Adjustments to Volume Points
during 2019 were not material.
Regional Net Sales and Foreign Exchange (“FX”) Impact
Region
Reported
Net Sales
4Q ‘19
(mil)
Growth/Decline
including FX
vs. Q4 ‘18
Growth/Decline
excluding FX
vs. Q4 ‘18
Asia Pacific
$
330.4
17.8%
16.4%
EMEA
$
241.1
3.5%
5.1%
North America
$
233.6
8.9%
8.9%
Mexico
$
116.6
1.8%
(1.0%)
China
$
205.9
(15.0%)
(13.4%)
South & Central America (a)
$
92.7
(9.1%)
*
Worldwide Total
$
1,220.3
2.8%
*
Worldwide Total excl. China
$
1,014.4
7.4%
*
South & Central America excl.
Venezuela (a)
$
92.4
(8.6%)
(2.2%)
Worldwide Total excl. Venezuela
(a)
$
1,220.0
2.9%
3.5%
Worldwide Total excl. China and
Venezuela (a)
$
1,014.1
7.5%
7.8%
(a) Venezuela was impacted by significant price increases and
erosion in foreign currency exchange rates. Venezuela represents
less than 1% of the Company’s consolidated net sales. See Schedule
A – “Reconciliation of Non-GAAP Financial Measures” for a
discussion of why we believe adjusting for Venezuela is useful.
* Figure not meaningful due to significant foreign currency
fluctuations in Venezuela and the price increases implemented as a
result thereof that, when considered in isolation, have a
disproportionately large impact on the Company’s South and Central
American region and consolidated results. Amounts were 100.1%,
12.3% and 18.8% for South & Central America, Worldwide Total
and Worldwide Total excluding China, respectively.
_________________________________
4 Supplemental tables that include Average Active Sales Leader
and additional business metrics can be found at
http://ir.Herbalife.com.
Region
Reported
Net Sales
FY ‘19
(mil)
Growth/Decline
including FX
vs. FY ‘18
Growth/Decline
excluding FX
vs. FY ‘18
Asia Pacific
$
1,249.0
18.6%
20.7%
EMEA
$
998.0
2.1%
8.5%
North America
$
1,025.5
8.1%
8.2%
Mexico
$
473.6
1.2%
1.5%
China
$
752.0
(25.4%)
(22.1%)
South & Central America (a)
$
379.0
(13.4%)
*
Worldwide Total
$
4,877.1
(0.3%)
*
Worldwide Total excl. China
$
4,125.1
6.2%
*
South & Central America excl.
Venezuela (a)
$
377.6
(10.8%)
(3.1%)
Worldwide Total excl. Venezuela
(a)
$
4,875.7
0.0%
3.1%
Worldwide Total excl. China and
Venezuela (a)
$
4,123.7
6.6%
9.6%
(a) Venezuela was impacted by significant price increases and
erosion in foreign currency exchange rates. Venezuela represents
less than 1% of the Company’s consolidated net sales. See Schedule
A – “Reconciliation of Non-GAAP Financial Measures” for a
discussion of why we believe adjusting for Venezuela is useful.
* Figure not meaningful due to significant foreign currency
fluctuations in Venezuela and the price increases implemented as a
result thereof that, when considered in isolation, have a
disproportionately large impact on the Company’s South and Central
American region and consolidated results. Amounts were 3,240.6%,
293.2% and 375.0% for South & Central America, Worldwide Total
and Worldwide Total excluding China, respectively.
Outlook
- The extent and duration of business disruption and related
financial impact from the Coronavirus cannot be reasonably
estimated at this time but could materially impact our consolidated
results for the first quarter and full year 2020. The Company will
update its guidance for full year 2020 when we can reasonably
estimate the impact.
Leadership Transition
Herbalife Nutrition also announced today that John Agwunobi, who
as previously announced will become CEO effective March 30, 2020,
will also assume the role of Chairman of the Board, effective upon
his election to the Board at the upcoming Annual Meeting of
Shareholders. Michael Johnson will retire as Chairman and CEO after
17 years at the company.
