Herbalife Q3 2025 Earnings Report

Herbalife EPS Results

• Actual EPS: $0.50
• Consensus EPS: $0.46
• Beat/Miss: Beat by +$0.04
• One Year Ago EPS: $0.57

Herbalife Revenue Results

• Actual Revenue: $1.27 billion
• Expected Revenue: $1.27 billion
• Beat/Miss: Beat by +$6.65 million
• YoY Revenue Growth: +4.80%

Herbalife Announcement Details

• Quarter: Q3 2025
• Date: 11/5/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, November 5, 2025
• Conference Call Time: 5:30PM ET

Herbalife (NYSE:HLF). (NYSE: HLF) is a global nutrition and wellness company that develops and sells products through a network of independent distributors. Its offerings are designed to support weight management, balanced nutrition, energy, sports performance and personal care.

The company’s product portfolio includes meal-replacement shakes, protein and fiber products, dietary supplements, vitamins, herbal teas, sports nutrition products and skin- and body-care items. Herbalife distributes its products in markets around the world, including North America, Latin America, Europe, Asia-Pacific and Africa, primarily through direct selling and independent members who provide product information and personalized support to consumers.

Herbalife was founded in 1980 by Mark Hughes and has since expanded from a primarily weight-management business into a broader nutrition and wellness enterprise. The company is headquartered in Los Angeles, California, and is led by Chief Executive Officer Stephan Gratziani.

Herbalife Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Returned to growth — Q3 net sales were $1.3 billion, up 2.7% YoY (3.2% constant currency) and adjusted EBITDA of $163M beat guidance, with North America posting its first quarter of growth since Q2 2021.
• Positive Sentiment: Debt and cash generation — strong operating cash flow ($139M), full repayment of the 2025 notes, and a total leverage ratio reduced to 2.8x (below the 3.0x target) as the company pursues a gross-debt goal of $1.4B by end-2028.
• Positive Sentiment: Protocol beta traction — the personalized health app (beta ~7,900 distributors) shows high engagement (steps, logged meals, product schedules) and AI features, with Protocol Beta 2.0 planned for U.S./Puerto Rico by year-end and wider rollouts in 2026, supporting subscription and recurring-sales potential.
• Positive Sentiment: Personalization and product innovation — acquisition of Linked Bioscience plus new R&D labs and recent launches (HL Skin, MultiBurn, Baseline) position Herbalife to offer formulated, personalized supplements at scale and speed to market.
• Negative Sentiment: Near-term margin and regional risks — China volumes fell ~12% (China sales down 5%), adjusted EBITDA margin declined ~60 bps due to a non-repeat government grant and FX headwinds, and a higher Q3 effective tax rate (32.7% vs 22.3% prior year) plus changed bonus accrual timing create headwinds into Q4.

Presentation

[Operator]

Afternoon, and thank you for joining the third quarter 2025 earnings conference call for Herbalife Limited. During the company's opening remarks, all participants will be in a listen-only mode. Following the opening remarks, we will conduct a question-and-answer session. As a reminder, today's conference call is being recorded. I would now like to turn the call over to Erin Banyas, Vice President and Head of Investor Relations, to begin today's call. You may begin.

[Erin Banyas, Vice President and Head of Investor Relations at Herbalife Limited]

Thank you, and good morning, good afternoon, or good evening to everyone joining us. Joining us today are Stephan Gratziani, our Chief Executive Officer, and John DeSimone, our Chief Financial Officer. Before we begin today's call, I would like to direct you to the cautionary statement regarding forward-looking statements on page two of our presentation and in our earnings release issued earlier today, which are both available under the Investor Relations section of our website. The presentation and earnings release include a discussion of some of the important factors that could cause results to differ from those expressed in any forward-looking statement within the meaning of the Private Securities Litigation Reform Act of 1995. As is customary, the content of today's call and presentation will be governed by this language. In addition, during today's call, we will be discussing certain Non-GAAP financial measures.

[Erin Banyas, Vice President and Head of Investor Relations at Herbalife Limited]

These Non-GAAP financial measures exclude certain unusual or non-recurring items that management believes impact the comparability of the period's reference. Please refer to our earnings release and presentation materials for additional information regarding these Non-GAAP financial measures and the reconciliations to the most directly comparable GAAP measure. I will now turn the call over to our CEO, Stephan Gratziani.

[Stephan Gratziani, CEO at Herbalife Limited]

Thank you, Erin, and good afternoon, everyone. When we met last quarter, I reiterated our vision to be the world's premier health and wellness company, community, and platform. I talked about how Herbalife was in motion, honoring our 45-year legacy while transforming for the future. This quarter, we made great progress against our strategy, and we're turning the corner. Disciplined execution, strong operating fundamentals, and aligned leadership are accelerating momentum and strengthening confidence in our path forward. We have a clear vision, and we're executing against it. Let me walk you through the progress we made in Q3. The headline is clear: Herbalife returned to net sales growth in North America and on a worldwide basis. This is a significant milestone.

[Stephan Gratziani, CEO at Herbalife Limited]

For North America, it marks the first quarterly increase since the second quarter of 2021 and is a reflection of nearly two years of disciplined execution and foundational work across every level of the business. On a worldwide basis, it is our first quarter of net sales growth since Q1 of 2024. Q3 net sales were $1.3 billion, up 2.7% year-over-year and above the midpoint of our guidance range. On a constant currency basis, net sales were up 3.2% and towards the upper end of guidance. Adjusted EBITDA of $163 million exceeded guidance. We fully repaid the 2025 notes in September, leaving no significant debt maturities until 2028. We ended Q3 with a total leverage ratio of 2.8 times, reducing our leverage beyond our three-times commitment. While these results are encouraging on their own, they are just one part of the story.

