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Herbalife Ltd. Announces Record Fourth Quarter 2012 and Record Full Year Results, and Raises 2013 Earnings Guidance
- Fourth quarter worldwide volume growth of 18 percent with double-digit increases in each of its six regions compared to the prior year period.
- Fourth quarter EPS of
$1.05 increased 22 percent compared to the prior year. - Raising FY'13 EPS guidance to a range of
$4.45 to $4.65 . - Annual sales leader retention of approximately 51.8 percent.
- Repurchased 4.0 million shares of stock since
December 31, 2012 . - Board of directors approved a
$0.30 per share quarterly dividend.
For the twelve months ended
"Herbalife continues to deliver record results in sales and profitability as our independent distributors go deeper into existing markets, developing more and more customers using our nutrition products every day," said
For the year ended
Fourth Quarter and Fiscal 2012 Regional Key Metrics1,2
Volume Points (Mil) | Average Active Sales Leaders | ||||||
Region | 4Q'12 | Yr/Yr % Chg | 4Q'12 | Yr/Yr % Chg | |||
267.0 | 15% | 68,029 | 14% | ||||
304.6 | 18% | 69,553 | 26% | ||||
EMEA | 156.6 | 14% | 47,226 | 14% | |||
208.9 | 13% | 61,836 | 19% | ||||
South & |
222.5 | 34% | 50,874 | 28% | |||
50.5 | 17% | 12,560 | 25% | ||||
Worldwide Total | 1,210.1 | 18% | 300,521 | 20% |
Volume Points (Mil) | Average Active Sales Leaders | ||||||
Region | FY'12 | Yr/Yr % Chg | FY'12 | Yr/Yr % Chg | |||
1,157.8 | 17% | 66,054 | 16% | ||||
1,197.8 | 25% | 63,255 | 31% | ||||
EMEA | 602.5 | 11% | 44,098 | 14% | |||
815.4 | 16% | 57,651 | 21% | ||||
South & |
740.4 | 30% | 44,980 | 29% | |||
206.5 | 34% | 11,683 | 33% | ||||
Worldwide Total | 4,720.4 | 20% | 277,803 | 22% |
2012 Annual Sales Leader Requalification
By the end of January of each year, sales leaders are required to re-qualify to retain their sales leader status. A record number of sales leaders were retained in 2012. The overall pool of sales leaders needing to re-qualify increased by approximately 21% compared to the prior year and we retained 20% more of them than in the prior year. While size of the group needing to re-qualify increased for the year, our overall retention rate remained fairly constant at 51.8%.
________________________________________
1Supplemental tables that include additional business metrics can be found at http://www.ir.herbalife.com.
2Worldwide Average Active Sales Leaders may not equal the sum of the Average Active Sales Leaders in each region due to the calculation being an average of Sales Leaders active in a period, not a summation, and the fact that some sales leaders are active in more than one region but are counted only once in the worldwide amount.
Updated 2013 Guidance
Guidance for fully diluted 2013 EPS is based on the average daily exchange rates of
Based on current business trends the company's first quarter fiscal 2013 and fiscal 2013 guidance is provided below.
Three Months Ending | Twelve Months Ending | ||||||
|
|||||||
Low | High | Low | High | ||||
Volume Point Growth vs 2012 | 11.5% | 13.5% | 8.5% | 10.5% | |||
Net Sales Growth vs 2012 | 15.0% | 17.0% | 12.0% | 14.0% | |||
Diluted EPS | |||||||
Cap Ex ($ millions) | |||||||
Effective Tax Rate | 28.5% | 30.5% | 27.5% | 29.5% |
Announces Quarterly Dividend
The company reported today that its board of directors has approved a dividend of
Share Repurchase Program Update
Subsequent to
Fourth Quarter and Fiscal 2012 Earnings Conference Call
The dial-in number for this conference call for domestic callers is (877) 317-1296 and (706) 634-5671 for international callers (conference ID 90082326). 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 90082326). The webcast of the teleconference will be archived and available on
About
FORWARD-LOOKING STATEMENTS
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
• any collateral impact resulting from the ongoing worldwide financial environment including the availability of liquidity to us, our customers and our suppliers or the willingness of our customers to purchase products in a difficult economic environment;
• our relationship with, and our ability to influence the actions of, our distributors;
• improper action by our employees or distributors 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;
• our reliance upon, or the loss or departure of any member of, our senior management team which could negatively impact our distributor relations and operating results;
• 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 market in which we operate;
• legal challenges to our network marketing program;
• 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
• uncertainties relating to the application of transfer pricing, duties, value added taxes, and other tax regulations, and changes thereto;
• uncertainties relating to interpretation and enforcement of legislation in
• our inability to obtain the necessary licenses to expand our direct selling business in
• adverse changes in the Chinese economy, Chinese legal system or Chinese governmental policies;
• our dependence on increased penetration of existing markets;
• contractual limitations on our ability to expand our business;
• our reliance on our information technology infrastructure and outside manufacturers;
• the sufficiency of trademarks and other intellectual property rights;
• product concentration;
• changes in tax laws, treaties or regulations, or their interpretation;
• taxation relating to our distributors;
• product liability claims;
• 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, except as required by law.
