Herbalife’s Second Quarter Earnings Weaker Than Expected

Photo credit: Reuters/ Robert Galbraith

Herbalife Ltd. (HLF—NYSE) announced second quarter 2014 results after the markets closed on Monday with earnings of $1.55, falling a penny short of expectations. According to the Wall Street Journal’s Money Beat, analysts polled by Thomson Reuters expected Herbalife to report earnings of $1.56 a share. This was the first time since 2008 that Herbalife missed estimates. Despite this difference, earnings increased 10 percent compared to the prior year.

The global nutrition company reported net sales for the quarter ended June 30, 2014, at $1.3 billion, reflecting an increase of 7 percent compared to 2013. Estimates had been $1.36 billion. Second quarter worldwide volume growth was 5 percent compared to the prior year period.

Adjusted net income for the quarter was $141.4 million, compared to 2013 second quarter adjusted net income of $150.7 million. On a reported basis, second quarter 2014 net income was $119.5 million, or $1.31 per diluted share compared to $143.2 million, or $1.34 per diluted share for the same period in 2013.

“Herbalife has once again delivered strong results in sales and profitability while demonstrating our continued ability to enhance our earnings per share,” said Michael Johnson, Herbalife’s Chairman and CEO. “Our performance is a testament to the enthusiasm our millions of consumers and members have for our products. Additionally, our independent members are successfully executing numerous growth strategies to further develop customer loyalty and encourage individuals across our network to lead healthier, nutritious lives.”

For the quarter ended June 30, 2014, the company generated cash flow from operations of $156.9 million; invested $39.6 million in capital expenditures; and repurchased $581.3 million in common shares outstanding under its share repurchase program.

Herbalife’s guidance for third quarter EPS is a range of $1.49 to $1.53, and full-year EPS is a range of $6.17 to $6.32.

During the second quarter, the company repurchased 9.8 million shares at an average cost of $59.41. There is currently $232.9 million remaining on the existing $1.5 billion share repurchase authorization.

Read the full results here.


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