Herbalife Ltd. (NYSE: HLF) today reported financial results for
the fourth quarter and year ended December 31, 2023.
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“We continue to modernize Herbalife with a sharp focus on
top-line growth and margin expansion for 2024,” said Michael
Johnson, Chairman and CEO.
Highlights
Fourth Quarter 2023
- Achieved year-over-year net sales growth on both reported and
constant currency basis1
- Fourth consecutive quarter of improved year-over-year reported
net sales trends
- Net sales of $1.2 billion, up 2.9% vs. 4Q ‘22; on constant
currency basis1, net sales increased 2.5% vs. 4Q ‘22
- Net income of $10.2 million and adjusted EBITDA2 of $108.8
million
- Diluted EPS of $0.10 and adjusted diluted EPS2 of $0.28
- Achieved cost savings of approximately $27 million related to
Company’s Transformation Program, approximately $70 million
realized in 2023
- Recognized pre-tax expenses of approximately $12 million
related to Transformation Program
- Continued roll out of all-new Herbalife.com website; now live
in markets representing approximately 70% of Company’s sales
Full-Year 2023
- Net sales of $5.1 billion, down 2.7% vs. 2022; on constant
currency basis1, net sales declined 1.6% vs. 2022
- Net income of $142.2 million and adjusted EBITDA2 of $570.6
million
- Diluted EPS of $1.42 and adjusted diluted EPS2 of $2.21
- Net cash provided by operating activities of $357.5 million;
free cash flow2 of $222.5 million
Recent Developments
- Initiated process to refinance 2018 Term Loan A and 2018
Revolving Credit Facility, due in March 2025
_____________________________ 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 Adjusted EBITDA, adjusted diluted EPS and free cash flow 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 U.S. GAAP measure, and a discussion
of why we believe these non-GAAP measures are useful.
Management Commentary
Herbalife reported full-year 2023 net sales of $5.1 billion,
down 2.7% year-over-year. On a constant currency basis1, net sales
declined 1.6% year-over-year. Net income was $142.2 million. Net
cash provided by operating activities was $357.5 million, with free
cash flow2 of $222.5 million. Adjusted EBITDA2 was $570.6 million,
with adjusted EBITDA2 margin of 11.3%. Diluted EPS was $1.42, with
adjusted diluted EPS2 of $2.21.
For the year ended December 31, 2023, capital expenditures,
including spending related to the Herbalife One digital technology
platform, were approximately $135 million. The Company expects to
incur total capital expenditures of approximately $145 million to
$195 million for the full year of 2024.
Fourth quarter 2023 net sales were $1.2 billion, up 2.9%
year-over-year, marking the fourth consecutive quarter of improved
year-over-year net sales trends. On a constant currency basis1, net
sales increased 2.5% year-over-year.
Fourth quarter gross profit margin was 76.3%, down 120 basis
points year-over-year, primarily due to the benefit of
approximately 100 basis points of pricing more than offset by
continued headwinds from input cost inflation of approximately 210
basis points. Net income was $10.2 million. Adjusted EBITDA2 of
$108.8 million includes approximately $2 million of foreign
currency tailwinds year-over-year, with adjusted EBITDA2 margin of
9.0%. Diluted EPS was $0.10, with adjusted diluted EPS2 of $0.28,
which includes a $0.01 year-over-year foreign currency
tailwind.
The Company implemented further actions related to its
Transformation Program, which was initiated in 2021 to
strategically optimize global business processes. Based on the
Company’s actions as of December 31, 2023, it delivered
approximately $70 million of cost savings in 2023, of which
approximately $27 million was realized during the three months
ended December 31, 2023. The Company now expects to deliver total
program run rate savings of at least $115 million in 2024 and
beyond (up from at least $90 million). For the three and twelve
months ended December 31, 2023, the Company recognized pre-tax
expenses of approximately $12 million and $54 million,
respectively, in SG&A related to the program, which are
excluded from the adjusted results. The Company now expects to
incur total program pre-tax expenses of at least $95 million (up
from at least $75 million), of which $79 million has been incurred
to date.
Consistent with the Company’s capital allocation priorities, it
intends to repay the $197.0 million outstanding principal under its
2024 Convertible Notes at maturity in March 2024 with available
cash on hand and funds available under its revolving credit
facility.
