Herbalife Nutrition (HLF) 2 Aug 192019 Q2 Earnings call transcript

Company Profile

Participants

Eric Monroe	Director, IR
Michael Johnson	Chairman & CEO
Alex Amezquita	SVP of Finance & Strategy and IR
John DeSimone	Co-President & Chief Strategic Officer
John Agwunobi	Co-President & Chief Health and Nutrition Officer
Tim Ramey	Pivotal Research
Stephanie Wissink	Jefferies
Doug Lane	Lane Research
Beth Kite	Citi
Hale Holden	Barclays

Call transcript

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Operator

Good afternoon, and thank you for joining the Second Quarter 2019 Earnings Conference Call for Herbalife Nutrition Ltd.

On the call today is Michael Johnson, the Company's Chairman and CEO; John DeSimone, the Company's Co-President and Chief Strategic Officer; Dr. John Agwunobi, the Company's co-President and Chief Health and Nutrition Officer; Alex Amezquita, the Company's Senior Vice President of Finance, Strategy and Investor Relations; and Eric Monroe, the Company's Director, Investor Relations.

I would now like to turn the call over to Eric Monroe to read the Company's Safe Harbor language.

Eric Monroe

Before we begin, as a reminder, during this conference call, we may make forward-looking statements within the meaning of the federal securities laws. to actual unknown from results or subject that and those are anticipated. cause could to statements known risks and uncertainties discussed These differ materially

in associated complete quarterly to refer report XX-K recent release filings XX-Q. these of annual a SEC earnings we risks on our our For forward-looking you Form discussion today's statements and including our and to report business, encourage Form with most on

any us. statements to are information We of future any based release or do occurrence revisions update obligation as to reflect events, circumstances to any statement undertake forward-looking or required Our or forward-looking currently not events upon any by except or unanticipated the available law. report to to

be financial and measures manner, differ in Exchange financial as measures. We Accounting operations Securities addition, earnings measures schedules contained consistent Commission prepared comparable our more and believe greater management statements Principles, discussed results meaningful the non-GAAP that period-to-period U.S. In and call, referred measures in that evaluating financial this release. during Generally our from and to a of as accordance discussed these certain in with financial by Accepted to assist performance may preparing our in investors supplemental the detail non-GAAP in in performance

these also are section submitted the information SEC. to the of most comparable together in release press additional our GAAP at to supplemental of reconciliation non-GAAP A the herbalife.com. Investor included These measures earnings financial measures website, our is available with Relations reconciliations

call, volume makes during conference are they referring to points. volumes Management when reference Additionally, to this

CEO, Michael over call the our Johnson. turn and Chairman now will I to

Michael Johnson

confident Quarter by our us Call. obvious joining the Nutrition. stating XXXX are strong Conference in start of like afternoon, Good I'd the direction Thank Herbalife everyone. for are we of fundamentals for that and the to business our you Second

light of and we diversity in our second volume quarterly China. the company Our in history, geographic performance our in of this reported points demonstrates as the strength is worldwide highest challenges

second We of results sales were our guidance X EMEA XX in within regions, bottom both, of growth line. year-over-year our range APAC net delivered all-time sales reported and quarterly our X set quarter three point volume in growth on Top and our year-over-year We of countries; Our NAM, net regions. the records. top X

However, we plan have issue is place is China recognize an and a we working. in that

doing we look Let's to the are market. what Chinese stimulate

with stage project expanded from products customers our retail we purchase partnership the where quarter platform to the This give First, ecommerce the are in our Tencent, established directly who conjunction you late we the a working quarter larger may platform second a is of ability a the social model. first in company. to e-commerce is in The our China leading this year. media of e-commerce launch social establish to business fourth full channel know expected to is and in platform, with

sponsorship of Second, improved enhancing with impact focus activities a providers are and executing Champions we the our and we have the including of exciting on with our investment official clubs. opportunities, the economics third, nutrition service nutrition growth branding program on And China for Cup. International profitability

China. The playing They're tournament The Manchester & Europe is and matches Juventus across in annual the America, ICC in the Asia. featuring globally world including clubs premier soccer televised of world's top United. CCTV summer including is North the XX tournament

on visible will the broadcasts. Our during be products the to sidelines available the players and

in see started the the of with we're to end China corporate both see, half team and important market. see of in the improvement position back and our the continuing We at focused to As ground improve quarter year. the toward in this you expect our can to on improvement

