Herbalife Nutrition Ltd. (NYSE:HLF) Q2 2021 Earnings Conference Call August 3, 2021 5:30 PM ET Company Participants Eric Monroe – Senior Director, Investor Relations John Agwunobi – Chairman and Chief Executive Officer Alex Amezquita – Chief Financial Officer John DeSimone – President Conference Call Participants Wendy Nicholson – Citi Steph Wissink – Jefferies Doug Lane – Lane Research Hale Holden – Barclays Jeff Van Sinderen – B. Riley Carla Casella – JPMorgan Operator Good afternoon, and thank you for jo ...

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's unaudited condensed consolidated financial statements detail its financial position, performance, and cash flows [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased while total liabilities increased, widening the total shareholders' deficit as of June 30, 2021 Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$2,966.7** | **$3,076.1** | | Cash and cash equivalents | $837.5 | $1,045.4 | | Inventories | $538.3 | $501.4 | | **Total Liabilities** | **$4,257.9** | **$3,932.2** | | Long-term debt, net | $2,752.8 | $2,405.5 | | **Total Shareholders' Deficit** | **$(1,291.2)** | **$(856.1)** | [Unaudited Condensed Consolidated Statements of Income](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Income) Increased net sales drove significant growth in net income and diluted EPS for the three and six-month periods Condensed Consolidated Statements of Income (in millions, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,552.3 | $1,346.9 | $3,053.9 | $2,609.3 | | Operating income | $237.9 | $189.7 | $460.4 | $285.3 | | Net income | $144.2 | $115.1 | $291.6 | $160.7 | | Diluted EPS | $1.31 | $0.82 | $2.63 | $1.15 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased while significant share repurchases drove a net use of cash in financing activities Condensed Consolidated Statements of Cash Flows (in millions) | Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $286.9 | $385.0 | | Net cash used in investing activities | $(68.4) | $(49.4) | | Net cash (used in) provided by financing activities | $(419.8) | $588.4 | | Net change in cash | $(207.7) | $900.6 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail key accounting policies, debt increases, global tax contingencies, and significant share repurchases - Total long-term debt increased to **$2,779.2 million** as of June 30, 2021, primarily due to the issuance of **$600.0 million** in 4.875% Senior Notes due 2029[38](index=38&type=chunk)[65](index=65&type=chunk)[68](index=68&type=chunk) - The company is engaged in various tax disputes globally, with key contingencies in Brazil (**~$48.8M**), India (**~$41.4M**), and Korea (**~$57.6M**)[78](index=78&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) - The company repurchased approximately **14.8 million common shares** for an aggregate cost of **$719.0 million** during the first six months of 2021, including a significant purchase from Carl C Icahn[130](index=130&type=chunk)[135](index=135&type=chunk) - Subsequent to the quarter end, the company amended its 2018 Credit Facility to **increase borrowing capacity** and reduce applicable interest rate margins[159](index=159&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong net sales growth driven by increased Volume Points, despite a significant decline in China [Volume Points and Results of Operations](index=41&type=section&id=Volume%20Points%20and%20Results%20of%20Operations) Volume Point growth in Asia Pacific and EMEA drove a 15.2% increase in Q2 net sales, offsetting a sharp decline in China Volume Points by Geographic Region (in millions) | Region | Three Months Ended June 30, 2021 | % Change YoY | | :--- | :--- | :--- | | North America | 505.6 | 2.7% | | Mexico | 214.7 | 0.6% | | South and Central America | 121.1 | 11.0% | | EMEA | 445.2 | 9.5% | | Asia Pacific | 489.9 | 38.9% | | China | 106.6 | (26.3)% | | **Worldwide** | **1,883.1** | **9.5%** | - The decline in China's Volume Points is attributed to business strengthening efforts and the continuing impact of the pandemic and prior government reviews[176](index=176&type=chunk)[232](index=232&type=chunk) Net Sales by Product Category (in millions) | Category | Three Months Ended June 30, 2021 | % Change YoY | | :--- | :--- | :--- | | Weight Management | $908.6 | 11.7% | | Targeted Nutrition | $429.4 | 18.6% | | Energy, Sports, and