Herbalife Shares Jump After Earnings

Nutritional supplements seller Herbalife earnings came right in line with analysts’ estimates.

EPS for the fourth quarter came in at $US1.28.

Sales for the quarter came in at $US1.27 billion.

The stock is up more than 4% in after-hours trading following the earnings announcement.

Herbalife, a multi-level marketing company that sells weight loss products, is one of the closely followed stocks on Wall Street these days. The company has been at the center of a huge hedge fund battle for over a year now.

In December 2012, Bill Ackman, who runs Pershing Square, publicly declared that he was shorting $US1 billion worth of Herbalife. His thesis is that the company operates as a pyramid scheme and that regulators, specifically the FTC, will be persuaded to investigate and shut down the company.

Right after Ackman publicly revealed his short, his arch-nemesis Carl Icahn piled on by amassing a huge long position. Icahn, who has made hundreds of millions on his position, has said that Ackman will be the victim of “the mother of all short squeezes.” A number of other fund managers have gone long the stock, too.

Ackman has said that he will take his Herbalife short “to the end of the earth.”

Here’s an excerpt from the Q4 earnings release:

Herbalife Ltd. Announces Record Fourth Quarter 2013 and Record Full Year Results, and Raises 2014 Earnings Guidance

  • Fourth quarter worldwide volume growth of 13 per cent compared to the prior year period.
  • Fourth quarter EPS of $US1.15 increased 15 per cent, and adjusted1EPS of $US1.28 increased 28 per cent, both as compared to the prior year period.
  • Raises FY’14 adjusted2diluted EPS guidance to a range of $US5.85 to $US6.05, reflecting the impact of the recent financial transactions and subsequent share repurchase.
  • Annual sales leader retention of approximately 51.8 per cent.
  • Generated $US773 million in operating cash flow in fiscal 2013.
  • Board of Directors approved a $US0.30 per share quarterly dividend.

LOS ANGELES–(BUSINESS WIRE)–

Herbalife Ltd. (HLF) today reported fourth quarter net sales of $US1.3 billion, reflecting an increase of 20 per cent compared to the same period in 2012, on volume point growth of 13 per cent. Net income for the quarter was $US123.5 million, or $US1.15 per diluted share. On an adjustedbasis, adjusted1 net income for the quarter was $US137.2 million, or $US1.28 per diluted share, as compared to 2012 fourth quarter net income3of $US112.2 million and EPS of $US1.00.

For the twelve months ended December 31, 2013, the company reported record net sales of $US4.8 billion, an 18 per cent increase, on 13 per cent growth in volume compared to 2012. For the same period, the company reported net income of $US527.5 million, or $US4.91 per diluted share. On an adjusted basis, adjusted1 net income of $US577.4 million, or $US5.37 per diluted share, reflected increases of 24 per cent and 36 per cent respectively, over 2012 net income3 of $US464.0 million and EPS of $US3.94.

“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 $US772.9 million, an increase of 36 per cent compared to 2012; paid dividends of $US123.1 million; invested $US162.5 million in capital expenditures; and repurchased $US297.4 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 $US1.5 billion. Following repurchases made in connection with the company’s recent financing transaction on February 7, 2014, the remaining authorised capacity under the repurchase program is $US814 million.

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