America. on China, to North drive things exciting some other in are focused are we results business in doing including we While markets the also

club own U.S. able week coffee will be Club makes this group was pay the My a of released Just with a we club their called H.M. distributor, out and full by our called nutrition than all launched annual suite a distributors. Club This attended connected tools of our XX,XXX this Extravaganza These which This stay operators to device. announced facing the mobile to menu, browse club more consuming at Engage, pre-order Nutrition customers apps the experience. club their club tea, nutrition expected of was operator ale, with nutrition their to the will development a operate week and their Herbalife make quarter. enjoyable clubs in more We it where app, easier or and nutrition by fourth and shake, in our an nutrition app helping set customer to businesses. from manage launch club up, customer one grow beta

will reiterate working share tell Asia about the DeSimone we other in I business we having will confident successes I said Dr. branding as the to and later call; of you a our other and We're you the also of on in call. are direction global what positive some key of EMEA. such that fundamentals and promotional in John initiatives Herbalife. Agwunobi In of closing, Pacific strong the geographies the want with beginning are are at exciting

in this Now let me and more John to detail John hand results. who Alex, about talk over will our

Alex Amezquita

countries. represents were in this volume in Note the that growth history. of the in sales second second points Volume $X.X for values quarter point quarter history. that points billion prior absolute our experienced volume We was on for largest XX largest company's the in terms earnings Michael. X net you, regions, of and adjusting Thank approximately the changes company's X and X calls, of Top quarter in we discussed our

to a foreign expected, be headwind. continue rates exchange currency As

on sales quarter basis declined in net the $X.X to quarter second a compared of reported Second X.X% billion XXXX.

net for exchange Adjusting the foreign and over basis same period second XX points XXXX. quarter the Venezuela, excluding impact sales for increased

reflects performance our through XXX-day strength the quarter diversity the geographic China works from its second of of as The the recovery impact review.

to X.X% prior the constant compared year or of adjusted China the approximately share year per year. to earnings per income approximately X.X% China million program $XX.X over million period net expenses increased $X.XX We reported increased of were sales and $X.XX includes growth diluted net share. diluted share net and or Venezuela, related $X.XX, sales and per excluding China, Excluding currency adjusted $X which

a As expenses of the guidance. expense the will amount aware continue China this you currency make impact our to reminder, represented year-over-year in of a program and approximately reported of to headwind from included results $X.XX our the related earnings second The on we is as of quarter. growth is for fluctuations excluded that adjusted

period. the foreign unfavorable of primarily was offset price compared the by and currency decrease country by impact points XXX Reported approximately mix XX.X% favorable by gross to driven fluctuations second for of increases. margin basis decreased quarter prior the of year the partially impact The

adjusted and percentage XX.X% XX.X% a sales respectively. Second SG&A as and quarter of were XXXX net reported

which basis Excluding approximately the XXXX, China adjusted as shift of impacted higher in second cloud-based to member infrastructure payments a by SG&A quarter XX to points was particularly technology investments sales than be percentage XX.X%, continues net and

of discreet tax Our tax approximately expectations impact and XX.X% was rate quarter the rate our events. due effective reported was was second adjusted our primarily and mix to effective which unfavorable higher country XX.X% than

mix updated guidance. Worldwide to and has the Net year for volume also point Now XXXX has full let updated guidance sales growth. share reflective of adjustments This currency range a me XXX been well X% X.X% country impact X.X% a point guidance of the to from been foreign X.X%. a to expecting range the range of for updated we down fluctuation. point volume and are is as as basis now up

range to of reported estimated excluding expected be diluted impact an $X.XX EPS of $X.XX and $X.XX range of Full in a adjusted to is in approximately $X.XX. the a Venezuela. Full EPS currency when a guidance year EPS is be includes to now diluted had adjusted diluted year reported $X.XX to

an tax increased to XX% adjusted increased XX% reported XXX to to basis to effective a XX% guidance Our rate basis. XXX on points XX% basis points and basis on

headwind prior estimate volume of in the X% For the quarter range X% currency points X.X% versus down growth are down approximate to a XX an sales to of the expected X.X%. in be XXXX, third basis range year. which to be up to Net of points includes we

diluted quarter EPS headwind $X.XX. Reported a $X.XX reported Venezuela. includes is the diluted of of quarter be $X.XX of range EPS to $X.XX diluted a to Third a to currency in and compared to adjusted XXXX the of an to third EPS in range impact projected adjusted estimated $X.XX be excluding