[Stephan Gratziani, CEO at Herbalife Limited]

Herbalife's more than 2 million distributors across 95 markets are driving execution globally, capitalizing on health and wellness trends and delivering personalized nutrition at scale. With this foundation in place, we are moving faster, operating more efficiently, and embracing technology to deepen engagement and drive growth. Importantly, this momentum comes even before the commercial release of Pro2col and other personalized nutrition initiatives slated for introduction in the coming quarters. Pro2col, our next-generation digital personalized health operating system, which elevates our heritage in personalized connection and coaching, is designed to deliver tailored, accessible wellness solutions through innovation and the strength of our global distributor network. Since forming our beta group in July, which has grown to 7,900 distributors, we have seen strong engagement and enthusiasm. To date, thousands of app users have completed their Pro2scores, our proprietary personalized wellness scoring system.

[Stephan Gratziani, CEO at Herbalife Limited]

In addition, a large majority have set intended consumption schedules for Herbalife products, which are supported by automated reminders designed to drive consistency of product use. Simply put, the app can turn engagement into action and action into sales. Engagement metrics are encouraging. In the short period since the beta release, users have logged approximately 32 million steps, scheduled over 200,000 instances of Herbalife product usage, logged 36,000 meals, and scheduled 42,000 lifestyle hacks. In the past 30 days, AI-driven features have proven popular, including the AI Health Guide and an AI Food Scanner, which evaluates macronutrients of meals. Last week, we hosted a virtual Pro2col event and expanded beta access to retail customers of distributors in the beta group. Alongside this expansion, we introduced key enhancements to the app, including the full Herbalife product catalog, nutrition-linked product tracking, and improved Pro2score functionality.

[Stephan Gratziani, CEO at Herbalife Limited]

We also launched a new coach dashboard, providing distributors with real-time customer insights to support more customers and more effectively. Plus, we rolled out customizable sales funnels for a variety of DMO flows. Insights from this phase are informing refinements ahead of the commercial release of Pro2col Beta 2.0 in the U.S. and Puerto Rico by year-end and additional markets beginning in 2026. Building on the growing consumer demand for accessible health insights, we will be introducing at-home tests that deliver baseline blood biomarkers as an additional health and wellness service. U.S. distributors in the beta group will gain early access to the tests in the first quarter of 2026. Technology drives personalization, but accountability drives results. That's why our high-tech, high-touch model is so critical.

[Stephan Gratziani, CEO at Herbalife Limited]

Studies consistently show that coaching improves adherence and outcomes, and our global distributor network provides a proven, scalable way to convert digital engagement into lasting behavior change, a capability digital-only platforms cannot replicate. Herbalife has always been about personalized nutrition, one-to-one guidance, curated product support, and human accountability that drives behavioral change. It is a core capability and a clear competitive edge. Now we are taking that foundation to the next level with HBL Link Bioscience. With Link Bioscience and data from Pro2col, we will move from curated to formulated, delivering precision-made supplements tailored to an individual's needs and goals. Link Bioscience brings proven proprietary manufacturing technology and positions us to bring one-to-one formulation to scale. This represents a step change in our value proposition. No one else in our space combines trusted human support, deep community reach, and now the ability to deliver personalized supplement formulation at scale.

[Stephan Gratziani, CEO at Herbalife Limited]

It accelerates our innovation cycle and firmly positions Herbalife at the forefront of personalized wellness. U.S. distributors in the beta group will have the first opportunity to access these personalized nutritional supplements in the first half of 2026. Herbalife's distributors remain at the center of everything we do. In the third quarter, three of our five regions reported year-over-year new distributor growth, led by North America, up 17%. On a worldwide basis, new distributor growth declined 2% versus Q3 of last year, which had the most new distributors of any quarter since exiting COVID in 2021. That said, momentum remains strong on a two-year stacked basis, with growth of new distributors up 11%. Programs like the Flex45 Challenge, Herbalife Premier League, and the Diamond Development Mastermind continue to strengthen leadership pipelines and elevate performance. Our Mastermind program celebrated its first anniversary in August, expanding to India this quarter.

[Stephan Gratziani, CEO at Herbalife Limited]

Approximately 10,700 distributors and service providers worldwide are committed to the program. Participants report greater confidence in their core business and leadership skills. We plan to evolve and expand the program to additional markets in 2026. Strong engagement and confidence were also evident at the five extravaganzas we held in September, where approximately 57,000 attendees gathered in Tashkent, Mexico City, Delhi, Bengaluru, and Budapest. Across all 2025 extravaganza events, we welcomed nearly 142,000 participants, a 5% increase compared to 2024, demonstrating the continued strength, enthusiasm, and engagement of our global community. Notably, EMEA saw nearly a 25% increase in attendance year-over-year. The engagement, excitement, and commitment of our distributors extend well beyond our extravaganzas. Everywhere our team has traveled this year, we've seen firsthand our passionate distributors embracing our vision for the future and our shared purpose of helping more people live healthier, more active lives.

[Stephan Gratziani, CEO at Herbalife Limited]

That purpose begins with our products, the cornerstone of our brand. Herbalife is a leader in global health and wellness because consumers trust our products and the results they deliver. This leadership is grounded in our dedication to innovation, science, and quality. We recently strengthened our product innovation engine with the opening of our new state-of-the-art center of excellence, quality control, and research and development labs in Torrance, California, a facility designed by scientists for scientists. This 8,600 sq ft center, which is one of seven global state-of-the-art facilities, brings R&D, quality, and sensory labs together, enabling us to move from idea to prototype to commercialization even faster. With more than 40 scientists and experts, this facility supports over 300,000 tests annually across more than 90 markets and houses one of the world's largest botanical DNA reference databases to authenticate ingredients and ensure purity.

