Q3 2020 Herbalife Nutrition Ltd Earnings Call
[music].
On the call today is Dr., John I go to <unk>, the company's chairman and CEO Joe.
John Desimone, the company's president.
Alex Mosquito the Companys senior Vice President of Finance strategy and Investor Relations.
And Eric Monroe, the company's senior director Investor Relations.
I would now like to turn the call over to Eric Monroe.
To read the company's Safe Harbor language.
Before we begin as a reminder, during this conference call. We may make forward looking statements within the meaning of the federal Securities laws. These statements involve assumptions and are subject to known and unknown risks.
And uncertainties that could cause actual results to differ materially from those discussed or anticipated for a complete discussion of risks associated with these forward looking statements in our business. We encourage you to refer to today's earnings release, and our SEC filings, including our most recent annual report on form 10-K and.
Quarterly report on form 10-Q.
Our forward looking statements are based upon information currently available to us we do not undertake any obligation to update or release any revisions to any forward looking statement or to report any future events or circumstances or to reflect the occurrence of unanticipated events. In addition, during this call certain financial perform.
It's measures may be discussed that differ from comparable measures contained in our financial statements prepared in accordance with US generally accepted accounting principles referred to by the Securities and Exchange Commission as non-GAAP financial measures. We believe that these non-GAAP financial measures assist management and investors in evaluating our performance.
And preparing period to period results of operations in a more meaningful and consistent manner as discussed in greater detail in the supplemental schedules to our earnings release, a reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release submitted to the SEC. These reconciliations.
For our nutrition products.
Our products and our innovative direct sales channel allow us to help consumers reached their nutrition goes through education and community healthier eating and a more active lifestyle.
Technology has been key during these times.
We have seen our distributors turn to social media in higher numbers to reach new customers and to stay connected.
We are empowering our distributors with enhanced technology tools for ordering analyzing business performance and customer retailing the.
The combination of our traditional business methods and a more advanced digital infrastructure creates a more resilient sales force and channel.
Additionally, or training activities have shifted to a virtual online format, which has extended outreach to an even larger audience.
At some of our larger events attendance has been well above prior year levels.
We expect to utilize and efficient hybrid event model in the coming years.
I know what to pivot to our outlook for the future.
For the fourth quarter, we expect the momentum to continue with net sales growth in the range of 10% to 20%.
Looking ahead to 2021, we expect to build off this year's 13% year to date net sales growth and project full year 2021, net sales to increase between three and 11% Alec.
Alex will provide more details on our guidance.
We also announced today Ah distribution of warrants to our shareholders in an effort to provide the potential for enhanced value to all of our shareholders.
Alex will also provide additional information on these warrants and you can also find a Q&A document available now on our Investor Relations website.
Let's dig a little deeper into a regional results starting with the U S where volume points were at an all time high and grew 50% for the quarter.
We continued to see spread across all our channels in the U S led by customer direct shipping, which increased approximately 90% compared to the prior year.
Sales coming from nutrition clubs also increased for the third quarter, including more home deliveries from nutrition clubs to their customers and approach that has seen increased use as a response to the pandemic.
Over the past two quarters, we have seen a material acceleration in new distributors in the U S with year over year growth of 75% in queue too and 85% in Q3.
Our analysis into the behavior and ordering patterns of this new distributor Court show similar trends to distributors that entered the business prior to the pandemic.
The activity weights and productivity of these new distributors gives us confidence in the future retention rates of the U S business.
In China volume points grew 1% compared to the third quarter of 2019.
Although meeting attendance is not back to historical levels. We are encouraged that certain cities in China are beginning to allow larger in person group meetings to take place.
These types of large gatherings have not taken place in China since last year's 100 Day review.
And we expect to utilize a combination of in person and virtual meetings going forward in China.
India return to growth in the quarter, increasing by 16% compared to the prior year.
Restrictions imposed in the market due to the lockdown continue to ease by.
