Herbalife Reports First Quarter 2023 Results LOS ANGELES--(BUSINESS WIRE)

LOS ANGELES--(BUSINESS WIRE)--May 2, 2023--Herbalife Ltd. (NYSE: HLF) today reported financial results for the first quarter ended March 31, 2023:

"We have accomplished a lot this quarter and are on the right trajectory to see growth by the end of the year," said Michael Johnson, Chairman and CEO of Herbalife.

First quarter 2023 net sales of $1.3 billion, down 6.3% compared to first quarter 2022; on a constant currency basis1, net sales declined 2.6% compared to the prior year period

First quarter 2023 reported net income of $29.3 million and Adjusted EBITDA2 of $128.9 million

First quarter 2023 reported diluted EPS of $0.29 and adjusted diluted EPS2 of $0.54

Significant progress with the Company's Transformation Program, actions to date result in approximately $35 million of savings in 2023; on track to exceed $70 million of total program run rate savings in 2024 and beyond

One-time pre-tax expenses of approximately $27 million recognized during first quarter related to the Company's Transformation Program impacted reported financial results

In April, the Company amended its Senior Secured Credit Facility to increase the gross leverage ratio covenant, which provides greater financial flexibility to make investments in key initiatives; the Company was compliant with all debt

covenants as of March 31, 2023

Given the continued dynamic macroeconomic backdrop, the Company is not providing guidance

1 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 Schedule A - "Reconciliation of Non-GAAP Financial Measures" for a discussion of

why we believe adjusting for the effects of foreign exchange is useful.

2 Adjusted diluted EPS and adjusted EBITDA are non-GAAP measures. See Schedule A - "Reconciliation of Non-GAAP Financial Measures" for a detailed reconciliation of these measures to the most directly comparable GAAP measure, and a

discussion of why we believe these non-GAAP measures are useful.

Management Commentary

Herbalife reported first quarter 2023 net sales of $1.3 billion, down 6.3% year-over-year, or a 2.6% decline on a constant currency basis1. First quarter net income of $29.3 million and adjusted EBITDA2 of $128.9 million

was negatively impacted by lower sales, continued input cost inflation and the timing of distributor event spending, partially offset by improved pricing. In addition, first quarter gross profit margin of 76.2% was negatively impacted by

currency headwinds of approximately 150 bps year-over-year. Diluted EPS was $0.29 for the first quarter, with adjusted diluted EPS1 of $0.54, which included a $0.32 year-over-year currency headwind.

Engagement with distributors remained strong, as more than 700 in-person events worldwide attracted more than 400,000 attendees, year-to-date through April 30. For the first time in three years, approximately 2,700 of the Company's

independent distributor leaders from around the world gathered in Los Angeles and were given a preview of the Company's modernized branding and plans for expanding product offerings. The Company's digital transformation initiative remains on

track, as launch plans were solidified for modernized websites and a new e-commerce platform.

"The return of in-person events have engaged more than 400,000 attendees this year, building strong momentum and driving increased engagement in our business," said Chairman and CEO, Michael Johnson. "We expect this energy to drive continued

improvement in our top line, resulting in growth by the end of the year."

The Company continues to make significant progress in productivity through its Transformation Program, which was initiated in 2021 to strategically optimize global business processes. The Company's actions to date result in approximately $35

million of savings in 2023 and it is on track to exceed $70 million of total program run rate savings in 2024 and beyond.

In April, the Company amended its Senior Secured Credit Facility, which among other things, increased the gross leverage ratio covenant from 3.75 to 4.50 effective through December 31, 2023, stepping down to 4.25 as of March 31, 2024 and 4.00

thereafter. This will provide greater financial flexibility to make investments in key initiatives. As of March 31, 2023, the related gross leverage ratio was approximately 3.6. The Company was compliant with all debt covenants as of March 31,

"We have taken steps to protect profitability and secure our balance sheet in order to provide flexibility to execute on our strategic plan and return to growth," said Chief Financial Officer, Alex Amezquita. "Our capital allocation

priorities remain unchanged as we take steps to achieve a long-term target gross leverage ratio of 3.0x."

In a separate announcement today, the Company announced updates to its leadership succession plan. The Company is announcing the retirement of Chief Operating Officer, Mark Schissel following 16 years of dedicated service. Frank Lamberti will

be appointed to Chief Operating Officer, Ibi Montesino, EVP and Chief of Staff, will have increased management authority and Rob Levy, will be appointed Regional President Americas. These changes are all effective as of July 1, 2023 and will

report to Michael Johnson.

First Quarter 2023 Key Metrics

Regional Net Sales and Foreign Exchange ("FX") Impact

Regional Volume Point Metrics

Given the continued dynamic macroeconomic backdrop, the Company is not providing guidance. The Company will periodically reassess its ability to provide guidance when we believe future performance can be reasonably estimated.

