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HERBALIFE NUTRITION LTD.

(HLF)
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Earnings Release Q3 2021

11/02/2021 | 03:25pm EST

Herbalife Nutrition Reports Third Quarter 2021 Results

and on Track for Another Record Year

LOS ANGELES, November 2nd, 2021 - Herbalife Nutrition Ltd. (NYSE: HLF) today reported financial results for the third quarter ended September 30, 2021:

HIGHLIGHTS

  • Third quarter 2021 net sales of $1.4 billion, a 6% decrease compared to the third quarter 2020 and in-line with guidance issued on September 13, 2021.
  • Third quarter 2021 reported diluted EPS of $1.09 and adjusted1 diluted EPS of $1.212, compared to $1.04 and $1.152, respectively, for the third quarter 2020. Third quarter 2021 reported and adjusted earnings per share both increased by approximately 5% compared to the third quarter 2020.
  • Third quarter 2021 reported net income of $117.4 million and adjusted1 EBITDA of $222.4 million.
  • Third quarter 2021 adjusted1 diluted EPS and adjusted1 EBITDA exceeded the high-end of the guidance ranges issued on September 13, 2021.
  • Reiterating FY 2021 outlook for the top and bottom line, including net sales guidance range of 4.5% to 8.5% growth, adjusted3 diluted EPS guidance range of $4.55 - $4.95, and adjusted3 EBITDA guidance of $860 million - $910 million.
  • During the third quarter, the Company repurchased approximately 3.5 million shares for a total of $162 million.

"Over the course of the global pandemic, we have delivered unprecedented business performance and growth. Despite challenging comparison periods in the third and fourth quarters, we remain on track for another record sales year."

  • John Agwunobi, Chairman and CEO of Herbalife Nutrition
  1. Adjusted diluted EPS and adjusted EBITDA are non-GAAP measures. See Schedule A - "Reconciliation of Non-GAAP Financial Measures" for a detailed reconciliation of these measures to the most directly comparable GAAP measure, and a discussion of why we believe these non-GAAP measures are useful.
  2. Third quarter 2021 results were impacted by expenses related to the China Growth and Impact Investment Program of approximately $4.1 million or $0.03 per diluted share. Third quarter 2020 results were impacted by China grant income of approximately $0.6 million, or $0.00 per diluted share and expenses related to the China Growth and Impact Investment Program of approximately $3.2 million or $0.02 per diluted share. Third quarter 2020 adjusted results have been updated in Schedule A to no longer exclude China grant income.
  3. Adjusted diluted EPS and adjusted EBITDA are non-GAAP measures. See the "Outlook" discussion below and the related footnotes and Schedule A - "Reconciliation of Non-GAAP Financial Measures" for additional information regarding adjusted diluted EPS and adjusted EBITDA guidance.

MANAGEMENT COMMENTARY

Herbalife Nutrition reported net sales of $1.4 billion, a decline of 6% compared to the prior year. These results were in-line with guidance. The quarter was impacted by a challenging year-over-year comparison period, while on a two-year stack basis, net sales grew 15% compared to the third quarter of 2019.

The Company exceeded the high-end of its guidance range for adjusted1 diluted EPS and adjusted1 EBITDA.

"Over the course of the global pandemic, we have delivered unprecedented business performance and growth. Despite challenging comparison periods in the third and fourth quarters, we remain on track for another record sales year," said John Agwunobi, Chairman and Chief Executive Officer, Herbalife Nutrition. "The fundamental tailwinds driving the global nutrition industry, along with demand for our science-based nutrition products, continue to benefit the Company."

The Company continues to demonstrate solid business fundamentals as evidenced by a 10% increase in the number of sales leaders actively selling in the quarter, compared to the prior year period, excluding China. The number of new distributors and preferred customers joining the business in the third quarter was down compared to the record number of new entrants in Q3 2020 but was up 28% compared to Q3 2019.

In the regions, Asia Pacific led with double-digit net sales growth, up 11% compared to the prior year. India demonstrated 46% growth in the quarter and set its fifth straight quarterly net sales record, as well as had over 220,000 new preferred customers join the business. In North America, though net sales declined 11% when compared to an extraordinarily high prior year, when comparing to a more normalized, pre-COVID third quarter 2019, the two-year stack increased 38%. Similarly, in EMEA, when looking at the two-year stack against the third quarter 2019, the region grew 33%.

