Core Viewpoint - Herbalife Ltd (HLF) shows potential for upside with a mean price target of $8.67, indicating a 28.8% upside from the current price of $6.73 [1] Price Targets and Estimates - The mean estimate consists of three short-term price targets with a standard deviation of $2.08, where the lowest estimate is $7 (4% increase) and the highest is $11 (63.5% increase) [2] - A low standard deviation suggests a high degree of agreement among analysts regarding the stock's price movement [9] Analyst Sentiment and Earnings Estimates - Analysts are optimistic about HLF's earnings prospects, as indicated by a positive trend in earnings estimate revisions, which has shown a strong correlation with near-term stock price movements [11] - Over the last 30 days, the Zacks Consensus Estimate for the current year has increased by 9.8%, with one estimate moving higher and no negative revisions [12] Zacks Rank and Investment Implications - HLF currently holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates [13] - While consensus price targets may not be reliable for predicting the extent of gains, they can provide a directional guide for potential price movement [13]

Group 1 - The article discusses the performance of Herbalife (NYSE: HLF) in early 2025, indicating that the company was not in a strong position at that time [1] - It notes that Herbalife has since experienced a relatively better performance compared to its earlier struggles [1]

Forward-looking statements made in this presentation speak only as of the date hereof. 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 of this presentation or to reflect the occurrence of unanticipated events, except as required by law. Q1 2025 Earnings Presentation April 30, 2025 Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of Section 27A of ...

Herbalife (HLF) Q1 2025 Earnings Call April 30, 2025 05:30 PM ET Company Participants Erin Banyas - Vice President - Head of Investor RelationsStephan Gratziani - CEOJohn DeSimone - Chief Financial OfficerJohn Baumgartner - Managing Director, Equity ResearchRobert Rigby - AssociateHale Holden - Managing DirectorDouglas Lane - Head of Consumer Products Conference Call Participants None - Analyst Operator Good afternoon, and thank you for joining the First Quarter twenty twenty five Earnings Conference Call f ...

Financial Data and Key Metrics Changes - The company's net sales for Q1 2025 were $1.2 billion, down 3.4% compared to Q1 2024, but showed a constant currency growth of 1.4% year over year [10][27] - Adjusted EBITDA for Q1 was $165 million, exceeding guidance, with adjusted EBITDA margins at 13.5%, up 260 basis points year over year [28] - The total leverage ratio was reduced to three times as of March 31, achieving the target set for the end of 2025 nine months ahead of schedule [11][31] Business Line Data and Key Metrics Changes - The number of new distributors joining Herbalife worldwide increased by 16% year over year, marking the fourth consecutive quarter of new distributor growth [12] - The company reported a gross profit margin improvement to 78.3%, up 80 basis points compared to Q1 2024, driven by pricing actions and reduced input costs [28] Market Data and Key Metrics Changes - In Latin America, net sales were down 4% on a reported basis but up 11% on a local currency basis, with a 4% increase in volumes [33] - EMEA net sales were down 2% year over year on a reported basis, while up 3% on a local currency basis, with a 5% decline in volume [34] - North America saw a 4% decrease in net sales year over year, primarily due to an 8% reduction in volumes [35] Company Strategy and Development Direction - The company aims to lead in the health and wellness economy by leveraging its distributor network and enhancing its product offerings through technology and personalization [7][8] - Recent acquisitions of Protocol Health, Pruvit Ventures, and Link Biosciences are intended to strengthen the company's position in personalized health solutions [13][21] - The focus will be on innovation, operational excellence, and sustainable growth rather than just short-term gains [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to adapt to changing consumer expectations and the gig economy, viewing these changes as opportunities for growth [6][8] - The company expects FX to remain a significant headwind for the remainder of 2025, impacting both net sales and adjusted EBITDA [40][43] - The outlook for Q2 2025 includes expected net sales to range from down 3.5% to up 0.5% year over year, with a constant currency basis expectation of down 0.5% to up 3.5% [41][44] Other Important Information - The company plans to launch a beta version of the Protocol platform in July 2025, with a commercial release planned for Q4 2025 [17][18] - The total cash consideration paid for recent acquisitions was $25.5 million, with contingent payments of up to $5 million based on successful launches [39] Q&A Session Summary Question: Can you expand on the monetization strategy of Protocol? - Management indicated that it is early to discuss ROI, but the digital platform aims to support product consumption and distributor engagement [47][50] Question: What is driving the sequential decline in distributor KPIs in North America? - Management noted that the quarter started strong but faced challenges in February, with expectations for improvement in Q2 [61][63] Question: Why was the constant currency sales guidance for 2025 reduced? - The reduction was primarily due to rolling in Q1 trends, with some weakness noted in Asia Pacific and cautious expectations for China [66][67] Question: What are the intentions for Link Biosciences? - The company aims to target both athletes and a more general audience, focusing on hyper-customization in health products [71][75] Question: Is there any additional CapEx associated with the recently acquired assets? - Management confirmed that the CapEx guidance was lowered due to underspending in Q1, but future months will include necessary expenditures for the acquisitions [92][93]