[Stephan Gratziani, CEO at Herbalife Limited]

Along with nearly 1,000 raw materials tested globally, we bring a level of scientific capability that we believe is unmatched in our category and that reinforces our commitment to product quality, integrity, and effectiveness. This facility, along with every one of our labs worldwide, is where ideas become science, science becomes products, and products change lives. In Q3, that continuous innovation and commitment to quality was evident as we further expanded and elevated our portfolio and launched offerings that reflect the most relevant global health trends, from functional nutrition and personalized wellness solutions to cutting-edge K-beauty innovations and science-backed self-care. These products not only reinforce our commitment to innovation but also deepen our connection with consumers seeking tailored, high-impact health solutions. In EMEA, we launched HL/Skin, a new skincare line built on advanced South Korean science with K-beauty formulated ingredients.

[Stephan Gratziani, CEO at Herbalife Limited]

The HL/Skin range builds on Herbalife's science-backed approach to product development, with the efficacy of each product supported by clinical studies. What makes this launch particularly noteworthy is that we brought it to market in just 11 months, demonstrating both operational agility, product velocity, and our unwavering commitment to innovation. HL/Skin is supported by an AI-powered skin assessment tool that delivers a personalized skincare analysis in less than 60 seconds. At the same time, it sends product recommendations directly to distributor dashboards. This helps consumers understand their skin needs and track visible improvements over time while giving distributors actionable insights for faster, more informed customer interactions. By leveraging tech-enabled solutions, we are advancing personalized wellness and equipping our distributors with insights and guidance that strengthen trust and expand their value proposition.

[Stephan Gratziani, CEO at Herbalife Limited]

This enhances the customer experience and drives greater engagement and loyalty, helping to increase customer lifetime value while meeting the rising demand for products such as Korean skincare. The HL/Skin launch generated strong enthusiasm and immediate distributor engagement. We launched it alongside recommended DMO strategies, allowing distributors to integrate the line quickly into their businesses. Early activity is promising with skincare-focused events and product-led gatherings, and we're evaluating opportunities to expand HL/Skin into additional markets. Also, this quarter, we launched a new product in Mexico that supports restful, high-quality sleep. The product is formulated with chelated magnesium Bisglycinate, glycine, and Affron, which is a clinically studied plant-based saffron extract shown to improve sleep quality.

[Stephan Gratziani, CEO at Herbalife Limited]

As we previewed in Q2, we initiated an early release in July of our new healthy lifespan supplement formulated with Niagen, a patented ingredient that's clinically shown to increase NAD levels, which is important for maintaining cellular energy. This product is now officially called Baseline, which will be launched commercially in the U.S. and Puerto Rico by the end of the year. These product launches showcase our ability to innovate and respond to emerging global health trends. By blending science, personalization, and innovation, we're expanding our portfolio, energizing distributors, and building long-term value. Before turning it over to John, I want to underscore the tangible impact of our disciplined execution. Strong cash flow, reduced leverage, and targeted investments in innovation and technology are strengthening our financial position and laying the foundation for scalable growth and long-term shareholder value. We are moving fast and executing with precision.

[Stephan Gratziani, CEO at Herbalife Limited]

Let me give you some examples. Our new labs accelerate idea-to-market execution and strengthen our product pipeline. After nearly two years of focused execution in North America, including renewed recruiting and business-building efforts, a new key account management program, new products, and technology, we have strengthened our business, which positions us for long-term growth. Just months after acquiring the Pro2col assets, we are already beta testing with thousands of distributors, a reflection of our focus on technology and innovation. The Link Bioscience asset acquisition will bring next-generation personalized supplements to market with manufacturing capabilities to deliver tailored formulations, and we are moving quickly to bring these solutions to distributors and consumers. Products like MultiBurn, Baseline, and HL/Skin showcase our ability to quickly translate science and consumer trends into highly relevant and efficacious offerings.

[Stephan Gratziani, CEO at Herbalife Limited]

Simply said, our differentiated strength lies in pairing scientific rigor and technology with the scale and trust of our global distributor network. Very few companies can combine personalized digital tools, advanced analytics, and human connection. This allows us to bring targeted, science-backed products to market faster, sharpen distributor execution with data-driven insights, and deliver personalized consumer experiences, furthering our vision to be the world's premier health and wellness company, community, and platform. Quarter by quarter, Herbalife is getting stronger. We're turning the corner, and today, we're operating from a position of growing strength and increasing confidence in the path ahead. Now I'll turn it over to John for a deeper dive into our financial results.

[John DeSimone, CFO at Herbalife Limited]

Thank you, Stephan. Turning to our Q3 financial highlights on slide 10. As Stephan mentioned earlier, the headline for the quarter is that we returned to net sales growth on a worldwide basis.

[John DeSimone, CFO at Herbalife Limited]

North America delivered its first quarter of growth since the second quarter of 2021. This is a strong validation that our strategy is working. The actions we've taken to reinforce our distributor base, drive engagement, and strengthen our fundamentals are translating into measurable results. We've now achieved year-over-year constant currency net sales growth in six of the last eight quarters. This quarter, we built on that momentum, achieving constant currency net sales growth of 3.2% year-over-year, our strongest performance since the second quarter of 2021. Our third quarter performance reflects disciplined financial, operational, and capital execution, strategic clarity, and a focused commitment to deliver shareholder value. Moving to the financial highlights for the third quarter. Net sales were $1.3 billion, up 2.7% versus Q3 of 2024 and above the midpoint of our guidance range. On a constant currency basis, net sales increased 3.2%.