The Company is focused on several key growth strategies as outlined at its investor day, one of which is product innovation. The Herbalife24 Sports Nutrition brand has contributed to product innovation and global expansion in the past several years. This has contributed to impressive growth in the Energy, Sport and Fitness category, which has increased at an 18% three-year CAGR from 2017 - 2020, and 31% year-to-date. The Company's strategic objective is to increase sales attributable to new product development from 14.5% to 25% over the next five years by localizing product development and improving speed to market.

For the full year 2021, the Company is reiterating its outlook for the top and bottom line. This includes net sales to be within a range of 4.5% - 8.5% growth, adjusted3 diluted EPS of $4.55 - $4.95 per diluted share, and adjusted3 EBITDA of $860 - $910 million dollars.

2

Third Quarter 2021 Key Metrics

Regional Net Sales and Foreign Exchange ("FX") Impact

Reported Net

Growth/Decline

Growth/Decline

Region

Sales

including FX

excluding FX

3Q'21 (mil)

vs. 3Q'20

vs. 3Q'20 (a)

Asia Pacific

$

393.5

10.6%

9.5%

North America

$

354.8

(11.0%)

(11.1%)

EMEA

$

321.9

(3.7%)

(4.5%)

China

$

154.0

(30.0%)

(34.6%)

Mexico

$

117.5

6.5%

(3.5%)

South & Central America (b)

$

89.2

(13.1%)

*

Worldwide Total

$

1,430.9

(6.0%)

*

South & Central America excl. Venezuela (b)

$

88.8

(13.1%)

(9.9%)

Worldwide Total excl Venezuela (b)

$

1,430.5

(6.0%)

(7.6%)

  1. Growth/decline in net sales excluding the effects of foreign exchange is based on "net sales in local currency," a non-GAAP financial measure. See Schedule A - "Reconciliation of Non-GAAP Financial Measures" for a discussion of why we believe adjusting for the effects of foreign exchange is useful.
  2. Venezuela has been generally impacted by significant price increases and erosion in foreign currency exchange rates. Venezuela represents less than 1% of the Company's consolidated net sales. See Schedule A - "Reconciliation of Non-GAAP Financial Measures" for a discussion of why we believe adjusting for Venezuela is useful.
  • Figure not meaningful due to significant foreign currency fluctuations in Venezuela and the price increases implemented as a result thereof that, when considered in isolation, have a disproportionately large impact on the Company's South and Central American region and consolidated results. Amounts were (4.8%) and (7.3%) for South & Central America and Worldwide Total, respectively.

Regional Volume Point Metrics

Volume Points

Region

3Q'21 (mil)

Yr/Yr % Chg

Asia Pacific

489.5

9.0%

North America

438.4

(12.5%)

EMEA

390.3

(7.8%)

China

91.6

(36.2%)

Mexico

208.3

(10.3%)

South & Central America

124.4

(17.5%)

Worldwide Total

1,742.5

(8.3%)

3

Outlook

Following is the Company's updated full year 2021 guidance based on current business trends:

Twelve Months Ending

December 31, 2021

Low

High

Volume Point Growth vs 2020

1.0%

5.0%

Net Sales Growth vs 2020 (a)

4.5%

8.5%

Adjusted Diluted EPS (a) (b) (c)

$4.55

$4.95

Adjusted EBITDA ($ millions) (a) (b) (c)

$860.0

$910.0

Cap Ex ($ millions)

$145.0

$175.0

Currency Fluctuation in Guidance

  • Guidance is based on the average daily exchange rates for the first two weeks of October 2021.
  • For the full year 2021, net sales guidance includes a projected currency tailwind of approximately 200bps, adjusted(a)(b)(c) diluted EPS guidance includes a projected currency tailwind of approximately $0.11 per diluted share, and adjusted(a)(b)(c) EBITDA guidance includes a projected currency tailwind of approximately $15 million, all versus the full year 2020.
  • Net sales, adjusted(a)(b)(c) diluted EPS, and adjusted(a)(b)(c) EBITDA represent projections translated into US dollars at currency rates equal to the average rates used to translate 2020 full year net sales and diluted EPS and adjusted for items such as hedging gains/losses and Venezuela to be directly comparable to 2020 values. See our Company's Form 10-Q for the three months ended September 30, 2021 and Schedule A -
    "Reconciliation of Non-GAAP Financial Measures" for a discussion of why we believe adjusting for the effects of foreign exchange is useful.

