Herbalife Nutrition Ltd. Q3 FY2025 earnings call

• Herbalife returned to net sales growth in North America and worldwide, with Q3 net sales at $1.3 billion, up 2.7% year-over-year and above guidance.
• Pro2col beta group has 7,900 distributors with strong engagement, including logged steps, meals, and usage schedules.
• New distributor growth in 3 of 5 regions, with North America up 17% year-over-year.
• 5 Extravaganzas in September had ~57,000 attendees, a 5% increase compared to 2024.
• Launched new products like HL/Skin (EMEA skin care line), Baseline (healthy lifespan supplement), and a sleep product in Mexico.
• Opened new state-of-the-art R&D center in Torrance, CA, supporting over 300,000 tests annually.

Net sales for the third quarter were $1.3 billion, up 2.7% year-over-year. On a constant currency basis, net sales increased 3.2%. North America returned to growth with net sales up 1% year-over-year in both reported and local currency. Latin America had reported and local currency net sales up 11% year-over-year. EMEA net sales increased 4% on a reported basis and 2% on a local currency basis. Asia-Pacific reported net sales were relatively flat, but up 3% on a local currency basis. China net sales were down 5% year-over-year on both reported and local currency basis. Revenue contributions varied by region, with North America, Latin America, and EMEA showing growth while China faced decline.

• Full year net sales expected to range from a slight decline of 0.3% to growth of 0.7% year-over-year; on a constant currency basis, net sales are anticipated to increase between 1.2% and 2.2% year-over-year.
• Adjusted EBITDA is now expected to be in the range of $645 million to $655 million, or $700 million to $710 million on a constant currency basis.
• Capital expenditures for the full year are expected to be in the range of $80 million to $90 million, with capitalized SaaS implementation costs in the range of $25 million to $30 million.
• The adjusted effective tax rate for full year 2025 is expected to be between 27% and 28%.

• Currency volatility can impact financial results.
• Tariffs enacted through the period are immaterial but monitored.
• Bonus accrual patterns in 2025 may cause year-over-year differences in expenses.
• Potential impact of global market conditions on distributor engagement and sales.

Q: About capital allocation and other uses of cash, A: Debt reduction is the priority, with excess cash to be used for business investments and circumstantial decisions.

Q: About costs for distributors on new product introductions, A: No significant increase expected as distributors use normal education formats.

Q: Early responses from Pro2col beta group, A: Strong engagement with distributors, feedback being used to refine the app.

Q: New distributor growth and productivity, A: Growth due to excitement about future initiatives and business building programs.

Q: AI in skin care product development, A: Developed in partnership, with strong initial engagement.

Q: Volume growth and product categories, A: Mix includes healthy active lifestyle products, with Multiburn boosting weight loss focus in the U.S.

Q: Sales mix and profitability, A: Some product lines and countries more profitable, but no specific categories highlighted.

Q: GLP-1 integration, A: Continues to focus on natural alternatives and supporting customers on weight loss journeys.

Q: Mastermind program and beauty product expansion, A: Mastermind program expanded to India, beauty products to be expanded globally with strong demand.

Q: North America sales growth and cash generation, A: North America saw a jump in sales due to July product launches, cash generation focused on debt reduction, not stock buybacks currently.

Q: Subscription revenue, A: Subscription revenue is part of future vision, with products like Multiburn and Pro2col app supporting it.