On February 2, 2024, the Company initiated the refinancing of
its 2018 Term Loan A and 2018 Revolving Credit Facility, both of
which mature in March 2025. As of December 31, 2023, $236.1 million
was outstanding under the Term Loan A and the revolver remained
undrawn. The terms of the proposed refinancing transaction will be
disclosed upon completion of the transaction. The proposed
refinancing is subject to customary closing conditions and there
can be no assurance any refinancing will occur.
“We continue to take strategic actions to optimize our cost
structure and strengthen our balance sheet,” said Alex Amezquita,
Chief Financial Officer. “The incremental cost savings achieved
through the expansion of our Transformation Program is evidence of
our commitment to enhance productivity and we are continuing to
look at all aspects of our business with a focus on driving
top-line growth, expanding margins and securing our balance
sheet.”
During the fourth quarter, the Company continued the rollout of
its all-new Herbalife.com websites, which are part of Herbalife
One. To date, the websites are live in markets across Asia Pacific,
EMEA, Latin America and North America, which represent
approximately 70% of the Company’s 2023 sales. The rollout to the
remaining planned markets is expected to be completed in 2024. In
2024, development will continue on offerings to elevate the digital
capabilities provided to distributors and their customers, such as
distributor e-commerce, customer loyalty and data-enabled
solutions.
2023 marked the Company’s full return to in-person events, which
were met with an overwhelming positive response from distributors,
providing opportunities to re-establish connections and share best
practices. The Company hosted nine Extravaganzas across the globe
with nearly 125,000 attendees, as well as thousands of other
corporate-led and distributor-led education and training events.
These events helped engage, motivate, inspire and educate the
distributor base. The Company believes these interactions have
supported an increase in sales leader retention. For the
twelve-month requalification period ending January 2024,
approximately 68.3% of the distributor sales leaders, excluding
China, requalified to retain their status as a sales leader, versus
67.6% for the twelve-month period ended January 2023.
During December 2023 and January 2024, the Company continued to
deliver on its growth strategy, launching four innovative products
that it believes will resonate in local markets and align with
consumer trends and preferences:
- Shape Control – gluten-free weight loss supplement capsule
which combines Morosil® Moro Orange extract with Chromium;
available in Brazil
- Herbalife24® Premium Creatine – vegan, gluten-free and zero
calorie powdered drink mix with 3g of creatine that provides
multiple fitness benefits, including helping to enhance exercise
performance and increase muscle mass; available in Brazil
- Formula 1 Express Healthy Meal Bars (Cranberry & White
Chocolate) – reformulated with 15g of protein and 6g of fiber and
suitable for vegetarians; available in select markets in EMEA
- Pycno® Plus – capsule that combines Pycnogenol (French maritime
pine bark extract) and B Vitamins to support women and men’s
health; available in Korea
Additionally, last week the Company announced the offering of
two Herbalife® GLP-1 Nutrition Companion Product Combos, Classic
and Vegan. The product combos are fueled by the #1 Protein Shake in
the World* and are intended to support the nutritional needs of
individuals on GLP-1 and other weight loss medications. Each
product combo provides vital protein to help build muscle tissue
and maintain lean muscle mass, while providing energy and fiber to
promote regularity and a healthy digestive system. Additionally,
the Classic combo delivers essential vitamins and minerals to
support overall health, while the Vegan combo also delivers three
organic blends of 20 fruits and vegetables. Further, the Company’s
distributors can help consumers develop proper nutrition practices
while on the weight-loss drugs and develop sustainable healthy
habits for when they stop using the medications, to create lasting
changes beneficial to long-term health. The Herbalife® GLP-1
Nutrition Companion Product Combos are now available in the United
States and Puerto Rico.
“Our charge is clear – sales growth, margin expansion and
maximizing shareholder value,” said Michael Johnson. “Together with
our distributors, Herbalife is on the path to becoming the global
premier health and wellness company, community and platform.”
The Herbalife® GLP-1 Nutrition Companion is not a drug.
Remember to consult your physician before you make changes to your
diet during medically supervised weight loss.