Earnings Conference Call

Herbalife 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 2, 2023, at 2:30 p.m. PT (5:30 p.m. ET).

Participants will need to register to receive dial-in information to the call, and may do so by visiting the investor relations section of the Company's website at http://ir.herbalife.com. Additionally, live audio of the conference call will

be simultaneously webcast at https://edge.media-server.com/mmc/p/hkz6x6y6. Senior management also plans to reference slides during the call, which will also be available on the investor relation's section of the Company's website.

An audio replay will be available following the completion of the conference call, and the webcast of the teleconference will be archived and available on the Company's investor relations site.

About Herbalife Ltd.

Herbalife (NYSE: HLF) is a premier health and wellness company and community that has been changing people's lives with great nutrition products and a business opportunity for its independent distributors since 1980. The Company offers

science-backed products to consumers in more than 90 markets through entrepreneurial distributors who provide one-on-one coaching and a supportive community that inspires their customers to embrace a healthier, more active lifestyle in order to

live their best life.

Herbalife encourages investors to visit its investor relations website at ir.herbalife.com as financial and other information is posted.

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of

historical fact are "forward-looking statements" for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management,

including for future operations, capital expenditures, or share repurchases; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of

belief or expectation; and any statements of assumptions underlying any of the foregoing or other future events. Forward-looking statements may include, among other, the words "may," "will," "estimate," "intend," "continue," "believe,"

"expect," "anticipate" or any other similar words.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results or outcomes 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. 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:

the potential impacts of current global economic conditions, including inflation, on us; our Members, customers, and supply chain; and the world economy;

our ability to attract and retain Members;

our relationship with, and our ability to influence the actions of, our Members;

our noncompliance with, or improper action by our employees or Members in violation of, applicable U.S. and foreign laws, rules, and regulations;

adverse publicity associated with our Company or the direct-selling industry, including our ability to comfort the marketplace and regulators regarding our compliance with applicable laws;

changing consumer preferences and demands and evolving industry standards, including with respect to climate change, sustainability, and other environmental, social, and governance, or ESG, matters;

the competitive nature of our business and industry;

legal and regulatory matters, including regulatory actions concerning, or legal challenges to, our products or network marketing program and product liability claims;

the Consent Order entered into with the FTC, the effects thereof and any failure to comply therewith;

risks associated with operating internationally and in China;

our ability to execute our growth and other strategic initiatives, including implementation of our Transformation Program and increased penetration of our existing markets;

any material disruption to our business caused by natural disasters, other catastrophic events, acts of war or terrorism, including the war in Ukraine, cybersecurity incidents, pandemics such as the COVID-19 pandemic, and/or other acts

our ability to adequately source ingredients, packaging materials, and other raw materials and manufacture and distribute our products;

our reliance on our information technology infrastructure;

noncompliance by us or our Members with any privacy laws, rules, or regulations or any security breach involving the misappropriation, loss, or other unauthorized use or disclosure of confidential information;

contractual limitations on our ability to expand or change our direct-selling business model;

the sufficiency of our trademarks and other intellectual property;

product concentration;

our reliance upon, or the loss or departure of any member of, our senior management team;

restrictions imposed by covenants in the agreements governing our indebtedness;

risks related to our convertible notes;

changes in, and uncertainties relating to, the application of transfer pricing, income tax, customs duties, value added taxes, and other tax laws, treaties, and regulations, or their interpretation;

our incorporation under the laws of the Cayman Islands; and

share price volatility related to, among other things, speculative trading and certain traders shorting our common shares.

Additional factors and uncertainties that could cause actual results or outcomes to differ materially from our forward-looking statements are set forth in the Company's Quarterly Report on Form 10-Q for the fiscal quarter

ended March 31, 2023, filed with the Securities and Exchange Commission on May 2, 2023, including under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations"

and in our Condensed Consolidated Financial Statements and the related Notes, and in Part I, Item 1A, Risk Factors, of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange

Commission on February 14, 2023. In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue

to evolve, and assumptions that are subject to change in the future.

Forward-looking statements made in this release speak only as of the date hereof. 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

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, Adjusted Diluted EPS and Adjusted EBITDA

In addition to its reported results calculated in accordance with GAAP, the Company has included in this release adjusted net income, adjusted diluted EPS and adjusted EBITDA, performance measures that the Securities and Exchange Commission

defines as "non-GAAP financial measures." Adjusted net income, adjusted diluted EPS and adjusted EBITDA exclude the impact of certain unusual or non-recurring items such as net expenses related to COVID-19 pandemic, expenses related to

Transformation Program and expenses related to digital technology program, as further detailed in the reconciliations below.