Full Press Release Details
Herbalife Reports Year-Over-Year Net Sales Growth
for Second Consecutive Quarter;
Raises Full-Year 2024 Adjusted EBITDA1 Guidance
LOS ANGELES, May 1, 2024 Herbalife Ltd. (NYSE: HLF) today reported financial results for the first quarter ended March 31, 2024:
| First Quarter 2024 Achieved year-over-year net sales growth on both reported and constant currency basis 2 Net sales of $1.3 billion, up 1.0% vs. 1Q 23, in-line with guidance; on constant currency basis 2 up 2.4% Net income of $24.3 million Adjusted EBITDA 1 of $138.3 million exceeds guidance; adjusted EBITDA 1 margin up 60 basis points year-over-year Diluted EPS of $0.24 and adjusted diluted EPS 1 of $0.49 Announced new restructuring plan to streamline organizational structure Annual cost savings of at least $80 million expected beginning in 2025, with approximately $40 million expected in 2024 | We achieved our second consecutive quarter of year-over-year net sales growth. We are laser focused on cost reductions, which drove outperformance of our Adjusted EBITDA 1 guidance. - Michael Johnson, Chairman and CEO | |
| Recognized pre-tax expenses of approximately $17 million in SG&A |
Management Commentary
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.
Herbalife reported first quarter 2024 net sales of $1.3 billion, up 1.0% year-over-year. On a constant currency
basis2, net sales increased 2.4% year-over-year.
First quarter gross profit margin improved to 77.5% compared
to 76.2% in first quarter 2023. On a year-over-year basis, gross profit margin benefited from approximately 150 basis points of pricing, approximately 60 basis points of lower inventory write-downs and approximately 10 basis points each from
favorable sales mix and foreign currency, partially offset by approximately 110 basis points of input cost inflation, primarily related to increased raw material costs.
Net income was $24.3 million, with net income margin of 1.9%. Net cash provided by operating activities was $13.8 million. Adjusted EBITDA1 of $138.3 million includes approximately $4 million of foreign currency headwinds year-over-year, with adjusted EBITDA1 margin
of 10.9%, up 60 basis points year-over-year. Diluted EPS was $0.24, with adjusted diluted EPS1 of $0.49, which includes a $0.03 year-over-year foreign currency headwind.
For the three months ended March 31, 2024, capital expenditures and capitalized SaaS implementation costs were approximately $33 million and $5 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
On March 20, the Company announced a new organizational restructuring plan designed to bring leadership closer to its markets, streamline the employee
structure and accelerate productivity ( Restructuring Program ). The Restructuring Program is expected to deliver annual savings of at least $80 million beginning in 2025, with approximately $40 million expected to be achieved in
2024. The Company expects to incur total program pre-tax expenses of at least $60 million related to the program, which are primarily related to severance costs and will be excluded from adjusted results.
The Company began implementing actions related to the program during the first quarter and expects a majority of all actions to be completed by the end of June 2024. For the three months ended March 31, 2024, approximately $17 million of pre-tax expenses were recognized in SG&A related to the restructuring. The Restructuring Program is separate from Herbalife s Transformation Program.
In March, and consistent with its capital allocation priorities, the Company repaid in full, the outstanding principal and accrued interest on the 2024 Convertible
Notes at maturity with a combination of $108.6 million in cash and $91.0 million in borrowings under its revolving credit facility.
Company completed a $1.6 billion senior secured refinancing, which included:
Proceeds from the transactions were used to repay all amounts outstanding under the 2018 Term Loan A, 2018 Term Loan B and 2018 Revolving Credit
Facility, which were scheduled to mature in 2025, redeem $300 million of the $600 million aggregate principal amount of the 7.875% Senior Notes due 2025 ( 2025 Senior Notes ) at a price of 101.969% of the principal amount plus
accrued and unpaid interest and pay related fees and expenses.
In addition, the Company separately repurchased approximately $38 million of the 2025 Senior
Notes in a private transaction at the same redemption price as the $300 million described above. Following the repurchase, approximately $262 million remains outstanding on the 2025 Senior Notes. Upon completion of the refinancing
transactions, approximately $170 million was outstanding under the Amended Revolving Credit Facility as of April 26.