of convertible cash-on-hand. $XXX this approximately from to of on of for rate third expected be currently $X.X is million August tax million and We XX% adjusted pay $XXX effective notes effective our intention of It the the have off guidance XX.X%. to our at rate is billion is notes convertible quarter our XX. tax Our XX.X% range to and in XX% debt the is cash-on-hand time with due of a due

over turn now John will I the call DeSimone. to

John DeSimone

Thank Alex. you,

that and this something Before the earlier performance, key evidenced diversity of one let achieved which the Herbalife despite volume near-record speaking of Michael me about down assets regional we geographical China in specific of is performance results XX%. repeat our said being QX our in by is

constant X.X% nearly net point XX%. sales excluding grew net China, in volume quarter, X.X% grew fact, the currency In sales and grew

benefit to continue we while acutely focus will improving China. on We our from geographic diversity

improvements overall an show volume trend. to compared performance improving QX performance and moderate our in June's will We believe have QX seen China

short These seen term number It's XXX-day and we obviously prior meetings But approved impact members expand. review. level are of to a still the taking to rebuild critical to the new as in of offset XXX-day continue are the attendees of the review. the the meetings time below cohorts to

platform China traditional like for we these for to of providers good ordering changes improved the in believe and made meeting-based while future. a other growth will business, service mentioned. the that a business in changes for opportunity present in as about continue spoke we economics meaningful believe consumer initiatives the well we to We medium term few volume previously be However, a long the rebuild the Michael as

volume Volume few test point compared points. we increasing accelerate The a markets. benefited comparison products a and business approximately quarter continue had the quarter on key quarter in The terms points U.S. second other to point history both to XXX began net the of XXXX. in basis. to and trends both stack largest net sales Moving the of volume by on its the recording X% quarter sales points with a of year strong basis volume last two-year value

net reported of increased both in currency Turning the to net of constant Mexico. down Despite region in being sales X.X% sales the quarter, in X.X%. volume

stated there Mexico last going surcharge cost. X% we instituted on our were to this cover we order for a in quarter, which placed temporary products into tariffs As

now the last price our our quarter distributors increase which eliminated by products it surcharge for since eliminated. been can Fortunately converting we Accordingly, the have tariffs earn. into on a

collect a the which through quarter. as the tariffs system negative million is However $X to approximately during the This for of the third longer turn almost surcharge. PNL we inventory system while company the inventory paid near-term there our impact should no to run entirely were

The Xth by Asia year-over-year This Malaysia high region Pacific Indonesia, this region sales. Growth be the and region in a row all-time and point net in led quarter the broad-based in South to reported Korea. increase currency which a record in point. set volume new has volume a XX% continued Vietnam, constant is India,

India access increased volume to and the some double also half growth of year year included during points we as XX% last volume our and rates Vietnam expand of note, was more back that much a for digits Korea during Of XX%. XX%. was get add continued to XX% annualized as up increased the couple Indonesia the quarter comps events. APAC we XX%. Malaysia strong offering. up difficult one-times very the product

points and XX.X% decline South America at of a which was volume driven XX% in by declined which Looking Central Brazil.

in optimistic most likely year the QX. the cautiously are in launch the we will and segmentation Brazil later During trends improve -- that we did quarter

for with Turning increased the increasing broad-based strong The Spain were growth and and by Russia. X.X%. in quarter continues its the and currency to net point South EMEA. increases Volume Africa, region X% led constant pattern volume quarter points sales

remarks EMEA. Now let quarter in is me now Congratulations, my volume incredible This end an the with of growth prepared EMEA. consecutive statistic. XXth

initiatives. the provide update over some turn of John Dr. our call now will growth on to Agwunobi to I an

John Agwunobi

John. you, Thank

sell particularly event highlighted a strategy have we prior we passionate help on and future about calls, investor we in our as earnings last our growth drive at we providing help nutrition help strategy with appeal distributors them believe have As I'm day said business. will that multi-prong product customers and existing and them to choices to to new product new leveraging distributors. products trends attract food more our our to customers in more and

and annual Within five-year been this share category. compounded projected sports billion our focused of about categories acutely gain this Euromonitor data, one are market a at According on nutrition. is of strategy, that to grow XX.X%, growth we rate this to category we've to $XX.X is aiming rapidly-growing in

a launched at Extravaganza. branched-chain we This this amino enthusiasts a new the novices. our and comprehensive weekend creating product BCAAs. sports We portfolio HerbalifeXX product past it extends acids fitness or competitive our nutrition more launched In U.S., our line, for

delivers Our recovery stimulate grams caffeine, acids protein BCAA quicker after build sweeteners. muscle ingredients. does is X and grams made not is that amino X.X X and than gluten-free, the of or of more contain non-GMO which required It including is retain helps It product to artificial lean synthesis. exercise. branched-chain supports It flavors Leucine with grams

