Herbalife Ltd. Quarterly report [Sections 13 or 15(d)]

Quarterly report [Sections 13 or 15(d)]

Segment Information (Tables)

Segment Information (Tables)

3 Months Ended

Mar. 31, 2025

Reconciliation of Revenue from Segments to Consolidated

Operating information for the two reportable segments is as follows:


	Three Months Ended
	March 31, 2025		March 31, 2024
	(in millions)
Net sales:
Primary Reporting Segment	$	1,156.9	$	1,189.1
China		64.8		75.2
Total net sales	$	1,221.7	$	1,264.3
Significant segment expenses
Cost of Sales (4)(5):
Primary Reporting Segment	$	255.9	$	273.4
China		9.3		11.6
Total cost of sales	$	265.2	$	285.0
Royalty Overrides and service fees to China independent service providers(1)(3)(4)(5):
Primary Reporting Segment	$	401.2	$	414.5
China		32.2		37.5
Total royalty overrides and service fees to China independent service providers	$	433.4	$	452.0
Contribution margin(1)(3):
Primary Reporting Segment	$	499.8	$	501.2
China		23.3		26.1
Total contribution margin	$	523.1	$	527.3
Selling, general, and administrative expenses excluding service fees to China independent service providers(1)(2)(3)		400.3		455.4
Interest expense, net		52.0		37.9
Income before income taxes		70.8		34.0
Income taxes		20.4		9.7
Net income	$	50.4	$	24.3

(1)

Contribution margin consists of net sales less cost of sales, Royalty overrides, and service fees to our independent service providers in China. For the China segment, contribution margin includes the portion of service fees to China independent service providers that are currently recorded in selling, general, and administrative expenses within the Company’s accompanying condensed consolidated statements of income, which totaled $31.6 million and $36.8 million for the three months ended March 31, 2025 and 2024, respectively.

(2)

Selling, general, and administrative expenses exclude the portion of service fees to China independent service providers that are included in selling, general, and administrative expenses within the Company’s accompanying condensed consolidated statements of income as described in footnote (1) above.

(3)

In the second quarter of 2024, the Company, as part of its restructuring initiatives, which are described further in Note 13, Restructuring Activities, changed its contribution margin presentation for its China segment which now includes expenses related to service fees to the Company’s independent service providers in China as described in the footnotes immediately above. Historically, the China contribution margin did not include the portion of service fees that are recognized in selling, general and administrative expenses in the Company’s accompanying condensed consolidated statements of income. Historical information presented in the table above has been reclassified to conform with the current period contribution margin presentation. This change had no impact on the Company’s accompanying condensed consolidated statements of income and only impacts this segment note presentation.

(4)

The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM.

(5)

As a result of adopting ASU 2023-07 during the fourth quarter of 2024, the Company has expanded and updated its disclosures for the current year and prior year periods as described in Note 2, Basis of Presentation, to the Consolidated Financial Statements included in the 2024 10-K.

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area

The following table sets forth net sales by geographic area:


	Three Months Ended
	March 31, 2025		March 31, 2024
	(in millions)
Net sales:
United States	$	247.7	$	258.7
India		209.3		203.5
Mexico		126.5		140.9
Vietnam		75.4		75.6
China		64.8		75.2
Others		498.0		510.4
Total net sales	$	1,221.7	$	1,264.3