Full Press Release Details
Herbalife Reports Second Quarter 2024 Results,
Adjusted EBITDA1 Exceeds Guidance;
Raised Full-Year Adjusted EBITDA1 Guidance
LOS ANGELES, July 31, 2024 Herbalife Ltd. (NYSE: HLF) today reported financial results for the second quarter ended June 30, 2024:
1 Non-GAAP measure. Refer to Schedule A Reconciliation of Non-GAAP Financial Measures for a detailed reconciliation of these measures to the most directly comparable U.S. GAAP measure for historical periods, as applicable, and a discussion of why the Company believes
these non-GAAP measures are useful and certain information regarding non-GAAP guidance.
2 Growth/decline in net sales excluding the effects of foreign exchange is based on net sales in local
currency, a non-GAAP financial measure. Refer to Schedule A Reconciliation of Non-GAAP Financial Measures for a discussion of why the Company
believes adjusting for the effects of foreign exchange is useful.
Management Commentary
Herbalife reported second quarter 2024 net sales of $1.3 billion, down 2.5% year-over-year, including 270 basis points of foreign currency headwinds. On a constant
currency basis2, net sales increased 0.2% year-over-year.
Second quarter gross profit margin improved to 77.9% compared to 77.0% in the second quarter of 2023. On
a year-over-year basis, gross profit margin primarily benefited from approximately 160 basis points of pricing, partially offset by approximately 60 basis points of input cost inflation, mainly related to increased raw material costs.
Net income was $4.7 million, with net income margin of 0.4% and adjusted net income1 of $54.8 million.
Adjusted EBITDA1 of $180.0 million includes approximately $11 million of foreign currency headwinds year-over-year, with adjusted EBITDA1
margin of 14.1%, up 120 basis points year-over-year. Diluted EPS was $0.05, with adjusted diluted EPS1 of $0.54, which includes a $0.07 year-over-year foreign currency headwind.
Net cash provided by operating activities was $102.5 million and $116.3 million for the three and six months ended June 30, 2024, respectively. Capital
expenditures were approximately $36 million and $69 million for the three and six months ended June 30, 2024, respectively, and capitalized SaaS implementation costs were approximately $5 million and $10 million,
respectively. The Company expects to incur total capital expenditures of approximately $120 million to $150 million and total capitalized SaaS implementation costs of approximately $20 million to $25 million for the full year of
The Company implemented further actions related to its Restructuring Program, which was initiated during the first quarter of 2024 and designed to bring
leadership closer to its markets, streamline the employee structure and accelerate productivity. The Restructuring Program is expected to deliver annual savings of at least $80 million beginning in 2025, with at least $50 million now
expected to be achieved in 2024 (up from approximately $40 million). Based on actions through June 30, at least $10 million of savings were realized during the second quarter of 2024. The Company expects to incur total program pre-tax expenses of approximately $70 million (up from at least $60 million) related to the program, which are primarily related to severance costs and will be excluded from adjusted results. For the three and
six months ended June 30, 2024, approximately $49 million and $66 million of pre-tax expenses were recognized in SG&A related to the restructuring. Substantially all actions related to the
program have been completed as of June 30, with the remainder to be completed by the end of 2024.
As previously disclosed, the Company completed a
$1.6 billion debt refinancing in April, which included $1.2 billion of senior secured debt and a $400 million senior secured revolving credit facility. Proceeds from the transactions were used to repay all amounts outstanding under
the 2018 Credit Facility, which were scheduled to mature in 2025, and redeem $300 million of the $600 million aggregate principal amount of the 2025 Notes. In addition, the Company separately repurchased approximately $38 million of
the 2025 Notes in a private transaction in April. For the three months ended June 30, 2024, a $10.5 million loss on extinguishment of debt related to the transactions was recognized in other expense, net and is excluded from adjusted
In July, the Company completed the sale and a sixteen-month leaseback transaction of its office building in Torrance, California. The net proceeds from
the sale transaction were approximately $38 million. The Company expects to recognize a gain of approximately $4 million related to the sale in SG&A in the third quarter of 2024, which will be excluded from adjusted results.
We continue to make significant progress in our initiatives to enhance profitability, said John DeSimone, Chief Financial Officer. We remain focused
on further expanding margins, creating shareholder value and reducing our total leverage ratio to 3.0x by the end of 2025.
Over the past three months,
approximately 83,300 attendees from around the world convened at Extravaganza training events in Thailand, Colombia, India and the U.S. The Asia Pacific region set a new attendance record in
Bangkok with approximately 24,000 attendees present. India held its first-ever multi-city Extravaganza with events in both Bangalore and Delhi, collectively setting a new record with
approximately 35,700 attendees.
