Herbalife Ltd. Misses Earnings Estimates, Shares Plunge

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Herbalife Ltd. (NYSE:HLF) released its third quarter earnings report after closing bell tonight, posting adjusted earnings per share of $1.45 on $1.26 billion in revenue. Analysts had been looking for earnings of $1.51 per share on $1.32 billion in revenue. In the same quarter last year, the nutritional supplements company posted $1.31 billion in revenue and $1.41 per share in adjusted earnings.

Key metrics in Herbalife’s earnings report

Net income was 13 cents, compared to $1.32 per share in the same quarter last year. Herbalife said $1.39.5 million in pretax charges, which amounted to 97 cents per share, weighed on this year’s net income. The charges were in connection with the re-measurement of the company’s Venezuelan assets and liabilities. Herbalife also took a 13 cent per share or $17.5 million charge after taxes in connection with legal reserves.

For the third quarter, Herbalife reported $101.9 million in net operating cash flow.

Herbalife by geography

Herbalife reported a 2.3% decline (including foreign exchange rates) in net sales in North America but a 4.9% increase in the Asia Pacific region, excluding China. In Europe, the Middle East and Africa, Herbalife saw net sales grow by 12.5%, while in Mexico, they increased by 1.9%. In South and Central America, sales slumped by 14.9%, but in China, they climbed by 32.6%.

“In the quarter we saw volume increases in two-thirds of our 91 countries, especially Russia and China,” said Herbalife Chairman and CEO Michael Johnson in a statement. “Excluding the impact of currency translation in Venezuela, the company had solid increases in both volume and net sales. We continue to implement initiatives that we believe will further strengthen our foundation and drive long-term improvements in activity, productivity and retention of our Sales Leaders.”

Herbalife provides guidance

The company guided for fourth quarter earnings of $1.30 to $1.40 per share, excluding items, and currency adjusted earnings of between $1.61 and $1.71 per share. The company expects an 8% to 5% decline in net sales growth year over year.

For the full year, Herbalife expects net sales to fall between a 1% decline and a 2% increase year over year. The nutritional supplements company expects earnings excluding items to be between $5.45 and $5.75 per share and currency adjusted earnings to be between $6.10 and $6.40 per share.

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