Herbalife Ltd. · NYSE:HLF
Herbalife — Q2 2023 Earnings Presentation
26 slides from Herbalife's earnings presentation, Aug 2, 2023
Slide 1: Q2 2023 Earnings Presentation
Q2 2023 Earnings Presentation August 2, 2023
Slide 2: Forward-Looking Statements
Q2 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
Q2 2023 Strategic Update Michael Johnson Chairman & CEO 3
Slide 4: Herbalife V: A Plant-Based Lifestyle Re-imagined
Q2 2023 EARNINGS PRESENTATION HERBALIFE V A Plant-Based Lifestyle Re-imagined Protein Shake Protein Shake Chocolate Classic Greens Digestive Immune Booster Support* Support* USDA Organic | Vegan/Plant-based | Non-GMO Project Verified | Kosher 4 * These statements have not been evaluated by the Food
Slide 5: Business & Financial Update
Q2 2023 Business & Financial Update Alex Amezquita CFO 5
Slide 6: Q2 2023 Key Financial Highlights
Q2 2023 EARNINGS PRESENTATION Q2 2023 Key Financial Highlights 1. Herbalife reports Q2 2023 net sales of ~$1.3B, down 5.7% YoY; down 4.2% YoY on constant currency basis1 • YoY reported net sales trends improved for 2 sequential quarters 2. Q2 gross profit margin of 77.0% negatively impacted by ~90 b
Slide 7: Results – Financial Highlights
Q2 2023 EARNINGS PRESENTATION Q2 2023 Results – Financial Highlights Net Sales Adjusted EBITDA1 Adjusted Diluted EPS1 (5.7%) ~$170M $0.74 vs Q2 2022 Q2 2023 Q2 2023 2nd Consecutive Quarter Operating Cash Flows of Improved YoY Reported Net Sales Trends ~150 bps 12.9% ~$136M Currency headwind Q2 2023
Slide 8: Q2 Drivers of Net Sales Change
Q2 2023 EARNINGS PRESENTATION Net Sales Q2 Drivers of Net Sales Change (% Change vs Prior Year) 10.9% (2.5%) (1.5%) (4.2%) (5.7%) (12.6%) 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 adju
Slide 9: Adjusted EBITDA Margin Bridge
Q2 2023 EARNINGS PRESENTATION Adjusted EDITDA1 Margin Bridge Q2 Drivers of Adjusted EBITDA1 Margin Change (% Change vs Prior Year) 3.6% 0.1% 14.0% (1.8%) 12.9% (0.5%) (0.4%) (1.0%) (1.1%) Inventory Promotional Salaries Q2 2022 Pricing Input Costs Reserves Other FX Q2 2023 Related Spend & Bonus & Oth
Slide 10: Average Active Sales Leaders Relatively Flat vs Q1 2023, Above 2019 Levels
Q2 2023 EARNINGS PRESENTATION Average Active Sales Leaders Relatively Flat vs Q1 2023, Above 2019 Levels Average Active Sales Leaders1 600,000 500,000 482K 462K 459K 400,000 300,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2019 2020 2021 2022 2023 (1) Average Active Sales Leaders repres
Slide 11: Active Preferred Customers and Non-Sales Leaders Relatively Flat vs Q1 2023
Q2 2023 EARNINGS PRESENTATION Active Preferred Customers and Non-Sales Leaders Relatively Flat vs Q1 2023 Total Active Preferred Members/Customers1 and Non-Sales Leaders Distributors/Members2 2,000K 1,752K 1,665K 1,700K 1,649K 1,400K 1,100K Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2019
Slide 12: Younger Generations Active with Business
Q2 2023 EARNINGS PRESENTATION Younger Generations Active with Business Active Preferred Customers Average Active Sales Leaders1 and Non-Sales Leaders 2 Gen Z 6% Boomers Gen Z Boomers 9% 10% 12% Gen X Millennials Gen X Millennials 38% 44% 34% 47% ~50% Millennials and Gen Z (1) Average Active Sales Le
Slide 13: Regional Scorecard
Q2 2023 EARNINGS PRESENTATION Regional Scorecard Local Currency Reported Net Sales Net Sales1 Q2 2023 Q2 2022 YoY % Change YoY % Change $ million Asia Pacific 425.8 450.7 (6%) (1%) North America 303.6 343.5 (12%) (11%) EMEA 289.6 289.0 +0% +2% Latin America2 207.0 205.8 +1% (4%) China 88.0 103.7 (15