For the second quarter of 2024, the number of new distributors joining Herbalife worldwide increased 12% year-over-year and 26% on
a sequential basis, reversing 12 consecutive quarters of year-over-year declines. The Company believes events such as Extravaganzas, access to industry-leading entrepreneurial skills training, as well as the March 2024 launch of the all-new Herbalife Premier League training and recognition program, which is designed to encourage recruitment and activity from new distributors, are driving the positive momentum in new distributor recruiting.
This is an exciting time at Herbalife and while we have work to do, there are many good things happening, said Michael Johnson. Our Adjusted EBITDA1 margins are up, we ve reduced our total leverage ratio to 3.5x, distributor recruiting is up and distributors are engaged in building their businesses.
Second Quarter and Year to Date 2024 Key Metrics
Regional Net Sales and Foreign Exchange ( FX ) Impact
| Reported Net Sales | YoY Growth (Decline) | |||||||||||||||||||
| $ million | Q2 24 | Q2 23 | including FX | excluding FX 2 | ||||||||||||||||
| North America | $ | 283.2 | $ | 303.6 | (6.7) | % | (6.7) | % | ||||||||||||
| Latin America | 211.7 | 207.0 | 2.3 | % | 4.7 | % | ||||||||||||||
| EMEA | 287.8 | 289.6 | (0.6) | % | 3.5 | % | ||||||||||||||
| Asia Pacific | 416.7 | 425.8 | (2.1) | % | 1.6 | % | ||||||||||||||
| China | 81.7 | 88.0 | (7.2) | % | (4.0) | % | ||||||||||||||
| Worldwide | $ | 1,281.1 | $ | 1,314.0 | (2.5) | % | 0.2 | % | ||||||||||||
| Reported Net Sales | YoY Growth (Decline) | |||||||||||||||||||
| $ million | YTD 24 | YTD 23 | including FX | excluding FX 2 | ||||||||||||||||
| North America | $ | 549.0 | $ | 600.8 | (8.6) | % | (8.6) | % | ||||||||||||
| Latin America | 425.9 | 412.5 | 3.2 | % | 3.3 | % | ||||||||||||||
| EMEA | 565.7 | 557.7 | 1.4 | % | 4.9 | % | ||||||||||||||
| Asia Pacific | 847.9 | 839.4 | 1.0 | % | 4.2 | % | ||||||||||||||
| China | 156.9 | 155.7 | 0.8 | % | 5.0 | % | ||||||||||||||
| Worldwide | $ | 2,545.4 | $ | 2,566.1 | (0.8) | % | 1.3 | % |
Regional Volume Point Metrics
| Volume Points | ||||||||||||||||||||||||||||
| in millions | Q2 24 | Q2 23 | YoY % Chg. | YTD 24 | YTD 23 | YoY % Chg. | ||||||||||||||||||||||
| North America | 272.5 | 313.4 | (13.1) | % | 536.7 | 627.9 | (14.5) | % | ||||||||||||||||||||
| Latin America (a) | 253.2 | 258.5 | (2.1) | % | 508.5 | 529.9 | (4.0) | % | ||||||||||||||||||||
| EMEA | 299.2 | 331.2 | (9.7) | % | 597.9 | 645.5 | (7.4) | % | ||||||||||||||||||||
| Asia Pacific | 520.2 | 530.5 | (1.9) | % | 1,048.6 | 1,035.7 | 1.2 | % | ||||||||||||||||||||
| China | 61.5 | 62.6 | (1.8) | % | 116.3 | 111.2 | 4.6 | % | ||||||||||||||||||||
| Worldwide (b) | 1,406.6 | 1,496.2 | (6.0) | % | 2,808.0 | 2,950.2 | (4.8) | % |
Note: During Q2 24, most markets within the Latin America region, excluding Mexico, implemented a 5% price reduction and Volume
Point adjustments to enhance the competitiveness of product pricing, aiming to stimulate incremental volume growth and increase Members ability to promote business opportunities. Refer to the Company s Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2024 for additional details.
Third Quarter 2024 Guidance
| $ million | Q3 24 Guidance | Q3 23 Results | ||||
| Net Sales | (4.5)% to 0% YoY | 1,281.3 | ||||
| Adjusted EBITDA 1 | 125 155 | 163.3 | ||||
| Capital Expenditures | 35 45 | 31.1 |
Full-Year 2024 Guidance Revised
| $ million | FY 24 Guidance REVISED | FY 24 Guidance (as of May 1 24) | FY 23 Results | |||||||
| Net Sales | (3.5)% to +1.5% YoY | Reduced | 0% to +5% YoY | 5,062.4 | ||||||
| Adjusted EBITDA 1 | 560 600 | Raised | 550 590 | 570.6 | ||||||
| Capital Expenditures | 120 150 | Reaffirmed | 120 150 | 135.0 |
Earnings Webcast and Conference Call
senior management team will host a live audio webcast and conference call to discuss its second quarter 2024 financial results on Wednesday, July 31, 2024, at 5:30 p.m. ET (2:30 p.m. PT).
