Q2 2024 Herbalife Ltd Earnings Call

Unknown Executive: As is customary, the content of today's call and presentation will be governed by this. In addition, during today's call, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures exclude certain unusual or non-recurring items that management believes impact the comparability of the periods. 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. And with that, I will now turn the call over to Chairman and CEO, Michael Johnson. Good afternoon and good evening, everyone, and thanks for joining us.

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. These non-GAAP financial measures exclude certain unusual or nonrecurring items that management believes impact the comparability of the periods of 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.

And with that I will now turn the call over to chairman and CEO Michael Johnson.

Michael O. Johnson: Good afternoon, and good evening, everyone and thanks for joining us our financial Foundation is strong and continues to improve and.

Michael O. Johnson: Our financial foundation is strong and continues to improve. In the second quarter, we exceeded our adjusted EBITDA expectations. And while we missed our top-line guidance, which was impacted by a higher-than-anticipated FX headwind, we are continuing to execute on our initiatives to drive top-line growth. Now, let's take a look at our finances. Net sales for $1.3 billion, up slightly versus Q2 of 2023 on a constant currency basis, while down 2.5% on a reported basis due to 270 basis points of FX headwinds.

Speaker Change: In the second quarter, we exceeded our adjusted EBITDA expectations and why we missed our top line guidance, which was impacted by a higher than anticipated FX headwind, we are continuing to execute on our initiatives to drive top line growth.

Take a look at our financial performance net sales for 1.3 billion up slightly versus quarter. Two of 2023 on a constant currency basis was down two 5% on a reported basis.

Due to 270 basis points of FX headwinds, our adjusted EBITDA of 180 million exceeded our guidance and we are raising our full year expectations. Adjusted EBITDA margin was 14.1% up 120 basis points year over year quarter.

Michael O. Johnson: Our adjusted EBITDA of $180 million exceeded our guidance, and we are raising our full-year expectations. The adjusted EBITDA margin was 14.1%, up 120 basis points year-over-year. Quarter 2 marks our highest adjusted EBITDA, and an adjusted EBITDA margin in seven quarters. We further reduced our total leverage ratio to 3.5 times at the end of June and remain committed to reducing our total leverage ratio to 3 by the end of 2025. John DeSimone will do a deeper dive into the numbers later on in the call, but let me highlight some of what we accomplished in quarter two.

Speaker Change: Quarter, two marks our highest adjusted EBITDA and adjusted EBITDA margin in seven quarters. We further reduced our total leverage ratio to three five times at the end of June and remain committed to reducing our total leverage ratio to three by the end of 2025, John Desimone will do a deeper dive into.

The numbers later on the call, but let me highlight some of what we accomplished in quarter two.

Michael O. Johnson: We have substantially completed our reorganization. We have the right people in the right roles, and our leaders and employees are incredibly engaged and committed to our vision of becoming the world's premier health and wellness company, community, and platform. We will continue to focus on refining our business to drive even more efficiencies and cost-saving. We welcome e-commerce and media technology executive Perkins Miller to our board of directors. Perkins has proven expertise in leading large-scale digital transformations, and he's done it for some of the biggest brand names, like NBC Sports and the NFL.

Speaker Change: We have substantially completed our reorganization we have the right people in the right roles and our leaders and employees are incredibly engaged and committed to our vision of becoming the world's Premier health and wellness company community and platform.

Continue to focus on refining our business to drive even more efficiencies and cost savings.

Speaker Change: We work with ecommerce and media technology Executive Perkins Miller to our board of directors.

Perkins Miller: Perkins has a proven expertise in leading large scale digital transformation and he's done it for some of the biggest brand names NBC sports and the NFL.

Michael O. Johnson: Perkins' experience is invaluable to us, especially as we continue our digital transformation. I focus on distributor recruiting through programs like Herbalife Premier League, our work. We've advanced and evolved our training programs as part of our strategic alliance with Eric Worre to excite, motivate, and provide high-level training and resources to our distributors. As I said, these are the highlights.