[John DeSimone, CFO at Herbalife Limited]

Came into the upper end of our guidance range. FX rates moved unfavorably during the quarter versus our assumptions, creating a 50 basis point year-over-year headwind. Adjusted EBITDA was $163 million, exceeding the high end of our guidance range of $150 miliion-$160 million. Adjusted EBITDA margin of 12.8% declined 60 basis points year-over-year, primarily due to approximately $5 million in China government grant income recognized in the third quarter of last year that did not repeat this quarter, along with some FX-related headwinds. CapEx for the third quarter was $21 million, at the low end of our guidance range of $20 million-$30 million. Capitalized SaaS implementation costs were approximately $7 million in the quarter. Gross profit margin was 77.7% for the quarter, down 60 basis points year-over-year.

[John DeSimone, CFO at Herbalife Limited]

Pricing benefits contributed approximately 80 basis points, offset primarily by foreign currency headwinds of approximately 90 basis points and approximately 30 basis points of input costs. Q3 net income attributable to Herbalife was $43 million, with adjusted net income of $52 million. Third quarter adjusted diluted EPS of $0.50 included an $0.08 FX headwind versus the third quarter of 2024. Our adjusted effective tax rate was 32.7%, up from 22.3% for Q3 of 2024, which drove an approximately $0.08 unfavorable impact to adjusted diluted EPS. The higher effective tax rate in 2025 was primarily due to changes in timing of the geographic mix of income. For full year 2025, we continue to expect our adjusted effective tax rate to be in the range of 27%-28%, which is slightly below last year's rate of 30.2%. Operating cash flows for the quarter were strong at $139 million.

[John DeSimone, CFO at Herbalife Limited]

Up 40% from Q3 of 2024. In addition, we fully repaid the 2025 notes in September, leaving no significant debt maturities until 2028. Credit agreement EBITDA for the third quarter was $184 million. Our total leverage ratio was further reduced to 2.8x, outperforming our three-times commitment as we continue to focus on reducing our debt. For additional details regarding adjustments between Adjusted EBITDA and credit agreement EBITDA, as well as the calculation of our total leverage ratio, please refer to the presentation appendix and the earnings press release. Turning to slide 11, reported net sales for the quarter increased 2.7% year-over-year, while constant currency net sales were up 3.2%. We also achieved year-over-year volume growth on a worldwide basis for the first time since the second quarter of 2021. The volume increase reflects the early impact of our initiatives. Pricing benefits were approximately $43 million in the quarter.

[John DeSimone, CFO at Herbalife Limited]

FX had a negative impact of approximately $6 million in the third quarter, representing a year-over-year headwind of 50 basis points. Turning to slide 12, we have the regional net sales results for the third quarter. Four of our five regions delivered year-over-year net sales growth in the third quarter on both the reported and local currency basis. These same four regions also showed sequential improvement on both the reported and local currency basis. Latin America delivered another solid quarter. Reported and local currency net sales were both up 11% year-over-year, primarily driven by favorable year-over-year pricing impacts, improved sales mix, and approximately 2% increase in volume. FX had a minimal impact on results. For Mexico, reported net sales were up 12%, while local currency net sales were up 10%. Primarily driven by favorable year-over-year pricing and an approximately 3% increase in volume.

[John DeSimone, CFO at Herbalife Limited]

EMEA net sales increased 4% on a reported basis and 2% on a local currency basis. Higher year-over-year pricing and FX tailwinds were partially offset by approximately 2% decline in volume and unfavorable sales mix. In Asia-Pacific, reported net sales were relatively flat, while on a local currency basis, net sales were up 3%. Pricing benefits and approximately 2% increase in volume were partially offset by unfavorable sales mix and FX movements. In India, net sales increased 4% on a reported basis and 8% on a local currency basis, primarily due to favorable year-over-year pricing and an approximately 5% increase in volume, partially offset by FX headwinds. North America, which outperformed our expectations in the quarter, returned to growth with net sales up 1% year-over-year in both reported and local currency. This was primarily driven by favorable pricing year-over-year on flat volumes.

[John DeSimone, CFO at Herbalife Limited]

On a sequential basis, North America's year-over-year net sales trend improved by approximately 480 basis points, with volume trends improving by approximately 570 basis points. China net sales were down 5% year-over-year on both the reported and local currency basis, primarily due to a 12% decline in volumes year-over-year, partially offset by favorable sales mix. Moving to slide 13, we see the drivers of the third quarter year-over-year changes in Adjusted EBITDA. Adjusted EBITDA for the quarter was $163 million, slightly below the prior year driven entirely by unfavorable foreign currency impacts. As mentioned earlier, the non-repeat of the China government grant income recognized in the third quarter of last year drove an approximately $5 million headwind to Adjusted EBITDA. On a constant currency basis, Adjusted EBITDA was $175 million for the third quarter, demonstrating the continued underlying strength of our business.

[John DeSimone, CFO at Herbalife Limited]

Looking at the bridge, the drivers of gross profit margin changes were primarily a pricing benefit, partially offset by input cost inflation, mainly due to higher raw material costs. The $6 million headwind in salaries reflects employee merit increases implemented in the first quarter of 2025, which was more than offset by the $7 million tailwind from lower employee bonus accruals. It is important to note that the full 2024 bonus was entirely accrued by the end of Q3 2024. There was no additional bonus expense recognized in the fourth quarter of last year. In 2025, the bonus accruals have been recognized much more readily each quarter, which we expect will result in a significant year-over-year headwind in Q4. In addition, we expect 2025 bonus achievement levels to be normalized compared to the elevated levels seen in 2024.

