Herbalife Nutrition Ltd. Q2 FY2025 earnings call

• Product innovation: Entered a new category with the first healthy lifespan product and launched MultiBurn, a nonpharmaceutical weight loss supplement. Strengthened core business through market and DMO-specific product launches.
• Distributor growth: New distributor growth was flat Y/Y, but 4 out of 5 regions saw increases, led by 16% growth in Latin America. Nearly 38,000 attendees at Extravaganza training events. North America distributors embraced data-driven solutions, with over 7,000 participating in the Pro2col beta.
• Pro2col beta: Launched at North America Extravaganza, centered around 4 pillars (what to measure, what to do, what to take, who to do it with), with over 7,000 distributors participating.
• Acquisitions: Integrated Link Biosciences, acquired certain assets of Pruvit, with Pruvit distributors opting into the Pro2col beta program.
• North America momentum: July was the first month of year-over-year volume growth in North America since April 2021.

Net sales for the second quarter were $1.3 billion, down 1.7% versus Q2 2024 and near the midpoint of the guidance range. On a constant currency basis, net sales were flat year-over-year. Adjusted EBITDA was $174 million, exceeding guidance. Regional performance: Latin America had reported net sales down 1% year-over-year but constant currency net sales up 9%; EMEA net sales were flat on a reported basis and down 1% on a local currency basis; Asia Pacific reported net sales down 2% and constant currency net sales down 1%; North America net sales down 4% reported. Latin America saw 16% year-over-year growth, and 4 out of 5 regions had year-over-year increases in new distributor growth.

• Revised full year net sales guidance range: Down 1% to up 3% year-over-year on constant currency, and flat to up 4% year-over-year on constant currency. Q3 net sales growth projected at 0.5% to 4.5% on both reported and constant currency basis.
• Adjusted EBITDA guidance: Full year range $640 million to $660 million, Q3 range $150 million to $160 million. Constant currency adjusted EBITDA full year range $685 million to $705 million, Q3 range $155 million to $165 million.
• Debt reduction: Plan to reduce debt outstanding to $1.4 billion by end of 2028, with next meaningful debt maturity not due until 2028.

• Currency headwinds: FX had a negative impact, though less severe than expected. Dollar weakening was an overall headwind for the quarter on average.
• Tariff impacts: Preliminary estimate of tariff impact not material to full year 2025 expected results.
• Dependence on distributor engagement: Continued success reliant on distributor enthusiasm and effective implementation of new initiatives like Pro2col.

Q: Thoughts on Pro2col monetization strategy and unit economics?

A: Beta with distributors to understand how they'll promote it. Monetization includes supporting existing business and entering new segment, with earn-based and subscription models. Unit economics slightly different with earn-based and subscription assumptions.

Q: Subscription model history and future?

A: Past subscription model not consumer friendly. Future to expand with new products like the healthy lifespan product, leveraging subscription as an attractive model.

Q: Pro2col rollout globally?

A: Plans to expand in 2026, entering other markets after North America launch in Q4 2025.

Q: High-cost debt plans?

A: New debt deal has 2-year no-call protection until April 2026. Will actively consider refinancing when no-call protection ends if conditions are right.