HLF - Earnings call transcript Q3 2024 | Herbalife Nutrition Ltd.

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Operator

Good afternoon, and thank you for joining the Third Quarter 2024 Earnings Conference Call for Herbalife Ltd. [Operator Instructions].

Following the opening remarks, we will conduct a question-and-answer session.

As a reminder, today's conference is being recorded.

I would now like to turn the call over to Erin Banyas, Vice President and Head of Investor Relations, to begin today's call.

begin. may You

Erin Banyas

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

our us President; Executive Chief are and Johnson, today Michael Chairman Officer; Officer. DeSimone, Chief and our Joining John Financial Stephan Gratziani, our

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

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

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

now with CEO, Michael over turn Johnson. I And that, to will call the Chairman and

Michael Johnson

adjusted financial and Greetings, in flows the sales. us for We with journey performance on our strong to joining strength continue everyone. our cash of foundation our you reinforced third Thank the as call the grow today. both we quarter EBITDA

basically sales currency were constant Our flat.

base and which the of positive for future. trends in distributors is However, growth as customers, confidence recruiting rebuild seeing we the in we are giving us our

in on financial a talk look John depth at our later let's more which will highlights, take So our DeSimone call. about

of paid which part cash million versus leverage basis margin our to of On cash debt XXXX. X with the in QX our million We is billion further line guidance saw $X basis, under operating up X and X We $XX billion, $X.X XX is strong down by points quarter quarter is million. total and adjusted net $XXX our generation a EBITDA range. adjusted $XXX were of debt Quarter exceeded EBITDA in our X.Xx. sales reported guidance, in with our strategy years. ratio to total reduce This flow of reduced of

to of the In changing meet and the importance We've today's lot, company, marketplace. world's we needs as opportunity, modernized products. continue platform. a our the changing health business of evolving ourselves rapidly understand and and premier brand, our accomplished environment, establish business We've our wellness the and will we to community,

and very Our efforts including distributor have resulted in engagement, increased recruitment, activity. trends, some positive

XX% joining of distributors was quarter representing quarters worldwide, distributor of New XX recruiting consecutive our decline. following our year-over-year growth year-over-year business up second

recruiting from ideas business, to their to best most grow for easier it We're shared our quickly, make with enhancing businesses. worldwide. the them our distributors distributors plan, taken into and opportunity localizing sustainably earning selling managers, distributors account marketing key force get we've our new sales successful success historically a sales sign mobilized are you our bigger customized our been increase distributor consistent significant as in organization know, programs, Simply Under in organization put, future ways. of a training Distributors, sales. has bigger a we're new and investing And sales Stephan's our in leadership, and the money include to and also means growth. begin

our network with Premier like extravagant was people Developed get led in Asia our to year markets marketing than distributor off the industry January to training in support supported trained, program, Eric base by new in is that We to replenish With the the and leader, program Mastermind League training our Stephan The distributors a Pacific before. of we're and Diamond ever versus It's XXXX. events leaders additional Worre. productive. program kicked on with follow U.S. and expand active, Mastermind More to new motivated, attended distributor said, building. more and plan focused going And year. this worldwide little in the to by the time take momentum fully programs later Herbalife and

This approach and of reinforces as support the his with new significance training years company an experience into executive. bringing of field to Stephan the

we're Stephan about in hear to a going minute. just we You're the and more have seeing from the underway trends initiatives

is achieved commitment Herbalife and CDC's seller our Lifestyle certified a with to diabetes becoming of the and able our coaches direct for These Program only National to listed healthcare will through type huge to offer distributor coaches. lifestyle leadership step Herbalife our is and enhancing distributor milestone directly Furthering program credibility. trained newly Registry the This our distributors be health to programs. on leaders lifestyle in prevention recognized first we've our towards the wellness, X of customers group prevention our professionals. a diabetes and now

offerings in Authority our our enhancing that expand meet stringent we market-specific customer of standards. broaden X, which gels reach, meet EMEA, Food also quarter portfolio, our customer In and and European a line preferences. Herbalife needs launching products are by launched We Safety

banned energy We formulated EMEA, sports substances. which was also Prolong "informed is gel alongside meaning it's certified", scientists and that in tested launched world-leading HerbalifeXX sports for

our our planet we products, of we a live initiatives. investing all through company, believe investing strongly our our as our health the sustainability on people ever important planet the in distributors, through It's health in of and before. we as principle in is employees to impact by. more Limiting our the Just believe the in

key shipping promoting a the repackaging reducing part hear format packaging a reducing the plastic plastic this As an to use, more efficiency EMEA to a about effort, overall for region. we include transition footprint, transitioned benefits weight, quarter broader example, increasing you'll X, is pouch Strength The of in of we in amount due modern lighter which the This and design of our future. our carbon sustainability. in Rebuild HerbalifeXX new from canister

is like teams sponsored our by We XX Italy, Israel, of Herbalife superstars Olympics including Paralympics. of Ronaldo. best peak Cristiano super The and with Mexico, Best concluded and trusted the the Fueling We're Vietnam of culminated with and our on committees Paralympic global India, XX Summer Herbalife them a Olympic the own know, which XX you we is and XXXX Individual world's Herbalife metals. designed our many just and Greece, athletes, home and total their all proud performance campaign, of athletes for metals As sponsored earned returned from success. congratulate athletes by and

proud long-term really there. also and Galaxy of LA partnership We're the our

players. because Soccer. and of the in the embedded their are products our performance In is first fact, And and the jersey Their will. Herbalife is our products sponsored program deeply of League Galaxy in Major longest-running nutrition

Cup. distributor They're excited quest for the pulling worldwide Galaxy about is Our community their the the MLS and for playoffs. hard

the years. Herbalife nearly was power of we recognize first women athletes sports, also the and XX in have sponsored among to teams for and female