[John DeSimone, CFO at Herbalife Limited]

Promotional-related spend increased approximately $4 million year-over-year, primarily related to two additional extravaganza events in the current quarter versus the prior year. Lastly, unfavorable year-over-year FX movements resulted in an approximately $12 million reduction in Adjusted EBITDA. Moving to slide 14, I'll provide an update on the capital structure. As I stated earlier, we have fully repaid the remaining $147 million principal balance on the 2025 notes and the scheduled $5 million amortization payment on the Term Loan B. We ended the quarter with $25 million outstanding on our revolving credit facility and a leverage ratio of 2.8 times. We remain committed to reducing our gross debt to $1.4 billion by the end of 2028. A $1 billion reduction from the end of the second quarter of last year when we first made the commitment. Since announcing that goal five quarters ago, we have repaid $343 million in debt.

[John DeSimone, CFO at Herbalife Limited]

Since the beginning of last year, we have paid down over $500 million in debt. Turning to slide 15, we will review our outlook for the fourth quarter and full year 2025. Given currency volatility, we are continuing to provide our net sales and Adjusted EBITDA guidance on both the reported and constant currency basis. For the guidance on a reported basis, we use the average daily exchange rates for the first two weeks of October 2025. For the fourth quarter, FX will impact our top and bottom lines differently when compared to the prior year. We expect approximately $12 million positive effect on net sales, but an approximately $10 million negative effect on Adjusted EBITDA. We expect net sales growth in the fourth quarter on a reported basis of 1.5%-5.5% year-over-year, which includes an approximately 100 basis point tailwind from currency.

[John DeSimone, CFO at Herbalife Limited]

On a constant currency basis, we expect net sales to be up 0.5%-4.5% year-over-year. We expect Adjusted EBITDA for the fourth quarter to be in the range of $144 million-$154 million, while in the range of $154 million-$164 million on a constant currency basis. The change from the implied Q4 guidance last quarter is primarily a result of FX movements since last quarter. Our planned capital expenditures for the fourth quarter are in the range of $18-$28 million. Let's move on to our full year guidance. We have revised our outlook based on year-to-date performance, updated Q4 expectations, and recent currency rates. With three quarters now behind us, we've narrowed our full year ranges. We've raised the low end across all metrics and raised the midpoint for constant currency Adjusted EBITDA.

[John DeSimone, CFO at Herbalife Limited]

We now expect full year net sales to range from a slight decline of 0.3% to growth of 0.7% year-over-year. On a constant currency basis, we anticipate net sales to increase between 1.2% and 2.2% year-over-year. Adjusted EBITDA is now expected to be in the range of $645 million-$655 million, or $700 million-$710 million on a constant currency basis. Regarding tariffs, our 2025 guidance includes a preliminary estimate of the impact from tariffs enacted through yesterday, which are immaterial. Looking ahead on an annualized basis, we continue to believe that the enacted tariffs will not materially impact our overall performance. With respect to capital expenditures, we now expect full year spend to be in the range of $80 million-$90 million. We continue to expect capitalized SaaS implementation costs to be in the range of $25 million-$30 million, which is incremental to our planned CapEx.

[John DeSimone, CFO at Herbalife Limited]

Our expectations for depreciation and amortization, including the amortization of SaaS implementation costs, remain unchanged at $140-$150 million. For the full year 2025, we continue to expect our adjusted effective tax rate to be between 27%-28%. Before moving to Q&A, I want to close my opening remarks with one final comment. Q3 was another step forward in the company's transformation. The combination of growth, cash generation, and continued debt reduction reflects both the resilience of our distributors and the strength of our operating model. We are confident in the direction we're heading, grounded in execution, focused on shareholder value, and energized by the momentum we are seeing in our business. This concludes our opening remarks. Operator, please open the call for questions.

[Operator]

Thank you. Ladies and gentlemen, to ask a question, please press star one one on your telephone, then wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of William Rueter with Bank of America. Your line is open.

[William Reuter, Analyst at Bank of America]

Good afternoon or good evening. My first question is a little bit of a housekeeping one, or maybe not so much housekeeping, but capital allocation. You're now below your targets. You still continue to reduce debt by the end of 2027 by, I don't know, another $600 million, $600 and something million. How are you thinking about other uses of cash and allocation of that?

[John DeSimone, CFO at Herbalife Limited]

Yeah. To be clear, there were two debt goals. There was a short-term debt goal and a longer-term debt goal. The short-term debt goal that we announced early last year was that we wanted a leverage ratio to be below three times by the end of this year. That is a short-term goal. The reason is, I do not think we should ever be higher than three times. We got there for a number of reasons. We wanted to get that as a baseline. We further said, "That is not our endpoint. That is our short-term goal." The longer-term goal is to pay down debt by $1 billion from the time we set it a year ago till the end of 2028 because we generate a lot of cash. We continue to expect to generate a lot of cash. That is our number one use after our internal investments is to buy down cash. Are we tracking ahead of?

[John DeSimone, CFO at Herbalife Limited]

Obviously, we tracked ahead of the leverage goal. We achieved 2.8 times already. On the long-term goal, we paid a lot back, and we're probably tracking ahead of that goal too, which means we have some additional cash that will likely be generated beyond the needs to pay down the billion dollars. What we do with that will be, first and foremost, how can we drive value in the business and other opportunities to invest in certain things in the business? Then beyond that, we'll make decisions circumstantially.

[William Reuter, Analyst at Bank of America]

Got it. And then secondly, with these new product introductions, they certainly sound extremely exciting. You're spending a lot of time on them. I'm wondering if there are going to be costs associated with getting your distributors up to speed on the usage of them. That will result in elevated SG&A next year that will have returns in subsequent years, or if you think that kind of your natural distributor event cadence or extravaganza cadence will be sufficient to educate them.

[Stephan Gratziani, CEO at Herbalife Limited]

Yeah. Bill, thanks for the question. There's nothing outside of the normal scope of distributors learning about the products and through the education format that we have that they're able to go to market with. So yeah, I don't see any type of an increase.

