Earnings call transcript Q2 2023

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Operator

Good afternoon, and thank you for joining the Second Quarter 2023 Earnings Conference Call for Herbalife Limited. [Operator Instructions].

As a reminder, today's conference is being recorded. I would now like to turn the conference over to Erin Banyas, Vice President and Head of Investor Relations, to begin today's call.

You may begin.

Erin Banyas

good everyone. and Tuwanda, you, afternoon, evening, Thank

Joining Chief our Executive are Michael Chief Chairman and Johnson, our Officer; Officer. us today Financial and Alex Amezquita,

important meaning factors amended from Securities Before issued more could XXA Page discussion Relations website. X cause to our presentation the any Securities differ would cautionary of call, the XXXX Investor and some our the section to that regarding which of those the amended. we of forward-looking Exchange The earnings results is of in as includes of to under release statement XXE of on Act statement our you a of Act today, earnings the in like statements Section as forward-looking and begin expressed today's of within earlier of direct the Section release I XXXX available

is As this call presentation by will content governed be today's customary, the and language. of

non-GAAP call, comparable management measures. In measure. measures believes today's that earnings financial periods addition, comparability exclude non-GAAP impact items reconciliations information financial the referenced. the financial These to the during additional to these of regarding we'll unusual nonrecurring release our directly refer measures and non-GAAP the discussing certain or Please most be for certain GAAP

CEO, also call, now will turn Investor will today's Johnson. our Following the under with presentation to that, I the and be the website. Chairman available made Michael materials Relations over And section of call

Michael Johnson

things Herbalife in message, we on to company. are our have. I you, today today Thank team afternoon good simple about many our are good so ever as I Erin, and that as confident good There feeling start everyone. going and with one evening, want and

momentum are and strong improving. building trends are We our

that billion, year-over-year for sales were Our row sales second the net quarter quarter net trends in a and this improved. our $X.X is the

say we're numbers, has the confidently making quarter In financial year. all will present the overall of addition, progress. while I Alex first this from our improved can performance And steady

those familiar, on hosted earnings are started we in aren't off training And it's last multi-day Bengaluru. who and were just San large world our important last then of we We And tour. been understand, distributor call, that XXXX. and weekend, We've Nanjing, we've to and since these This And are in-person were these Lima in events. Since develop China, Singapore, in our regional a train, first for to Antonio, for these business. to X we've and Texas. Extravaganza. to Peru time events. their business the attended our note a held shape XX,XXX distributors methods reenergize India X motivate, recruiting the Over to distributors is to Singapore, and events techniques in-person

filled and event out had main majority our we hour Texas, a a main streets heat Gen separate hosted to split In with event so an our XX,XXX in and out the first-time additional X San in estimated we Singapore, virtual distributors sessions. millennials a Texas. And of were offered many distributors Antonio of we a the mega the sold of In attendees. of months, Lima, attendees. Nanjing, we the attendees and Z. In option, Bengaluru, X in virtual were In garnered distributor attendance, in the the into working event, record heart so addition fit which

businesses to with their understand spent events are I distributors these of and a time doing. lot at their stories many how

distributors saying, It These and #X seen. in they important goes retailing recruiting entrepreneurs. on I've are gifted Kazakhstan, we distributors as Herbalife our business be our and our and and set events September are motion ever road asset, Brazil We'll the Poland. than head Mexico, engaged in super are energized Our new more are and to back activity. without in

from leaders organizations, long-term and with daily say, many distributors younger generations new methods successful of introducing many line we or down solid operations DMOs. also are as have that We upcoming we innovative have

and evolving, camps, modernize weight it. the is lifestyle with movement our challenges, transformation evolving our active fit is and world are digital with healthy business more. marathons They to embracing loss We and recognize even

on We products are a continuing regional launch basis. to

support Red line, During this in They the a I second week plant-based routine. vegan organic backed X great. an including plant Kosher The Korean booster, is quarter immune the North into line they X certified attest, greens support includes organic can the marketplace. a to produced shakes, the for by and incorporate protein we under baseline format, ingredients we launched made V, a Extravaganza, and are locally quality easy product. launched third-party ready-to-drink with And marketplace. Ginseng our all a product for In This digestive U.S. individual science, past daily American and tested products, non-GMO. vegan taste Herbalife

opportunity Initial from baseline a product also The and testament for their innovation. to only is distributors not to group been market whole customers launch business. reactions the door distributors commitment overwhelmingly an distributors, but positive. have and existing plant a to This of our opens expand quality of provides new

tools is It and grow our are and costs their our we team, are for and of Herbalife distributors new and representative to It With supporting customers. both the innovation, face streamline engaged in look about of fully and a and brand. the reduce platform. We're will utilization, modern distributors' this Herbalife. businesses. of businesses, development new accelerate in transactions our of the customers fully is new distributors partners order a a and quality their launching simplify internal a this, new world-class digital immersed distributors and One, and Herbalife integrated That's of for technology excited technical digital been them team modern feel more modernized frontier. and innovative Speaking our data have with