Women's and better XXXX Her our use selling of community. through it globally wonderful of direct in our can XX% our channels. inspire commitment. we new like International become women March sponsorships U.S. social to kicked The and month, conjunction which our products, campaign and The approximately are these sports campaign our out you to Women make campaigns highlights up We business, worldwide, join Day. of more campaign, want part in will our long-time with in media check leveraging off this launch

powerful across a set via multiple one and also of distributors, new is largest September provides XX distributors a and person. was It enthusiasts, people livestream. with title who all opportunity on employees of and in than over us There Herbalife. evident came together aspects of virtually to venues. the fitness most world community unique bring The together YouTube were X,XXX this of the the for World when training independent more Record Our power workout than community Herbalife's interval more to customers people class XX,XXX Guinness joined from high-intensity Herbalife

to join ways other the once and and with want doing Herbalife, are make inclusive. companies business, to to people We people, we're bring the than them join from all ever in healthy, their a at they today providing power to we While of money, succeed. opportunity help We're And us, we're community. eliminate people them looking more get in. more believe for

over it. how it about turn to who Stephan, details give doing more me you let we're So will

Stephan Gratziani

Thank you, Michael.

Michael one our has focus sales. base the and of key strengthen been of base, since areas year to our the the beginning of rebuild As of bigger highlighted, distributors, bigger

process in to years. reverse step declines distributor first trends was this year-over-year new for successfully experienced The in the X we

are pleased of distributors in report we year-over-year quarter consecutive the Herbalife. Today, of to number growth joining our new second

data, X I'll in China, Slide at all tables the key cover look we multiple continued let distributor growth Number one, me which minute. markets except new across and takeaways. with a QX in As summarize

steadily is in leadership our recruiting. non-sales show X, levels improving leaders active X, increases Number base And quarter-by-quarter. year-over-year of number significant

in Let's new jump basis. on the percentage upper by distributors in. year-to-date the highlights of a table The the a number both left region on quarter-to-date and growth

best to the in see Moving are plan the new of organizations, with each year-to-date are way a levels This bringing the to our as sales quarter-to-date the percentage new top of growth have number the longest support leading how the slide, the and the in. know by marketing of go-to-market of plan side marketing is level, positive and right that distributors you distributors sign distributors they strategies. tenure, the largest

without leaders, posted the of which and distributor separate metrics the Investor present active by on preferred includes programs. of summary section of website. in markets bottom change total the the our slide, This the quarter At under is percentage supplemental in regional we the nonsales members Relations based also customer year-over-year number

every declines leaders extended leaders. non-sales As active number due year-over-year QX the you region, active was in to can total APAC, largely of recruiting. in The in was XXXX, except trend see, negative experiencing declining for nonsales of

been QX almost every since quarterly there will see, region, you as However, have improvements of XXXX. in

to America. company the base quarters this X QX and On declining had of to base of we quarters multiple near-flat XXXX. in leaders XX% I leaders, nonsales nonsales declines. declines to went your attention in table, have From of consecutive active of draw growing a year-over-year a now active North from QX Overall, want

the support we who business. coming to sales of sales new in are market. takeaway the new to and about leaders' and leader are new North leaders consistent turnaround is The drives a non-sales the trends we taking further growth growth launched growing the of is foundation American ultimately the longer, a of talk While the leads encouraging. seeing and of later overall grows in improvements base non-sales to foundation This I customer highly leads are this volume. distributors new growth, active our in distributor will number August slide from distributors that initiative

offset of new of quarters year-over-year experienced. distributor As quarter growth distributor to X XX I we have growth X declines, of new consecutive isn't as will before, just mentioned quarters enough nor

off. encouraged see However, to are efforts are starting pay our we that to

our of declining the to continue base as point this inflection the is we sales to reached have distributor going momentum we are confident point as that Just positive volume growing, on we from inflection the horizon. growth

China. Let's talk about

past the customer-focused we recognized a to for stronger program year, drive sustainable need the growth. Over

Following loyalty its first-ever XX launched was customers, the April Premier originally League, the which launch of in our new focused preferred on market acquiring China Herbalife customer program June.

prioritized in the quarter. new resulting of a new decrease representatives, number initiatives sales joining new over sales the in customer business These in representatives acquisition significant the

for We since qualification the to sales representatives. in and the Herbalife China have customers preferred Premier include League new both modified

XX% QX, in Although focus customers showing the is we long-term positive yield a In decline in on XXXX. quarterly QX a sales decline initial results. will a representatives to it to our strategy believe compared saw already sales, new new and preferred we benefits, customer-centric increase in contributed

these in successful to making to but driven aim had and a year. customers preferred India, increased We high customers rates purchases a of not China to compared solid results significantly base growth customer only a last also preferred major of has percentage we've replicate conversion as customer has the program the where opportunity Additionally, distributors. see built

training to programs. company. Diamond in top-level support the leadership and on recently focused in We Development North launched Mastermind now Pivoting our program America

network growth, Eric program. participating, which company-to-distributor a the program, training experience an and Worre, marks marketing XXX with business development. the training has of industry first-ever and flows program ongoing distributor historically leadership the and kind approximately focuses leaders Herbalife. professional Leveraging support in This While on and that new its been embarked on for we've and vitally leader, training systems, distributor-to-distributor, mindset, field my has important, is of is personal which this support

and increase and program continuous this of a This that we support elements Other our provides our groups positive, feedback commercial needs. connection creates model. been engagement and peer-to-peer significant strategy our of management account in and loop a seeing and accountability distributors' align to in a key North include has participants. the overwhelmingly are feedback America The insights energy

for distributor enthusiasm globally. is spreading The from leaders our program this

program are only be on in additional we commitment accelerating are This to launching Asia the initiative this to we'll to to amongst deliver to one regions in return And we year. that January, many For Pacific our later the with most rollout. markets our follow reason, is growth. focused sales on

turn I'll that, to with it And John. over

John DeSimone

margins, operating and strong year. you, expectations Stephan. were into our our were on details. begin our adjusted Slide within we reduction flows, sales whereas are quarter, financial and operating I'll all Therefore, the raising expectations. range more QX our adjusted above performance debt XX Thank net QX with cash getting in for before of significantly highlights Overall, dollars EBITDA EBITDA expectations, given the

