Herbalife Nutrition Exceeds First Quarter Net Sales Guidance;

Exceeds High End of Reported and Adjusted¹ Diluted EPS Guidance

by $0.18 and $0.30, Respectively; Raises Full Year 2018 Guidance

 

LOS ANGELES, May 3, 2018 – Herbalife Nutrition Ltd. (NYSE: HLF) today reported financial results for the first quarter ended March 31, 2018:   QUARTER HIGHLIGHTS   •    Reported net sales of $1.2 billion increased 7% compared to first quarter 2017, above the guidance range      of (1.0%) – 3.0%.   •    Reported and adjusted1 diluted EPS of $1.08 and $1.40, respectively, compared to $0.98 and $1.24 for first      quarter last year. •    Volume points of 1.4 billion were relatively flat compared to the prior year period, above the guidance range       of (7.0%) – (3.0%).   •    Raising FY 2018 volume point guidance range to 3% – 7% growth as well as reported and adjusted1 diluted      EPS guidance to $3.95 – $4.35 and $5.05 – $5.45, on a pre stock split basis, respectively.

“We reported higher than expected results and returned to growth in the US, reflecting the efforts of our entrepreneurial distributors, who are meeting the needs of consumers around the world. We are confident about Herbalife Nutrition’s bright future and, accordingly, we have raised our guidance for the full year, as we continue to execute on our strategy to drive long-term growth and fulfill our mission of making the world healthier and happier through personalized nutrition.”   -Rich Goudis, CEO of Herbalife Nutrition

¹ Adjusted diluted EPS is a non-GAAP measure and, for the purpose of guidance, excludes the impact of: non-cash interest expense associated with the Company’s convertible notes, expenses related to regulatory inquiries, China grant income, contingent value rights revaluation, loss on extinguishment of convertible debt, and Venezuela currency devaluation. Adjusted diluted EPS, for the purpose of reported results, excludes the impact of the foregoing as well as expenses relating to challenges to the Company’s business model, and expenses relating to FTC Consent Order implementation. See Schedule A – “Reconciliation of Non-GAAP Financial Measures” for a detailed reconciliation of adjusted net income to net income calculated in accordance with GAAP and a reconciliation of adjusted diluted EPS to diluted EPS calculated in accordance with GAAP and a discussion of why we believe these non-GAAP measures are useful.

 

First Quarter 2018 Key Metrics²

 

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Outlook

 

Following is the Company’s second quarter 2018 and full year 2018 guidance based on current business trends:

 

 

 

▪	Guidance includes a $600 million impact to the Company’s share base from repurchases under its share repurchase program in 2018.

▪	Any incremental repurchases beyond $600 million that may be made in 2018 cannot be accurately predicted and are therefore excluded from the guidance table above.

▪	Guidance is based on the average daily exchange rates during the first two weeks of April 2018.

▪	Adjusted1 diluted EPS guidance for the second quarter 2018 includes a projected currency benefit, on a pre stock split basis, of approximately $0.07 per diluted share versus the second quarter of 2017.

▪	Full year 2018 adjusted1 diluted EPS guidance includes a projected currency benefit, on a pre stock split basis, of approximately $0.26 per diluted share, compared to 2017, which is $0.13 favorable compared to the benefit included in the full year 2018 guidance provided on February 22, 2018.

 

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Earnings Conference Call

 

Herbalife Nutrition senior management will host an investor conference call to discuss its recent financial results and provide an update on current business trends on Thursday, May 3, 2018, at 2:30 p.m. PT (5:30 p.m. ET).

The dial-in number for this conference call for domestic callers is (877) 317-1296, and (262) 320-2006 for international callers (conference ID: 6562099). Live audio of the conference call will be simultaneously webcast in the investor relations section of the Company's website at http://ir.Herbalife.com.

