Full Press Release Details
Herbalife Nutrition Raises Full Year 2021 Guidance;
Reports Record First
Quarter Net Sales with Growth of 18.9% Versus Prior Year
LOS ANGELES, May 4th, 2021 - Herbalife
Nutrition Ltd. (NYSE: HLF) today reported financial results for the first quarter ended March 31, 2021:
MANAGEMENT COMMENTARY
The Company's double-digit net sales growth of 18.9% in the first quarter is a reflection of the long-established strategy and growth trajectory that
started in 2018. The demand for Herbalife Nutrition products, combined with the determination and entrepreneurial spirit of the Company's independent distributors, resulted in first quarter net sales of $1.5 billion, which is a record for the
"This quarter we delivered record first quarter results with net sales growth of 18.9%, as our distributors delivered valuable nutrition solutions to
consumers around the world," said John Agwunobi, Chairman and CEO of Herbalife Nutrition.
The Company is seeing continued consumer interest in health and wellness products which is driving demand for its range of nutritional product offerings.
The Company's global products and direct sales channel allow its independent distributors to support consumers as they reach their nutrition goals.
The fundamentals of the business are strong, evidenced by year-over-year growth and the record first quarter. Five of the Company's six regions experienced
net sales growth with three of the six regions: North America, Asia Pacific and EMEA, growing by more than 20%. In particular, India set a new quarterly net sales record for the third quarter in a row, with year-over-year growth of 37%.
Additionally, the Company is seeing the first net sales benefit from currency since the fourth quarter 2017, as currency was a net sales tailwind of approximately
180 bps, excluding Venezuela.
1 Adjusted diluted EPS is a non-GAAP measure and excludes the impact of: non-cash interest
expense and amortization associated with the Company's convertible notes, expenses related to regulatory inquiries and legal accruals, debt issuance costs related
to the senior secured credit facility amendment, and net expenses related to the COVID-19 pandemic. 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. See the "Outlook" discussion below and the related
footnotes for additional information regarding adjusted diluted EPS guidance.
2 First quarter 2021 results were impacted by China grant income of approximately $15.9 million, or $0.11 per diluted share and expenses related
to the China Growth and Impact Investment Program of approximately $3.5 million or $0.03 per diluted share. First quarter 2020 results were impacted by China grant income of approximately $9.1 million, or $0.05 per diluted share and expenses
related to the China Growth and Impact Investment Program of approximately $2.2 million or $0.01 per diluted share. First quarter 2020 adjusted results have been updated in Schedule A to no longer exclude China grant income.
Agwunobi added, "Due to the ongoing performance of our materially enlarged sales force and the increased awareness and consumer demand for our rapidly
expanding product portfolio, we have meaningfully raised and narrowed our full year 2021 guidance. We believe in the long-term growth opportunity of our business."
Based on the continued increased growth in net sales, the Company's new guidance calls for net sales growth to be in a range of 9% to 15%, up from its prior
range of 6% to 14%. Additionally, the midpoint of our reported and adjusted1 diluted EPS guidance range increased by approximately 7%.
The demand for the Company's full line of nutrition products and adaption of technology tools provided by the Company to its independent distributors
contributed to double-digit growth in over 50 of the Company's markets. The Company's sports nutrition line continues to drive growth, with worldwide net sales in energy, sports, and fitness category increasing approximately 34% during the first
quarter. Furthermore, the Company's targeted nutrition category, which includes health and wellness products, grew by 21% while the core weight management product category grew by 16% in the quarter. Moreover, consumer facing technology used by
the Company's independent distributors to interact with their customers, particularly in cases where face-to-face interactions are unable to take place, was also a key factor in helping drive growth.
We are deeply grateful to our employees and distributors around the world who continue to deliver on our promise to customers every day, despite the
To drive shareholder value, during the first quarter the Company executed an approximately $621 million in share repurchases. The Company has just under
$1.5 billion remaining on our three-year $1.5 billion share repurchase authorization.
"We repurchased $621 million in shares in the first quarter. We will continue to keep a sharp focus on enhancing shareholder value and capital allocation as
we look to deploy excess cash to the almost $1.5 billion remaining on our share repurchase program." said Alex Amezquita, Chief Financial Officer, Herbalife Nutrition.
The company will host a virtual Investor Day in August 2021.