Share Repurchase in Guidance

  • With respect to guidance, the Company cannot accurately predict the impact to its share base from any future share repurchases. Accordingly, any impact thereof is excluded from the guidance table above.
  1. Excludes any future potential Venezuela currency devaluations and associated pricing and inflationary consequences.
  2. Excludes the following items that cannot be accurately predicted: any future potential ongoing tax effects from the exercise or vesting of equity awards that could impact the Company's tax rate due to the stock compensation accounting standard, benefits from future potential
    China grant income, any future potential dilution from the Company's convertible notes due in 2024, as well as any future impact of the China Growth and Impact Investment Program.
  3. Adjusted diluted EPS and adjusted EBITDA guidance are non-GAAP measures and exclude potential charges or gains that may be recorded during the applicable period, such as, among other things, loss contingencies, gain/loss on debt extinguishments and refinancing, tax charges relating to tax law changes, net expenses related to the COVID-19 pandemic and other unanticipated charges and event. The Company does not provide reconciliations of forward-lookingnon-GAAP Adjusted diluted EPS and adjusted EBITDA guidance to net income, the comparable GAAP measure because the impact and timing of these potential charges and gains cannot be determined without unreasonable efforts due to their inherent historical variability, complexity, and unpredictability. These items, which are necessary for a presentation of the reconciliation to GAAP, could have a potentially significant impact on the Company's GAAP results.

4

Earnings Conference Call

Herbalife Nutrition senior management will host an investor conference call to discuss its recent financial results and provide an update on current business trends on Tuesday, November 2nd, 2021, at 2:30 p.m. PT (5:30 p.m. ET).

The dial-in number for this conference call for domestic callers is (833) 962-1459, and (956) 394-3596 for international callers (conference ID: 7086354). Live audio of the conference call will be simultaneously webcast in the investor relations section of the Company's website at http://ir.Herbalife.com.

An audio replay will be available following the completion of the conference call in MP3 format or by dialing

  1. 859-2056for domestic callers or (404) 537-3406 for international callers (conference ID: 7086354). The webcast of the teleconference will be archived and available on Herbalife Nutrition's website.

About Herbalife Nutrition Ltd.

Herbalife Nutrition (NYSE: HLF) is a global company that has been changing people's lives with great nutrition products and a business opportunity for its independent distributors since 1980. The Company offers high- quality, science-backed products, sold in over 90 countries by entrepreneurial distributors who provide one-on- one coaching and a supportive community that inspires their customers to embrace a healthier, more active lifestyle. Through the Company's global campaign to eradicate hunger, Herbalife Nutrition is also committed to bringing nutrition and education to communities around the world.

For more information, please visit IAmHerbalifeNutrition.com.

Herbalife Nutrition also encourages investors to visit its investor relations website at ir.herbalife.com as financial and other information is updated and new information is posted.

Media Contact:

Jennifer Butler

VP, Media Relations 213.745.0420

Investor Contact:

Eric Monroe

Senior Director, Investor Relations 213.745.0449

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Herbalife Nutrition Ltd. published this content on 02 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 November 2021 20:21:24 UTC.


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Financials (USD)
Sales 2021 5 852 M - -
Net income 2021 467 M - -
Net Debt 2021 1 994 M - -
P/E ratio 2021 10,4x
Yield 2021 -
Capitalization 4 531 M 4 531 M -
EV / Sales 2021 1,11x
EV / Sales 2022 1,11x
Nbr of Employees 9 900
Free-Float 80,9%
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Number of Analysts 6
Last Close Price 44,36 $
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Managers and Directors
John O. Agwunobi Chairman & Chief Executive Officer
John G. DeSimone President
Alexander Amezquita Chief Financial Officer
Rhonda Vetere Chief Information Officer
Mark J. Schissel Chief Operating Officer
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