Full Press Release Details
Herbalife Reports Year-Over-Year Net Sales Growth in Fourth Quarter 2023
LOS ANGELES--(BUSINESS WIRE)--February 14, 2024--Herbalife Ltd. (NYSE: HLF) today reported financial results for the fourth quarter and year ended December 31, 2023.
"We continue to modernize Herbalife with a sharp focus on top-line growth and margin expansion for 2024," said Michael Johnson, Chairman and CEO.
Achieved year-over-year net sales growth on both reported and constant currency basis1
Fourth consecutive quarter of improved year-over-year reported net sales trends
Net sales of $1.2 billion, up 2.9% vs. 4Q 22; on constant currency basis1, net sales increased 2.5% vs. 4Q 22
Net income of $10.2 million and adjusted EBITDA2 of $108.8 million
Diluted EPS of $0.10 and adjusted diluted EPS2 of $0.28
Achieved cost savings of approximately $27 million related to Company's Transformation Program, approximately $70 million realized in 2023
Recognized pre-tax expenses of approximately $12 million related to Transformation Program
Continued roll out of all-new Herbalife.com website; now live in markets representing approximately 70% of Company's sales
Net sales of $5.1 billion, down 2.7% vs. 2022; on constant currency basis1, net sales declined 1.6% vs. 2022
Net income of $142.2 million and adjusted EBITDA2 of $570.6 million
Diluted EPS of $1.42 and adjusted diluted EPS2 of $2.21
Net cash provided by operating activities of $357.5 million; free cash flow2 of $222.5 million
Initiated process to refinance 2018 Term Loan A and 2018 Revolving Credit Facility, due in March 2025
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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 EBITDA, adjusted diluted EPS and free cash flow 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 U.S. GAAP measure, and a discussion of why we believe these non-GAAP measures are useful.
Management Commentary
Herbalife reported full-year 2023 net sales of $5.1 billion, down 2.7% year-over-year. On a constant currency basis1, net sales declined 1.6% year-over-year. Net income was $142.2 million. Net cash provided by operating
activities was $357.5 million, with free cash flow2 of $222.5 million. Adjusted EBITDA2 was $570.6 million, with adjusted EBITDA2 margin of 11.3%. Diluted EPS was $1.42, with adjusted diluted EPS2
For the year ended December 31, 2023, capital expenditures, including spending related to the Herbalife One digital technology platform, were approximately $135 million. The Company expects to incur total capital expenditures of
approximately $145 million to $195 million for the full year of 2024.
Fourth quarter 2023 net sales were $1.2 billion, up 2.9% year-over-year, marking the fourth consecutive quarter of improved year-over-year net sales trends. On a constant currency basis1, net sales increased 2.5%
Fourth quarter gross profit margin was 76.3%, down 120 basis points year-over-year, primarily due to the benefit of approximately 100 basis points of pricing more than offset by continued headwinds from input cost inflation of
approximately 210 basis points. Net income was $10.2 million. Adjusted EBITDA2 of $108.8 million includes approximately $2 million of foreign currency tailwinds year-over-year, with adjusted EBITDA2 margin of 9.0%.
Diluted EPS was $0.10, with adjusted diluted EPS2 of $0.28, which includes a $0.01 year-over-year foreign currency tailwind.
The Company implemented further actions related to its Transformation Program, which was initiated in 2021 to strategically optimize global business processes. Based on the Company's actions as of December 31, 2023, it delivered
approximately $70 million of cost savings in 2023, of which approximately $27 million was realized during the three months ended December 31, 2023. The Company now expects to deliver total program run rate savings of at least $115 million
in 2024 and beyond (up from at least $90 million). For the three and twelve months ended December 31, 2023, the Company recognized pre-tax expenses of approximately $12 million and $54 million, respectively, in SG&A related to the
program, which are excluded from the adjusted results. The Company now expects to incur total program pre-tax expenses of at least $95 million (up from at least $75 million), of which $79 million has been incurred to date.
Consistent with the Company's capital allocation priorities, it intends to repay the $197.0 million outstanding principal under its 2024 Convertible Notes at maturity in March 2024 with available cash on hand and funds available under
its revolving credit facility.
On February 2, 2024, the Company initiated the refinancing of its 2018 Term Loan A and 2018 Revolving Credit Facility, both of which mature in March 2025. As of December 31, 2023, $236.1 million was outstanding under the Term Loan A and
the revolver remained undrawn. The terms of the proposed refinancing transaction will be disclosed upon completion of the transaction. The proposed refinancing is subject to customary closing conditions and there can be no assurance any
refinancing will occur.
"We continue to take strategic actions to optimize our cost structure and strengthen our balance sheet," said Alex Amezquita, Chief Financial Officer. "The incremental cost savings achieved through the expansion of our Transformation
Program is evidence of our commitment to enhance productivity and we are continuing to look at all aspects of our business with a focus on driving top-line growth, expanding margins and securing our balance sheet."
During the fourth quarter, the Company continued the rollout of its all-new Herbalife.com websites, which are part of Herbalife One. To date, the websites are live in markets across Asia Pacific, EMEA, Latin America and North America,
which represent approximately 70% of the Company's 2023 sales. The rollout to the remaining planned markets is expected to be completed in 2024. In 2024, development will continue on offerings to elevate the digital capabilities provided
to distributors and their customers, such as distributor e-commerce, customer loyalty and data-enabled solutions.