Perkins Miller: Perkins experience is invaluable to us, especially as we continue our digital transformation.

Perkins Miller: Our focus on distributor recruiting through programs like Herbalife Premier League are working.

Speaker Change: We've advanced and evolved our training programs as part of our strategic Alliance with Eric worry to excite motivate and provide high level training and resources to our distributors.

Perkins Miller: As I said these are the highlights now I wanted to talk a little bit more detail about the heart of the company, our distributors and what we're doing to excite and engage and empower them to grow their businesses.

Michael O. Johnson: Now I want to talk a little bit more in detail about the heart of the company, our distributors, and what we're doing to excite, engage, and empower them to grow their business. Under the leadership of our president, Stephan Graziani, we're implementing new and innovative initiatives for our distributors, and we're seeing some very positive results. And most importantly, in quarter two, our worldwide distributed recruiting was up year over year, re Part of our new approach to training and supporting our distributors.

Stephan Paulo Gratziani: Under the leadership of our President Stefan Graziano, we're implementing new and innovative initiatives for our distributors and we're seeing some very positive trends importantly in quarter. Two our worldwide distributor recruiting was up year over year, reversing 12 consecutive quarters of decline. Thanks to programs like the Herbalife Premier League, which launched earlier.

Perkins Miller: This year.

Perkins Miller: That's part of our new approach to training and supporting our distributors in August we will launch our new Mentorship leadership development and Accountability program for our top leaders in North America, which is unlike any program we've ever had at herbalife or in the industry for that matter. This training will be focused on among other things supporting.

Michael O. Johnson: In August, we will launch our new mentorship, leadership development, and accountability program for our top leaders in North America. This training will be focused on, among other things, supporting the implementation of successful go-to-market strategies and providing one-on-one support to distributors by sharing business metrics, creating an accountability structure with their peers, distributor leadership, and the company. This is the next phase and we continue to upscale our distributors and provide better support through a key account management program. Stephan has engineered this and is leading our mastermind program and will provide more details on this later in the call.

The implementation of successful go to market strategies, and providing one on one support to distributors by sharing business metrics and created an accountability structure with their peers distributor leadership and the company.

Stefan: This is the next phase and continue to upscale our distributors and better support them through our key account management program. Stefan is engineered this and is leading our mastermind programmer will provide more details on this later in the call.

Michael O. Johnson: As you know, we have a long-term relationship with Eric Worre, one of the most trusted and influential thought leaders in network marketing. Eric has been working with us for a little over four months and has already made a positive impact. He's provided hours and hours of training and events around the world, including extravaganzas in APAC, Latin America, and North America, just to name a few.

Unknown Executive: As you know we have a long term relationship with Aerie Corey one of the most trusted and influential thought leaders in network marketing Eric has been working with us for a little over four months and has already made a positive impact he has provided hours and hours of training and events around the world, including the extravaganzas in APAC Latin America, and North America, just to name a few.

Michael O. Johnson: Speaking of extravaganzas, over the last three months, we've hosted events in Thailand, Colombia, India, and the U.S. Record Attendance Numbers in APEC, where approximately 24,000 people convened in Bangkok, and in India, where events in Bangalore and Delhi drew nearly 36,000 people on a combined to their first ever multi-city extravaganza event. These events were the perfect time to get our distributors excited As I mentioned, Stephan is going to talk more about the positive distributor trends and some exciting new ways we're upscaling distributors, supporting distributor leaders, and creating more productive, relevant DMO business flows, including enhanced support for nutrition clubs, a Key Differentiator for Herbalife. This is an exciting time at Herbalife, an exciting time in the world of sports. Herbalife is the ultimate nutrition sport behind some of the most legendary champions and teams in the world.