By the end of the quarter our company locations, we're open to take orders receive payments and to pick up product. However, we continued to see our members favor home delivery where volumes still exceed pre pandemic levels.
The growth in India contributed to a record quarter for the Asia Pacific region, which increase 10% versus the third quarter of 2019.
In Mexico.
Volume points were up 7% in the quarter following five quarters of single digit declines.
New members in Mexico grew 26% during the quarter with 58% of new members coming from the millennia and jazzy demographics compared to only 51% at the end of last year.
The Amiga region set another volume point record and grew 34% in the quarter.
The 42nd consecutive quarter of growth dating back to 2010.
The growth came from countries, such as Spain, which was up 43%, Turkey up, 69%, South Africa, which increased 82% and the United Kingdom, which grew 137%.
Members are turning to social media to connect with their customers and are using technology to carry out their sales and training activities.
Finally, south and Central America returned to growth and we're up 16% in the quarter.
This was led by double digit increases in Colombia, Chile, and Peru, while Brazil was down just 1% in the quarter.
Sales have rebounded as product access challenges from the pandemic of east and we're seeing distributors utilise virtual events similar to what we've seen in other regions to improve the reach of their training.
Additionally, we have two leadership changes to share.
Effective November 9th Bosco Chew, who has been with Herbalife nutrition for 27 years has assumed the new role of Chief risk Officer.
Where he will work across all business units to lead our enterprise risk management internal controls ethics and compliance strategy.
In conjunction with this move Alex and Mosquito, who celebrated his three year anniversary with the company. This week will become our company's new Chief Financial Officer.
He will now be responsible for all corporate financial functions at the highest level.
Both will report to me and with these executive leadership transitions, we strengthen an already strong in high performing senior management team I look forward to working closely with Bosco and Alex as they assume their new responsibilities.
So what you've heard today is that in the third quarter of 2020, Herbalife nutrition continues to set records.
I am confident in the resilience and and the innovation of our distributors the future of our business and our continued growth potential I now turn the call over to Alex to review the financials. Thank you John third quarter net sales of 1.5 billion represented an increase of 22.
2.3% on a reported basis compared to the third quarter and 2019 currency normalize during the third quarter, but still drove ahead one of approximately 280 basis points adjusting for the change in foreign exchange rates net sales for the corner increased 25.1%.
We reported net income of approximately 138.1 million or a dollar and four cents per diluted share adjusted earnings per diluted share where $1.15 an increase of approximately 60% compared to adjusted EPS of 72 cents for the third quarter last year the impact of currency fluctuations.
<unk> represented a year over year headwind of approximately 12 cents on results for the third quarter.
Note that are reported and adjusted results. This quarter include expenses related to the China growth and impact investment program of approximately 3.2 million reported gross margin for the third quarter of 78.8% decreased by approximately 165 basis points compared to the prior year period.
The decrease was primarily driven by the unfavorable impact of foreign currency fluctuations and increased freight costs related to orders being shifted to home delivery versus member pick up as a result of COVID-19 that we called out and quarter ago.
Third quarter Twenty-twenty reported SG&A as a percentage of net sales was 34.8% and adjusted SG&A as a percentage of net sales was 34.6%.
Adjusted SG&A, excluding China remember payments was 26.5% approximately 240 basis points lower than the third quarter 2019.
This was largely driven by a decrease in remember promotion and event costs as a result of delays cancellations and reformatting of promotions and events due to the COVID-19 pandemic a significant amount of the underspent on these items from the first three quarters of the year is projected to be spent in the fourth quarter.
Our third quarter reported effective tax rate was approximately 19.5% and are adjusted effective tax rate was 16.3%, which was lower than the prior year, primarily due to favourable changes and the companies geographic mix of income and a reduction in income tax rate of certain foreign jurisdictions.
