HERBALIFE LTD. Q1 FY2025 earnings call

• Stephan emphasized Herbalife's mission to change lives through nutrition, community, and entrepreneurship, with evolution driven by market changes. He highlighted three aspects: conviction in leading the health and wellness economy, transformation by building on brand, business model, and products, and a path forward focusing on innovation, operational excellence, and sustainable growth.
• Asset acquisitions: Acquired Pro2col with its technology platform for personalized health protocols, Link BioSciences for manufacturing personalized products, and Pruvit assets for expanding product offerings. Planned beta launch of Pro2col platform in July and commercial release in Q4 2025.
• Distributor initiatives: Fourth consecutive quarter of new distributor growth, with programs like Herbalife Premier League, Diamond Development Mastermind Program, and Herbalife Flex45 challenge; Extravaganza training events held in various regions.

Net sales for the first quarter were $1.2 billion, down 3.4% compared to Q1 2024, but up 1.4% on a constant currency basis. Adjusted EBITDA was $165 million, exceeding the guidance range of $140 million to $150 million. The total leverage ratio was reduced to three times as of March 31. Regionally, in Latin America, net sales were down 4% on a reported basis but up 11% on a local currency basis. EMEA net sales were down 2% on a reported basis but up 3% on a local currency basis. Asia Pacific net sales were down 2% on a reported basis but up 2% on a local currency basis.

• Second quarter net sales expected to be in the range of down 3.5% to up 0.5% year-over-year, with approximately $40 million negative impact from FX; adjusted EBITDA expected to be in the range of $160 million to $170 million.
• Full year 2025 net sales range narrowed to down 2.5% to up 2.5% year-over-year, constant currency up 0.5% to up 5.5%; adjusted EBITDA raised to range of $625 million to $655 million; capital expenditures reduced to range of $90 million to $120 million.

• FX volatility risk, as FX was a significant headwind and expected to continue impacting results.
• Market competition risk, as the health and wellness market is evolving with new competitors and changing consumer expectations.

Q: Chasen Bender asked about Pro2col's monetization strategy and Nutrition Club conversion rates.

A: Stephan and John discussed Pro2col being new, with beta launch in July and commercial release in Q4, and Nutrition Club conversion as a large opportunity with potential for increased conversion.

Q: John Baumgartner asked about Link BioSciences' audience and Asia Pacific volume and distributor situation.

A: Stephan said Link targets athletes and sophisticated customers, John DeSimone discussed Asia Pacific having some market weaknesses but overall positive with rolling forward some trends.

Q: Rob Rigby asked about tariffs and CapEx related to acquisitions.

A: John DeSimone explained tariff impact is not material after duty drawback, and CapEx guidance lowered due to reprioritization and underspending in Q1.

Q: Hale Holden asked about EBITDA increase and cash conversion.

A: John DeSimone said EBITDA increase includes SG&A costs for protocol launch, and cash conversion benefited from initiatives to lower minimum cash needs.

Q: Doug Lane asked about protocol capital investment and Flex45 Challenge.

A: John DeSimone said protocol CapEx is reprioritized, Stephan discussed positive distributor response to Flex45 Challenge.