Monday, Herbalife Ltd. (HLF) said its third quarter profit declined from last year, hurt primarily by lower sales and gross profit margins. Adjusted net income, however, came in well above the Street's estimate. Looking ahead, the company raised its fiscal 2009 earnings estimate, while initiating fourth quarter and fiscal 2010 forecast. Following the news, the stock gained more than 8% in after hours.
The Los Angeles, California-based company reported net income for the third quarter of $57.90 million or $0.91 per share, compared to $58.08 million or $0.89 per share in the year-ago quarter.
The company attributed the decline in profit to lower net sales and gross profit margins attributable to unfavorable currency fluctuations, offset by a lower effective tax rate and accretion from the its share repurchase program.
Excluding the impact from items, adjusted net income was $54.1 million or $0.85 per share, reflecting a decrease of 6.9% and 4.5%, respectively, from $58.08 million or $0.89 per share for the same period in 2008.
On average, six analysts polled by Thomson Reuters expected the company to earn $0.69 per share for the quarter. Analysts estimates typically exclude special items.
Worldwide net sales for the quarter decreased to $600.22 million from $602.20 million in the prior-year quarter. Five analysts had a revenue consensus of $575.06 million for the quarter.
Excluding the impact from currency fluctuations, local currency year-over-year net sales were 7.5% higher than third quarter 2008.
Commenting on the results, the company's chairman and chief executive officer, Michael Johnson said, "We were very pleased with our local currency sales growth of 7.5 percent that was driven by volume point growth of five percent this quarter and was well ahead of our expectations. We believe that the increase in volume continues to validate that our distributors are gaining traction and momentum through the use of the daily consumption sales model around the globe."
For the nine-month period, the company's net income declined to $147.69 million or $2.34 per share from $187.53 million or $2.83 per share in the similar period of 2008.
Year-to-date, the company's worldwide net sales totaled $1.69 billion, down from $1.85 billion in the prior-year period.
Looking forward, for the fourth quarter of 2008, the company expects earnings per share in the range of $0.88 to $0.91. Assuming constant currency levels from the fourth quarter of 2008, the company expects net sales growth to range from 11.0% to 12.0% and earnings per share to be in the range of $0.79 to $0.82.
Street analysts currently expect earnings of $0.86 per share.
For the full year 2009, the company now expects earnings per share in the range of $3.19 to $3.22, compared to its previous guidance in the range of $2.97 to $3.03. Assuming constant currency levels from 2008, the company's net sales growth range is now estimated to be in the range of 3.0% to 4.0% and earnings per share in range of $3.99 to $4.02. The company's net sales growth range were previously estimated to be two percent to four percent and earnings per share in the range of $3.79 to $3.85.
Street analysts currently expect earnings of $3.03 per share for the year 2009.
Further, the company provided its fiscal year 2010 earnings guidance in the range of $3.50 to $3.65 per share and net sales growth in the range of 11.0% to 13.0%.
Seven Street analysts currenlty expect earnings of $3.41 per share for the year 2010.
HLF closed Monday's regular trading at $34.64, up $0.99 or 2.94%, on a volume of 0.76 million shares. The stock gained $2.87 or 8.29%, trading at $37.51 in after hours.
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