Herbalife Reports Third Quarter 2024 Results, Net Sales In Line with Expectations, Adjusted EBITDA¹ Exceeds Guidance; Raised Full-Year Adjusted EBITDA¹ Guidance
Herbalife (NYSE: HLF) reported Q3 2024 financial results with net sales of $1.2 billion, down 3.2% year-over-year, including 290 basis points of FX headwinds. The company posted net income of $47.4 million and adjusted EBITDA of $166.5 million, exceeding guidance. Gross profit margin improved to 78.3% from 76.3% in Q3 2023. The company raised its full-year adjusted EBITDA guidance to $590-620 million and narrowed its net sales guidance to -2.0% to -1.0% year-over-year. New distributor recruitment increased 14% worldwide, marking the second consecutive quarter of growth.
Herbalife (NYSE: HLF) ha riportato i risultati finanziari del terzo trimestre 2024 con vendite nette di 1,2 miliardi di dollari, in calo del 3,2% rispetto all'anno precedente, inclusi 290 punti base di impatti valutari. L'azienda ha registrato un utile netto di 47,4 milioni di dollari e un EBITDA rettificato di 166,5 milioni di dollari, superando le previsioni. Il margine di profitto lordo è migliorato al 78,3% rispetto al 76,3% nel terzo trimestre del 2023. L'azienda ha aumentato la sua guida per l'EBITDA rettificato dell'intero anno a 590-620 milioni di dollari e ha ristretto le previsioni sulle vendite nette a una flessione del -2,0% a -1,0% rispetto all'anno precedente. Il reclutamento di nuovi distributori è aumentato del 14% a livello globale, segnando il secondo trimestre consecutivo di crescita.
Herbalife (NYSE: HLF) reportó los resultados financieros del tercer trimestre de 2024 con ventas netas de 1.2 mil millones de dólares, una disminución del 3.2% interanual, incluyendo 290 puntos básicos de dificultades cambiarias. La empresa registró un ingreso neto de 47.4 millones de dólares y un EBITDA ajustado de 166.5 millones de dólares, superando las proyecciones. El margen de ganancia bruta mejoró al 78.3% desde el 76.3% en el tercer trimestre de 2023. La empresa elevó su guía de EBITDA ajustado para todo el año a 590-620 millones de dólares y ajustó su guía de ventas netas a una caída de -2.0% a -1.0% interanual. El reclutamiento de nuevos distribuidores aumentó un 14% en todo el mundo, marcando el segundo trimestre consecutivo de crecimiento.
허벌라이프 (NYSE: HLF)는 2024년 3분기 재무 결과를 보고하며 순매출 12억 달러를 기록하였으며, 이는 전년 대비 3.2% 감소한 수치로, 외환 영향으로 290 베이시스 포인트의 타격을 받았습니다. 회사는 순이익 4740만 달러와 조정된 EBITDA 1억 6650만 달러를 기록하여 예상치를 초과했습니다. 총 이익률은 2023년 3분기 76.3%에서 78.3%로 개선되었습니다. 회사는 연간 조정 EBITDA 가이드를 5억 9000만 - 6억 2000만 달러로 상향 조정하였고, 순매출 가이드는 전년 대비 -2.0%에서 -1.0%로 좁혔습니다. 전 세계적으로 신규 유통업체 모집이 14% 증가하여 두 번째 연속 분기 성장세를 보였습니다.
Herbalife (NYSE: HLF) a publié les résultats financiers du troisième trimestre 2024, avec un chiffre d'affaires net de 1,2 milliard de dollars, en baisse de 3,2% par rapport à l'année précédente, incluant 290 points de base de vents contraires liés aux changes. L'entreprise a affiché un revenu net de 47,4 millions de dollars et un EBITDA ajusté de 166,5 millions de dollars, dépassant les prévisions. La marge brute de profit s'est améliorée pour atteindre 78,3% contre 76,3% au troisième trimestre 2023. L'entreprise a relevé sa prévision d'EBITDA ajusté pour l'année entière à 590-620 millions de dollars et a affiné sa prévision de chiffre d'affaires net à une baisse de -2,0% à -1,0% par rapport à l'année précédente. Le recrutement de nouveaux distributeurs a augmenté de 14% dans le monde entier, marquant le deuxième trimestre consécutif de croissance.
Herbalife (NYSE: HLF) hat die finanziellen Ergebnisse für das 3. Quartal 2024 veröffentlicht, mit Nettoverkäufen von 1,2 Milliarden USD, was einem Rückgang von 3,2% im Vergleich zum Vorjahr entspricht, einschließlich 290 Basispunkten negativen Währungsimpact. Das Unternehmen verzeichnete ein Nettoergebnis von 47,4 Millionen USD und ein bereinigtes EBITDA von 166,5 Millionen USD, was die Prognosen übertraf. Die Bruttogewinnmarge verbesserte sich auf 78,3% im Vergleich zu 76,3% im 3. Quartal 2023. Das Unternehmen hob die Jahresprognose für das bereinigte EBITDA auf 590-620 Millionen USD an und verengte die Prognose für die Nettoverkäufe auf -2,0% bis -1,0% im Jahresvergleich. Die Rekrutierung neuer Vertriebspartner stieg weltweit um 14%, was das zweite aufeinanderfolgende Quartal mit Wachstum markiert.
