Herbalife Profit Tops Views, Lifts FY Outlook; Shares Up 6%

(RTTNews) - Herbalife Ltd. (HLF) Monday reported an increase in second-quarter profit that comfortably beat Wall Street expectations, led largely by growth across all regions. The nutrition supplements company also lifted its full-year 2013 outlook, sending its shares up six percent in extended trade.

Herbalife, a multi-level marketing company that sells nutritional supplements, energy, sports and fitness products, have been the center of attention for investors ever since William Ackman, the activist manager of hedge fund Pershing Square, announced a large short-position in the company and called it a pyramid scheme that would fail soon. A "short position" indicates betting on the price of shares to go down.

However, activist investor Carl Icahn had come to the company's rescue and became a major shareholder of Herbalife and had two of his representatives inducted to the board. Icahn noted Herbalife as a legitimate business model, with favorable long-term opportunities for growth.

Since then, Herbalife stock performance indicate that investors appear to support Icahn's view and have brushed aside Ackman's doubts. Herbalife stock climbed 83.88 percent through the close of regular trade on Monday.

Los Angeles, California-based Herbalife's profit rose to $143.16 million or $1.34 per share from $131.95 million or $1.09 per share last year. Adjusted earnings were $1.41 per share, trumping the $1.18 per share average estimate of seven analysts polled by Thomson Reuters. Analysts' estimates typically exclude special items.

Second-quarter sales grew 18 percent to $1.22 billion from $1.03 billion last year. Analysts estimated revenues of $1.16 billion for the quarter.

Second-quarter worldwide volume growth was 14 percent, with a spurt in all regions including North America, South and Central America, EMEA and the Asia Pacific.

"The second quarter record results for volume point and net sales were driven by the ongoing engagement of our distributors and consumer demand for our weight loss and nutrition products worldwide," said Michael Johnson, Herbalife chairman and CEO.

Looking forward to the third quarter, the company expects adjusted earnings of $1.09 to $1.13 per share and sales growth of 16.5 to 18.5 percent. Analysts currently estimate earnings of $1.16 per share on revenue growth of 13.30 percent for the quarter.

Herbalife raised its outlook for the full year 2013 and now expect earnings in the range of $4.83 to $4.95 per share. Sales for the year is estimated to grow 16 to 18 percent. Analysts currently estimate earnings of $4.80 per share on revenue growth of 13.50 percent.

The company had previously estimated full year adjusted earnings of $4.60 to $4.80 per share and sales growth of 13 to 15 percent.

The company also approved a dividend of $0.30 per share to shareholders of record August 13, payable on August 27.

HLF closed Monday's regular trade at $60.57, up $2.12 or 3.63%, on the NYSE. The stock further gained $3.55 or 5.86% in after-hours.