Herbalife Shares Rise On Better-than-expected Q1 Results, Raised Outlook

(RTTNews) - Shares of Herbalife Ltd. (HLF) gained 14 percent in extended trades Tuesday after the nutrition supplements company's financial results for the first quarter beat analysts' estimates and it raised its earnings outlook for fiscal 2015.

Herbalife reported a 5 percent increase in profit for the first quarter from last year as a double-digit decline in revenues was more than offset by lower expenses. However, both revenue and adjusted earnings per share for the quarter beat analysts' expectations.

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.

Herbalife's first-quarter net income was $78.2 million or $0.92 per share, up from $74.6 million or $0.74 per share in the year-ago period. The latest quarter's results were negatively impacted by a currency headwind of $0.44 per share.

Adjusted earnings for the quarter were $1.29 per share, compared to $1.50 per share in the year-ago period. On average, four analysts polled by Thomson Reuters expected the company to earn $1.01 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter declined 12 percent to $1.11 billion from $1.26 billion a year ago, primarily due to the unfavorable impact of currency exchange rates. Analysts had a consensus revenue estimate of $1.09 billion for the quarter.

Net sales, excluding the currency impact, grew 4 percent compared to the prior year period.

Selling, general and administrative expenses declined 14 percent from last year to $431.4 million.

The company's worldwide volume for the quarter declined 4 percent from last year. Of this, North America volume decreased 11 percent, Asia Pacific volume declined 12 percent, and South and Central America volume as well as Mexico volume were down 8 percent each. Meanwhile, EMEA volume rose 13 percent and China volume grew 25 percent.

Looking ahead to the second quarter, Herbalife forecast adjusted earnings of $1.05 to $1.15 per share, currency adjusted earnings of $1.45 to $1.55 per share, and net sales decline of 13.5 percent to 10.5 percent. Analysts currently expect earnings of $1.06 per share on 10.8 percent decline in revenues to $1.16 billion.

For fiscal 2015, Herbalife now forecasts net sales decline of 9.5 percent to 6.5 percent, adjusted earnings of $4.30 to $4.60 per share, and currency adjusted earnings of $5.55 to $5.85 per share. Earlier, the company forecast net sales decline of 9 percent to 6 percent, adjusted earnings of $4.10 to $4.50 per share, and currency adjusted earnings of $5.30 to $5.70 per share.

The Street currently expects the company to earn $4.22 per share for the year on an 8.6 percent decline in revenues to $4.53 billion.

The company said its guidance excludes, among others, the impact of legal and advisory services and expenses relating to challenges to the company's business model, including expenses related to an FTC Civil Investigative Demand or CID.

HLF closed Tuesday's regular trading at $40.09, down $1.98 or 4.71 percent on a volume of 3.85 million shares. However, in after-hours, the stock gained $5.71 or 14.24 percent to $45.80.