- Adjusted EBITDA of $166.5 million exceeded guidance
- Gross profit margin improved to 78.3% from 76.3% YoY
- New distributor recruitment increased 14% YoY
- Raised full-year adjusted EBITDA guidance to $590-620 million
- Total leverage ratio reduced to 3.3x
- Restructuring program expected to deliver $80 million annual savings by 2025
- Net sales declined 3.2% YoY to $1.2 billion
- Volume points decreased 5.4% YoY globally
- North America sales declined 6.3%
- China sales dropped 16.4%
- Diluted EPS decreased to $0.46 from previous year
Insights
The Q3 results show mixed performance with some concerning trends but also positive developments. Net sales of
Key positives include worldwide distributor recruitment up
The multilevel marketing industry dynamics reflected in this report deserve attention. While new distributor recruitment is up
The regional performance varies significantly - Latin America shows resilience with
“Our financial foundation is strong. Third quarter net sales were in line with our expectations, adjusted EBITDA1 exceeded guidance and distributor recruiting is up worldwide year-over-year. Our new business initiatives are taking root as we continue on our path to sustainable top-line growth.” - Michael Johnson, Chairman and CEO
Highlights
Third Quarter 2024
-
Net sales of
, down$1.2 billion 3.2% vs. Q3 ’23 including 290 basis points of FX headwinds- Net sales nearly flat year-over-year on constant currency basis2
-
Net income of
; adjusted net income1 of$47.4 million $58.0 million -
Adjusted EBITDA1 of
exceeds guidance; adjusted EBITDA1 margin up 70 basis points year-over-year$166.5 million -
Recognized pre-tax gain on sale of property of approximately
; excluded from adjusted results$4 million -
Diluted EPS of
; adjusted diluted EPS1 of$0.46 $0.57 -
Net cash provided by operating activities of
; capital expenditures of approximately$99.5 million $27 million -
Credit Agreement EBITDA1
; total leverage ratio reduced to 3.3x at September 30$197.2 million
Outlook
- Fourth quarter 2024 guidance provided
- Full-year 2024 guidance revised: net sales range narrowed, adjusted EBITDA1 raised, capital expenditures top end of range reduced
_________________________
1 Non-GAAP measure. Refer to Schedule A – “Reconciliation of Non-GAAP Financial Measures” for a detailed reconciliation of these measures to the most directly comparable
2 Growth/decline in net sales excluding the effects of foreign exchange is based on “net sales in local currency,” a non-GAAP financial measure. Refer to Schedule A – “Reconciliation of Non-GAAP Financial Measures” for a discussion of why the Company believes adjusting for the effects of foreign exchange is useful.
Management Commentary
Herbalife reported third quarter 2024 net sales of
Third quarter gross profit margin improved to
Net income was
Net cash provided by operating activities was
During the first quarter of 2024, the Company initiated a Restructuring Program designed to bring leadership closer to its markets, streamline the employee structure and accelerate productivity. Substantially all actions related to the program were completed as of June 30, with the remainder to be completed by the end of 2024. The Restructuring Program is expected to deliver annual savings of at least
In July, the Company completed the sale and a sixteen-month leaseback transaction of its office building in
“Our margins have improved year-over-year, and we continue to strengthen our financial foundation,” said John DeSimone, Chief Financial Officer. “We paid down debt in the quarter. Our total leverage ratio is down to 3.3x at September 30 and we are on track to reduce our total leverage ratio to 3.0x by the end of 2025, as well as reduce total debt by
For the third quarter of 2024, the number of new distributors joining Herbalife worldwide increased
In August, the Company launched its all-new Diamond Development Mastermind Program in the
Extravaganza training events also continued in September and October. Approximately 37,300 attendees convened at events in
On September 21, independent distributors, fitness enthusiasts and employees participated in the Herbalife 2024 Worldwide Workout, demonstrating their unique ability to activate their communities through a healthy active lifestyle. During the event, the Company set a new GUINNESS WORLD RECORDS™ title for the Largest High-Intensity Interval Training Class across multiple venues. Over 4,900 individuals took part in workouts at host sites in
“We see a new and exciting energy all across Herbalife,” said Michael Johnson. “We are providing opportunities for our distributors to enhance their skills and create a community for their customers through good nutrition and health and wellness. In our 44 years as a company, our impact continues to stand on its own merit.”
