Herbalife Ltd. (HLF) has reported a 17.63 percent rise in profit for the quarter ended Dec. 31, 2016. The company has earned $99.40 million, or $1.16 a share in the quarter, compared with $84.50 million, or $0.98 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $85.90 million, or $1 a share compared with $100.20 million or $1.17 a share, a year ago.
Revenue during the quarter dropped 4.86 percent to $1,045 million from $1,098.40 million in the previous year period. Gross margin for the quarter contracted 16 basis points over the previous year period to 81.23 percent. Total expenses were 84.86 percent of quarterly revenues, down from 87.02 percent for the same period last year. This has led to an improvement of 216 basis points in operating margin to 15.14 percent.
Operating income for the quarter was $158.20 million, compared with $142.60 million in the previous year period.
Michael O. Johnson, chairman and chief executive officer of Herbalife, stated, "2016 was a dynamic and record-breaking year. Our members continue to successfully build customer-focused businesses, which is evident in our record volume and retention metrics. In addition, our new share buyback authorization is a further testament of our commitment to enhance shareholder value."
For fiscal year 2017, The company expects diluted earnings per share to be in the range of $0.50 to $0.70. The company expects diluted earnings per share to be in the range of $2.95 to $3.35. On an adjusted basis, the company expects diluted earnings per share to be in the range of $0.75 to $0.95. The company expects diluted earnings per share to be in the range of $3.65 to $4.05 on adjusted basis.
Operating cash flow drops significantly
Herbalife Ltd. has generated cash of $367.30 million from operating activities during the year, down 41.58 percent or $261.40 million, when compared with the last year.
The company has spent $141.30 million cash to meet investing activities during the year as against cash outgo of $73.40 million in the last year.
The company has spent $252.30 million cash to carry out financing activities during the year as against cash outgo of $250 million in the last year period.
Cash and cash equivalents stood at $844 million as on Dec. 31, 2016, down 5.15 percent or $45.80 million from $889.80 million on Dec. 31, 2015.
Working capital increases
Herbalife Ltd. has recorded an increase in the working capital over the last year. It stood at $671 million as at Dec. 31, 2016, up 23.82 percent or $129.10 million from $541.90 million on Dec. 31, 2015. Current ratio was at 1.85 as on Dec. 31, 2016, up from 1.53 on Dec. 31, 2015.
Cash conversion cycle (CCC) has increased to 75 days for the quarter from 62 days for the last year period. Days sales outstanding were almost stable at 3 days for the quarter, when compared with the last year period.
Days inventory outstanding has increased to 87 days for the quarter compared with 75 days for the previous year period. At the same time, days payable outstanding was almost stable at 15 days for the quarter, when compared with the previous year period.
Debt comes down
Herbalife Ltd. has recorded a decline in total debt over the last one year. It stood at $1,447.90 million as on Dec. 31, 2016, down 10.73 percent or $174.10 million from $1,622 million on Dec. 31, 2015. Total debt was 56.44 percent of total assets as on Dec. 31, 2016, compared with 65.46 percent on Dec. 31, 2015.
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