Herbalife expects Q4 EPS above consensus; ups buyback program


Herbalife (HLF) expects Q4 adjusted EPS of $1.26-1.30, well above consensus of $1.17.

The company also projects net sales growth of 19.8% vs estimates of +15.5%, and volume of +12.7%.

The company increases its stock repurchase program to an available balance of $1.5B; the previous $1B plan had a balance of $653M.

Herbalife sees Q1 EPS of $1.24-1.28 vs estimates of $1.40, with the figures hurt by $0.20 in adverse currency fluctuations. (PR)

Herbalife intends to pay for the buyback by offering $1B of five-year convertible debt, with the initial buyers being BofA, Credit Suisse, HSBC and Morgan Stanley. The banks have an option to purchase another $150M. (PR)

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Comments (12)
  • MK71
    , contributor
    Comments (136) | Send Message
     
    So let's see.
    We will get an article of 4-5 in the coming 5 days from the usual suspects about
    1) how liable all those banks are
    2) how bad these numbers are

     

    What I find most interesting is that there is no mentioned involvement of Icahn and Stiritz, so that Ace is left in their hand. Interesting is also that the thing is financed with convertible debt. That makes a CDS play a little more difficult for Ackman.
    But apart from teasing Ackman hat is the point to buy back equity with convertibles. The big difference is in the region underneath the strike where the company has debt iso equity. Further it will be tougher to lend the shares.

     

    At 70USD per share they may buy back between 15 and 20 Million shares. That means that soon the available nr of shares is down to 90M-ish. With all of the big shareholders getting automatically higher stakes in HLF AND the short position of Ackman (roughly 15M) is increasing to higher percentages too.

     

    Is this the way to get a squeeze play back into the game?
    3 Feb 2014, 07:47 AM Reply Like
  • pat45
    , contributor
    Comments (461) | Send Message
     
    $HLF needs money. Their financials are terrible. They are on last legs of scaring out shorts. Will be a short soon..sorry I missed peak last month. Don't know how far buyout and buyback rumors will carry this but definitely not a buyer.
    3 Feb 2014, 08:16 AM Reply Like
  • herbs4mike
    , contributor
    Comments (2064) | Send Message
     
    LOL @ Pat.... Herbalife makes in NET profit $400,000,000 a year..... What are you talking about? We're not talking Revenue or Gross, This is NET! This company is a cash making machine. They have no debt because they have a billion in the bank to offset the billion they owe.
    3 Feb 2014, 10:42 AM Reply Like
  • Kay Herbert
    , contributor
    Comments (1180) | Send Message
     
    Why is the 1Q estimate lower than the 4Q are things starting to go south?
    Looks to me like the cat is out of the bag. Good look selling those convertibles.
    3 Feb 2014, 08:06 AM Reply Like
  • MK71
    , contributor
    Comments (136) | Send Message
     
    indeed. good point. which currencies btw? that must be all emerging markets if it is not effecting Q4 but it would Q1. Have they heard about hedging?
    Re your cat. given volume and sales predictions it seems the cat is still in the bag.
    Well the banks have underwritten, so I guess it is looking whether they exercise the option on the 150M or not. That would be a sign whether they had a good look or not.
    3 Feb 2014, 08:23 AM Reply Like
  • Kay Herbert
    , contributor
    Comments (1180) | Send Message
     
    So maybe all that previous "growth" was all due to the weak dollar?
    3 Feb 2014, 08:43 AM Reply Like
  • MK71
    , contributor
    Comments (136) | Send Message
     
    You really want to explain everything only the negative way, don't you?
    Anyhow the dollar has been weak since you came to this planet with some bear market rallies. It may be that we witness now a little rally. Thereafter it will commence on its slide.
    Just face it: this company growths fast. Whether you like it or not. Try read the numbers from time to time through bulls- glasses. It may be painful for you, but it helps you lose a lot of money.
    3 Feb 2014, 10:59 AM Reply Like
  • webkowuite
    , contributor
    Comments (42) | Send Message
     
    The Q1 2014 EPS guidance is significantly below consensus but not mentioned in the article's title; a sign of the times we are living in. Also, are the Q4 EPS numbers after or before the buyback program? $1.5bn buyback on a ~$6.5bn (~23 of free float) has a significant temporary effect on EPS...
    3 Feb 2014, 08:10 AM Reply Like
  • MK71
    , contributor
    Comments (136) | Send Message
     
    Q4 EPS can't be after the new buy back program. They have not even begun on that one.
    I do agree that future EPS growth need to be taken with a lot of care if so many shares are taken away.
    3 Feb 2014, 08:25 AM Reply Like
  • Kay Herbert
    , contributor
    Comments (1180) | Send Message
     
    Considering that the debt probably converts at a discount to the sp, there might not be much to calculate.
    3 Feb 2014, 09:05 AM Reply Like
  • MK71
    , contributor
    Comments (136) | Send Message
     
    during the 5 years of the transaction there is something.
    If you are not that interested in those 5 years but more interested in the long haul why are you always so negative about HLF?
    3 Feb 2014, 04:25 PM Reply Like
  • Akmanscam
    , contributor
    Comments (2074) | Send Message
     
    Amazing. No comments from CB, QTR, MATT or KARMA here. I guess they do not understand how to talk stock, only know how to cut and paste nonsense. Herbalife sales are now close to $7 billion. Earnings have been accelerating. And after months of hearing that the buyback was dead, guess again.

     

    The same people who are short on HLF now and calling doom and gloom were also short on Dell 20 years ago and lost a fortune as that stock went through 6 stock splits. Some people take trading stocks too personally and really think they can manipulate a stock price with innuendo.
    3 Feb 2014, 08:10 PM Reply Like
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