HerbalifeXX and to helps We've amino this enhanced supports protein soreness gram repair. vitamins. for high-protein This fit into five is all Like line. new of one also sport. our along a and grams lean Featuring of a acids protein improving and powder types while makes XX added products, recovery nutritional any low-carb powder muscle blend Featuring this easy it of NSF-certified growth regiment. only protein key protein our to with reduce of sugar, muscle and product HerbalifeXX powder

Additionally, quick and Recovery both we our shortcake. a includes effective amino tri-core needs to product protein carbohydrates, our minerals. and way along With of quality new and of the to also and high of of blend have acids and it's meet Muscle Strength vanilla vitamins cream free Rebuild added athletes warriors. immediate our popular ice weekend strawberry portfolio: and a HerbalifeXX two select Rebuild blend long-term with Strength professional flavors

our India sports we our one second line launched quarter. Hydrate first time, where in of markets, HerbalifeXX And for growing the the fastest in introduced we nutrition

product are HerbalifeXX working in India line We year. further expand later our to this

hosting XXX we In of produced ago. quarter, more was welcomed ever hometown second including the X,XXX the than Triathlon, Los where our the and almost first our bringing XX hosted company America. as participants event HerbalifeXX was Angeles HerbalifeXX We founded and committed to triathletes years from for Triathlete we've Triathlon in the America's South featured Angeles U.S., and The years. of to Los Asia triathlons event in the three next new one Magazine best this

to Los We and the event lifestyle bringing LA Angeles to are thrilled to community this offer active healthy a beyond.

Champions the to Herbalife was the Michael returning nutrition earlier, about spoke International Cup. Partner Sports of what Nutrition Official And named

matches Atlético While featuring off Herbalife Nutrition's also which brought to with Madrid. partnership Cup North August the XX China, our we're this company-sponsored kicks on year's Champions International in tournament team de Women's sponsoring Carolina

of we like at the Before I'd sales incredible seen the events our around the recent that Q&A, to some some highlight distributor globe. have engagement of

Orleans. this As XX,XXX attended a the regional which America in we Herbalife referenced Extravaganza, this few times record North by New event Nutrition's and on largest call, past event was weekend was place a our This took history. distributors,

for service we during events records This Kong another the Hong respective hosted attendance as our to Kong quarter. markets Russian-speaking second regions. providers and events for set for well for events our Both quarter, in region. Hong our China as all their One APAC of also in

distributors that enthusiasm the me in our attended of company's our confidence and I amazing and continue to engagement, give personally future. witnessed these passion I events firsthand

our open questions. the for please comments. Operator, that concludes lines So

Operator

first Ramey Instructions] from Tim? from [Operator Our Tim is Research. Pivotal question

Tim Ramey

I Good the a than the afternoon. FCPA disclosure on assume strangulating you up last on $XX your from marketing in progress million other in -- the China further that you I was Thanks. result? think on was reserve plan noticed Anything that it particular quarter no I $X refine say can on quarter. -- just matter. million to there

Michael Johnson

for I the is than say Obviously, much Thanks in Tim. what the disclosure. Hey, can't more too question.

in that and update in matter more are the tooth really imagine matters, from types that $XX dig you on is could say. I'd FCPA finer that as the there's a but $X you the up quarter as of a comb whole with deeper these accrual some last lot not You other million small correct million language. is that is there important we on one adjustments can

obviously I review. details were that own internally review to conducted our we just -- completed wanted process notice internal know we it, review. can't quarter discussions get the You'll that of conducting the our We've last and internal but into in you let that of own those

Tim Ramey

until not fourth be even quarter. maybe we real then thing get should What sounds help maybe end impact much. the thinking of QX. to the being ecommerce a the like won't being in or track? relative Okay, meaningful China. to levers to fourth quarter are if that back And of be really It bear terms platform are there are thanks that on region the about brought will that levers It's and clear any QX pulled that

John DeSimone

Hey, John. It's Tim.