James Nelson, Lead Independent Director of the Board, commented,
“Michael Johnson has been a tremendous leader of Herbalife
Nutrition for the last 17 years, setting the course and overseeing
a period of extraordinary growth marked by global expansion,
significant product innovation and deep connections to distributors
and customers around the world. On behalf of the entire Board, I
thank Michael for being the architect of the Company’s success to
date and for laying a strong foundation for continued growth under
John Agwunobi’s leadership. We have complete confidence that John
will continue where Michael leaves off as Chairman and CEO and are
eager for him to bring his vision and unique skills to leading the
Company.”
Johnson added, “I couldn’t be more proud of the incredible
strides our employees and distributors have made to advance our
mission to change lives and communities around the world. John has
been a critical contributor to these efforts over the last several
years and as we’ve worked together to prepare to transition the
leadership of our Company, it’s become clear he is ready to assume
both the CEO and Chairman roles now. With John at the helm of the
Company and the Board, I know that our mission will endure, and
expect that Herbalife Nutrition will continue to grow.”
Agwunobi added, “Michael’s tenure with Herbalife Nutrition has
been nothing short of extraordinary, leading overall net sales
growth from $1.2 billion in 2003 to $4.9 billion in 2019. We are
all grateful for his dedication to the Company, our people and our
mission, and we know that he will always be part of the Herbalife
Nutrition family. Looking to the future, I am energized by knowing
that each day we are meeting a growing need for millions of people
around the globe who want to improve their nutrition and wellness.
We plan on expanding our reach by working with our distributors and
providing them with further opportunities to grow their business
and serve even more customers.”
Earnings Conference Call
Herbalife Nutrition senior management will host an investor
conference call to discuss its recent financial results and provide
an update on current business trends on Tuesday, February 18, 2020,
at 2:30 p.m. PT (5:30 p.m. ET).
The dial-in number for this conference call for domestic callers
is (877) 317-1296, and (262) 320-2006 for international callers
(conference ID: 5283569). 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: 5283569). The webcast of the teleconference will be
archived and available on Herbalife Nutrition's website.
About Herbalife Nutrition
Ltd.
Herbalife Nutrition is a global company that has been changing
people's lives with great nutrition products and a proven business
opportunity for its independent distributors since 1980. The
Company offers high-quality, science-backed products, sold in over
90 countries by entrepreneurial distributors who provide one-on-one
coaching and a supportive community that inspires their customers
to embrace a healthier, more active lifestyle. Through the
Company’s global campaign to eradicate hunger, Herbalife Nutrition
is also committed to bringing nutrition and education to
communities around the world.
For more information, please visit
IAmHerbalifeNutrition.com.
Herbalife Nutrition also encourages investors to visit its
investor relations website at ir.herbalife.com as financial and
other information is updated and new information is posted.
Forward-Looking
Statements
This release contains “forward-looking statements” within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. 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:
- 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;
- 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 markets in which we operate;
- legal challenges to our network marketing program;
- the Consent Order entered into with the FTC, the effects
thereof and any failure to comply therewith;
- 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 interpretation and enforcement of
legislation in China governing direct selling and
anti-pyramiding;
- our inability to obtain or maintain the necessary licenses for
our direct selling business in China and elsewhere;
- adverse changes in the Chinese economy;
- our dependence on increased penetration of existing
markets;
- any material disruption to our business caused by natural
disasters, other catastrophic events, acts of war or terrorism,
viral outbreaks and other similar epidemics or cybersecurity
incidents;
- noncompliance by us or our Members with any privacy laws or any
security breach by us or a third party involving the
misappropriation, loss, or other unauthorized use or disclosure of
confidential information;
- contractual limitations on our ability to expand our
business;
- our reliance on our information technology infrastructure and
outside manufacturers;
- the sufficiency of our trademarks and other intellectual
property rights;
- product concentration;
- 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;
- U.S. and foreign laws and regulations applicable to our
operations;
- uncertainties relating to the United Kingdom’s vote to exit
from the European Union;
- restrictions imposed by covenants in our existing
indebtedness;
- risks related to the convertible notes;
- uncertainties relating to the application of transfer pricing,
duties, value added taxes, and other tax regulations, and changes
thereto;
- changes in tax laws, treaties or regulations, or their
interpretation;
- taxation relating to our Members;
- product liability claims;
- our incorporation under the laws of the Cayman Islands;
- 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.