Third Quarter and Year to Date 2024 Key Metrics
Regional Net Sales and Foreign Exchange (“FX”) Impact
|
Reported Net Sales |
|
YoY Growth (Decline) |
||||||
$ million |
Q3 ‘24 |
Q3 ‘23 |
|
including FX |
excluding FX2 |
||||
|
$ |
260.4 |
$ |
277.8 |
|
(6.3 |
)% |
(6.2 |
)% |
|
|
207.1 |
|
212.0 |
|
(2.3 |
)% |
9.4 |
% |
EMEA |
|
261.9 |
|
261.0 |
|
0.3 |
% |
2.2 |
% |
|
|
436.1 |
|
441.0 |
|
(1.1 |
)% |
0.8 |
% |
|
|
74.8 |
|
89.5 |
|
(16.4 |
)% |
(17.3 |
)% |
Worldwide |
$ |
1,240.3 |
$ |
1,281.3 |
|
(3.2 |
)% |
(0.3 |
)% |
|
Reported Net Sales |
|
YoY Growth (Decline) |
||||||
$ million |
YTD ‘24 |
YTD ‘23 |
|
including FX |
excluding FX2 |
||||
|
$ |
809.4 |
$ |
878.6 |
|
(7.9 |
)% |
(7.9 |
)% |
|
|
633.0 |
|
624.5 |
|
1.4 |
% |
5.4 |
% |
EMEA |
|
827.6 |
|
818.7 |
|
1.1 |
% |
4.1 |
% |
|
|
1,284.0 |
|
1,280.4 |
|
0.3 |
% |
3.0 |
% |
|
|
231.7 |
|
245.2 |
|
(5.5 |
)% |
(3.1 |
)% |
Worldwide |
$ |
3,785.7 |
$ |
3,847.4 |
|
(1.6 |
)% |
0.8 |
% |
Regional Volume Point Metrics
|
Volume Points |
||||||||
in millions |
Q3 ‘24 |
Q3 ‘23 |
YoY % Chg. |
|
YTD ‘24 |
YTD ‘23 |
YoY % Chg. |
||
|
253.3 |
282.4 |
(10.3 |
)% |
|
790.0 |
910.3 |
(13.2 |
)% |
|
262.5 |
258.7 |
1.5 |
% |
|
771.0 |
788.6 |
(2.2 |
)% |
EMEA |
269.1 |
297.9 |
(9.7 |
)% |
|
867.0 |
943.4 |
(8.1 |
)% |
|
547.8 |
563.5 |
(2.8 |
)% |
|
1,596.4 |
1,599.2 |
(0.2 |
)% |
|
56.4 |
66.3 |
(14.9 |
)% |
|
172.7 |
177.5 |
(2.7 |
)% |
Worldwide(b) |
1,389.1 |
1,468.8 |
(5.4 |
)% |
|
4,197.1 |
4,419.0 |
(5.0 |
)% |
Note: During Q2 ‘24, most markets within the
(a) |
Excluding the Volume Point adjustments noted above, the year-over-year percentage change for Q3 ’24 and YTD ‘24 would have been a decrease of |
|
(b) |
Excluding the Volume Point adjustments noted above, the year-over-year percentage change for Q3 ’24 and YTD ‘24 would have been a decrease of |
Outlook
Fourth Quarter 2024 Guidance
$ million |
Q4 ‘24 Guidance |
Q4 ‘23 Results |
Net sales |
(3.0)% to + |
1,215.0 |
Adjusted EBITDA1 |
105 – 135 |
108.8 |
Capital expenditures |
25 – 45 |
35.3 |
Full-Year 2024 Guidance – Revised
$ million |
FY ‘24 Guidance
|
|
FY ‘24 Guidance (as of Jul 31 ’24) |
FY ‘23 Results |
Net sales |
(2.0)% to (1.0)% YoY |
Narrowed Range |
(3.5)% to + |
5,062.4 |
Adjusted EBITDA1 |
590 – 620 |
Raised |
560 – 600 |
570.6 |
Capital expenditures |
120 – 140 |
Reduced |
120 – 150 |
135.0 |
Earnings Webcast and Conference Call
Herbalife’s senior management team will host a live audio webcast and conference call to discuss its third quarter 2024 financial results on Wednesday, October 30, 2024, at 5:30 p.m. ET (2:30 p.m. PT).
The live audio webcast will be available at the following link: https://edge.media-server.com/mmc/p/i5tx7naj.
Participants joining via the conference call may obtain the dial-in information and personal PIN to access the call by registering at the following link: https://register.vevent.com/register/BIe4627c57c8fd4c99b8cda37657987d7c.
Senior management also plans to reference slides during the webcast and call, which will be available under the Investor Relations section of Herbalife’s website at https://ir.herbalife.com, where financial and other information is posted from time to time. The live webcast will also be available at the same website, along with a replay of the webcast following the completion of the event and for 12 months thereafter.
About Herbalife Ltd.
Herbalife (NYSE: HLF) is a premier health and wellness company, community and platform that has been changing people's lives with great nutrition products and a business opportunity for its independent distributors since 1980. The Company offers science-backed products to consumers in more than 90 markets through entrepreneurial distributors who provide one-on-one coaching and a supportive community that inspires their customers to embrace a healthier, more active lifestyle to live their best life.
For more information, visit https://ir.herbalife.com.
Forward-Looking Statements
This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management, including for future operations, capital expenditures, or share repurchases; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief or expectation; and any statements of assumptions underlying any of the foregoing or other future events. Forward-looking statements may include, among others, the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “anticipate” or any other similar words.
Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results or outcomes could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include the following:
- the potential impacts of current global economic conditions, including inflation, on us; our Members, customers, and supply chain; and the world economy;
- our ability to attract and retain Members;
- our relationship with, and our ability to influence the actions of, our Members;
-
our noncompliance with, or improper action by our employees or Members in violation of, applicable
U.S. and foreign laws, rules, and regulations; - adverse publicity associated with our Company or the direct-selling industry, including our ability to comfort the marketplace and regulators regarding our compliance with applicable laws;
- changing consumer preferences and demands and evolving industry standards, including with respect to climate change, sustainability, and other environmental, social, and governance, or ESG, matters;
- the competitive nature of our business and industry;
- legal and regulatory matters, including regulatory actions concerning, or legal challenges to, our products or network marketing program and product liability claims;
- the Consent Order entered into with the Federal Trade Commission, or FTC, the effects thereof and any failure to comply therewith;
-
risks associated with operating internationally and in
China ; - our ability to execute our growth and other strategic initiatives, including implementation of our restructuring initiatives, and increased penetration of our existing markets;
-
any material disruption to our business caused by natural disasters, other catastrophic events, acts of war or terrorism, including the war in
Ukraine , cybersecurity incidents, pandemics, and/or other acts by third parties; - our ability to adequately source ingredients, packaging materials, and other raw materials and manufacture and distribute our products;
- our reliance on our information technology infrastructure;
- noncompliance by us or our Members with any privacy laws, rules, or regulations or any security breach involving the misappropriation, loss, or other unauthorized use or disclosure of confidential information;
- contractual limitations on our ability to expand or change our direct-selling business model;
- the sufficiency of our trademarks and other intellectual property;
- product concentration;
- our reliance upon, or the loss or departure of any member of, our senior management team;
- restrictions imposed by covenants in the agreements governing our indebtedness;
- risks related to our convertible notes;
- changes in, and uncertainties relating to, the application of transfer pricing, income tax, customs duties, value added taxes, and other tax laws, treaties, and regulations, or their interpretation;
-
our incorporation under the laws of the
Cayman Islands ; and - share price volatility related to, among other things, speculative trading and certain traders shorting our common shares.
Additional factors and uncertainties that could cause actual results or outcomes to differ materially from our forward-looking statements are set forth in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024, filed with the Securities and Exchange Commission on October 30, 2024, including under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our Condensed Consolidated Financial Statements and the related Notes included therein, and Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and Exchange Commission on February 14, 2024, including under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our Consolidated Financial Statements and the related Notes included therein. In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
Forward-looking statements made in this release speak only as of the date hereof. We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.
Results of Operations
Herbalife Ltd. and Subsidiaries | ||||||||||||||||
Condensed Consolidated Statements of Income | ||||||||||||||||