Financial Performance - Q1 2025 net sales were $1.2 billion, down 3.4% year-over-year, but up 1.4% on a constant currency basis[6] - Net sales for Q1 2025 were $1,221.7 million, a decrease of 3.2% compared to $1,264.3 million in Q1 2024[37] - Gross profit for Q1 2025 was $956.5 million, down from $979.3 million in Q1 2024, reflecting a gross margin of 78.3%[37] - Operating income increased to $122.8 million in Q1 2025, compared to $71.9 million in Q1 2024, representing a significant improvement[37] - Net income for Q1 2025 was $50.4 million, compared to $24.3 million in Q1 2024, resulting in diluted earnings per share of $0.49[37] - The company's net income for the three months ended March 31, 2025, was $50.4 million, compared to $24.3 million in the same period of 2024, representing a 107.4% increase[47] - Adjusted net income for the same period was $59.9 million, up from $49.3 million, reflecting a 21.3% increase year-over-year[47] - Diluted earnings per share increased to $0.49 in Q1 2025 from $0.24 in Q1 2024, marking a 104.2% rise[47] - Adjusted diluted earnings per share rose to $0.59, compared to $0.49 in the prior year, indicating a 20.4% increase[47] - Adjusted EBITDA for Q1 2025 was $164.9 million, exceeding guidance, with an adjusted EBITDA margin of 13.5%, up 260 basis points from Q1 2024[9] - Adjusted EBITDA for the trailing twelve months (TTM) was $661.4 million, compared to $634.8 million in the previous TTM, reflecting a 4.2% increase[50] - The adjusted EBITDA margin for Q1 2025 was 13.5%, compared to 12.7% in Q1 2024, showing an increase of 0.8 percentage points[50] Acquisitions and Investments - The company completed acquisitions of Pro2col Health LLC and Pruvit Ventures, Inc., and formed a 51% ownership interest in HBL Link Bioscience LLC[6] - Total cash consideration for the recent asset acquisitions was $25.5 million, with additional contingent payments possible based on future performance[21] - Capital expenditures for Q1 2025 were $18.3 million, with total capitalized SaaS implementation costs expected to be $25 million to $30 million for the full year[10] - The company plans to launch a beta version of the Pro2col technology platform at the Herbalife North America Extravaganza in July 2025, with a commercial release planned for Q4 2025[18] Market and Operational Insights - The number of new distributors joining Herbalife increased by 16% year-over-year, marking the fourth consecutive quarter of growth[12] - The company is focused on executing growth initiatives and restructuring efforts to enhance market penetration[32] - Future outlook includes addressing risks related to global economic conditions, competitive pressures, and regulatory compliance[32] - The company continues to focus on international operations, which significantly impact net sales due to currency fluctuations[46] Balance Sheet and Cash Flow - Total assets decreased to $2,684.3 million as of March 31, 2025, from $2,728.1 million at the end of 2024[39] - Current liabilities decreased to $1,129.0 million as of March 31, 2025, compared to $1,230.4 million at the end of 2024[39] - Cash and cash equivalents at the end of Q1 2025 were $351.0 million, down from $412.5 million at the end of Q1 2024[41] - The company reported a net cash provided by operating activities of $0.2 million for Q1 2025, a significant decline from $13.8 million in Q1 2024[41] - The total debt as of March 31, 2025, was $2,262.5 million, with a total leverage ratio of 3.0x[50] Profitability Metrics - The gross profit margin improved to 78.3% in Q1 2025, benefiting from pricing and favorable input costs[8] - The company's net income margin improved to 4.1% in Q1 2025 from 1.9% in Q1 2024[50]