*Source Euromonitor International Limited; per Consumer
Health 2024ed, Protein Shake as per sports protein powder, sports
protein RTDs, meal replacement, supplement nutrition drinks and
protein supplements, combined % RSP share GBO, 2023 data
Fourth Quarter and Full-Year 2023 Key Metrics
Regional Net Sales and Foreign Exchange (“FX”) Impact
Region
Reported Net Sales 4Q
’23 (mil)
Growth/Decline
including FX vs. 4Q ’22
Growth/Decline
excluding FX vs. 4Q ’22 1
Asia Pacific
$
433.5
9.3%
10.2%
North America
252.8
(8.1)%
(8.1)%
EMEA
250.1
1.3%
0.7%
Latin America
196.4
2.8%
(1.3)%
China
82.2
15.6%
17.4%
Worldwide
$
1,215.0
2.9%
2.5%
Region
Reported Net Sales FY
’23 (mil)
Growth/Decline
including FX vs. FY ’22
Growth/Decline
excluding FX vs. FY ’22 1
Asia Pacific
$
1,713.9
1.6%
5.3%
North America
1,131.4
(10.4)%
(10.3)%
EMEA
1,068.8
(0.9)%
0.8%
Latin America
820.9
4.5%
(0.5)%
China
327.4
(16.3)%
(11.8)%
Worldwide
$
5,062.4
(2.7)%
(1.6)%
Regional Volume Point Metrics
Volume Points
Region
4Q '23 (mil)
YoY % Chg.
FY '23 (mil)
YoY % Chg.
Asia Pacific
552.3
11.2%
2,151.5
(0.2)%
North America
250.6
(14.9)%
1,160.9
(18.8)%
EMEA
279.5
(6.6)%
1,222.9
(9.6)%
Latin America
239.4
(12.4)%
1,028.0
(12.7)%
China
60.1
28.1%
237.6
(9.1)%
Worldwide
1,381.9
(2.0)%
5,800.9
(9.1)%
Earnings Webcast and Conference Call
Herbalife’s senior management team will host a live audio
webcast and conference call to discuss its fourth quarter and
full-year 2023 financial results and provide an update on current
business trends on Wednesday, February 14, 2024, at 5:30 p.m. ET
(2:30 p.m. PT).
The live audio webcast will be available at
https://edge.media-server.com/mmc/p/zstgjz99/.
Participants joining via the conference call will need to
register to receive the dial-in information and personal PIN to
access the call, and may do so by visiting the Investor Relations
section of the Company’s website at https://ir.herbalife.com.
Senior management also plans to reference slides during the call,
which will also be available on the Investor Relations section of
the Company’s website, where financial and other information is
posted from time to time.
A replay of the event will be available following the completion
of the live audio webcast and conference call, and for 12 months
thereafter, under the Investor Relations section of the Company's
website at https://ir.herbalife.com.
About Herbalife Ltd.
Herbalife (NYSE: HLF) is a premier health and wellness company
and community that has been changing people's lives with great
nutrition products and a business opportunity for its independent
distributors since 1980. The Company offers science-backed products
to consumers in more than 90 markets through entrepreneurial
distributors who provide one-on-one coaching and a supportive
community that inspires their customers to embrace a healthier,
more active lifestyle to live their best life.
For more information, visit https://ir.herbalife.com.
Forward-Looking Statements
This release contains “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended.
All statements other than statements of historical fact are
“forward-looking statements” for purposes of federal and state
securities laws, including any projections of earnings, revenue or
other financial items; any statements of the plans, strategies and
objectives of management, including for future operations, capital
expenditures, or share repurchases; any statements concerning
proposed new products, services, or developments; any statements
regarding future economic conditions or performance; any statements
of belief or expectation; and any statements of assumptions
underlying any of the foregoing or other future events.
Forward-looking statements may include, among others, the words
“may,” “will,” “estimate,” “intend,” “continue,” “believe,”
“expect,” “anticipate” or any other similar words.