(in millions, except per share amounts) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|||||
(unaudited) |
||||||||||||||||
$ |
260.4 |
|
$ |
277.8 |
|
$ |
809.4 |
|
$ |
878.6 |
|
|||||
|
207.1 |
|
|
212.0 |
|
|
633.0 |
|
|
624.5 |
|
|||||
EMEA |
|
261.9 |
|
|
261.0 |
|
|
827.6 |
|
|
818.7 |
|
||||
|
436.1 |
|
|
441.0 |
|
|
1,284.0 |
|
|
1,280.4 |
|
|||||
|
74.8 |
|
|
89.5 |
|
|
231.7 |
|
|
245.2 |
|
|||||
Worldwide Net sales |
|
1,240.3 |
|
|
1,281.3 |
|
|
3,785.7 |
|
|
3,847.4 |
|
||||
Cost of sales |
|
268.7 |
|
|
303.2 |
|
|
836.8 |
|
|
903.4 |
|
||||
Gross profit |
|
971.6 |
|
|
978.1 |
|
|
2,948.9 |
|
|
2,944.0 |
|
||||
Royalty overrides |
|
405.5 |
|
|
416.1 |
|
|
1,236.0 |
|
|
1,261.8 |
|
||||
Selling, general, and administrative expenses |
|
444.0 |
|
|
455.3 |
|
|
1,438.5 |
|
|
1,391.7 |
|
||||
Other operating income (1) |
|
(5.0 |
) |
|
- |
|
|
(5.0 |
) |
|
(10.1 |
) |
||||
Operating income |
|
127.1 |
|
|
106.7 |
|
|
279.4 |
|
|
300.6 |
|
||||
Interest expense, net |
|
56.5 |
|
|
38.5 |
|
|
152.1 |
|
|
116.3 |
|
||||
Other expense (income), net (2) |
|
- |
|
|
(1.0 |
) |
|
10.5 |
|
|
(1.0 |
) |
||||
Income before income taxes |
|
70.6 |
|
|
69.2 |
|
|
116.8 |
|
|
185.3 |
|
||||
Income taxes |
|
23.2 |
|
|
26.4 |
|
|
40.4 |
|
|
53.3 |
|
||||
Net income | $ |
47.4 |
|
$ |
42.8 |
|
$ |
76.4 |
|
$ |
132.0 |
|
||||
Weighted-average shares outstanding: | ||||||||||||||||
Basic |
|
100.9 |
|
|
99.2 |
|
|
100.4 |
|
|
98.9 |
|
||||
Diluted |
|
101.9 |
|
|
100.4 |
|
|
101.4 |
|
|
100.0 |
|
||||
Earnings per share: | ||||||||||||||||
Basic | $ |
0.47 |
|
$ |
0.43 |
|
$ |
0.76 |
|
$ |
1.33 |
|
||||
Diluted | $ |
0.46 |
|
$ |
0.43 |
|
$ |
0.75 |
|
$ |
1.32 |
|
||||
(1) Other operating income for the three and nine months ended September 30, 2024 and nine months ended September 30, 2023 relates to certain |
||||||||||||||||
(2) Other expense, net for the nine months ended September 30, 2024 relates to loss on extinguishment of 2018 Credit Facility, as well as partial redemption and private repurchase of 2025 Notes. Other income, net for the three and nine months ended September 30, 2023 relates to gain on extinguishment of a portion of 2024 Convertible Notes. |
Herbalife Ltd. and Subsidiaries |
||||||||
Condensed Consolidated Balance Sheets |
||||||||
(in millions) |
||||||||
September 30, | December 31, | |||||||
|
2024 |
|
|
2023 |
|
|||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets: | ||||||||
Cash and cash equivalents | $ |
402.5 |
|
$ |
575.2 |
|
||
Receivables, net |
|
82.0 |
|
|
81.2 |
|
||
Inventories |
|
515.3 |
|
|
505.2 |
|
||
Prepaid expenses and other current assets |
|
244.8 |
|
|
237.7 |
|
||
Total Current Assets |
|
1,244.6 |
|
|
1,399.3 |
|
||
Property, plant and equipment, net |
|
463.3 |
|
|
506.5 |
|
||
Operating lease right-of-use assets |
|
187.7 |
|
|
185.8 |
|
||
Marketing-related intangibles and other intangible assets, net |
|
312.7 |
|
|
314.0 |
|
||
Goodwill |
|
93.1 |
|
|
95.4 |
|
||
Other assets |
|
352.1 |
|
|
308.4 |
|
||
Total Assets | $ |
2,653.5 |
|
$ |
2,809.4 |
|
||
LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ |
86.6 |
|
$ |
84.0 |
|
||
Royalty overrides |
|
332.1 |
|
|
343.4 |
|
||
Current portion of long-term debt |
|
283.3 |
|
|
309.5 |
|
||
Other current liabilities |
|
583.0 |
|
|
540.7 |
|
||
Total Current Liabilities |
|
1,285.0 |
|
|
1,277.6 |
|
||
Non-current liabilities: | ||||||||
Long-term debt, net of current portion |
|
1,977.9 |
|
|
2,252.9 |
|
||
Non-current operating lease liabilities |
|
167.3 |
|
|
167.6 |
|
||
Other non-current liabilities |
|
177.5 |
|
|
171.6 |
|
||
Total Liabilities |
|
3,607.7 |
|
|
3,869.7 |
|
||
Commitments and Contingencies | ||||||||
Shareholders' deficit: | ||||||||
Common shares |
|
0.1 |
|
|
0.1 |
|
||
Paid-in capital in excess of par value |
|
267.0 |
|
|
233.9 |
|
||
Accumulated other comprehensive loss |
|
(235.4 |
) |
|
(232.0 |
) |
||
Accumulated deficit |
|
(985.9 |
) |
|
(1,062.3 |
) |
||
Total Shareholders' Deficit |
|
(954.2 |
) |
|
(1,060.3 |
) |
||
Total Liabilities and Shareholders' Deficit | $ |