plan Singapore, approximately and and year, kick our year. necessary XX% the launching content test, where represent that This the quarter, sales Later in began been has to to in the is platform as move launch to markets by we a of new this as by growth. critical we distributor the Herbalife it end modernize tremendous of One. continue e-commerce XX undertaking U.K. This and majority to will Herbalife approximately remaining and of and our XXXX. towards a additional in of the the this Spain, We we markets next step team refine the expanding website optimize functionality we chapter with launch to prior off the launch

of is our and adhere through this in headlines. the telehealth providing the developing X certain lifestyle watching requires have and for core is treat been drugs. and which drugs Herbalife were lot potential As press, that we in in you've the distributor closely. are support evaluating to diabetes. strength whether a to our the are They We loss, active as type habits demand, we is from seen And XXXX a recently, benefit healthy GLP are change, a this approved trend and various paths no getting how drugs and of different the it agonist first this brands GLP-X solution to FDA a know, by behavioral healthy are and better certain lifestyle. GLP-X recognize for approved or distributors do nutritional base can those help who we But individuals, weight drugs interested of

this it, will. to study to capitalize when we an and on continue will we We see opportunity

game across excited the throughout as record a an of Gratziani, America, to markets growth proven to and announce This team. is Chief as me. a independent an Europe years changer. South Officer, very I'm track also XX addition Strategy will management distributor business global XX After America, Asia, our than join and executive Stephan North to reporting more company

minds internally business, team wonderful company's built named advance of the of all us. for our and for our Circle. for open XXXX, improve in of and distributor XXXX. our have Chairman years. and Stephan was Club Our this our closely to the achieved tremendously distributors a is and highest the a this distributors great world He is a see greater worked top of independent market. alongside he has XXXX, speed is opportunity to to Founder's opportunity opportunities I He in business X Stephan level models, our in one successful

highly an a distributor, to be voice voice I In strategy a his distributor one During integral of and groups landscape various member the people and of valuable the integral is been planning know. ever-changing field inside the data as strategist with more for has of want voice He new he the effective most as experience. a the distributors distributor the analytic-driven brings company. company. time we even the part company, of He our and as our business, of a

companies know, you than is business channels. distribution as other that operate different Herbalife, traditional

growth in through their in will distributors, of our performance future. its the order together responsibilities and line well the of fulfill work All potential company growth how our dictate for top individual and support each other comes distributors to the our

the we distributorship in company we distributorship company. an create to ever-shifting look that the his sales the an connection Herbalife has becoming can waived under even future, his the It marketing employment spent to to executive with agreed important decades the and have building leverage in term its more company's between marketplace. to is the to of rights of Stephan teams and sets, navigating distributors. will our processes be an he will synergy As who skill Stephan developing an advantage and alignment during note earnings have It employee has company, any and suspend plan the he with

our from Directors. Tuesday, on Stephan addition, Board In down of stepped

DeSimone going to will to his feeling will of XX also continue also transition an ever would Officer I to pivotal Strategic part Adviser forward. years really about integral I I'm Herbalife, organization John confident position been today from Herbalife. than Special role announce that Chief to for more John nearly has a like and play as have. our

from last of sitting fourth you year. our will in believe where growth to all are see world. indicators are we indicate this our Things told quarter. are in And would quarter the growth fourth key changing in quarter We we the return we we trends today, that

leverage positioned healthy and economy, evolve and to believe we'll preferences, globe. around the well this trends are practices consumer world, to the we changing in With continue gig lifestyle best we

flow of how distributor at one One direction. successful for is recruit, sped Herbalife everyone progressing pandemic, changes and the job up, a the Coming new We're and right we Herbalife. moving create out introduce business track. on in for is

all margin and Our return initiatives. and our distributors to to growth are committed expansion management Board,

Stephan in We top team. are join confident bottom and laser-focused to the to extremely decision bring line in on I'm our growth. the

before is needle. and As said this move will we'll a again, we and say game I changer the believe

to over turn our back than to for in it and a succession Alex, closing all And before proper Alex, I through staying place. express plan is I commitment with my that, I'll to committed remarks And come turnaround Q&A. over it following we'll want stakeholders. this ensuring more to I'm to and hand ever the

Alexander Amezquita

quarter. my Thank you, begin key financial section highlights the I'll the Michael. with for

down were same quarter consecutive compared our billion quarter $X.X of second trends. sales net X.X% to improved quarter This marks sales second year-over-year First, of last year. the net reported

margin The from profit headwind QX points of second benefit a cost XXX a quarter. the over inflation quarter of sequential year be FX of XX% XX Second, to past The approximately compared points gross the respectively, to improvement and gross input pricing basis of point year. have led the to margin. XXX taken and approximately continue to actions basis profit headwind, an margin basis gross with was impacts to last approximate first

rate. revision upward of impact Fifth, the had and profitability. tax of dollar $XXX a XXXX. Third, for by was point currencies currency $X.XX sales year reported adjusted which a X-month Fourth, as XX.X%, $X.XX improvement headwind of QX versus of QX has an foreign EBITDA reflected U.S. results, strengthening impacted on in million, our negative basis was EPS a our achieving true-up XXX at adjusted diluted the negatively and margin our from $X.XX was full

