Slide 1: Q3 2023 Earnings Presentation
Q3 2023 Earnings Presentation November 1, 2023
Slide 2: Forward-Looking Statements
Q3 2023 EARNINGS PRESENTATION Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of hi
Slide 3: Strategic Update
Q3 2023 Strategic Update Michael Johnson Chairman & CEO 3
Slide 4: New Product Launches
Q3 2023 EARNINGS PRESENTATION New Product Launches EMEA* Mexico Brazil Latin America* Night Mode Beverage Enhancers OnActive® Drink Golden Beverage Night-time product Powder drink mixes For adults 40+; supports vision, Turmeric drink that supports promoting sleep quality designed for Nutrition Clubs
Slide 5: Business Update
Q3 2023 Business Update Stephan Gratziani CSO 5
Slide 6: Financial Update
Q3 2023 Financial Update Alex Amezquita CFO 6
Slide 7: Q3 2023 Key Financial Highlights
Q3 2023 EARNINGS PRESENTATION Q3 2023 Key Financial Highlights 1. Q3 YoY reported net sales trends improved for third consecutive quarter, down 1.1% YoY 2. Q3 gross profit margin of 76.3% impacted by ~160 bps of favorable pricing, ~290 bps of unfavorable input cost inflation 3. Q3 adjusted EBITDA1 o
Slide 8: Results – Financial Highlights
Q3 2023 EARNINGS PRESENTATION Q3 2023 Results – Financial Highlights Net Sales Adjusted EBITDA1 Adjusted Diluted EPS1 (1.1)% ~$163M $0.65 vs Q3 2022 Q3 2023 Q3 2023 3rd Consecutive Quarter Operating Cash Flows of Improved YoY Reported Net Sales Trends ~40 bps 12.7% ~$80M Currency tailwind Q3 2023 Q3
Slide 9: Q3 Drivers of Net Sales Change
Q3 2023 EARNINGS PRESENTATION Net Sales Q3 Drivers of Net Sales Change (% Change vs Prior Year) 6.3% 0.4% (1.5)% (1.1)% (2.2)% (5.6)% Country Mix Local Currency Reported Volume Pricing FX and Other Net Sales1 Net Sales (1) Non-GAAP Measure. Refer to Appendix for discussion of why we believe adjustin
Slide 10: Adjusted EBITDA Margin Bridge
Q3 2023 EARNINGS PRESENTATION Adjusted EDITDA1 Margin Bridge Q3 Drivers of Adjusted EBITDA1 Margin Change (% Change vs Prior Year) 1.9% 14.1% 0.5% - 12.7% 0.0% (2.9)% (0.1)% (0.5)% (0.3)% Inventory Promotional Salaries Q3 2022 Pricing Input Costs Reserves Other FX Q3 2023 Related Spend & Bonus & Oth
Slide 11: Average Active Sales Leaders Up +2% vs Q2 2023
Q3 2023 EARNINGS PRESENTATION Average Active Sales Leaders Up +2% vs Q2 2023 Average Active Sales Leaders1 600,000 500,000 482K 467K 459K 400,000 300,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2019 2020 2021 2022 2023 (1) Average Active Sales Leaders represents the weighted monthly
Slide 12: Active Preferred Customers and Non-Sales Leaders Up +10% vs Q4 2022
Q3 2023 EARNINGS PRESENTATION Active Preferred Customers and Non-Sales Leaders Up +10% vs Q4 2022 Total Active Preferred Members/Customers1 and Non-Sales Leaders Distributors/Members2 2,000K 1,687K 1,700K 1,666K 1,665K 1,533K 1,400K 1,100K Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 201
Slide 13: Younger Generations Active with Business
Q3 2023 EARNINGS PRESENTATION Younger Generations Active with Business Gen Z Boomers 6% Average Active 12% Sales Leaders1 Gen X Millennials 50% 38% 44% Millennials and Gen Z Boomers Gen Z 10% 10% Active Preferred Customers and Non-Sales Leaders2 Gen X 57% 33% Millennials 47% Millennials and Gen Z (1
Slide 14: Regional Scorecard
Q3 2023 EARNINGS PRESENTATION Regional Scorecard Local Currency Reported Net Sales Net Sales1 Q3 2023 Q3 2022 YoY % Change YoY % Change $ million Asia Pacific 441.0 431.7 +2% +5% North America 277.8 317.5 (13)% (13)% EMEA 261.0 247.7 +5% +3% Latin America 212.0 187.6 +13% +4% China 89.5 110.6 (19)%
