Full Press Release Details
Nutrition Achieves Double Digit Net Sales Growth in 2018 and Updates
Growth Projections for 2019
LOS ANGELES--(BUSINESS WIRE)--February 19, 2019--Herbalife Nutrition
Ltd. (NYSE: HLF) today reported financial results for the fourth quarter
and full year ended December 31, 2018:
"In 2018, we continued to show the strength of our business in
providing premier nutrition products to distributors and consumers
around the world. We achieved double digit net sales growth and
record volume points, enhancing our value for shareholders. In
2019, our momentum will continue as global trends drive demand for our
products and business opportunity, and our distributors deliver value to
their customers." - Michael O. Johnson, Chairman and CEO of Herbalife
QUARTER AND FULL YEAR HIGHLIGHTS
Reported net sales of $4.9 billion for the full year 2018, increased
10% compared to full year 2017. Fourth quarter reported net sales of
$1.2 billion increased 9% compared to the prior year period.
Record full year 2018 volume points of 5.9 billion, increased 10%
Full year 2018 reported diluted EPS of $1.98 and adjusted2
earnings of $2.88 per adjusted3 diluted share, compared to
$1.29 and $2.43 respectively, for the full year 2017, which were
negatively impacted by expenses of approximately $14.1 million or
$0.07 per share related to the China Growth and Impact Investment
Fourth quarter reported diluted EPS of $0.34 and adjusted2
earnings of $0.63 per adjusted3 diluted share, which were
negatively impacted by expenses of approximately $8.2 million or $0.04
per diluted share related to the China Growth and Impact Investment
Reiterating FY 2019 volume point guidance range of 4.0% - 8.0% growth,
as well as reported and adjusted1 diluted EPS guidance of
$2.34 - $2.74 and $2.70 - $3.10, respectively.
Record worldwide sales leader retention of 67.9%.
________________________________________
1 Excluding adjustments to volume point values in 2018, the
year over year change would have been an increase of 9.0%. 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 expenses
relating to challenges to the Company's business model, contingent value
rights revaluation, loss on extinguishment of convertible debt, loss on
extinguishment of the Company's 2017 senior secured credit facility,
Venezuela currency devaluation. expenses relating to FTC Consent Order
implementation, China grant income, and U.S. tax reform impact. 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
fourth quarter of 2017 and 2018, and full year 2018.
Fourth Quarter and Full Year 2018 Key Metrics4
Regional Volume Point Metrics
| Volume Points | Volume Points | |||||||||
| Region | Q4 '18 (mil) | Yr/Yr % Chg | FY '18 (mil) | Yr/Yr % Chg | ||||||
| Asia Pacific | 355.5 | 29.8 | % | 1,291.4 | 18.6 | % | ||||
| North America | 280.5 | 11.8 | % | 1,229.4 | 11.9 | % | ||||
| EMEA | 302.6 | 11.3 | % | 1,219.9 | 12.1 | % | ||||
| Mexico | 228.6 | 10.1 | % | 920.5 | 5.2 | % | ||||
| China | 155.2 | 3.7 | % | 669.2 | 5.7 | % | ||||
| South & Central America | 138.6 | (9.4 | %) | 561.6 | (5.4 | %) | ||||
| Worldwide Total (a) | 1,461.0 | 11.8 | % | 5,892.0 | 9.5 | % |
(a) During 2018, the Company adjusted volume point values for
certain products in Mexico, 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 11.1% for the fourth
quarter and 9.0% for the full year.
________________________________________
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
| Reported Net Sales | Growth/Decline | Growth/Decline | |||||||
| Region | 4Q'18 (mil) | including FX | excluding FX | ||||||
| vs. 4Q 17 | vs. 4Q 17 | ||||||||
| Asia Pacific | $ | 280.5 | 22.1 | % | 28.4 | % | |||
| North America | $ | 214.6 | 11.7 | % | 11.7 | % | |||
| EMEA | $ | 232.9 | 5.7 | % | 13.5 | % | |||
| Mexico | $ | 114.5 | 6.0 | % | 10.6 | % | |||
| China | $ | 242.1 | 11.1 | % | 16.1 | % | |||
| South & Central America (a) | $ | 102.0 | (18.5 | %) | 2,440.6 | % | |||
| Worldwide Total | $ | 1,186.6 | 8.5 | % | 294.3 | % | |||
| South & Central America excl . Venezuela (a) | $ | 101.1 | (16.5 | %) | (5.8 | %) | |||
| Worldwide Total excl. Venezuela (a) | $ | 1,185.7 | 8.9 | % | 14.4 | % |
| Reported Net Sales | Growth/Decline | Growth/Decline | |||||||
| Region | FY'18 (mil) | including FX | excluding FX | ||||||
| vs. FY 17 | vs. FY 17 | ||||||||
| Asia Pacific | $ | 1,053.4 | 15.0 | % | 16.7 | % | |||
| North America | $ | 948.3 | 12.9 | % | 12.8 | % | |||
| EMEA | $ | 977.0 | 12.5 | % | 12.4 | % | |||
| Mexico | $ | 467.9 | 5.7 | % | 7.8 | % | |||
| China | $ | 1,007.6 | 13.7 | % | 11.3 | % | |||
| South & Central America (a) | $ | 437.6 | (7.7 | %) | 858.7 | % | |||
| Worldwide Total | $ | 4,891.8 | 10.5 | % | 103.4 | % | |||
| South & Central America excl . Venezuela (a) | $ | 423.4 | (8.7 | %) | (1.1 | %) | |||
| Worldwide Total excl. Venezuela (a) | $ | 4,877.6 | 10.4 | % | 11.3 | % |
(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 first quarter and full year 2019 guidance
based on current business trends:
| Three Months Ending | Twelve Months Ending | |||||||||||||||
| March 31, 2019 | December 31, 2019 | |||||||||||||||
| Low | High | Low | High | |||||||||||||
| Volume Point Growth vs 2018 (a) | 4.0 | % | 8.0 | % | 4.0 | % | 8.0 | % | ||||||||
| Net Sales Growth vs 2018 (b) | 0.5 | % | 4.5 | % | 4.0 | % | 8.0 | % | ||||||||
| Diluted EPS (b) (c) | $ | 0.51 | $ | 0.61 | $ | 2.34 | $ | 2.74 | ||||||||
| Adjusted Diluted EPS (b) (c) (d) | $ | 0.60 | $ | 0.70 | $ | 2.70 | $ | 3.10 | ||||||||
| Cap Ex ($ millions) | $ | 30.0 | $ | 40.0 | $ | 135.0 | $ | 175.0 | ||||||||
| 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) | 6.5 | % | 10.5 | % | 5.7 | % | 9.7 | % | ||||||||
| Adjusted Diluted EPS (Currency Adjusted) (b) (c) (d) (e) | $ | 0.68 | $ | 0.78 | $ | 2.92 | $ | 3.32 |
(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 believe 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 full year net sales and