Stock Update (NYSE:HLF): Herbalife Ltd. Announces First Quarter 2015 Results and Raises Full Year Guidance

Herbalife Ltd. (NYSE:HLF) reported first quarter net sales of $1.1 billion. While local currency net sales grew by 4%, reported net sales declined 12% primarily due to the unfavorable impact of currency exchange rates. Adjusted1 earnings for the quarter were $1.29 per diluted share compared to $1.50 per diluted share for the same period in 2014. On a reported basis, the company announced first quarter net income of $78.2 million, or $0.92 per diluted share, compared to $74.6 million, or $0.74 per diluted share for the same period in 2014. First quarter 2015 diluted EPS was negatively impacted by a $0.442currency headwind.

First quarter 2015 reported net income was negatively impacted by $36.3 million in pre-tax charges, or $0.30 per diluted share after tax, related to the devaluation of the Venezuelan Bolivar. During the first quarter, the company remeasured its Bolivar-denominated monetary assets and liabilities at the SIMADI rate.

For the quarter that ended March 31, 2015, the company generated $161.1 million net operating cash flow, and invested $15.4 million in capital expenditures.

Michael Johnson, chairman and CEO stated, “Our performance this quarter was above our expectations and has resulted in us increasing our full year 2015 guidance.”

Johnson continued, “As reflected in our record sales leader retention results, we remain confident that we are building a stable foundation for volume and sales growth, driving long-term shareholder value creation, and providing an even better experience for our millions of Members and our customers throughout the world.”

First Quarter and 2015 Key Metrics

Regional Volume Point and Average Active Sales Leader Metrics

Volume Points (Mil) Average Active Sales Leaders
Region 1Q’15 Yr/Yr % Chg 1Q’15 Yr/Yr % Chg
North America 297.8 -11 % 77,480 4 %
Asia Pacific 265.9 -12 % 74,767 4 %
EMEA 228.4 13 % 69,256 28 %
Mexico 203.4 -8 % 65,340 3 %
South & Central America 210.5 -8 % 62,971 2 %
China 113.7 25 % 20,277 22 %
Worldwide Total 1,319.7 -4 % 357,465 8 %

Regional Net Sales and FX Impact

Region Reported Net Sales1Q ’15 (mil) Growth/Declineincluding FX Growth/Declineexcluding FX
North America $ 226.7 -9% -8%
Asia Pacific (ex. China) $ 242.8 -13% -10%
EMEA $ 186.4 -12% 14%
Mexico $ 123.6 -13% -2%
South & Central America $ 161.7 -34% 16%
China $ 164.2 21% 23%
Worldwide Total $ 1,105.4 -12% 4%

2015 Outlook

Guidance for the second quarter includes an unfavorable impact from currency exchange rates of approximately $0.40 per diluted share, inclusive of approximately $0.14resulting from Venezuela. Full year 2015 guidance includes a currency headwind of approximately $1.26 per diluted share, including approximately $0.45 from Venezuela.

Based on current business trends the company’s second quarter 2015 and full year 2015 guidance is as follows:

Three Months Ending Twelve Months Ending
June 30, 2015 December 31, 2015
Low High Low High
Volume Point Growth vs 2014 (7.5%) (4.5%) (4.0%) (1.0%)
Net Sales Growth vs 2014 (13.5%) (10.5%) (9.5%) (6.5%)
Adjusted Diluted EPS $1.05 $1.15 $4.30 $4.60
Cap Ex ($ millions) $20.0 $30.0 $120.0 $140.0
Effective Tax Rate 28.0% 30.0% 28.0% 30.0%
Currency Adjusted(a) Net Sales Growth vs 2014 (3.0%) 0.0% (0.5%) 2.5%
Currency Adjusted EPS (a) $1.45 $1.55 $5.55 $5.85
Free Cash Flow ($ millions) (b) $440.0 $470.0
(a) Excludes the impact of Venezuela price increases tied to FX rate movements.
(b) Free Cash Flow equals Cash Flow from operations less Capital Expenditures.

Guidance excludes the impact of legal and advisory services and expenses relating to challenges to the company’s business model, including expenses related to an FTC Civil Investigative Demand or CID, the impact of non-cash interest costs associated with the company’s Convertible Notes and the expenses incurred related to the effort to recover costs related to the re-audits that occurred in 2013. Forward guidance is based on the average daily exchange rates of the first two weeks of April. With respect to Venezuela, the guidance assumes a SIMADI rate of 192 to 1 for the remainder of 2015 and excludes the potential impact of the recent and any future devaluation of the Venezuelan Bolivar and future repatriation, if any, of existing cash balances in Venezuela. (Original Source)

Shares of Herbalife Ltd closed today at $40.09, down $1.98 or 4.71%. HLF has a 1-year high of $69.69 and a 1-year low of $27.60. The stock’s 50-day moving average is $42.46 and its 200-day moving average is $38.80.

On the ratings front, Herbalife has been the subject of a number of recent research reports. In a report issued on April 23, Canaccord Genuity analyst Scott Van Winkle reiterated a Buy rating on HLF, with a price target of $50, which represents a potential upside of 19.3% from where the stock is currently trading. Separately, on March 13, BTIG’s April Scee maintained a Buy rating on the stock and has a price target of $55.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Scott Van Winkle and April Scee have a total average return of 13.6% and 3.6% respectively. Winkle has a success rate of 57.6% and is ranked #196 out of 3589 analysts, while Scee has a success rate of 55.2% and is ranked #1679.

Herbalife Ltd is a nutrition company. The Companyalong with its subsidiariessells weight management, targeted nutrition, energy, sports & fitness, and outer nutrition products.

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