Herbalife Reports Year-Over-Year Net Sales Growth in Fourth Quarter 2023
- Achieved year-over-year net sales growth in Q4 2023 on both reported and constant currency basis.
- Net sales for Q4 were $1.2 billion, up 2.9% year-over-year; adjusted EBITDA was $108.8 million.
- Cost savings of approximately $27 million related to the Transformation Program were realized in 2023.
- Initiated process to refinance 2018 Term Loan A and 2018 Revolving Credit Facility to strengthen balance sheet.
- Full-year 2023 net sales were $5.1 billion, down 2.7% year-over-year; adjusted EBITDA was $570.6 million.
- Company expects total capital expenditures of $145 million to $195 million for 2024.
- Fourth consecutive quarter of improved year-over-year net sales trends.
- Gross profit margin for Q4 was 76.3%, down 120 basis points year-over-year.
- Continued rollout of all-new Herbalife.com website in markets representing 70% of sales.
- Launched four innovative products in December 2023 and January 2024 to align with consumer trends.
- Company hosted nine Extravaganzas with nearly 125,000 attendees, supporting an increase in sales leader retention.
- Expect total program run rate savings of at least $115 million in 2024 from Transformation Program.
- Full-year 2023 net sales declined by 2.7% year-over-year.
- Gross profit margin for Q4 decreased by 120 basis points year-over-year.
- Company recognized pre-tax expenses of approximately $12 million and $54 million for the three and twelve months ended December 31, 2023, respectively, in SG&A related to the Transformation Program.
- Company expects to incur total program pre-tax expenses of at least $95 million, of which $79 million has been incurred to date.
- Intends to repay $197.0 million outstanding principal under its 2024 Convertible Notes at maturity in March 2024 with available cash on hand and funds available under its revolving credit facility.
Insights
The reported financial results of Herbalife Ltd. indicate a mixed performance for the fourth quarter and full year of 2023. Despite a year-over-year increase in net sales for Q4, the full-year net sales show a decline. The discrepancy between reported and constant currency basis net sales suggests that foreign exchange volatility has impacted the company's earnings. This is further corroborated by the company's mention of foreign currency tailwinds contributing to adjusted EBITDA.
Herbalife's cost-saving measures through its Transformation Program are noteworthy. The reported savings of approximately $70 million in 2023, with the expectation to deliver at least $115 million in savings in 2024, could be a significant driver for margin expansion. However, the upfront costs associated with this program, which have totaled $79 million to date, should be considered when evaluating the company's net savings and overall financial efficiency.
The capital expenditure plans for 2024, estimated between $145 million to $195 million, indicate ongoing investments in digital technology platforms, which may be essential for long-term growth but could also pressure short-term cash flow. The repayment of the $197.0 million outstanding principal under its 2024 Convertible Notes and the refinancing initiatives for existing credit facilities will be critical to monitor as they will affect the company's leverage and interest expense.
Herbalife's strategic focus on digital transformation, as evidenced by the rollout of its new website and continued development of digital capabilities, addresses the evolving consumer preferences towards online shopping and digital engagement. This is a pivotal move in the health and wellness industry where digital presence is increasingly important. However, the impact of these initiatives on sales growth will depend on the execution and adoption rate by distributors and customers.
The company's full return to in-person events and the positive response from distributors could be a catalyst for increased engagement and potentially higher sales. The retention rate of distributor sales leaders has shown a slight improvement, which could translate into better sales stability. The launch of new products and the introduction of Herbalife® GLP-1 Nutrition Companion Product Combos are aligned with consumer health trends and could potentially open up new market segments.
The regional performance metrics reveal mixed results, with some regions such as Asia Pacific and China showing growth, while North America and Latin America experienced declines. This regional variability indicates that Herbalife's performance is subject to diverse market dynamics, which could require tailored strategies for different geographies.
The refinancing process initiated by Herbalife for its 2018 Term Loan A and 2018 Revolving Credit Facility is a significant financial maneuver that will likely affect the company's interest rate risk and debt maturity profile. The terms and successful completion of the refinancing will be essential to assess the company's future financial flexibility and cost of capital. As these transactions are subject to customary closing conditions, investors and stakeholders should closely watch for any updates or changes that might arise from this process.