transformation Assuming And progress relatively FX the previously rates of tailwind of date we our six, modest program. exceeded have we results to stay our actions quarter with make to our initial expectations. announced a The XXXX. in continue constant, expect fourth significant

expected June, savings, we expect run on XXXX, have bringing we now through our communicated be up in of an cost deliver program now total at than savings Based million expected million $XX that million the savings to from to to more the $XX to million, realized implemented annual of you with what approximately we first quarter. least rate $XX in $XX incremental these

primarily excluded related second $XX bringing date of adjusted cost the These total our $XX to employee an SG&A our quarter, we program costs, for the pretax results. in recognized and During retention program, are incremental million. expenses to separation expenses to million from

at As we pretax now incremental least a our taken, we at have result million. $XX $XX total million, estimate actions of of to expenses expect previous the program up of from least incur

X.X% year-over-year declined the of the This net quarter the a in for pull second is basis a all second which ahead improved our all a of to in the product result sales XXX in we others, quarter net current Reported internal headwind have of in this to implemented by 'XX XXXX. comparison the year. year-over-year, difficult our trends this the sales of quarter currency our of to trend most was quarter due of second despite row that sales negatively growth XX% points. in return impacted year-over-year increase reported approximately markets point the fourth Based June the of across top on lines indicators as in in line price geographic quarter

tax of and income million which of FX impacted was with impacts. XX.X% Adjusted EBITDA rate negative income higher the $XX was net quarter million quarter for margin, the an posted $XXX with input second We effective primarily costs XX.X%. by for

was Second by expenses approximately of diluted net negatively by per both Adjusted quarter share $X.XX. with technology EPS program to $X.XX. EPS digital year-over-year of was earnings $X.XX impacted new charges our the headwind of and EPS impacted platform, was related adjusted diluted to $X.XX, One. currency diluted diluted Herbalife transformation related Reported

for with flows second at were cash to quarter $XX million the from the hand, cash up approximately on the first $XXX million of Operating quarter. second $XXX million end the quarter

our flows which to operating along drove commitment the by favorable profitability, with quarter. working cash impact million approximate execute in $XX quarter initiatives were on Second optimize an higher driven our capital, to

benefit our net period quarter just I the Pricing a XX% basis as XX in in see were XXX relative points of June partially increase in the headwinds past points. driven Moving sales increases by implemented XX.X% China sales. and to of prior down XXX result a portfolio. mix sales of provided U.S. price year-over-year X.X% for lower that to markets to and compared months, noted, Slide net net basis India overall in X. Local FX the quarter over sales most offset by with in year of including change unfavorable We second sales currency approximately the drivers higher and the of other country the the the implemented during approximately XXXX the across

of XXX increases price Moving past margin to in the to the in points EBITDA $XXX EBITDA the points adjusted basis quarter June Adjusted of due margin EBITDA million including benefited resulted margin 'XX. by implemented below XXXX. bridge. XXX XX.X%, second Adjusted year, approximately basis of the a XX% our of over

drove elevated XXX the to approximately material last costs costs However, EBITDA an raw of of and overhead second manufacturing adjusted headwind continue points versus impact our basis quarter results, which year. margin

different point extravaganza impact of point sold, of mix the country SG&A, an events, largely flat year-over-year X large the an approximate basis Within XX due contributed our promotional other XX across regions. write-downs spend was and held in-person with goods inventory quarter approximately of during The year-over-year, distributor contributing cost X basis headwind relatively return trainings headwind. including to

XX distributors, this bringing are Also events improve these believe year. basis result turn, renewed transformation to bonus benefited point begin and bonus we as the SG&A, which accruals stated, in in current related from program trends we approximately to savings to energy we we've continuing salaries will, realize period. offset an As increased in by within to cost our partially improvement attending in

point negative quarter, headwind on impact basis in XXX EBITDA approximately margin. was Currency million adjusted $XX adjusted the EBITDA resulting approximate during an on

Turning to XX. Slide

average active leaders of sales first versus We quarter are encouraged our that stable XXXX. relatively remains the

XXXX the had sales XXXX. For quarter and versus quarter the second XX% which relatively leaders, second first XXX,XXX average quarter, we approximately above was flat active of of

those activity sales of this or downline. leaders have their the leaders number either preferred purchases reminder, their nonsales that a customers own of metric from average shows monthly or As

Slide XX. to Moving

understand a business. believe useful the We are be introducing trends we to that will metric better underlying the in

metric business of any the it years. that of given believe the during trend individuals unique as insight within is and this into respective can as see number have customers the past non-sales We in actively we are purchased for Within number product X.X the primarily customers period. useful and leaders behave chart, in that preferred quarter engaged each the provides the

an in first that from evidence As organizations XXXX, is quarter you to XXXX, leaders, and needs sales see their XX% million second are this our to of believe nonsales communities. of our on demographics and distributors continuing are in We we million the Gen reengaging to implementing evolve is individuals better quarter our and that with business whereas actives to customers declined Z, We with our modernize our indication and $X.X The younger us the of leaders have we can millennials to of and this in is their with customers upward recognize in see, and $X.X position connect quarter. preferred active active leaders, second our business demographic. are the average XXXX with that the it. active evolving, trend which non-sales along fourth of preferred Based world generations. from approximately initiatives strategic with and resonate continued products the we are about customers important age the