Speaker Change: And speaking of extravaganzas over the last three months, we posted events in Thailand, Colombia, India and the U S. We had record attendance numbers in APAC were approximately 24000 people convened in Bangkok, and in India, where events in Bangalore and Deli drew nearly 36000 people on a combined basis through their first ever.

Stefan: Her multi city extravaganza events these events, where the perfect time to get our distributors are excited about the broad and diverse range of products. We continue to roll out globally from nutrition and performance products at Gerber life twenty-four creatine and Herbalife protein chips in North America to beauty products like Virtu like skin care line in India.

Stefan: As I mentioned Stefan is going to talk more about composites distributor trends and some exciting new ways, we're upscaling distributors supporting distributor leaders and creating more productive relevant D. M O business flows, including enhanced support for nutrition clubs, a key differentiator for herbalife.

Stefan: This is an exciting time at herbalife and exciting time in the world of sports Herbalife is the ultimate nutrition support behind some of the most legendary champions and teams in the world. These athletes dedicate their lives to their chosen sports and we dedicate ourselves to fueling their pursuit of greatness by providing the best nutrition products.

Michael O. Johnson: These athletes dedicate their lives to their chosen sports, and we dedicate ourselves to fueling their pursuit of greatness by providing the best nutrition. We are incredibly proud of all of our sponsored athletes, which is why we just launched our Fueling the Best program. Highlighting their accomplishments, you'll even see some of them competing this summer in the Olympic and Paralympic Games, where we are fueling 33 athletes and 17. These athletes are important brand ambassadors and a testament to the advanced nutrition delivered by our science-backed products.

Speaker Change: We are incredibly proud of all of our sponsored athletes, which is why we just launch are fueling the best campaign highlighting their accomplishments, you'll even see some of them competing this summer and the Olympic and Paralympic games, where we are fueling 33 athletes and seven teams. These athletes are important brand ambassadors and a testament to the advanced nutrition delivered.

Stefan: By our science backed products, we believe in them and we're hoping to bring home some gold to herbalife.

Michael O. Johnson: We believe in them, and we're hoping to bring home some gold for Herbalife. We also believe in our employees, our distributors, our business model, and our products. We believe we can and will continue to change and empower people's lives. Most of all, we believe in the transformative journey we are on. And we believe in our vision of becoming the world's premier health and wellness company, community, and platform. It's going to take a little time, but we're well on our way. Now I'm going to turn it over to Stephan, who will give you more details on why we believe so strongly in Herbalife and in our future. Stephan, over to you, my friend.

Stefan: We also believe in our employees our distributors our business model and our products. We believe we can and continue to change and empower People's lives. Most of all we believe the transformative journey, we are on and we believe in our vision of becoming the world's Premier health and wellness company community and platform, it's going to take a little time, but we're well on our way.

Stephane: Now I'm going to turn it over to Stephane, who will give you more details and why we believe so strongly in herbalife and in our future Stephane over to you my friend.

Stephan Paulo Gratziani: Thank you, Mike. On our last earnings call, we shared some early recruiting numbers after the launch of the Herbalife Premier League at Summit in mid-March. Now I'd like to share some details on how the quarter developed. As Michael mentioned in his opening comments, new distributor numbers were up in Q2, following 12 consecutive quarters of year-over-year decline. This is an early positive sign, as new distributor recruitment, especially on a consistent and prolonged basis, is a driver for future growth. Let's take a look at the numbers. As you can see on the left side of slide 8, Q2 had significant sequential improvements over Q1 across all regions. 26% Worldwide.

Stephane: Thank you Michael on our last earnings call. We shared some early recruiting numbers. After the launch of the Herbalife Premier League at summit in mid March.

Stephan Paulo Gratziani: More importantly, Q2 year-over-year recruiting was up in every region, with the exception of China, which I'll talk about in a minute. North American recruiting was up 15% over Q1 and 23% over Q2 of last year. Latin America was up 30% over Q1 and 34% over 2020. Amir was up 15% over Q1 and 9% over the same quarter last year.