Herbalife's intention to repay the outstanding principal of its 2024 Convertible Notes with available cash and credit facilities is a prudent move to manage its debt obligations. However, the use of cash for debt repayment will reduce the cash reserves available for other operational needs or investment opportunities. The company's balance sheet management strategies in the context of these refinancing and repayment plans will be a key area of interest for stakeholders.
“We continue to modernize Herbalife with a sharp focus on top-line growth and margin expansion for 2024,” said Michael Johnson, Chairman and CEO.
Highlights
Fourth Quarter 2023
- Achieved year-over-year net sales growth on both reported and constant currency basis1
- Fourth consecutive quarter of improved year-over-year reported net sales trends
-
Net sales of
$1.2 billion 2.9% vs. 4Q ‘22; on constant currency basis1, net sales increased2.5% vs. 4Q ‘22 -
Net income of
$10.2 million $108.8 million -
Diluted EPS of
$0.10 $0.28 -
Achieved cost savings of approximately
$27 million $70 million -
Recognized pre-tax expenses of approximately
$12 million -
Continued roll out of all-new Herbalife.com website; now live in markets representing approximately
70% of Company’s sales
Full-Year 2023
-
Net sales of
$5.1 billion 2.7% vs. 2022; on constant currency basis1, net sales declined1.6% vs. 2022 -
Net income of
$142.2 million $570.6 million -
Diluted EPS of
$1.42 $2.21 -
Net cash provided by operating activities of
$357.5 million $222.5 million
Recent Developments
- Initiated process to refinance 2018 Term Loan A and 2018 Revolving Credit Facility, due in March 2025
_____________________________
1 Growth/decline in net sales excluding the effects of foreign exchange is based on “net sales in local currency,” a non-GAAP financial measure. See Schedule A – “Reconciliation of Non-GAAP Financial Measures” for a discussion of why we believe adjusting for the effects of foreign exchange is useful.
2 Adjusted EBITDA, adjusted diluted EPS and free cash flow are non-GAAP measures. See Schedule A – “Reconciliation of Non-GAAP Financial Measures” for a detailed reconciliation of these measures to the most directly comparable
Management Commentary
Herbalife reported full-year 2023 net sales of
For the year ended December 31, 2023, capital expenditures, including spending related to the Herbalife One digital technology platform, were approximately
Fourth quarter 2023 net sales were
Fourth quarter gross profit margin was
The Company implemented further actions related to its Transformation Program, which was initiated in 2021 to strategically optimize global business processes. Based on the Company’s actions as of December 31, 2023, it delivered approximately
Consistent with the Company’s capital allocation priorities, it intends to repay the
On February 2, 2024, the Company initiated the refinancing of its 2018 Term Loan A and 2018 Revolving Credit Facility, both of which mature in March 2025. As of December 31, 2023,
“We continue to take strategic actions to optimize our cost structure and strengthen our balance sheet,” said Alex Amezquita, Chief Financial Officer. “The incremental cost savings achieved through the expansion of our Transformation Program is evidence of our commitment to enhance productivity and we are continuing to look at all aspects of our business with a focus on driving top-line growth, expanding margins and securing our balance sheet.”
