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]

Core Viewpoint - Herbalife Ltd (HLF) has received an upgrade to a Zacks Rank 1 (Strong Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are closely correlated with short-term stock price movements, particularly due to institutional investors adjusting their valuations based on these estimates [3][5]. - An increase in earnings estimates typically leads to higher fair value for a stock, prompting institutional investors to buy or sell, thus affecting stock prices [3]. Business Improvement Indicators - The upgrade in rating for Herbalife Ltd suggests an improvement in the company's underlying business, which should encourage investors to drive the stock price higher [4][9]. - The Zacks Consensus Estimate for Herbalife Ltd has increased by 1.5% over the past three months, although the expected earnings per share for the fiscal year ending December 2025 is projected to be $1.74, reflecting a year-over-year decline of 11.2% [7]. Zacks Rank System Overview - The Zacks Rank system categorizes stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [6]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, indicating superior earnings estimate revisions, which positions Herbalife Ltd favorably for potential market-beating returns [8][9].

Group 1 - Herbalife Ltd is part of the Retail-Wholesale sector, which includes 212 individual stocks and holds a Zacks Sector Rank of 2, indicating strong performance relative to other sectors [2] - The Zacks Rank system highlights stocks with characteristics that are likely to outperform the market in the next one to three months, with Herbalife Ltd currently holding a Zacks Rank of 1 (Strong Buy) [3] - Over the past three months, the Zacks Consensus Estimate for Herbalife's full-year earnings has increased by 1.5%, reflecting improving analyst sentiment and a positive earnings outlook [4] Group 2 - Herbalife Ltd has gained approximately 23.9% year-to-date, significantly outperforming the average return of 6.2% for Retail-Wholesale companies [4] - Herbalife is part of the Retail - Pharmacies and Drug Stores industry, which ranks 1 in the Zacks Industry Rank, with an average gain of 22.2% year-to-date, indicating strong performance within its specific industry [6] - In comparison, another stock in the Retail-Wholesale sector, Potbelly, has a year-to-date return of 28% and a Zacks Rank of 2 (Buy), with an 8% increase in the consensus EPS estimate over the past three months [5][6]

Company Overview - Herbalife Ltd. operates in 95 countries with a network of six million independent distributors utilizing a direct selling and multi-level marketing model [1] - The company's product offerings include weight management, targeted nutrition, fitness, skincare, and body care [1] Analyst Background - The article includes a brief background of Myriam Hernandez Alvarez, who holds multiple degrees in engineering, computer science, business management, and computer applications [1] Disclosure Information - The article states that the author has no stock or derivative positions in any of the companies mentioned and has no plans to initiate any such positions within the next 72 hours [2] - It is noted that the author is not receiving compensation for the article, other than from Seeking Alpha, and has no business relationship with any mentioned company [2]

Q4 2024 Earnings Presentation February 19, 2025 Forward-Looking Statements This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including any projections of earnings, revenue or other financial items; any statements of the p ...

Financial Data and Key Metrics Changes - For Q4 2024, reported net sales were $1.2 billion, down 0.6% year-over-year, but up 2.7% on a constant currency basis [39][40] - Full year 2024 net sales were $5 billion, down 1.4% year-over-year, but up 1.2% on a constant currency basis [41][42] - Adjusted EBITDA for Q4 was $150 million, exceeding guidance, with a margin of 12.4%, up 340 basis points year-over-year [43][58] - Full year adjusted EBITDA was $635 million, significantly up from $571 million in 2023, with a margin of 12.7%, up 140 basis points [44][70] Business Line Data and Key Metrics Changes - New distributor growth was up 22% year-over-year in Q4, marking the third consecutive quarter of growth, and up 11% for the full year compared to 2023 [26][29] - Active non-sales leaders showed year-over-year growth for the third consecutive quarter, indicating a positive trend in distributor engagement [28][31] - Sales leader retention rate improved from 68.3% to 70.3% year-over-year, reflecting better distributor support and training initiatives [31][70] Market Data and Key Metrics Changes - Latin America reported net sales growth of 2% on a reported basis and 15% on a local currency basis [51] - EMEA net sales were up 3% year-over-year on a reported basis and 6% on a local currency basis [53] - Asia-Pacific net sales increased by 1% on a reported basis and 3% on a local currency basis [54] - North America saw a decline of 3% year-over-year in net sales, but trends showed improvement over the last three quarters [55][81] - China experienced a significant decline of 20% year-over-year in net sales, attributed to volume declines and strategic shifts [57][99] Company Strategy and Development Direction - The company aims to become one of the world's most important health and wellness platforms, focusing on digital transformation and distributor engagement [24][34] - Initiatives launched in 2024 to rebuild the distributor base and improve activity levels are yielding positive results [25][31] - The company is addressing market-specific challenges with optimization strategies, particularly in Latin America [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the improving distributor metrics and the potential for growth in 2025, despite currency headwinds [70][72] - The company is focused on leveraging industry disruptors and adapting to changing consumer trends [33][72] - Management acknowledged the challenges in the North American market but indicated that improvements are on track [80][82] Other Important Information - The company reduced its total leverage ratio to 3.2 times as of December 31, down from 3.9 times at the end of 2023 [48][61] - The company plans to pay down $1 billion of debt by the end of 2028, with a target to reduce debt to $1.4 billion [61][62] - The company is experiencing a significant currency headwind, projected to impact 2025 net sales and adjusted EBITDA [63][66] Q&A Session Summary Question: What needs to happen to turn around North American volume trends? - Management indicated the need to rebuild the distributor and supervisor base, with positive signs of improvement after 14 quarters of decline [78][80] Question: Is the plan to repay the 2025 maturity just once it comes due in September? - Management confirmed the plan to repay the 2025 notes in September, with some revolver drawn to assist in the repayment [83][84] Question: Can you discuss the constant currency sales guidance range for 2025? - Management explained that the wide range reflects potential opportunities in China and the US, with more upside than downside risks [89][90] Question: What is the situation in China regarding revenue decline? - Management noted a strategic shift towards a customer-focused approach, which has yielded some positive results but is still in transition [98][100] Question: How do you view the preferred customer declines in North America? - Management acknowledged the need to balance transactional and transformational aspects of the business to improve preferred customer metrics [103][106]