Speaker Change: Now I'd like to share some details on how the quarter developed as.

Stephane: As Michael mentioned in his opening comments new distributor numbers were up in Q2, following 12 consecutive quarters of year over year declines. This is an early positive sign as new distributor recruiting, especially on a consistent and prolonged basis is a driver for future growth.

Speaker Change: Let's have a look at the numbers as you can see on the left side of slide eight Q2 had significant sequential improvements over Q1 across all regions up 26% worldwide. More importantly, Q2 year over year recruiting was up in every region with the exception of China, which I'll talk about in a minute.

Stephan Paulo Gratziani: Asia Pacific was up 40% over Q1 and 11% over Q2 last year, and China was up 10% over Q1 and down 3% over the same quarter last year. Those are significant improvements across the board. And now, let's talk about China.

Speaker Change: North America recruiting was up 15% over Q1, and 22% over Q2 of last year Latin America was up 30% over Q1, and 34% over 2023, and Neil was up 15% over Q1 and 9% over the same quarter last year.

Speaker Change: Asia Pacific was up 40% over Q1, and 11% over Q2 last year, and China was up 10% over Q1 and down 3% over the same quarter last year.

Speaker Change: Those are significant improvements across the board and now let's talk about China.

Stephan Paulo Gratziani: When the Premier League program was launched in China, we chose to focus on the acquisition of preferred customers instead of sales representatives. This was due to the timing of the launch of a new Preferred Customer Loyalty Program. Unlike the rest of the world, where the Premier League qualification involves recruiting 10 first-line distributors, in China, the program launched with the qualification based on adding 20 first-line preferred customers.

Speaker Change: When the Premier League program was launched in China, We chose to focus on the acquisition of preferred customers instead of sales representatives.

Stephane: This was due to the timing of the launch of a new preferred customer loyalty program.

Stephane: Unlike the rest of the World, where the Premier League qualification includes recruiting 10 first line distributors in China. The program launched with the qualification based on adding 21st line preferred customers.

Stephane: This led to significant focus on preferred customers, which impacted the level of recruitment of new sales representatives in the quarter.

Stephan Paulo Gratziani: This led to a significant focus on preferred customers, which impacted the level of recruitment of new sales representatives in the quarter. During Q2, we believe we accomplished what we set out to do, which was to create enough inertia to reverse the previous 12 quarters of year-over-year decline by creating a long-term strategic alliance with Eric Warren, making his training and expertise available to our distributors. In combination with the launch of the Herbalife Premier League, we have successfully refocused and reinvigorated our distributor league.

Stephane: During Q2, we believe we accomplished what we set out to deal which was to create enough inertia to reverse the previous 12 quarters of year over year declines.

Stephane: By creating a long term strategic alliance with Eric Laurie, making is training and expertise available to our distributors in combination with the launch of the Herbalife Premier League, we have successfully refocused and reinvigorated our distributor leaders. This is illustrated not only by the growth in recruiting that we see overall, but by the level of those in the March.

Stephan Paulo Gratziani: This is illustrated not only by the growth and recruiting that we see overall but by the level of those in the marketing plan who are doing the recruiting. If we look at the right side of the chart, you'll see the recruiting growth by the different levels of distributors within Herbalife. Note that China has been excluded due to its different business model.

Stephane: <unk> plan, who are doing the recruiting.

Speaker Change: If we look at the right side of the slide you'll see the recruiting growth by the different levels of distributors within Herbalife note, China has been excluded due to its different business model.

Stephan Paulo Gratziani: At the top of the chart, you will see our president team members, who have typically built the largest organizations in the country. All the way through to distributor, which is the entry level of the market. As you can see, our president's team recruited 66% more distributors in Q2 over Q1 of 2025 and 72% more over Q2 of last year. Our next level of leadership, our mill team, had the second highest percentage increase in recruiting.