XXX billion, $X.X net flat a constant headwinds by QX some down versus Looking quarter, points for of of sales On the sales year. were currency net Reported X.X% QX were sales third nearly impacted at XXXX. details of basis basis, were FX negatively year-over-year. last the versus net

$XX and million. $XX portion of the million, for EBITDA of cost-saving QX initiatives. another adjusted marks range guidance yet driven Adjusted to of was basis shifted our versus to being strong range recent $XXX of and up the third-quarter million EBITDA quarter restructuring was XX.X%, CapEx XXXX. million certain timing $XX our QX points exceeded by $XXX $XXX of Our the QX. end A results, million operating XX million. quarter due low third was guidance the of was to projects our underspend below of margin to

margins with due input approximately related points incurred $X we approximately basis the have along primarily material capitalized points reduced year, gross profit drove million raw to gross XXX of additional up costs XXX basis in XXX to costs. year. of benefit, SaaS increase margin of quarter efficiencies the profit in from The over quarter. implementation basis costs, QX pricing to actions past points was improved addition, XX.X%, In compared we third of which lower to taken manufacturing favorability the and mainly an last

XX EPS included negative QX of FX adjusted an pretax adjusted was our diluted QX Torrance, by XXXX. versus of mix QX million with approximately $X.XX, EPS impact sales impacted which to from our diluted diluted a sales of results. related basis had favorably margin of $X.XX excluded $X gain building office EPS Unfavorable points headwind year-over-year. on $X.XX in the California, approximately which is

was of rate to XXXX, in our of down tax the quarter for changes was tax an expense offset by approximate effective favorable elevated effective drove income, primarily XXXX rate third lower from recent adjusted QX tax XX.X% partially refinancing. Our adjusted the to which $X.XX XX.X%, in of the following due geographic impact diluted impact interest debt EPS. The mix

approximately to our XX%. rate adjusted expect We full-year continue tax XXXX to be effective

the to approximately quarter. We were generation related in had which strong Operating included payments cash million, program. cash flows million the cash $XXX of restructuring $XX

our flows. July, which Torrance incremental the operating the million of cash sales to In of $XX building to office are addition, approximately proceeds net we received related in

of until to and employees us of relocate our November out labs which gives Southern locations the in to R&D our adequate of XXXX to office end time We other that quality move California. well as have building, as

$XX expect incur we to down as capital million $X to earlier, Michael quarter. paid And in of We so. debt about the year of costs one-time million next do noted

as $XXX was the the million, September for leverage X.Xx to from and EBITDA ratio third end quarter agreement of total is down of Credit at X.Xx June. our XX

adjusted the earnings release. our well details adjustments to ratio, as in please refer and the appendix calculation presentation EBITDA of additional For total credit agreement press EBITDA regarding the between our leverage as

a approximate point offset $XX July. of a Overall, see approximately was XX. net or X.X% year-over-year headwind an with was pricing declined $XX year-over-year reported the leading $XX line points, our to partially in XXX million net anticipated year-over-year, down headwind, X.X% performance. basis, basis basis. the million approximately sales flat On million were basis in currency to approximately we Turning nearly and which Slide year-over-year constant XXX sales on drivers headwind of We by by volumes benefits. FX

Turning to XX. Slide

were for regional all negatively in basis. In each On reported of quarter, local sales the We net local a impacting EMEA, Asia devaluation regions peso, America, Argentinian while of these on sales on X% the net down volumes net a X% basis, third currency Latin in the quarter. growth a currency FX on primarily America, basis, up continued Pacific Latin have reported was results the and a overall Favorable sales the with with by reported unfavorable and to year-over-year Mexican pricing basis. peso FX than offset relatively flat. headwinds, region the more due

to price offset regular in take FX increases to the Argentina continue We headwinds.

the Mexico's reported year-over-year, driven on noting offset whereas, a year-over-year, net excluding the were in X.XX% QX of year-over-year a down of in in impact X% It's a overall instituted markets most up the as QX X% increases were sales majority these by markets volumes. Mexico, local impact basis, On in pricing XXXX, not a material worth price currency price XXXX. lower March reduction net slightly to partially was basis, also regions that by implemented of sales increase price X% the QX,

believe X%. impacts the were and increases declines by may QX of currency to changes several year-over-year relatively this positively Favorable with the flat mostly price year-over-year FX EMEA have were net markets year-over-year year. volume volume in unfavorable net and we sales However, of in headwinds. pricing offset sales QX up sales contributed local the mix

and basis Pacific, while the net on improvement the markets more This decline. is America, currency Asia local reported net were we a sales sales year-over-year the decline X% on the in were QX volumes net trends. year-over-year. X% down XXXX year-over-year year-over-year slight North across quarter mixed benefits basis, up in offsetting a sales X% up basis. X% region. row India, in in seen generally with slight In local a were second year-over-year, down were in results a reported In a a X% Year-over-year In from currency, the have improvement pricing than on

As and believe the decreased positive region that China's path opening Stephan to year-over-year on several we metrics noted basis. are a back net to in distributor encouraging, gradual currency new of XX% down our our indication is XX% gain in have are new initiatives growth. improvement the sales local were remarks, We and beginning his a traction.

increase customer in seeing to Herbalife launch customers the Stephan which representative focus significant the following program and loyalty noted, a new Premier preferred of League, As we the number signing of the sales are on less up led recruitment.