buckets, been of split that's see me business it very can the kind with stop meeting-based. I to different traditional Let if

industry, in the We're following two-thirds important end I'm where campaign, at and which a from focus going back at probably of they they meeting were are we level what were not attendance second. than of but the know on total terms XXX-day to meetings. attendees are more the a -- the from about you As for QX attendance attendees level levels of review is XXX-day progressing. to just numbered

came that's reason and the to do And cohorts but the is progressing. therefore that It's be rebuilt. that's XXX-day why also The XXX-day the it's there review, two dropped an couldn't of never that because the basically business prior existed that are review immediate in the to out. cohort have cohort not inflection that

continue So in year the we to build expect from to through as just end you based business build piece. will progression up, see that the and the of do that

it ecommerce. launch couple Think system to other not The was We that ability based is platform to market. on was ecommerce in go That's from a on order actually go a clunky, June to having the XX. quick of more us. through our way to this with was June commerce later a a that pieces for to work Tencent, the That XX the me and customers It let on. phases. slow-built. or something platform internal little close Now three is

of X.X to which be we it's to almost is our be and going a While developed Tencent, much with around service sales reps kind will a phase Tencent. a X, robust each separate there ecommerce where too then of version providers; more with platform

October, So year, to we're coming the fact [indiscernible] Tencent, that on later it's the meetings layered we're are but that's in. this thinking

in is multiple the different traditional in been believe or model cities ways. it and club big but have to the economics the second -- at that nutrition of model distributors third club That help one out the ecommerce of First, to just operate to the is those clubs in for nutrition cities, not Tier bigger the which X is But in well X to footprint, SPEs a out try cities, China. site; clubs, traction. business the it's economics the ways is this focus the meeting-based; profitability because into that's the smaller it's increasing of will Tier the it's and get suburbs some getting in and least in help we China starting

So are to night this to on. flowing see ideas things China through other appointment that do. continuing And with Sunday the actually those management can and what meet layering in handful of to a in and we distributors we're big we're Tencent things both

Tim Ramey

fourth see know pushed like out of it's now to year-over-year profit? in year- a Is it's not It you think it sort over-year might you progressing, into sounds XXXX that the fair like be guided. there sounds previously quarter Do statement? as growth

John DeSimone

not below, say little below a meaningfully was our below China expectations. our but a I bit expectations. in would It's QX little

that It necessarily China. won't I out we [indiscernible]. has changed in grow doesn't won't fundamentally come QX, looking and Nothing might QX. So be it but on could mean change

Tim Ramey

you. Okay, thank

John DeSimone

you. Thank

Operator

Wissink And Stephanie Jefferies. Steph? from our from next is line of question the

Stephanie Wissink

Thank everyone. afternoon, you. Good

guidance for Our year. the question relates the to

higher we're fundamental changes of us rate FX You talked new slightly aware that be the a guidance want and if majority other wondering the headwinds tax incremental accounting or and for in the guidance of. about underlying I'm some to that you to incremental

Michael Johnson

Hi, Steph. Yes.

is sort about If out it that what partition and our indicated mid-point of the you I just $X.XX. by without $X.XX, half lowered we So tax -- about of of FX. guidance

around China primarily half revised about. just to that other The talked our expectations John goes

that where the line of of it's have So we refining more three year our be we thought ago, while we think is just clearly were going where going we within end months up the to now through to that kind of months EPS. and knowledge, how kind the rolls three range of

Stephanie Wissink

could the Okay, to of around mix? How that's decline little in think So we a then substantial China great. country margin, margin? just you China, online? share bit is drag more recovery a And growth on effects as the that back about comes growth should margin growth the

Michael Johnson

on Right. that gross have China that line, up or impact pushing a pushing down. material will profit a On

push China QX percentage. sales is As as what -- of which gross is profit percentage in going to our materially happened -- as net that's our reduced down

sequential that's growth As and a QX, percentage sales. in to attributed you've as seen net

a of continues net our that see pushed you'll sales As up. get percentage increase, to over

you, mind you goes move et generally lot there's Now, that will cetera that it profit, but -- of impacts pricing, just percentage number isolate into of the that how a China that's gross factors if on line. other -- FX,

Stephanie Wissink

almost Okay, franchise-ish. And one you little nutrition I'm app, the operator. the the sounds efficiency is on up then app. the club a talk your it if bit It offers setting about bit the center a new to can center ease last using more that curious a great.

app if to in in U.S. you internationally? of of terms peek of a wondering about particularly number centers, you can expect in online the you a the I'm think use So the you bit and of into also us of coming do then this those give pace and see what it