As John mentioned, we are issuing guidance for the remainder of 2020 and providing initial guidance for 2021, while there is still uncertainty related to the impact that COVID-19 might have on the future performance of the business. We have gained increasing confidence in the business and operational trends in response to the impact of COVID-19 throughout.
2020.
For the fourth quarter Twenty-twenty, we estimate volume point growth in a range of 10% to 20% net sales are also expected to be in the range of 10% to 20% growth, which includes an approximate 350 basis points currency headwind versus the prior year Fourthquarter reported diluted EPS is estimated to be.
And arrange a 45 to 75 cents and adjusted diluted EPS to be in a range of 55 285 cents reported and adjusted diluted EPS includes a projected currency headwind of 10 cents compared to the fourth quarter of 2019 B.
The sequential reduction in EPS from Q3, two are fourthquarter guidance is primarily driven by the previously mentioned increase in SG&A due to advertising and promotion that was deferred from the first three quarters of the year. However.
However, fourthquarter adjusted diluted EPS guidance implies full year Twenty-twenty adjusted diluted EPS guidance of $3.48 to $3.78, which implies twenty-three to 34% growth over 2019.
Initial guidance for 2021 builds off the double digit top line growth implied in our full year Twenty-twenty guidance.
2021 worldwide volume points are estimated to be between flat and 8% growth with world wide net sales growth of 3% to 11% on a reported basis, which includes an approximate 80 basis points tailwind due to currency.
Constant currency net sales are expected to be in a range of 2.2% to 10.2% growth.
Full year 2021 guidance for reported diluted EPS is in the range of $3.50 to $4 with adjusted diluted EPS and a range of $3.65 to $4.15.
Appointed and adjusted diluted EPS are expected to be currency neutral compared to 2020.
EPS guidance excludes the impact of any future expenses related to China growth program share repurchases and excess tax benefits from equity exercises.
Turning to cash flow and our share repurchase activity.
During the first three quarters. This year, we generated over $500 million in cash flow from operations and we currently have over 1 billion of cash on hand during the third quarter. We also completed 800 million in share repurchases, which included 750 million from the modified Dutch auction self tender offer completed in August followed by.
50 million of open market repurchases over the remainder of the quarter. We have approximately 700 million remaining on our existing share repurchase authorization and we will prudently return excess cash to shareholders on a consistent basis.
Two potentially unlock additional shareholder value, we are making a pro rata distribution of warrants were shareholders of record will receive one quarter of a warrant for each common share held.
The warrants provide all of our shareholders the opportunity to potentially take advantage of the option value embedded in the war.
The exercise price of the war is 67 50 with a majority of seven years in which the warrant will only be exercisable at maturity should the warrants be exercised amateur already the company has the ability to net settle the warrants and chairs, which minimises any impact on our diluted share count the record date for the distribution of November 16th.
And the payment date will be December 14th we continue to believe the repurchase a common shares along with the distribution of warrants is consistent with the companies long term goal of maximizing shareholder value. This.
This concludes our prepared remarks, operator, please open up the line for questions.
Thank you Sir.
As a reminder to ask a question at this time, you would need to press star one on your telephone.
Which are your question. Please press the pound key.
Please stand by while we compiled a Q&A roster.
I shall our first question comes from the line of dog away from Lane Research. Please go ahead.
Yeah, Hi, good afternoon, everybody Congrats Alex when your promotion Alex can you elaborate on the Orange here and what the expected dilution is juror EPS count going forward.
Hi, Thanks, Thanks for the well wishes sure. So the awards themselves. So the exercise price is 67 50, the way that the war's will be accounted for is effectively treasury stock method. So while the share prices below the exercise price, there's actually no dilution at all to.
Yes.
As far.
Our stock price becomes above the exercise price again, we will use treasury stock method in which that means the value above 67, 50 will be what is reflected into the denominator and <unk> in calculating adjusted EPS.