X%. another with up regional Latin in X% local sales sales region up primarily peso to net Chile, region net fluctuations of quarter a Brazil. unfavorable year-over-year saw up the currency, Pacific in in sales while India declines growth down on local slight XX% reported FX, in The a posting year, currency XX% our and lead The reported FX. Mexico by sales was and sales in down were favorably continues decline currency the grew reported currency. basis EMEA to net sales Mexican local the compared whereas Colombia and net in due results. prior with partially impacted a relatively X% X% offsetting to Asia local year-over-year Moving region year-over-year flat reported net to currency reported In America, basis. local net were on down XX%

primarily healthy America, group decline. of stimulating such such as or launch market's North run. with U.S. the several productivity and for products lifestyle us, fitness class XX% new This combine in year-over-year on the market These use with decline engagement in In distributed is by net Herbalife sales a and the was are the reported active market the we XK as initiatives key that on laser-focused driven element a of activities. events fitness are a

have a trends improved year-over-year in reported and In basis net a local China, sales for both currency. in quarters X on the row,

net in currency XX%, XX%. net down reported quarter, the were local sales For with down sales

Turning to our and structure capital position. cash

our the gross $XXX fully increased to we $XXX borrowings. our and is with During Effective quarter, compliant ratio, We to X.Xx our benchmark hand for no with SOFR cash July million million, revolving set leverage fully LIBOR credit $XX undrawn we referenced. for longer rate and debt and on covenants. the credit facility quarter by million the ended available senior facility a all X, were remains and is

investments X ended million, One. the XX $XX Herbalife for June was months CapEx including in our

to expect remain to around We to million $XXX One $XXX come the of XXXX. for million, CapEx expect elevated total inclusive through Herbalife in and year CapEx

Our and use long-term capital allocation remain of cash priorities unchanged.

to debt in ratio cash to use always, work plan levels. generated our free investment-grade towards to XXXX #X targeted priority debt leverage gross As of X.Xx. as our and nominal flow our We debt our is continue we reduce service metrics to

for open prepared questions. Operator, line our please remarks. concludes the This

Operator

Instructions]. [Operator

of Our Citi. with first Chasen line Bender the from question comes

Chasen Bender

most the you or start your of the little of nitpick out? that on I of kind the just was just basis. much, how rest to LatAm, your America of on And good reference look but it expectations markets kind and geos. you for volumes North softer a and trends had not Can the whether to to sequential across a too looked of guys came bit wanted relative performance that in that frame in and us unpack members,

Alexander Amezquita

yes, that question. Chasen, thanks for

the second have if off the look what as quarter LatAm So at you of and with we're distributor stabilization the especially a where you North similarly first America metrics, seeing the quarter. metrics,

on those see that we're stabilization. of to rate metrics, a we're yet. haven't X here metrics, in we stabilization encouraged we seeing signs seeing that seen lots so we of ago, that of and themselves, When we even those change energy that were reengagement distributor though knew months and And the were metrics

at a while like necessarily So quarter point, stabilization. second least see have posting the now going similar as see would we don't you up it at trends, we as where this we

confidence as with the so where weren't in of to it increase our in markets, you the in mentioned, rates growth so, that you're stabilization the market necessarily markets, return in those given ones you've for particular what's couple from metrics other the that's this other seeing of markets. overall And future, company coupled growth us

Chasen Bender

is price there your kind level? Got us of could where you increases holding then that give And you. And back than thoughts about places CPI, a thinking of more global basis? it's on you're are Are any of latest CPI you on kind just thinking still the kind right minus, maybe others?

Alexander Amezquita

this Yes. sensitivity. I mean I definitely of at different monitor increases. saturation closely. generally, incredibly there say, would is We different for markets levels price the are price at world

So say might CPI pricing certainly certainly may general certain see as be future, this into -- in increases point maybe don't to term. -- of bit markets we near ceiling. a But be CPI at plus even or for It's we be this where aggressive sensitive strategies I markets policy a a CPI world. that other more seems any sort be point. a go the some may going we'll the even there at be price There to the in markets the ceiling at for would

Chasen Bender

those think you update to specifically. on is senior an And going you're portion to that one flow. heavy And sounds of sneak converts, a give know more started terms it last lifting $XXX free But tackle offering. notes? cash Got plan to of 'XX with the the convert the how the December just if remaining you. for XXXX then then I in. of still just those maybe plan with But lot you about like million the in us did to

Alexander Amezquita

Yes. questions. Good

park we in So for to XXXX, due continue converts cash. the

cash increased our over balance this quarter last see quarter. You'll

due. the cash that to and pay it we'll we'll to continue comes park then, use So generate cash between now and excess when down flow we that cash that

