Real quickly here…Herbalife reported their Q3 earnings and results last night and it wasn’t a pretty picture. This is a business in slow decline, yet remains the most well known network marketing company in the world. Any changes in the stock price are strictly related to funny business between large hedge funds, and internal policies such as stock buy backs and the like. Be careful.

Herbalife Ltd. (HLF) (NYSE: HLF) reports results for the third quarter ended September 30, 2017.

“During this year of transition, we believe our performance has now stabilized and we are seeing improvements in trends,” said Rich Goudis, CEO of Herbalife. “By continuing to implement our strategic plan, we expect to build on the improving trends and return to growth in 2018.”

For the third quarter 2017, the company reported net sales of $1.1 billion, which represents a decline of 3.3% and 4.0% on an as reported and constant currency basis, respectively, compared to the third quarter 2016.

Third quarter 2017 volume points of 1.3 billion declined 5.6% compared to the prior year period.

On a reported basis, third quarter 2017 net income was $54.5 million, or $0.66 per diluted share, compared to third quarter 2016 net income of $87.7 million, or $1.01 per diluted share.

Adjusted1 earnings for the third quarter 2017 was $0.82 per diluted share compared to $1.21 per diluted share for the third quarter of 2016.

For the full year 2017, the company is narrowing its 2017 reported and adjusted1 diluted EPS guidance to ranges of $3.90 to $4.10 and $4.42 to $4.62, respectively, from the previous ranges of $3.80 to $4.20 and $4.30 to $4.70, respectively.

For the full year 2018, the company is providing initial volume guidance in the range of 2% to 6% growth and initial full year 2018 GAAP diluted and adjusted1 diluted EPS guidance in the range of $3.82 to $4.22 and $4.60 to $5.00, respectively.

Third Quarter 2017 Key Metrics2

Regional Volume Point Metrics

***Take a look at some of the serious issues here in China, and North America. Yikes!

Volume Points (Mil)
Region 3Q ’17 Yr/Yr % Chg
North America 261.5 -16.1 %
Asia Pacific 278.7 1.0 %
EMEA 258.9 2.7 %
Mexico 213.3 -9.0 %
South & Central America 150.2 -6.8 %
China 147.8 -3.5 %
Worldwide Total 1,310.4 -5.6 %

Regional Net Sales and Foreign Exchange (“FX”) Impact

Reported Net Sales Growth/Decline Growth/Decline
Region 3Q ’17 (mil) including FX excluding FX
North America $ 199.8 -17.1 % -17.2 %
Asia Pacific $ 230.9 -0.2 % -0.5 %
EMEA $ 213.9 6.1 % 2.0 %
Mexico $ 114.3 1.3 % -3.6 %
South & Central America $ 116.7 -3.6 % 1.5 %
China $ 209.8 -2.1 % -2.0 %
Worldwide Total $ 1,085.4 -3.3 % -4.0 %

Outlook

Based on current business trends the company’s fourth quarter 2017, full year 2017, and full year 2018 guidance are as follows:

Three Months Ending Twelve Months Ending
December 31, 2017 December 31, 2017
Low High Low High
Volume Point Growth vs 2016 (4.0 %) 1.0 % (4.2 %) (2.9 %)
Net Sales Growth vs 2016 2.3 % 7.3 % (1.9 %) (0.6 %)
Diluted EPS (a) $ 0.64 $ 0.84 $ 3.90 $ 4.10
Adjusted Diluted EPS (a) (b) $ 0.84 $ 1.04 $ 4.42 $ 4.62
Cap Ex ($ millions) $ 20.0 $ 40.0 $ 88.0 $ 108.0
Effective Tax Rate (a) 30.0 % 36.0 % 24.4 % 25.9 %
Adjusted Effective Tax Rate (a) (b) 27.0 % 33.0 % 22.1 % 23.6 %
Currency Adjusted Net Sales Growth vs 2016 (0.7 %) 4.3 % (2.1 %) (0.8 %)
Currency Adjusted Diluted EPS $ 0.80 $ 1.00 $ 4.62 $ 4.82
Twelve Months Ending
December 31, 2018
Low High
Volume Point Growth vs 2017 2.0 % 6.0 %
Net Sales Growth vs 2017 5.5 % 9.5 %
Diluted EPS (a) $ 3.82 $ 4.22
Adjusted Diluted EPS (a) (b) $ 4.60 $ 5.00
Cap Ex ($ millions) $ 115.0 $ 155.0
Effective Tax Rate (a) 29.0 % 33.0 %
Adjusted Effective Tax Rate (a) (b) 26.0 % 30.0 %
Currency Adjusted Net Sales Growth vs 2017 4.3 % 8.3 %
Currency Adjusted Diluted EPS $ 4.50 $ 4.90
(a) Excludes any future potential ongoing tax effects from the exercise of equity awards that could impact the company’s tax rate due to the updated stock compensation accounting standard.
(b) Adjusted diluted EPS and adjusted effective tax rate, for the purposes of guidance, excludes the impact of expenses relating to challenges to the company’s business model, the impact of non-cash interest costs associated with the company’s convertible notes, benefits from future potential China grants, FTC settlement implementation and expenses related to regulatory inquiries, as applicable and detailed in Schedule A. See Schedule A – “Reconciliation of Non-GAAP Financial Measures” for a detailed reconciliation of adjusted diluted EPS to diluted EPS calculated in accordance with GAAP and a discussion of why the company believe these non-GAAP measures are useful.

With respect to guidance, the company cannot accurately predict the impact to its share base from any future repurchases in 2017 and 2018 that may be made under its share repurchase program and therefore the guidance table above excludes any impact thereof to EPS. Guidance includes the impact of the recently completed tender offer.

Guidance is based on the average daily exchange rates during the first two weeks of October.

Adjusted1 diluted EPS guidance for the fourth quarter 2017 includes a projected currency benefit of approximately $0.04 per diluted share versus the fourth quarter of 2016.

Full year 2017 adjusted1 diluted EPS guidance includes a projected currency headwind of approximately $0.20 per diluted share, compared to 2016, which is consistent with the headwind included in the updated guidance the company provided on August 1, 2017.

Full year 2018 adjusted1 diluted EPS guidance includes a projected currency benefit of approximately $0.10 per diluted share, compared to 2017.

For the full report, head here: https://seekingalpha.com/pr/16990073-herbalife-reports-third-quarter-2017-results-provides-initial-full-year-2018-guidance