Although we believe that the expectations reflected in any of
our forward-looking statements are reasonable, actual results or
outcomes 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, many of which are beyond our control. Important
factors that could cause our actual results, performance and
achievements, or industry results to differ materially from
estimates or projections contained in or implied by our
forward-looking statements include the following:
- the potential impacts of current global economic conditions,
including inflation, on us; our Members, customers, and supply
chain; and the world economy;
- our ability to attract and retain Members;
- our relationship with, and our ability to influence the actions
of, our Members;
- our noncompliance with, or improper action by our employees or
Members in violation of, applicable U.S. and foreign laws, rules,
and regulations;
- adverse publicity associated with our Company or the
direct-selling industry, including our ability to comfort the
marketplace and regulators regarding our compliance with applicable
laws;
- changing consumer preferences and demands and evolving industry
standards, including with respect to climate change,
sustainability, and other environmental, social, and governance, or
ESG, matters;
- the competitive nature of our business and industry;
- legal and regulatory matters, including regulatory actions
concerning, or legal challenges to, our products or network
marketing program and product liability claims;
- the Consent Order entered into with the FTC, the effects
thereof and any failure to comply therewith;
- risks associated with operating internationally and in
China;
- our ability to execute our growth and other strategic
initiatives, including implementation of our Transformation Program
and increased penetration of our existing markets;
- any material disruption to our business caused by natural
disasters, other catastrophic events, acts of war or terrorism,
including the war in Ukraine, cybersecurity incidents, pandemics,
and/or other acts by third parties;
- our ability to adequately source ingredients, packaging
materials, and other raw materials and manufacture and distribute
our products;
- our reliance on our information technology infrastructure;
- noncompliance by us or our Members with any privacy laws,
rules, or regulations or any security breach involving the
misappropriation, loss, or other unauthorized use or disclosure of
confidential information;
- contractual limitations on our ability to expand or change our
direct-selling business model;
- the sufficiency of our trademarks and other intellectual
property;
- product concentration;
- our reliance upon, or the loss or departure of any member of,
our senior management team;
- restrictions imposed by covenants in the agreements governing
our indebtedness;
- risks related to our convertible notes;
- changes in, and uncertainties relating to, the application of
transfer pricing, income tax, customs duties, value added taxes,
and other tax laws, treaties, and regulations, or their
interpretation;
- our incorporation under the laws of the Cayman Islands;
and
- share price volatility related to, among other things,
speculative trading and certain traders shorting our common
shares.
Additional factors and uncertainties that could cause actual
results or outcomes to differ materially from our forward-looking
statements are set forth in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2023, filed with the
Securities and Exchange Commission on February 14, 2024, including
under the headings “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and in
our Consolidated Financial Statements and the related Notes
included therein. In addition, historical, current, and
forward-looking sustainability-related statements may be based on
standards for measuring progress that are still developing,
internal controls and processes that continue to evolve, and
assumptions that are subject to change in the future.
Forward-looking statements made in this release speak only as of
the date hereof. 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.
Results of Operations
Herbalife Ltd. and
Subsidiaries
Condensed Consolidated Statements
of Income
(in millions, except per share
amounts)
Three Months Ended December 31 Year Ended December 31
2023
2022
2023
2022
(unaudited) North America
$
252.8
$
275.0
$
1,131.4
$
1,262.2
EMEA
250.1
246.8
1,068.8
1,078.5
Asia Pacific
433.5
396.8
1,713.9
1,686.9
Latin America
196.4
191.1
820.9
785.8
China
82.2
71.1
327.4
391.0
Worldwide Net sales
1,215.0
1,180.8
5,062.4
5,204.4
Cost of sales
287.6
265.6
1,191.0
1,173.6
Gross profit
927.4
915.2
3,871.4
4,030.8
Royalty overrides
397.4
389.0
1,659.2
1,690.1
Selling, general, and administrative expenses
474.3
437.3
1,866.0
1,810.4
Other operating income (1)
(0.1
)
-
(10.2
)
(14.9
)
Operating income
55.8
88.9
356.4
545.2
Interest expense, net
38.1
37.3
154.4
133.2
Other income, net (2)
-
(12.8
)
