Annual report pursuant to Section 13 and 15(d)

Segment Information

v3.24.0.1
Segment Information
 12 Months Ended
Dec. 31, 2023
Segment Reporting [Abstract]  
Segment Information

10. Segment Information

The Company is a nutrition company that sells a wide range of weight management; targeted nutrition; energy, sports, and fitness; and outer nutrition products. The Company’s products are manufactured by the Company in its Changsha, Hunan, China extraction facility; Suzhou, China facility; Nanjing, China facility; Lake Forest, California facility; and Winston-Salem, North Carolina facility, as well as by third-party providers, and then are sold to Members who consume and sell Herbalife products to retail consumers or other Members. Revenues reflect sales of products by the Company to its Members and are categorized based on geographic location.

As of December 31, 2023, the Company sold products in 95 markets throughout the world and was organized and managed by five geographic regions: North America, Latin America, EMEA, Asia Pacific, and China. The Company defines its operating segments as those geographical operations. The Company aggregates its operating segments, excluding China, into a reporting segment, or the Primary Reporting Segment, as management believes that the Company’s operating segments have similar operating characteristics and similar long-term operating performance. In making this determination, management believes that the operating segments are similar in the nature of the products sold, the product acquisition process, the types of customers to whom products are sold, the methods used to distribute the products, the nature of the regulatory environment, and their economic characteristics. China has been identified as a separate reporting segment as it does not meet the criteria for aggregation. The Company reviews its net sales and contribution margin by operating segment, and reviews its assets and capital expenditures on a consolidated basis and not by operating segment. Therefore, net sales and contribution margin are presented by reportable segment and assets and capital expenditures by segment are not presented.

Operating information for the two reportable segments, sales by product line, and sales by geographic area are as follows:

 

 

 

Year Ended December 31,

 

 

 

2023

 

 

2022

 

 

2021

 

 

 

(in millions)

 

Net sales:

 

 

 

 

 

 

 

 

 

Primary Reporting Segment

 

$

4,735.0

 

 

$

4,813.4

 

 

$

5,173.3

 

China

 

 

327.4

 

 

 

391.0

 

 

 

629.5

 

Total net sales

 

$

5,062.4

 

 

$

5,204.4

 

 

$

5,802.8

 

Contribution margin(1):

 

 

 

 

 

 

 

 

 

Primary Reporting Segment

 

$

1,937.8

 

 

$

2,005.3

 

 

$

2,175.6

 

China

 

 

274.4

 

 

 

335.4

 

 

 

554.2

 

Total contribution margin

 

$

2,212.2

 

 

$

2,340.7

 

 

$

2,729.8

 

Selling, general, and administrative expenses(1)

 

 

1,866.0

 

 

 

1,810.4

 

 

 

2,012.1

 

Other operating income

 

 

(10.2

)

 

 

(14.9

)

 

 

(16.4

)

Interest expense

 

 

165.9

 

 

 

139.3

 

 

 

153.1

 

Interest income

 

 

11.5

 

 

 

6.1

 

 

 

4.4

 

Other (income) expense, net

 

 

(1.0

)

 

 

(12.8

)

 

 

24.6

 

Income before income taxes

 

 

203.0

 

 

 

424.8

 

 

 

560.8

 

Income taxes

 

 

60.8

 

 

 

103.5

 

 

 

113.6

 

Net income

 

$

142.2

 

 

$

321.3

 

 

$

447.2

 

Net sales by product line:

 

 

 

 

 

 

 

 

 

Weight Management

 

$

2,851.7

 

 

$

2,954.2

 

 

$

3,370.4

 

Targeted Nutrition

 

 

1,480.0

 

 

 

1,512.7

 

 

 

1,636.6

 

Energy, Sports, and Fitness

 

 

560.3

 

 

 

550.6

 

 

 

551.8

 

Outer Nutrition

 

 

82.5

 

 

 

85.8

 

 

 

107.8

 

Literature, Promotional, and Other(2)

 

 

87.9

 

 

 

101.1

 

 

 

136.2

 

Total net sales

 

$

5,062.4

 

 

$

5,204.4

 

 

$

5,802.8

 

Net sales by geographic area:

 

 

 

 

 

 

 

 

 

United States

 

$

1,100.5

 

 

$

1,225.5

 

 

$

1,386.7

 

China

 

 

327.4

 

 

 

391.0

 

 

 

629.5

 

India

 

 

796.6

 

 

 

677.1

 

 

 

519.1

 

Mexico

 

 

525.0

 

 

 

474.6

 

 

 

463.7

 

Others

 

 

2,312.9

 

 

 

2,436.2

 

 

 

2,803.8

 

Total net sales

 

$

5,062.4

 

 

$

5,204.4

 

 

$

5,802.8

 

 

(1) Contribution margin consists of net sales less cost of sales and Royalty overrides. For the China segment, contribution margin does not include the portion of service fees to China independent service providers that is included in selling, general, and administrative expenses, which totaled $165.0 million, $196.2 million, and $350.1 million for the years ended December 31, 2023, 2022, and 2021, respectively.

(2) Product buybacks and returns in all product categories are included in the Literature, Promotional, and Other category.

As of December 31, 2023 and 2022, goodwill allocated to the Company’s reporting units included in the Company’s Primary Reporting Segment was $92.4 million and $90.1 million, respectively, and goodwill allocated to the China segment was $3.0 million and $3.1 million, respectively.

The following table sets forth property, plant, and equipment and deferred tax assets by geographic area:

 

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

2021

 

 

 

(in millions)

 

Property, plant, and equipment, net:

 

 

 

 

 

 

 

 

 

United States

 

$

437.6

 

 

$

399.9

 

 

$

348.3

 

Foreign

 

 

68.9

 

 

 

86.4

 

 

 

93.8

 

Total property, plant, and equipment, net

 

$

506.5

 

 

$

486.3

 

 

$

442.1

 

Deferred tax assets:

 

 

 

 

 

 

 

 

 

United States

 

$

209.1

 

 

$

170.0

 

 

$

142.6

 

Foreign

 

 

78.7

 

 

 

73.2

 

 

 

78.0

 

Total deferred tax assets

 

$

287.8

 

 

$

243.2

 

 

$

220.6