Herbalife Q4 Adj. Profit Beats View, But Lowers 2015 Outlook

(RTTNews) - Nutrition supplements company Herbalife Ltd. (HLF) on Thursday reported a 16 percent decline in profit for the fourth quarter from last year on a double-digit decline in revenues, reflecting the unfavorable impact of currency fluctuations.

However, adjusted earnings per share for the quarter beat analysts' expectations, while revenues missed their estimates. Looking ahead, the company lowered its financial outlook for fiscal 2015.

Los Angeles, California-based Herbalife, a multi-level marketing company that sells nutritional supplements and energy drinks, has been at the center of attention for investors ever since William Ackman, the activist manager of hedge fund Pershing Square, called it a pyramid scheme that would fail. Ackman's allegations have led to federal probes against Herbalife.

Nonetheless, Herbalife has found support from numerous hedge funds, most importantly the backing of billionaire investor Carl Icahn, who became a major shareholder of Herbalife. Icahn said that Herbalife has a legitimate business model. Consequently, the company has been witnessing sharp swings in its stock price.

Herbalife's fourth-quarter net income was $103.3 million, down from $123.5 million in the year-ago period. However, earnings per share rose to $1.21 from $1.15 in the prior-year period on lower share count.

The latest quarter's results were negatively impacted by a currency headwind of $0.31 per share.

Adjusted net income for the quarter were $121.0 million or $1.41 per share, compared to $137.2 million or $1.28 per share in the year-ago period.

On average, five analysts polled by Thomson Reuters expected the company to earn $1.22 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter declined 11 percent to $1.13 billion from $1.27 billion a year ago, due to the unfavorable impact of currency fluctuations. Analysts had a consensus revenue estimate of $1.16 billion for the quarter.

Net sales, excluding the currency impact, were flat compared to the prior year period.

Worldwide volume for the quarter declined 6 percent from last year, while excluding Venezuela, it decreased 3 percent.

North America volume decreased 6 percent, Asia Pacific volume declined 10 percent, South and Central America volume declined 24 percent and Mexico volume was down 6 percent. Meanwhile, EMEA volume rose 17 percent and China volume improved 15 percent.

Looking ahead to the first quarter, Herbalife forecast earnings of $1.00 to $1.10 per share, currency adjusted earnings of $1.30 to $1.40 per share, and net sales decline of 15.5 percent to 12.5 percent. Analysts currently expect earnings of $1.30 per share on 7.2 percent decline in revenues to $1.17 billion.

For fiscal 2015, the company now forecasts net sales decline of 9 percent to 6 percent, earnings of $4.10 to $4.50 per share, and currency adjusted earnings of $5.30 to $5.70 per share.

Earlier, Herbalife forecast fiscal 2015 earnings of $5.45 to $5.75 per share and sales in a range between a decline of 1 percent and an increase of 2 percent.

Analysts currently expect earnings of $5.08 per share on 3.8 percent decline in sales to $4.80 billion.

Michael Johnson, chairman and CEO of Herbalife said, "Our revised guidance reflects the currency landscape faced by all global companies and the short-term volume impact of the enhancements we are making. We believe we are executing the right long-term strategy and are confident in our ability to create sustainable value for our shareholders and the millions of Herbalife members and their customers worldwide."

HLF closed Thursday's regular trading at $34.82, up $1.16 or 3.45 percent on a volume of 4.16 million shares. However, in after-hours, the stock declined $0.52 or 1.49 percent to $34.30.