(1.0
)
(12.8
)
Income before income taxes
17.7
64.4
203.0
424.8
Income taxes
7.5
10.0
60.8
103.5
Net income
$
10.2
$
54.4
$
142.2
$
321.3
Weighted-average shares outstanding: Basic
99.3
98.1
99.0
98.5
Diluted
100.7
99.0
100.2
99.5
Earnings per share: Basic
$
0.10
$
0.55
$
1.44
$
3.26
Diluted
$
0.10
$
0.55
$
1.42
$
3.23
(1) Other operating income for the three and twelve
months ended December 31, 2023 and twelve months ended December 31,
2022 relates to certain China government grant income (2) Other
income, net for the twelve months ended December 31, 2023 and the
three and twelve months ended December 31, 2022 relates to the
extinguishment of a portion of the 2024 Convertible Notes
Herbalife Ltd. and
Subsidiaries
Consolidated Balance Sheets
(in millions)
December 31 December 31
2023
2022
ASSETS Current Assets: Cash and cash equivalents
$
575.2
$
508.0
Receivables, net
81.2
70.6
Inventories
505.2
580.7
Prepaid expenses and other current assets
237.7
196.8
Total Current Assets
1,399.3
1,356.1
Property, plant and equipment, net
506.5
486.3
Operating lease right-of-use assets
185.8
207.1
Marketing-related intangibles and other intangible assets, net
314.0
315.7
Goodwill
95.4
93.2
Other assets
308.4
273.6
Total Assets
$
2,809.4
$
2,732.0
LIABILITIES AND SHAREHOLDERS' DEFICIT Current
Liabilities: Accounts payable
$
84.0
$
89.8
Royalty overrides
343.4
343.3
Current portion of long-term debt
309.5
29.5
Other current liabilities
540.7
514.0
Total Current Liabilities
1,277.6
976.6
Non-current liabilities: Long-term debt, net of current
portion
2,252.9
2,662.5
Non-current operating lease liabilities
167.6
192.4
Other non-current liabilities
171.6
166.4
Total Liabilities
3,869.7
3,997.9
Commitments and Contingencies Shareholders' deficit:
Common shares
0.1
0.1
Paid-in capital in excess of par value
233.9
188.7
Accumulated other comprehensive loss
(232.0
)
(250.2
)
Accumulated deficit
(1,062.3
)
(1,204.5
)
Total Shareholders' Deficit
(1,060.3
)
(1,265.9
)
Total Liabilities and Shareholders' Deficit
$
2,809.4
$
2,732.0
Herbalife Ltd. and
Subsidiaries
Consolidated Statements of Cash
Flows
(in millions)
Year Ended December 31
2023
2022
Cash flows from operating activities: Net income
$
142.2
$
321.3
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
113.3
115.4
Share-based compensation expenses
48.0
44.4
Non-cash interest expense
7.4
6.7
Deferred income taxes
(41.1
)
(29.9
)
Inventory write-downs
28.5
38.4
Foreign exchange transaction loss (gain)
6.0
9.1
Gain on extinguishment of debt
(1.0
)
(12.8
)
Other
6.5
(17.0
)
Changes in operating assets and liabilities: Receivables
(12.6
)
(9.1
)
Inventories
57.5
(68.4
)
Prepaid expenses and other current assets
(13.8
)
(12.4
)
Accounts payable
(7.4
)
(1.1
)
Royalty overrides
(6.5
)
(9.6
)
Other current liabilities
23.8
(53.6
)
Other
6.7
31.1
Net cash provided by operating activities
357.5
352.5
Cash flows from investing activities: Purchases of property,
plant and equipment
(135.0
)
(156.4
)
Other
0.2
0.2
Net cash used in investing activities
(134.8
)
(156.2
)
Cash flows from financing activities: Borrowings from senior
secured credit facility
215.2
564.2
Principal payments on senior secured credit facility and other debt
(289.6
)
(683.5
)
Proceeds from convertible senior notes
-
277.5
Repayment of convertible senior notes
(64.3
)
(273.2
)
Debt issuance costs
(1.8
)
(7.2
)
Share repurchases
(11.0
)
(146.7
)
Other
3.2
4.2
Net cash used in financing activities
(148.3
)
(264.7
)
Effect of exchange rate changes on cash, cash equivalents, and
restricted cash
4.8
(25.7
)
Net change in cash, cash equivalents, and restricted cash
79.2
(94.1
)
Cash, cash equivalents, and restricted cash, beginning of period
516.3
610.4
Cash, cash equivalents, and restricted cash, end of period
$
595.5
$
516.3
Cash paid during the year: Interest paid
$
159.1
$
133.5
Income taxes paid
$
133.1
$
144.9
Supplemental Information
SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(unaudited)
Adjusted Net Income, Adjusted Diluted EPS, Adjusted EBITDA and
Free Cash Flow
In addition to its reported results calculated in accordance
with U.S. GAAP, the Company has included in this release adjusted
net income, adjusted diluted EPS and adjusted EBITDA, performance
measures, and free cash flow, a liquidity measure, that the
Securities and Exchange Commission defines as “non-GAAP financial
measures.” Adjusted net income, adjusted diluted EPS and adjusted
EBITDA exclude the impact of certain unusual or non-recurring items
such as net expenses related to COVID-19 pandemic, expenses related
to Transformation Program, expenses related to digital technology
program, charges related to the Russia-Ukraine conflict, gain from
extinguishment of debt and Korea tax settlement, as further
detailed in the reconciliations below. Adjusted EBITDA margin
represents adjusted EBITDA divided by net sales. Free cash flow is
calculated as net cash provided by operating activities less
purchases of property, plant and equipment.