We haven't begun we've the something our and address front yet. center we but overall, specific as plan there is to It's capital structure. to begun in obviously to stack, implement very but think about any moves our aren't that our obviously XXXX address XXXX strategic overall that

Operator

Our Sinderen of next question Jeff Riley. from the Van comes with B. line

Jeff Van Sinderen

It's of are hear up do so second realize half? the inputs, future. lot considered, great to for you fired a guys all about the things but I outlook margin you there in what think gross is the

Alexander Amezquita

Yes.

parts we Largely, said XX.X%, as and quarter, were last this going So and of improve this was cetera, knew those some was price, gross where of to where quarter, point just we where et landed in other take are, ability improvements of XX.X%. are, were our we structure. of quarter overall inflation is, product FX just which where At all at we were last a off wages that rates modest where types input to the at inputs. some cost costs margin we transportation where

we're be the halfway For largely rates of of year start depending in shift for at there's currency to on to where where bit of in opportunity XXXX. of that that longer-term see But the will given this we of year. rest point largely the little that the an through, we're the margin be opportunity expansion maybe this sort for a rest expansion, XX.X%, going year,

all There in opportunities are categories. of those still

but have continue come see spot of some those our forecast down. There we we can costs market we they input will little we running a where flow up start profit and see opportunity. we X.X see We variances bit opportunities rates and see a than are are in And other question more asked, are our be as grow. XXXX stabilize point. to expect to lag your some facilities of manufacturing for we'll that XXXX, through probably our of gross of manufacturing productive to all a But materially those like bit rates market things rates margin. to bit that starting to improve currently, the I extent between the to as start contracts maybe that when rest And than catch maybe our short-term can something a can overhead this as catch fact, a expansion, and XX%, start our start in to up more wouldn't hovering to

Jeff Van Sinderen

launch expectations just line. Okay. the wanted been guess, the the status we in as that as world? far to could, guess vegan then if of guess, on, and launched vegan Fair it, you're how of your then new launched And what's how I touch -- enough. Has And everywhere the I the that markets? I different maybe evolving it's been I for where overall around new line. Or

Michael Johnson

an as United line line And that. Michael. called the a is reception. weekend, incredibly V It's received this So products, refresher on in here is just the It's States. a warm vegan packaged of X just last launched

than It's In do already It's right to for the who We not there. we vegan as getting are East Europe, -- try is line I I have it whole before, suggest tastes is it which third-party reference just thinks In natural. branding it's at on to and -- Indian We've I wider is U.S. have It here. we Europe, do better consume those here the going And that you don't Middle of positive. all going vegan the we think of top which that's who process on you packaged going drinks have to from in of product an is parts, into here, very, organic. slickly line now, really got of that I'm the numbers it Frank repackaging, knows of. incredible a we're little product that group does, for products. unusual give proud be and I super line vegan one And products. look We important very think have an turn as certified a you the green too. because that, we line to the that that just but in we're great, line

Jeff Van Sinderen

it Yes, be drink -- would first taste green that be the ever that good. probably that the vegan taste first sounds I've good, like it will tasted that

Michael Johnson

I haven't lasted of I've lot couldn't agree tried with you along. them more. and a they

good this tasting a really So is product.

Jeff Van Sinderen

Terrific.

your as but are should all taste milestones understand real think One selling what products platform? positive ramp a I really the you point. testing in toward Singapore we Herbalife are QX, be aimed for looking and the are good other guys I in you that's

Alexander Amezquita

Yes.

what is of Herbalife on place, the But and the of come will to needed milestone that that distributor-facing be beta starts -- in and support expression just in underlying So that it applications customer the other website. first architecture Singapore future. the that the XXXX platform, One is launch the platform. in all really it's is sort will validate again, that's in put big due be the to the And

beta website So a as well the visual that to under sort distributors of the is just there's running that that test first as brand the the being hood representation begin lot is, and and proven test. will

as us. well. have markets another capability the that's we'll we step and step So well. And big distributor those roll also X that a capability in will rolling out Spain, as be Later as out year, in U.K. markets, e-commerce monumental that fairly for monumental in again,

Operator

John the Our of next question Baumgartner Mizuho. line with comes from

John Baumgartner

until stands first on just sort How ask cross-selling, One, retention of you I are ramp? the it the to the the sort in are the revenue terms Herbalife of opportunities, the with wanted until just those in? thinking steps about to we company off, about converting related of benefits where sort of kicks capabilities Maybe begin first-party benefits, the data. Michael. now what And right timing of sort the see associated interim

Michael Johnson

Okay.

of and it. So the sure question understand I make I context want your to

say, was -- I'm you're in is to Herbalife I about? question talking You didn't retailing, recruiting, Or the not that One retention? relation -- what perfectly. I follow

John Baumgartner

Well, different I integrating just of or the guess settlement since guess, you've jump -- accumulating the that Herbalife it sort apps if of starts of years sort with all streamlining going about of in sort applying data forward. kind over X X thinking sort past initiative One, I of data the been the first-party and