The live audio webcast will be available at the following link:
Participants joining via the conference call may obtain the dial-in information and personal PIN to access the call by
registering at the following link: https://register.vevent.com/register/BI912a2bd326f64fcfb80efc4f2f34d208.
Senior management also plans to reference slides during the webcast and call, which will be available under the Investor Relations section of Herbalife s website
at https://ir.herbalife.com, where financial and other information is posted from time to time. The live webcast will also be available at
the same website, along with a replay of the webcast following the completion of the event and for 12 months thereafter.
About Herbalife Ltd.
Herbalife (NYSE: HLF) is a premier health and wellness company, community and platform 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 to live their best life.
For more information, visit https://ir.herbalife.com.
| Media Contact: | Investor Contact: | |
| Thien Ho | Erin Banyas | |
| Vice President, Global Corporate Communications | Vice President, Head of Investor Relations | |
| thienh@herbalife.com | erinba@herbalife.com |
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 others,
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
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 June 30, 2024, filed with the Securities and Exchange Commission on July 31, 2024, 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 included therein, and Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on February 14, 2024, including under the headings Risk Factors and Management s
Discussion and Analysis of Financial Condition and Results of Operations and in our Consolidated Financial Statements and the related Notes included therein. 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
Herbalife Ltd. and Subsidiaries
Condensed Consolidated Statements of Income
millions, except per share amounts)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (unaudited) | ||||||||||||||||
| North America | $ | 283.2 | $ | 303.6 | $ | 549.0 | $ | 600.8 | ||||||||
| Latin America | 211.7 | 207.0 | 425.9 | 412.5 | ||||||||||||
| EMEA | 287.8 | 289.6 | 565.7 | 557.7 | ||||||||||||
| Asia Pacific | 416.7 | 425.8 | 847.9 | 839.4 | ||||||||||||
| China | 81.7 | 88.0 | 156.9 | 155.7 | ||||||||||||
| Worldwide Net sales | 1,281.1 | 1,314.0 | 2,545.4 | 2,566.1 | ||||||||||||
| Cost of sales | 283.1 | 301.6 | 568.1 | 600.2 | ||||||||||||
| Gross profit | 998.0 | 1,012.4 | 1,977.3 | 1,965.9 | ||||||||||||
| Royalty overrides | 415.3 | 429.7 | 830.5 | 845.7 | ||||||||||||
| Selling, general, and administrative expenses | 502.3 | 460.5 | 994.5 | 936.4 | ||||||||||||
| Other operating income (1) | - | (1.2 | ) | - | (10.1 | ) | ||||||||||
| Operating income | 80.4 | 123.4 | 152.3 | 193.9 | ||||||||||||
| Interest expense, net | 57.7 | 38.4 | 95.6 | 77.8 | ||||||||||||
| Other expense, net (2) | 10.5 | - | 10.5 | - | ||||||||||||
| Income before income taxes | 12.2 | 85.0 | 46.2 | 116.1 | ||||||||||||
| Income taxes | 7.5 | 25.1 | 17.2 | 26.9 | ||||||||||||
| Net income | $ | 4.7 | $ | 59.9 | $ | 29.0 | $ | 89.2 | ||||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 100.6 | 99.1 | 100.1 | 98.8 | ||||||||||||
| Diluted | 101.7 | 99.5 | 101.2 | 99.8 | ||||||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.05 | $ | 0.60 | $ | 0.29 | $ | 0.90 | ||||||||
| Diluted | $ | 0.05 | $ | 0.60 | $ | 0.29 | $ | 0.89 |
(1) Other operating income for the three and six months ended June 30, 2023 relates to certain China government
(2) Other expense, net for the three and six months ended June 30, 2024 relates to loss on extinguishment of
2018 Credit Facility, as well as partial redemption and private repurchase of 2025 Notes
Herbalife Ltd. and Subsidiaries
Condensed Consolidated Balance Sheets
| June 30, 2024 | December 31, 2023 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 374.0 | $ | 575.2 | ||||
| Receivables, net | 82.8 | 81.2 | ||||||
| Inventories | 480.7 | 505.2 | ||||||
| Prepaid expenses and other current assets | 276.3 | 237.7 | ||||||