Speaker Change: At the top of the chart you will see our president team members with typically built the largest organizations in the company all the way through the distributor, which is the entry level of the marketing plan as you can see our president team recruited 66% more distributors in Q2 over Q1 of 'twenty 'twenty four and 72%.

Stephane: Moreover, Q2 of last year.

Stephane: Our next level of leadership, our mill team had the second highest percentage increase of recruiting up 62% over Q1, and 54% over last year, followed by to get team, which was up 48% over Q1 and 40% over Q2 of last year.

Stephan Paulo Gratziani: 62% over Q1 and 54% over last year, followed by the GET team, which was up 48% over Q1 and 40% over Q2 of last year. This is good for them, as these three groups of leaders, whom we refer to as TAB team members, lead the largest sales organization in the U.S. and Know How to Support New Distributors with the Best Go-to-Market Strategy. We consider this a positive sign that our top distributors are engaged and leading the way in new distributor growth.

Stephane: This is good for the business as these three groups of leaders, which we referred to as tab team members typically have the longest tenure in the company.

Speaker Change: The largest sales organizations and know how to support new distributors with the best go to market strategies weakens.

Stephane: We consider this a positive sign that our top distributors are engaged and lead the way in new distributor growth.

Stephan Paulo Gratziani: And we are about to launch a program for this group that we believe will help drive new customer and distributor growth, helping them achieve even more success within their organization. One final comment on the recruiting metrics before we move on.

Stephane: And we are about to launch a program for this group that we believe will help drive new customer and distributor growth, helping them achieve even more success within their organizations.

Stephane: A final comment on the recruiting metrics before we move on.

Stephan Paulo Gratziani: One quarter of new distributor growth following 12 consecutive quarters of year-over-year declines is only the beginning of our journey to return to volume growth. We are going to build on this trend step-by-step, quarter-by-quarter. Now I'd like to talk about the program I referred to for the TAB team that Michael also mentioned.

Stephane: One quarter of new distributor growth following 12 consecutive quarters of year over year declines is only the beginning of our journey of a return to volume growth. We are going to build on this trend step by step quarter by quarter.

Stephane: Now I'd like to talk about the program I referred to for the tab team and Michael also mentioned we.

Stephan Paulo Gratziani: We are about to launch an all-new mentoring, leadership development, and accountability program that we believe will be a game-changer. This program, which we refer to as the Mastermind program, is like nothing we have ever done before and is geared towards creating sustainable growth and increased productivity. It will address two important areas that make the biggest difference in helping distributors succeed long-term. The first is supporting them in leveling up their skills and further developing their leadership.

Stephane: We are about to launch in all new mentoring leadership development and Accountability program that we believe will be a game changer.

Stephane: This program, which we referred to as the mastermind program is like nothing we've ever done before and is geared towards creating sustainable growth and increased productivity you will address two important areas that make the biggest difference in helping distributors succeed long term. The first is supporting them and leveling up their skills and further developing there.

Stephan Paulo Gratziani: The second is ensuring that their go-to-market strategies, or DMOs, are always evolving and staying effective and relevant in the current market. In late August, we will launch the Mastermind program to our top distributor leaders in North America, and we will later expand it into other markets. Eric Worre and I, alongside a team of some of the most successful Herbalife distributors, have designed the program, which will deliver monthly actionable content and coaching. Participating leaders will be part of a peer accountability group and will have a personal key account manager to support them with metrics and data to help them increase sales, further drive recruiting growth, and expand their business.

Stephane: Ship and the second is ensuring that their go to market strategies or D. M. O's are always evolving and staying effective and relevant in the current marketplace. In late August we will launch the mastermind program to our top distributor leaders in North America.

Stephane: And we will later expanded into other markets.

Stephane: Erik already and I alongside a team of some of the most successful herbalife distributors have designed the program, which will deliver monthly actionable content and coaching.