Michael Johnson

is, our what sure Frank We're or that to profile out our customer on not much anything answer, the jump to the integrate opportunity But they us, of in interrupting in would and working you. with that with make we're doing, going data if way ordered they're marketplace. very I'm working let Amazon what gigantic. we and data we're Alex -- the very closely they're to with their doing we're going to make upselling profiles enhancing when, sure I'm to but whose and closely from want. upsell that Yes. start But understand the is base management very distributor working either distributors the so to

them to But their they'll data it we're profound nutrition be able that to as to availability club, management point-of-sale be data of so of whether selling. far to efficiency social how as with operation, is a maximize and it's clubs in media whether maximize, and the a more own going working as time distributors those online there's their in progresses personal a

I'm a and understanding how distributor's their Stephan work we business to that is forum. in one business. maximization plug going to advantages us to that in going points Gratziani, and to However, the into data of frankly, advantage format of it a their so big he's bring And to life, is going for

Alexander Amezquita

I'll add. Yes.

One question. I'll a of the we on overall today it's in There's a as things that we I data, thing lot prerequisite. only ecosystem. do the with great data Herbalife about So to John, we lot things And different data can that don't a is, talk think of that a that means when need add

there that's but simple we'll as that able are receive the be will us that, data, ideas win-back that things we as something campaign, a do platform a to have additional that of about and additional on to to express do for new example, -- for very so ways come data And to today. lot ways cumbersome

picture. So There's either ways be or of that data that other to we're then we'll sort silo to there lot new data data that's ways are X using receive the us help of with just but leverage a overall data. strategies, different able new of

you efficient we Herbalife X of today and from since data lot had -- and in the as that how leveraging that program U.S. X along, as the today. use saying we years, -- Again, places, that of today that you're we're were but other One and were or customer I not preferred It from go that the for be to may being think customers in the data we referencing data a we've get leverage data optimized still market. comes it's receipt

John Baumgartner

productivity Okay. from to looking And there, year-on-year about sense But from how those mechanical much the to stabilization relative of the a at North think back as volume productivity. with half headwinds, pronounced do signs on do front. to and elasticity you then How America the of you mentioned sort balance to distributor was distributor have Alex, elasticity you sticking year? looking as that with the for QX the the of anything erosion side QX, of opposed more at the on softness volume the the of

Alexander Amezquita

question, That's you're new how around where moving to significant America proposition. And will, environment. you a there that if strict marketplace and productivity, go demand we is determine. lifestyle versus lifestyle, phase, it's those a that in of that is over. program, in in things same that concept that our said, this, asked Yes, transformation a it's of over active they're great but said difficult in we understand an movement they're in that is more how impact There with And the overall that time, effectively same. healthy between the some to and to question starting doing way is they're the the the -- changes e-comm company is where some that which have to to answer in market is demand today numbers. we've healthy certainly in to apportion a today's all see to ourselves North data, elasticity do answer very market. The had innovation all market -- this With sort value way go XXX the to is body that's using elasticity the for the active in

-- And come concept value come and old the today's a seeing proposition. that it call innovative flow. in really that to in market, you're they when marketplace to you're distributor flows out to in leverage that a seeing how a new demonstrate goes effectively And flows, --

your importance think have and The whatever you to U.S. changed where market brand XX% you key have, where And year proposition today's leveraging on need particularly market basis. was the in own seeing that of the the or points And attracting you with future price in their do past in just is increases. to I understand how of in kind to and proposition customers selling a value over today in communicate marketplace value the we're really the the rather than way. past,

John Baumgartner

uptake the feedback this how I'm development a limiting been that been from curious view trend of very I'm wanted if On for more relative guess, a for And has line new then back to the net plant And the cannibalization one your sort it's consumer for the me, just in company? lack to has risk, the on the you're could. about factor the distributors process, some same at the space. then incrementality thinking I line? that But V. of of I V I on one line, just terms the vegan broad-based to much in come some hand, time, of in curious, cannibalization. in there's

Michael Johnson

-- that is this Michael. think I

that for we're going think open here. line They're had to to haven't a business spoken back. expand is ways. they clubs marketplace doing of V I have a And have this vegan now opportunity a another. open included, in vegan, They into been people, and or the I've but I've an in with part-time distributors is is and low-risk going about range a been they offering trade to There's everybody the been product It inside a haven't group are an that since our choice a now that what we're ton before. product before. to myself line not that, company one can not for to go line know They out talking with doors a their able lot clamoring we of group that with a that vegans. a out they years.

flexitarian, been of HerbalifeXX uptake missing the the seeing with excited about And wider, just couple on fish Monday me, me. get what weekend, And in eat product maybe and take this and it always I range product place. -- over But an we're is launches, get on and high is this one we have. on that all the product, we of and the products very distributors we've through social of I now these it is to that a what always I've a about call kind we're products. I'm of media the launch on in I about of they vegan acceptance that Friday, seeing it. any seen opportunity terms

back tastes us don't Our distributors create salesman the -- like and it. to for advantage a great, marketplace. And want product are super excited sound in Coming to the here, I about salesman. a to huge going that's

