Herbalife Nutrition Reports Record-Breaking 2020 Net Sales with

14% Growth versus Prior Year; Raises 2021 Net Sales Guidance;

Announces New $1.5 Billion Share Repurchase Authorization

LOS ANGELES, February 17^th, 2021 – Herbalife Nutrition Ltd. (NYSE: HLF) today reported financial results for the fourth quarter and full year ended December 31, 2020.

“In 2020, we saw our best year ever with record net sales as our distributors met the global demand for better nutrition,” said John Agwunobi, Chairman and CEO of Herbalife Nutrition.

QUARTER AND FULL YEAR HIGHLIGHTS

 

▪	Full year 2020 net sales of $5.5 billion increased 13.6% compared to full year 2019, representing the largest annual net sales result in Company history. Three of our six regions: Asia Pacific, EMEA, and North America set annual net sales records.

▪	Fourth quarter net sales of $1.4 billion increased 15.6% compared to the fourth quarter 2019, representing the largest fourth quarter net sales result in Company history.

▪	Full year 2020 reported diluted EPS of $2.77 and adjusted1 earnings of $3.712  per diluted share, each grew by approximately 25% compared to $2.20 and $2.982 per adjusted3 diluted share respectively, for the full year 2019.

▪	Fourth quarter 2020 reported diluted EPS of $0.59 and adjusted1 earnings of $0.714 per diluted share, compared to $0.40 and $0.764 respectively, for the fourth quarter 2019.

▪	China grant income will no longer be excluded from adjusted1 results. Adjusted results from all prior year periods have been updated in Schedule A to no longer exclude China grant income.

▪	Raising FY 2021 net sales guidance ranges to 6.0% to 14.0% growth, as well as raising reported and adjusted1 diluted EPS guidance ranges to $4.05 - $4.55 and $4.25 – $4.75, respectively.

▪	Company announces board approval of a new three-year $1.5 billion share repurchase program.

Regional Net Sales and Foreign Exchange (“FX”) Impact

^(a) Venezuela has been generally impacted by significant price increases and erosion in foreign currency exchange rates. Venezuela represents less than 1% of the Company’s consolidated net sales.  See Schedule A – “Reconciliation of Non-GAAP Financial Measures” for a discussion of why we believe adjusting for Venezuela is useful.

* Figure not meaningful due to significant foreign currency fluctuations in Venezuela and the price increases implemented as a result thereof that, when considered in isolation, have a disproportionately large impact on the Company’s South and Central American region and consolidated results. Amounts were 31.1% and 16.9% for South & Central America and Worldwide Total, respectively.

^(a) Venezuela has been generally impacted by significant price increases and erosion in foreign currency exchange rates. Venezuela represents less than 1% of the Company’s consolidated net sales.  See Schedule A – “Reconciliation of Non-GAAP Financial Measures” for a discussion of why we believe adjusting for Venezuela is useful.

* Figure not meaningful due to significant foreign currency fluctuations in Venezuela and the price increases implemented as a result thereof that, when considered in isolation, have a disproportionately large impact on the Company’s South and Central American region and consolidated results. Amounts were 20.8% and 17.5% for South & Central America and Worldwide Total, respectively.

Regional Volume Point Metrics

Following is the Company’s first quarter and full year 2021 guidance based on current business trends:

▪	With respect to guidance, the Company cannot accurately predict the impact to its share base from any future share repurchases. Accordingly, any impact thereof is excluded from the guidance tables above.

▪	Guidance is based on the average daily exchange rates during the first three weeks of January 2021.

▪	Adjusted(a)(b)(c) diluted EPS guidance for the first quarter 2021 includes a projected currency tailwind of approximately $0.06 per diluted share versus the first quarter of 2020.

▪	Full year 2021 adjusted(a)(b)(c) diluted EPS guidance includes a projected currency tailwind of approximately $0.35 per diluted share versus the full year of 2020.

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 Wednesday, February 17th, 2021, at 2:30 p.m. PT (5:30 p.m. ET).

The dial-in number for this conference call for domestic callers is (833) 962-1459, and (956) 394-3596 for international callers (conference ID: 1352428). 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: 1352428). The webcast of the teleconference will be archived and available on Herbalife Nutrition's website.

Herbalife Nutrition is a global company that has been changing people's lives with great nutrition products and a proven business opportunity for its independent distributors since 1980. The Company offers high-quality, science-backed products, sold in over 90 countries by entrepreneurial distributors who provide one-on-one coaching and a supportive community that inspires their customers to embrace a healthier, more active lifestyle. Through the Company’s global campaign to eradicate hunger, Herbalife Nutrition is also committed to bringing nutrition and education to communities around the world.

For more information, please visit IAmHerbalifeNutrition.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.

