Herbalife NYSE: HLF outlined its strategy for returning to growth, expanding margins and reducing debt during a presentation at the Midwest IDEAS Conference, with incoming Chief Financial Officer Scott Schaefer highlighting growth in active sales leaders, regional momentum in Asia-Pacific and Latin America, and new investments in personalized nutrition.
Schaefer, who is scheduled to become CFO in January, said the company operates in 95 markets, sells more than 144 products and has a broader distributor network of 6.4 million people, including more than 2 million active participants. Herbalife generated more than $5 billion in net sales and $658 million in EBITDA last year, he said.
Distributor network and regional trends
Herbalife’s direct-selling model relies on distributors, particularly active sales leaders who have established customer bases and qualify for compensation and production bonuses. Schaefer said average active sales leaders have increased for seven consecutive quarters, including 4.3% growth in the latest reported period.
Global sales-leader retention was 70%, while U.S. retention was about 78%, according to Schaefer. He said the company’s historical shift toward a customer-first approach helped improve the sustainability of the distributor model.
Asia-Pacific was a notable source of recent growth. APAC net sales rose 15.2% in the second quarter, with India a major contributor following a goods and services tax change in September of the prior year. Sales-leader growth in the region exceeded 12%, Schaefer said.
Latin America, representing about 17% of company sales, recorded 16% sales growth. North America, meanwhile, has been in a stabilization phase following declines after the COVID-19 period. Schaefer said the company expects its North American sales-leader trend to approach flat levels by year-end or early next year. Europe, the Middle East and Africa remain in a rebuilding phase, he added.
Nutrition clubs and product initiatives
Nutrition clubs are an important differentiator for Herbalife, according to Schaefer. The company has approximately 63,000 nutrition clubs globally, including 9,000 in the U.S. The U.S. clubs account for roughly one-third of U.S. volume, he said. Globally, the clubs generate about 49 million annual transactions across 3.7 million unique customers.
These locations are independently operated and generally do not carry Herbalife branding on their exteriors. In the U.S., they often operate as single-serve consumption venues for shakes and teas, while other markets may use membership or virtual-club formats that combine products, wellness activities and community engagement.
The company is also broadening its portfolio beyond core weight-management products. Schaefer cited Herbalife24 sports nutrition, Life I/O healthy-lifespan products, newly launched ketone products in North America, and a Korean skincare line currently sold in Europe and Africa that Herbalife expects to bring to North America in 2027.
Herbalife completed its acquisition of personalized nutrition company Bioniq in April. Schaefer said Bioniq uses an online assessment to select from 40 supplement formulas that vary across 26 vitamins and minerals. The company has not yet disclosed results from the offering.
The company is also testing Pro2col, a personalized health operating system available in beta in 11 European countries and North America. The platform is intended to allow distributors and customers to track wellness data, activity and protocols digitally. Schaefer said blood-testing capabilities are also on the product roadmap.
Cash flow, refinancing and leverage targets
Schaefer described Herbalife as a cash-generative and relatively low-capital-intensity business, with capital expenditures, including software-as-a-service implementation capitalization, representing approximately 1% to 2% of sales. The company reported $147 million in year-to-date operating cash flow and cited a 23% free-cash-flow yield.
The company has reduced debt by approximately $800 million since 2021, lowering gross debt from roughly $2.8 billion to $2 billion. Herbalife is targeting $1.4 billion in gross debt and $1 billion in net debt by 2028.
Herbalife recently refinanced its revolving credit facility, term loan and certain senior debt. Schaefer said the refinancing lowered the senior debt rate from a “12 handle” to a “seven handle” and is expected to save approximately $45 million in annual interest expense at the current debt balance.
The company’s net leverage ratio was about 2.2x, and Herbalife aims to reach 2x or below by year-end, Schaefer said. He added that management is currently prioritizing debt service, internal investments and growth initiatives before shareholder rewards, and that the company does not currently have an active share-repurchase program.
Guidance raised after second-quarter growth
For the second quarter, Herbalife reported net sales of $1.3 billion, up 5.4% year over year, or 5.8% in constant currency. EBITDA was $167 million. Schaefer said the year-over-year EBITDA decline reflected the timing of sales events and related general and administrative spending, rather than a change to the full-year outlook.
The company reported a net loss in the quarter due to debt-refinancing extinguishment costs. Adjusted earnings per share were $0.51, according to Schaefer.
For the third quarter, Herbalife expects reported net-sales growth of 0.5% to 4.5%, or 1.5% to 5.5% on a constant-currency basis. The company expects third-quarter EBITDA of about $170 million at the midpoint, or $175 million on a constant-currency basis.
Herbalife raised its full-year net-sales guidance to a range of 2.5% to 5.5% growth. Schaefer said foreign-exchange headwinds led the company to reduce the midpoint of its reported EBITDA outlook by $10 million, while its constant-currency EBITDA outlook was increased.
About Herbalife (NYSE:HLF)
Herbalife Nutrition Ltd. NYSE: HLF operates as a global multi-level marketing company specializing in weight-management, nutritional supplement, sports nutrition and personal care products. Its portfolio includes protein shakes, vitamins, energy and fitness supplements, hydration products and skin and hair care items, all formulated to support wellness, performance and healthy living. Products are manufactured in GMP-certified facilities to ensure consistent quality and safety standards.
Founded in 1980 by Mark R.
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