2023 marked the Company's full return to in-person events, which were met with an overwhelming positive response from distributors, providing opportunities to re-establish connections and share best practices. The Company hosted nine
Extravaganzas across the globe with nearly 125,000 attendees, as well as thousands of other corporate-led and distributor-led education and training events. These events helped engage, motivate, inspire and educate the distributor base.
The Company believes these interactions have supported an increase in sales leader retention. For the twelve-month requalification period ending January 2024, approximately 68.3% of the distributor sales leaders, excluding China,
requalified to retain their status as a sales leader, versus 67.6% for the twelve-month period ended January 2023.
During December 2023 and January 2024, the Company continued to deliver on its growth strategy, launching four innovative products that it believes will resonate in local markets and align with consumer trends and preferences:
Shape Control - gluten-free weight loss supplement capsule which combines Morosil Moro Orange extract with Chromium; available in Brazil
Herbalife24 Premium Creatine - vegan, gluten-free and zero calorie powdered drink mix with 3g of creatine that provides multiple fitness benefits, including helping to enhance exercise performance and increase muscle
mass; available in Brazil
Formula 1 Express Healthy Meal Bars (Cranberry & White Chocolate) - reformulated with 15g of protein and 6g of fiber and suitable for vegetarians; available in select markets in EMEA
Pycno Plus - capsule that combines Pycnogenol (French maritime pine bark extract) and B Vitamins to support women and men's health; available in Korea
Additionally, last week the Company announced the offering of two Herbalife GLP-1 Nutrition Companion Product Combos, Classic and Vegan. The product combos are fueled by the #1 Protein Shake in the World* and are intended to
support the nutritional needs of individuals on GLP-1 and other weight loss medications. Each product combo provides vital protein to help build muscle tissue and maintain lean muscle mass, while providing energy and fiber to promote
regularity and a healthy digestive system. Additionally, the Classic combo delivers essential vitamins and minerals to support overall health, while the Vegan combo also delivers three organic blends of 20 fruits and vegetables. Further,
the Company's distributors can help consumers develop proper nutrition practices while on the weight-loss drugs and develop sustainable healthy habits for when they stop using the medications, to create lasting changes beneficial to
long-term health. The Herbalife GLP-1 Nutrition Companion Product Combos are now available in the United States and Puerto Rico.
"Our charge is clear - sales growth, margin expansion and maximizing shareholder value," said Michael Johnson. "Together with our distributors, Herbalife is on the path to becoming the global premier health and wellness company,
community and platform."
The Herbalife GLP-1 Nutrition Companion is not a drug. Remember to consult your physician before you make changes to your diet during medically supervised weight loss.
*Source Euromonitor International Limited; per Consumer Health 2024ed, Protein Shake as per sports protein powder, sports protein RTDs, meal replacement, supplement nutrition drinks and protein supplements, combined % RSP share GBO,
Fourth Quarter and Full-Year 2023 Key Metrics
Regional Net Sales and Foreign Exchange ("FX") Impact
| Region | Reported Net Sales 4Q '23 (mil) | Growth/Decline including FX vs. 4Q '22 | Growth/Decline excluding FX vs. 4Q '22 1 | |
| Asia Pacific | $ | 433.5 | 9.3% | 10.2% |
| North America | 252.8 | (8.1)% | (8.1)% | |
| EMEA | 250.1 | 1.3% | 0.7% | |
| Latin America | 196.4 | 2.8% | (1.3)% | |
| China | 82.2 | 15.6% | 17.4% | |
| Worldwide | $ | 1,215.0 | 2.9% | 2.5% |
| Region | Reported Net Sales FY '23 (mil) | Growth/Decline including FX vs. FY '22 | Growth/Decline excluding FX vs. FY '22 1 | |
| Asia Pacific | $ | 1,713.9 | 1.6% | 5.3% |
| North America | 1,131.4 | (10.4)% | (10.3)% | |
| EMEA | 1,068.8 | (0.9)% | 0.8% | |
| Latin America | 820.9 | 4.5% | (0.5)% | |
| China | 327.4 | (16.3)% | (11.8)% | |
| Worldwide | $ | 5,062.4 | (2.7)% | (1.6)% |
Regional Volume Point Metrics
| Volume Points | ||||
| Region | 4Q '23 (mil) | YoY % Chg. | FY '23 (mil) | YoY % Chg. |
| Asia Pacific | 552.3 | 11.2% | 2,151.5 | (0.2)% |
| North America | 250.6 | (14.9)% | 1,160.9 | (18.8)% |
| EMEA | 279.5 | (6.6)% | 1,222.9 | (9.6)% |
| Latin America | 239.4 | (12.4)% | 1,028.0 | (12.7)% |
| China | 60.1 | 28.1% | 237.6 | (9.1)% |
| Worldwide | 1,381.9 | (2.0)% | 5,800.9 | (9.1)% |
Earnings Webcast and Conference Call
Herbalife's senior management team will host a live audio webcast and conference call to discuss its fourth quarter and full-year 2023 financial results and provide an update on current business trends on Wednesday, February 14, 2024,
at 5:30 p.m. ET (2:30 p.m. PT).
The live audio webcast will be available at https://edge.media-server.com/mmc/p/zstgjz99/.
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
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 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 to
live their best life.
For more information, visit https://ir.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 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;