It also probably worth noting that while there is that potential dilutive affect the EPS overall shareholders. If you're if you received this war and you're holding both the war and the equity that you had there is no dilution to your equity value that you're with all because the delusion that is in EPS is cow.
Entered by the accretion of the ultimate underlying shares that you're holding so effectively if you hold the awards you're no different from an equity ownership in the company and effectively no different from a value perspective from that from that Lance.
Right now that's helpful. Thanks, and and how have you calculated the impact of warrants to your ETS guidance for next year.
They are not they had zero impact on the EPS guidance of next year, because obviously, we are below the stock price or the exercise price. So that is a non factor.
Okay that makes sense and then you mentioned 700 million left on your stock buyback I assume that no stock buyback is factored into your EPS guidance for next year as of yet as.
As well.
That is correct and as you probably heard of my remarks.
Close the tender offer opposed to $750 million a tender offer we did do $50 million worth of open market repurchases I think.
Going forward again I think this is a message for me to say.
The company generates a lot of cash we typically don't have a lot of users for those cache of excess cash returning cash to shareholders by way of repurchases. A is a good way to do that I think those that 50 million dollar level that we did last.
Quarter is probably a good level generally speaking as we as we look forward, obviously it might be less it might be it might be more depending on the facts and circumstances of the quarter, but but back to your original question guidance does not have any of those repurchases factored into the factored into the R. E.
P S guidance for for 2021.
Okay. Thanks, and then just just last week I mean, the the the the acceleration and growth here is been pretty astounding and you know I've I've dealt with these models for a long time and I just need help understanding how you expect this momentum this acceleration that we're seeing to revert back to the single digit so quickly in 2021.
<unk>.
Yeah also I think if you look at the guidance range that we have in Q4 right. So Q4 is volume point growth between 10, and 20%. So I think even in queue or what were effectively saying is you know on the high end of the range. The business continues to perform as you've seen too much of.
You too and through Q3 and in the low end of the range is a beginning of a deceleration to a more normal growth rate.
Obviously, we're still in.
And a circumstance, where there's not as much visibility as we have historically had but as we look at the sustainability matrix as we look at the underlying matrix. We can see the top end of the range being a plausible alcohol me and we can see the low end of the range be something as as Covid like the.
Has an impact on the business, yes. This is John jumping.
Jumping just add to a comment.
Grow up basis, you're a tremendous and you followed decision industry for a long time and there is there are spikes and grow and some leveling off I I I I like to look at our guidance and staggered of over two years to see that the sustained.
This year becomes part of the foundation once you start comping. The numbers. We've had this year it gets a lot harder so.
I prefer to the easy ways will get to you Sir.
Okay fair enough. Thanks, John.
Thank you.
Sure. Our next question comes from the line of Covid Martinson from Jefferys. Please go ahead.
Good afternoon, I'd like to offer my congratulations Alex as well on the promotion.
Just in terms of the the distributor growth I mean, 85% in the U S.
What what is the typical person coming in in terms of their their involvement here you you mentioned, 65% globally eating millennial and Jen Z's what are what are you seeing in the U S and how are they spending.
Yeah. This is John day, I'll take that one I mean, the mix is mixing younger skewing younger which is exciting for us as a company and.
And I know you are asking for the U S specific I don't have it your off hand, but in general across almost all of our markets.
The new members coming in Ah millennials agenda.
Mexico's was a market that was kind of further behind some of the other markets and in the third quarter, 65% of their new members were generally a millennium. So that's a big pick up so.
It does strengthen and not distributed base getting younger and that's exciting as far as the the first thing patterns from an overall volume standpoint, not much different than what we've seen pre covid. So we got a lot more people coming in.
Productivity around those people are pretty standard and the activity rates are pretty standard. So that's also encouraging so.
Short term.
Trial basis, we're seeing pretty good sustainability people coming in that's not dissimilar from what we've seen in the past.
Okay, and then when we look at the product mix that you guys have during the corner or are you still seeing kind of the.
