Herbalife Q1 Sales $1,3 Billion up 12%

Michale O. Johnson, Herbalife, CEO


Herbalife Ltd. Announces Record Adjusted First Quarter 2014 Results, and Raises 2014 Adjusted Earnings Guidance

First quarter worldwide volume growth of 9 percent compared to the prior year period.

Adjusted EPS1 of $1.50 increased 18 percent as compared to the same period in the prior year. Reported EPS of $0.74 primarily reflects a foreign exchange loss for Venezuela and other items.

Raises FY'14 adjusted2 diluted EPS guidance to a range of $6.10 to $6.30.

Generated $191 million in operating cash flow in first quarter 2014.

Board of Directors takes steps to accelerate cash returns to shareholders – terminates dividend, determines to utilize cash instead to repurchase stock during the second quarter.

Herbalife Ltd. (NYSE: HLF) today reported first quarter net sales of $1.3 billion, reflecting an increase of 12 percent compared to the same period in 2013 on volume point growth of 9 percent. Adjusted1 net income for the quarter was $151.1 million, or $1.50 per diluted share, as compared to 2013 first quarter adjusted net income of $137.4 million, or $1.27 per diluted share.

GAAP net income for the quarter was $74.6 million, or $0.74 per diluted share, compared to $118.9 million, or $1.10 per diluted share for the same period in 2013, primarily due to a foreign exchange loss for Venezuela during the quarter ended March 31, 2014.

We continue to achieve record earnings, strong sales growth and enhanced profitability, said Michael O. Johnson, Herbalife's chairman and CEO.

Our performance reflects the demand for our exceptional products, as well as the hard work of our independent members who continue to cultivate and grow their base of satisfied customers worldwide. In addition, we are pleased to raise our expectations for the balance of 2014. This reflects our confidence that Herbalife is well-positioned to continue to grow and play an increasingly important role in improving nutrition and reducing obesity around the world.

For the quarter ended March 31, 2014 the company generated cash flow from operations of $190.6 million, an increase of 39 percent compared to 2013; paid cash dividends of $30.4 million; invested $49.7 million in capital expenditures; and spent $685.8 million for approximately 9.9 million outstanding common shares under our prepaid forward share repurchase agreement. As of April 25, 2014, the company has spent $255 million during the month of April to repurchase approximately 4.5 million outstanding common shares under our existing repurchase program and pursuant to a Rule 10b5-1 trading plan.

As of March 31, 2014 we moved to the SICAD I rate of 10.7 Venezuelan bolivar per U.S. dollar for US GAAP remeasurement purposes. This change impacted our 2014 Q1 reported results by $89.3 million before tax and we have normalized this impact out of our adjusted results.

First Quarter and Fiscal 2014 Key Metrics3,4

Regional Volume Point and Average Active Sales Leader Metrics

    Volume Points (Mil)     Average Active Sales Leaders
Region   1Q'14   Yr/Yr % Chg     1Q'14   Yr/Yr % Chg
North America   336.5   9 %     74,241   9 %
Asia Pacific   302.1   (6 %)     71,627   4 %
EMEA   202.2   25 %     54,113   17 %
Mexico   220.2   7 %     63,568   6 %
South & Central America   227.7   4 %     61,862   19 %
China   91.1   91 %     16,648   40 %
Worldwide Total   1,379.8   9 %     329,902   11 %


2014 Second Quarter and Full Year Guidance

Forward guidance excludes the impact of expenses (primarily for legal and advisory services) relating to the company's response to information put into the marketplace by a short seller, which the company believes to be inaccurate and misleading, expenses related to a FTC inquiry, and the impact of non-cash interest costs associated with the company's Convertible Notes. Forward guidance is based on the average daily exchange rates of the first two weeks of April. Included in the guidance is the use of the GAAP rate for Venezuela of 10.7 to 1 for the balance of the year and excludes the potential impact of future devaluation of the Venezuelan bolivar and future repatriation, if any, of existing cash balances in Venezuela.

    Three Months Ending   Twelve Months Ending
    June 30, 2014   December 31, 2014
    Low   High   Low   High
Volume Point Growth vs 2013     7.0 %     9.0 %     8.0 %     10.0 %
Net Sales Growth vs 2013     10.0 %     12.0 %     10.0 %     12.0 %
Diluted EPS as adjusted   $ 1.51     $ 1.55     $ 6.10     $ 6.30  
Cap Ex ($ millions)   $ 55.0     $ 65.0     $ 175.0     $ 195.0  
Effective Tax Rate     28.0 %     30.0 %     28.0 %     30.0 %

Board of Directors Accelerates Cash Returns to Shareholders

The company's board of directors also announced today that, as part of its goal to accelerate cash returns to shareholders, it has approved terminating the company's quarterly cash dividend and instead utilizing the cash to repurchase additional shares of the company's outstanding common stock during the second quarter of 2014.

The company now expects to repurchase a total of $581 million of its outstanding common stock during the second quarter of 2014 as part of its previously announced $1.5 billion share repurchase program. The $581 million is comprised of the approximately $315 million expected to be purchased in April as part of a 10b5-1 trading plan ($255 million already completed as of Friday, April 25); plus the $50 million included in previous guidance and $216 million that otherwise was expected to be returned to shareholders in the form of quarterly cash dividends over the next eight quarters.

Mr. Johnson stated, Our strong sustained financial performance and the current market valuation of our shares make repurchasing stock the most attractive method of returning capital to shareholders and reflects our continued commitment to creating long-term value for our shareholders.

First Quarter Earnings Conference Call

Herbalife senior management will host an investor conference call to discuss its recent financial results and provide an update on current business trends on Tuesday, April 29, 2014 at 8 a.m. PDT (11 a.m. EDT).

The dial-in number for this conference call for domestic callers is (877) 317-1296 and (706) 634-5671 for international callers (conference ID 24490341). Live audio of the conference call will be simultaneously webcast in the investor relations section of the company's website at https://ir.herbalife.com.

An audio replay will be available following the completion of the conference call in MP3 format or by dialing (855) 859-2056 for domestic callers or (404) 537-3406 for international callers (conference ID 24490341). The webcast of the teleconference will be archived and available on Herbalife's website.

About Herbalife Ltd.

Herbalife Ltd. (NYSE:HLF) is a global nutrition company that sells weight-management, nutrition and personal care products intended to support a healthy lifestyle. Herbalife products are sold in more than 90 countries to and through a network of independent members. The company supports the Herbalife Family Foundation and its Casa Herbalife program to help bring good nutrition to children. Herbalife's website contains a significant amount of financial and other information about the company at https://ir.Herbalife.com. The company encourages investors to visit its website from time to time, as information is updated and new information is posted.

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