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Herbalife Ltd. Announces Record Second Quarter 2012 and Raises 2012 Earnings Guidance
- Second quarter volume points of 1.2 billion increased 23 percent with increases in each of its six regions compared to the prior year period.
- Second quarter EPS of
$1.10 increased 25 percent compared to the prior year period EPS. - Raising FY'12 EPS guidance to a range of
$3.88 to $3.98 . - Board of directors approved a
$0.30 per share quarterly dividend. - Board of directors approved a new
$1 billion share repurchase authorization. - Company announces a
$500 million increase in its credit facility.
"The broad strength of our business success continued throughout the second quarter with strong sales performance from each of our six regions, along with record earnings and strong cash flow," said
For the quarter ended
Second Quarter Regional Key Metrics1,2
Volume Points (Mil) | Average Active Sales Leaders | ||||||||||||||||||||||
Region | 2Q'12 | Yr/Yr % Chg | 2Q'12 | Yr/Yr % Chg | |||||||||||||||||||
305.0 | 18 | % | 65,828 | 18 | % | ||||||||||||||||||
313.8 | 29 | % | 61,329 | 35 | % | ||||||||||||||||||
EMEA | 154.5 | 13 | % | 42,972 | 14 | % | |||||||||||||||||
203.9 | 17 | % | 55,969 | 21 | % | ||||||||||||||||||
South & |
167.2 | 30 | % | 41,966 | 27 | % | |||||||||||||||||
57.7 | 54 | % | 11,949 | 43 | % | ||||||||||||||||||
Worldwide Total | 1,202.1 | 23 | % | 269,974 | 24 | % | |||||||||||||||||
Updated 2012 Guidance
Guidance for fully diluted 2012 EPS is based on the average daily exchange rates of the first two weeks of
Based on current business trends the company's third quarter fiscal 2012 and fiscal 2012 guidance is provided below.
Three Months Ending | Twelve Months Ending | |||||||||||||||||||||||||||||
Low | High | Low | High | |||||||||||||||||||||||||||
Volume Point Growth vs 2011 | 13.0 | % | 15.0 | % | 17.0 | % | 19.0 | % | ||||||||||||||||||||||
Net Sales Growth vs 2011 | 10.0 | % | 12.0 | % | 15.0 | % | 17.0 | % | ||||||||||||||||||||||
Diluted EPS | $ | 0.97 | $ | 1.01 | $ | 3.88 | $ | 3.98 | ||||||||||||||||||||||
Cap Ex ($ millions) | $ | 35.0 | $ | 45.0 | $ | 110.0 | $ | 120.0 | ||||||||||||||||||||||
Effective Tax Rate | 23.0 | % | 25.0 | % | 26.5 | % | 28.5 | % | ||||||||||||||||||||||
Announces Quarterly Dividend
The company reported today that its board of directors has approved a dividend of
Share Repurchase Program Update
Following the completion of the prior
Herbalife's future share repurchases, if any, may take place from time to time at management's discretion based on market conditions, and shares may be purchased in open-market, privately negotiated or other transactions.
Announces a New
The company amended its credit facility to add a new
Chief financial officer
Second Quarter 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 96426914). 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 96426914). The webcast of the teleconference will be archived and available on
About
FORWARD-LOOKING STATEMENTS
This document contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words "may," "will," "estimate," "intend," "continue," "believe," "expect" or "anticipate" and any other similar words.
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 "crisis," 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;
- 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
Venezuela ; - 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
China governing direct selling; - our inability to obtain the necessary licenses to expand our direct selling business in
China ; - 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; and
- whether we will purchase any of our shares in the open markets or otherwise.
We do not undertake any obligation to update or release any revisions to any forward-looking statements or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.
