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Management View

• CEO Stephan Gratziani reflected on 2025 performance, emphasizing reductions in total leverage ratio to 2.8x from 3.9x, stating, “This meaningful step down… underscores the strength of our business and our strong sustainable cash generation.” He

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Management View

• Stephan Gratziani, President & CEO, highlighted that “Herbalife returned to net sales growth in North America and on a worldwide basis,” noting this as a significant milestone and the first such increase for North America since Q2 2021. He emphasized the company’s “disciplined execution, strong operating fundamentals and aligned leadership” as key factors in accelerating momentum.
• Gratziani detailed the beta progress of Pro2col, Herbalife’s next-generation personalized health platform, stating, “Since forming our beta group in July, which has grown to 7,900 distributors, we have seen strong engagement and enthusiasm.” He described robust engagement metrics and the expansion of the beta to retail customers.
• The CEO announced the launch of HL/Skin in EMEA, a new skin care line supported by an AI-powered assessment tool, and outlined the rapid market introduction as evidence of “operational agility, product velocity and our unwavering commitment to innovation.”
• He reported that “in the third quarter, 3 of our 5 regions reported year-over-year new distributor growth led by North America, up 17%.” He also underscored the opening of a new R&D and quality control facility in California to support product innovation.
• Gratziani described the company’s efforts to reduce leverage, stating, “We fully repaid the 2025 notes in September, leaving no significant debt maturities until 2028. We ended Q3 with a total leverage ratio of 2.8x, reducing our leverage beyond our 3x commitment.”
• CFO John DeSimone stated, “Net sales were $1.3 billion, up 2.7% versus Q3 of 2024 and above the midpoint of our guidance range… Adjusted EBITDA was $163 million, exceeding the high end of our guidance range of $150 million to $160 million.”

Outlook

• DeSimone provided guidance for Q4, stating, “We expect net sales growth in the fourth quarter on a reported basis of 1.5% to 5.5% year-over-year… On a constant currency basis, we expect net sales to be up 0.5% to 4.5% year-over-year.”
• For the full year 2025, management narrowed its outlook: “We now expect full year net sales to range from a slight decline of 0.3% to growth of 0.7% year-over-year. On a constant currency basis, we anticipate net sales to increase between 1.2% and 2.2% year-over-year.”
• Adjusted EBITDA for the full year is projected at “$645 million to $655 million or $700 million to $710 million on a constant currency basis.”
• The company continues to expect its adjusted effective tax rate for 2025 to be “between 27% and 28%.”

Financial Results

• Net sales for Q3 2025 were $1.3 billion, reflecting a 2.7% increase year-over-year and surpassing the midpoint of guidance. Constant currency net sales rose 3.2%.
• Adjusted EBITDA was $163 million, with a margin of 12.8% and a noted decline of 60 basis points year-over-year due to factors including the absence of a China government grant recognized last year and FX headwinds.
• Q3 net income attributable to Herbalife was $43 million, while adjusted net income was $52 million. Adjusted diluted EPS for the quarter was $0.50, with an $0.08 FX headwind versus the prior year.
• Operating cash flows reached $139 million, up 40% from Q3 2024. Capital expenditures were $21 million.
• Regional highlights included Latin America net sales up 11% and North America returning to growth with net sales up 1% year-over-year.

Q&A

• William Reuter, BofA Securities: Asked about capital allocation and debt reduction. Gratziani responded, “The longer-term goal is to pay down debt by $1 billion from the time we set it a year ago until the end of 2028… that’s our #1 use after our internal investments.”
• Song Xue, Mizuho Securities: Inquired about early responses from the Pro2col beta group. Gratziani shared, “The feedback that they’re giving, the suggestions. When you aggregate close to 8,000 distributors and their ideas… there’s a certain level of richness in the information and the data.”
• Karru Martinson, Jefferies: Asked about product categories driving volume growth. DeSimone replied, “There’s a little bit of skewing mix toward healthy active lifestyle products, fit products and a little bit toward targeted nutrition and a little less on weight loss.”
• Hale Holden, Barclays: Questioned the rollout of the Mastermind program and HL/Skin, with Gratziani noting, “We are going to evolve the program… it’s something that’s fundamentally and foundationally that’s supporting the growth that we’re having… this will be something that we will be expanding.”
• Douglas Lane, Water Tower Research: Raised subscription revenue opportunities. Gratziani responded, “We believe that there is a big place in the future for subscription revenue… we’re building all of the things that are needed for that… it’s en route.”