During the fourth quarter, the Company continued the rollout of its all-new Herbalife.com websites, which are part of Herbalife One. To date, the websites are live in markets across
2023 marked the Company’s full return to in-person events, which were met with an overwhelming positive response from distributors, providing opportunities to re-establish connections and share best practices. The Company hosted nine Extravaganzas across the globe with nearly 125,000 attendees, as well as thousands of other corporate-led and distributor-led education and training events. These events helped engage, motivate, inspire and educate the distributor base. The Company believes these interactions have supported an increase in sales leader retention. For the twelve-month requalification period ending January 2024, approximately
During December 2023 and January 2024, the Company continued to deliver on its growth strategy, launching four innovative products that it believes will resonate in local markets and align with consumer trends and preferences:
-
Shape Control – gluten-free weight loss supplement capsule which combines Morosil® Moro Orange extract with Chromium; available in
Brazil -
Herbalife24® Premium Creatine – vegan, gluten-free and zero calorie powdered drink mix with 3g of creatine that provides multiple fitness benefits, including helping to enhance exercise performance and increase muscle mass; available in
Brazil - Formula 1 Express Healthy Meal Bars (Cranberry & White Chocolate) – reformulated with 15g of protein and 6g of fiber and suitable for vegetarians; available in select markets in EMEA
-
Pycno® Plus – capsule that combines Pycnogenol (French maritime pine bark extract) and B Vitamins to support women and men’s health; available in
Korea
Additionally, last week the Company announced the offering of two Herbalife® GLP-1 Nutrition Companion Product Combos, Classic and Vegan. The product combos are fueled by the #1 Protein Shake in the World* and are intended to support the nutritional needs of individuals on GLP-1 and other weight loss medications. Each product combo provides vital protein to help build muscle tissue and maintain lean muscle mass, while providing energy and fiber to promote regularity and a healthy digestive system. Additionally, the Classic combo delivers essential vitamins and minerals to support overall health, while the Vegan combo also delivers three organic blends of 20 fruits and vegetables. Further, the Company’s distributors can help consumers develop proper nutrition practices while on the weight-loss drugs and develop sustainable healthy habits for when they stop using the medications, to create lasting changes beneficial to long-term health. The Herbalife® GLP-1 Nutrition Companion Product Combos are now available in
“Our charge is clear – sales growth, margin expansion and maximizing shareholder value,” said Michael Johnson. “Together with our distributors, Herbalife is on the path to becoming the global premier health and wellness company, community and platform.”
The Herbalife® GLP-1 Nutrition Companion is not a drug. Remember to consult your physician before you make changes to your diet during medically supervised weight loss.
*Source Euromonitor International Limited; per Consumer Health 2024ed, Protein Shake as per sports protein powder, sports protein RTDs, meal replacement, supplement nutrition drinks and protein supplements, combined % RSP share GBO, 2023 data
Fourth Quarter and Full-Year 2023 Key Metrics
Regional Net Sales and Foreign Exchange (“FX”) Impact
Region |
Reported
|
Growth/Decline
|
Growth/Decline
|
|
|
$ |
433.5 |
|
|
|
|
252.8 |
(8.1)% |
(8.1)% |
EMEA |
|
250.1 |
|
|
|
|
196.4 |
|
(1.3)% |
|
|
82.2 |
|
|
Worldwide |
$ |
1,215.0 |
|
|
Region |
Reported
|
Growth/Decline
|
Growth/Decline
|
|
|
$ |
1,713.9 |
|
|
|
|
1,131.4 |
(10.4)% |
(10.3)% |
EMEA |
|
1,068.8 |
(0.9)% |
|
|
|
820.9 |
|
(0.5)% |
|
|
327.4 |
(16.3)% |
(11.8)% |
Worldwide |
$ |
5,062.4 |
(2.7)% |
(1.6)% |
Regional Volume Point Metrics
|
Volume Points |
|||
Region |
4Q '23 (mil) |
YoY % Chg. |
FY '23 (mil) |
YoY % Chg. |
|
552.3 |
|
2,151.5 |
(0.2)% |
|
250.6 |
(14.9)% |
1,160.9 |
(18.8)% |
EMEA |
279.5 |
(6.6)% |
1,222.9 |
(9.6)% |
|
239.4 |
(12.4)% |
1,028.0 |
(12.7)% |
|
60.1 |
|
237.6 |
(9.1)% |
Worldwide |
1,381.9 |
(2.0)% |
5,800.9 |
(9.1)% |
Earnings Webcast and Conference Call
Herbalife’s senior management team will host a live audio webcast and conference call to discuss its fourth quarter and full-year 2023 financial results and provide an update on current business trends on Wednesday, February 14, 2024, at 5:30 p.m. ET (2:30 p.m. PT).
The live audio webcast will be available at https://edge.media-server.com/mmc/p/zstgjz99/.