John Agwunobi

This John. is Yes.

to format beta slow Let April the be so slow can this the And to the bugs. out bill. bit to a is what since of purpose more go with slow this test But we started. to where people a it of And the we launched little field lot as in We've other it then through get on and launched tremendous. the expect. of work been available Extravaganza the that importantly, had stage get to in tool senior and bill start designed point, decided migration U.S. we they're me a we tool are and more then as knowledge-base a we has and our bill, in more going help download two and trained to made so on distributors everybody the get before about weeks the with people course

the half at is beyond October clubs a the least end by of it's have this the to I goal Our think in achievable U.S. and very goal. tool

we're So excited it. about

when You distributors. event don't stage, thought on this were and is tools most the at the is on reception Sunday that there the I I you this greatest and were I've most if here, that seen launched my know but time had of all the in from people one launched the positive

was even So and help it's the it are its models designed efficient I them. what we're different way, say is people and excited it's which [indiscernible] small by of to and all U.S. [indiscernible] club XX, designed designed business it's to what within the about our operate it -- in nutrition is, XX an not to future way. handle effective want

I that think one to of not of to that from tool. it premise, That that tool tool want poll other that of if a that's that's the -- way. use. it. And design we next on was we in foundational it's and to call, want created ton been they'll I use I me of want with we're means it was other that created that underlying when use, the there the to people going you'll think kind force that a meet, want regions see in then advantages tool mind this to to of successful discuss design effective, people that was premise a that was on this think people, the It big and

Michael Johnson

I particular just their operator franchise a -- their other doesn't time. customizable if words, model. everybody particular put not add shakes. It's very in a the each to tool. also own It it's standardize menus, can -- all could this try club own nutrition John, And is In

Stephanie Wissink

very Great, thank you much.

Michael Johnson

you much. Thank great. very That's

Operator

from Doug from Research. is next question Lane our of line Doug? Lane And the

Doug Lane

afternoon, channel to hi. more interested everybody. that, going existing Yes, Or some in a on you that is channels a in just in for China? China? it and this discreet tool Good China for I'm is developing you're be ecommerce ecommerce very get your to color really just for

Michael Johnson

in can our a had channel the It's order tool rep, and were our providers. is and sales which order sales China efficiency us It's is to in channel. for technologically which which could it's directly We company. greater quite only product customers from that This more for is China our service their opportunity directly people ecommerce savvy tool consumers except from service existing reps order China, our a that for own providers, the this missing something an in China. customers incredibly model. lot from allows the a was access for and frankly is in

put With has the XXX-day this to opportunity an review, it kind of opened in. up

Doug Lane

sense. makes It

customer now? distributor then line price still going a retail customer will to Will markup be wholesale a in full somewhere? your a ship there you'll sales to you will directly book be or the orders, the and it So price

Michael Johnson

be won't still at us. change We want our distributors economics. to the for accounting the It

model, believe credits you're go all consumer the the and I same So do sales us the directly buys a to from to debits accounting, or distributor, adviser, line or the for if whether or us trying anything. rep, regardless or

Doug Lane

it. my America North Okay, at just be versus model. continues to got least upside And lastly,

quarter the translatable you're of bit America? in on growth what of fifth good elaborate in So And what's North numbers this other I geographies? in there. America North a some pretty to doing is little you think driving the Can

Michael Johnson

the a scratch, I transformed America If know geographies. were we yes, from Let into first which me change. of is of North I to other lot what give tell answer course will the be question, in U.S. the went story to

distributors can I don't I and now, come to being in Xk change. we're think have changes we that the history business the those out side think used We're from stronger our preferred it's business to members right stronger. the say with a of on using segmentation because China which the is other know, you I what build and make better an able that we to prove a dissimilar and drivers there's primary of event that being As doing the event.

out So nutrition latest come and clubs. the something really a in segmentation other in in had club in countries. prefer already obviously strong members lot the the and U.S. the We our that's nutrition from of so Xk, club think is addition to [indiscernible] I that's group to migrated of it's nutrition model clubs small into

segmentation, the think have I and it's an on to It's things expansion build. in not a overnight So world. an an fact these the [indiscernible] you will tool, impact rest POS of the hopefully expansion process, on

Doug Lane

Okay. Thank you.

Operator

[Operator from Beth? Kite Instructions] from line comes Beth Our next question of the Citi.