Sentiment Analysis

• Analysts expressed a positive to neutral tone, with questions focused on capital allocation, new product launches, distributor engagement, and technology integration. There was evident interest in subscription models and innovation, with no significant skepticism or pressing challenges.
• Management maintained a confident and optimistic tone throughout, emphasizing execution, innovation, and financial discipline. Phrases such as “we are confident in the direction we’re heading” (CFO DeSimone) and “Herbalife is getting stronger… operating from a position of growing strength and increasing confidence” (CEO Gratziani) reinforced this sentiment.
• Compared to the previous quarter, management appeared slightly more assertive in claiming momentum and foundational progress, while analysts remained engaged but less probing on risk.

Quarter-over-Quarter Comparison

• Guidance for full year net sales was narrowed, now ranging from a slight decline of 0.3% to growth of 0.7% versus the prior range of down 1% to up 3%. The midpoint for constant currency adjusted EBITDA was raised.
• Net sales returned to growth in Q3, reversing the prior quarter’s decline.
• North America achieved its first quarterly increase in net sales since Q2 2021, compared to persistent declines in previous quarters.
• The tone of management was more upbeat and forward-looking, leveraging recent milestones in product innovation (HL/Skin, Pro2col) and distributor engagement.
• Analysts’ focus shifted more toward subscription models, capital allocation, and product innovation than risk or competitive pricing pressure.

Risks and Concerns

• Management cited foreign currency headwinds and the non-repeat of China government grant income as impacting adjusted EBITDA and gross margin.
• There was acknowledgment of potential headwinds in Q4 related to changes in bonus accruals and normalization of bonus achievement levels compared to 2024.
• Analysts raised questions about potential SG&A increases from new product launches, but management indicated no material increase outside the normal scope.

Final Takeaway

Herbalife management underscored a pivotal quarter, with a return to net sales growth in both North America and globally, driven by disciplined execution, innovation, and robust distributor engagement. Advances in personalized nutrition technology, highlighted by the beta progress of Pro2col and the commercial launch of new product lines, are positioning Herbalife for long-term value creation. The company continues its strong cash generation and accelerated debt reduction, while maintaining a confident outlook and commitment to operational agility, innovation, and shareholder value.

Read the full Earnings Call Transcript

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Management View

• CEO Stephan Paulo Gratziani described Herbalife’s ongoing transformation, emphasizing “the progress we’ve made has only reinforced my conviction that Herbalife is uniquely positioned to lead in this new era of health and wellness.” He highlighted the company’s shift from weight management to becoming “the #1 active and lifestyle nutrition brand in the world,” and its journey toward being “the world’s premier health and wellness company, community and platform.”
• Product innovation was a key focus in Q2, with Herbalife entering a new category through its first healthy lifespan product and the launch of MultiBurn, a nonpharmaceutical weight loss supplement. Gratziani explained, “initial sales are outpacing our expectations” for MultiBurn, and excitement is building ahead of the U.S. and Puerto Rico launch of the new healthy lifespan supplement in Q4.
• The company is accelerating its digital strategy with the Pro2col app beta, integrating AI, data, and personalized recommendations. “Just over 7,000 distributors signed up to participate in the exclusive Pro2col beta group,” Gratziani stated, noting the app’s four pillars: measurement, daily AI-assisted recommendations, adaptive nutrition tracking, and community support.
• Herbalife completed the integration of Link Biosciences to enable personalized supplements, stating, “this positions us to deliver data-driven personalized supplement formulations, which gives us a unique competitive advantage in the U.S. today.”
• CFO John G. DeSimone reported, “We delivered another solid quarter with adjusted EBITDA exceeding guidance, reflecting our continued focus on operational efficiencies.” He noted operating cash flows of $96 million, net sales of $1.3 billion (down 1.7% year-over-year), and a $55 million debt repayment, maintaining leverage at 3x.

Outlook

• Management raised and narrowed full year net sales guidance to a range of down 1% to up 3% year-over-year, and constant currency guidance to flat to up 4%.
• Q3 net sales growth is expected between 0.5% and 4.5% both on a reported and constant currency basis.
• Adjusted EBITDA guidance for Q3 is set at $150 million to $160 million, and $155 million to $165 million on a constant currency basis.
• Full year adjusted EBITDA guidance is $640 million to $660 million, while constant currency guidance is $685 million to $705 million.
• CFO DeSimone stated, “We do not believe that the impact will be material to our full year 2025 expected results” regarding recently enacted tariffs.