Participants joining via the conference call will need to register to receive the dial-in information and personal PIN to access the call, and may do so by visiting the Investor Relations section of the Company’s website at https://ir.herbalife.com. Senior management also plans to reference slides during the call, which will also be available on the Investor Relations section of the Company’s website, where financial and other information is posted from time to time.
A replay of the event will be available following the completion of the live audio webcast and conference call, and for 12 months thereafter, under the Investor Relations section of the Company's website at https://ir.herbalife.com.
About Herbalife Ltd.
Herbalife (NYSE: HLF) is a premier health and wellness company and community that has been changing people's lives with great nutrition products and a business opportunity for its independent distributors since 1980. The Company offers science-backed products to consumers in more than 90 markets through entrepreneurial distributors who provide one-on-one coaching and a supportive community that inspires their customers to embrace a healthier, more active lifestyle to live their best life.
For more information, visit https://ir.herbalife.com.
Forward-Looking Statements
This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objectives of management, including for future operations, capital expenditures, or share repurchases; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; any statements of belief or expectation; and any statements of assumptions underlying any of the foregoing or other future events. Forward-looking statements may include, among others, the words “may,” “will,” “estimate,” “intend,” “continue,” “believe,” “expect,” “anticipate” or any other similar words.
Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results or outcomes could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include the following:
- the potential impacts of current global economic conditions, including inflation, on us; our Members, customers, and supply chain; and the world economy;
- our ability to attract and retain Members;
- our relationship with, and our ability to influence the actions of, our Members;
-
our noncompliance with, or improper action by our employees or Members in violation of, applicable
U.S. and foreign laws, rules, and regulations; - adverse publicity associated with our Company or the direct-selling industry, including our ability to comfort the marketplace and regulators regarding our compliance with applicable laws;
- changing consumer preferences and demands and evolving industry standards, including with respect to climate change, sustainability, and other environmental, social, and governance, or ESG, matters;
- the competitive nature of our business and industry;
- legal and regulatory matters, including regulatory actions concerning, or legal challenges to, our products or network marketing program and product liability claims;
- the Consent Order entered into with the FTC, the effects thereof and any failure to comply therewith;
-
risks associated with operating internationally and in