An audio replay will be available following the completion of the conference call in MP3 format or by dialing (855) 859-2056 for domestic callers or (404) 537-3406 for international callers (conference ID: 6562099). The webcast of the teleconference will be archived and available on Herbalife Nutrition's website.

Herbalife Nutrition is a global nutrition company whose purpose is to make the world healthier and happier.  The Company has been on a mission for nutrition - changing people's lives with great nutrition products & programs - since 1980. Together with our Herbalife Nutrition independent distributors, we are committed to providing solutions to the worldwide problems of poor nutrition and obesity, an aging population, and skyrocketing public healthcare costs, while supporting the rise in entrepreneurs of all ages.  Herbalife Nutrition offers high-quality, science-backed products, most of which are produced in Company-operated facilities, one-on-one coaching with an Herbalife Nutrition independent distributor, and a supportive community approach that inspires customers to embrace a healthier, more active lifestyle.

Herbalife Nutrition's targeted nutrition, weight-management, energy and fitness and personal care products are available exclusively to and through dedicated Herbalife Nutrition distributors in more than 90 countries.  

Through its corporate social responsibility efforts, Herbalife Nutrition supports the Herbalife Family Foundation (HFF) and its Casa Herbalife Nutrition programs to help bring good nutrition to children in need. Herbalife Nutrition is also proud to sponsor more than 190 world-class athletes, teams and events around the globe, including Cristiano Ronaldo, the LA Galaxy, and numerous Olympic teams.

Herbalife Nutrition has over 8,000 employees worldwide, and its shares are traded on the New York Stock Exchange (NYSE: HLF) with net sales of approximately $4.4 billion in 2017. To learn more, visit Herbalife.com or IAmHerbalife.com.

Herbalife Nutrition also encourages investors to visit its investor relations website at ir.Herbalife.com as financial and other information is updated and new information is posted.

 

Media Contact:

Jennifer Butler

VP, Media Relations

213.745.0420

Investor Contact:

Eric Monroe

Director, Investor Relations

213.745.0449

 

 

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▪	U.S. and foreign laws and regulations applicable to our international operations;

▪	uncertainties relating to the United Kingdom’s vote to exit from the European Union;

▪	restrictions imposed by covenants in our credit facility;

▪	risks related to the convertible notes;

▪	uncertainties relating to the application of transfer pricing, duties, value added taxes, and other tax regulations, and changes thereto;

▪	changes in tax laws, treaties or regulations, or their interpretation;

▪	taxation relating to our Members;

▪	product liability claims;

▪	our incorporation under the laws of the Cayman Islands;

▪	whether we will purchase any of our shares in the open markets or otherwise; and

▪	share price volatility related to, among other things, speculative trading and certain traders shorting our common shares.

 

 

We do not undertake any obligation to update or release any revisions to any forward-looking statement or to report any events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law.

Results of Operations

 

Herbalife Nutrition Ltd. and Subsidiaries
Condensed Consolidated Statements of Income
(In millions, except per share amounts)
(Unaudited)
		Three Months Ended
		3/31/2018				3/31/2017
North America		$	231.2			$	229.8
Mexico			114.0				104.8
South and Central America			125.7				122.4
EMEA			248.2				209.8
Asia Pacific			245.6				219.7
China			212.2				215.6
Worldwide Net Sales			1,176.9				1,102.1
Cost of Sales			239.9				204.6
Gross Profit			937.0				897.5
Royalty Overrides			337.3				315.1
Selling, General and Administrative Expenses			460.1				438.6
Other Operating Income (1)			(16.2	)			-
Operating Income			155.8				143.8
Interest Expense, net			39.9				30.2
Other Expense, net (2)			24.4				-
Income Before Income Taxes			91.5				113.6
Income Taxes (3)			9.4				28.4
Net Income		$	82.1			$	85.2
Weighted Average Shares Outstanding:
Basic			72.7				83.1
Diluted			76.3				86.7
Earnings Per Share:
Basic		$	1.13			$	1.03
Diluted		$	1.08			$	0.98

