Full Press Release Details
Record-Breaking Year in 2018, Herbalife Nutrition Reports Highest First
Quarter Volume Points in Company History
LOS ANGELES--(BUSINESS WIRE)--May 2, 2019--Herbalife Nutrition Ltd.
(NYSE: HLF) today reported financial results for the first quarter ended
"In the first quarter of 2019, the momentum of our geographically
diverse business continued with net sales growth in four of our six
regions. We are confident that our strategies will drive volume growth
in 2019," said Michael O. Johnson, Chairman and CEO of Herbalife
Reported net sales of $1.2 billion included growth in four of our six
regions and was approximately flat compared to first quarter 2018.
Excluding China, net sales increased 6% compared to the first quarter
Volume points of 1.5 billion increased 6% compared to the prior year
period1, the highest first quarter in Company history.
Excluding China, volume points increased 10% compared to the prior
First quarter reported diluted EPS of $0.66 and adjusted2
earnings of $0.66 per adjusted3 diluted share, both of
which were negatively impacted by expenses of approximately $0.7
million or $0.00 per diluted share and adjusted3 diluted
share, respectively, related to the China Growth and Impact Investment
In mid-April, the Chinese government concluded a 100-day review of the
health products industry, which led to a significant decrease in
company and service provider meetings during the first quarter. While
the Company and service providers are proceeding in a methodical
manner, local government approvals for meetings in May
are ramping up significantly and meetings have already begun.
Due to this recent slowdown in China, the Company is revising full
year 2019 volume point guidance to a range of 0.5% - 6.5% growth, net
sales guidance to a range of (1.0%) - 5.0%, as well as reported and
adjusted1,3 diluted EPS guidance to a range of $2.19 -
$2.64 and $2.50 - $2.95, respectively.
__________________________________________________________________
1 Excluding adjustments to volume point values in 2018, the
year over year change would have been an increase of 5.6%. See Regional
Volume Point Metrics below.
2 Adjusted diluted EPS is a non-GAAP measure and, for
guidance purposes, excludes the impact of: non-cash interest expense
associated with the Company's convertible notes and expenses related to
regulatory inquiries. Adjusted diluted EPS for reported results
purposes, excludes the impact of the foregoing as well as impacts
relating to contingent value rights revaluation, insurance recoveries
and China grant income. See Schedule A - "Reconciliation of Non-GAAP
Financial Measures" for a detailed reconciliation of adjusted net income
to net income calculated in accordance with GAAP and a reconciliation of
adjusted diluted EPS to diluted EPS calculated in accordance with GAAP
and a discussion of why we believe these non-GAAP measures are useful.
3 See Schedule A - "Reconciliation of Non-GAAP Financial
Measures" for a reconciliation of adjusted diluted share count to
reported diluted share count and a discussion of why the share count has
been adjusted for purposes of calculating adjusted diluted EPS for the
first quarter of 2019 and second and full year 2019 guidance.
First Quarter 2019 Key Metrics4
Regional Volume Point Metrics
| Volume Points | |||||
| Region | 1Q '19 (mil) | Yr/Yr % Chg | |||
| Asia Pacific | 369.2 | 28.8 | % | ||
| North America | 330.7 | 9.1 | % | ||
| EMEA | 325.5 | 10.5 | % | ||
| Mexico | 224.9 | 1.4 | % | ||
| South and Central America | 133.8 | (9.9 | %) | ||
| China | 96.3 | (31.8 | %) | ||
| Worldwide Total (a) | 1,480.4 | 6.1 | % | ||
| Worldwide Total excl. China (a) | 1,384.1 | 10.3 | % |
(a) During 2018, the Company adjusted volume point values for
certain products in North America and South & Central America. Excluding
these adjustments, the worldwide total year over year change in volume
points would have been an increase of 5.6% for the first quarter.
Adjustments to Volume Points during 2019 were not material.
______________________________________________________________
4 Supplemental tables that include Average Active Sales
Leader and additional business metrics can be found at http://ir.Herbalife.com.