Beth Kite

to Hi, ask online, the to a like the that management/weight on past. the for the fundamental think I to of meetings is appetite distributors Perfect. it's that issue just the a might loss/nutrition I lost demand there's investor's get get everyone. change terms more products discussion may. question Chinese -- say one weight a and in sounds accurate if a of it timing It more not little like till I bit real a from by today Because consumer into China in a the you to back coming would while is side of concern back product into the investigation for not in future, have given there the in pipeline that system? you the the

conversation. So if in and perception my this the discussion so far you that in could speak of to

Michael Johnson

that our volume. good amount Sure. sit of of it's By meeting-based. very meetings the same a and We attendees down about suggest The question. it's the analysis in do number way,

we're certain but We stay demands member site, up. Certainly believe over you changed. meetings. clubs nutrition from right believe assume cities don't So to product no it we're things activity, the it think some know and I term. where it's will we But only is hasn't again, and that But based don't will We anything will to that would thing of it long they're you that have in to the sentiment there's There definitely a need that. assume a big two-thirds about we believe as it's fundamentally time that suggested consumer level. will. if The still changed. going can now doing I for and short-term be the are has Right to we're consumer guarantee where approving I what seeing would not change. is on it add ecommerce meetings on get ever now the overcome what certainly we will, There our was.

Our products real issue. a solved have

this healthcare. China, is really recognize activity real initiative. China They crisis Healthy has on draws In got preventive -- economic good measures a China and for XXXX nutrition that

So important for issue of the think do is an I be this we that I that and term. long think part can

Beth Kite

Thanks Perfect. so much.

doesn't guidance. you or Have for -- and it I that convertible got actually of queue about off is this -- another activity the in in sort maybe the that Might on we could that and the comments horizon operating to how Alex decision paid us Now, through in on is is Might think your with flow refinancing be a talk that sound prior there buy cash if tied And are second no this like the you one. today to event? I be came in going event a half next that, you the about share you days. second share actually to for XX back XXXX opportunistic? XXXX? is able be half? assume you Can

Alex Amezquita

Sure.

Let's easiest issued buybacks just of in first. fundamentals we guidance, the business. our our take the guidance. the pure have don't any In projected guidance We one on

we have to of question converts, go -- of post of go but to to One item something for mean doesn't the we're in us as a be market some could market to investigation. could. that we'll have just may there be won't this forward. around it to market, kind in in Tim's the disclosures and going the be that we updated have we way? That's we're in be -- that mindful closely the monitor be We the as mindful is challenges meaningful going and Secondly, to It that be unfolds. situation to

there and As an timing then economic that potential about situation unfolds, refi. in becomes decision a when

we Anywhere converts. very stated, We're at level X.Xx current place about is leverage effectively, refinancing to when put carrying be Xx work of and post-maturity obviously we've the we X.Xx, refi. feel of may our there cost cash But about to will balance an in room out good and feel our as upside zip sheet a code We'll a that that to of know down the debt comfortable and in be goes we about economic on that where can't so leverage growth at levels. into level. we be the So decision. you position

So economic quarter we'll month of decision. right that have follow together here, and the and to just the just the take all make as

Beth Kite

able you the the context flow cash Lots year? good you. Are give number thank for there. for of to operating a Great,

Alex Amezquita

here. line? that at that have follow off we Maybe don't up I can fingertips my on

Beth Kite

Wonderful.

year then expand --I think strategy then line sports into and of if XX -- single this top expansion a members, the markets? preferred you there and might to much. India. magnitude second Okay, on year, like just close so half In the Thank of small just recent HerbalifeXX additional you around And a questions may, at it's think its right I and I'd into when two into about segment, to also but I those with fitness -- to are the that where with start next one And be energy thinking other the and markets in you any now this the perfect. I five? continuing product suppose five call point, of

Alex Amezquita

Yes, thanks for question. the

the question you performance the it sports start It's I'll purposes after HXX PM which on of skews cases then we On is line, for HerbalifeXX product join Let colleague. high-protein principally is my use right skews. a a Strength the HXX In as and including It quickly line hydration of for me product has Rebuild which it's a know, very U.S., launched -- use that -- the product off multiple in hand products. the with skews Hydrate multiple actually multiple has number India. and exercise. a to successful it has

launched this HXX launched amino at last that acids Extravaganza. branched-chain quarter, recently BCAAs, the we was Most

product We HXX same also brand. launched enhanced the under an protein

to who the are we're question better-satisfies who add to individuals it overall, and it to So mass individuals who answer needs continue HXX your gain going so want sports. line innovate exercise, into and individuals of is expanding to the new muscle that the products to

it world take going add to take in India. to as we to most them, that to demanded. line also it countries and continue that we're to -- extend we've continue as the recently even However, around take to line done We'll other as other countries

