Herbalife Ltd. (HLF) Reports Fourth Quarter and Full Year 2016 Results


Herbalife Ltd. (NYSE:HLF) reports results for the fourth quarter and full year ended December 31, 2016.

Michael O. Johnson, chairman and CEO of Herbalife, stated, “2016 was a dynamic and record-breaking year. Our members continue to successfully build customer-focused businesses, which is evident in our record volume and retention metrics. In addition, our new share buyback authorization is a further testament of our commitment to enhance shareholder value.”

The company reported record full year 2016 worldwide volume points of 5.6 billion, which represents an increase of approximately 5% compared to 2015. Reported full year 2016 net sales of $4.5 billion was flat, while constant currency net sales increased 6%, both compared to 2015.

On a reported basis, full year 2016 net income was $260.0 million, or $3.02 per diluted share, compared to net income of $339.1 million or $3.97 per diluted share for 2015.

Adjusted1 earnings for 2016 was $4.85 per diluted share compared to $4.952 per diluted share for 2015. Due to the negative impact of currency, full year 2016 reported and adjusted1 net income were each negatively impacted by $82.2 million, and reported diluted EPS and adjusted1 diluted EPS were each negatively impacted by $0.95.

For the fourth quarter 2016, the company reported net sales of $1.0 billion and a volume point decline of 1% compared to the prior year period.

On a reported basis, fourth quarter 2016 net income was $99.4 million, or $1.16 per diluted share, compared to net income of $84.5 million or $0.98 per diluted share for the fourth quarter in 2015.

Adjusted1 earnings for the fourth quarter was $1.00 per diluted share compared to $1.172 per diluted share for the comparable quarter in 2015. Due to the negative impact of currency, fourth quarter 2016 reported and adjusted1 net income were each negatively impacted by $9.5 million, and reported diluted EPS and adjusted1 diluted EPS were each negatively impacted by $0.11.

In a separate press release this afternoon, the Company announced that it has reached an agreement in principle to form a joint venture with China’s Tasly Holding Group. The press release can be found here http://ir.Herbalife.com.

Fourth Quarter and Fiscal 2016 Key Metrics

Regional Volume Point Metrics

Regional Net Sales and Foreign Exchange (“FX”) Impact

Outlook

John DeSimone, CFO of Herbalife, stated “the company’s new $1.45 billion debt deal and $1.5 billion share repurchase authorization combined with the strength of our balance sheet, allows us to capitalize on our global market potential, and gives us the financial flexibility to further create long-term shareholder value through investments that includes share repurchase.”

With respect to guidance, the company cannot accurately predict the impact to its share base from any repurchases that may be made under the new authorization during 2017 and therefore the guidance table below excludes any impact thereof to EPS. However, the cost of the new debt deal is predictable and has been included.

Shares of Herbalife are down nearly 3% to $57.80 in after-hours trading Thursday. HLF has a 1-year high of $72.22 and a 1-year low of $45.15. The stock’s 50-day moving average is $55.58 and its 200-day moving average is $57.06.

On the ratings front, Pivotal Research analyst Timothy Ramey reiterated a Buy rating on HLF, with a price target of $90, in a report issued on January 20. The current price target represents a potential upside of 52% from where the stock is currently trading. According to TipRanks.com, Ramey has a yearly average return of 5.2%, a 58% success rate, and is ranked #1267 out of 4494 analysts.

Herbalife Ltd. is a global nutrition company. Its offers range of science-based weight management products, nutritional supplements and personal care products intended to support a healthy lifestyle. It operates through the following geographical segments: North America, Mexico, South & Central America, EMEA (Europe, Middle East and Africa), Asia Pacific and China. It’s products are categorized into four principal groups: weight management, targeted nutrition, energy, sports & fitness, and outer nutrition. Its weight management products include meal replacement, protein shakes, drink mixes, weight loss enhancers and healthy snacks and its Outer nutrition products include facial skin care, body care and hair care.