Results of Operations
Herbalife Nutrition Ltd. and Subsidiaries Condensed Consolidated
Statements of Income (In millions, except per share amounts)
Three Months Ended Twelve Months Ended
12/31/2019 12/31/2018
12/31/2019 12/31/2018 (unaudited) North America
$
233.6
$
214.6
$
1,025.5
$
948.3
EMEA
241.1
232.9
998.0
977.0
Asia Pacific
330.4
280.5
1,249.0
1,053.4
Mexico
116.6
114.5
473.6
467.9
China
205.9
242.1
752.0
1,007.6
South and Central America
92.7
102.0
379.0
437.6
Worldwide Net Sales
1,220.3
1,186.6
4,877.1
4,891.8
Cost of Sales
229.8
225.9
958.0
919.3
Gross Profit
990.5
960.7
3,919.1
3,972.5
Royalty Overrides
358.1
332.9
1,448.2
1,364.0
Selling, General, and Administrative Expenses
527.8
485.5
1,940.3
1,955.2
Other Operating Income (1)
(3.8
)
(5.9
)
(37.5
)
(29.8
)
Operating Income
108.4
148.2
568.1
683.1
Interest Expense, net
28.4
37.5
132.4
161.6
Other Expense (Income), net (2)
-
(2.7
)
(15.7
)
57.3
Income Before Income Taxes
80.0
113.4
451.4
464.2
Income Taxes (3)
23.3
64.5
140.4
167.6
Net Income
$
56.7
$
48.9
$
311.0
$
296.6
Weighted-Average Shares Outstanding: Basic
137.5
137.0
137.4
140.2
Diluted
140.8
145.0
141.6
149.5
Earnings Per Share: Basic
$
0.41
$
0.36
$
2.26
$
2.12
Diluted
$
0.40
$
0.34
$
2.20
$
1.98
(1) Other Operating Income for the three months ended
December 31, 2019 and 2018 relates to certain China government
grant income. Other operating income for the twelve months ended
December 31, 2019 relates to certain China government grant income
and income related to the finalization of insurance recoveries in
connection with the flooding at one of the Company's warehouses in
Mexico during September 2017. Other Operating Income for the twelve
months ended December 31, 2018 relates to certain China government
grant income. (2) Other Expense (Income), net for the three months
ended December 31, 2018 relates to the gain on revaluation of the
Contingent Value Rights (CVR) issued in connection with the October
2017 modified Dutch auction tender offer. Other Expense (Income),
net for the twelve months ended December 31, 2019 relates to the
gain on revaluation of the CVR. Other Expense (Income), net for the
twelve months ended December 31, 2018 relates to the $35.4 million
loss on extinguishment of the 2017 senior secured credit facility;
the $13.1 million loss on the extinguishment of a portion of the
2.0% convertible senior notes due 2019 repurchased in March 2018;
and the $8.8 million loss on revaluation of the CVR. (3) Includes
the impact of excess tax benefit recognized under ASU 2016-09 of
$2.8 million and $3.5 million for the three months ended December
31, 2019 and 2018, respectively; and $5.8 million and $53.1 million
for the twelve months ended December 31, 2019 and 2018,
respectively. Herbalife Nutrition Ltd. and Subsidiaries Condensed
Consolidated Balance Sheets (In millions)
Dec 31,
Dec 31,
2019
2018
ASSETS Current Assets: Cash and cash equivalents
$
839.4
$
1,198.9
Receivables, net
79.7
70.5
Inventories
436.2
381.8
Prepaid expenses and other current assets
132.9
153.8
Total Current Assets
1,488.2
1,805.0
Property, plant and equipment, net
371.5
360.0
Operating lease right-of-use assets
189.5
-
Marketing-related intangibles and other intangible assets, net
310.1
310.1
Goodwill
91.5
92.9
Other assets
227.8
221.8
Total Assets
$
2,678.6
$
2,789.8
LIABILITIES AND SHAREHOLDERS' DEFICIT Current
Liabilities: Accounts payable
$
81.6
$
81.1
Royalty overrides
294.1
281.4
Current portion of long-term debt
24.1
678.9
Other current liabilities
564.6
547.4
Total Current Liabilities
964.4
1,588.8
Non-current liabilities: Long-term debt, net of current
portion
1,778.9
1,774.9
Non-current operating lease liabilities
169.9
-