Immune essentials and things that are more kobe related outpacing the rest of the portfolio or some shift on that or are you still seeing meal replacement and weight loss holding the bulk of the business.
Yeah, it's still broad race throughout across the product portfolio I'll pick one particular, one particular product sector is disproportionately or just making a material difference in the next.
All all those Roger.
Okay, and then when we look at the guidance for for next year. How much is is built in in terms of new product introductions or how should we think about that pipeline as we go out to next year.
Yeah, when we when we build guidance, we don't necessarily built guidance from a from a product standpoint, we look more from the distributor.
And sales metrics so.
I don't I don't have a great answer to that to that question in that way I would say generally speaking though.
The refreshing our product portfolio is instrumental for distributors to be successful out there in the field, that's part of their ability to be competitive and remain competitive. So I would say generally as we do product introductions.
That that is just an underlying assumption in the effectiveness that we see them out in the field that we continue to launch into different different products as well I think and you continue to penetrate different segments of the market.
As you know we've been talking a lot about choice. So as we talk about clean label and those types of products as we talk about further penetration into our sports line and as we talk about further investing in localization of flavors specific to different markets all of those all of those.
Aspects help to to help our distributors be successful out there.
Thank you very much guys I appreciate it.
Thank you.
Our next question comes from the line of Hell Hogan from Barclays. Please go ahead.
Thank you for taking the call I had two questions for you.
I was just wondering a thought pattern behind the warrants Uhm I'm sure you had multiple different things on the whiteboard that you're considering.
Why are you hot the warrants for the most efficient sort of shareholder distribution method.
Sure so.
There is no judgment on most or least to me the warrants become just another lever in unlucky shareholder value or the potential to unlock shareholder value. Obviously, there's a lot going on in the business. We had a great queue to we continue to have a great Q3, and as we looked into guidance of next year.
The business is going to continue to grow so.
From a company standpoint.
The biggest the way that we can return shareholder value is to make sure. This business continues to grow.
There are other things that the company can do with its capital structure in the form of share repurchase which is a lever and and now we have this warrant distribution and candidly. The Warren distribution provides an opportunity not an obligation but provides an opportunity for a shareholder to potentially take advantage of the.
The option value embedded in the war.
And so I don't think it's mutually exclusive it's just another it's just another lever in the set of shareholder may or may not take advantage of as we move forward. So that's that's sort of the rationale and how I would put the warrant in context with all of the other all of the other things available to a shareholder investing in herbalife nutrition.
Got it and then my my second question is we've been.
Trying to track you guys and we chat and you.
You know the the level of activity seems like it's very high.
And I was wondering with the resumption of the bigger in person China meetings.
If that would be our growth accelerator in 2021, or if alternatively can you guys think you'd just such a good job virtually this year that it was just sort of more additive or how I should think that through.
Yeah. So this is John D and.
So I assume you're talking wechat, you're talking to personal stores that we've helped create for members in China onwards, yet we catch you get a lot of things.
The volume goes in that personal store in queue to was in the low twenties in Q3. It was in the mid twenties. It's it's.
It's building, but it's still got a lot of.
Growth left.
Meetings by the way are not fully back.
And China, not even close the big cities affect me he's still have a lot of restrictions.
And some of the rural areas, which is where we're seeing some of the strength is more in the rural areas in the city.
Is because the meetings are coming back, but I suspect over time next year and the year after you'll see a big celebration.
<unk>.
Sales that coming from the digital platform as we enhance both.
The the functionality because there's a feeling new tool in the training behind it.
Great. Thank you so much I appreciate it.
Thank you.
Our next question comes from the lineup Sebastian Barbero from Jeffries. Please go ahead.
Alright, Thanks for taking my question and congrats on a great quote it.
Uhm.
Entering if you could talk more about the trends.
Yeah, I'm trying to I'm trying to understand what is needing to a sizeable outperformance.
