Company Recognizes its Distributors and
Approximately 400,000 Preferred Members in the United
States
Company Collected More Than Three Million
Receipted Retail Transactions in the United States in May
Company Provides Updated Guidance
Premier global nutrition company, Herbalife (NYSE:HLF), today
announced that due to the dedication and diligence of its
distributors, in May, 90 percent of United States sales were
documented purchases by consumers, comprised of more than three
million receipted retail transactions. These results far exceed the
80 percent threshold called for in the Company’s agreement with the
U.S. Federal Trade Commission. The Company also announced that
approximately 400,000 customers have converted or signed up as
preferred members in the U.S. since the program began in October
2016.
“These figures should put an end to any questions regarding
demand for our nutrition products and the strength of our
go-to-market business model,” said Richard P. Goudis, CEO,
Herbalife Nutrition.
In the past ten months, Herbalife Nutrition created
industry-leading technology and tools in partnership with its
distributors to help them efficiently document retail sales.
The flexibility of the tools, built on a robust scalable
infrastructure, has allowed the Company to track retail sales of
products to end-users thereby allowing the Company to collect new
marketing data, such as pricing, buying preferences and consumer
purchase trends. This critical information, most of which is new to
the Company, will help create significant competitive advantages as
Herbalife Nutrition leverages data analytics to provide enhanced,
industry-leading personalized support to its distributors and
customers.
While the 80 percent threshold is an annual test, the Company
believes this one-time off-cycle announcement is important to share
with distributors in order to recognize their significant role in
achieving this May 2017 milestone. The Company notes, however,
these results are based on the Company’s records and are subject to
the review of the independent compliance auditor.
Guidance Update
The Company’s distributors have successfully utilized the full
array of new tools and processes necessary to document retail sales
transactions. Yet, as is typical with any change, the new
technology and processes have taken time for distributors to learn,
then teach and implement in their organizations. This acute focus
on learning has impacted current period sales as distributors
adapted to these new protocols. The Company expects as these new
processes become even more efficient and more routine, the current
sales trend will be a short-lived cycle followed by a sequential
acceleration of growth.
The Company further believes that this situation is similar to
what the Company has experienced in markets when changes of this
magnitude have been introduced. In fact, other protocol changes
made by the Company in 2014 and 2015 had a similar short-term sales
impact but then contributed to record performance in 2016.
As a result of current sales trends during the transition in the
US, combined with softer trends in Mexico, the Company is updating
its volume, net sales and EPS guidance for the second quarter and
the full year 2017. The updated guidance reflects an increase in
diluted EPS and adjusted diluted EPS but a decrease in volume and
net sales.
Finally, the Company believes that the second quarter of 2017
will be the most challenging quarter of the year from a comparative
perspective given that last year’s second quarter volume was the
largest in the Company’s history.
The updated guidance is reflected in the following chart:
Three Months Ending Twelve Months Ending June
30, 2017 December 31, 2017
Low
High
Low
High
Volume Point Change vs 2016 (8.0%) (4.0%) (1.0%) 2.0% Net Sales
Change vs 2016 (6.0%) (2.0%) 0.5% 3.5% Diluted EPS (a) $0.75 $0.95
$3.30 $3.70 Adjusted(b) Diluted EPS $0.95 $1.15 $4.10 $4.50
(a) Excludes any potential impact of ongoing tax effects from
exercise of equity awards and share repurchases that took place
after April 30, 2017. (b) Adjusted diluted EPS, for the purposes of
2017 guidance, excludes the impact of expenses relating to
challenges to the company's business model, the impact of non-cash
interest costs associated with the company's convertible notes, FTC
settlement implementation, and expenses related to regulatory
inquiries.
The following is a reconciliation of
diluted earnings per share guidance, presented in accordance with
U.S. generally accepted accounting principles, to adjusted diluted
earnings per share guidance for certain items.
Three Months
Ending Twelve Months Ending June 30, 2017 December 31, 2017
Diluted EPS Guidance (1) $0.75 - $0.95 $3.30 - $3.70
Expenses incurred responding to challenges to the company's
business model (2) 0.02 0.08 Non-cash interest expense and
amortization of non-cash issuance costs (3) 0.14 0.55 FTC Consent
Order Implementation (4) (5) 0.04 0.12 Expenses related to
Regulatory inquiries (6) 0.03 0.11 Income tax adjustments for above
items (7) (0.02) (0.06) Adjusted Diluted EPS Guidance (8)
$0.95 - $1.15 $4.10 - $4.50
(1) Excludes any potential impact of ongoing tax
effects from exercise of equity awards and share repurchases that
took place after April 30, 2017. (2) Excludes tax impact of $0.5
million and $2.0 million for the three months ending June 30, 2017
and the twelve months ending December 31, 2017, respectively. (3)
Relates to non-cash expense on our convertible notes and prepaid
forward share repurchase contract. (4) Excludes tax impact of $1.0
million and $3.0 million for the three months ending June 30, 2017
and the twelve months ending December 31, 2017, respectively. (5)
Includes $3.0 million of product discounts related to preferred
member conversions for the twelve months ending December 31, 2017.