Other non-current liabilities
155.4
149.5
Total Liabilities
3,068.6
3,513.2
Commitments and Contingencies Shareholders' deficit:
Common shares
0.1
0.1
Paid-in capital in excess of par value
366.6
341.5
Accumulated other comprehensive loss
(212.5
)
(209.8
)
Accumulated deficit
(215.3
)
(526.3
)
Treasury stock
(328.9
)
(328.9
)
Total Shareholders' Deficit
(390.0
)
(723.4
)
Total Liabilities and Shareholders' Deficit
$
2,678.6
$
2,789.8
Herbalife Nutrition Ltd. and Subsidiaries Condensed
Consolidated Statements of Cash Flows (In millions) Twelve Months
Ended
12/31/2019 12/31/2018 CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
311.0
$
296.6
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
97.7
100.4
Share-based compensation expenses
38.6
35.5
Non-cash interest expense
43.7
63.8
Deferred income taxes
15.4
(8.1
)
Inventory write-downs
19.1
17.4
Foreign exchange transaction loss
2.1
8.0
Loss on extinguishment of debt
-
48.5
Other
(7.9
)
7.1
Changes in operating assets and liabilities: Receivables
(14.4
)
2.8
Inventories
(68.6
)
(83.3
)
Prepaid expenses and other current assets
28.3
(5.1
)
Accounts payable
0.1
21.7
Royalty overrides
11.5
22.8
Other current liabilities
(5.5
)
106.8
Other
(13.6
)
13.5
NET CASH PROVIDED BY OPERATING ACTIVITIES
457.5
648.4
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property,
plant and equipment
(106.1
)
(84.0
)
Other
(1.9
)
0.1
NET CASH USED IN INVESTING ACTIVITIES
(108.0
)
(83.9
)
CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings from senior
secured credit facility, net of discount
-
998.1
Principal payments on senior secured credit facility and other debt
(24.5
)
(1,237.4
)
Proceeds from convertible senior notes
-
550.0
Repayment of convertible senior notes
(675.0
)
(582.5
)
Proceeds from senior notes
-
400.0
Debt issuance costs
-
(29.9
)
Share repurchases
(16.7
)
(750.3
)
Proceeds from settlement of capped call transactions
-
55.9
Other
3.2
3.0
NET CASH USED IN FINANCING ACTIVITIES
(713.0
)
(593.1
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH
(4.0
)
(51.9
)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
(367.5
)
(80.5
)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD
1,215.0
1,295.5
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD
$
847.5
$
1,215.0
Cash paid during the year: Interest paid
$
114.3
$
106.1
Income taxes paid
$
147.9
$
158.9
Supplemental Information
SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited and unreviewed), (All tables provide Dollars in
millions, except per Share Data)
In addition to its reported results and guidance calculated in
accordance with GAAP, the Company has included in this release
adjusted net income and adjusted diluted EPS, performance measures
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 or forecasted results, in each case calculated in
accordance with GAAP, can provide useful supplemental information
for investors because they facilitate a period to period
comparative assessment of the Company’s operating performance
relative to its performance based on reported or forecasted results
under GAAP, while isolating the effects of some items that vary
from period to period without any correlation to core operating
performance and eliminate certain charges that management believes
do not reflect the Company’s operations and underlying operational
performance. The Company’s definition of adjusted net income and
adjusted diluted earnings per share may not be comparable to
similarly titled measures used by other companies because other
companies may not calculate them in the same manner as the Company
does and should not be viewed in isolation from nor as alternatives
to net income or diluted EPS calculated in accordance with
GAAP.