| Total Current Assets | 1,213.8 | 1,399.3 | ||||||
| Property, plant and equipment, net | 468.2 | 506.5 | ||||||
| Operating lease right-of-use assets | 188.3 | 185.8 | ||||||
| Marketing-related intangibles and other intangible assets, net | 313.1 | 314.0 | ||||||
| Goodwill | 91.5 | 95.4 | ||||||
| Other assets | 327.3 | 308.4 | ||||||
| Total Assets | $ | 2,602.2 | $ | 2,809.4 | ||||
| LIABILITIES AND SHAREHOLDERS DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 81.3 | $ | 84.0 | ||||
| Royalty overrides | 316.5 | 343.4 | ||||||
| Current portion of long-term debt | 21.7 | 309.5 | ||||||
| Other current liabilities | 556.7 | 540.7 | ||||||
| Total Current Liabilities | 976.2 | 1,277.6 | ||||||
| Non-current liabilities: | ||||||||
| Long-term debt, net of current portion | 2,321.0 | 2,252.9 | ||||||
| Non-current operating lease liabilities | 173.3 | 167.6 | ||||||
| Other non-current liabilities | 168.9 | 171.6 | ||||||
| Total Liabilities | 3,639.4 | 3,869.7 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders deficit: | ||||||||
| Common shares | 0.1 | 0.1 | ||||||
| Paid-in capital in excess of par value | 253.4 | 233.9 | ||||||
| Accumulated other comprehensive loss | (257.4 | ) | (232.0 | ) | ||||
| Accumulated deficit | (1,033.3 | ) | (1,062.3 | ) | ||||
| Total Shareholders Deficit | (1,037.2 | ) | (1,060.3 | ) | ||||
| Total Liabilities and Shareholders Deficit | $ | 2,602.2 | $ | 2,809.4 |
Herbalife Ltd. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
| Six Months Ended June 30, | ||||||||
| 2024 | 2023 | |||||||
| (unaudited) | ||||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 29.0 | $ | 89.2 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 61.8 | 56.7 | ||||||
| Share-based compensation expenses | 23.7 | 22.0 | ||||||
| Non-cash interest expense | 5.6 | 3.6 | ||||||
| Deferred income taxes | (27.5 | ) | (8.4 | ) | ||||
| Inventory write-downs | 11.4 | 16.9 | ||||||
| Foreign exchange transaction loss (gain) | 4.5 | 1.0 | ||||||
| Loss on extinguishment of debt | 10.5 | - | ||||||
| Other | 2.8 | 3.4 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | (5.1 | ) | (16.6 | ) | ||||
| Inventories | (6.6 | ) | 50.7 | |||||
| Prepaid expenses and other current assets | (6.4 | ) | (17.5 | ) | ||||
| Accounts payable | (3.5 | ) | (0.8 | ) | ||||
| Royalty overrides | (19.2 | ) | (21.3 | ) | ||||
| Other current liabilities | 41.2 | 15.3 | ||||||
| Other | (5.9 | ) | (12.4 | ) | ||||
| Net cash provided by operating activities | 116.3 | 181.8 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property, plant and equipment | (69.2 | ) | (68.6 | ) | ||||
| Other | 0.2 | 0.1 | ||||||
| Net cash used in investing activities | (69.0 | ) | (68.5 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Borrowings from senior secured credit facility and other debt | 961.7 | 71.0 | ||||||
| Principal payments on senior secured credit facility and other debt | (1,413.8 | ) | (146.7 | ) | ||||
| Repayment of convertible senior notes | (197.0 | ) | - | |||||
| Proceeeds from senior secured notes, net of discount | 778.4 | - | ||||||
| Repayment of senior notes | (344.3 | ) | - | |||||
| Debt issuance costs | (20.9 | ) | (1.8 | ) | ||||
| Share repurchases | (5.7 | ) | (9.4 | ) | ||||
| Other | 1.4 | 1.6 | ||||||
| Net cash used in financing activities | (240.2 | ) | (85.3 | ) | ||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | (13.3 | ) | 3.0 | |||||
| Net change in cash, cash equivalents, and restricted cash | (206.2 | ) | 31.0 | |||||
| Cash, cash equivalents, and restricted cash, beginning of period | 595.5 | 516.3 | ||||||
| Cash, cash equivalents, and restricted cash, end of period | $ | 389.3 | $ | 547.3 |
Supplemental Information
SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA and Credit Agreement EBITDA
In addition to its reported results calculated in accordance with U.S. GAAP, the Company has included in this release adjusted net income, adjusted diluted EPS,
adjusted EBITDA and credit agreement EBITDA, performance measures that the Securities and Exchange Commission defines as non-GAAP financial measures. Adjusted net income, adjusted diluted EPS,