Management believes that such non-GAAP performance measures,
when read in conjunction with the Company’s reported results,
calculated in accordance with U.S. GAAP, can provide useful
supplemental information for investors because they facilitate a
period to period comparative assessment of the Company’s operating
performance relative to its performance based on reported results
under U.S. GAAP, while isolating the effects of some items that
vary from period to period without any correlation to core
operating performance and eliminate certain charges that management
believes do not reflect the Company’s operations and underlying
operational performance. Free cash flow is used by management as
one of the means by which it assesses available liquidity,
including for purposes of strategic initiatives, reduction of
long-term debt and share repurchases.
The Company’s definition and calculation as set forth in the
tables below of adjusted net income, adjusted diluted EPS, adjusted
EBITDA and free cash flow may not be comparable to similarly titled
measures used by other companies because other companies may not
calculate them in the same manner as the Company does and should
not be viewed in isolation from, nor as alternatives to, net
income, diluted EPS or cash flows from operating activities
calculated in accordance with U.S. GAAP. In evaluating free cash
flow, one should consider that free cash flow does not represent
residual cash flow available for discretionary expenditures.
Currency Fluctuation
Our international operations have provided and will continue to
provide a significant portion of our total net sales. As a result,
total net sales will continue to be affected by fluctuations in the
U.S. dollar against foreign currencies. In order to provide a
framework for assessing how our underlying businesses performed
excluding the effect of foreign currency fluctuations, in addition
to comparing the percent change in net sales from one period to
another in U.S. dollars, we also compare the percent change in net
sales from one period to another period using “net sales in local
currency.” Net sales in local currency is not a measure presented
in accordance with U.S. GAAP. Net sales in local currency removes
from net sales in U.S. dollars the impact of changes in exchange
rates between the U.S. dollar and the local currencies of our
foreign subsidiaries, by translating the current period net sales
into U.S. dollars using the same foreign currency exchange rates
that were used to translate the net sales for the previous
comparable period. We believe presenting net sales in local
currency is useful to investors because it allows a meaningful
comparison of net sales of our foreign operations from period to
period. However, net sales in local currency should not be
considered in isolation or as an alternative to net sales in U.S.
dollar measures that reflect current period exchange rates, or to
other financial measures calculated and presented in accordance
with U.S. GAAP.
