Herbalife(HLF) - 2025 Q3 - Quarterly Results

Financial Performance - Q3 2025 net sales reached $1.3 billion, up 2.7% year-over-year, exceeding the guidance midpoint[5] - Adjusted EBITDA for Q3 2025 was $163.0 million, surpassing guidance, with a margin of 12.8%[8] - North America net sales increased by 1.0% year-over-year, marking the region's first quarterly gain since Q2 2021[5] - Net sales for Q3 2025 were $1,273.7 million, a 2.9% increase from $1,240.3 million in Q3 2024[35] - Gross profit for Q3 2025 was $989.5 million, compared to $971.6 million in Q3 2024, reflecting a gross margin improvement[35] - Net income attributable to Herbalife for the nine months ended September 30, 2025, was $142.9 million, significantly up from $76.4 million in the same period of 2024[35] - Basic earnings per share for Q3 2025 were $0.42, down from $0.47 in Q3 2024[35] - Adjusted net income for Q3 2025 was $51.5 million, compared to $58.0 million in Q3 2024, reflecting a decrease of approximately 8.6%[45] - Adjusted diluted EPS for Q3 2025 was $0.50, down from $0.57 in Q3 2024, representing a decline of about 12.3%[45] - Total net income attributable to Herbalife for the nine months ended September 30, 2025, was $142.9 million, compared to $76.4 million for the same period in 2024, indicating an increase of 87.0%[45] - Adjusted EBITDA for the nine months ended September 30, 2025, was $171.9 million, compared to $162.1 million in 2024, reflecting a growth of approximately 6.0%[45] Guidance and Projections - Full-year 2025 guidance revised to a net sales range of (0.3)% to +0.7% year-over-year, with adjusted EBITDA guidance of $645 million to $655 million[21] - The company plans to exclude certain tax effects from adjusted net income and adjusted diluted EPS starting in Q1 2025[40] Capital and Debt Management - The company repaid $147.3 million of its 2025 Notes, reducing the total leverage ratio to 2.8x as of September 30, 2025[11] - Credit Agreement Total Debt as of September 30, 2025, was $2,079.1 million, with a total leverage ratio of 2.8x[48] Operational Highlights - The number of new distributors in North America increased by 17% year-over-year, contributing to overall growth[12] - Attendance at the company's training events in 2025 reached nearly 142,000, a 5% increase compared to 2024[14] - The Pro2col app's beta version was expanded to retail customers, with approximately 7,900 distributors involved in the beta group[16] - The company launched a new skincare line, HL/Skin, supported by an AI-powered assessment tool for personalized customer engagement[15] Cash Flow and Assets - Cash and cash equivalents at the end of Q3 2025 were $328.0 million, down from $417.9 million at the end of Q3 2024[39] - The company reported a net cash provided by operating activities of $235.0 million for the nine months ended September 30, 2025, compared to $215.8 million in the same period of 2024[39] - Total current assets decreased to $1,106.2 million as of September 30, 2025, from $1,143.7 million at the end of 2024[37] - Total liabilities decreased to $3,303.2 million as of September 30, 2025, compared to $3,529.2 million at the end of 2024[37] Risks and Challenges - The company faces risks related to global economic conditions, including inflation and foreign exchange rate fluctuations, which could impact its performance[30] - The company’s international operations continue to significantly impact total net sales, which are affected by fluctuations in the U.S. dollar against foreign currencies[44] Expenses and Costs - Expenses related to the Restructuring Program for Q3 2025 were $0.8 million, significantly lower than $2.7 million in Q3 2024[45] - Digital technology program costs for the three months ended September 30, 2024, were $5.1 million, with a total of $7.4 million for the TTM [48] - Share-based compensation expenses for the three months ended September 30, 2024, were $13.0 million, totaling $46.5 million for the TTM [48] - Inventory write-downs for the three months ended September 30, 2024, amounted to $5.6 million, contributing to a total of $23.3 million for the TTM [48] Technology and Innovation - The company is focusing on enhancing its information technology infrastructure and integrating artificial intelligence into its business operations[33]