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, which was just above the midpoint of the guidance range [10][27] - On a constant currency basis, net sales grew by 1.4% year over year, marking the second consecutive quarter of growth excluding foreign exchange headwinds [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][29] - 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 [10][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 [11] - The company reported a gross profit margin improvement to 78.3%, up 80 basis points compared to Q1 2024, primarily due to 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, driven by favorable pricing and a 4% increase in volumes [34] - 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 offsetting favorable pricing [35] - In North America, net sales decreased by 4% year over year, primarily due to an 8% reduction in volumes [36] Company Strategy and Development Direction - The company aims to lead in the health and wellness economy by leveraging its network of 2.1 million distributors and enhancing its product offerings through technology and personalization [6][8] - Recent acquisitions of Protocol Health, Pruvit Ventures, and Link Biosciences are intended to strengthen the company's position in the market and enhance its product portfolio [12][21] - The focus will be on innovation in products and technology, including AI-powered solutions to empower distributors and improve customer engagement [9][22] 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 [5][6] - The company expects to see improvements in North America in Q2 compared to Q1, despite a weak February due to external factors [60] - Management remains cautious about the Chinese market, anticipating gradual improvements but not rolling in significant upside into projections yet [64] 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 [40] Q&A Session Summary Question: Can you expand on the monetization strategy of Protocol? - Management acknowledged that it is early to discuss ROI but emphasized the potential for the platform to support product consumption and distributor engagement [47][48] Question: What is driving the sequential decline in distributor numbers in North America? - Management noted that the quarter started strong but faced challenges in February, with expectations for improvement in Q2 [58][60] 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 markets [62][63] Question: What are the intentions for Link Biosciences? - Management indicated that Link Biosciences will target both athletes and a broader audience seeking customized health solutions, positioning the company ahead of competitors [69][72] Question: Is there any additional CapEx associated with the recently acquired assets? - Management confirmed that the CapEx guidance was lowered due to less spending in Q1, but all necessary CapEx for acquisitions is included in the updated guidance [90]