Herbalife 1Q Profit Easily Tops Street View, Extending Beat Streak to 17

By Matt Egan Earnings FOXBusiness

(Herbalife International of America, Inc.)

Beating estimates for the 17th consecutive quarter, controversial nutrition company Herbalife (HLF) reported stronger-than-expected first-quarter earnings on Monday and raised its full-year guidance.

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While the bottom-line results managed to exceed forecasts from analysts, Herbalife’s revenue narrowly trailed the Street’s view, helping to keep a lid on the stock’s after-hours rally.

Herbalife has served as a piñata between warring hedge fund giants Carl Icahn and Bill Ackman, who have placed competing bets on whether or not the company is a pyramid scheme, a charge Herbalife execs vehemently deny.

The multilevel marketing company said it earned $118.86 million, or $1.10 a share, last quarter, compared with a profit of $108.16 million, or 88 cents a share, a year earlier.

Excluding one-time items, Herbalife logged a profit of $1.27 a share, easily besting estimates of $1.07. Herbalife hasn’t missed EPS estimates since the fourth quarter of 2008, according to FactSet.

Revenue jumped 17% to $1.1 billion, compared with estimates from analysts for $1.17 billion. 

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Herbalife said global volumes jumped 13% year-over-year, highlighted by a 33% surge in South and Central America and a 17% rise in the Asia-Pacific region. The company said North American volumes gained 4%, while volume in Europe, the Middle East and Africa rose 11%.

In an effort to squeeze short-sellers like Ackman, Herbalife said it spent $162.4 million to buy back 4 million shares of common stock during the first quarter, leaving $787.6 million left on the existing $1 billion repurchase program.

Looking ahead, Herbalife increased its forecast for 2013 EPS to $4.60 to $4.80, the midpoint of which would top the Street’s view of $4.66. Sales are seen jumping 13% to 15%.

For the ongoing second quarter, management sees non-GAAP EPS of $1.14 to $1.18 on sales growth of 11% to 13%. By comparison, analysts had been anticipating EPS of $1.17.

Shares of Herbalife initially lost ground on the results but were recently up 1.1% to $39.18, putting them on pace to extend their 2013 rally of 17.6%.

Herbalife’s shares plummeted 80% after Ackman revealed a short position and questioned the company’s business model, but they quickly bounced back amid high-profile support from Icahn and fellow hedge-fund manager Daniel Loeb.

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