BUSINESS NEWS: Herbalife Ltd. Announces Record First Quarter Revenue and Raises FY'10 EPS Guidance

Herbalife Ltd. Announces Record First Quarter Revenue and Raises FY'10 EPS Guidance

* First quarter adjusted EPS increased 44.1 percent to $0.98 compared to the prior year period.1
* Raises FY'10 EPS guidance range to a range of $3.80 to $3.90 on higher volume point and net sales growth.
* Company announces expansion of the current share repurchase authorization to $1 billion through 2014.

LOS ANGELES (BUSINESS WIRE) --Herbalife Ltd. (NYSE:HLF) today reported first quarter net sales increased 18.6 percent to $618.6 million and local currency net sales increased 13.3 percent compared to the same period in 2009. The record revenue reflects volume point growth of 6.2 percent and an increase in Average Active Sales Leaders of 7.4 percent, both compared to the first quarter of 2009. First quarter adjusted net income was $61.5 million, or $0.98 in adjusted diluted earnings per share, reflecting an increase of 46.7 percent and 44.1 percent, respectively, compared to the same period in 2009. The 2010 first quarter adjusted results exclude a $9.7 million negative impact to net income, or $0.15 net charge to EPS due to the implementation of highly-inflationary accounting in Venezuela.

For the quarter ended March 31, 2010, the company reported net income of $51.9 million, or $0.83 per diluted share compared to $41.5 million or $0.67 per diluted share in the first quarter of 2009, primarily reflecting the contribution margin from higher volume combined with currency benefits and a lower effective tax rate partially offset by the impact of the implementation of highly-inflationary accounting in Venezuela noted above.

For the three months ended March 31, 2010, the company generated cash flow from operations of $87.4 million, paid dividends of $12.1 million, invested $11.6 million in capital expenditures and repurchased $28.0 million in common stock. The company's net debt balanceat the end of the first quarter was $82.1 million, reflecting an improvement of $17.4 million from December 31, 2009.

The first quarter operating margin of 10.3 percent was negatively impacted by 390 basis points from one-time items associated with the implementation of highly-inflationary accounting in Venezuela. Excluding this impact, adjusted operating income margin was 14.2 percent, a 210bps improvement from the prior year's adjusted operating margin.

"Our Distributors ongoing success using daily consumption business models is fueling the company's momentum and driving continued growth," said Chairman and Chief Executive Officer Michael O. Johnson. "They are in the early innings of the global expansion of these business models, which have the potential to reach dramatically deeper into the marketplace and attract more consumers."

The North America region reported volume points of 220.1 million in the first quarter of 2010, reflecting an increase of 18.0 percent versus the same period of 2009. Volume point growth in the U.S., the largest country in the region, increased 18.7 percent compared to 2009, reflecting an increase in both the Latin market and General market of 21.3 percent and 14.3 percent respectively compared to the first quarter of 2009. For the quarter, Average Active Sales Leaders in the region increased 13.8 percent compared to the prior year period.

The Asia Pacific region reported volume points of 152.2 million in the first quarter of 2010, reflecting an increase of 5.0 percent over the same period of 2009 despite the negative impact of Taiwan, where volume points declined 28.2 percent as that country anniversaried the one-time favorable benefit of the government stimulus coupon program in the first quarter of 2009. Top countries in the region include Korea, with volume point growth of 70.1 percent and India where volume point growth was 51.9 percent, both compared to the same period in 2009. Average Active Sales Leaders in the quarter improved 18.9 percent compared to the same period in 2009.

The Europe, Middle East and Africa (EMEA) region reported volume points of 119.5 million in the first quarter of 2010, reflecting a decrease of 3.7 percent versus the same period in 2009. The top market in this region was Italy where volume points declined 2.7 percent compared to the same period in 2009. Average Active Sales Leaders in EMEA were essentially flat, declining 0.2 percent for the quarter compared to the prior year period.

The Mexico region reported volume points of 124.2 million in the first quarter of 2010, reflecting an increase of 3.2 percent versus the same period of 2009. Average Active Sales Leaders in Mexico increased 3.9 percent for the quarter. During the quarter the company expanded its fixed distribution locations by more than 300 through its ongoing distribution agreement with a Mexican store chain which we believe will improve distributor access to our products.

The South and Central America region reported volume points of 101.1 million in the first quarter of 2010, reflecting a decrease of 1.5 percent versus the same period of 2009. During the first quarter, the top markets in this region were Brazil, with volume point growth of 1.3 percent and Venezuela, with a volume point increase of 2.0 percent, both compared to the same period in 2009. Average Active Sales Leaders improved 2.0 percent for the quarter compared to 2009.

The China region reported volume points of 25.6 million in the first quarter of 2010, reflecting an increase of 22.8 percent over the same period of 2009. The company currently operates through 75 retail store locations in 30 provinces and is licensed for direct sales in 11 provinces. Average Active Sales Leaders increased 5.7 percent for the quarter compared to the same period in 2009.

SOURCE: Herbalife Press Release