At this point, I will now turn the call over to Michael Johnson, our Chairman and CEO. Michael, please go ahead.
Michael Johnson: Thank you, Erin, and good afternoon, everyone. I am pleased to report that Herbalife had a solid performance in the third quarter of 2024, meeting our net sales guidance of $1.2 billion and surpassing expectations with an adjusted EBITDA of $167 million. We continue to focus on driving growth, reducing debt, and improving our leverage ratio. I am proud of the progress we have made in these areas, as well as the momentum we are building with our distributor base and new product initiatives. Stephan will provide more details on our strategy and outlook shortly, but first, I will hand it over to John to discuss our financial performance in more detail. John?
John DeSimone: Thank you, Michael. In the third quarter, we achieved a cash flow of $100 million and paid down $85 million in debt, reducing our leverage ratio to 3.3x. We also saw a 14% year-over-year increase in new distributor growth, which is a positive trend for our business. We are focused on managing our capital expenditures and debt reduction efforts to strengthen our financial position and support our long-term growth initiatives. I will provide more insights into our financials and outlook in the following presentation. Thank you.
Erin Banyas: Thank you, John. Now, I will turn it over to Stephan to discuss our strategic initiatives and outlook for the company.
Stephan Gratziani: Thank you, Erin. Our focus remains on driving growth through our distributor base and new product initiatives. We have launched new products and a type 2 diabetes lifestyle program, with a strong focus on sustainability. In addition, our sports sponsorships and campaigns to empower women in sports are expected to contribute to global sales growth. We are optimistic about our future sales growth driven by an expanding distributor base and improved training programs. We are also making strategic changes to enhance our global business performance through localized adaptations, which we believe will drive greater distributor value and volume sales. Our outlook for the fourth quarter and full year is as follows:
For the fourth quarter, we expect net sales to range from a 1% increase to a 3% decrease, with adjusted EBITDA projected between $105 million and $135 million. Our full-year net sales guidance has been updated to a decline of 1% to 2%, with adjusted EBITDA expectations increased to $590 million to $620 million. We are also forecasting capital expenditures for the fourth quarter at $25 million to $45 million. Our goal is to reduce debt by $1 billion over the next four years, supported by strong cash flows. Thank you for your attention, and I will now turn it back to Erin for the Q&A session.
Erin Banyas: Thank you, Stephan. At this time, we will open the line for questions. Please limit your questions to one per person to allow for as many participants as possible. Thank you.
Operator: Thank you. We will now begin the question-and-answer session. (Q&A session ensues)
Disclosure: This article is not an investment recommendation. Any analysis presented in this article is illustrative in nature, is based on an incomplete set of information and has limitations to its accuracy, and is not meant to be a substitute for professional financial advice. Please consult a professional financial advisor for more information. In conclusion, we are encouraged by the positive momentum we are seeing in our business. Our focus on recruiting and training distributors, launching new products, and investing in sustainability initiatives is driving growth and success. We are committed to continuing to evolve and meet the changing needs of the marketplace to solidify our position as the world’s premier health and wellness company. Thank you for your continued support and for joining us on this call. Now I will turn it over to John DeSimone to provide more detail on our financial performance. Thank you. This focus on customer acquisition in China is part of our broader strategy to increase customer engagement and loyalty across all markets. In addition to the Herbalife Premier League and customer loyalty programs, we have also launched new product lines and promotions to attract and retain customers. These efforts have resulted in increased customer retention rates and higher average order values. Overall, we are confident that our customer-centric approach will drive sustainable growth and help us achieve our long-term goals.
In conclusion, we are pleased with the progress we have made in rebuilding and strengthening our base of distributors. The growth in new distributor numbers, leadership levels, and active non-sales leaders is a positive sign that our efforts are paying off. We are also encouraged by the initial results of our customer-centric strategy in China and believe that it will lead to long-term benefits for the business.