Fitness | $149.8 | 44.6% | | Outer Nutrition | $27.4 | 5.4% | [Liquidity and Capital Resources](index=58&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow decreased due to working capital changes, while the company refinanced debt and continued its share repurchase program - Operating cash flow decreased to **$286.9 million** for the six months ended June 30, 2021, from $385.0 million in the prior-year period, due to unfavorable working capital changes[254](index=254&type=chunk) - In May 2021, the company issued **$600.0 million** of 4.875% Senior Notes due 2029 and used proceeds to redeem its **$400.0 million** 7.250% Senior Notes due 2026[268](index=268&type=chunk)[269](index=269&type=chunk) - A new **$1.5 billion share repurchase program** was authorized in February 2021, with approximately **$1.4 billion** remaining as of June 30, 2021[274](index=274&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages foreign currency and interest rate risks through derivative instruments and a mix of fixed and variable-rate debt - The company uses foreign exchange derivatives to reduce currency exposure, with a total notional amount of **$516.2 million** in outstanding forward contracts as of June 30, 2021[301](index=301&type=chunk)[306](index=306&type=chunk) - The company's variable-rate debt is exposed to interest rate changes, where a 1% rate change could impact annual interest expense by approximately **$10.2 million**[308](index=308&type=chunk)[309](index=309&type=chunk) [Item 4. Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2021[313](index=313&type=chunk) - **No material changes** to the company's internal control over financial reporting occurred during the quarter ended June 30, 2021[314](index=314&type=chunk) PART II. OTHER INFORMATION [Item 1A. Risk Factors](index=73&type=section&id=Item%201A.%20Risk%20Factors) Key risks include dependence on Members, regulatory compliance, the FTC Consent Order, and challenges in international operations - The business is highly dependent on its ability to **recruit, retain, and motivate** a large base of independent Members[333](index=333&type=chunk) - The company is subject to the **2016 Consent Order with the FTC**, which imposes significant compliance costs and operational requirements in the U.S[372](index=372&type=chunk)[377](index=377&type=chunk) - Operations in China are subject to a modified business model and **unique political, economic, and regulatory risks**[399](index=399&type=chunk)[401](index=401&type=chunk)[404](index=404&type=chunk) - The **COVID-19 pandemic** has amplified many business risks, potentially impacting the supply chain, Member activity, and overall economic conditions[320](index=320&type=chunk)[353](index=353&type=chunk)[355](index=355&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=95&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company continued its $1.5 billion share repurchase program, buying back 1.82 million shares during the second quarter Share Repurchases for Q2 2021 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2021 | — | — | | May 2021 | 275,568 | $52.41 | | June 2021 | 1,546,612 | $53.87 | | **Total Q2** | **1,822,180** | **$53.65** | - As of June 30, 2021, the remaining authorized capacity under the company's **$1.5 billion share repurchase program** was approximately **$1.4 billion**[432](index=432&type=chunk)[433](index=433&type=chunk)

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |------------------------------------------------------------------------------------------------------------------------|------------------------------------------- ...

Herbalife Nutrition Ltd. (NYSE:HLF) Q2 2020 Earnings Conference Call August 6, 2020 5:30 PM ET Company Participants John Agwunobi - Chairman and Chief Executive Officer John DeSimone - President Alex Amezquita - Senior Vice President, Finance Strategy - Investor Relations Eric Monroe - Director, Investor Relations Conference Call Participants Wendy Nicholson - Citi Hale Holden - Barclays Steph Wissink - Jefferies Doug Lane - Lane Research Ivan Feinseth - Tigress Financial Karru Martinson - Jefferies Operato ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | |------------------------------------------------------------------------------------------------------------------------|------------------------------------------------ ...