Home Business Herbalife Ltd. (HLF) Beats Estimates, Dumps Dividend

Herbalife Ltd. (HLF) Beats Estimates, Dumps Dividend

When you purchase through our sponsored links, we may earn a commission. By using this website you agree to our T&Cs.

Herbalife Ltd. (NYSE:HLF) released the results from its first quarter of the year, posting record adjusted results for the first quarter. The company’s adjusted earnings per share were $1.50, an increase of 18% year over year, on $1.3 billion in sales, a 12% increase. Reported earnings per share were 74 cents, mostly due to foreign exchange losses in connection with Herbalife’s Venezuela’s business. Analysts had been expecting the nutritional supplements company to post earnings of $1.29 per share on $1.23 billion in revenue.

Herbalife management happy with earnings results

Herbalife Ltd. (NYSE:HLF) said it generated $190.6 million in cash flow from operations, a 39% increase year over year. It paid $30.4 million in cash dividends and spent $49.7 million in capital expenditures.

“We continue to achieve record earnings, strong sales growth and enhanced profitability,” said Michael O. Johnson, Herbalife Ltd. (NYSE:HLF)’s chairman and CEO, in a statement. “Our performance reflects the demand for our exceptional products, as well as the hard work of our independent members who continue to cultivate and grow their base of satisfied customers worldwide. In addition, we are pleased to raise our expectations for the balance of 2014. This reflects our confidence that Herbalife is well-positioned to continue to grow and play an increasingly important role in improving nutrition and reducing obesity around the world.”

Herbalife raises guidance, returns capital

Herbalife Ltd. (NYSE:HLF) also raised its 2014 fiscal year adjusted diluted earnings per share guidance. The new range is between $6.10 and $6.30 per share. The company also said it was terminating its dividend and decided to utilize its cash to buy back stock instead during the second quarter. Herbalife bought back about 9.9 million outstanding shares for a total of $685.8 million during the quarter. The company said so far this month, it has spent about $255 million more to buy back about 4.5 million shares.

Bill Ackman plans another Herbalife event this week

Herbalife Ltd. (NYSE:HLF) has been posting significant earnings surprises over the last several quarters, so investors had likely been expecting more of the same. All of those earnings beats have made it extremely difficult for activist investor Bill Ackman of Pershing Square Capital Management to make gains on the short position he announced in late 2012.

It seems he is finally beginning to make progress with officials and regulators, however. A number of agencies have said they are now investigating whether Herbalife is indeed a pyramid scheme, as he claims, and whether it is unfairly targeting and victimizing low income people

On Friday, we’ll hear more about Ackman’s view of Herbalife Ltd. (NYSE:HLF). His firm is planning a private screening of a documentary focusing on the personal lives of those who feel as if Herbalife has victimized them. ValueWalk has received an invitation to the private screening and will bring you more on that Friday. Those who are interested in seeing the trailer for it can visit one of Ackman’s two websites, FactsAboutHerbalife or HerbalifePyramidScheme.

Our Editorial Standards

At ValueWalk, we’re committed to providing accurate, research-backed information. Our editors go above and beyond to ensure our content is trustworthy and transparent.

Michelle Jones

Want Financial Guidance Sent Straight to You?

  • Pop your email in the box, and you'll receive bi-weekly emails from ValueWalk.
  • We never send spam — only the latest financial news and guides to help you take charge of your financial future.