[William Reuter, Analyst at Bank of America]

Got it. All right. That's all for me.

[Operator]

Thank you.

[Stephan Gratziani, CEO at Herbalife Limited]

Thank you.

[Operator]

Our next question comes from the line of Christina with Mizuho. Your line is open.

[Operator]

Hi. Good evening. Thank you for the question. Just want to ask about. Can you share some of the early responses from the Pro2col Beta Group? Any interesting takeaways from the testers so far?

[Stephan Gratziani, CEO at Herbalife Limited]

Yeah, Christina, thanks for the question. It's been a really great process with the beta group. Obviously, these are distributors who are engaging. They're kind of like our super users. When you hear about the number of miles or steps logged and the amount of meals, they're engaging at a very high level with the app. The process for us is really to get their feedback. That's been step one. They're helping us to formulate the features so that when we go to market, it's things that they can leverage and things that they're already doing with coaching and understanding how to actually engage with the customer to be able to get the biggest opportunity, as many sales as possible, stickier customer, upgrading customers onto other products. The takeaway for us has really been the process. Has been amazing. The feedback that they're giving, the suggestions.

[Stephan Gratziani, CEO at Herbalife Limited]

When you aggregate close to 8,000 distributors and their ideas and how they're interacting with it, it's just there's a certain level of richness in the information and the data. Next step for us is obviously to move towards customers. That's why we opened up the beta now for customers of those distributors in the beta, because customers are different than distributors. They experience different things. The distributors will be interacting with them. Having insights from customer data, but also the distributors who have their customers who are participating in the Pro2col app as well. It's been a great process for us. Thank you for the question.

[Stephan Gratziani, CEO at Herbalife Limited]

Yeah. Maybe another one on the new distributor growth, which is pretty strong in the quarter for North America. Did you kind of see some kind of early signs of progress on the productivity side?

[Stephan Gratziani, CEO at Herbalife Limited]

Yeah. From a productivity standpoint, I think it's in line with traditionally what's happening. I think the growth in the new distributor, it's coming from the excitement that they have, number one, about what's coming in the future. The way things are looking. It's also a lot of work that's been taking place. All of the things that we mentioned, the Diamond Development Mastermind, the key account management program where we're working with the leaders. They are figuring out in their DMOs. There's been this re-engagement with the Herbalife Premier League of getting people back focused on business building as well. It's really an excitement, obviously, about the product launches that we've had. MultiBurn was.

[Stephan Gratziani, CEO at Herbalife Limited]

I would just say very, very well accepted and is creating kind of a new focus, really, and I would say around weight loss, where quite honestly, we've been probably more of a healthy active lifestyle. Having this product really brought a focus on weight loss, which we see as an added benefit.

[Stephan Gratziani, CEO at Herbalife Limited]

Okay. Maybe last one for me. On the new skincare product, can you share how the AI was developed? Was it built in-house or is it kind of through a partnership? Do you see that kind of AI interaction expanding across the rest of the product line?

[Stephan Gratziani, CEO at Herbalife Limited]

Yeah. It was in partnership. We customized based on our products and our needs as well. It's really interesting to watch the engagement. I don't know the exact figures, but I know in the first few weeks, we were. Over 100,000 scans, actually, which was quite impressive. It is something that when people see the data, and especially when they are going to use a product and come back and scan to see the difference, it just gives a way of interacting, which is very effective. Obviously, technology today is very important, and leveraging it is one of the key pillars that we are building on.

[Stephan Gratziani, CEO at Herbalife Limited]

Okay. Thank you. That is it for me.

[Stephan Gratziani, CEO at Herbalife Limited]

Thank you.

[Operator]

Our next question comes from the line Karru Martinson with Jefferies. Your line is open.

[Karru Martinson, Analyst at Jeffries]

Good afternoon. When we look at the volume growth, which is encouraging to see you guys return, are there product categories that are driving it? How should we think about that against kind of like the traditional mix of products that you used to be selling?

[John DeSimone, CFO at Herbalife Limited]

Yeah. Hi. I will take that one. I mean, there's a little bit of skewing mix toward healthy active lifestyle products, fit products. And a little bit toward, and this is a global comment, a little bit toward targeted nutrition and a little less on weight loss. That's been a trend now for a few years. That's still the trend globally, but in the U.S., with the launch of MultiBurn, it brought some of that focus on weight loss back. It took a little share in the U.S. versus our kind of historical rate. It's not a revolutionary shift.

[Karru Martinson, Analyst at Jeffries]

Okay. When we think about the sales mix that you called out, just a modest decline there. I mean, are some of these categories more profitable than others, or how do you look at the mix going forward?

[John DeSimone, CFO at Herbalife Limited]

Some product lines are more profitable than others. Some countries are more profitable than others. I mean, when you run a global business with net thousands of SKUs, there's always a profit differential. I wouldn't say it can't be significant, but there's nothing specific to call out.

[Karru Martinson, Analyst at Jeffries]

Okay. There was talk a couple of quarters ago. We had been looking at GLP-1, certainly incorporating it into the thought process. Is there anything that we should be highlighting there, or has that thinking kind of evolved?

[Stephan Gratziani, CEO at Herbalife Limited]

I would say it's still the same thinking, right? If people want, they don't want to go down the GLP-1 route, we want to give them a natural alternative, right? Thus, MultiBurn, as an example. If people want to go down the GLP-1 route, we want to be able to help them and make sure they're getting the protein, they're supporting their muscle mass, their bone density.

