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Herbalife Ltd. Announces Record Second Quarter 2013 And Raises 2013 Earnings Guidance

Herbalife Ltd. (NYSE: HLF) today reported second quarter net sales of $1.2 billion, reflecting an increase of 18 percent compared to the same time period in 2012, on volume point growth of 14 percent. Adjusted 1 net income for the quarter of $150.7 million, or $1.41 per diluted share, compares to the second quarter 2012 net income of $132.0 million and EPS of $1.09, respectively. On an as reported basis, second quarter 2013 EPS of $1.34 increased 23 percent compared to the $1.09 reported in the comparable quarter last year.

“We reported our fifteenth quarter in a row of double digit top-line growth, reflecting the success that our products and distribution model are having in markets around the world helping to mitigate the adverse effects of the obesity epidemic. The second quarter record results for volume point and net sales were driven by the ongoing engagement of our distributors and consumer demand for our weight loss and nutrition products worldwide,” said Michael O. Johnson, Herbalife’s chairman and CEO.

For the quarter ended June 30, 2013 the company generated cash flow from operations of $213.8 million, an increase of 56 percent compared to 2012; paid dividends of $30.9 million and invested $31.3 million in capital expenditures.

Second Quarter 2013 Key Metrics 2,3

Regional Volume Point and Average Active Sales Leader Metrics

  Volume Points (Mil)   Average Active Sales Leaders
Region   2Q'13   Yr/Yr % Chg   2Q'13   Yr/Yr % Chg
North America 339.9   11 % 72,282   10 %
Asia Pacific 316.9 1 % 70,802 15 %
EMEA 179.3 16 % 48,008 12 %
Mexico 219.9 8 % 62,940 13 %
South & Central America 222.6 33 % 54,614 30 %
China   85.9   49 %   14,070   18 %
Worldwide Total   1,364.5   14 %   311,503   15 %
 

Updated 2013 Guidance

Guidance for fully diluted 2013 EPS is based on the average daily exchange rates of the first two weeks of July 2013. Our 2013 guidance continues to assume a Venezuelan exchange rate of 10 to 1 for the balance of the year, excludes the impact of the February devaluation of the bolivar as well as any potential future devaluation, and excludes the impact of any repatriation of existing cash balances in Venezuela. Guidance for the year also excludes the following which were recognized in the first half of the year: $15.1 million in expenses (post-tax), mostly legal and advisory services relating to the Company’s response to information put into the marketplace by a short seller which information the Company believes to be inaccurate and misleading, and $2.7 million in expenses (post-tax) incurred for the re-audit of 2010-2012 financial statements resulting from KPMG LLP’s resignation, as well as any additional expenses related to these matters that are expected to be incurred in the second half of the year.

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