RESULTS OF OPERATIONS:
Condensed Consolidated Statements of Income | ||||||||||||
(In thousands, except per share amounts) | ||||||||||||
(Unaudited) | ||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
$ | 197,052 | $ | 165,737 | $ | 841,243 | $ | 698,631 | |||||
132,070 | 106,192 | 496,101 | 436,930 | |||||||||
South and |
203,252 | 155,373 | 688,799 | 554,439 | ||||||||
EMEA | 164,684 | 151,556 | 627,801 | 615,180 | ||||||||
295,166 | 247,015 | 1,139,867 | 938,590 | |||||||||
67,096 | 58,696 | 278,519 | 210,767 | |||||||||
Worldwide net sales | 1,059,320 | 884,569 | 4,072,330 | 3,454,537 | ||||||||
Cost of Sales | 211,105 | 170,960 | 812,583 | 680,084 | ||||||||
Gross Profit | 848,215 | 713,609 | 3,259,747 | 2,774,453 | ||||||||
Royalty Overrides | 355,658 | 293,109 | 1,338,633 | 1,137,560 | ||||||||
SGA | 332,764 | 286,151 | 1,259,667 | 1,074,623 | ||||||||
Operating Income | 159,793 | 134,349 | 661,447 | 562,270 | ||||||||
Interest Expense - net | 2,453 | (1,357 | ) | 10,541 | 2,491 | |||||||
Income before income taxes | 157,340 | 135,706 | 650,906 | 559,779 | ||||||||
Income Taxes | 39,459 | 30,349 | 173,716 | 147,201 | ||||||||
Net Income | 117,881 | 105,357 | 477,190 | 412,578 | ||||||||
Basic Shares | 107,444 | 115,989 | 112,359 | 117,540 | ||||||||
Diluted Shares | 112,230 | 122,640 | 117,856 | 124,846 | ||||||||
Basic EPS | $ | 1.10 | $ | 0.91 | $ | 4.25 | $ | 3.51 | ||||
Diluted EPS | $ | 1.05 | $ | 0.86 | $ | 4.05 | $ | 3.30 | ||||
Dividends declared per share | $ | 0.30 | $ | 0.20 | $ | 1.20 | $ | 0.73 | ||||
Condensed Consolidated Balance Sheets | |||||||
(In thousands) | |||||||
(Unaudited) | |||||||
2012 | 2011 | ||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash & cash equivalents | $ | 333,534 | $ | 258,775 | |||
Receivables, net | 116,139 | 89,660 | |||||
Inventories | 339,411 | 247,696 | |||||
Prepaid expenses and other current assets | 125,425 | 117,073 | |||||
Deferred income taxes | 49,339 | 55,615 | |||||
Total Current Assets | 963,848 | 768,819 | |||||
Property, plant and equipment, net | 242,886 | 193,703 | |||||
Deferred compensation plan assets | 24,267 | 20,511 | |||||
Other assets | 48,805 | 41,125 | |||||
Deferred financing cost, net | 7,462 | 4,797 | |||||
Marketing related intangibles and other intangible assets, net | 311,186 | 311,764 | |||||
Goodwill | 105,490 | 105,490 | |||||
Total Assets | $ | 1,703,944 | $ | 1,446,209 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current Liabilities: | |||||||
Accounts payable | $ | 75,209 | $ | 57,095 | |||
Royalty overrides | 243,351 | 197,756 | |||||
Accrued compensation | 95,220 | 76,435 | |||||
Accrued expenses | 181,523 | 152,744 | |||||
Current portion of long term debt | 56,302 | 1,542 | |||||
Advance sales deposits | 49,432 | 31,702 | |||||
Income taxes payable | 15,854 | 31,415 | |||||
Total Current Liabilities | 716,891 | 548,689 | |||||
Non-current liabilities | |||||||
Long-term debt, net of current portion | 431,305 | 202,079 | |||||
Deferred compensation plan liability | 29,454 | 23,702 | |||||
Deferred income taxes | 62,982 | 72,348 | |||||
Other non-current liabilities | 42,557 | 39,203 | |||||
Total Liabilities | 1,283,189 | 886,021 | |||||
Commitments and Contingencies | |||||||
Shareholders' equity: | |||||||
Common shares | 107 | 116 | |||||
Paid-in capital in excess of par value | 303,975 | 291,950 | |||||
Accumulated other comprehensive loss | (31,695 | ) | (37,809 | ) | |||
Retained earnings | 148,368 | 305,931 | |||||
Total Shareholders' Equity | 420,755 | 560,188 | |||||
Total Liabilities and Shareholders' Equity | $ | 1,703,944 | $ | 1,446,209 | |||
Condensed Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
(Unaudited) |
||||||||
|
||||||||
Twelve Months Ended | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income | $ | 477,190 | $ | 412,578 | ||||