Stephane: Participating leaders will be part of a peer accountability group and we'll have a personal key account manager to support them with metrics and data to help them increase sales further drive recruiting growth and expand their businesses. We're excited about this program, which could potentially reach thousands of our tab team members in North America.

Stephan Paulo Gratziani: We're excited about this program, which could potentially reach thousands of our TAB team members in North America. We're encouraged by this first quarter of this new distributor. And we see a lot of potential in this new mastermind program launching in North America and elsewhere. We also have a lot of exciting things happening in other countries. This year in Mexico, we had two new chairman's clubs and 11 new president team members qualified. It's been years since we've seen these types of numbers in newspapers.

Stephane: We're encouraged by this first quarter of new distributor growth and we see a lot of potential in this new mastermind program launching in North America in August.

Stephane: We also have a lot of exciting things happening in other markets. This year in Mexico, We've had two new Chairman's club and 11, New President team members qualify its been years since we've seen these types of numbers in Mexico and Europe, We continue with the D. M O master classes and the models are gaining traction in multiple countries.

Stephan Paulo Gratziani: In Europe, we continue with the DMO Master, and the models are gaining traction in multiple markets. In Latin America, we launched a pilot program aimed at stimulating growth, and the markets have responded positively, which John will discuss briefly, and India continues to outperform. With that, I'll turn it over to you, John. Thank you, Stephan.

Stephane: In America, we launched a pilot program aimed at stimulating growth in the markets have responded positively, which John will discuss briefly and India continues to outperform.

John: With that I'll turn it over to you John Thank.

John G. DeSimone: I'll begin with our key financial highlights on slide before getting into more. Net sales for the second quarter were $1.3 billion. The decline versus last year is driven by 270 basis points of FX on a constant current. However, net sales were up. And as Michael stated, our top line was more significantly impacted by FX headwinds than we had anticipated coming Q2. Adjusted EBITDA was $180 million and exceeded our guidance, 140-216. Adjusted EBITDA margin was $14.12. A 120 Basis Point Improvement versus the second quarter. 2023. Q2 reflects the significant progress we have made in our initiatives to improve profitability. Capital expenditure for the second quarter was $36 million.

John: Thank you Stefan.

John: I'll begin with our key financial highlights on slide 10 before getting into more details.

John: Net sales for the second quarter with $1.3 billion.

Speaker Change: The decline versus last year is driven by 270 basis points of FX headwinds.

John: On a constant currency basis, net sales were up slightly and as Michael stated, our topline was more significantly impacted by FX headwinds than.

Michael O. Johnson: And then we had anticipated coming into the quarter.

Michael O. Johnson: Our Q2, adjusted EBITDA was $180 million and exceeded our guidance range of $140 million to $160 million.

Speaker Change: Just an EBITDA margin was 14.1%.

Stephane: A 120 basis point improvement versus the second quarter of 2023.

Speaker Change: Q2 reflects the significant progress we've made in our initiatives to improve profitability.

Speaker Change: Capex for the second quarter was $36 million essentially the midpoint of our guidance range.

John G. DeSimone: Essentially, the midpoint of our guidance. In addition, we incurred approximately $5 million in capitalized SAS implementation costs. Q2 Gross Profit Margin was 77.9%, up 90 basis points compared to the second quarter of last year. The improvement in Gross Profit, primarily driven by pricing actions we have taken over the past year, provided approximately 160 basis points of benefit, partially offset by the impact of increased. Input costs of approximately, mainly relating to increased Second quarter EPS was $0.05 and included approximately $49 million dollars of pre-tax costs related to the implementation of our restructuring.

Speaker Change: In addition, we incurred approximately $5 million of capitalized SaaS implementation costs in the quarter.

Speaker Change: Q2 gross profit margin was 77, 9%.

Stephane: 90 basis points compared to the second quarter of last year.

Stephane: The improvement in gross profit margin.