Slide 14: Capital Structure Update
Q2 2023 EARNINGS PRESENTATION Capital Structure Update • ~$527 million of cash on hand at Jun 30 ’23, up ~$72M from Mar 31 ‘23 • $330M revolving credit facility remains fully undrawn at Jun 30 ‘23 • Gross leverage ratio of ~3.7x at Jun 30 ’23; compliant with all debt covenants as of Jun 30’ 23 • Eff
Slide 15: Q&A
Q2 2023 EARNINGS PRESENTATION Q&A 15
Slide 16: Appendix
Q2 2023 EARNINGS PRESENTATION Appendix 16
Slide 17: Supplemental Information
Q2 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 GAAP, the Company has included in this presentation adjusted SG&A, adjuste
Slide 18: YTD Drivers of Net Sales Change
Q2 2023 EARNINGS PRESENTATION Net Sales YTD Drivers of Net Sales Change (% Change vs Prior Year) 11.8% (1.7%) (3.4%) (2.6%) (6.0%) (13.5%) 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 adj
Slide 19: YTD Adjusted EBITDA Margin Bridge
Q2 2023 EARNINGS PRESENTATION Adjusted EDITDA1 Margin Bridge YTD Drivers of Adjusted EBITDA1 Margin Change (% Change vs Prior Year) 4.1% 14.0% 0.1% (2.0%) (0.6%) 11.6% (1.3%) (1.0%) (1.7%) Inventory Promotional Salaries YTD 2022 Pricing Input Costs Reserves Other FX YTD 2023 Related Spend & Bonus &
Slide 20: Regional Scorecard (YTD)
Q2 2023 EARNINGS PRESENTATION Regional Scorecard Local Currency Reported Net Sales Net Sales1 YTD 2023 YTD 2022 YoY % Change YoY % Change $ million Asia Pacific 839.4 858.4 (2%) +3% North America 600.8 669.7 (10%) (10%) EMEA 557.7 584.0 (5%) (0%) Latin America2 412.5 407.1 +1% (2%) China 155.7 209.3
Slide 21: Reconciliation of SG&A to Adjusted SG&A
Q2 2023 EARNINGS PRESENTATION Reconciliation of SG&A to Adjusted SG&A THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30 $ million 2023 2022 2023 2022 Net sales 1,314.0 1,392.7 2,566.1 2,728.5 Selling, general, and administrative expenses (SG&A) 460.5 470.0 936.4 924.9 SG&A as a percentage of net s
Slide 22: Reconciliation of Net Income to Adjusted EBITDA
Q2 2023 EARNINGS PRESENTATION Reconciliation of Net Income to Adjusted EBITDA THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30 $ million 2023 2022 2023 2022 Net income 59.9 86.5 89.2 184.7 Interest expense, net 38.4 31.7 77.8 61.4 Income taxes 25.1 37.6 26.9 62.8 Depreciation and amortization 29.
Slide 23: Reconciliation of Net Income to Adjusted Net Income
Q2 2023 EARNINGS PRESENTATION Reconciliation of Net Income to Adjusted Net Income THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30 $ million 2023 2022 2023 2022 Net income 59.9 86.5 89.2 184.7 Net expenses related to COVID-19 pandemic ― 1.6 ― 3.3 Expenses related to Transformation Program 10.1 3.
Slide 24: Reconciliation of Diluted EPS to Adjusted Diluted EPS
Q2 2023 EARNINGS PRESENTATION Reconciliation of Diluted EPS to Adjusted Diluted EPS THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30 $ per share 2023 2022 2023 2022 Diluted earnings per share 0.60 0.88 0.89 1.84 Net expenses related to COVID-19 pandemic ― 0.02 ― 0.03 Expenses related to Transform
Slide 25: FX Translation Impact
Q2 2023 EARNINGS PRESENTATION FX Translation Impact $ million, except EPS Net Sales EBITDA Net Income Diluted EPS1 Q2 2023 as Reported 1,314.0 152.5 59.9 0.60 Non-GAAP adjustments2 ― 17.1 14.1 0.14 Q2 2023 Adjusted 1,314.0 169.6 74.0 0.74 FX rate adjustments3 18.8 16.9 12.3 0.12 Q2 2023 FX Adjusted
Slide 26: Herbalife
Herbalife’