Herbalife Revenue 2022 Down 10.3% To $5.2. Billion

Herbalife Nutrition Ltd. (NYSE: HLF) today reported financial results for the full year and fourth quarter ended December 31, 2022:

Highlights

• Full year 2022 net sales of $5.2 billion, a 10.3% decrease compared to the full year 2021. On a constant currency basis¹, net sales declined 5.4% compared to the prior year.

• Full year 2022 reported diluted EPS of $3.23 and adjusted² diluted EPS of $3.40, compared to full year 2021 reported and adjusted² diluted EPS of $4.13 and $4.79, respectively.

• Full year 2022 reported net income of $321.3 million and adjusted² EBITDA of $694.5 million.

• Fourth quarter 2022 net sales of $1.2 billion, a 10.4% decrease compared to the fourth quarter 2021. On a constant currency basis¹, net sales declined 4.2% compared to the prior year period.

• Fourth quarter 2022 reported diluted EPS of $0.55 and adjusted² diluted EPS of $0.53, compared to fourth quarter 2021 reported and adjusted² diluted EPS of $0.37 and $0.57, respectively.

• Fourth quarter 2022 reported net income of $54.4 million and adjusted² EBITDA of $130.7 million.

• During the fourth quarter, the Company reduced its nominal debt level by approximately $60 million.

• Given the rapidly shifting macroeconomic sentiment and backdrop, as well as increased volatility in the market, the Company is not providing FY 2023 guidance.
• The Company’s previously announced Transformation Program is expected to deliver annual savings of at least $70 million with approximately half of these savings being realized in 2023 and the remainder largely being realized in 2024 and thereafter.

Management Commentary

Herbalife Nutrition reported fourth quarter 2022 net sales of $1.2 billion and full-year 2022 net sales of $5.2 billion, a decrease of 10.4% and 10.3% respectively when compared to the prior year. The Company believes that macroeconomic inflationary pressures continued to challenge Members’ operations and customer demand during the quarter.

During the quarter, management continued to execute on profit protection initiatives which helped generate Q4 2022 adjusted² EBITDA that was approximately flat compared to the prior year period.

Keenly focused on opportunities to grow sales, leadership has been increasing in-person engagement with distributors. Year-to-date in 2023, the Company has already hosted 170 in-person Distributor events around the world, reaching approximately 175,000 Distributors.

“We anticipate the energy and engagement being generated at our in-person events will translate to improving metrics in 2023,”

said Chairman and CEO, Michael O. Johnson.

“Since taking on the CEO role, we have aligned with our distributors behind strategies and objectives to refresh and vitalize the Company, in order to return to growth.”

From a global perspective, some of the Company’s underlying business trends and KPIs remained largely stabilized during the fourth quarter. Worldwide active sales leaders decreased approximately 1% sequentially, compared to Q3 2022. New distributors and preferred customers decreased approximately 1% year-over-year, compared to Q4 2021. Additionally, the Company announced sales leader retention results for the last 12-month requalification period ending in January of 2023 of 67.6%.

While focused on growth, expense management initiatives remain a priority. The Company’s previously announced Transformation Program is expected to deliver annual savings of at least $70 million with approximately half of these savings being realized in 2023 and the remainder largely being realized in 2024 and thereafter. The Company expects to incur total pre-tax one-time expenses of at least $60 million on the Transformation Program to realize these run-rate savings.

“While we are optimistic about revitalizing the topline, we are actively controlling expenses to manage margins, maximize profitability and secure our balance sheet,”

said CFO, Alex Amezquita.

“We expect that free cash flow in 2023 will largely be put towards reducing our overall debt as we continue to work towards our long-term target leverage of 3.0x gross debt to adjusted³ EBITDA.”

During the fourth quarter, the Company strategically reduced its nominal debt by approximately $60 million by paying down its revolver, refinancing a portion of its outstanding convertible notes, and scheduled amortization payments.

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.