The business continues to strengthen, said John DeSimone, Chief Financial Officer. We are taking
swift actions to expand margins, maximize shareholder value and reduce our total leverage ratio to 3.0x by the end of 2025.
The Company recently rolled out
its all-new distributor e-commerce platform, built on Herbalife One, to its distributors in the UK and Spain. The distributor platform continues to build upon the
foundational capabilities launched with the all-new Herbalife.com websites and supports personalized commerce websites that enable distributors to offer a seamless online shopping experience. The new
distributor sites place a strong emphasis on strengthening the customer-distributor connection, providing faster order fulfillment and checkout for customers, and various other feature enhancements. In 2024, development will continue on offerings to
elevate the digital platform capabilities provided to its distributors and customers.
In March, approximately 4,300 distributor leaders from 80 countries came
together in Lisbon, Portugal for Summit 2024, the Company s annual leadership training and recognition event. During the five-day event, several new initiatives were unveiled to help distributors
sustainably grow their businesses, including enhanced leadership development opportunities, elevated entrepreneurial skills training, and a program to drive increased recruitment globally. In April, approximately 14,000 attendees gathered at
China s Extravaganza training event in Chengdu, an increase of approximately 25% over the 2023 event.
Economic opportunities built around selling
diversified nutrition and wellness offerings, including through approximately 67,000 fixed location nutrition clubs worldwide, differentiates us from others in our industry, said Michael Johnson.
First Quarter 2024 Key Metrics
Regional Net Sales and Foreign Exchange ( FX ) Impact
| $ million | Reported Net Sales 1Q 24 | Growth/Decline including FX vs. 1Q 23 | Growth/Decline excluding FX vs. 1Q 23 1 | |||||||||
| North America | $ | 265.8 | (10.6) | % | (10.6) | % | ||||||
| Latin America | 214.2 | 4.2 | % | 2.0 | % | |||||||
| EMEA | 277.9 | 3.7 | % | 6.5 | % | |||||||
| Asia Pacific | 431.2 | 4.3 | % | 6.9 | % | |||||||
| China | 75.2 | 11.1 | % | 16.7 | % | |||||||
| Worldwide | $ | 1,264.3 | 1.0 | % | 2.4 | % |
Regional Volume Point Metrics
| Volume Points | ||||||||
| in millions | 1Q 24 | YoY % Chg. | ||||||
| North America | 264.2 | (16.0) | % | |||||
| Latin America | 255.3 | (5.9) | % | |||||
| EMEA | 298.7 | (5.0) | % | |||||
| Asia Pacific | 528.4 | 4.6 | % | |||||
| China | 54.8 | 12.8 | % | |||||
| Worldwide | 1,401.4 | (3.6) | % |
| $ million | Q2 24 Guidance | Q2 23 Results | ||||
| Net Sales | 0% to +3% YoY | 1,314.0 | ||||
| Adjusted EBITDA 1 | 140 160 | 169.6 | ||||
| Capital Expenditures | 30 40 | 38.3 |
Full-Year 2024 Guidance Revised
| $ million | FY 24 Guidance REVISED | FY 24 Guidance (as of Mar 20 24) | FY 23 Results | |||||||
| Net Sales | 0% to +5% YoY | Reaffirmed | 0% to +5% YoY | 5,062.4 | ||||||
| Adjusted EBITDA 1 | 550 590 | Raised | 540 580 | 570.6 | ||||||
| Capital Expenditures | 120 150 | Reduced | 125 175 | 135.0 |
Earnings Webcast and Conference Call
Herbalife s senior management team will host a live audio webcast and conference call to discuss
its first quarter 2024 financial results and provide an update on current business trends on Wednesday, May 1, 2024, at 5:30 p.m. ET (2:30 p.m. PT).
audio webcast will be available at https://edge.media-server.com/mmc/p/8s4dwfp6/.
Participants joining via the conference call will need to register to receive the dial-in information and personal PIN
to access the call, and may do so by visiting the Investor Relations section of the Company s website at https://ir.herbalife.com. Senior management also plans to reference slides during the call, which will also be available on the Investor Relations section of the Company s website, where financial and other information is posted from time to
A replay of the event will be available following the completion of the live audio webcast and conference call, and for 12 months thereafter, under
the Investor Relations section of the Company s website at https://ir.herbalife.com.
