On July 31, 2024, Herbalife Ltd (HLF, Financial) released its 8-K filing for the second quarter ended June 30, 2024. Herbalife Ltd is an international nutrition company that provides health and wellness products to consumers in 95 markets through their direct-selling business model. The company's product categories include weight management, targeted nutrition, energy, sports, and fitness, outer nutrition, and literature, promotional, and other. Weight management products generate the majority of revenue.
Performance Overview
Herbalife Ltd (HLF, Financial) reported net sales of $1.3 billion for Q2 2024, a 2.5% decrease compared to Q2 2023, primarily due to 270 basis points of foreign exchange (FX) headwinds. On a constant currency basis, net sales increased by 0.2% year-over-year. The company achieved a gross profit margin of 77.9%, up from 77.0% in the same period last year, benefiting from pricing adjustments and partially offset by input cost inflation.
Financial Achievements
Herbalife Ltd (HLF, Financial) reported a net income of $4.7 million, with an adjusted net income of $54.8 million. Adjusted EBITDA reached $180.0 million, exceeding guidance and marking the highest level in seven quarters. The adjusted EBITDA margin improved by 120 basis points year-over-year to 14.1%. Diluted EPS was $0.05, while adjusted diluted EPS stood at $0.54, surpassing the analyst estimate of $0.33.
Key Financial Metrics
Net cash provided by operating activities was $102.5 million for Q2 2024. Capital expenditures were approximately $36 million, with capitalized SaaS implementation costs at $5 million. The company expects total capital expenditures for the full year 2024 to be between $120 million and $150 million.
| Region | Q2 2024 Net Sales ($ million) | Q2 2023 Net Sales ($ million) | YoY Growth (Decline) % | YoY Growth (Decline) % Excluding FX |
|---|---|---|---|---|
| North America | 283.2 | 303.6 | -6.7% | -6.7% |
| Latin America | 211.7 | 207.0 | 2.3% | 4.7% |
| EMEA | 287.8 | 289.6 | -0.6% | 3.5% |
| Asia Pacific | 416.7 | 425.8 | -2.1% | 1.6% |
| China | 81.7 | 88.0 | -7.2% | -4.0% |
| Worldwide | 1,281.1 | 1,314.0 | -2.5% | 0.2% |
Challenges and Strategic Initiatives
Herbalife Ltd (HLF, Financial) faced challenges such as FX headwinds and input cost inflation. However, the company implemented a restructuring program aimed at streamlining operations and enhancing productivity. This program is expected to deliver annual savings of at least $80 million starting in 2025, with $50 million anticipated in 2024.
Management Commentary
"Our Q2 Adjusted EBITDA is the highest it's been in seven quarters. We remain focused on driving shareholder value as the continued increase in new distributors builds the foundation for sales growth." - Michael Johnson, Chairman and CEO
Outlook
For Q3 2024, Herbalife Ltd (HLF, Financial) expects net sales to decline by 4.5% to remain flat year-over-year, with adjusted EBITDA guidance between $125 million and $155 million. For the full year 2024, the company revised its net sales guidance to a range of -3.5% to +1.5% year-over-year and raised its adjusted EBITDA guidance to a range of $560 million to $600 million.
Herbalife Ltd (HLF, Financial) continues to focus on expanding margins, creating shareholder value, and reducing its total leverage ratio to 3.0x by the end of 2025. The company remains committed to enhancing profitability and driving growth through strategic initiatives and operational efficiencies.
Explore the complete 8-K earnings release (here) from Herbalife Ltd for further details.