2,653.5 |
|
$ |
2,809.4 |
|
||
Herbalife Ltd. and Subsidiaries | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(in millions) | ||||||||
Nine Months Ended September 30, | ||||||||
|
2024 |
|
|
2023 |
|
|||
(unaudited) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ |
76.4 |
|
$ |
132.0 |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization |
|
92.4 |
|
|
85.1 |
|
||
Share-based compensation expenses |
|
36.7 |
|
|
35.7 |
|
||
Non-cash interest expense |
|
9.4 |
|
|
5.5 |
|
||
Deferred income taxes |
|
(52.7 |
) |
|
(25.9 |
) |
||
Inventory write-downs |
|
17.0 |
|
|
21.9 |
|
||
Foreign exchange transaction (gain) loss |
|
11.9 |
|
|
(2.7 |
) |
||
Loss (gain) on extinguishment of debt |
|
10.5 |
|
|
(1.0 |
) |
||
Other |
|
3.8 |
|
|
2.9 |
|
||
Changes in operating assets and liabilities: | ||||||||
Receivables |
|
(3.6 |
) |
|
(11.8 |
) |
||
Inventories |
|
(41.7 |
) |
|
62.9 |
|
||
Prepaid expenses and other current assets |
|
(3.7 |
) |
|
(24.5 |
) |
||
Accounts payable |
|
0.9 |
|
|
(12.1 |
) |
||
Royalty overrides |
|
(2.3 |
) |
|
(8.8 |
) |
||
Other current liabilities |
|
62.1 |
|
|
13.6 |
|
||
Other |
|
(1.3 |
) |
|
(11.4 |
) |
||
Net cash provided by operating activities |
|
215.8 |
|
|
261.4 |
|
||
Cash flows from investing activities: | ||||||||
Purchases of property, plant and equipment |
|
(96.3 |
) |
|
(99.7 |
) |
||
Proceeds from sale and leaseback transaction, net of related expenses |
|
37.9 |
|
|
- |
|
||
Other |
|
(0.6 |
) |
|
0.1 |
|
||
Net cash used in investing activities |
|
(59.0 |
) |
|
(99.6 |
) |
||
Cash flows from financing activities: | ||||||||
Borrowings from senior secured credit facility and other debt, net of discount |
|
1,117.7 |
|
|
195.0 |
|
||
Principal payments on senior secured credit facility and other debt |
|
(1,655.0 |
) |
|
(278.1 |
) |
||
Repayment of convertible senior notes |
|
(197.0 |
) |
|
(64.3 |
) |
||
Proceeds from senior secured notes, net of discount |
|
778.4 |
|
|
- |
|
||
Repayment of senior notes |
|
(344.3 |
) |
|
- |
|
||
Debt issuance costs |
|
(22.4 |
) |
|
(1.8 |
) |
||
Share repurchases |
|
(5.7 |
) |
|
(9.7 |
) |
||
Other |
|
2.0 |
|
|
2.3 |
|
||
Net cash used in financing activities |
|
(326.3 |
) |
|
(156.6 |
) |
||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
(8.1 |
) |
|
(5.5 |
) |
||
Net change in cash, cash equivalents, and restricted cash |
|
(177.6 |
) |
|
(0.3 |
) |
||
Cash, cash equivalents, and restricted cash, beginning of period |
|
595.5 |
|
|
516.3 |
|
||
Cash, cash equivalents, and restricted cash, end of period | $ |
417.9 |
|
$ |
516.0 |
|
||
Supplemental Information
SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA and Credit Agreement EBITDA
In addition to its reported results calculated in accordance with
Management believes that such non-GAAP performance measures, when read in conjunction with the Company’s reported results, calculated in accordance with
The Company’s definitions and calculations as set forth in the tables below of adjusted net income, adjusted diluted EPS, adjusted EBITDA and credit agreement EBITDA may not be comparable to similarly titled measures used by other companies because other companies may not calculate them in the same manner as the Company does and should not be viewed in isolation from, nor as alternatives to, net income or diluted EPS calculated in accordance with
The Company does not provide a reconciliation of forward-looking adjusted EBITDA guidance to net income, the comparable
Currency Fluctuation
Our international operations have provided and will continue to provide a significant portion of our total net sales. As a result, total net sales will continue to be affected by fluctuations in the
The following is a reconciliation of net income to adjusted net income:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
$ million |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Net income | $ |
47.4 |
|
$ |
42.8 |
|
$ |
76.4 |
|
$ |
132.0 |
|
||||
Expenses related to Restructuring Program (1) (2) |
|
2.7 |
|
|
- |
|
|
68.2 |
|