Operator

of America. from line with comes the question Bank next William Reuter of Our

William Reuter

One, Should be kind it be how million have on to you that $XXX CapEx the elevated mentioned much XXXX. we just expect Out two. Herbalife you the total will through expect as to of thus spend same I just in will year, million? you have that $XXX like assume this And of you far? spent range

Alexander Amezquita

Yes. take I'll William, that. yes,

ranging So will the $XXX be of of from a overall of is program things bit beta There of goes little on and how just CapEx changed. $XXX expense year. hasn't into out. how sort probably dollars of million that this million XXXX spend lot XXXX. between still in dependent A Singapore roll materially the test shifting and just We're

to that I CapEx some, overall, be as we're just some hits. an think spend would different. clarity timing call, to XXXX. a provide it But just at trying we're there's of going differences what when So through program, And elevated no I

about I more in case think been just to but that be clear we we've wanted communicating missed that. anyone that,

I get is of spend, timing would the material of amount we of any not really the to differences coming program, there's pushed that -- slight into say as not up this just there's some So maybe the any really year could changes end on and XXXX. see us, it to might

William Reuter

Clearly, seen has been everything. second Okay. inflation just across question. And then my

they'd -- to know, last something mentioned increase And price you like you CPI. you'll large relatively our for and much try pricing the increase getting through feedback that's feedback your How price? distributors maybe pushed you do from July. I guys think You reduce Are to don't you consider, that or engagement?

Alexander Amezquita

Well, that there broad basis. on I a reduction wouldn't say price is

product a was sure an about elasticity. demand -- the had we that select from U.S. about thinking with in landscape line, it. overall make competitive have which there awesome our sure a was did product is it was we HerbalifeXX price that line to a just competitive marketplace really chance in of distributors perspective and decrease that wanted more I and on wanted than be make Now the been to we that just market, to itself,

with Broadly where about are most speaking, of well, would we we've I them. mentioned at that date. how being point At mindful a the back markets and increases measured saturation. price this we just I taken to a point, think moment ago, consider rolling any we're it's I at think go forward don't very

Operator

Hale line with Our from next the comes Barclays. question Holden of

Hale Holden

I two had questions.

think than in First first longer the the growth may one, back Alex, take Or both quarter. you do year-over-year fourth the that to on quarter? part that you Does America? in expectation [indiscernible]

Alexander Amezquita

know normally we regional -- we questions. get these forecast I Yes.

So answer. going just our standard defer to don't really forecast on a We I'm to basis. regional

comment have as to quarter we if if quarter. company, that a fourth don't quarter. continue growth want and see that fourth total get rate to But I will, go of trends at our growth. change, in work third current still do these are, as to included change I these as the trends net sales improve to through still we in into continues, the continue So company obviously and all the there's But the to We indicated is get signs what comment on to we earlier, there. need

Hale Holden

GLP-Xs. East And [indiscernible] the then me bit, do guys evaluating you here think but in Coast, Michael, about it's a

based way through go to [Technical a to chose in they you if whatever from guys touch to avenue cash you XXXX? flow-neutral you wanted could detract Just Difficulty] all so or there, on didn't

Michael Johnson

out in Well, and cutting you were there.

that more X I GLP-X heard but... try can on the distraction, just So we time?

Hale Holden

Yes.

either it GLP-Xs, of of was if market So in that evaluation margin into should uplift the see to way such flow the margin 'XX neutral neutral? you your [Technical question cash kind decide explore in absent So possible of is a you some Difficulty] XXXX guys that. or that's for you

Michael Johnson

way exploring telehealth that, We're of into out we would companies, alternatives. that's only prospects. interesting really all there it. the have companies that different go I think sorts There's

close and to Some have announced recently very with we're Optiva Medifast, it. obviously,

that inside it company our make and go promise only Let's also -- changes I way. sure want changes. to just those want drug don't business whether looking our put foundational Ozempic, at the carefully hope, lifestyle us. but be these that is, it with fits you because very, that culture effective we're to it's to trying not No give make without I we're great something opportunity, but doing have think to matter that to will any it not to very all it got studying any sure or lifestyle not you've this along and of or no what into

with And And can't muscle products. going light to those a it that effects these studying that's we complementary be that very still a offering to be are that's coming with loss, could carefully. not these program that we offer our to there's we're and side loss protein or because But say to there somehow someway. fit product into

Let's just put it that way.