Adjustments to reconcile net income to net cash provided by | ||||||||
operating activities: | ||||||||
Depreciation and amortization | 74,384 | 71,853 | ||||||
Excess tax benefits from share-based payment arrangements | (29,684 | ) | (27,450 | ) | ||||
Share based compensation expenses | 27,906 | 24,133 | ||||||
Amortization of discount and deferred financing costs | 1,797 | 1,007 | ||||||
Deferred income taxes | (9,050 | ) | (12,984 | ) | ||||
Unrealized foreign exchange transaction loss (gain) | 2,121 | 9,403 | ||||||
Write-off of deferred financing costs | - | 914 | ||||||
Other | 532 | 2,206 | ||||||
Changes in operating assets and liabilities: | ||||||||
Receivables | (28,186 | ) | (9,687 | ) | ||||
Inventories | (82,177 | ) | (84,880 | ) | ||||
Prepaid expenses and other current assets | 249 | 3,229 | ||||||
Other assets | (5,288 | ) | (13,864 | ) | ||||
Accounts payable | 17,034 | 15,427 | ||||||
Royalty overrides | 41,868 | 44,041 | ||||||
Accrued expenses and accrued compensation | 39,440 | 28,749 | ||||||
Advance sales deposits | 17,790 | (1,538 | ) | |||||
Income taxes | 16,106 | 42,659 | ||||||
Deferred compensation plan liability | 5,752 | 3,535 | ||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 567,784 | 509,331 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchases of property, plant and equipment | (121,524 | ) | (90,408 | ) | ||||
Proceeds from sale of property, plant and equipment | 280 | 297 | ||||||
Deferred compensation plan assets | (3,756 | ) | (1,975 | ) | ||||
NET CASH USED IN INVESTING ACTIVITIES | (125,000 | ) | (92,086 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Dividends paid | (135,091 | ) | (85,489 | ) | ||||
Borrowings from long-term debt | 1,430,560 | 914,200 | ||||||
Principal payments on long-term debt | (1,146,580 | ) | (888,865 | ) | ||||
Deferred financing costs | (4,460 | ) | (5,718 | ) | ||||
Share repurchases | (556,727 | ) | (321,639 | ) | ||||
Excess tax benefits from share-based payment arrangements | 29,684 | 27,450 | ||||||
Proceeds from exercise of stock options and sale of stock under | ||||||||
employee stock purchase plan | 11,373 | 22,262 | ||||||
NET CASH USED IN FINANCING ACTIVITIES | (371,241 | ) | (337,799 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | 3,216 | (11,221 | ) | |||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 74,759 | 68,225 | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR | 258,775 | 190,550 | ||||||
CASH AND CASH EQUIVALENTS, END OF YEAR | 333,534 | 258,775 | ||||||
CASH PAID DURING THE YEAR | ||||||||
Interest paid | $ | 14,268 | $ | 8,800 | ||||
Income taxes paid | $ | 169,725 | $ | 118,906 |
SUPPLEMENTAL INFORMATION
SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited), (Dollars in Thousand, Except Per Share Data)
In addition to its reported results, the Company has included in the tables below adjusted results that the
The following is a reconciliation of net income and diluted earnings per share, 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 | |||||||
Net income, as reported | ||||||||
Write-off of unamortized deferred financing cost | ||||||||
from debt refinancing (net of |
- | - | - | 700 | ||||
Net income, as adjusted |
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 | |||||||
Diluted earnings per share, as reported | ||||||||
Write-off of unamortized deferred financing cost | ||||||||
from debt refinancing | - | - | - | 0.01 | ||||
Diluted earnings per share, as adjusted |
The following is a reconciliation of total long-term debt to net debt:
Total long-term debt (current and long-term portion) | $ | 487,607 | $ | 203,621 | |||
Less: Cash and cash equivalents | 333,534 | 258,775 | |||||
Net debt | $ | 154,073 | $ | (55,154 | ) |
Media Contact:
SVP,
213.745.0517
or
Investor Contact:
VP, Investor Relations
213.745.0474
Source:
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