We are committed to empowering women in sports and inspiring more women to join our business and become part of our community. We believe in the power of all people and are inclusive in our approach. We are dedicated to helping our distributors and customers succeed and are constantly looking for new ways to support them.
Thank you for your continued support of Herbalife. We are excited about the future and look forward to sharing more updates with you in the months ahead.
Net sales in North America were down 2.8% year-over-year, driven by a 4.1% decline in volumes partially offset by a 1.3% benefit from pricing actions. In EMEA, net sales were down 8.7% year-over-year, primarily due to a 7.6% decline in volumes, partially offset by a 1.1% benefit from pricing. Asia Pacific net sales were up 2.7% year-over-year, driven by a 1.1% increase in volumes and a 1.6% benefit from pricing. China continued to be a strong performer with net sales up 20.4% year-over-year, driven by a 22% increase in volumes partially offset by a 1.6% headwind from pricing. Now turning to Slide 13, we have the breakdown of our volumes by region. North America volumes declined by 4.1% year-over-year, driven by a 4.4% decline in the US and a 1.7% decline in Canada. EMEA volumes declined by 7.6% year-over-year, driven by declines in most countries within the region. Asia Pacific volumes increased by 1.1% year-over-year, driven by growth in China and India partially offset by declines in other countries within the region. China volumes were up 22% year-over-year, driven by strong growth in the preferred customer base and increased purchasing frequency. In India, volumes were up 4.7% year-over-year, driven by growth in the preferred customer base and increased purchasing frequency. Overall, we are pleased with the progress we are making in key markets and remain focused on driving growth and profitability in the coming quarters. With that, I’ll turn it back over to Stephan for closing remarks. We are adjusting our full year adjusted EBITDA guidance to be in the range of $555 million to $585 million. Our full year planned capital expenditures are expected to be in the range of $145 million to $165 million. The guidance also includes approximately $10 million of capitalized SaaS implementation costs. We continue to focus on driving sustainable growth and profitability in our business, while also maintaining a strong capital structure and disciplined approach to managing our debt. We believe that the initiatives we have in place, combined with our ongoing efforts to optimize our cost structure and improve operational efficiency, will position us well for future success. Thank you for your continued support and confidence in Herbalife Nutrition. Can you maybe talk about any specific initiatives or strategies that you’re implementing to continue this positive trend and what you see as the key drivers to sustain this growth in the upcoming quarters?
Stephan Boffa: Thank you for the question, Chasen. Yes, we are focused on several key initiatives to drive and sustain distributor growth in North America. One of the key strategies is our Mastermind program, which provides targeted support and training to our top leaders who run nutrition clubs. This program helps them improve their business flow, attract more customers and distributors, and ultimately drive growth in their organizations. Additionally, our Herbalife Premier League initiative is designed to recognize and reward high-performing distributors, motivating them to continue their success and serve as positive examples for others in the organization. We are also leveraging our key account management program to provide ongoing support and guidance to our leaders, ensuring they have the resources and tools they need to succeed. Overall, our focus is on rebuilding a strong distributor base, supporting them with targeted programs and initiatives, and creating a culture of growth and success within our organization. We believe that these efforts will continue to drive positive trends in distributor growth in North America in the upcoming quarters. Thank you.
Chasen Bender: Great. Thank you for the detail. And then maybe just a quick follow-up on the debt reduction goal. Can you provide some more color on the specific strategies or actions you plan to take to achieve this $1 billion debt reduction target by the end of 2028? And do you anticipate any challenges or obstacles in reaching this goal?