The following is a reconciliation of net income to adjusted
net income: Three Months Ended December 31 Year Ended
December 31
2023
2022
2023
2022
(in millions) Net income
$
10.2
$
54.4
$
142.2
$
321.3
Net expenses related to COVID-19 pandemic (1) (2)
-
0.6
-
4.4
Expenses related to Transformation Program (1) (2)
12.2
4.4
54.2
12.1
Digital technology program costs (1) (2)
9.5
8.6
32.1
11.9
Gain on extinguishment of debt (1) (2)
-
(12.8
)
(1.0
)
(12.8
)
Korea tax settlement (1) (2)
-
-
8.6
-
Russia-Ukraine conflict charges (1) (2)
-
-
-
5.5
Income tax adjustments for above items (1) (2)
(3.3
)
(2.7
)
(14.3
)
(4.1
)
Adjusted net income (3)
$
28.6
$
52.4
$
221.8
$
338.3
The following is a reconciliation of diluted
earnings per share to adjusted diluted earnings per share:
Three Months Ended December 31 Year Ended December 31
2023
2022
2023
2022
(per share) Diluted earnings per share
$
0.10
$
0.55
$
1.42
$
3.23
Net expenses related to COVID-19 pandemic (1) (2)
-
0.01
-
0.04
Expenses related to Transformation Program (1) (2)
0.12
0.04
0.54
0.12
Digital technology program costs (1) (2)
0.09
0.09
0.32
0.12
Gain on extinguishment of debt (1) (2)
-
(0.13
)
(0.01
)
(0.13
)
Korea tax settlement (1) (2)
-
-
0.09
-
Russia-Ukraine conflict charges (1) (2)
-
-
-
0.06
Income tax adjustments for above items (1) (2)
(0.03
)
(0.03
)
(0.14
)
(0.04
)
Adjusted diluted earnings per share (3)
$
0.28
$
0.53
$
2.21
$
3.40
The following is a reconciliation of net
income to EBITDA and adjusted EBITDA: Three Months
Ended December 31 Year Ended December 31
2023
2022
2023
2022
(in millions) Net income
$
10.2
$
54.4
$
142.2
$
321.3
Interest expense, net
38.1
37.3
154.4
133.2
Income taxes
7.5
10.0
60.8
103.5
Depreciation and amortization
28.2
28.2
113.3
115.4
EBITDA
84.0
129.9
470.7
673.4
Amortization of SaaS implementation costs
3.1
-
6.0
-
Net expenses related to COVID-19 pandemic (1) (2)
-
0.6
-
4.4
Expenses related to Transformation Program (1) (2)
12.2
4.4
54.2
12.1
Digital technology program costs (1) (2)
9.5
8.6
32.1
11.9
Gain on extinguishment of debt (1) (2)
-
(12.8
)
(1.0
)
(12.8
)
Korea tax settlement (1) (2)
-
-
8.6
-
Russia-Ukraine conflict charges (1) (2)
-
-
-
5.5
Adjusted EBITDA
$
108.8
$
130.7
$
570.6
$
694.5
(1) Based on interim income tax reporting
rules, these expenses are not considered discrete items. The tax
effect of the adjustments between our U.S. GAAP and non-GAAP
results takes into account the tax treatment and related tax
rate(s) that apply to each adjustment in the applicable tax
jurisdiction(s). (2) Excludes tax (benefit)/expense as
follows: Three Months Ended December 31 Year Ended December 31
2023
2022
2023
2022
(in millions) Net expenses related to COVID-19 pandemic
$
-
$
(0.1
)
$
-
$
(0.8
)
Expenses related to Transformation Program
(2.3
)
(1.2
)
(10.6
)
(1.6
)
Digital technology program costs
(1.2
)
(1.5
)
(2.6
)
(0.6
)
Gain on extinguishment of debt
(0.1
)
-
-
-
Korea tax settlement
0.3
-
(1.1
)
-
Russia-Ukraine conflict charges
-
0.1
-
(1.1
)
Total income tax adjustments
$
(3.3
)
$
(2.7
)
$
(14.3
)
$
(4.1
)
Three Months Ended December 31 Year Ended
December 31
2023
2022
2023
2022
(per share) Net expenses related to COVID-19 pandemic
$
-
$
-
$
-
$
(0.01
)
Expenses related to Transformation Program
(0.02
)
(0.01
)
(0.11
)
(0.02
)
Digital technology program costs
(0.01
)
(0.02
)
(0.03
)
(0.01
)
Gain on extinguishment of debt
-
-
-
-
Korea tax settlement
-
-
(0.01
)
-
Russia-Ukraine conflict charges
-
-
-
(0.01
)
Total income tax adjustments (3)
$
(0.03
)
$
(0.03
)
$
(0.14
)
$
(0.05
)
(3) Amounts may not total due to rounding The
following is a reconciliation of net cash provided by operating
activities to free cash flow: Three Months Ended
December 31 Year Ended December 31
2023
2022
2023
2022
(in millions) Net cash provided by operating activities
$
96.1
$
53.6
$
357.5
$
352.5
Purchases of property, plant and equipment
(35.3
)
(42.8
)
(135.0
)
(156.4
)
Free cash flow
$
60.8
$
10.8
$
222.5
$
196.1
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240213976950/en/
Media Contact: Thien Ho Vice President, Global Corporate
Communications thienh@herbalife.com
Investor Contact: Erin Banyas Vice President, Head of Investor
Relations erinba@herbalife.com
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