Herbalife holds off on big share buyback

Herbalife has a message for investors: Don’t hold your breath waiting for a massive share buyback.

Executives said during an earnings call Tuesday that the company wasn’t making plans for share repurchases in its earnings guidance for next year and is only planning to buy back $50 million in stock during the fourth quarter.

That’s a far cry from the $2 billion leveraged share repurchase some investors were hoping for to fend off hedge fund activist Bill Ackman, who has a $1 billion short on the nutritional shake seller and calls it a pyramid scheme.

Shares of Herbalife, which had more than doubled this year, were little changed to close at 67.93 on Tuesday.

Herbalife earlier in the year said it had been planning a big debt-financed buyback program before its auditor, KPMG, resigned due to an insider-trading scandal. Without audited statements, Herbalife can’t tap the debt markets.

Since then, the lack of audited financials put the matter on hold, and it now appears on ice.

“There’s nothing specific on buybacks at this time” for next year, CFO John DeSimone said on the company’s third-quarter earnings call.

He said the earlier plans were “based on economics,” as would be any future buybacks.

The CFO reiterated the company’s position that a re-audit of the prior three years of financial results will be completed by year-end. Herbalife hired PricewaterhouseCoopers to replace KPMG.

In August, Ackman fired off a 52-page letter to PricewaterhouseCoopers in which he blasted Herbalife’s accounting and warned PwC that it could “incur substantial liabilities in the event of the company’s failure.”

Herbalife has denied Ackman’s allegation that it’s a pyramid scheme.

Meanwhile, Herbalife’s latest forecast suggests earnings and revenue growth are slowing.

Herbalife executives projected adjusted earnings per share of between $5.45 and $5.65 in 2014, a penny below analysts’ most recent expectations.

The company anticipates a 9-to-11-percent net sales growth for next year, significantly lower than the 17.5 percent this year.