Herbalife Nutrition Ltd. (NYSE: HLF) today reported financial results for the third quarter ended September 30, 2022:
- Third quarter 2022 net sales of $1.3 billion, a 9.5% decrease compared to the third quarter 2021. On a constant currency basis1, net sales declined 3.5% compared to the prior year period.
- Third quarter 2022 reported diluted EPS of $0.83 and adjusted2 diluted EPS of $0.91, compared to third quarter 2021 reported and adjusted2 diluted EPS of $1.09 and $1.21, respectively.
- Third quarter 2022 reported net income of $82.2 million and adjusted2 EBITDA of $182.8 million.
- During the third quarter, the Company reduced its debt levels by paying down $50 million of its revolving credit facility.
- Given the rapidly shifting macroeconomic sentiment and backdrop, as well as increased volatility in the marketplace, the Company is withdrawing FY 2022 guidance. The Company will periodically reassess its ability to provide guidance when we believe future performance can be reasonably estimated.
- Michael O. Johnson announced as Chairman and interim CEO. Please refer to separate press release for more information related to the CEO transition.
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 diluted EPS and adjusted EBITDA 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 GAAP measure, and a discussion of why we believe these non-GAAP measures are useful.
Herbalife Nutrition reported net sales of $1.3 billion for the third quarter of 2022, a decrease of 9.5% compared to the prior year, which was below the Company’s expectations. The Company believes that macroeconomic inflationary pressures challenged Members’ operations and customer demand during the quarter. Net sales were also negatively impacted due to unfavorable geographic mix of revenue as well as the strengthening of the U.S. dollar, which drove a significant currency headwind compared to net sales the prior year.
Management took decisive actions to execute on expense management initiatives that benefited net income and also contributed to an adjusted1 EBITDA and adjusted1 EPS that were above or near the high-end of the Company’s Q3 guidance range. Additionally, during the third quarter, the Company strategically reduced $50 million of its outstanding debt.
From a global perspective, some of the Company’s underlying business trends and KPIs remained largely stabilized compared to Q2 levels. Worldwide active sales leaders, and new distributors and preferred customers, were slightly improved from Q2 levels. The global metrics were supported by significant strength in India and management is keenly focused on improving distributor metrics outside of India.
As such, the Company is rolling out a new campaign focused on driving new distributors to the Company. This collaboration with the Company’s independent distributors has resulted in market-specific initiatives designed to attract additional distributors to join the company in both the short and long-term. The Company is also supporting Members with the resumption of in-person events, product line expansions, and the deployment of enhanced technology tools to support their businesses.
The sales trends that softened through the third quarter are expected to continue into the fourth quarter were impacted by the challenging macroenomic landscape. Given the rapidly shifting macroeconomic sentiment and backdrop, as well as increased volatility in the marketplace, the Company is withdrawing FY 2022 guidance.
As the Company continues to navigate the macro backdrop, profit protection initiatives remain a focal point for management. At the same time, the Company continues to invest for future growth, including its digital transformation, the Herbalife ONE platform, in addition to the development and launch of new products around the world.
“Over our 42-year history we have overcome numerous macroeconomic challenges, and many of our distributors have developed new successful sales strategies and seen positive longer-term impacts on their organizations as a result of these times, as new individuals look to the Herbalife Nutrition business opportunity as a way to supplement their income,”
said CEO, Michael O. Johnson.
“We remain confident that the resilience of our business model, the entrepreneurial spirit of our independent distributors, the growth profile of our product categories, and the strategic actions we are taking will help us emerge from the current environment stronger than ever.”
About Herbalife Nutrition Ltd.
Herbalife Nutrition (NYSE: HLF) is a global company 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 95 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. Through the Company’s commitment to nourish people, communities and planet, Herbalife Nutrition pledges to achieve 50 million positive impacts – tangible acts of good – by 2030, its 50th anniversary.
For more information, please visit IAmHerbalifeNutrition.com.
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