Operator

America. of Bank of from Our next with Anna line the question comes Lizzul

Jon Keypour

Anna. by This I is Jon the just had Keypour region. on state a the of about consumer line question for

detail different factors a and guys please? segment could there of the level, reporting out consumer the are of give us macro how you at go of picture bit sort playing a little by into If

Michael Johnson

Yes.

region, like have a in isolated region that that So of say instead China I is the way of has China dynamic. X look their category. it, I'll and going fairly market you own sort by at

COVID. X is market that obviously, Now coming of out

out The first population actually that. much contracting quarter now was came COVID, of and they the challenging of with

June. You and moderated in spending sort in of saw significantly May up retail

you normal. at our that over So second see looked you our to is results, if think second quarter And our you'll overall getting improving back quarter I have an market quarter. first

of look quarter with just XXXX. quarter-over-quarter, first improving nominally you it over that's fourth quarter at a If

that would feet expect had to the So consumer that seeing market finally we're you're over generally on really speaking, it's years. that you that the trends back few preferences and after get market its a excited run again and see challenging really past the

the how I the -- to bit of U.S. I challenge earlier marketplace. distributors relearning Western little of move of on pandemic addressed the U.S. probably then the is coming place. different the actually A In market. you lot Europe diversity my put a different a really U.S. really sort in a of America has would a of I North call, Europe, out Europe, the in and story. more and bit significant to kind If the market. go go it's to The little of comments way a experiencing think

diversity so allowed feet has to in markets. get that on their other faster than And a little them bit

quarter are where so first where North of stabilization And you year-over-year more quarter, to if a significant see the in in from trends they see the America, it was quarter. the improvement second you'll

Latin that market. the you in America generally, is see of have also included some mixture APAC Asia in India broader seeing say a you again, America. North consistent you're Pacific, what are I'd in And the think of I trends with

Asia that a suffering once of in and Europe, of mid- tremendous in the in behavior the conditions, or again, say, pandemic particularly we're year what growth, little third the constant showing to Western or And saw in other have we bit quarter that currency, at I lag in should call the growth India behavior Southeast a Indonesia, seeing XX-plus-percent are U.S. bit and You in sort a market. least markets, there. of it, a conditions lag post-pandemic the last in where really

lag markets happen in year. seeing is we through saw that that last Western while this that Asia year, we're Southeast So going some

we seeing sort different -- the themes and Again, each region, respond That preference training to those will the consumer all around sort go -- world. be general we're just almost to in but efforts that changes market. distributor address we're the that. general of apply grassroots -- answer is to to engagement, really know how how So and back getting the ubiquitously of to almost you

Operator

of comes Jefferies. the Our Martinson next question Karru from with line

Karru Martinson

those is need that stable at return it have fourth base growth the quarter, leaders to now When distributors or from the need the active the that sales of of it productivity in improve? to grow you and we the to is distributors look kind

Alexander Amezquita

both. I as you'll it's think into a see in the -- I all improve Obviously, as But that of company we our probably right more so. metrics productivity now be that the will metric lever the mean improve the be to will bigger continue through will fourth. that move quarter

Karru Martinson

margin And Okay. year to was at kind range perspective. quarter, then about modeling earlier. Is that something just from I trying aware the in the ago we're gross talking of at that for this look for of the out be of I model that the just the about in we a for third housekeeping when a square with the should quarter? target XX% year XX% there ago we're of kind year rest third When

Alexander Amezquita

out. to model this actually how know don't how this know will I how you currency be point, the don't biggest But prescribe I year. out. at versus movers and -- really so movement, year of last biggest the how mean to comparisons this really moves to for I the model

significant third you And of in had strengthening so U.S. very strength generally -- a a the the dollar speaking, quarter.

there's I'll out. business would So want say a I trends would and in it comparison fundamentally nothing the might I out, you from call point it but of just to that that you to side how those there's perspective model --

Karru Martinson

Okay.

maybe, up rest to point of about XX% said, you the how think kind should that in still So of X.X we as the year.

Alexander Amezquita

that moves. point in will big at this the how again, really And FX volatility Yes. number be

Operator

in call remarks. showing I'm turn closing I questions now further Michael to to Johnson no like the back queue. the for would

Michael Johnson

Thanks, faith with our us, to rewarded. us, going us call. We the that be we're in you being for make being in and on here appreciate everybody, faith

and reason passion you ever. for that. excited the So making and than about it's progress, this I'm I my stronger company, We're it, think we're and here, know

our We it team committed growth seen I team And have never do. return I've see -- a to lot this to as fully as this of to and today. engaged work

will track. distributors our the with One, Herbalife on hey, into it's next phase. catapult us energy The

evolving. Our distributor mends of are operations

of the You around it right And are There right the, do, so as we work game. I've back the more of know back. on or for going and are than got to distributor get and because increasing to we heard we're sharing is these the activity They've seen. us getting and the work ever many there. the mentioned excited coming now, name world transformation. People energy We I'm about momentum. the path marketplace we're ideas right

team this way into to an company Stephan the for marketplace company, employees way for our closer our us distributors move to and get another the opportunity another more and to see Gratziani as and to us Bringing it's to Stephan be joined this forward. for innovate, even provide proud both

Our best path on team to our live helping flights. great the to is great. committed their we're of and totally on success. ball, eye got people We've We're a goal our

you. I So thank didn't It this me Thank Herbalife. if go a let's to say you. be is all you of close, wouldn't

Operator

gentlemen, call. your Thank for Ladies and participation. you this conference today's concludes

now disconnect. may You

Herbalife Nutrition (HLF) 2 Aug 232023 Q2 Earnings call transcript