China The the Herbalife more changes requirements and qualification to recruitment sales team made League has encourage some customers the of Premier third both quarter representatives. during to

We number joining. continue encouraged by to new the customers be of

However, we translate it PC lifetime sustainable representative how need the sales growth. to to time assess the and to performance purchase to customer will observe flow from

adjusted Moving to increase a in million the Slide was our EBITDA year-over-year. XX. We of year-over-year our $XXX XX.X%, adjusted QX up XX basis see EBITDA. with margin at points drivers

Looking gross and the volumes of at the and bridge, benefits lower seen margin the mix. improvement increases costs, impact price favorable sales in can by offset partially profit of input the be

continues to million QX a communicated year. be of and in accrual headwind, we the bonus Employee consistent up expectations with around $XX year-over-year this

in were from expect no quarter program approximately China adjusted bonus primarily with restructuring QX $X year-over-year, million XXXX similar already in bonus benefited in to QX government additional as due up the level of costs income grant accrued and September, impact hosting recognized we fees. million XXXX. the SaaS increased of Given don't $X EBITDA QX. income Technology unfavorable

an in other movements third of I EBITDA QX bucket. was million in reduction we the large is had stated of in place to this a year-over-year $X.X which year, year-over-year held took driving $XX the adjusted that in a As quarter in quarter, last fourth EBITDA. XXXX, included approximately distributor million adjusted which event led year, quarter headwind Unfavorable FX the to last

Moving XX. provide I'll on to update an capital Slide our structure.

payment, Loan repaid $XX revolving $XX $X credit scheduled million the million debt, of quarter, on the the we and amortization During million of B facility. Term

undrawn. As of was fully revolving credit September XX, facility the

leverage we earlier, XXXX noted to and XX, end of I X.Xx the track leverage to reduced Xx September ratio As further we the to ratio total believe reduce following are by our XXXX of our repayment on total we the of as notes.

accordance repay September credit facility, of In paid year the with prior $XX plan to to of the the least or of to next the with at at maturity. the million remainder beginning of XXXX be the XXXX by we March XXXX notes our notes terms

X-plus $X of next the repay billion the million years, we to the $XX Over debt, in repaid plan including quarter.

review year. will fourth quarter our Moving full the to Slide XX, for and we outlook

For be sales the expect X% X% down range up to of to we fourth in quarter, year-over-year. net the

in to fourth to million. the in capital range EBITDA adjusted be of $XXX million quarter expenditures range to of the expect and $XX $XXX We the million, our are for million planned $XX

approximately the on of SaaS and is $X addition, updated capitalized we third to full year results the the the Based our for which million, CapEx. our the In expect remainder QX through outlook costs implementation XXXX. incremental our planned be for quarter have guidance to we year,

Our last full-year X% net sales of to down now versus the down guidance is X% year. range in

to by We a one be expenditures full-year expectations million of move Herbalife, end to EBITDA flows we XXXX. Q&A. and next these reduce even reduced end X-plus capital and the cash $XXX we the are between capital million, and to for we this range plan raising goal comment, to million. expenditure accomplish we last of billion cash over to elevated to adjusted top $X $XXX continues our $XXX before technology, to can now for the flows, our of years our by with near-term million debt And $XXX generate range to the use significant believe

please concludes remarks. opening questions. Operator, our the open call This for

Operator

Securities. Riley [Operator from of with first Instructions] comes Our Van the Sinderen line B. Jeff question

Jeff Van Sinderen

the more underlying you get may overall of can negative. seeing speak provide new major in in sales to in what be considering time to on you're drivers frame the a that early what for you maybe then I materialize adds? sales where And regions do recent realize volumes think be think turn distributors. distributor the needs out the volume to to What to performance related Wonder America. the they're it if might to color the you little around North happen

Stephan Gratziani

Yes, Jeff, thank you for that.

active I see So, non-sales in metrics the leader's think improving on it's that NAM, quarter-over-quarter. you

that's So have started at been strong. distributors X obviously really by the very this year growth last the beginning new and of driven quarters that

So, the that our using more to we that productive people United models models and here And know adjust foundation. doing. for be this helping is are how distributors Nutrition building the first the the what is to Clubs be able they're important it's are in States, really to their focus us and effective at

the It's with And of the the is have we've level that so, the Mastermind, first top-level which the one Nutrition initiatives taken, are leaders the ones time with as first that them as actually have the the ever and our and on DMOs and leadership that we've of they've models is Clubs. is taken mostly that who more in support XX that really and distributors, the that more that helping effectively really Mastermind, got customers, making duplicate in working a them and possible. directly days sure flow focused business brings

them. have So, account sharing and to it's to of with this the monthly they're a grassroots XXX what the to is is weekly, support be is these sure and get direct an company, leaders that them key with base management having or program experiencing them, supporting on input distributor to be touch basis to rebuilt. a in able which a so And another focus needs that kind making the There's on we're leadership. productivity overall part of

implementing we base, base, is what presented supporting and are rebuilding every the effective general and on to Mastermind with that to and we through programs, really comment, So, Herbalife just new the on. what go that to its they're that region there distributors it of we're the are on just continue at Premier going doing. be all rebuilding them out every need League has with things the like to program very specific market, focus we grow doing And focus we and ways our support to a

increase mentioned, get And we to where it's how not increasing. growth. a sales know on volume line, more going of point return a to really, it's terms in we've direct which speed have time when the We'll at to as next going is impact quickly quarter to gotten base in So, we The that's quarter-by-quarter. a growth. together. decreasing, is

Jeff Van Sinderen

could a then turn minute. to gross outlook we the And if margin for

on remind What year-over-year Just your get increases. a plans can of on are might costs. more costs? us for input And bit seeing latest latest maybe price wondering input little when you the is comparisons kind and the you're what further price challenging

John DeSimone

Yes.