Financial Performance - Net sales for the three months ended March 31, 2025, were $1,221.7 million, a decrease of $42.6 million, or 3.4%, compared to the same period in 2024[180]. - In local currency, net sales increased by 1.4% for the three months ended March 31, 2025, compared to the same period in 2024[180]. - Net income for the three months ended March 31, 2025, was $50.4 million, or $0.49 per diluted share, representing an increase of $26.1 million, or 107.4%, compared to the same period in 2024[181]. - The decrease in net sales was primarily driven by a 4.8% unfavorable impact from foreign currency exchange rate fluctuations and a 2.3% decrease in sales volume, partially offset by a 3.7% favorable impact from price increases[180]. - Total net sales across all product categories were $1,221.7 million for the three months ended March 31, 2025, a decrease of $42.6 million or 3.4% compared to the same period in 2024[215]. Segment Performance - The Primary Reporting Segment reported net sales of $1,156.9 million for the three months ended March 31, 2025, a decrease of $32.2 million, or 2.7%, compared to the same period in 2024[189]. - Contribution margin for the Primary Reporting Segment was $499.8 million, or 43.2% of net sales, representing a decrease of $1.4 million, or 0.3%, compared to the same period in 2024[192]. - Net sales in North America were $254.4 million, a decrease of $11.4 million, or 4.3%, for the three months ended March 31, 2025, primarily due to an 8.0% decrease in sales volume[199]. - Latin America reported net sales of $206.7 million, a decrease of $7.5 million, or 3.5%, for the three months ended March 31, 2025, impacted by a 14.1% unfavorable impact of foreign currency fluctuations[202]. - EMEA region net sales were $273.3 million, a decrease of $4.6 million, or 1.7%, for the three months ended March 31, 2025, primarily due to a 5.0% unfavorable impact of foreign currency fluctuations[206]. - Asia Pacific region reported net sales of $422.5 million for the three months ended March 31, 2025, a decrease of $8.7 million or 2.0% compared to the same period in 2024[209]. - The China region reported net sales of $64.8 million for the three months ended March 31, 2025, a decrease of $10.4 million or 13.8% compared to the same period in 2024, primarily due to a 13.9% decrease in sales volume[213]. Cost and Expenses - Selling, general, and administrative expenses decreased by $60.3 million, primarily due to lower labor and benefits costs[181]. - Gross profit margin improved to 78.3% for the three months ended March 31, 2025, compared to 77.5% for the same period in 2024[187]. - Operating income increased to 10.1% of net sales for the three months ended March 31, 2025, compared to 5.7% for the same period in 2024[187]. - Interest expense, net increased to $52.0 million for the three months ended March 31, 2025, compared to $37.9 million for the same period in 2024, primarily due to an increase in the weighted-average interest rate[225]. - Income taxes for the three months ended March 31, 2025, were $20.4 million, with an effective tax rate of 28.8%, up from 28.5% in 2024[226]. Strategic Initiatives - The company continues to focus on enhancing customer experience and expanding market penetration despite global inflationary pressures and geopolitical conflicts[160]. - The company continues to support Members with new product launches and modernizing technological tools to enhance marketing and sales capabilities[201]. - The company is focusing on promotions, events, and launching new products to grow sales in the EMEA region[208]. - The Nutrition Club DMO remains a key focus in several markets, with promotional efforts aimed at increasing in-person activities and supporting Member operations[205]. Capital Expenditures and Savings Programs - Capital expenditures for the three months ended March 31, 2025 were $20.0 million, with a focus on enhancing digital capabilities through the $400 million multi-year Digital Technology Program[230]. - The company expects total capital expenditures of approximately $90 million to $120 million for the full year 2025, including investments in the Herbalife One initiative[230]. - The Transformation Program initiated in 2021 is expected to deliver annual savings of approximately $110 million, with $70 million realized in 2023 and the full amount expected from 2024 onwards[232]. - The Restructuring Program is anticipated to yield annual savings of at least $80 million starting in 2025, with $50 million already realized in 2024[233]. - The Technology Realignment Program's first phase is expected to deliver annual savings of approximately $9 million beginning in 2026, with $6 million expected in 2025[234]. Debt and Liquidity - The company entered into a $1.25 billion senior secured credit facility in August 2018, which was subsequently amended to increase borrowing capacity[235][236]. - As of March 31, 2025, the outstanding principal balance under the 2024 Credit Facility was $385 million, with a weighted-average interest rate of 11.25%[245]. - The company issued $800 million in senior secured notes due 2029, with an interest rate of 12.250% per annum, to repay the 2018 Credit Facility and partially redeem the 2025 Notes[247]. - The company had negative working capital of $35.0 million as of March 31, 2025, an improvement from negative working capital of $86.7 million as of December 31, 2024[260]. - The company expects cash and funds from operations, available borrowings under the 2024 Credit Facility, and access to capital markets to meet liquidity requirements for the next twelve months[261].