Financial Results

• Net sales for Q2 were $1.3 billion, down 1.7% versus Q2 2024; on a constant currency basis, net sales were flat year-over-year.
• Adjusted EBITDA for Q2 was $174 million, exceeding the high end of guidance.
• Adjusted EBITDA margin was 13.8%, down 30 basis points year-over-year due to currency impacts.
• Operating cash flows were $96 million for the quarter; CapEx was $23 million.
• Gross profit margin improved by 10 basis points to 78%.
• Second quarter net income attributable to Herbalife was $49 million with adjusted net income of $61 million.
• Adjusted diluted EPS was $0.59, including an $0.11 FX headwind; adjusted effective tax rate was 27.7%.

Q&A

• Chasen Louis Bender, Citi: Asked about Pro2col monetization, bundling, and unit economics. Gratziani responded that the beta allows for distributor feedback, and the app is designed as a tool to support existing business and attract new customer segments. DeSimone added, “the economic model is not materially different, but it is slightly different” due to subscription and earn-based variations.
• Bender also clarified guidance assumptions for Pro2col’s Q4 release. DeSimone replied, “Very little at this point. Mostly it’s just mostly upside.”
• Bender inquired about pricing strategy. DeSimone stated, “our strategy on pricing hasn’t changed, which is to take pricing commensurate with what we’re seeing in the marketplace.”
• Douglas Matthai Lane, Water Tower Research: Asked about app and supplement bundling options and the future of subscriptions. Gratziani confirmed flexible options: “There will be an option also. So it is fitting current models, and it’s going to also create a new model.”
• Lane followed up on global rollout timing for Pro2col. Gratziani stated, “we have plans for expansion in 2026… our goal is to globalize this as quickly as possible.”
• Lane asked about refinancing high-cost debt. DeSimone replied, “we’ll actively consider refinancing if the conditions are right… So we’ll look at the economics and do it as soon as it makes sense.”
• Unidentified Analyst, Mizuho: Inquired about the slight reduction in constant currency guidance midpoint. Gratziani explained, “we did come in below our constant currency midpoint for Q2. that’s the majority of the reason why the year — the midpoint for the year has come down.”

Sentiment Analysis

• Analysts were moderately constructive but probed for details on monetization, guidance assumptions, and the sustainability of momentum, showing a slightly positive tone.
• Management maintained a confident and proactive stance, frequently emphasizing transformation and distributor engagement. Gratziani repeatedly referenced the company’s “unique position” and “momentum,” while DeSimone’s responses were detailed and direct.
• Compared to the previous quarter, management’s tone was more assertive and optimistic about growth inflection, while analysts maintained similar levels of cautious optimism, with questions focused on execution and financial impact.

Quarter-over-Quarter Comparison

• The company increased the upper end of its full year net sales and adjusted EBITDA guidance versus Q1, signaling improved confidence in second half momentum.
• Product innovation discussion advanced from strategic intent to actual launches (MultiBurn, healthy lifespan supplement) and active distributor participation in digital initiatives.
• Q2 featured concrete progress on digital transformation, with the Pro2col beta launched and significant distributor uptake, compared to a more conceptual discussion in Q1.
• Net sales decline narrowed from Q1’s 3.4% to Q2’s 1.7%, with constant currency sales stabilizing.
• Management’s tone shifted from transformational vision-setting in Q1 to execution and early results in Q2.
• Analysts focused more on monetization and the operational impact of new launches, while previously they asked about strategic fit and market rollout.

Risks and Concerns

• Currency fluctuations and FX headwinds negatively impacted both sales and EBITDA, though the company noted improvement versus prior expectations.
• Guidance includes preliminary tariff impact estimates, with management stating no material effect expected for 2025.
• Volume declines persisted in several regions, with North America and China highlighted for ongoing pressure.
• Management acknowledged the nascent stage of new digital initiatives and subscription models, noting that “it’s new. So it’s going to take time, and we’re going to work with our distributors through the process.”

Final Takeaway

Herbalife management expressed strong conviction in the company’s transformation into a digital-first health and wellness platform, citing the successful launch of the Pro2col beta, new product introductions, and expanding distributor engagement as catalysts for renewed growth. With raised sales and EBITDA guidance, ongoing debt reduction, and robust operational cash flow, Herbalife believes it is positioned to capitalize on evolving consumer demand and deliver long-term value for shareholders as it progresses toward its goal of becoming the world’s premier health and wellness platform.

Read the full Earnings Call Transcript

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