1 Supplemental tables that include additional business metrics can be found at http://www.ir.herbalife.com.
2 Worldwide 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.
RESULTS OF OPERATIONS:
Condensed Consolidated Statements of Income | ||||||||||||||||||||||||||||
(In thousands, except per share amounts) | ||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||||||||||||||
$ | 224,661 | $ | 185,159 | $ | 435,372 | $ | 352,159 | |||||||||||||||||||||
119,449 | 113,882 | 236,558 | 217,759 | |||||||||||||||||||||||||
South and |
152,583 | 130,130 | 318,054 | 255,407 | ||||||||||||||||||||||||
EMEA | 161,635 | 162,017 | 315,627 | 315,954 | ||||||||||||||||||||||||
296,548 | 237,103 | 556,496 | 436,406 | |||||||||||||||||||||||||
77,072 | 51,363 | 134,016 | 97,065 | |||||||||||||||||||||||||
Worldwide net sales | 1,031,948 | 879,654 | 1,996,123 | 1,674,750 | ||||||||||||||||||||||||
Cost of Sales | 203,737 | 171,023 | 399,881 | 333,816 | ||||||||||||||||||||||||
Gross Profit | 828,211 | 708,631 | 1,596,242 | 1,340,934 | ||||||||||||||||||||||||
Royalty Overrides | 335,195 | 289,232 | 652,728 | 553,609 | ||||||||||||||||||||||||
SGA | 306,310 | 266,225 | 602,703 | 510,751 | ||||||||||||||||||||||||
Operating Income | 186,706 | 153,174 | 340,811 | 276,574 | ||||||||||||||||||||||||
Interest Expense - net | 3,169 | 855 | 4,542 | 3,503 | ||||||||||||||||||||||||
Income before income taxes | 183,537 | 152,319 | 336,269 | 273,071 | ||||||||||||||||||||||||
Income Taxes | 50,169 | 41,139 | 94,739 | 73,872 | ||||||||||||||||||||||||
Net Income | 133,368 | 111,180 | 241,530 | 199,199 | ||||||||||||||||||||||||
Basic Shares | 116,557 | 119,007 | 116,376 | 118,609 | ||||||||||||||||||||||||
Diluted Shares | 121,482 | 126,617 | 122,182 | 126,610 | ||||||||||||||||||||||||
Basic EPS | $ | 1.14 | $ | 0.93 | $ | 2.08 | $ | 1.68 | ||||||||||||||||||||
Diluted EPS | $ | 1.10 | $ | 0.88 | $ | 1.98 | $ | 1.57 | ||||||||||||||||||||
Dividends declared per share | $ | 0.30 | $ | 0.20 | $ | 0.60 | $ | 0.33 | ||||||||||||||||||||
Condensed Consolidated Balance Sheets | |||||||||||||||||
(In thousands) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
2012 | 2011 | ||||||||||||||||
ASSETS | |||||||||||||||||
Current Assets: | |||||||||||||||||
Cash & cash equivalents | $ | 286,166 | $ | 258,775 | |||||||||||||
Receivables, net | 108,633 | 89,660 | |||||||||||||||
Inventories | 262,386 | 247,696 | |||||||||||||||
Prepaid expenses and other current assets | 131,919 | 117,073 | |||||||||||||||
Deferred income taxes | 56,998 | 55,615 | |||||||||||||||
Total Current Assets | 846,102 | 768,819 | |||||||||||||||
Property, plant and equipment, net | 196,787 | 193,703 | |||||||||||||||
Deferred compensation plan assets | 23,119 | 20,511 | |||||||||||||||
Deferred financing cost, net | 4,222 | 4,797 | |||||||||||||||
Other assets | 43,644 | 41,125 | |||||||||||||||
Marketing related intangibles and other intangible assets, net | 311,428 | 311,764 | |||||||||||||||
Goodwill | 105,490 | 105,490 | |||||||||||||||
Total Assets | $ | 1,530,792 | $ | 1,446,209 | |||||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||||
Current Liabilities: | |||||||||||||||||
Accounts payable | $ | 79,031 | $ | 57,095 | |||||||||||||
Royalty overrides | 206,079 | 197,756 | |||||||||||||||
Accrued compensation | 71,131 | 76,435 | |||||||||||||||
Accrued expenses | 156,672 | 152,744 | |||||||||||||||
Current portion of long term debt | 763 | 1,542 | |||||||||||||||
Advance sales deposits | 36,298 | 31,702 | |||||||||||||||
Income taxes payable | 16,356 | 31,415 | |||||||||||||||
Total Current Liabilities | 566,330 | 548,689 | |||||||||||||||
Non-current liabilities | |||||||||||||||||
Long-term debt, net of current portion | 555,051 | 202,079 | |||||||||||||||
Deferred compensation plan liability | 27,118 | 23,702 | |||||||||||||||
Deferred income taxes | 72,828 | 72,348 | |||||||||||||||
Other non-current liabilities | 38,746 | 39,203 | |||||||||||||||
Total Liabilities | 1,260,073 | 886,021 | |||||||||||||||
Commitments and Contingencies | |||||||||||||||||
Shareholders' equity: | |||||||||||||||||
Common shares | 112 | 116 | |||||||||||||||
Additional paid in capital | 288,050 | 291,950 | |||||||||||||||
Accumulated other comprehensive loss | (42,927 | ) | (37,809 | ) | |||||||||||||
Retained earnings | 25,484 | 305,931 | |||||||||||||||
Total Shareholders' Equity | 270,719 | 560,188 | |||||||||||||||
Total Liabilities and Shareholders' Equity | $ | 1,530,792 | $ | 1,446,209 | |||||||||||||
Condensed Consolidated Statements of Cash Flows | |||||||||||||||||
(In thousands) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Six Months Ended | |||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES | |||||||||||||||||