Slide 15: Capital Structure Update
Q3 2023 EARNINGS PRESENTATION Capital Structure Update • Strategically repurchased $65.5M of 2024 Convertible Notes in open market o Recognized ~$1M gain on extinguishment of debt o $197M outstanding principal due Mar ‘24 • $330M revolving credit facility remains fully undrawn at Sep 30 ‘23 • Gross
Slide 16: Appendix
Q3 2023 EARNINGS PRESENTATION Appendix 16
Slide 17: Supplemental Information
Q3 2023 EARNINGS PRESENTATION Supplemental Information Non-GAAP Financial Measures Adjusted SG&A, Adjusted EBITDA, Adjusted Net Income and Adjusted Diluted EPS In addition to its reported results calculated in accordance with U.S. GAAP, the Company has included in this presentation adjusted SG&A, ad
Slide 18: YTD Drivers of Net Sales Change
Q3 2023 EARNINGS PRESENTATION Net Sales YTD Drivers of Net Sales Change (% Change vs Prior Year) 9.5% (1.3)% (2.8)% (1.6)% (4.4)% (11.0)% Country Mix Local Currency Reported Volume Pricing FX and Other Net Sales1 Net Sales (1) Non-GAAP Measure. Refer to Supplemental Information included herein for d
Slide 19: Adjusted EBITDA Margin Bridge YTD
Q3 2023 EARNINGS PRESENTATION Adjusted EDITDA1 Margin Bridge YTD Drivers of Adjusted EBITDA1 Margin Change (% Change vs Prior Year) 3.1% 14.0% - 0.0% 12.0% (2.2)% (0.3)% (0.7)% (0.7)% (1.2)% Inventory Promotional Salaries YTD 2022 Pricing Input Costs Reserves Other FX YTD 2023 Related Spend & Bonus
Slide 20: Regional Scorecard YTD
Q3 2023 EARNINGS PRESENTATION Regional Scorecard Local Currency Reported Net Sales Net Sales1 YTD 2023 YTD 2022 YoY % Change YoY % Change $ million Asia Pacific 1,280.4 1,290.1 (1)% +4% North America 878.6 987.2 (11)% (11)% EMEA 818.7 831.7 (2)% +1% Latin America2 624.5 594.7 +5% (0)% China 245.2 31
Slide 21: Reconciliation of SG&A to Adjusted SG&A
Q3 2023 EARNINGS PRESENTATION Reconciliation of SG&A to Adjusted SG&A THREE MONTHS ENDED SEPTEMBER 30 NINE MONTHS ENDED SEPTEMBER 30 $ million 2023 2022 2023 2022 Net sales 1,281.3 1,295.1 3,847.4 4,023.6 Selling, general, and administrative expenses (SG&A) 455.3 448.2 1,391.7 1,373.1 SG&A as a perc
Slide 22: Reconciliation of Net Income to Adjusted EBITDA
Q3 2023 EARNINGS PRESENTATION Reconciliation of Net Income to Adjusted EBITDA THREE MONTHS ENDED SEPTEMBER 30 NINE MONTHS ENDED SEPTEMBER 30 $ million 2023 2022 2023 2022 Net income 42.8 82.2 132.0 266.9 Interest expense, net 38.5 34.5 116.3 95.9 Income taxes 26.4 30.7 53.3 93.5 Depreciation and amo
Slide 23: Reconciliation of Net Income to Adjusted Net Income
Q3 2023 EARNINGS PRESENTATION Reconciliation of Net Income to Adjusted Net Income THREE MONTHS ENDED SEPTEMBER 30 NINE MONTHS ENDED SEPTEMBER 30 $ million 2023 2022 2023 2022 Net income 42.8 82.2 132.0 266.9 Net expenses related to COVID-19 pandemic ― 0.5 ― 3.8 Expenses related to Transformation Pro
Slide 24: Reconciliation of Diluted EPS to Adjusted Diluted EPS
Q3 2023 EARNINGS PRESENTATION Reconciliation of Diluted EPS to Adjusted Diluted EPS THREE MONTHS ENDED SEPTEMBER 30 NINE MONTHS ENDED SEPTEMBER 30 $ per share 2023 2022 2023 2022 Diluted earnings per share 0.43 0.83 1.32 2.68 Net expenses related to COVID-19 pandemic ― 0.01 ― 0.04 Expenses related t
Slide 25: FX Translation Impact
Q3 2023 EARNINGS PRESENTATION FX Translation Impact $ million, except EPS Net Sales EBITDA Net Income Diluted EPS1 Q3 2023 as Reported 1,281.3 136.1 42.8 0.43 Non-GAAP adjustments2 ― 27.2 22.5 0.23 Q3 2023 Adjusted 1,281.3 163.3 65.3 0.65 FX rate adjustments3 (7.0) 2.3 1.6 0.02 Q3 2023 FX Adjusted 1
Slide 26: Herbalife
Herbalife’