First Quarter 2021 Key Metrics
Regional Net Sales and Foreign Exchange ("FX") Impact
| Region | Reported Net Sales 1Q'21 (mil) | Growth/Decline including FX vs. 1Q'20 | Growth/Decline excluding FX vs. 1Q'20 (a) |
| Asia Pacific | $ 403.4 | 22.4% | 19.9% |
| North America | $ 360.5 | 29.8% | 29.6% |
| EMEA | $ 354.2 | 36.9% | 32.1% |
| China | $ 169.3 | (10.8%) | (17.1%) |
| Mexico | $ 118.2 | 2.9% | 5.4% |
| South & Central America (b) | $ 96.0 | 4.9% | * |
| Worldwide Total | $ 1,501.6 | 18.9% | * |
| South & Central America excl . Venezuela (b) | $ 95.6 | 4.9% | 12.7% |
| Worldwide Total excl Venezuela (b) | $ 1,501.2 | 19.0% | 17.1% |
(a) Growth/decline in net sales excluding the effects of foreign
exchange is based on "net sales in local currency," a non-GAAP financial measure. See the Company's Form 10-Q for the three months ended March 31, 2021 for a discussion of why we believe adjusting for the effects of foreign exchange is useful.
(b) Venezuela has been generally 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.
* Figure not meaningful due to significant foreign currency
fluctuations in Venezuela and the price increases implemented as a result thereof that, when considered in isolation, have a disproportionately large impact on the Company's South and Central American region and consolidated results. Amounts were
23.0% and 17.8% for South & Central America and Worldwide Total, respectively.
Regional Volume Point Metrics
| Volume Points | ||
| Region | 1Q'21 (mil) | Yr/Yr % Chg |
| Asia Pacific | 490.1 | 19.6% |
| North America | 465.8 | 30.8% |
| EMEA | 424.5 | 26.1% |
| China | 100.8 | (19 . 1%) |
| Mexico | 217.8 | 3.8% |
| South and Central America | 128.8 | 1.7% |
| Worldwide Total | 1,827.8 | 16.9% |
Following is the Company's second quarter and updated full year 2021 guidance based on current business trends:
| Three Months Ending | Twelve Months Ending | |||
| June 30, 2021 | December 31, 2021 | |||
| Low | High | Low | High | |
| Volume Point Growth vs 2020 | 6.5% | 12 . 5% | 4.5% | 10.5% |
| Net Sales Growth vs 2020 (a) | 13.5% | 19.5% | 9.0% | 15.0% |
| Diluted EPS (a) (b) | $1.17 | $1.32 | $4.41 | $4.81 |
| Adjusted Diluted EPS (a) (b) (c) | $1.22 | $1.37 | $4.65 | $5.05 |
| Cap Ex ($ millions) | $40.0 | $55.0 | $175.0 | $225.0 |
| Effective Tax Rate (a) (b) | 20.3% | 26.3% | 19.4% | 25.4% |
| Adjusted Effective Tax Rate (a) (b) (c) | 19.5% | 25 . 5% | 18.7% | 24.7% |
| Net Sales Growth vs. 2020 (Currency Adjusted) (a) (d) | 9.0% | 15.0% | 7.0% | 13.0% |
| Adjusted Diluted EPS (Currency Adjusted) (a) (b) (c) (d) | $1.03 | $1.18 | $4.53 | $4.93 |
Earnings Conference Call
Herbalife Nutrition senior management will host an investor conference call to discuss its recent financial results and provide an update on current
business trends on Tuesday, May 4th, 2021, at 2:30 p.m. PT (5:30 p.m. ET).
The dial-in number for this conference call for domestic callers is (833) 962-1459, and (956) 394-3596 for international callers (conference ID: 3526984).
Live audio of the conference call will be simultaneously webcast in the investor relations section of the Company's website at http://ir.Herbalife.com.
An audio replay will be available following the completion of the conference call in MP3 format or by dialing (855) 859-2056 for domestic callers or (404)
537-3406 for international callers (conference ID: 3526984). The webcast of the teleconference will be archived and available on Herbalife Nutrition's website.
About Herbalife Nutrition Ltd.