Stephane: It was primarily driven by pricing actions, we have taken over the past year.

Stephane: Which provided approximately 160 basis points of benefit.

Stephane: Partially offset by the impact of increased input cost of approximately 60 basis points, mainly relating to increased raw material costs.

Stephane: Second quarter EPS was five cents and included approximately $49 million of pre tax costs related to the implementation of our restructuring program.

John G. DeSimone: And $10.5 million of pre-tax costs relating to the extinguishment of our debt that was refinanced during the... Both of these items are excluded from our adjusted EPS. Our adjusted EPS for the second quarter was $54,000, which included a 7-cent FX headwind versus the second quarter of 2021. Our second quarter adjusted effective tax rate was 32.3%, up from 27.5% for the second quarter of 2023.

Stephane: And $10.5 million of pre tax costs relating to the extinguishment of our debt that was refinanced during the second quarter.

Stephane: Both of these items are excluded from our adjusted results.

Stephane: Our adjusted EPS for the second quarter with 54 cents, which included a seven cent FX headwind versus second quarter of 2023.

Stephane: Our second quarter adjusted effective tax rate was 32.3% up from 27, 5% for the second quarter of 2023.

John G. DeSimone: Strove and approximately $0.04 unfavorable impact to adjusted diluted, Higher effective tax rates in 2024 were primarily due to changes in geographic mix of income. Elevated, following our recent debt refinance. Inc. Tax Expense from Discrete Events in the Period. We continue to expect a full year of 2020. Adjusted Effective Tax Rate to be approximately 30% based on our forecasted geographic mix of income and the impact of high

Stephane: Which drove an approximately four cent unfavorable impact to adjusted diluted EPS.

Stephane: The higher effective tax rate in 'twenty 'twenty four was primarily due to changes in geographic mix of income.

Stephane: Elevated interest expense following our recent debt refinancing.

Stephane: An increase in tax expense from discrete events in the period.

Stephane: We continue to expect our full year 2024, adjusted effective tax rate to be approximately 30% based on our forecasted geographic mix of income and the impact of higher interest expense.

John G. DeSimone: Operating cash flows for the. Strong at $103 million and included approximately $31 million of cash payments related to the restructuring. Credit Agreement, EBITDA, for the second quarter, leading to a further reduction in our overall leverage 3.5 times as of the end of June.

Stephane: Operating cash flows for the quarter were strong at HUD, It and $3 million and included approximately $31 million of cash payments related to the restructuring program.

Stephane: Credit agreement EBITDA for the second quarter was $208 million.

Stephane: Leading to a further reduction in our overall leverage ratio the 3.5 times as of the end of June.

John G. DeSimone: Please refer to the schedule in the back of our presentation and earnings press for a Reconciliation Between Adjusted Ibidah and Credit. Turning to slide 11, we see the drivers of our year-over-year net sales; on a reported basis, net sales were down 2.5% year over year. Overall Volume Decline of Nearly $80 Million Head is more than offset by approximately $86 million of pricing. We continue to implement pricing in, Generally In Line. The unfavorable country mix of approximately $7 million was primarily driven by increased sales in Mexico and India, as well as lower sales in the U.S. relative to our overall net sales portfolio. FX, as I said earlier, was a 270 basis point headwind year, or about 36. Moving to slide 12.

Stephane: Please refer to the schedule in the back of our presentation and earnings press release for a reconciliation between adjusted EBITDA and credit agreement EBITDA.

Speaker Change: Turning to slide 11, we see the drivers of our year over year net sales performance.

Speaker Change: On a reported basis net sales were down 2.5% year over year.

Speaker Change: With an overall volume decline of 6%.

Stephane: Which drove a nearly 80 million dollar headwind.

Stephane: This was more than offset by approximately $86 million of pricing benefit as we continue to implement pricing increases to address region or market specific conditions, which are generally in line with local CPI increases.