Michael Johnson

And segmentation I'll question. the take

from a pop We it implement think various in and various you're their won't more of hear from a next announce respective I particular countries few names markets that we to until various more announce demand markets. I of market, each which segmentation additional think countries distributors in to segmentation over quarters, in to standpoint, lot -- but the up. going

years. a significantly do turn the market quite of markets a few can grow frankly, switch each the and so model full to number takes using turn over segmentation on on We region. expect and you it's programming, It's whole next a not

are, you announce do this you a You know launching about, source. market-by-market pipeline call be we'll understand. for I already that which you have yet But a which it those and to markets from there to in that know we're the to already on is for five segmentation. addition not Those hope reasons

Beth Kite

very all you much. Thank Perfect. XXX%.

Operator

Hale Hale? the question our next from Barclays. Holden is from line of And

Hale Holden

quick I Thanks. two ones. had

to something that you're negotiations? restrictions Just Or missing in that a related shares disclosures. buy Is on is there? back? the I'm You blackout want on while else share buybacks to clarification wouldn't restriction the a there

Michael Johnson

have don't Hale, think restriction. to just a we're I clear, that be saying we

the to just here I what of. sitting When of in months have. signal discussions think be these signal gives think that impacted three from go. could don't aware trying to a and idea we we There's don't are you an just to we just over I where need we quarter. that going that we're -- we're be possibility now just we're might trying transpire know to

Hale Holden

is of a And my then expand thought speed roll to to be market? I mechanism in from wondering on it saw on to distributors was into you going people were week on was the HXX. the I athlete release a the if second last to out standpoint Understood. Or question press a just spot your -- training that it? distribution current good to take more get able different in sort to a of to that performance

John DeSimone

It's a good question.

have what we model marketplace process, should largely products distributors. for are, they customers debate day, they first. we know response of the launch every their committees in the where in help needs they our Our is They needs are they touch have understand as prioritize with is demand product you that them what to discuss, from and a fill

in in to are launches demand So response our typically from distributors. these demand

are our distribution So the our your yes. We answer believe is distributors to question network; ready.

way, demand. not keeping so increasingly and into their built if up by have it's and over of them models time sports the their their Hundreds us with and growth thousands, fitness

Hale Holden

higher I expense? a distributor results higher an has the flywheel assume basket and a all effect for earnings, distributor on of

John DeSimone

I think fair Yes. that's a statement.

Michael Johnson

loss some more actually customers a some have respect And whereas can't it in doesn't weight finite One weight bit goal than of -- sustainable a them lifestyle, are a change. nutrition loss a customer, [indiscernible]. some

John DeSimone

doubt. a Without

Hale Holden

Thank you. it. good. I appreciate Sounds

Operator

gentlemen, for Sir? Johnson and Michael over the closing Ladies I back now would remarks. like to to turn call

Michael Johnson

great I quarters want that's methods we of to one It's great besides course listen We in our doing of with a great markets basket terms saying distributors these is got not of for going an global about opportunity up pick we've marketplace I situation of to China, and China. models, about we're into got call. We're of talk business have China. in to conclusion and team a our great. in everybody think we there the nutrition isolated market. with incredible leader. of Thanks, team executives the then this to on get and one being to the

the and muscle They mass lean to talk John heard saying, this 'Hey You of body. and sustainability muscle. BCAA is who product in John want type and just build about their customer want DeSimone in jumping that Dr. in somebody look,

a before, place, of and even strong. is for this is a it, methods, company have these it we our this problem to the and basket a a satisfy superdome two New go in our we've for strong beat to Energetic are markets, over evidenced That markets, meetings going products China, and distributors the market conquered got was a they us we're special APAC a in one we energy passion them, of we've of all in long basket Russian-speaking it business bit going we distributors. of you going that our have a representatives problems Chinese do have service to and way we're gigantic this we've the special of of them, for last to build distributors company The we'll five time. that. XX,XXX in two get seen consumers a We is build at the Kong, Hong many month to participated a in time, in in Orleans, could -- in we basket again, of

with us. We appreciate your So support. thanks for being energy, your

herbal go a Let's get life [ph].

Operator

your Ladies and greatly this conference. participation. gentlemen, for does conclude thank you We the

disconnect. may now You

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