John DeSimone: Thank you for the question, Chasen. Our debt reduction goal of $1 billion by the end of 2028 is a key priority for us, and we have a clear strategy in place to achieve this target. Our plan is to use the significant cash flows generated by Herbalife to pay down debt over the next four plus years. This will involve a disciplined approach to managing our capital expenditures, optimizing our cash flow generation, and prioritizing debt repayment as a use of funds. We believe that this goal is achievable based on our current financial position and cash flow outlook. While there may be challenges or obstacles along the way, we are confident in our ability to execute on this plan and reduce our debt levels in line with our target. Thank you. Thank you for your question. Would you like to ask anything else? John DeSimone: And just to add to that, we are constantly monitoring the macroeconomic factors in all of our markets, not just in India, but globally. We understand that there are risks and uncertainties, but we are focused on continuing to innovate and provide value to our distributors and customers. Our goal is to adapt to the changing environment and continue to grow our business despite any challenges that may arise. Thank you for your question, John. Stephan, thank you for that detailed explanation on China. It’s clear that the focus on customer-centric strategies is starting to show positive results, even if there were short-term impacts on volume. It’s encouraging to hear about the growth in preferred customers and purchasers, and the potential upside in such a large market. It sounds like the long-term strategy is the right approach, and I appreciate the transparency on the challenges and adjustments that may be needed. Thank you. We are working on expanding our distributor network to reach more customers, but we are also focused on increasing the productivity of our existing distributors. This includes providing them with the tools and resources they need to be successful, as well as training and support to help them grow their customer base and increase sales. So it’s a combination of both expanding and optimizing our distributor network to drive volume growth. As we move forward, we remain focused on our key priorities of generating new sellers, improving efficiencies in our plants, and continuing to pay down debt. We are encouraged by the progress we have made and are optimistic about the future. Thank you for your continued support and we look forward to updating you on our progress in the future. Have a great day. We’ve repaid $85 million in debt from our revolving credit facility, which was fully undrawn as of September 30. This brings our total leverage ratio down to 3.3x at the end of September, and we are working towards lowering it even further. The addition of new distributors is crucial to our growth, as we have seen a 14% increase year-on-year worldwide. This marks the second consecutive quarter of year-on-year improvement, and we are focused on building a stronger distributor base.
Stephan, Eric, and the team are actively training and working with our distributors to help them grow their businesses. We have identified distributors who are committed to expanding their business and are eager to participate in high-level training programs offered by the company. By leveraging the best ideas from distributors around the world and motivating our team, we are creating more opportunities for distributors than ever before.
Despite facing challenges in our industry, we believe strongly in the Herbalife model. While other companies are investing in automation and driverless technology, we are dedicated to bringing more people into our community and empowering them to lead healthier lives. Our commitment to health, nutrition, and wealth-building opportunities remains unwavering, and we are confident in the future of our company.
We recognize that rebuilding will take time, but we have a great management team, dedicated distributors, and loyal customers who have experienced life-changing transformations. Our mission is to continue strengthening and expanding our reach, and we are prepared to face any challenges that come our way. Let’s grow and go Herbalife.
Translation to B1 English:
We have paid off $85 million in debt from our revolving credit facility, which was completely unused as of September 30. This has reduced our total leverage ratio to 3.3x by the end of September, and we are working towards lowering it even further. The addition of new distributors is essential for our growth, as we have seen a 14% increase year-on-year worldwide. This marks the second consecutive quarter of year-on-year improvement, and we are focused on building a stronger distributor base.
Stephan, Eric, and the team are actively training and working with our distributors to help them grow their businesses. We have identified distributors who are committed to expanding their business and are eager to participate in high-level training programs offered by the company. By leveraging the best ideas from distributors around the world and motivating our team, we are creating more opportunities for distributors than ever before.
Despite facing challenges in our industry, we believe strongly in the Herbalife model. While other companies are investing in automation and driverless technology, we are dedicated to bringing more people into our community and empowering them to lead healthier lives. Our commitment to health, nutrition, and wealth-building opportunities remains unwavering, and we are confident in the future of our company.
We recognize that rebuilding will take time, but we have a great management team, dedicated distributors, and loyal customers who have experienced life-changing transformations. Our mission is to continue strengthening and expanding our reach, and we are prepared to face any challenges that come our way. Let’s grow and go Herbalife.