Herbalife Q4 2017 Sales Up 5% To $1.1 Billion

Herbalife Ltd. (NYSE: HLF) reports results for the fourth quarter and full year ended December 31, 2017.

Fourth quarter 2017 reported net sales of $1.1 billion increased 5% and 3% on an as reported and constant currency basis, respectively, compared to fourth quarter 2016.

Fourth quarter 2017 reported EPS of ($0.87) per diluted share compared to $1.16 per diluted share for the comparable prior year quarter, which includes a provisional one-time non-cash charge of $153 million, or ($2.01) per adjusted¹ diluted share, as a result of the Tax Cuts and Jobs Act (the “Tax Act”) that was signed into law on December 22, 2017.

Adjusted² earnings per adjusted¹ diluted share of $1.29 increased 29% compared to $1.00 per diluted share for the comparable prior year quarter.

Reiterates FY 2018 volume point guidance range of 2% to 6% growth as well as reported and adjusted² diluted EPS guidance of $3.82 to $4.22 and $4.60 to $5.00.

Announces new executive organization structure.

“After a year of transition, we returned to net sales growth in the fourth quarter as expected, and we anticipate stronger net sales growth for the full year in 2018,”

said Rich Goudis, CEO of Herbalife.

“This growth is due to the determination and hard work of our talented independent distributors and employees around the globe who are continuously looking for ways to fulfill our purpose to make the world healthier and happier.”

The Company reported fourth quarter 2017 volume points of 1.3 billion, which represents a decline of 1.8%, compared to the prior year period, in line with the pre-announcement issued on January 8, 2018. Reported fourth quarter 2017 net sales of $1.1 billion increased 4.6%, while constant currency net sales increased 3.4%, both compared to the same period in 2016.

On a reported basis, fourth quarter 2017 net loss was $63.4 million, or ($0.87) per diluted share, which includes a provisional charge of $153.3 million, or ($2.01) per adjusted¹ diluted share, related to the Tax Act, compared to fourth quarter 2016 net income of $99.4 million, or $1.16 per diluted share. The provisional charge related to the Tax Act is subject to continued evaluation and adjustment in future periods as additional information becomes available and further analysis is completed.

Adjusted² earnings for the fourth quarter 2017 were $1.29 per adjusted¹ diluted share compared to $1.00 per diluted share for the fourth quarter of 2016.

Full year 2017 worldwide volume points of 5.4 billion declined 3.6% compared to full year 2016. Reported full year 2017 net sales of $4.4 billion decreased 1.4%, while constant currency net sales decreased 1.1%, both compared to full year 2016.

On a reported basis, full year 2017 net income was $213.9 million, or $2.58 per diluted share, compared to net income of $260.0 million, or $3.02 per diluted share for 2016.

Adjusted² earnings for 2017 were $4.86 per diluted share compared to $4.85 per diluted share for 2016. Due to the negative impact of currency, full year 2017 reported diluted EPS and adjusted² diluted EPS were each negatively impacted by $0.23.

Since the approval by the Company’s Board of Directors in February 2017 of the share repurchase program, a total of approximately 11.7 million shares were repurchased, including approximately 400,000 shares repurchased from November 2, 2017 through February 21, 2018.

For the full year 2018, the Company is reiterating its volume point guidance range of 2% to 6% growth as well as its 2018 reported and adjusted² diluted EPS guidance of $3.82 to $4.22 and $4.60 to$5.00.

Furthermore, Herbalife announces, consistent with the Company’s succession strategy, a new executive organization structure effective May 1, 2018.

The Company’s president, Des Walsh, will transition to the new role of executive vice-chairman where his 14 years of experience at the Company will primarily be used in growing the business and developing and maintaining strong relationships with the Company’s distributor leaders around the world.

Concurrently with Mr. Walsh’s transition to his new role, two Company veterans will each be promoted to serve as co-president of the Company, each with separate but complementary responsibilities for leading the Company forward.

John DeSimone, currently chief financial officer, will assume the role of co-president and chief strategic officer where he will manage the Company’s regional leadership, who have responsibility for growing the Company’s nutrition business and driving performance in more than 90 countries around the globe. These will be new duties for Mr. DeSimone who will continue to manage the Company’s financial planning and investor relations operations.

Chief health and nutrition officer, Dr. John Agwunobi, will continue in his role leading the Company’s nutrition and fitness training and medical and consumer affairs. As co-president and chief health and nutrition officer, Dr. Agwunobi will expand his responsibilities to concentrate on enhancing the distributor and customer experience. This new position will work intimately with our distributors and customers, ensuring that the Company is continuously innovating in the areas of corporate sales, technology, marketing and product development.

As part of this new organization structure, current senior vice president and principal accounting officer, Bosco Chiu, having served close to 25 years at the Company, will be promoted to executive vice president and chief financial officer. In addition, current acting general counsel Richard Werber will assume the new role of chief legal officer while current senior vice president, deputy general counsel and chief compliance officer Henry Wang will be promoted to executive vice president and general counsel.