Net income | $ | 241,530 | $ | 199,199 | |||||||||||||
Adjustments to reconcile net income to net cash provided by | |||||||||||||||||
operating activities: | |||||||||||||||||
Depreciation and amortization | 36,613 | 36,657 | |||||||||||||||
Excess tax benefits from share-based payment arrangements | (27,212 | ) | (19,544 | ) | |||||||||||||
Share based compensation expenses | 12,497 | 11,103 | |||||||||||||||
Amortization of discount and deferred financing costs | 572 | 435 | |||||||||||||||
Deferred income taxes | (4,896 | ) | 671 | ||||||||||||||
Unrealized foreign exchange transaction loss (gain) | (4,909 | ) | 5,452 | ||||||||||||||
Write-off of deferred financing costs | - | 914 | |||||||||||||||
Other | 120 | 899 | |||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||
Receivables | (21,317 | ) | (26,966 | ) | |||||||||||||
Inventories | (14,476 | ) | (26,489 | ) | |||||||||||||
Prepaid expenses and other current assets | (9,367 | ) | (6,391 | ) | |||||||||||||
Other assets | (3,124 | ) | (4,977 | ) | |||||||||||||
Accounts payable | 22,948 | 19,411 | |||||||||||||||
Royalty overrides | 7,932 | 16,873 | |||||||||||||||
Accrued expenses and accrued compensation | (3,516 | ) | (2,995 | ) | |||||||||||||
Advance sales deposits | 5,199 | 26,323 | |||||||||||||||
Income taxes | 15,433 | 16,427 | |||||||||||||||
Deferred compensation plan liability | 3,416 | 3,645 | |||||||||||||||
NET CASH PROVIDED BY OPERATING ACTIVITIES | 257,443 | 250,647 | |||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||||||||
Purchases of property, plant and equipment | (39,719 | ) | (44,428 | ) | |||||||||||||
Proceeds from sale of property, plant and equipment | 43 | 190 | |||||||||||||||
Deferred compensation plan assets | (2,609 | ) | (2,055 | ) | |||||||||||||
NET CASH USED IN INVESTING ACTIVITIES | (42,285 | ) | (46,293 | ) | |||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||||||||||||||
Dividends paid | (70,310 | ) | (38,689 | ) | |||||||||||||
Borrowings from long-term debt | 806,560 | 390,700 | |||||||||||||||
Principal payments on long-term debt | (454,371 | ) | (408,329 | ) | |||||||||||||
Deferred financing costs | - | (5,729 | ) | ||||||||||||||
Share repurchases | (505,636 | ) | (115,287 | ) | |||||||||||||
Excess tax benefits from share-based payment arrangements | 27,212 | 19,544 | |||||||||||||||
Proceeds from exercise of stock options and sale of stock under | |||||||||||||||||
employee stock purchase plan | 10,356 | 8,280 | |||||||||||||||
NET CASH USED IN FINANCING ACTIVITIES | (186,189 | ) | (149,510 | ) | |||||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH | (1,578 | ) | 9,073 | ||||||||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 27,391 | 63,917 | |||||||||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 258,775 | 190,550 | |||||||||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | 286,166 | 254,467 | |||||||||||||||
CASH PAID DURING THE YEAR | |||||||||||||||||
Interest paid | $ | 5,884 | $ | 4,062 | |||||||||||||
Income taxes paid | $ | 86,214 | $ | 49,738 | |||||||||||||
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, presented and reported in accordance with U.S. generally accepted accounting principles, to net income adjusted for certain items: |
|||||||||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||
Net income, as reported | $ | 133,368 | $ | 111,180 | $ | 241,530 | $ | 199,199 | |||||||||||||||||||||
Write-off of unamortized deferred financing cost | |||||||||||||||||||||||||||||
from debt refinancing (net of |
- | - | - | 700 | |||||||||||||||||||||||||
Net income, as adjusted | $ | 133,368 | $ | 111,180 | $ | 241,530 | $ | 199,899 | |||||||||||||||||||||
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 | Six Months Ended | ||||||||||||||||||||||||||||
Diluted earnings per share, as reported | $ | 1.10 | $ | 0.88 | $ | 1.98 | $ | 1.57 | |||||||||||||||||||||
Write-off of unamortized deferred financing cost | |||||||||||||||||||||||||||||
from debt refinancing | - | - | - | 0.01 | |||||||||||||||||||||||||
Diluted earnings per share, as adjusted | $ | 1.10 | $ | 0.88 | $ | 1.98 | $ | 1.58 | |||||||||||||||||||||
The following is a reconciliation of total long-term debt to net debt:
Total long-term debt (current and long-term portion) | $ | 555,814 | $ | 203,621 | ||||||||||||||
Less: Cash and cash equivalents | 286,166 | 258,775 | ||||||||||||||||
Net debt | $ | 269,648 | $ | (55,154 | ) | |||||||||||||
Media Contact:
SVP,
213-745-0517
or
Investor Contact:
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213-745-0474
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