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SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(Unaudited and unreviewed), (All tables provide Dollars in millions, except per Share Data)

In addition to its reported results and guidance calculated in accordance with GAAP, the Company has included in this release adjusted net income and adjusted diluted EPS, performance measures that the Securities and Exchange Commission defines as “non-GAAP financial measures.”  Management believes that such non-GAAP financial measures, when read in conjunction with the Company’s reported or forecasted results, in each case calculated in accordance with GAAP, can provide useful supplemental information for investors because they facilitate a period to period comparative assessment of the Company’s operating performance relative to its performance based on reported or forecasted results under GAAP, while isolating the effects of some items that vary from period to period without any correlation to core operating performance and eliminate certain charges that management believes do not reflect the Company’s operations and underlying operational performance.  The Company’s definition of adjusted net income and adjusted diluted earnings per share may not be comparable to similarly titled measures used by other companies because other companies may not calculate them in the same manner as the Company does and should not be viewed in isolation from nor as alternatives to net income or diluted EPS calculated in accordance with GAAP.

The impact of foreign currency fluctuations in Venezuela and the price increases we implement as a result of the highly inflationary economy in that market can each, when considered in isolation, have a disproportionately large impact to our consolidated results despite the offsetting nature of these drivers and that net sales in Venezuela, which represent less than 1% of our consolidated net sales, are not material to our consolidated results. Therefore, in certain instances, we believe it is helpful to provide additional information with respect to these factors as reported and excluding the impact of Venezuela to illustrate the disproportionate nature of Venezuela’s individual pricing and foreign exchange impact to our consolidated results. However, excluding the impact of Venezuela from these measures is not in accordance with U.S. GAAP and should not be considered in isolation or as an alternative to the presentation and discussion thereof calculated in accordance with U.S. GAAP.

 

The following is a reconciliation of net income, presented and reported in accordance with U.S. generally accepted accounting principles, to net income adjusted for certain items:

 

		Three Months Ended
		3/31/2018				3/31/2017
		(in millions)
Net income, as reported		$	82.1			$	85.2
Expenses incurred responding to attacks on the Company's business model (1) (2)			-				1.5
Expenses related to regulatory inquiries (1) (2)			2.3				3.8
Non-cash interest expense and amortization of non-cash issuance costs (1) (2) (3)			12.5				11.7
China grant income (1) (2)			(16.2	)			-
FTC Consent Order implementation (1) (2) (4)			-				8.5
Contingent value rights revaluation (1) (2)			11.3				-
Loss on extinguishment of convertible debt (1) (2) (5)			13.1				-
Venezuela devaluation (1) (2)			4.7				-
Income tax adjustments for above items (1) (2)			(3.3	)			(3.5	)
Net income, as adjusted (6)		$	106.5			$	107.1

 

The following is a reconciliation of diluted earnings per share, presented and reported in accordance with U.S. generally accepted accounting principles, to diluted earnings per share adjusted for certain items.

 

		Three Months Ended
		3/31/2018				3/31/2017
		(per share)
Diluted earnings per share, as reported		$	1.08			$	0.98
Expenses incurred responding to attacks on the Company's business model (1) (2)			-				0.02
Expenses related to regulatory inquiries (1) (2)			0.03				0.04
Non-cash interest expense and amortization of non-cash issuance costs (1) (2) (3)			0.16				0.13
China grant income (1) (2)			(0.21	)			-
FTC Consent Order implementation (1) (2) (4)			-				0.10
Contingent value rights revaluation (1) (2)			0.15				-
Loss on extinguishment of convertible debt (1) (2) (5)			0.17				-
Venezuela devaluation (1) (2)			0.06				-
Income tax adjustments for above items (1) (2)			(0.04	)			(0.04	)
Diluted earnings per share, as adjusted (6)		$	1.40			$	1.24

 

 

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