meaningful probably just standpoint, So outlook at general this expect meaningful rest change point. least right don't are to a from we now, year this where year the profit, I of from gross nothing and nothing next at

already next plans when a we of In left couple terms of increases for that's most roll months. are the in deal There's out India of increases, our market year X a price price to is with the do. do. or year done. left to we'll And then

It we've next markets, haven't we South very possible. that different circumstances, changes on we specific whether of made will other a So, roll anything American announced out lot year. of some depend to the and that's including

Jeff Van Sinderen

else sorry, input then to And on add costs? I'm anything

John DeSimone

control, under from have I there. stay at least suspect costs not expecting any in We're increases costs and input the material in hits forward, going they'll been No, near term. input

Operator

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

Chasen Bender

Stephan, when at I base. sign distributor obviously you're new the that frankly, number, which non-sales America. look you the in filling the sequentially. back working trend the really a leader distributor funnel to the top distributor you growth, grow wanted mean, obviously, active is North trends to you're And to that and the come of highlighted I good has improved

numbers, still in, an that suggest and a on adds you're that at look progress. number they if is But of the bringing new remain little the certainly, bit with issue So churn side. seems making or qualification absolute below of to you that which retention there

your do end the perspective funnel closing can terms in the top? refilling the you And addressing get of of of of what to there you the there. back think besides curious just gap So do the and kind

Stephan Gratziani

decline, of coming One is have XX of when catch-up in non-sales ends look you're quarters years that, attrition of when the couple think right? a active through X a is what about and kind the pipeline, that of you numbers, you're So, still you there's talking to I when of off you're things. So, at up happening bit filter leaders' playing or happening. which that's

see quarter-over-quarter. sequential You the

is sure are things are we're DMOs is that different focused more really it's one on the out obviously, to very on that whatever even make and to there. the focused the focus models and becoming specific, of Our that

people look nutrition bit that little from challenges certain And different clubs. people more models. there's then they on these are a are working You you've different have some And Clubs, than general got a marathons. have working all on Nutrition the market or standpoint, that Latin

we're support one markets So, they're actually market really of what and leaders individual they doing in things supporting and as having. their the doing can, are that in specific is that we accelerate as the to models

that whatever customers to way don't do people, accelerate So the really that to there people through out in get support more translates that the attrition they're seeing pipeline, more more to want that more people to to to they're we distributors. working and this way in speak, they're to quarter-by-quarter into basic improvement I working have and a attract go capable then to the and clubs, sequential you're but it's

supervisors, then impact. more and takes the metric. models the the of on new see based other and is you effectiveness customers that supervisors more ultimately base. which then And And the to more distributors, sales. distributor will And the model, the aspect distributors the that impact growing leads incoming was base more supervisor it This of

to doing focus we've what rebuild on. this better got our that's that is. have than past, why areas the the and go We've through. different And support process that's So to many is been to we're we got we've focused in that and

hope bit that I So little clarity. gives a more

Chasen Bender

And being for minute just cohort ended had the come pipe that the churned to time longer. of on unproductive had a consequently staying think out into new topic for the system. up bunch get a that not and to I ago, If remember when distributors the Herbalife long I of that back company a rather

follow are Mastermind and Eric system the are should of about with So what's Worre, be into and in distributors doing now think new just as the I in in activity how that gives new won't that people going that about a now? productive group? think we've opposed you productive guys So past? that what cohorts that they to as I And are the to coming the now the say weaker seen less to anything the coming productivity initiatives you the confidence

Stephan Gratziani

Yes.

So Chasen. it's a great question,

the I most of example, give and And So you per model directly United right successful, just that before. this model now correlated So I've think is I'll distributor highest-producing spoken within going models. productive, one most the with one an Kingdom. we have effectiveness club the successful, And this about of highest breakfast the the of right? the this is budget really

pricing, the distributor couple last the products, years, Over Kingdom has model, haven't the grown that the individual honed a and the this macroeconomic with same United extent. same X in clear, XXx market the other same same to in in on distributors it very they've documented conditions it, that grown

I And the the and and a models, the of difference. it's new of there's and the model company, leaders leaders bring the level customers, huge of don't comparable effectiveness market, recruiting but level want and because to say acquisition sales other their that their level of people charts, into so their of same off productivity sales the to productivity they the the that they of in distributors different become model,

these supported we to who in leaders of committed, look who at the very that are United all North right, they And able hard so to as are in be be working, very need States, here America, is are it, the and more to to optimized within than be successfully market potentially their doing what own people markets in able most other that model, they're are understand duplicate right? doing elements the to what

get the coming a to so bit about little United believe be to to come the back. XX it's note, Kingdom the And States of weekend from knowledge, United leaders participate our we to side able class going that's of the master actually a I have up, for this

that And business, most to a individual can people to education, want support then models a that in why so be so and their impacts as platform they own the are, what where overall, implement no for the understand are and those models matter company and successful be we productivity. delivering able the

Operator

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

Hale Holden

just guess, Congratulations World on the Record. record. your or questions Guinness Guinness second World I had I quick X

the that repatriation John, forward? is, does an amount one having balance hold the deck first of the internal and no change in sheet commentary have to taxes, creating around The bank the cash on cash you going that ultimately

John DeSimone

is, million commit we got a hold. more now. bank repatriation. the lot lot there's per down. to centralizing keep little cash $XXX We take is countries. certain to I it not There's I'm designed reduce room the that cash just amount less by low is not of it million a as And bit ready a let other there's that quarter. to bit could it, room. it's think, key of friction country have We're what around of more number just internal least allows a timing. at $XXX little The as, with to we last to go us over you A point to know little Yes,

friction wanted at that repatriate. so it a no is, you get value we lot make cash as there's of we the to from because cash not ultimately balance, will to matter look about And where our that's that sure