|
- |
|
||||
Expenses related to Transformation Program (1) (2) |
|
- |
|
|
4.6 |
|
|
9.4 |
|
|
42.0 |
|
||||
Digital technology program costs (1) (2) |
|
5.1 |
|
|
12.1 |
|
|
22.1 |
|
|
22.6 |
|
||||
Gain on sale of property (1) (2) |
|
(4.0 |
) |
|
- |
|
|
(4.0 |
) |
|
- |
|
||||
|
- |
|
|
8.6 |
|
|
- |
|
|
8.6 |
|
|||||
Loss (gain) on extinguishment of debt (1) (2) |
|
- |
|
|
(1.0 |
) |
|
10.5 |
|
|
(1.0 |
) |
||||
Income tax adjustments for above items (1) (2) |
|
6.8 |
|
|
(1.8 |
) |
|
(20.5 |
) |
|
(11.0 |
) |
||||
Adjusted net income | $ |
58.0 |
|
$ |
65.3 |
|
$ |
162.1 |
|
$ |
193.2 |
|
||||
The following is a reconciliation of diluted earnings per share to adjusted diluted earnings per share:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
$ per share |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Diluted earnings per share | $ |
0.46 |
|
$ |
0.43 |
|
$ |
0.75 |
|
$ |
1.32 |
|
||||
Expenses related to Restructuring Program (1) (2) |
|
0.03 |
|
|
- |
|
|
0.68 |
|
|
- |
|
||||
Expenses related to Transformation Program (1) (2) |
|
- |
|
|
0.05 |
|
|
0.10 |
|
|
0.42 |
|
||||
Digital technology program costs (1) (2) |
|
0.05 |
|
|
0.12 |
|
|
0.22 |
|
|
0.23 |
|
||||
Gain on sale of property (1) (2) |
|
(0.04 |
) |
|
- |
|
|
(0.04 |
) |
|
- |
|
||||
|
- |
|
|
0.09 |
|
|
- |
|
|
0.09 |
|
|||||
Loss (gain) on extinguishment of debt (1) (2) |
|
- |
|
|
(0.01 |
) |
|
0.10 |
|
|
(0.01 |
) |
||||
Income tax adjustments for above items (1) (2) |
|
0.07 |
|
|
(0.02 |
) |
|
(0.20 |
) |
|
(0.11 |
) |
||||
Adjusted diluted earnings per share (5) | $ |
0.57 |
|
$ |
0.65 |
|
$ |
1.61 |
|
$ |
1.93 |
|
||||
The following is a reconciliation of net income to EBITDA, adjusted EBITDA and Credit Agreement EBITDA and Credit Agreement total leverage ratio:
Three Months Ended | TTM | ||||||||||||||||||||
$ million | Sep 30 '23 | Dec 31 '23 | Mar 31 '24 | Jun 30 '24 | Sep 30 '24 | Sep 30 '24 | |||||||||||||||
Net sales | $ |
1,281.3 |
|
$ |
1,215.0 |
|
$ |
1,264.3 |
|
$ |
1,281.1 |
|
$ |
1,240.3 |
|
$ |
5,000.7 |
|
|||
Net income | $ |
42.8 |
|
$ |
10.2 |
|
$ |
24.3 |
|
$ |
4.7 |
|
$ |
47.4 |
|
$ |
86.6 |
|
|||
Interest expense, net |
|
38.5 |
|
|
38.1 |
|
|
37.9 |
|
|
57.7 |
|
|
56.5 |
|
|
190.2 |
|
|||
Income taxes |
|
26.4 |
|
|
7.5 |
|
|
9.7 |
|
|
7.5 |
|
|
23.2 |
|
|
47.9 |
|
|||
Depreciation and amortization |
|
28.4 |
|
|
28.2 |
|
|
29.2 |
|
|
32.6 |
|
|
30.6 |
|
|
120.6 |
|
|||
EBITDA |
|
136.1 |
|
|
84.0 |
|
|
101.1 |
|
|
102.5 |
|
|
157.7 |
|
|
445.3 |
|
|||
Amortization of SaaS implementation costs |
|
2.9 |
|
|
3.1 |
|
|
3.6 |
|
|
8.7 |
|
|
5.0 |
|
|
20.4 |
|
|||
Expenses related to Restructuring Program |
|
- |
|
|
- |
|
|
16.7 |
|
|
48.8 |
|
|
2.7 |
|
|
68.2 |
|
|||
Expenses related to Transformation Program |
|
4.6 |
|
|
12.2 |
|
|
5.9 |
|
|
3.5 |
|
|
- |
|
|
21.6 |
|
|||
Digital technology program costs |
|
12.1 |
|
|
9.5 |
|
|
11.0 |
|
|
6.0 |
|
|
5.1 |
|
|
31.6 |
|
|||
Gain on sale of property |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(4.0 |
) |
|
(4.0 |
) |
|||
|
8.6 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||||
Loss (gain) on extinguishment of debt |
|
(1.0 |
) |
|
- |
|
|
- |
|
|
10.5 |
|
|
- |
|
|
10.5 |
|
|||
Adjusted EBITDA |
|
163.3 |
|
|
108.8 |
|
|
138.3 |
|
|
180.0 |
|
|
166.5 |
|
|
593.6 |
|
|||
Interest income |
|
3.2 |
|
|
3.2 |
|
|
3.7 |
|
|
2.8 |
|
|
2.8 |
|
|
12.5 |
|
|||
Inventory write-downs |
|
5.0 |
|
|
6.6 |
|
|
4.7 |
|
|
6.7 |
|
|
5.6 |
|
|
23.6 |
|
|||
Share-based compensation expenses |
|
13.7 |
|
|
12.3 |
|
|
11.9 |
|
|
11.8 |
|
|
13.0 |
|
|
49.0 |
|
|||
Other expenses (3) |
|
(3.8 |
) |
|
11.8 |
|
|
0.9 |
|
|
6.7 |
|
|
9.3 |
|
|
28.7 |
|
|||
Credit Agreement EBITDA | $ |
181.4 |
|
$ |
142.7 |
|
$ |
159.5 |
|
$ |
208.0 |
|
$ |
197.2 |
|
$ |
707.4 |
|
|||
Credit Agreement Total Debt (4) | $ |
2,337.5 |
|
||||||||||||||||||
Credit Agreement Total Leverage Ratio | 3.3x | ||||||||||||||||||||
Net income margin |
|
3.3 |
% |
|
0.8 |
% |
|
1.9 |
% |
|
0.4 |
% |
|
3.8 |
% |
|
1.7 |
% |
|||
Adjusted EBITDA margin |
|
12.7 |
% |
|