[Stephan Gratziani, CEO at Herbalife Limited]

We want to be there to accompany them down that road. If they've been on GLP-1s and now they want to transition off, and they do not want to just fall back into the same situation and gain the weight back, we want to be there on the off-ramp, supporting them to get on better nutrition, better lifestyle so they can have a sustainable result. That remains. The way that we are approaching the GLP-1 in the marketplace. I would say that that has been something that's been a great strategy so far. It continues to be a great strategy. Obviously, with MultiBurn now, we are seeing an uptick in the focus of people that are interested in losing weight, and our distributors are gaining some market share there.

[Karru Martinson, Analyst at Jeffries]

Thank you very much, guys. Appreciate it.

[Stephan Gratziani, CEO at Herbalife Limited]

Thank you.

[John DeSimone, CFO at Herbalife Limited]

Thank you.

[Operator]

Our next question comes from the line of Hale Holden with Barclays. Your line is open.

[Hale Holden, Analyst at Barclays]

Hey, good afternoon. I just had three quick ones. The Mastermind rollout to India, that's been a pretty successful program for you in other parts of the world. Can you just give us a sense of what you're looking or what you think success would look like there?

[Stephan Gratziani, CEO at Herbalife Limited]

I was personally there in India when we launched. It's kind of interesting. I think this is the first time that we've ever had a program like this. India, as you know, has grown substantially over the last decade. Huge influx of leaders. Never having this level of training, especially in this format before, I think it was very impactful.

[Stephan Gratziani, CEO at Herbalife Limited]

The feedback from the leaders there was that this was something that was really needed to be able to continue the growth that they've experienced in the past and to see the continuing sustainable growth there. I can just tell you personally, there was a lot of feedback and energetically, it was really an amazing event. They're already very motivated, excited. They value the opportunity. They're very hardworking. It was something that was hugely beneficial. We're going to evolve the program. Obviously, we've been doing this now since August of 2024. The content, the structure, the support, the tools that we're using, it's evolving. We'll continue to expand the program. We have some additional markets coming online this year. It's, I'd say, something that's fundamentally and foundationally supporting the growth that we're having.

[Hale Holden, Analyst at Barclays]

Okay. The beauty slide that you guys flagged, it's certainly exciting. I think it's just been a while since I've seen you highlight. Things in that category. Is the intention there to bring it to more countries, or you're just highlighting it because it's working in South Korea?

[Stephan Gratziani, CEO at Herbalife Limited]

Yeah. It's interesting. We actually launched it in Namibia. There was a demand. Actually, to your point, it's not a product line or category specifically that we've focused on a lot. But when you have over 2 million distributors who are all using, for the most part, skincare and interested, you start to have certain markets where they just are like, "Listen, as a company, we need to do something." The way we do things here is we do it, and we go out and find the best technology, the most clinically proven. That's what led us to South Korea.

[Stephan Gratziani, CEO at Herbalife Limited]

The launch in EMEA, again, this is also part of the dynamics of our business. It did not take very long for that ripple effect to kind of spread around the world. We have got another market that is coming online very quickly. We have other markets that are already asking for it. The one thing that I would say is that there is also within the distributor network in certain markets, pockets of distributors who like to focus on this specifically as a DMO. Notably in Turkey, as an example, they have been doing nutrition clubs around the world. They actually implemented skin clubs. It is also one of the things that led us down this pathway. I could say that the launch was very successful, and the demand is there. This will be something that we will be expanding.

[Stephan Gratziani, CEO at Herbalife Limited]

We're going to evaluate, obviously, timing and everything. Yes, it is our goal to expand this around the world.

[Hale Holden, Analyst at Barclays]

I guess the reason I was asking is because it's a very different product line than the Pro2col launch. I was wondering if you have the ability, I guess, to walk and chew gum at the same time or if it would distract distributors or if it's just different markets.

[Stephan Gratziani, CEO at Herbalife Limited]

Yeah. Here's what I would say. Consumption is one thing. Again, when you have 2 million distributors that are consumers, much rather have them consuming our products in a category than buying them anywhere else, number one. Number two, our model is predicated on people getting results, liking something, and wanting to share it.

[Stephan Gratziani, CEO at Herbalife Limited]

We know that there will be benefits to having, especially an advanced product like this in skincare line, just in terms of the usage and the sales that'll happen, like accessory sales. You have distributors certain that are going to do it as a DMO. We do not see this as a distraction. We think certain distributors and markets are going to naturally gravitate towards this and figure out in their models. By the way, we've had this in the past. Brazil was a very, out of all of our markets, a very focused on skincare. There are just countries and certain leadership that it's part of their market. We do not see it as a distraction at all or something that's going to be too difficult in terms of what we're trying to accomplish overall with Pro2col.

[Hale Holden, Analyst at Barclays]

Okay. Thank you very much. I appreciate it.

[Stephan Gratziani, CEO at Herbalife Limited]

Thank you for your questions.

[Operator]

As a reminder, ladies and gentlemen, that's star 11 to ask the question. Our next question comes from the line of Doug Lane with Water Tower Research. Your line is open.

[Doug Lane, Analyst at Water Tower Research]

Yes, hi. Good evening, everybody. The one number that did stand out for me was that North American number. I mean, you mentioned the 480 basis points acceleration sequentially, but just going back beyond that, it was down 4% in the first quarter, 3%, 6%. So it just kind of was steady-state in that mid-single-digit decline, and all of a sudden, it jumped up to 1%. So I'm wondering, A, did you expect that? And B, what was driving that?