The impact of foreign currency fluctuations in Venezuela and the
price increases the Company implements as a result of the highly
inflationary economy in that market can each, when considered in
isolation, have a disproportionately large impact to the Company’s
consolidated results despite the offsetting nature of these drivers
and that net sales in Venezuela, which represent less than 1% of
the Company’s consolidated net sales, are not material to our
consolidated results. Therefore, in certain instances, the Company
believes it is helpful to provide additional information with
respect to these factors as reported and excluding the impact of
Venezuela to illustrate the disproportionate nature of Venezuela’s
individual pricing and foreign exchange impact to the Company’s
consolidated results. However, excluding the impact of Venezuela
from these measures is not in accordance with U.S. GAAP and should
not be considered in isolation or as an alternative to the
presentation and discussion thereof calculated in accordance with
U.S. GAAP.
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 12/31/2019 12/31/2018
12/31/2019 12/31/2018 (in millions)
Net income, as reported
$
56.7
$
48.9
$
311.0
$
296.6
Expenses related to regulatory inquiries and legal accrual (1) (2)
41.4
4.3
75.5
10.4
Non-cash interest expense and amortization of non-cash issuance
costs (1) (2) (3)
5.2
12.8
38.2
53.5
China grant income (1) (2)
(3.8
)
(5.9
)
(31.5
)
(29.8
)
Contingent Value Rights revaluation (1) (2)
-
(2.6
)
(15.7
)
8.8
Income related to finalization of insurance recoveries (1) (2) (4)
-
-
(6.0
)
-
Loss on extinguishment of convertible debt (1) (2) (5)
-
-
-
13.1
Loss on extinguishment of 2017 senior secured credit facility (1)
(2)
-
-
-
35.4
Mexico VAT assessment (1) (2)
-
-
19.0
-
Venezuela devaluation (1) (2)
-
-
-
4.7
Debt issuance costs related to the senior secured credit facility
amendment (1) (2) (6)
1.2
-
1.2
-
Income tax adjustments for above items (1) (2)
3.0
2.6
5.6
(0.9
)
US Tax Reform impact (7)
-
29.5
-
29.5
Net income, as adjusted (8)
$
103.6
$
89.6
$
397.3
$
421.3
The following table is a reconciliation of diluted shares
outstanding, as presented and reported in accordance with GAAP, to
adjusted diluted shares outstanding, adjusted to include the impact
of outstanding capped call transactions. The Company's outstanding
capped call transactions were anti-dilutive and not included in
GAAP earnings per share but were intended to mitigate the dilutive
effect of the Company's convertible notes due 2019, if the trading
price of the Company's stock exceeds the conversion price, up to a
certain level. Therefore, the Company has adjusted the diluted
shares outstanding to include the impact of the capped calls, based
on the average share price for the periods that the capped calls
were anti-dilutive.
Three Months Ended Twelve Months Ended 12/31/2019
12/31/2018 12/31/2019 12/31/2018
(in millions)
Diluted shares outstanding, as reported
140.8
145.0
141.6
149.5
Impact of capped call transactions
-
(3.4
)
(0.7
)
(2.9
)
Diluted shares outstanding, as adjusted (8)
140.8
141.6
140.9
146.5
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
12/31/2019
12/31/2018
12/31/2019
12/31/2018
(per share)
Diluted earnings per share, as reported
$
0.40
$
0.34
$
2.20
$
1.98
Impact of adjusted shares outstanding
-
0.01
0.01
0.04
Diluted earnings per share using adjusted diluted shares
outstanding
$
0.40
$
0.35
$
2.21
$
2.02
Expenses related to regulatory inquiries and legal accrual
(1) (2)
0.29
0.03
0.54
0.07
Non-cash interest expense and amortization of non-cash issuance
costs (1) (2) (3)
0.04
0.09
0.27
0.37
China grant income (1) (2)
(0.03
)
(0.04
)
(0.22
)
(0.20
)
Contingent Value Rights revaluation (1) (2)
-
(0.02
)
(0.11
)
0.06
Income related to finalization of insurance recoveries (1) (2) (4)
-
-
(0.04
)
-
Loss on extinguishment of convertible debt (1) (2) (5)
-
-
-
0.09
Loss on extinguishment of 2017 senior secured credit facility (1)