(6) Excludes tax impact of $0.8 million and $2.8 million for the
three months ending June 30, 2017 and the twelve months ending
December 31, 2017, respectively. (7) Aggregates the individual tax
impacts of each item as described in greater detail in footnotes 2,
4 and 6 above. (8) Amounts may not total due to rounding.
About Herbalife
Herbalife Nutrition is a global nutrition company whose purpose
is to make the world healthier and happier. The Company has been on
a mission for nutrition - changing people's lives with great
nutrition products & programs - since 1980. Together with our
Herbalife Nutrition independent distributors, we are committed to
providing solutions to the worldwide problems of poor nutrition and
obesity, an aging population, sky-rocketing public healthcare costs
and a rise in entrepreneurs of all ages. We offer
high-quality, science-backed products, most of which are produced
in Company-operated facilities, one-on-one coaching with an
Herbalife Nutrition independent distributor, and a supportive
community approach that inspires customers to embrace a healthier,
more active lifestyle.
Our targeted nutrition, weight-management, energy and fitness
and personal care products are available exclusively to and
through dedicated Herbalife Nutrition distributors in more than 90
countries.
Through its corporate social responsibility efforts, Herbalife
Nutrition supports the Herbalife Family Foundation (HFF)
and its Casa Herbalife programs to help bring good
nutrition to children in need. The Company is also proud to sponsor
more than 190 world-class athletes, teams and events around the
globe, including Cristiano Ronaldo, the LA Galaxy, and
numerous Olympic teams.
The company has over 8,000 employees worldwide, and its shares
are traded on the New York Stock Exchange (NYSE:HLF) with
net sales of approximately $4.5 billion in 2016. To learn
more, visit Herbalife.com or IAmHerbalife.com.
The company 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.
Forward-Looking
Statements
This release contains "forward-looking statements" within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Although we believe that the
expectations reflected in any of our forward-looking statements are
reasonable, actual results could differ materially from those
projected or assumed in any of our forward-looking statements. Our
future financial condition and results of operations, as well as
any forward-looking statements, are subject to change and to
inherent risks and uncertainties, such as those disclosed or
incorporated by reference in our filings with the Securities and
Exchange Commission. Important factors that could cause our actual
results, performance and achievements, or industry results to
differ materially from estimates or projections contained in our
forward-looking statements include, among others, the
following:
- our relationship with, and our ability
to influence the actions of, our Members;
- improper action by our employees or
Members in violation of applicable law;
- adverse publicity associated with our
products or network marketing organization, including our ability
to comfort the marketplace and regulators regarding our compliance
with applicable laws;
- changing consumer preferences and
demands;
- the competitive nature of our
business;
- regulatory matters governing our
products, including potential governmental or regulatory actions
concerning the safety or efficacy of our products and network
marketing program, including the direct selling market in which we
operate;
- legal challenges to our network
marketing program;
- the consent order entered into with the
FTC, the effects thereof and any failure to comply therewith;
- risks associated with operating
internationally and the effect of economic factors, including
foreign exchange, inflation, disruptions or conflicts with our
third party importers, pricing and currency devaluation risks,
especially in countries such as Venezuela;
- uncertainties relating to
interpretation and enforcement of legislation in China governing
direct selling and anti-pyramiding;
- our inability to obtain the necessary
licenses to expand our direct selling business in China;
- adverse changes in the Chinese
economy;
- our dependence on increased penetration
of existing markets;
- contractual limitations on our ability
to expand our business;
- our reliance on our information
technology infrastructure and outside manufacturers;
- the sufficiency of trademarks and other
intellectual property rights;
- product concentration;
- our reliance upon, or the loss or
departure of any member of, our senior management team which could
negatively impact our Member relations and operating results;
- U.S. and foreign laws and regulations
applicable to our international operations;
- uncertainties relating to the United
Kingdom's vote to exit from the European Union;
- restrictions imposed by covenants in
our credit facility;
- uncertainties relating to the
application of transfer pricing, duties, value added taxes, and
other tax regulations, and changes thereto;
- changes in tax laws, treaties or
regulations, or their interpretation;
- taxation relating to our Members;
- product liability claims;
- our incorporation under the laws of the
Cayman Islands;
- whether we will purchase any of our
shares in the open markets or otherwise; and
- share price volatility related to,
among other things, speculative trading and certain traders
shorting our common shares.
We do not undertake any obligation to update or release any
revisions to any forward-looking statement or to report any events
or circumstances after the date hereof or to reflect the occurrence
of unanticipated events, except as required by law.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170604005089/en/
Herbalife NutritionMedia:Jennifer Butler,
213-745-0420jenb@herbalife.comorInvestor Relations:Alan Quan,
213-745-0541alanqu@herbalife.com
Herbalife (NYSE:HLF)
Historical Stock Chart
From Aug 2024 to Sep 2024
Herbalife (NYSE:HLF)
Historical Stock Chart
From Sep 2023 to Sep 2024