Herbalife Nutrition is a global company that has been changing people's lives with great nutrition products and a proven business opportunity for its
independent distributors since 1980. The Company offers high-quality, science-backed products, sold in over 90 markets by entrepreneurial distributors who provide one-on-one coaching and a supportive community that inspires their customers to
embrace a healthier, more active lifestyle. Through the Company's global campaign to eradicate hunger, Herbalife Nutrition is also committed to bringing nutrition and education to communities around the world.
For more information, please visit IAmHerbalifeNutrition.com.
Herbalife Nutrition also encourages investors to visit its investor relations website at ir.herbalife.com as financial and other information is updated and
new information is posted.
Senior Director, Investor Relations
Forward-Looking Statements
This release contains "forward-looking
statements" within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual
results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent
risks and uncertainties, many of which are beyond our control. Additionally, many of these risks and uncertainties are, and may continue to be, amplified by the COVID-19 pandemic. Important factors that could cause our actual results, performance
and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include the following:
We do not undertake any obligation to update or release any revisions to any forward-looking
statement or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.
Results of Operations
Herbalife Nutrition Ltd. and Subsidiaries
Condensed Consolidated Statements of Income
(In millions, except per share amounts)
| Three Months Ended | ||||||||
| 3/31/2021 | 3/31/2020 | |||||||
| (unaudited) | ||||||||
| North America | $ | 360.5 | $ | 277.7 | ||||
| EMEA | 354.2 | 258.7 | ||||||
| Asia Pacific | 403.4 | 329.7 | ||||||
| Mexico | 118.2 | 114.9 | ||||||
| China | 169.3 | 189.9 | ||||||
| South and Central America | 96.0 | 91.5 | ||||||
| Worldwide Net Sales | 1,501.6 | 1,262.4 | ||||||
| Cost of Sales | 314.3 | 245.7 | ||||||
| Gross Profit | 1,187.3 | 1,016.7 | ||||||
| Royalty Overrides | 474.0 | 381.2 | ||||||
| Selling, General, and Administrative Expenses | 506.7 | 549.0 | ||||||
| Other Operating Income (1) | (15.9 | ) | (9.1 | ) | ||||
| Operating Income | 222.5 | 95.6 | ||||||
| Interest Expense, net | 37.5 | 25.0 | ||||||
| Income Before Income Taxes | 185.0 | 70.6 | ||||||
| Income Taxes | 37.6 | 25.0 | ||||||
| Net Income | $ | 147.4 | $ | 45.6 | ||||
| Weighted-Average Shares Outstanding: | ||||||||
| Basic | 108.4 | 137.8 | ||||||
| Diluted | 111.1 | 140.2 | ||||||
| Earnings Per Share: | ||||||||
| Basic | $ | 1.36 | $ | 0.33 | ||||
| Diluted | $ | 1.33 | $ | 0.32 |
(1) Other Operating Income for the three months ended March 31, 2021 and March 31, 2020 relates to certain China government grant income.
Herbalife Nutrition Ltd. and Subsidiaries
Condensed Consolidated Balance Sheets
| Mar 31, | Dec 31, | |||||||
| 2021 | 2020 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 611.7 | $ | 1,045.4 | ||||
| Receivables, net | 101.3 | 83.3 | ||||||
| Inventories | 509.4 | 501.4 | ||||||
| Prepaid expenses and other current assets | 164.5 | 145.7 | ||||||
| Total Current Assets | 1,386.9 | 1,775.8 | ||||||
| Property, plant and equipment, net | 389.8 | 390.2 | ||||||
| Operating lease right-of-use assets | 224.9 | 222.8 | ||||||
| Marketing-related intangibles and other intangible assets, net | 313.2 | 313.3 | ||||||
| Goodwill | 97.2 | 100.5 | ||||||
| Other assets | 254.8 | 273.5 | ||||||
| Total Assets | $ | 2,666.8 | $ | 3,076.1 | ||||
| LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 111.2 | $ | 88.7 | ||||
| Royalty overrides | 342.7 | 358.2 | ||||||
| Current portion of long-term debt | 24.7 | 22.9 | ||||||
| Other current liabilities | 588.6 | 657.5 | ||||||
| Total Current Liabilities | 1,067.2 | 1,127.3 | ||||||
| Non-current liabilities: | ||||||||
| Long-term debt, net of current portion | 2,556.3 | 2,405.5 | ||||||
| Non-current operating lease liabilities | 207.5 | 206.7 | ||||||
| Other non-current liabilities | 198.1 | 192.7 | ||||||
| Total Liabilities | 4,029.1 | 3,932.2 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders' deficit: | ||||||||
| Common shares | 0.1 | 0.1 | ||||||