[John DeSimone, CFO at Herbalife Limited]

Hey, Doug. This is John. Let me start. And if Stephan wants to add, he can. But. As you said, U.S. has been getting stronger now quarterly for two years, but the numbers were pretty weak. We had a really big jump in the third quarter, both on a net sales standpoint, also a volume standpoint. That actually exceeded our expectations, right? Some of that was elevated because of the event in July. We launched a lot of products in July. If you remember, on the last call, we said July actually had volume growth in the U.S.. For the quarter, the U.S. ended up flat with volume, which means we had a great July. We had a tremendous August and September, not quite flat, though. That is kind of the new baseline. I think we did make a jump. Not sure Q4 will exceed Q3 or maybe even be.

[John DeSimone, CFO at Herbalife Limited]

At the levels of Q3, but meaningfully higher than the run rates we had prior to our July extravaganza. I think we've hit a new Baseline in the U.S.. That's exciting.

[Doug Lane, Analyst at Water Tower Research]

Okay. Looking at the cash generation here, you've got cash from operations going up. You've got CapEx going down. You're ahead of your debt reduction targets. Is there any room to accelerate stock buyback? Maybe not be at the pace it was in the past, but maybe more than it's been recently?

[John DeSimone, CFO at Herbalife Limited]

It's not a priority right now, Doug. Our priorities are pretty well laid out. One is to support the new strategy of the business. Two is continue to pay down debt. We want to get our net debt down to under $1 billion, which is really getting our gross debt down to $1.4 billion by the end of 2028.

[John DeSimone, CFO at Herbalife Limited]

That's our goal. We are tracking ahead of that. What we do with the excess cash that we're generating beyond what's needed to pay that goal is something that we'll determine over time. Buyback's not our priority right now.

[Doug Lane, Analyst at Water Tower Research]

You've been fairly consistent with that message. Just one last thing. You talked a lot about the products, which are very exciting, but also the opportunity for subscription revenue. How is the move towards building up a subscription revenue base going?

[Stephan Gratziani, CEO at Herbalife Limited]

Yeah, Doug, I'll take that one. We believe that there is a big place in the future for subscription revenue. For that, obviously, we've introduced MultiBurn in the U.S. now. We have certain products that are available for subscription within the Pro2col app. Obviously, when we move to personalized, formulated, it would be based on subscription also. We just look at companies in the industry.

[Stephan Gratziani, CEO at Herbalife Limited]

Subscription is just a huge part of businesses today. For us, this is part of our vision. This is part of where we're going. We're building all of the things that are needed for that in terms of the commerce capabilities and the products and having it all tied to the service. I'll just say it's en route. It's a big part of what we believe is going to bring a lot of value in the future. We are just going to keep building quarter and quarter to where we want to go.

[Doug Lane, Analyst at Water Tower Research]

Okay. That's helpful. Thank you.

[Stephan Gratziani, CEO at Herbalife Limited]

Thank you.

[Operator]

Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Stephan for closing remarks. Thank you.

[Stephan Gratziani, CEO at Herbalife Limited]

Number one, I just want to say that if you don't know it, and I imagine that you do if you're listening, is that Herbalife is a very special company. I can say this because it's been 34 years of my life that I've been a part of this company. I've been on the side of building a business and interfacing and interacting with customers on a daily basis and distributors and across many, many markets and seeing the passion and the mission and the drive that they have to be agents of change, to actually, because of their own individual experience, want to share and impact other people's lives. Number one, special company, 45 years, over 2 million distributors. 60,000-plus nutrition clubs, physical brick-and-mortar locations around the world. We are different than, I would say, every other company in the direct sales channel.

[Stephan Gratziani, CEO at Herbalife Limited]

We are not only bigger, we're diversified, and we have probably the largest network effect and more reach than any other company in the world. Now, having said that, we are a direct sales company. That is a superpower when it comes to selling products to people that are going to be ingesting something, changing some behavior that's going to help them to become healthier, and having the support of a coach, a distributor, someone that cares about them. This is something that's very special to Herbalife. What we're doing as a company is we are technically and technologically enabling our distributors. Aggregating personal data information supported by AI and analytics.

[Stephan Gratziani, CEO at Herbalife Limited]

Personalizing and empowering support through technology in a way with the things that we're launching, the new coach dashboards, to be able to give distributors even more capability of following up their customers and helping them reach their goals than they've ever had in the past. Delivering tools for all of those 2 million-plus distributors to go out and build bigger businesses, like the sales funnels and the functionalities that we're delivering now that we've just launched for our distributors in beta. You think about personalized, curated products and solutions. Herbalife, this huge network, the quality, the science, the innovative products. We have been doing that for 45 years. We offer a personal solution through a personal coach and distributor supporting someone. We're about to take that to the next level and move from curated to actually formulated.

[Stephan Gratziani, CEO at Herbalife Limited]

Again, looking to the future, these are things that will set Herbalife aside from every other, not only direct sales company in the world, but we believe actually other health and wellness companies in the world. We are expanding the products and services beyond just selling products. When we look to the future, we know that this foundation and the strength of our business through our distributors, it has gotten us to where we are today. We know where we are going in the future. We believe that, with time, quarter by quarter, the potential of what Herbalife can and will become in the future will become evident. We believe last quarter was us turning the corner. We believe that we will do things that, quite honestly, and I will just say from a personal level.

[Stephan Gratziani, CEO at Herbalife Limited]

From someone who was a distributor for many years, are things that we would like to show the world, that we are just not great as a company that works in direct sales, but we will be one of the companies that impacts the health and well-being of humanity in a way that very few companies could ever do. So we thank you for your support and joining us on this journey, and we look forward to speaking with you next quarter.

[Operator]

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Stephan Gratziani, CEO
• John DeSimone, CFO
• Erin Banyas, Vice President and Head of Investor Relations

Analysts

• Karru Martinson, Analyst at Jeffries
• William Reuter, Analyst at Bank of America
• Analyst at Mizuho
• Hale Holden, Analyst at Barclays
• Doug Lane, Analyst at Water Tower Research