Herbalife expects 4Q profit to beat Street
Herbalife expects its fiscal fourth-quarter and full-year adjusted earnings will come in above Wall Street's expectations.
The company also announced a $1 billion notes offering and increased its stock repurchase program by $500 million to $1.5 billion.
The stock rose in Monday premarket trading.
Herbalife, which is incorporated in the Cayman Islands and based in Los Angeles, uses a network of distributors to sell its nutritional supplements and weight-loss products globally. Last month U.S. Sen. Edward Markey called for an investigation into the company's business practices. The company said in a statement at the time that it looked forward to an opportunity to "introduce the company to (Markey) and address his concerns at his earliest convenience."
This is not the first time Herbalife has had questions raised about its business structure.
Hedge fund manager William Ackman accused it in 2012 of operating a pyramid scheme, in which a company makes most of its money by recruiting new salespeople, rather than on the products that they sell. Herbalife has repeatedly denied the claims and rival investor Carl Icahn has disagreed as well, taking his fight against Ackman public and increasing his stake in the company.
For the period ended Dec. 31, Herbalife anticipates adjusted earnings between $1.26 and $1.30 per share. Analysts polled by FactSet predict fourth-quarter earnings of $1.16 per share.
Herbalife expects full-year adjusted earnings in a range of $5.35 to $5.39 per share. Wall Street is calling for $5.25 per share.
Fourth-quarter revenue is projected to rise about 19.8 percent, while full-year revenue is expected to increase 18.5 percent.
The company maintained its guidance for 2014 adjusted earnings of $5.45 to $5.65 per share. Analysts predict earnings of $5.89 per share.
For the first quarter, Herbalife expects adjusted earnings between $1.24 and $1.28 per share.
Herbalife said that it plans a $1 billion private offering of convertible senior notes due 2019. The initial buyers of the notes will be Bank of America Merrill Lynch, Credit Suisse, HSBC and Morgan Stanley. Herbalife expects to give an option to the initial buyers to purchase up to an additional $150 million notes.
The notes are expected to mature on August 15, 2019.
Herbalife anticipates using proceeds from the notes offering for stock repurchases. It plans to use remaining proceeds for working capital and general corporate purposes, including stock buybacks.
Shares of Herbalife Ltd. climbed $2.54, or 4 percent, to $66.92 in premarket trading 45 minutes before the market open.
The company expects to report its full-year financial results on Feb. 18.