China ; - our ability to execute our growth and other strategic initiatives, including implementation of our Transformation Program 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 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 December 31 | Year Ended December 31 | |||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
| (unaudited) | ||||||||||||||||
$ |
252.8 |
|
$ |
275.0 |
|
$ |
1,131.4 |
|
$ |
1,262.2 |
|
|||||
| EMEA |
|
250.1 |
|
|
246.8 |
|
|
1,068.8 |
|
|
1,078.5 |
|
||||
|
433.5 |
|
|
396.8 |
|
|
1,713.9 |
|
|
1,686.9 |
|
|||||
|
196.4 |
|
|
191.1 |
|
|
820.9 |
|
|
785.8 |
|
|||||
|
82.2 |
|
|
71.1 |
|
|
327.4 |
|
|
391.0 |
|
|||||
| Worldwide Net sales |
|
1,215.0 |
|
|
1,180.8 |
|
|
5,062.4 |
|
|
5,204.4 |
|
||||
| Cost of sales |
|
287.6 |
|
|
265.6 |
|
|
1,191.0 |
|
|
1,173.6 |
|
||||
| Gross profit |
|
927.4 |
|
|
915.2 |
|
|
3,871.4 |
|
|
4,030.8 |
|
||||
| Royalty overrides |
|
397.4 |
|
|
389.0 |
|
|
1,659.2 |
|
|
1,690.1 |
|
||||
| Selling, general, and administrative expenses |
|
474.3 |
|
|
437.3 |
|
|
1,866.0 |
|
|
1,810.4 |
|
||||
| Other operating income (1) |
|
(0.1 |
) |
|
- |
|
|
(10.2 |
) |
|
(14.9 |
) |
||||
| Operating income |
|
55.8 |
|
|
88.9 |
|
|
356.4 |
|
|
545.2 |
|
||||
| Interest expense, net |
|
38.1 |
|
|
37.3 |
|
|
154.4 |
|
|
133.2 |
|
||||
| Other income, net (2) |
|
- |
|
|
(12.8 |
) |
|
(1.0 |
) |
|
(12.8 |
) |
||||
| Income before income taxes |
|
17.7 |
|
|
64.4 |
|
|
203.0 |
|
|
424.8 |
|
||||
| Income taxes |
|
7.5 |
|
|
10.0 |
|
|
60.8 |
|
|
103.5 |
|
||||
| Net income | $ |
10.2 |
|
$ |
54.4 |
|
$ |
142.2 |
|
$ |
321.3 |
|
||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic |
|
99.3 |
|
|
98.1 |
|
|
99.0 |
|
|
98.5 |
|
||||
| Diluted |
|
100.7 |
|
|
99.0 |
|
|
100.2 |
|
|
99.5 |
|
||||
| Earnings per share: | ||||||||||||||||
| Basic | $ |
0.10 |
|
$ |
0.55 |
|
$ |
1.44 |
|
$ |
3.26 |
|
||||
| Diluted | $ |
0.10 |
|
$ |
0.55 |
|
$ |
1.42 |
|
$ |
3.23 |
|
||||
| (1) Other operating income for the three and twelve months ended December 31, 2023 and twelve months ended December 31, 2022 relates to certain |
||||||||||||||||
| (2) Other income, net for the twelve months ended December 31, 2023 and the three and twelve months ended December 31, 2022 relates to the extinguishment of a portion of the 2024 Convertible Notes | ||||||||||||||||
Herbalife Ltd. and Subsidiaries |
||||||||
Consolidated Balance Sheets |
||||||||
(in millions) |
||||||||
| December 31 | December 31 | |||||||
2023 |
2022 |
|||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ |
575.2 |
|
$ |
508.0 |
|
||
| Receivables, net |
|
81.2 |
|
|
70.6 |
|
||
| Inventories |
|
505.2 |
|
|
580.7 |
|
||
| Prepaid expenses and other current assets |
|
237.7 |
|
|
196.8 |
|
||
| Total Current Assets |
|
1,399.3 |
|
|
1,356.1 |
|
||
| Property, plant and equipment, net |
|
506.5 |
|
|
486.3 |
|
||
| Operating lease right-of-use assets |
|
185.8 |
|
|
207.1 |
|
||
| Marketing-related intangibles and other intangible assets, net |
|
314.0 |
|
|
315.7 |
|
||
| Goodwill |
|
95.4 |
|
|
93.2 |
|
||
| Other assets |
|
308.4 |
|
|
273.6 |
|
||
| Total Assets | $ |
2,809.4 |
|
$ |
2,732.0 |
|
||
| LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ |
84.0 |
|
$ |
89.8 |
|
||
| Royalty overrides |
|
343.4 |
|
|
343.3 |
|
||
| Current portion of long-term debt |
|
309.5 |
|
|
29.5 |
|
||
| Other current liabilities |
|
540.7 |
|
|
514.0 |
|
||
| Total Current Liabilities |
|
1,277.6 |
|
|
976.6 |
