Herbalife

Herbalife Ltd. (NYSE:HLF) reported fourth quarter earnings after the market closed yesterday. The reported numbers beat Wall Street expectations and have Herbalife Ltd. (NYSE:HLF) shares up over 1.6 percent in early morning trading today. We will be liveblogging Herbalife’s earnings conference call today as it goes live on 11 AM EST. To sum up, Herbalife posted a diluted EPS of $1.05 and revenues of $1.1 billion,which exceeded forescast EPS of $1.03 and revenue of $1.05 billion. Another highlight of last night’s press release was the rise in FY2013 EPS guidance from $4.45 to $4.65. Herbalife Ltd. (NYSE:HLF) has been a tug of war between several key investors in the hedge fund community. Bill Ackman presented his short thesis on 20th December and said he was shorting 20 million shares, in the new year Dan Loeb revealed that he is long 8.2 percent of the HLF’s common stock. In February, Carl Icahn disclosed that he is long 13 percent of the company with an active stake. In the past week, Robert Chapman exited his long position while Dan Loeb reduced it.  In short the drama around Herbalife Ltd. (NYSE:HLF) has truly become a circus ball.

11:00 AM EST: Herbalife Ltd. (NYSE:HLF) conference call opens. The operator turns call to Bret Chapman, Herbalife’s General Counsel who states standard disclaimer.  Michael Johnson takes the call.

11.05 AM EST: Johnson says that Herbalife Ltd. (NYSE:HLF) has attained record net sales, net income year over year. He says business continues to do extremely well despite unwarranted and completely dishonest attacks on the company. The CEO says that those “who truly understand Herbalife know that the company is doing meaningful business.”

11:09 AM EST: Michael Johnson says  “we have categorized distributors and customers in a structural way and congratulates them for their contributions.” Des Walsh takes the call. Says our retention rate has remained constant, we have sustainable growth. In 2011 we started a regionalization initiative and added local regional sale managers which worked with local distributors. This strategy has helped more per capita exposure for the company.

11:15 AM EST: Des Walsh says that Herbalife Ltd. (NYSE:HLF) has attained growth from 20 percent net sales y-o-y in North American region. New distributors increased 6 percent, now has 4500 nutritional clubs in the area. He says that we launched Formula One Bar which has been very successful. In Mexico sales have grown handsomely as well where nutrition clubs are doing well. Herbalife Ltd has been doing well in Asia pacific region, South America, Mexico accroding to Walsh, distributors continued to grow in all regions.

11:22 AM EST: Walsh stresses that Herbalife Ltd. (NYSE:HLF)’s growth, distributor retention and consumption has been attained with our excellent and healthy business model.Herbalife is cautious about China where they have positive outlook but they will move slowly in the area. He applauds the distributors and their engagement at the end and their ability to convert new distributors for the company.

11:25 AM EST: Walsh transfers call to John DeSimone, CFO of Herbalife Ltd. (NYSE:HLF). He is talking about gross margins, they declined on a full year basis. Operating margins for last year were nearly flat compared y-o-y. The tax rate was higher than last year but was in line with the company’s expectations. EPS for Q4 was 6 cents higher than Herbalife’s October guidance. Herbalife Ltd. (NYSE:HLF) bought $50 million in common stock in Q4 which is higher than year ago quarter. He talks about the updated full year guidance for 2013. DeSimone opens call for questions.

11:35 AM EST: A question is put up regarding Herbalife Ltd. (NYSE:HLF)’s business in Russia and what pointers has the company taken from the area. Herbalife says that distributor leadership groups in the area has helped in driving brand awareness and helped the business grow. A question comes about the high 54% retention rate in North America and how it was attained. John says that this was achieved again with great distributor leaders again.

11:40 AM EST: Herbalife says that we are focusing on their nomencalture and we are correcting it. The distributor recieves a wholesale price and are therefore wholesale customers rather than just being distributors. Herbalife wants to remove the confusion in the technical terms.In answer to a question, Herbalife’s management says that one time expenses  were incurred this year due to the negative publicity (from Bill Ackman’s short of course). Herbalife intends to improve their publicity which will cost some one time charges.

11:42 AM EST: Herbalife Ltd. (NYSE:HLF) down 2 percent in trading.

11: 45 AM EST: A question is asked about whether Herbalife contacted SEC or vice versa. Management asnwers that Herbalife requested a meeting with SEC and will answer any inquiries made about the company’s structure. To a question about recent activity in Herbalife’s shareholders, the managment refused to comment on the thoughts of Icahn’s public long position or his idea of taking Herbalife Ltd. (NYSE:HLF) private. However they welcomed new shareholders and mentioned that they have had short discussions with Icahn, but nothing concrete.

11:48 AM EST: To a question about share repurchase program and if going forward the company will exceed the $50 million in buybacks achieved in Q4. Herbalife Ltd. (NYSE:HLF) will continue to buyback but no details about how and when this will be done will not be disclosed.

11:52 AM EST: Conference call ends as Herbalife Ltd. (NYSE:HLF) says that they will be back with more exciting earnings and updates in April.