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.
Vice President, Global Corporate
Vice President, Head of Investor Relations
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 March 31, 2024, filed with the Securities and Exchange Commission on May 1, 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 March 31, | ||||||||
| 2024 | 2023 | |||||||
| (unaudited) | ||||||||
| North America | $ | 265.8 | $ | 297.2 | ||||
| Latin America | 214.2 | 205.5 | ||||||
| EMEA | 277.9 | 268.1 | ||||||
| Asia Pacific | 431.2 | 413.6 | ||||||
| China | 75.2 | 67.7 | ||||||
| Worldwide Net sales | 1,264.3 | 1,252.1 | ||||||
| Cost of sales | 285.0 | 298.6 | ||||||
| Gross profit | 979.3 | 953.5 | ||||||
| Royalty overrides | 415.2 | 416.0 | ||||||
| Selling, general, and administrative expenses | 492.2 | 475.9 | ||||||
| Other operating income (1) | - | (8.9 | ) | |||||
| Operating income | 71.9 | 70.5 | ||||||
| Interest expense, net | 37.9 | 39.4 | ||||||
| Income before income taxes | 34.0 | 31.1 | ||||||
| Income taxes | 9.7 | 1.8 | ||||||
| Net income | $ | 24.3 | $ | 29.3 | ||||
| Weighted-average shares outstanding: | ||||||||
| Basic | 99.7 | 98.5 | ||||||
| Diluted | 100.7 | 100.2 | ||||||
| Earnings per share: | ||||||||
| Basic | $ | 0.24 | $ | 0.30 | ||||
| Diluted | $ | 0.24 | $ | 0.29 |
(1) Other operating income for the three months ended March 31, 2023 relates to certain China
government grant income.
Herbalife Ltd. and Subsidiaries
Condensed Consolidated
| March 31, 2024 | December 31, 2023 | |||||||
| (unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 398.3 | $ | 575.2 | ||||
| Receivables, net | 87.9 | 81.2 | ||||||
| Inventories | 501.9 | 505.2 | ||||||
| Prepaid expenses and other current assets | 238.1 | 237.7 | ||||||
| Total Current Assets | 1,226.2 | 1,399.3 | ||||||
| Property, plant and equipment, net | 510.9 | 506.5 | ||||||
| Operating lease right-of-use assets | 179.1 | 185.8 | ||||||
| Marketing-related intangibles and other intangible assets, net | 313.6 | 314.0 | ||||||
| Goodwill | 93.9 | 95.4 | ||||||
| Other assets | 323.3 | 308.4 | ||||||
| Total Assets | $ | 2,647.0 | $ | 2,809.4 | ||||
| LIABILITIES AND SHAREHOLDERS DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 89.9 | $ | 84.0 | ||||
| Royalty overrides | 313.3 | 343.4 | ||||||
| Current portion of long-term debt | 2.9 | 309.5 | ||||||
| Other current liabilities | 538.6 | 540.7 | ||||||
| Total Current Liabilities | 944.7 | 1,277.6 | ||||||
| Non-current liabilities: | ||||||||
| Long-term debt, net of current portion | 2,405.0 | 2,252.9 | ||||||
| Non-current operating lease liabilities | 163.9 | 167.6 | ||||||
| Other non-current liabilities | 170.0 | 171.6 | ||||||
| Total Liabilities | 3,683.6 | 3,869.7 | ||||||
| Commitments and Contingencies | ||||||||
| Shareholders deficit: | ||||||||
| Common shares | 0.1 | 0.1 | ||||||
| Paid-in capital in excess of par value | 244.2 | 233.9 | ||||||
| Accumulated other comprehensive loss | (242.9 | ) | (232.0 | ) | ||||
| Accumulated deficit | (1,038.0 | ) | (1,062.3 | ) | ||||
| Total Shareholders Deficit | (1,036.6 | ) | (1,060.3 | ) | ||||
| Total Liabilities and Shareholders Deficit | $ | 2,647.0 | $ | 2,809.4 |
Herbalife Ltd. and Subsidiaries
Condensed Consolidated Statements of Cash Flows