|
||
| Non-current liabilities: | ||||||||
| Long-term debt, net of current portion |
|
2,252.9 |
|
|
2,662.5 |
|
||
| Non-current operating lease liabilities |
|
167.6 |
|
|
192.4 |
|
||
| Other non-current liabilities |
|
171.6 |
|
|
166.4 |
|
||
| Total Liabilities |
|
3,869.7 |
|
|
3,997.9 |
|
||
| Commitments and Contingencies | ||||||||
| Shareholders' deficit: | ||||||||
| Common shares |
|
0.1 |
|
|
0.1 |
|
||
| Paid-in capital in excess of par value |
|
233.9 |
|
|
188.7 |
|
||
| Accumulated other comprehensive loss |
|
(232.0 |
) |
|
(250.2 |
) |
||
| Accumulated deficit |
|
(1,062.3 |
) |
|
(1,204.5 |
) |
||
| Total Shareholders' Deficit |
|
(1,060.3 |
) |
|
(1,265.9 |
) |
||
| Total Liabilities and Shareholders' Deficit | $ |
2,809.4 |
|
$ |
2,732.0 |
|
||
Herbalife Ltd. and Subsidiaries |
||||||||
Consolidated Statements of Cash Flows |
||||||||
(in millions) |
||||||||
| Year Ended December 31 | ||||||||
2023 |
2022 |
|||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ |
142.2 |
|
$ |
321.3 |
|
||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization |
|
113.3 |
|
|
115.4 |
|
||
| Share-based compensation expenses |
|
48.0 |
|
|
44.4 |
|
||
| Non-cash interest expense |
|
7.4 |
|
|
6.7 |
|
||
| Deferred income taxes |
|
(41.1 |
) |
|
(29.9 |
) |
||
| Inventory write-downs |
|
28.5 |
|
|
38.4 |
|
||
| Foreign exchange transaction loss (gain) |
|
6.0 |
|
|
9.1 |
|
||
| Gain on extinguishment of debt |
|
(1.0 |
) |
|
(12.8 |
) |
||
| Other |
|
6.5 |
|
|
(17.0 |
) |
||
| Changes in operating assets and liabilities: | ||||||||
| Receivables |
|
(12.6 |
) |
|
(9.1 |
) |
||
| Inventories |
|
57.5 |
|
|
(68.4 |
) |
||
| Prepaid expenses and other current assets |
|
(13.8 |
) |
|
(12.4 |
) |
||
| Accounts payable |
|
(7.4 |
) |
|
(1.1 |
) |
||
| Royalty overrides |
|
(6.5 |
) |
|
(9.6 |
) |
||
| Other current liabilities |
|
23.8 |
|
|
(53.6 |
) |
||
| Other |
|
6.7 |
|
|
31.1 |
|
||
| Net cash provided by operating activities |
|
357.5 |
|
|
352.5 |
|
||
| Cash flows from investing activities: | ||||||||
| Purchases of property, plant and equipment |
|
(135.0 |
) |
|
(156.4 |
) |
||
| Other |
|
0.2 |
|
|
0.2 |
|
||
| Net cash used in investing activities |
|
(134.8 |
) |
|
(156.2 |
) |
||
| Cash flows from financing activities: | ||||||||
| Borrowings from senior secured credit facility |
|
215.2 |
|
|
564.2 |
|
||
| Principal payments on senior secured credit facility and other debt |
|
(289.6 |
) |
|
(683.5 |
) |
||
| Proceeds from convertible senior notes |
|
- |
|
|
277.5 |
|
||
| Repayment of convertible senior notes |
|
(64.3 |
) |
|
(273.2 |
) |
||
| Debt issuance costs |
|
(1.8 |
) |
|
(7.2 |
) |
||
| Share repurchases |
|
(11.0 |
) |
|
(146.7 |
) |
||
| Other |
|
3.2 |
|
|
4.2 |
|
||
| Net cash used in financing activities |
|
(148.3 |
) |
|
(264.7 |
) |
||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
|
4.8 |
|
|
(25.7 |
) |
||
| Net change in cash, cash equivalents, and restricted cash |
|
79.2 |
|
|
(94.1 |
) |
||
| Cash, cash equivalents, and restricted cash, beginning of period |
|
516.3 |
|
|
610.4 |
|
||
| Cash, cash equivalents, and restricted cash, end of period | $ |
595.5 |
|
$ |
516.3 |
|
||
| Cash paid during the year: | ||||||||
| Interest paid | $ |
159.1 |
|
$ |
133.5 |
|
||
| Income taxes paid | $ |
133.1 |
|
$ |
144.9 |