Hale Holden

through Okay. question India as And second geography to was, the stand-alone talk decision can report a guys anymore? you the not just

Stephan Gratziani

each about as never been in APAC. It's We've regions. stand-alone part bigger We reported go countries as region talk the of a always through the geography. we just

about U.S. in country like Just biggest we'll the America's the so U.S., North talk

standard, here as so just XX in that's my at but region. And a least years aware we've I'm that of

Hale Holden

how is talk some thoughts any on you guys if color just there. doing could go-forward maybe India about Well, and

John DeSimone

was repeat in some up in to commentary. net Yes, for net India, what up pass Hale, were mean currency, in my X% sales over opening local I were sales comments, to it X% just and I'll Stephan

Stephan Gratziani

Hale. Yes,

of continue. many expecting years. type to years those digits, is double going digits, X that and X of double growth of those in We're of not some high in So growth,

that build new focus, QX, in year. the the say will had they to distributors market, over a XX% I So coming the last leaders, they in increase are continuing

that than it the So not X is area. we've was much The the ago. the of had. X in we're of scale is years It's growth bigger or the focus type same just right market expecting

Operator

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

John Baumgartner

Maybe the line others here down influence settled I borrowing in risk developing do you questioning the think soft. the specific seem demand points in and that the levels? any just following you're increased, with factors watching more into than markets. But prices demand factors think having that are on QX. focus higher first The Asia of bit the downside in to at there picking A number costs that distributor a of off, from macro India still XXXX? up having sticking on with volume growth encouraging. how about also markets Are that is you're

John DeSimone

take Thanks, that. John. I'll

that specific position, show to how customer And the it's it to that distributor and no about a through you're and years how the value. the I'm go products experience. important. a value for about there's question right? and There's the there distributor opportunity from So is going giving, the developed really out that had bringing about about from you your that model it's situation macroeconomic speak experience XX in whatever services But you've that market. the is you're standpoint, It's

to And there. a a to you look, you twice really some are buy you're value say, really, were could shake great. products, there There's and take it it's my lose day. I'll give and I example. just a simple personal meal when to not It's and $XXX, going I also but be If say, weight plan. to twice and are your buy we're going you you coaching, products, is to get evaluating in like If only to going you're let's daily my for these the your get diet you, going say products, supplements

down impact X the and support to be put We're all taking place. which workouts. a a do body also analyze your we directly platform. on group, in to the where composition of customer week going to club come is we're also are it directly to going going a can you. And way, my the times machine, And into we've put able be got biometrics future, on and a you to You by

to able to going going You're is able track your coach be you. to support be to

sudden, value there. a becomes of more worth that All because $XXX, there's it more much it

I a as more value deliver forward, So support and can we think when can distributors look our we value? more company, how we to how deliver

to the looking value We're distributor's angles. from have impact. they're It's the look so again, that job, to Kingdom. the this And of there's to I'll to spend to money yes, where the go If less marketplace. going And much as spend, possible deliver as to an it's at in job back example people keep just United edge all going our it. they're and

over volume model that and value that You've delivering. macroeconomic got couple last model that in to people, delivers developed X points over they're the the differences they've the a a distributor month from and product, pricing, value taken Same the X.X years. same a a a same extreme to business million XX,XXX situation,

Stephan Gratziani

Yes.

socioeconomic America, Let well. economics received things had much were where global identical has or changed America a weren't what the handful a distributors, in were can we that really they other South of the optimized elements of in this which And business reason we have distributors that we sell me this and our more more in, climate plan. been our having is add, adapted The you we're and on points, test have of actually learning therefore, by test Latin value our with also and did this volume is of drive regardless business country opportunity volume test lowered locally prices, based to marketplace.

seeing. go the conditions other year think I that of into may may some countries next go macro of some that Asia, offset we're can help into And some

John Baumgartner

the program? can you program? in I of diabetes more become then think a first that coaches. us how America, group about has on process And think the certification distributors cohort, little first in with went, And update in comments expecting converting bit the consumer prevention prepared And you the I'm how terms this then participants additional North do you curious forward? the noted you're lifestyle with engagement how that the going

John DeSimone

through John, get that So, we've have a third-party certified. these members gone had program top-level to president

able to internal be trainers to and do thousands extend company that to certification actually if through become literally we program next certified the want people year, that. Over of the an will

up What are here. of really to them. it's businesses, many their put into types different aspect business. support do how scalable distributors in them, We're be they're going but a different it to going and focusing that there's people to So, with obviously, things to it going their on there's

this are DMOs. the see that we So, Are how standpoint, they're foundationally education that's at translated program, as from clubs program you credibility going going the some very their to going and important gets It's early into how out. important. It's it people we but groups do will have a role this offer see something going plays for us, years. is people online. next have Others days couple believe play We'll throughout very coming to that an in. of to it the of to

Operator

comes question next Bolton-Weiser with D.A. Davidson. of from Our line the Linda

Linda Bolton-Weiser

a just that talk that area. different being I maybe give I maybe I the bit things you bit than could done little kind wondering it you much on more worse mean made had about the talked is But you could macro Or worse? And if know of about just was a of color China. quite the little so I more numbers mean, expected. a kind we there. were it

Stephan Gratziani

Thank you, talk Linda. I'll this. about Yes.

what we just customer-centric having And there some China, on really at program. than year we XXx customer So, because on strategy in the way, adapting you the beginning are, were look of were at bigger very John most of companies that when at last to they markets some the obviously, saw was them focus our the based a successful started mentioned we when look on, industry, the by a or really strong to macro. really we of

on we we put of there, And the one League distributors. of Premier instead on customers launched the It's why when our focused that. Herbalife reasons we so sights

June. more for customer first importantly, launched loyalty But the time company program a the in

we've customers customer. loyalty imagine in to years a have becoming had, a there, never really for we've been all the benefit a the the preferred you So, didn't had way have there program and customer they