| Paid-in capital in excess of par value | 298.7 | 342.3 | ||||||
| Accumulated other comprehensive loss | (205.0 | ) | (182.2 | ) | ||||
| Accumulated deficit | (1,127.2 | ) | (687.4 | ) | ||||
| Treasury stock | (328.9 | ) | (328.9 | ) | ||||
| Total Shareholders' Deficit | (1,362.3 | ) | (856.1 | ) | ||||
| Total Liabilities and Shareholders' Deficit | $ | 2,666.8 | $ | 3,076.1 |
Herbalife Nutrition Ltd. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
| Three Months Ended | ||||||||
| 3/31/2021 | 3/31/2020 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | 147.4 | $ | 45.6 | ||||
| Adjustments to reconcile net income to net cash provided by | ||||||||
| operating activities: | ||||||||
| Depreciation and amortization | 26.4 | 24.2 | ||||||
| Share-based compensation expenses | 13.3 | 10.3 | ||||||
| Non-cash interest expense | 7.1 | 6.3 | ||||||
| Deferred income taxes | 8.3 | 7.4 | ||||||
| Inventory write-downs | 9.5 | 3.6 | ||||||
| Foreign exchange transaction loss | 0.3 | 8.5 | ||||||
| Other | (1.1 | ) | (5.0 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | (21.9 | ) | (7.8 | ) | ||||
| Inventories | (31.5 | ) | (7.4 | ) | ||||
| Prepaid expenses and other current assets | (15.7 | ) | (18.1 | ) | ||||
| Accounts payable | 23.4 | 2.9 | ||||||
| Royalty overrides | (8.4 | ) | (22.9 | ) | ||||
| Other current liabilities | (52.0 | ) | 92.9 | |||||
| Other | 5.0 | 1.2 | ||||||
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 110.1 | 141.7 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property, plant and equipment | (33.4 | ) | (24.4 | ) | ||||
| Other | - | 0.1 | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | (33.4 | ) | (24.3 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Borrowings from senior secured credit facility, net of discount | 270.0 | 30.2 | ||||||
| Principal payments on senior secured credit facility and other debt | (125.2 | ) | (5.3 | ) | ||||
| Share repurchases | (645.0 | ) | (4.7 | ) | ||||
| Other | 1.0 | 0.8 | ||||||
| NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (499.2 | ) | 21.0 | |||||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | (11.2 | ) | (33.8 | ) | ||||
| NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH | (433.7 | ) | 104.6 | |||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD | 1,054.0 | 847.5 | ||||||
| CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD | $ | 620.3 | $ | 952.1 |
Supplemental Information
SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited and unreviewed), (All tables provide Dollars in millions, except per Share Data)
Adjusted Net Income and Adjusted Diluted EPS
In addition to its reported results and guidance calculated in accordance with GAAP, the Company has included in this release adjusted net income and
adjusted diluted EPS, performance measures that the Securities and Exchange Commission defines as "non-GAAP financial measures." Management believes that such non-GAAP financial measures, when read in conjunction with the Company's reported or
forecasted results, in each case calculated in accordance with GAAP, can provide useful supplemental information for investors because they facilitate a period to period comparative assessment of the Company's operating performance relative to its
performance based on reported or forecasted results under GAAP, while isolating the effects of some items that vary from period to period without any correlation to core operating performance and eliminate certain charges that management believes
do not reflect the Company's operations and underlying operational performance. The Company's definition of adjusted net income and adjusted diluted earnings per share may not be comparable to similarly titled measures used by other companies
because other companies may not calculate them in the same manner as the Company does and should not be viewed in isolation from nor as alternatives to net income or diluted EPS calculated in accordance with GAAP.
Venezuela Adjustments
The impact of foreign currency fluctuations in Venezuela and the price increases the Company implements as a result of the highly inflationary economy in
that market can each, when considered in isolation, have a disproportionately large impact to the Company's consolidated results despite the offsetting nature of these drivers and that net sales in Venezuela, which represent less than 1% of the