|
||
|
||||||||
Supplemental Information
SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (unaudited)
Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA and Free Cash Flow
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 definition and calculation as set forth in the tables below of adjusted net income, adjusted diluted EPS, adjusted EBITDA and free cash flow 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, diluted EPS or cash flows from operating activities calculated in accordance with
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 December 31 | Year Ended December 31 | |||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
| (in millions) | ||||||||||||||||
| Net income | $ |
10.2 |
|
$ |
54.4 |
|
$ |
142.2 |
|
$ |
321.3 |
|
||||
| Net expenses related to COVID-19 pandemic (1) (2) |
|
- |
|
|
0.6 |
|
|
- |
|
|
4.4 |
|
||||
| Expenses related to Transformation Program (1) (2) |
|
12.2 |
|
|
4.4 |
|
|
54.2 |
|
|
12.1 |
|
||||
| Digital technology program costs (1) (2) |
|
9.5 |
|
|
8.6 |
|
|
32.1 |
|
|
11.9 |
|
||||
| Gain on extinguishment of debt (1) (2) |
|
- |
|
|
(12.8 |
) |
|
(1.0 |
) |
|
(12.8 |
) |
||||
|
- |
|
|
- |
|
|
8.6 |
|
|
- |
|
|||||
|
- |
|
|
- |
|
|
- |
|
|
5.5 |
|
|||||
| Income tax adjustments for above items (1) (2) |
|
(3.3 |
) |
|
(2.7 |
) |
|
(14.3 |
) |
|
(4.1 |
) |
||||
| Adjusted net income (3) | $ |
28.6 |
|
$ |
52.4 |
|
$ |
221.8 |
|
$ |
338.3 |
|
||||
| The following is a reconciliation of diluted earnings per share to adjusted diluted earnings per share: | ||||||||||||||||
| Three Months Ended December 31 | Year Ended December 31 | |||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
| (per share) | ||||||||||||||||
| Diluted earnings per share | $ |
0.10 |
|
$ |
0.55 |
|
$ |
1.42 |
|
$ |
3.23 |
|
||||
| Net expenses related to COVID-19 pandemic (1) (2) |
|
- |
|
|
0.01 |
|
|
- |
|
|
0.04 |
|
||||
| Expenses related to Transformation Program (1) (2) |
|
0.12 |
|
|
0.04 |
|
|
0.54 |
|
|
0.12 |
|
||||
| Digital technology program costs (1) (2) |
|
0.09 |
|
|
0.09 |
|
|
0.32 |
|
|
0.12 |
|
||||
| Gain on extinguishment of debt (1) (2) |
|
- |
|
|
(0.13 |
) |
|
(0.01 |
) |
|
(0.13 |
) |
||||
|
- |
|
|
- |
|
|
0.09 |
|
|
- |
|
|||||
|
- |
|
|
- |
|
|
- |
|
|
0.06 |
|
|||||
| Income tax adjustments for above items (1) (2) |
|
(0.03 |
) |
|
(0.03 |
) |
|
(0.14 |
) |
|
(0.04 |
) |
||||
| Adjusted diluted earnings per share (3) | $ |
0.28 |
|
$ |
0.53 |
|
$ |
2.21 |
|
$ |
3.40 |
|
||||
| The following is a reconciliation of net income to EBITDA and adjusted EBITDA: | ||||||||||||||||
| Three Months Ended December 31 | Year Ended December 31 | |||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
| (in millions) | ||||||||||||||||
| Net income | $ |
10.2 |
|
$ |
54.4 |
|
$ |
142.2 |
|
$ |
321.3 |
|
||||
| Interest expense, net |
|
38.1 |
|
|
37.3 |
|
|
154.4 |
|
|
133.2 |
|
||||
| Income taxes |
|
7.5 |
|
|
10.0 |
|
|
60.8 |
|
|
103.5 |
|
||||
| Depreciation and amortization |
|
28.2 |
|
|
28.2 |
|
|
113.3 |
|
|
115.4 |
|
||||
| EBITDA |
|
84.0 |
|
|
129.9 |
|
|
470.7 |
|
|
673.4 |
|
||||
| Amortization of SaaS implementation costs |
|
3.1 |
|
|
- |
|
|
6.0 |
|
|
- |
|
||||
| Net expenses related to COVID-19 pandemic (1) (2) |
|
- |
|
|
0.6 |
|
|
- |
|
|
4.4 |
|
||||
| Expenses related to Transformation Program (1) (2) |