And incentives, companies is what they this at created successfully. point doing we and again, system. other So, were a looking

that in the new So, the over that really behavior preferred came increase launch last year. created of business a customers of in this created in, QX program that XX%

started purchasers, customers, in we also and the of quarter preferred including the the in had a XX% it to increase impact and so, representatives the purchasers. And sales number

here building we billion as look as we've for a see the this market, at the there's business look in focused we future, that on just really us. been of of so, and customers lot upside and quarter $X.X is this we of population to continuation that this a the And one we launched program,

deny And off so strategy There that. going recruiting? take term, yes, to not did was from the right strategy. But volume. We're emphasis long representative it the we a did. It some believe an sales it's standpoint, impact on

just to area to a over us. is it's so, to going that we're be implement take And some time And have going This to, there'll the for new adjustments do. quarters, strategy. the

they've the business. new huge way and helps out to been distributors and a India's effective bringing new and of India, representatives that in from I The bigger sales point created is want and got just also customer part thing or to success build very I of that base a bigger this what that they've equivalent customers mentioned this base has the customer the one is

So, we think all are us great the of in aspects these for future.

Linda Bolton-Weiser

just you us that about was that kind then for the you the what the program months And that XXXX? then And of update savings X what being I And talk incremental savings of have? you've Can we're cost can expecting you are know some XXXX? through realized on reinvested. of

John DeSimone

Yes, Linda.

performance, the that year EBITDA improvement. of The which lot time that XXX-basis but where our margins come more management, about year. end A our year there's the has a lot a from obviously seen earnings point strong. XXXX we publicly across the we improvement of point in flat would also last in board, and made this savings to across first that quarter just May point, at not of do. work year has our And for of getting with next a that this initiative delayered cost would We're lot be we categories. where obviously, general been still XXX-basis restructuring we've most at this very margin you've said So a to that made call, the be commitment point

We'll line. the exactly for give of we accelerated cost of we about to be the that next we some year at as guidance there'll So, now, flowing next and year. But have more those call. talk when next said incremental some means what it's savings, bottom obviously

happen. where something you to if seeing not happen, to already it's wonder going it it's have you're So,

Linda Bolton-Weiser

Okay.

more that kind So, introducing ongoing or there's savings still in productivity can finding you an savings of is there any such meaningful XXXX? possibility program get that

John DeSimone

made always as couple much the I said, in I'm implementing a were savings commitment what was of I versus of that a the we commit areas improvement point give least tell in provide we about in program that guidance expected still margins made Until reinvesting how we do. next last not business. quarters will you publicly line February, to year. won't be over that with flat of the XXXX. XXX-basis we'll already to be at going hit bottom falls are to for We'll guidance, that that the to We we've to ago -- couple drive the in going year, I cost-savings can like

as update there That's So to on give an the restructuring. that had implies savings you point are going in incremental we XXXX. we months programs the cost commitment. talk savings and that That's now, besides active any what a about over working XXX year we'll we're least find. basis we're minimum next to But cost few at improvement

Linda Bolton-Weiser

impact, But do can us down on you guess Okay. said what me much mix gross could a or China driver negative what was that's being mix factors of something. just that so to Just final China I remind had question country then just think I you are? and you if be higher is margin? the remind region margin. my that? would with And margin. The mix gross or Is the

John DeSimone

for margin, higher a higher is China higher sure, but one gross margin. much right? has gross so Well, all profit, China has not operating

a Then which bigger country. of matter be So just it's that would a driver.

gross average. company profit the lower a has course, of India, than So,

probably margin rest on the China dollar where There X because if be sold the are currencies product made, meaningfully company. are the that is has nuances the big those would than profit in So But drivers. manufactured that gross based have driver biggest mix other single a versus weakened. of higher the

Operator

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

Karru Martinson

imagination in? the like every vegan Is or launches, ones that's more the And we're and clean quarter the seeing it product like to how feels out my we've rolled it a are new coming everything and date? lot that labeling performing

John DeSimone

Well, yes, this is I'll John. that take one.

just So, a we've highlighting our in the it than products. new part we of these it It and I lot past. we're have important on more talking launched think is calls consistently of about strategy. an Maybe

important some a build. we slow that this think launch build. slow it's realize And to I not when companies the big I get think of other to that's a get comp that it's it's don't they a We in the It's a pipeline that when new pipeline And comparison strength this product, and say pipeline. model get product. actually our new every big I year. big a is launch you

to incremental great are participated it's And launched, initially. for not the it but customers the seller it's a gels we well, And does huge so, that early like in the not I vegan going line in bring otherwise us, our do brand, for and It's but have sold our out days. in would those think just brand.

thing. big it these for new part launches. there That's stream products when steady new maybe of comes quarter every to modeling And our comp years. growth pipelines have know for out to a product So important of the that's But business, be you just important an don't coming our strategy. most will

Karru Martinson

need Okay. it kind truly the turnaround volume of dependent up? new get we have? is on Or to just existing distributor of And when the then products, volumes, you a is we fleet productivity that look with distributors to the the the

John DeSimone

selling, Well, can have to I current have sales, or higher productivity. you ways bit there that more more I from selling. can productivity Their can customers them everything, little are come it's getting their customers. people mean, them a grow from so of higher are higher The productivity different people right? You mean having okay?

why each those But more are has reach these every is to focused at put big that and looking of the way you've those emphasis talking it's is the other detriment it's that are rebuild the new quickest because sellers about, on term that. of each one Stephan short focused the generating seen the programs. on do on not one which and things. We We're foundation of But a greatest we to in elements.