And to other regions and is it we made it to hire adoption of digital tools.
<unk>.
So this is Jody I think that one too. So it's really it's right vectors three things, it's first and foremost customer interest in the product. Okay. That's the foundation.
Behind that of course distributor engagement, which is incredibly strong right now and then the third which is how you combine those two it is the use of technology a bunch of different technologies.
Technology platforms, and social media platforms and in the developed markets those are stronger the.
The infrastructure stronger behind some of those tools and certainly even the the ability to deliver the products and things like that are easier and more development.
This is John I, just add that within the distributor engagement piece. There's also the fact that there are many potential distributors sitting at home looking for new ways to fill their day to generate income for their families to perhaps start new businesses that makes it easier for distributors as a <unk>.
Route.
Their sales forces they build their sales team.
[noise] searching on to China.
I was wondering what issue for you what is your 2021 Guy.
<unk>.
Mhm.
Yeah.
So we don't provide guidance by region.
So just generally I just wait until the overall volume growth of the of 2021.
Okay and any.
Many of your peers.
Initiates sided.
Would they supply chain.
Anything to to report your has been pretty smooth when you guys.
Yeah, it's been pretty smooth it has not been entirely smooth.
That was mostly a reflection just substantial sales growth.
Has created some auto stocks on some products and it's been painful for some distributors, who so those products.
And manageable.
But certainly if we got an impact from it it's tough to quantify.
But but it's it's.
Certainly something we've been able to overcome but it's not it's not nonexistent.
And the last one on the 21.
So much doubled whitewashing 19.
Last name twenties, and just catch up with that.
That's right it's it's.
Is a bit of a catch up obviously the volume this year part of it is going to be into our manufacturing to help with with being able to sustain that volume not only for next year, but for the for our growth trajectory going forward.
Part of it's for technology, continuing to invest in technology, particularly around a distributor tools.
And part of it is just spike heinous.
Okay.
Thank you.
I sure. Our last question comes from the line of Ivan finds that from Tigress financial go ahead.
Thank you for taking my question and congratulations on another incredible quarter, and congratulations to Alex and BASCO on their promotions.
Thank you how are things first of all for the the great growth, where do you see the drivers or where did you see the drivers coming from especially since you say that the increase in.
In distributors is breaking more toward younger people toward millennials, what product lines are driving.
People to herbalife to become a distributor to become a customer and so where do you see like the key drivers.
Well I mean, one thing that's.
That's a broad question and there's a lot of different ways, we can take it but I think.
A piece of the question.
It could be answered in some of the product categories that we are going to to attract different demographics and different different folks. So clearly R. H 24 sports line attracts a younger demographic an active healthy.
Healthy active lifestyle demographic that seems to resonate.
With all with all demographics, but particularly with that younger demographic. So we know it's a huge opportunity and we're seeing that opportunity as we rolled out that that sort of sub brand. If you will really resonating with the with the younger generation yeah. The other thing by the way I then that we're pretty excited about on a go forward basis.
Is the fact that we've just launched in the U S. Two products that I think you're going to appeal not only to.
Jazzy and millennials that perhaps even two older customers as well.
So this is less about the answer to your question on.
On recruiting younger distributors and more to the fact that we were hoping to engage and retain abroad slab of customers. As we go forward. We're launching I think we've actually launched.
A couple of I think innovative products in the U S recently memory armor, which is a.
300 milligrams of Coppa, which is an Indian traditional herb with actually a fair amount of highest behind it that is known to impact cognitive function.
<unk> brain health and then our very first entry into the cannabinoid marketplace with two topical product a bomb.
And a serum for for outer use the skin and containing I think are really material amount of cannabinoid have extract.
At the beginning of our journey into that space, it's called in ritual and.
Think it's going to be an amazing product in the U S and at some point will take it to other countries as regulation allows.
I would like to get into more specifics on some of the nutrition.