Financial Performance - Q4 2024 net sales were $1.2 billion, down 0.6% year-over-year, but up 2.7% on a constant currency basis[5]. - Full-year 2024 net sales totaled $5.0 billion, a decrease of 1.4% year-over-year, with a 1.2% increase on a constant currency basis[10]. - Adjusted EBITDA for Q4 2024 was $150.0 million, exceeding guidance, with an adjusted EBITDA margin of 12.4%, up 340 basis points from Q4 2023[8]. - Full-year 2024 adjusted EBITDA reached $634.8 million, with an adjusted EBITDA margin of 12.7%, up 140 basis points compared to 2023[10]. - Net income for Q4 2024 was $177.9 million, significantly up from $10.2 million in Q4 2023, representing a year-over-year increase of 1,642.2%[39]. - Net income for the year ended December 31, 2024, increased to $254.3 million, up from $142.2 million in 2023, representing a growth of 78.9%[44]. - Adjusted net income for Q4 2024 was $36.8 million, compared to $28.6 million in Q4 2023, with full-year adjusted net income at $198.9 million, down from $221.8 million[51]. - EBITDA for the year ended December 31, 2024, was $496.8 million, compared to $470.7 million in 2023, indicating a year-over-year growth[51]. - Adjusted EBITDA for the year was $634.8 million, up from $570.6 million in 2023, reflecting a strong operational performance[52]. - The adjusted EBITDA margin for 2024 was 12.7%, compared to 11.3% in 2023, showcasing improved profitability[52]. Sales and Guidance - First quarter 2025 net sales guidance is projected to decline between 5.5% to 1.5% year-over-year[24]. - Full-year 2025 net sales guidance is expected to range from a decline of 3% to an increase of 3% year-over-year[25]. - The company reported a net sales figure of $4,993.1 million for 2024, a decrease from $5,062.4 million in 2023[51]. Cost Management and Restructuring - The company expects annual savings of at least $80 million from its Restructuring Program starting in 2025[12]. - The company incurred $69.1 million in restructuring program expenses for the year, compared to none in the previous year, indicating ongoing transformation efforts[51]. - Capital expenditures for full-year 2024 were $122.0 million, with guidance for 2025 set between $100 million and $130 million[11][25]. Debt and Financial Position - The company redeemed $65.0 million of its 7.875% Senior Notes due 2025, reducing the outstanding principal balance to $197.3 million[13]. - Total debt as of the end of 2024 was $2,332.7 million, down from $2,581.1 million in 2023, reflecting effective debt management[52]. - Principal payments on debt rose to $1,937.0 million in 2024 from $289.6 million in 2023, indicating a substantial increase in debt repayment activity[44]. - The leverage ratio under the Credit Agreement improved to 3.2x in 2024 from 3.9x in 2023, indicating a stronger balance sheet[52]. Assets and Liabilities - Total assets decreased to $2,728.1 million in 2024 from $2,809.4 million in 2023, a decline of 2.9%[42]. - Total liabilities decreased to $3,529.2 million in 2024 from $3,869.7 million in 2023, a reduction of 8.8%[42]. - The company reported a decrease in cash and cash equivalents to $415.3 million in 2024 from $575.2 million in 2023, a decline of 27.8%[42]. - Cash, cash equivalents, and restricted cash at the end of the period was $438.1 million, down from $595.5 million at the end of 2023, a decrease of 26.5%[44]. Market Strategy and Outlook - The company plans to continue focusing on expanding its market presence and enhancing its product offerings in 2025[33]. - The outlook for 2025 does not account for potential impacts from incremental tariffs, indicating a cautious approach to future projections[29]. - The company aims to improve its operational efficiency and strengthen its supply chain management to mitigate risks associated with global economic conditions[35]. - The company plans to continue focusing on international operations, which are expected to contribute significantly to total net sales[49]. Currency Impact - The company emphasized the impact of currency fluctuations on total net sales, which are significantly affected by the U.S. dollar against foreign currencies[49]. - The company experienced a foreign exchange transaction loss of $7.6 million in 2024, compared to a loss of $6.0 million in 2023[44].