(2)
-
-
-
0.24
Mexico VAT assessment (1) (2)
-
-
0.13
-
Venezuela devaluation (1) (2)
-
-
-
0.03
Debt issuance costs related to the senior secured credit facility
amendment (1) (2) (6)
0.01
-
0.01
-
Income tax adjustments for above items (1) (2)
0.02
0.02
0.04
-
US Tax Reform impact (7)
-
0.21
-
0.20
Adjusted diluted earnings per adjusted share (8)
$
0.74
$
0.63
$
2.82
$
2.88
(1) Based on interim income tax reporting rules, these expenses
are not considered discrete items. As a result, the Company's full
year effective tax rate is impacted by these items. When applying
the full year effective tax rate to year-to-date income, the
Company's year-to-date tax provision recorded with respect to these
non-GAAP adjustments is different from the forecasted full-year tax
provision impact of these items. As a consequence, adjustments to
the year-to-date and quarterly tax impacts will be recorded as the
adjusted full year effective tax rate is applied to income in
subsequent periods. Additionally, adjustments to items unrelated to
these non-GAAP adjustments may have an effect on the income tax
impact of these non-GAAP adjustments in subsequent periods. (2)
Excludes tax (benefit)/expense as follows:
Three Months Ended
Twelve Months Ended
12/31/2019
12/31/2018
12/31/2019
12/31/2018
(in millions)
Expenses related to regulatory inquiries and legal
accrual
1.8
$
-
(1.4
)
(1.0
)
Non-cash interest expense and amortization of non-cash issuance
costs
1.3
(0.8
)
-
-
China grant income
0.9
0.9
9.0
8.6
Contingent Value Rights revaluation
(1.3
)
(0.7
)
-
-
Income related to finalization of insurance recoveries
(0.4
)
-
0.1
-
Loss on extinguishment of convertible debt
-
1.2
-
-
Loss on extinguishment of 2017 senior secured credit facility
-
1.8
-
(7.4
)
Mexico VAT assessment
1.0
-
(1.8
)
-
Venezuela devaluation
-
0.2
-
(1.1
)
Debt issuance costs related to the senior secured credit facility
amendment
(0.3
)
-
(0.3
)
-
Total income tax adjustments
$
3.0
$
2.6
$
5.6
$
(0.9
)
Three Months Ended Twelve Months
Ended 12/31/2019 12/31/2018 12/31/2019 12/31/2018
(per share) Expenses related to regulatory inquiries
and legal accrual
0.01
-
(0.01
)
(0.01
)
Non-cash interest expense and amortization of non-cash issuance
costs
0.01
(0.01
)
-
-
China grant income
0.01
0.01
0.06
0.06
Contingent Value Rights revaluation
(0.01
)
-
-
-
Income related to finalization of insurance recoveries
-
-
-
-
Loss on extinguishment of convertible debt
-
0.01
-
-
Loss on extinguishment of 2017 senior secured credit facility
-
0.01
-
(0.05
)
Mexico VAT assessment
0.01
-
(0.01
)
-
Venezuela devaluation
-
-
-
(0.01
)
Debt issuance costs related to the senior secured credit facility
amendment
-
-
-
-
Total income tax adjustments (8)
$
0.02
$
0.02
$
0.04
$
-
(3) Relates to non-cash expense on the Company's 2.00%
convertible senior notes due 2019 and the related prepaid forward
share repurchase contracts and the 2.625% convertible senior notes
due 2024. (4) Relates to the finalization of insurance recoveries
in connection with the flooding at one of the Company's
warehouses in Mexico during September 2017, which damaged certain
of the Company's inventory stored within the warehouse. (5) Relates
to the loss on the extinguishment of a portion of the 2.00%
convertible senior notes due 2019 repurchased in March 2018. (6)
Relates to costs incurred in the amendment of the senior secured
credit facility which, among other things, reduced the interest
rate of Term Loan B. (7) Relates to the income tax effect of the
Tax Cuts and Jobs Act. (8) Amounts may not total due to
rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200218005996/en/
Media Contact: Jennifer Butler VP, Media Relations (213)
745-0420
Investor Contact: Eric Monroe Director, Investor Relations (213)
745-0449
Herbalife (NYSE:HLF)
Historical Stock Chart
Von Aug 2024 bis Sep 2024
Herbalife (NYSE:HLF)
Historical Stock Chart
Von Sep 2023 bis Sep 2024