Karru Martinson

gross on inputs, declining the we at nice that the any just or that inputs that the is inputs we pricing sustainable your margin. in coming was response there And lastly, if should down? have for Is something not competitive a tailwind the look keep just sense

John DeSimone

Well, they only came down slightly.

was So plants. within the profit in our biggest actually benefit better gross efficiencies own

reduce because sales year, a in last last huge inventory. the was year. program there So to to performance reaction

of happened getting stabilized us inventory talking was what's is single right? manufacturing reduction and around, price, shut been have built the Sales not turned that in back And our inventory and variances biggest but that's way down impact a the in lot in This our up cost was and factories. and within more factories so that last year, factories the have cost the unfavorable gave about year. side running, side,

The quarter only a was real high last costs or year third came input point. quarter, of last down slightly

expect also So I or on increases expect I price input. on big decreases price actually decreases big don't input. don't

think what have what year pretty right with I consistent expect any meaningful So to without we changes. next just we have now is

Operator

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

Robert Rigby

This Bill. Rob on for is

and see address? I us, maybe kind And encouraging this plans like to to the what forward? other of thoughts of any your for maybe pacing question obviously, 'XXs you terms the repaying you'd are moving guys So first in What than of guess debt.

John DeSimone

sure. Yes,

do to the are XXXXs paying it some of debt? year. penalties as down XXXX. in early cash priority, pay we through we'll look that we And probably that, the refinance. are the and that to generate further then even September maybe obviously, So first is, But do question beyond There us takes down next how or

I trajectory a slightly, but it basis, constant on of think currency margins, given basis on was down flat. a our were the know sales I reported

I So comes growing. sales Hopefully, have we inflection year the and next stabilized. start think

refinance margin in stronger maybe much 'XX profile is pay have a penalties. more without little we flexibility Our to it was, and than down

thinking. broad some on our that's strokes So

lot exception where about basically It's require generate down That think interest going that also that the forward. forward today between end with pay costs severance are key and gets down changes $X $X the billion I the in to of the now XXXX, today. the doesn't monologue. we we the get then on just we our assumptions And with we savings go of as of pay kind I those from debt. the with ability I any which announced to And to of think a the billion of restructuring. kind cash that can goal is flow used

think in XXXX, XXXX. I though are in debt CapEx a down CapEx, also by they even come isn't pay reduction going after the models to to down

it is pay which on XXXX. we on and best ability XXXX will flow circumstances reasonable the whatever based are penalty circumstances. a now to whether think economics based we'll pay the actually for to generation economics it a refinance in or between for cash it the mechanism us depend our So the down earlier, the whatever can down from are, pay we do at standpoint on I The do time

Robert Rigby

reducing that CapEx, it after terms Is going CapEx could I kind then helpful. were maybe And about would discuss of thinking you maybe that sounded forward plans any response, that correct? sorry, of of if And guess kind you super like in be in XXXX.

John DeSimone

Yes.

manufacturing will things, down have too. more will after in to are come and XXXX. we some that significantly in spend for projects we packaging some changes tech And next come next that year, have and that some online year, So coming down invest still

we think just I and year, we we So be will for be below I thinking next current haven't year, where think XXXX XXXX I previous XXXX that said our that that, want been below with consistent below next reiterate guided but XXXX. And it's to will communications think is XXXX.

Operator

turn gentlemen, back for to Michael and now closing like would to the remarks. call this time, I Ladies over at

Michael Johnson

go thanks, And sit this talking and we everybody, I'm points our line and for for these, through questions. XXXX Stephan your in and the about I'm and being quarter. about excited at us your gives just decline set and a them into net we're at in because thinking you, Thank down X. just Thanks with me I meeting. John this. notes with of for We had sales Board positivity looking looking that see questions, is in and of quarter X I'm sales and narrowing, decline expectations. pretty The quarter the coming

debt going XX.X% up lower is of of adjusted XX, is solidifying fully to cash at million position. $XX my more. cash news. excellent September leverage company's of reduced. activities even Total flat good facility all We're as EBITDA news. repaid provided wheelhouse. operating We've it September. guidance, in year-on-year. This news. great undrawn yearly by the I adjusted credit EBITDA end margins ratio adjusted the revolving sales X.X million. XXXX love this, exceeded Net generation, Strong We've raised EBITDA $XXX Net X our Quarter expectations,

key. distributors, New is the is This key. this

team and increase there building the consecutive Eric second XX% and and year-on-year working base distributors. training rebuilding are worldwide. the out We're with It's these stronger. got distributor and quarter our Stephan We've improvement. year-on-year of

growing their into mix, best are this who cited pulling high-level special and their training motivating to Eric further in adding this distributors in distributors before. business, ever something We've in Stephan ideas business, who worldwide, opportunities have company and from We really generating for interested are the than got come this more and into and through to will Herbalife. time bit say a could of magic but of wish that to time I number, we've in coming believed very, see to rebuild I've moment a an that take a happen, bit I going you give little end this. always soon. is a been to a very downturn. We little distributors

me, X was believe Our morning in category, driverless. but funny. tough Waymo We I this one, yes, were It's cars and we it strongly. it's next people. to a in driving watch

figure So out business. people many wealth in building, to never away. warehouse. figure opportunities companies those build care are health individual more of We're automated I out are get trying an driverless, and don't their lives if in, people's to trying how how wealth to nutrition. I to to people and get more for don't if in it's opportunity go it's going care out

anywhere. management in people stronger more want going to We've great people healthier. got mix, We're better team. helping communities, We've a of this a and group wholeheartedly. We got great distributors. model isn't in believe get we going Herbalife, It it. building at get our At

who know company's challenges to to what know with Our and we We We accomplish transform our wider get mission. We're are, it customers and this single the us. bigger better get just strength every lives got and see are. their love They here build better. day.

if wouldn't it it, say Herbalife. grow, So didn't me let's let's be I go,

Thanks, next guys. you We'll see quarter.

Operator

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

You disconnect. now may

Herbalife Nutrition (HLF) 30 Oct 242024 Q3 Earnings call transcript