Don't Wanna do adhere or I welcome the opportunity to speak offline absolutely Uhm then just.
Two other things when you spoke about there were some shortages of Aristarch uhm.
Do you think that the incredible results could have even been more incredible if the inventory was deeper.
So yes, there is some sales loss or the when we were out of stock I'm not going to get into quantifying any of the results are great.
Yeah.
Probably would've been immaterial to the overall performance, but definitely loss of sales.
And what were some of the the.
Like the largest selling single items in the quarter.
If you could just give some overview or quick highlights while it's still.
Formula one, which is I need to replace and shake our team products and our aloe product so represent.
A huge portion of our sales.
Hershey clubs around around the world has done very well in this last quarter last two or three quarters actually.
Those are products that are their mainstay.
F one aloe.
Yeah, and adding onto that I've been really across all of our categories. I mentioned us in an earlier question all boats have risen weight management, it's up 18% targeted nutrition that 28% or energy line is up 32%.
And so.
That kind of gives you some perspective, it's really all those rising.
Then just as quickly as an example, there was an article in the Wall Street Journal that saying one of the even younger people who have had covid are experiencing memory loss do you think that's a driver of this new memory product or helping no no no. It's.
Completely unrelated.
We have actually very very carefully.
Two separate anything that we do from the pandemic. Our hearts go out to those that have lost loved ones are those that are suffering and we've been very clear.
Team and our distributors on focusing on our traditional business at the traditional business performing and it's it's not about a direct response to covid in any way.
Okay and then my last question you keep talking about digital tools and investments in digital tools Oh, what what are some of the areas you're going to expand and also you know you have some great content that you have on this herbalife fitness website with exercise videos what are your thoughts how how are you going.
Be incorporating that more into your customer engagement and.
Giving ways to like monitor progress and things like that.
Yeah. So this is John D I'll take that as so first on the technology side, they fall into a number of different buckets by the way.
Some of them is is in fact, capturing customer transaction data.
Segmentation as you know.
Rolled out a number of countries in eight countries as of today.
Over the next six months it will be an eight more by the end of next year.
80% of our volume maybe in excess of 8% of our volume will come from countries.
That have the preferred customer program and that there's a lot of programming and their country by country.
You just turn on switching road out.
So that's certainly one there are tools that we will rollout.
So the U S. As a version of the <unk>, we will look to roll that out and countries that want it.
There are a number of countries that want it because we think that efficiency.
Tool for distributors that have clubs, but it can be used for more than just clubs and I think it also can help increase the economic value of their customers.
There's also just general online tools. So we have tools that are online sign up online ordering.
Those.
Best in class for US, we'll get rolled out globally. So there's just a whole host of.
Tools that we're going to invest in the next year plus it will take more of the year by the way, but big investment comes next year and then there is.
Of course on a sports side, we're going to look too.
Make sure that that portal has got all that information is easy to use in in different format. So can be vulnerable and things like that and that's what I think not only ties into our February 24 program in general but.
But even those who aren't on herbalife 24, there'll be a version.
And the total for them also diseases basically.
Thanks very quickly.
Thank you and congratulations again.
Okay.
Thank you.
I shouldn't have further questions in the queue at this time I'd like to turn the call back over to the chairman and CEO John are going to be for closing remarks.
Thank you.
Keep this very quick.
We're very proud of the work of our independent distributors around the world.
Really I think wisdom.
And and grown their businesses and supported their customers in a way that makes us all extraordinarily proud I'm also particularly proud of our team and the way that it has responded to that growth and so that increase in demand for our services or products.
And.
All of a sudden done a big congratulations.
For myself to Alex and Emma skater, our new CFO and two Bosco Chew who's transitioning from CFO to what I think is going to be in a critically important role as chief risk officer.
Our goal being to be a model and that space in the future.
The future is bright and as we say around here, we all feel like we've only just begun.
On our end on that.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
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