Herbalife Ltd. (HLF) Fires Back Against Shortsellers; Ups Estimates

Updated on

Herbalife Ltd. (NYSE:HLF) today took the battle into the short-sellers’ camp by announcing enhanced preliminary results for the fourth quarter and full year 2013, an enhanced buyback plan and a convertible note offering worth $1B. The company is scheduled to declare 2013 results on February 18, although at the time of this writing Ackman has started another campaign, as reported exclusively by ValueWalk.

Preliminary results beat analysts’ expectations

Herbalife Ltd. (NYSE:HLF) said today it expects to report fourth quarter EPS in the range $1.26-$1.30 on revenue of about $1.27B, up nearly 20% year-on-year. The revised estimates put consensus forecasts of EPS of $1.17 and revenue of $1.22B in the shade.

Herbalife Ltd. (NYSE:HLF)’s new estimates for full year EPS are in the range $5.35-$5.39, also ahead of analysts’ expectations of $5.26. Full year revenues are expected to now go up 18.5% year-on-year to about $4.82B whereas consensus was for $4.78B.

The company reaffirmed its guidance for first quarter and full year 2014 EPS in the range of $1.24-$1.28 and $5.45-$5.65 respectively, though it did indicate that it was likely to take a hit due to adverse foreign currency movements of about $0.20 per share in the first quarter and $0.10 per share over the full year.

Convertible bonds

Herbalife Ltd. (NYSE:HLF) also moved to boost its cash arsenal by announcing a private offering of senior convertible notes worth $1B. To be sold to Bank of America Merrill Lynch, Credit Suisse, HSBC and Morgan Stanley, the notes carry interest payable semi-annually and will mature in August 2019.

Herbalife Ltd. (NYSE:HLF) expects to use the net proceeds from the sale of the Convertible Notes to fund the cost of repurchasing its common shares by entering into prepaid forward share repurchase transactions and the cost of certain capped call transactions and the balance for working capital and general corporate purposes, including, without limitation, the repurchase of outstanding common shares.

Herbalife boosts buyback authorization

Herbalife Ltd. (NYSE:HLF) enhanced its share buyback authorization to $1.5B, which includes the balance of $653M left over from its earlier repurchase program.

Herbalife Ltd. (NYSE:HLF) is currently trading at $64.90, up 0.82%.

Leave a Comment