Regional Net Sales and Foreign Exchange ("FX") Impact
| Region | Reported Net Sales 1Q'19 (mil) | Growth/Decline including FX vs. 1Q 18 | Growth/Decline excluding FX vs. 1Q 18 | |||||||||
| Asia Pacific | $ | 294.5 | 19.9 | % | 25.9 | % | ||||||
| North America | $ | 256.5 | 10.9 | % | 11.1 | % | ||||||
| EMEA | $ | 251.7 | 1.4 | % | 12.9 | % | ||||||
| Mexico | $ | 119.3 | 4.6 | % | 7.3 | % | ||||||
| South & Central America (a) | $ | 99.8 | (20.6 | %) | 8130.8 | % | ||||||
| China | $ | 150.4 | (29.1 | %) | (24.8 | %) | ||||||
| Worldwide Total | $ | 1,172.2 | (0.4 | %) | 874.7 | % | ||||||
| Worldwide Total excl. China | $ | 1,021.8 | 5.9 | % | 1,072.7 | % | ||||||
| South & Central America excl . Venezuela (a) | $ | 99.5 | (16.4 | %) | (6.1 | %) | ||||||
| Worldwide Total excl. Venezuela (a) | $ | 1,171.9 | 0.1 | % | 5.9 | % |
(a) Venezuela was impacted by significant price increases and
erosion in foreign currency exchange rates. Venezuela represents less
than 1% of the Company's consolidated net sales. See Schedule A -
"Reconciliation of Non-GAAP Financial Measures" for a discussion of why
we believe adjusting for Venezuela is useful.
Following is the Company's second quarter and full year 2019 guidance
based on current business trends:
| Three Months Ending | Twelve Months Ending | |||||||||||||||||||
| June 30, 2019 | December 31, 2019 | |||||||||||||||||||
| Low | High | Low | High | |||||||||||||||||
| Volume Point Growth vs 2018 (a) | (1.0 | %) | 5.0 | % | 0.5 | % | 6.5 | % | ||||||||||||
| Net Sales Growth vs 2018 (b) | (3.5 | %) | 2.5 | % | (1.0 | %) | 5.0 | % | ||||||||||||
| Diluted EPS (b) (c) | $ | 0.53 | $ | 0.68 | $ | 2.19 | $ | 2.64 | ||||||||||||
| Adjusted Diluted EPS (b) (c) (d) | $ | 0.65 | $ | 0.80 | $ | 2.50 | $ | 2.95 | ||||||||||||
| Cap Ex ($ millions) | $ | 35.0 | $ | 45.0 | $ | 130.0 | $ | 170.0 | ||||||||||||
| Effective Tax Rate (b) (c) | 30.0 | % | 34.0 | % | 29.0 | % | 33.0 | % | ||||||||||||
| Adjusted Effective Tax Rate (b) (c) (d) | 27.0 | % | 31.0 | % | 27.0 | % | 31.0 | % | ||||||||||||
| Net Sales Growth vs. 2018 (Currency Adjusted) (b) (e) | (0.1 | %) | 5.9 | % | 1.1 | % | 7.1 | % | ||||||||||||
| Adjusted Diluted EPS (Currency Adjusted) (b) (c) (d) (e) | $ | 0.73 | $ | 0.88 | $ | 2.76 | $ | 3.21 |
a) The Company is evaluating our current approach to
assigning and maintaining volume point values for certain products or
markets. Guidance excludes any future potential impact of volume point
adjustments, which may have an impact on the use of volume points as a
proxy for sales trends in future periods.
(b) Excludes any future potential Venezuela currency
devaluations and associated pricing and inflationary consequences.
(c) Excludes the following items that cannot be accurately
predicted: any future potential ongoing tax effects from the exercise of
equity awards that could impact the Company's tax rate due to the stock
compensation accounting standard, any future contingent value rights
revaluation, benefits from future potential China grant income, any
future potential dilution from the Company's convertible notes due in
2019 and 2024, as well as any impact of the China Growth and Impact
(d) Adjusted diluted EPS and adjusted effective tax rate
excludes the impact of: non-cash interest expense associated with the
Company's convertible notes and expenses related to regulatory
inquiries, as 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 believes these non-GAAP measures are
(e) Currency adjusted net sales and adjusted diluted EPS
represent projections translated into US dollars at currency rates equal
to the average rates used to translate 2018 second quarter and full year
net sales and diluted EPS and adjusted for items such as hedging
gains/losses and Venezuela to be directly comparable to 2018 values.
With respect to guidance, the Company cannot accurately predict the
impact to its share base from any share repurchases in 2019.
Accordingly, any impact thereof is excluded from the guidance tables