Financial Performance - Net sales for the year ended December 31, 2024, were $4,993.1 million, a decrease of $69.3 million, or 1.4%, compared to 2023[287] - Net income for the year ended December 31, 2024, was $254.3 million, or $2.50 per diluted share, an increase of $112.1 million, or 78.8%, compared to 2023[288] - The Primary Reporting Segment reported net sales of $4,695.5 million for the year ended December 31, 2024, a decrease of $39.5 million, or 0.8%, compared to 2023[292] - Contribution margin for the Primary Reporting Segment was $2,004.3 million, or 42.7% of net sales, for the year ended December 31, 2024, an increase of $66.5 million, or 3.4%, compared to 2023[295] - The decrease in net sales for 2024 was primarily driven by a 4.0% decrease in Volume Points and a 2.6% unfavorable impact from foreign currency exchange rates[287] - In local currency, net sales increased by 1.2% for the year ended December 31, 2024, compared to the same period in 2023[287] - The company experienced a 5.3% favorable impact from price increases, partially offsetting the decrease in sales volume[287] Regional Performance - Net sales in North America were $1,054.4 million for the year ended December 31, 2024, a decrease of $77.0 million, or 6.8%, compared to the same period in 2023[298] - Latin America reported net sales of $832.5 million for the year ended December 31, 2024, an increase of $11.6 million, or 1.4%, compared to 2023[301] - EMEA region net sales were $1,084.8 million for the year ended December 31, 2024, an increase of $16.0 million, or 1.5%, compared to 2023[306] - Asia Pacific region, excluding China, reported net sales of $1,723.8 million for the year ended December 31, 2024, an increase of $9.9 million, or 0.6%, compared to 2023[309] - The China region reported net sales of $297.6 million for the year ended December 31, 2024, a decrease of $29.8 million, or 9.1%, compared to 2023[313] Cost and Expense Management - The company continues to assess its cost structure and potential pricing actions in response to ongoing inflationary pressures[286] - Selling, general, and administrative expenses rose to $1,875.4 million in 2024, representing 37.6% of net sales, compared to 36.9% in 2023[321] - The Transformation Program is expected to deliver annual savings of approximately $110 million, with $110 million realized in 2024[334] - The Restructuring Program is projected to yield annual savings of at least $80 million starting in 2025, with $50 million already realized in 2024[335] Cash Flow and Capital Expenditures - Operating cash flow for 2024 was $285.4 million, down from $357.5 million in 2023, primarily due to lower net income and unfavorable changes in operating assets and liabilities[331] - Capital expenditures for 2024 were $112.2 million, down from $140.1 million in 2023, with a focus on management information systems and the $400 million Digital Technology Program[332] - As of December 31, 2024, the company had $415.3 million in cash and cash equivalents, supporting general corporate purposes and potential strategic investments[330] Debt and Financing - The company entered into the 2024 Credit Facility, which includes a $400.0 million Term Loan B Facility and a $400.0 million revolving credit facility[339] - The company repaid $1,917.9 million in total debt during the year ended December 31, 2024, including $831.2 million under the 2024 Credit Facility[346] - As of December 31, 2024, the outstanding principal on the 2029 Secured Notes was $800.0 million, with an interest rate of 12.250% per annum[348] - The company recognized a loss on extinguishment of approximately $2.5 million related to the repayment of the 2018 Credit Facility[341] - The 2024 Revolving Credit Facility requires a maximum total leverage ratio of 4.50:1.00 through December 31, 2024, stepping down to 4.00:1.00 by September 30, 2025[344] Tax and Accounting - The effective income tax rate for 2024 was (50.1)%, influenced by corporate entity structure changes and a deferred income tax asset of $177.6 million recognized during the year[328] - The company is required to estimate income taxes in each jurisdiction prior to filing tax returns, which involves complex judgments and may take extended periods for resolution[379] - The realizability of deferred income tax assets is assessed by adjusting the valuation allowance, which could materially impact consolidated financial statements[380] - Tax benefits from uncertain tax positions are recognized only if it is more likely than not that the position will be sustained upon examination by taxing authorities[381] Shareholder Returns and Dividends - The company has not declared or paid cash dividends since 2014, with future declarations subject to board discretion and various factors[361] - The share repurchase program authorized in February 2021 had approximately $985.5 million of remaining capacity prior to expiration on February 9, 2024[362] Miscellaneous - Product returns and buybacks were approximately 0.1% of net sales for both years ended December 31, 2024 and 2023[372] - Goodwill decreased from approximately $95.4 million in 2023 to $87.7 million in 2024 due to foreign currency translation adjustments[377] - The company expects sufficient working capital from operations and available borrowings to meet liquidity requirements for the next twelve months[365] - Foreign subsidiaries' asset and liability accounts are translated into U.S. dollars at period-end exchange rates for consolidated financial reporting[383]