213.745.0420

Investor Contact:

Eric Monroe

Senior Director, Investor Relations

213.745.0449

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This release contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and to inherent risks and uncertainties, many of which are beyond our control. Additionally, many of these risks and uncertainties are, and may continue to be, amplified by the COVID-19 pandemic. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in or implied by our forward-looking statements include the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

Herbalife Nutrition Ltd. and Subsidiaries
Condensed Consolidated Balance Sheets
(In millions)
		Dec 31,				Dec 31,
		2020				2019
ASSETS
Current Assets:
Cash and cash equivalents		$	1,045.4			$	839.4
Receivables, net			83.3				79.7
Inventories			501.4				436.2
Prepaid expenses and other current assets			145.7				132.9
Total Current Assets			1,775.8				1,488.2
Property, plant and equipment, net			390.2				371.5
Operating lease right-of-use assets			222.8				189.5
Marketing-related intangibles and other intangible assets, net			313.3				310.1
Goodwill			100.5				91.5
Other assets			273.5				227.8
Total Assets		$	3,076.1			$	2,678.6
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable		$	88.7			$	81.6
Royalty overrides			358.2				294.1
Current portion of long-term debt			22.9				24.1
Other current liabilities			657.5				564.6
Total Current Liabilities			1,127.3				964.4
Non-current liabilities:
Long-term debt, net of current portion			2,405.5				1,778.9
Non-current operating lease liabilities			206.7				169.9
Other non-current liabilities			192.7				155.4
Total Liabilities			3,932.2				3,068.6
Commitments and Contingencies
Shareholders' deficit:
Common shares			0.1				0.1
Paid-in capital in excess of par value			342.3				366.6
Accumulated other comprehensive loss			(182.2	)			(212.5	)
Accumulated deficit			(687.4	)			(215.3	)
Treasury stock			(328.9	)			(328.9	)
Total Shareholders' Deficit			(856.1	)			(390.0	)
Total Liabilities and Shareholders' Deficit		$	3,076.1			$	2,678.6

 

Herbalife Nutrition Ltd. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In millions)
		Twelve Months Ended
		12/31/2020				12/31/2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	372.6			$	311.0
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization			100.3				97.7
Share-based compensation expenses			51.0				38.6
Non-cash interest expense			26.7				43.7
Deferred income taxes			2.0				15.4
Inventory write-downs			20.6				19.1
Foreign exchange transaction loss			9.9				2.1
Other			5.3				(7.9	)
Changes in operating assets and liabilities:
Receivables			(5.8	)			(14.4	)
Inventories			(76.6	)			(68.6	)
Prepaid expenses and other current assets			(11.9	)			28.3
Accounts payable			5.5				0.1
Royalty overrides			61.2				11.5
Other current liabilities			77.6				(5.5	)
Other			(9.8	)			(13.6	)
NET CASH PROVIDED BY OPERATING ACTIVITIES			628.6				457.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment			(112.0	)			(106.1	)
Other			(11.2	)			(1.9	)
NET CASH USED IN INVESTING ACTIVITIES			(123.2	)			(108.0	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from senior secured credit facility and other debt, net of discount			31.5				-
Principal payments on senior secured credit facility and other debt			(24.5	)			(24.5	)
Repayment of convertible senior notes			-				(675.0	)
Proceeds from senior notes			600.0				-
Debt issuance costs			(7.9	)			-
Share repurchases			(923.5	)			(16.7	)
Other			3.5				3.2
NET CASH USED IN FINANCING ACTIVITIES			(320.9	)			(713.0	)
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH			22.0				(4.0	)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH			206.5				(367.5	)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD			847.5				1,215.0
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD		$	1,054.0			$	847.5
Cash paid during the year:
Interest paid		$	78.9			$	114.3
Income taxes paid		$	138.2			$	147.9

Supplemental Information

 

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 the Company implements as a result of the highly inflationary economy in that market can each, when considered in isolation, have a disproportionately large impact to the Company’s consolidated results despite the offsetting nature of these drivers and that net sales in Venezuela, which represent less than 1% of the Company’s consolidated net sales, are not material to our consolidated results. Therefore, in certain instances, the Company believes 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 the Company’s 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								Twelve Months Ended
		12/31/2020				12/31/2019				12/31/2020				12/31/2019
		(in millions)
Net income, as reported		$	73.8			$	56.7			$	372.6			$	311.0
Expenses related to regulatory inquiries and legal accruals (1) (2) (3)			0.2				41.4				85.9				75.5
Non-cash interest expense and amortization of non-cash issuance costs (1) (2) (4)			5.6				5.2				21.8				38.2
Contingent Value Rights revaluation (1) (2)			-				-				-				(15.7	)
Income related to finalization of insurance recoveries (1) (2) (5)			-				-				-				(6.0	)
Debt issuance costs related to the senior secured credit facility amendment (1) (2) (6)			-				1.2				0.5				1.2
Mexico VAT assessment (1) (2)			-				-				-				19.0
Net expenses related to COVID-19 pandemic (1) (2)			4.6				-				21.2				-
Income tax adjustments for above items (1) (2)			4.0				2.1				(2.6	)			(3.4	)
Net income, as adjusted (7)		$	88.1			$	106.5			$	499.4			$	419.8