Core Viewpoint - Herbalife's stock price has significantly declined, dropping from $61.65 in February 2019 to $6.25, marking its lowest level since 2009, raising questions about its investment potential [1] Group 1: Reasons for Stock Decline - Herbalife operates in the multi-level marketing industry, relying on a large team of sellers to generate business, selling products like supplements and snacks [2] - The company's popularity surged when billionaires Bill Ackman and Carl Icahn took opposing positions on the stock, with Ackman shorting it and accusing it of being a pyramid scheme [2] - Ackman eventually closed his position, incurring a loss of over $1 billion, while Icahn's subsequent sale of his stock led to a significant sell-off [3] Group 2: Financial Performance - Herbalife's annual revenue decreased from $5.8 billion in 2021 to $4.933 billion last year, reflecting a slowdown in business [4] - Recent results indicated a 0.6% drop in net sales to $1.2 billion, with expectations of continued decline due to competition from weight loss drugs by companies like Eli Lilly and Novo Nordisk [4] Group 3: Turnaround Strategy - The company is implementing a turnaround strategy, appointing Stephan Gratziani as the new CEO and committing to reduce its debt by $1 billion to $1.4 billion by the end of 2028 [5] - Analysts project a slight revenue decline in the first quarter to $1.22 billion and a further drop to $1.27 billion in the second quarter, with an annual revenue forecast of $4.94 billion this year and $5.14 billion next year [6] Group 4: Profit Expectations - Herbalife's expected annual profit per share is $1.98 this year, increasing to $2.51 next year, with analysts generally optimistic about the stock's performance [7] Group 5: Technical Analysis - The stock has been in a strong bearish trend, falling from a high of $58.95 in 2021 to the current $6.25, forming a descending triangle pattern, which is typically a bearish signal [11][12] - The stock remains below the 50-week moving average, suggesting potential further declines, with a psychological target of $5, approximately 20% below the current level [12]

Core Insights - Herbalife has become the Official Nutrition and Hydration Sponsor for the Women's College All-Star Game, emphasizing its commitment to supporting female athletes through tailored nutrition and hydration solutions [1][3][5] Company Commitment - Herbalife has been dedicated to empowering female athletes for over 20 years, providing them with science-backed nutrition products and sponsorships to enhance their performance [3][5] - The company currently sponsors more than 50 female athletes across various sports, highlighting its long-standing support for women in athletics [5] Event Details - The Women's College All-Star Game will take place on April 5, 2025, in Tampa, Florida, featuring 20 top collegiate basketball players [1] - Herbalife will provide athletes with access to premium nutrition products, including those from the Herbalife24 NSF Certified for Sport® line, aimed at replenishing essential nutrients and enhancing hydration and recovery [4][6] Expert Insights - Personalized nutrition is crucial for female athletes, as factors like metabolism and hormonal fluctuations can significantly impact their performance and recovery [4] - Herbalife's approach includes offering athletes access to nutritionists and dietitians, addressing the unique nutritional needs often overlooked in women's sports [5]

Group 1 - Herbalife Ltd (HLF) is a notable stock within the Retail-Wholesale sector, which consists of 214 companies and ranks 8 in the Zacks Sector Rank [2] - HLF has a Zacks Rank of 2 (Buy), indicating a positive outlook based on earnings estimates and revisions, with a 2.4% increase in the consensus estimate for full-year earnings over the past 90 days [3] - Year-to-date, HLF has returned approximately 20.3%, outperforming the average loss of 3.5% in the Retail-Wholesale sector [4] Group 2 - HLF is part of the Retail - Pharmacies and Drug Stores industry, which includes 4 stocks and currently ranks 4 in the Zacks Industry Rank, with the industry gaining about 20.4% year-to-date [6] - Another stock in the Retail-Wholesale sector, MercadoLibre (MELI), has also performed well with an 18.9% return year-to-date, and it has a Zacks Rank of 2 (Buy) [4][5] - The Internet - Commerce industry, to which MercadoLibre belongs, has seen a decline of 1.2% year-to-date, ranking 57 among industries [7]