Herbalife(US:HLF)2024-10-30 20:18Volume Points and Sales Performance - For the three months ended September 30, 2024, Volume Points decreased by 5.4% compared to the same period in 2023, and for the nine months ended September 30, 2024, the decrease was 5.0%[168] - North America's Volume Points decreased by 10.3% for the three months ended September 30, 2024, and by 13.2% for the nine months ended September 30, 2024[166] - Latin America's Volume Points increased by 1.5% for the three months ended September 30, 2024, but decreased by 2.2% for the nine months ended September 30, 2024[166] - EMEA's Volume Points decreased by 9.7% for the three months ended September 30, 2024, and by 8.1% for the nine months ended September 30, 2024[166] - Asia Pacific's Volume Points decreased by 2.8% for the three months ended September 30, 2024, while remaining relatively flat for the nine months ended September 30, 2024[166] - China's Volume Points decreased by 14.9% for the three months ended September 30, 2024, and by 2.7% for the nine months ended September 30, 2024[166] - Net sales for the three and nine months ended September 30, 2024, were $1,240.3 million and $3,785.7 million, representing decreases of $41.0 million (3.2%) and $61.7 million (1.6%) compared to the same periods in 2023[186] - The decrease in net sales for the three months ended September 30, 2024, was primarily driven by a 5.4% decrease in Volume Points and a 2.9% unfavorable impact from foreign currency fluctuations, partially offset by a 4.8% favorable impact from price increases[186] Financial Performance - Net income for the three months ended September 30, 2024, was $47.4 million ($0.46 per diluted share), an increase of $4.6 million (10.7%), while for the nine months it was $76.4 million ($0.75 per diluted share), a decrease of $55.6 million (42.1%) compared to 2023[187] - The Primary Reporting Segment reported net sales of $1,165.5 million and $3,554.0 million for the three and nine months ended September 30, 2024, reflecting decreases of $26.3 million (2.2%) and $48.2 million (1.3%) respectively compared to 2023[197] - Contribution margin for the Primary Reporting Segment was $502.2 million (43.1% of net sales) and $1,517.1 million (42.7% of net sales) for the three and nine months ended September 30, 2024, representing increases of $16.1 million (3.3%) and $40.9 million (2.8%) respectively compared to 2023[200] - Selling, general, and administrative expenses represented 35.8% of net sales for the three months ended September 30, 2024, compared to 35.5% for the same period in 2023[195] - The company experienced a $10.5 million loss on extinguishment of debt related to the April 2024 refinancing transactions, impacting net income for the nine months ended September 30, 2024[189] - The unfavorable impact of foreign currency fluctuations was 2.4% for the nine months ended September 30, 2024, contributing to the overall decrease in net sales[186] Regional Sales Insights - Net sales in North America were $260.4 million for the three months ended September 30, 2024, a decrease of $17.4 million, or 6.3%, compared to the same period in 2023[208] - Latin America reported net sales of $207.1 million for the three months ended September 30, 2024, a decrease of $4.9 million, or 2.3%, compared to the same period in 2023[212] - The Asia Pacific region had net sales of $436.1 million for the three months ended September 30, 2024, a decrease of $5.0 million, or 1.1%, compared to the same period in 2023[202] - EMEA region reported net sales of $261.9 million and $827.6 million for the three and nine months ended September 30, 2024, representing increases of 0.3% and 1.1% compared to the same periods in 2023[215] - In the EMEA region, net sales growth was primarily driven by a 10.5% favorable impact of price increases for the nine months ended September 30, 2024, despite an 8.1% decrease in Volume Points[215] Cost and Expense Management - The company is focused on enhancing its Member-facing technology platform through a new Digital Technology Program, which incurred expenses of $22.1 million for the nine months ended September 30, 2024[189] - The company incurred $68.2 million in pre-tax unfavorable impacts from Restructuring Program expenses for the nine months ended September 30, 2024, primarily related to employee retention and separation costs[189] - The company recognized a $5.1 million pre-tax unfavorable impact from expenses related to the new Digital Technology Program for the three months ended September 30, 2024[188] - Selling, general, and administrative expenses were $444.0 million for the three months ended September 30, 2024, down from $455.3 million in 2023, and increased to $1,438.5 million for the nine months ended September 30, 2024, compared to $1,391.7 million in 2023[232] Debt and Liquidity - The company had $402.5 million in cash and cash equivalents as of September 30, 2024, supporting general corporate purposes and potential strategic investments[240] - The 2018 Credit Facility was amended to increase borrowing capacity, with a total of $1.25 billion available, including a $250 million revolving credit facility[249] - The company issued $800.0 million aggregate principal amount of senior secured notes due 2029, with an interest rate of 12.250% per annum payable semiannually[260] - The 2024 Term Loan B Facility has an aggregate principal amount of $400.0 million and requires quarterly payments equal to 5.0% of the principal amount per annum, starting September 2024[252] - The company repaid $981.0 million of long-term debt by extinguishing the 2018 Credit Facility, resulting in a loss on extinguishment of approximately $2.5 million[253] - As of September 30, 2024, the outstanding principal on the 2029 Secured Notes was $800.0 million, and the weighted-average interest rate for borrowings under the 2024 Credit Facility was 10.05%[260][258] Strategic Initiatives - The company introduced a new training and recognition program during the nine months ended September 30, 2024, aimed at encouraging recruitment and activity of new distributors[171] - The company is focusing on enhancing technology tools and training programs to support Members in marketing and selling products[204] - Global inflationary pressures and supply chain challenges are impacting cost structures and pricing strategies, with potential effects on sales volume[207] - The Transformation Program is expected to deliver annual savings of approximately $110 million, with $70 million realized in 2023 and similar savings expected in 2024[245] - The Restructuring Program is anticipated to yield annual savings of at least $80 million starting in 2025, with $30 million already realized in the nine months ended September 30, 2024[246]