Herbalife Ltd. (HLF) has reported an 11.06 percent fall in profit for the quarter ended Mar. 31, 2017. The company has earned $85.20 million, or $0.98 a share in the quarter, compared with $95.80 million, or $1.12 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $107.10 million, or $1.24 a share compared with $115.50 million or $1.35 a share, a year ago. Revenue during the quarter went down marginally by 1.56 percent to $1,102.10 million from $1,119.60 million in the previous year period. Gross margin for the quarter expanded 47 basis points over the previous year period to 81.44 percent. Total expenses were 86.95 percent of quarterly revenues, up from 84.97 percent for the same period last year. That has resulted in a contraction of 198 basis points in operating margin to 13.05 percent.
Operating income for the quarter was $143.80 million, compared with $168.30 million in the previous year period.
“We’ve made a solid start to 2017 exceeding our EPS guidance,” said Michael O. Johnson, chairman and chief executive officer, Herbalife. “As we transition this June to our new chief executive officer Rich Goudis and my role as executive chairman, we are more resolute than ever in making a profound and lasting effect on the nutritional habits of the world and offering people an opportunity to earn in the process.”
For financial year 2017, Herbalife Ltd. projects diluted earnings per share to be in the range of $3.25 to $3.65. It projects diluted earnings per share to be in the range of $4.05 to $4.45 on adjusted basis for the same period.
For the second-quarter, Herbalife Ltd. projects diluted earnings per share to be in the range of $0.65 to $0.85. It projects diluted earnings per share to be in the range of $0.85 to $1.05 on an adjusted basis for the same period.
Operating cash flow improves
Herbalife Ltd. has generated cash of $175.50 million from operating activities during the quarter, up 24.38 percent or $34.40 million, when compared with the last year period. Cash flow from investing activities was almost stable for the quarter at $25.70 million, when compared with the previous year period.
Cash flow from financing activities was $780.50 million for the quarter as against cash outgo of $233.70 million in the last year period.
Cash and cash equivalents stood at $1,782.90 million as on Mar. 31, 2017, up 130.29 percent or $1,008.70 million from $774.20 million on Mar. 31, 2016.
Working capital increases sharply
Herbalife Ltd. has recorded an increase in the working capital over the last year. It stood at $1,468.90 million as at Mar. 31, 2017, up 451.80 percent or $1,202.70 million from $266.20 million on Mar. 31, 2016. Current ratio was at 2.56 as on Mar. 31, 2017, up from 1.22 on Mar. 31, 2016.
Cash conversion cycle (CCC) has decreased to 56 days for the quarter from 119 days for the last year period. Days sales outstanding were almost stable at 7 days for the quarter, when compared with the last year period.
Days inventory outstanding has decreased to 82 days for the quarter compared with 143 days for the previous year period. At the same time, days payable outstanding went up to 33 days for the quarter from 31 for the same period last year.
Debt increases substantially
Herbalife Ltd. has witnessed an increase in total debt over the last one year. It stood at $2,302.80 million as on Mar. 31, 2017, up 64.16 percent or $900 million from $1,402.80 million on Mar. 31, 2016. Total debt was 64.68 percent of total assets as on Mar. 31, 2017, compared with 58.79 percent on Mar. 31, 2016. Debt to equity ratio was at 8.61 as on Mar. 31, 2017, down from 21.61 as on Mar. 31, 2016.
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