|
12.2 |
|
|
4.4 |
|
|
54.2 |
|
|
12.1 |
|
||||
| Digital technology program costs (1) (2) |
|
9.5 |
|
|
8.6 |
|
|
32.1 |
|
|
11.9 |
|
||||
| Gain on extinguishment of debt (1) (2) |
|
- |
|
|
(12.8 |
) |
|
(1.0 |
) |
|
(12.8 |
) |
||||
|
- |
|
|
- |
|
|
8.6 |
|
|
- |
|
|||||
|
- |
|
|
- |
|
|
- |
|
|
5.5 |
|
|||||
| Adjusted EBITDA | $ |
108.8 |
|
$ |
130.7 |
|
$ |
570.6 |
|
$ |
694.5 |
|
||||
| (1) Based on interim income tax reporting rules, these expenses are not considered discrete items. The tax effect of the adjustments between our |
||||||||||||||||
| (2) Excludes tax (benefit)/expense as follows: | ||||||||||||||||
| Three Months Ended December 31 | Year Ended December 31 | |||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
| (in millions) | ||||||||||||||||
| Net expenses related to COVID-19 pandemic | $ |
- |
|
$ |
(0.1 |
) |
$ |
- |
|
$ |
(0.8 |
) |
||||
| Expenses related to Transformation Program |
|
(2.3 |
) |
|
(1.2 |
) |
|
(10.6 |
) |
|
(1.6 |
) |
||||
| Digital technology program costs |
|
(1.2 |
) |
|
(1.5 |
) |
|
(2.6 |
) |
|
(0.6 |
) |
||||
| Gain on extinguishment of debt |
|
(0.1 |
) |
|
- |
|
|
- |
|
|
- |
|
||||
|
0.3 |
|
|
- |
|
|
(1.1 |
) |
|
- |
|
|||||
|
- |
|
|
0.1 |
|
|
- |
|
|
(1.1 |
) |
|||||
| Total income tax adjustments | $ |
(3.3 |
) |
$ |
(2.7 |
) |
$ |
(14.3 |
) |
$ |
(4.1 |
) |
||||
| Three Months Ended December 31 | Year Ended December 31 | |||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
| (per share) | ||||||||||||||||
| Net expenses related to COVID-19 pandemic | $ |
- |
|
$ |
- |
|
$ |
- |
|
$ |
(0.01 |
) |
||||
| Expenses related to Transformation Program |
|
(0.02 |
) |
|
(0.01 |
) |
|
(0.11 |
) |
|
(0.02 |
) |
||||
| Digital technology program costs |
|
(0.01 |
) |
|
(0.02 |
) |
|
(0.03 |
) |
|
(0.01 |
) |
||||
| Gain on extinguishment of debt |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
||||
|
- |
|
|
- |
|
|
(0.01 |
) |
|
- |
|
|||||
|
- |
|
|
- |
|
|
- |
|
|
(0.01 |
) |
|||||
| Total income tax adjustments (3) | $ |
(0.03 |
) |
$ |
(0.03 |
) |
$ |
(0.14 |
) |
$ |
(0.05 |
) |
||||
| (3) Amounts may not total due to rounding | ||||||||||||||||
| The following is a reconciliation of net cash provided by operating activities to free cash flow: | ||||||||||||||||
| Three Months Ended December 31 | Year Ended December 31 | |||||||||||||||
2023 |
2022 |
2023 |
2022 |
|||||||||||||
| (in millions) | ||||||||||||||||
| Net cash provided by operating activities | $ |
96.1 |
|
$ |
53.6 |
|
$ |
357.5 |
|
$ |
352.5 |
|
||||
| Purchases of property, plant and equipment |
|
(35.3 |
) |
|
(42.8 |
) |
|
(135.0 |
) |
|
(156.4 |
) |
||||
| Free cash flow | $ |
60.8 |
|
$ |
10.8 |
|
$ |
222.5 |
|
$ |
196.1 |
|
||||
|
||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20240213976950/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
What were Herbalife's net sales for Q4 2023?
What was Herbalife's adjusted EBITDA for Q4 2023?
What cost savings were achieved by Herbalife in 2023?
What is Herbalife's plan regarding the 2018 Term Loan A and 2018 Revolving Credit Facility?
What was Herbalife's full-year 2023 net sales?
What was Herbalife's gross profit margin for Q4 2023?
How many Extravaganzas did Herbalife host in 2023?
What was the Company's expectation regarding total program run rate savings for 2024?