9.0 |
% |
|
10.9 |
% |
|
14.1 |
% |
|
13.4 |
% |
|
11.9 |
% |
|||
The following is a reconciliation of net income to EBITDA, adjusted EBITDA and Credit Agreement EBITDA and Credit Agreement total leverage ratio:
Nine Months Ended September 30, | Year Ended Dec 31, | ||||||||||
$ million |
|
2024 |
|
|
2023 |
|
|
2023 |
|
||
Net sales | $ |
3,785.7 |
|
$ |
3,847.4 |
|
$ |
5,062.4 |
|
||
Net income | $ |
76.4 |
|
$ |
132.0 |
|
$ |
142.2 |
|
||
Interest expense, net |
|
152.1 |
|
|
116.3 |
|
|
154.4 |
|
||
Income taxes |
|
40.4 |
|
|
53.3 |
|
|
60.8 |
|
||
Depreciation and amortization |
|
92.4 |
|
|
85.1 |
|
|
113.3 |
|
||
EBITDA |
|
361.3 |
|
|
386.7 |
|
|
470.7 |
|
||
Amortization of SaaS implementation costs |
|
17.3 |
|
|
2.9 |
|
|
6.0 |
|
||
Expenses related to Restructuring Program |
|
68.2 |
|
|
- |
|
|
- |
|
||
Expenses related to Transformation Program |
|
9.4 |
|
|
42.0 |
|
|
54.2 |
|
||
Digital technology program costs |
|
22.1 |
|
|
22.6 |
|
|
32.1 |
|
||
Gain on sale of property |
|
(4.0 |
) |
|
- |
|
|
- |
|
||
|
- |
|
|
8.6 |
|
|
8.6 |
|
|||
Loss (gain) on extinguishment of debt |
|
10.5 |
|
|
(1.0 |
) |
|
(1.0 |
) |
||
Adjusted EBITDA |
|
484.8 |
|
|
461.8 |
|
|
570.6 |
|
||
Interest income |
|
9.3 |
|
|
8.3 |
|
|
11.5 |
|
||
Inventory write-downs |
|
17.0 |
|
|
21.9 |
|
|
28.5 |
|
||
Share-based compensation expenses |
|
36.7 |
|
|
35.7 |
|
|
48.0 |
|
||
Other expenses (3) |
|
16.9 |
|
|
(0.3 |
) |
|
11.5 |
|
||
Credit Agreement EBITDA | $ |
564.7 |
|
$ |
527.4 |
|
$ |
670.1 |
|
||
Credit Agreement Total Debt (4) | $ |
2,581.1 |
|
||||||||
Credit Agreement Total Leverage Ratio | 3.9x | ||||||||||
Net income margin |
|
2.0 |
% |
|
3.4 |
% |
|
2.8 |
% |
||
Adjusted EBITDA margin |
|
12.8 |
% |
|
12.0 |
% |
|
11.3 |
% |
||
(1) Based on interim income tax reporting rules, these (income)/expense items are not considered discrete items. The tax effect of the adjustments between our |
|||||||||||||||
(2) Excludes tax (benefit)/expense as follows: | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
$ million |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|||
Expenses related to Restructuring Program | $ |
5.3 |
|
$ |
- |
|
$ |
(14.9 |
) |
$ |
- |
|
|||
Expenses related to Transformation Program |
|
0.6 |
|
|
0.2 |
|
|
(1.9 |
) |
|
(8.3 |
) |
|||
Digital technology program costs |
|
(0.5 |
) |
|
(0.7 |
) |
|
(2.5 |
) |
|
(1.4 |
) |
|||
Gain on sale of property |
|
0.9 |
|
|
- |
|
|
0.9 |
|
|
- |
|
|||
|
- |
|
|
(1.4 |
) |
|
- |
|
|
(1.4 |
) |
||||
Loss (gain) on extinguishment of debt |
|
0.5 |
|
|
0.1 |
|
|
(2.1 |
) |
|
0.1 |
|
|||
Total income tax adjustments | $ |
6.8 |
|
$ |
(1.8 |
) |
$ |
(20.5 |
) |
$ |
(11.0 |
) |
|||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
$ per share |
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
|||
Expenses related to Restructuring Program | $ |
0.05 |
|
$ |
- |
|
$ |
(0.15 |
) |
$ |
- |
|
|||
Expenses related to Transformation Program |
|
- |
|
|
- |
|
|
(0.02 |
) |
|
(0.08 |
) |
|||
Digital technology program costs |
|
(0.01 |
) |
|
(0.01 |
) |
|
(0.02 |
) |
|
(0.01 |
) |
|||
Gain on sale of property |
|
0.01 |
|
|
- |
|
|
0.01 |
|
|
- |
|
|||
|
- |
|
|
(0.01 |
) |
|
- |
|
|
(0.01 |
) |
||||
Loss (gain) on extinguishment of debt |
|
0.01 |
|
|
- |
|
|
(0.02 |
) |
|
- |
|
|||
Total income tax adjustments (5) | $ |
0.07 |
|
$ |
(0.02 |
) |
$ |
(0.20 |
) |
$ |
(0.11 |
) |
|||
(3) Other expenses include certain non-cash items such as bad debt expense, unrealized foreign currency gains and losses, and other gains and losses | |||||||||||||||
(4) Represents the outstanding principal amount of total debt as of the respective period end | |||||||||||||||
(5) Amounts may not total due to rounding |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241030736401/en/
Media Contact:
Thien Ho
Vice President, Global Corporate Communications
thienh@herbalife.com
Investor Contact:
Erin Banyas
Vice President, Head of Investor Relations
erinba@herbalife.com
Source: Herbalife Ltd.
FAQ
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