Stephane: Unfavorable country mix of approximately $7 million was primarily driven by increased sales in Mexico, and India as well as lower sales in the U S relative to our overall net sales portfolio.

Stephane: FX as I said earlier was at 270 basis point headwind year over year or about $36 million.

Stephane: Moving to slide 12.

John G. DeSimone: We have the regional net sales results for the second quarter. On a local currency basis, three of our five regions reported net sales growth. FX, Negatively Impact: Latin American net sales were up 2% on a reported basis and up 5% on a local currency basis during the second quarter of this year in most markets in the region, excluding Mexico.

Stephane: We have the regional net sales results for the second quarter.

Stephane: On a local currency basis three of our five regions reported net sales growth in the quarter.

Stephane: With FX negatively impacting each of these regions on a reported basis.

Stephane: In Latin America, net sales were up 2% on a reported basis and up 5% on a local currency basis during.

Stephane: During the second quarter of this year in most markets in the region, excluding Mexico, we implemented a pilot program that reduced pricing and modified certain distributor compensation and qualification variables.

John G. DeSimone: We implemented a pilot program that reduced price and modified Certain Distributor Compensation and Qualification Variables. The pilot is designed to localize and optimize business based on certain socioeconomic conditions. We believe these initiatives are critical to the success of the United States. positively impacted many of the markets of Latin America, possibly to be expanded into. EMEA net sales were down 1% year over year, with local currency net sales up 4%.

Stephane: This pilot is designed to localize and optimize the business opportunity based on certain social or economic conditions in our country.

Stephane: We believe these initiatives positively impacted many of the markets in Latin America, and could possibly be expanded into other markets.

Stephane: EMEA net sales were down 1% year over year with local currency net sales up 4%.

John G. DeSimone: Favorable Year-over-Year Pricing Impacts More Than Offset Volume, However, unfavorable FX headwinds more than offset the net. The year-over-year results were generally mixed across the market. For example, Asia Pacific Net Sales were down 2% year-over-year on a reported basis, while up 2% on a local basis.

Stephane: Favorable year over year pricing impacts more than offset volume declines, however, unfavorable FX headwinds more than offset the net benefit.

Stephane: The year over year results were generally mixed across the markets in the region.

Stephane: Asia Pacific net sales were down 2% year over year on a reported basis.

Stephane: While up 2% on a local currency basis.

John G. DeSimone: India continues to outperform, with net sales up 8% on a reported basis and 10% in local currencies. China reported net sales decline of 7% year-on-year and were down 4% in local currencies.

Stephane: India continues to outperform the region with net sales up 8% on a reported basis and 10% in local currency.

Stephane: China reported net sales decline of 7% year over year and were down 4% on a local currency basis.

John G. DeSimone: China faced a difficult comp in Q2 this year as a result of a sales surge last year. The two-year stack for Q2 in China is an improvement versus Q1. Last month, we launched a new customer loyalty program, which encourages a more customer-centric approach aimed at driving customer recruitment, activation, and retention. Business is continuing to evolve in China, and we are encouraged by the positive trends we are seeing with respect to new customers.

Stephane: China faced a difficult comp in Q2 this year.

Stephane: As a result of a sales surge last year in Q2.

Stephane: The two year stack for Q2 in China is an improvement versus the Q1 two year stack.

Stephane: Last month, we launched a new customer loyalty program in China, which encourages a more customer centric approach aimed at driving customer recruitment activation and continuous repurchase with improved customer benefits.

Stephane: Business is continuing to evolve in China, and we are encouraged by the positive trends, we are seeing with respect to new customers joining.

John G. DeSimone: In North America, our net sales trend improved from the first quarter of 2020. A 7% year-over-year decline in reported net sales in the second quarter, primarily driven by the Stephan noted earlier in his opening, New Distributor Recruiting is up year-over-year.

Stephane: In North America on net sales trend improved from the first quarter of 2020 for.

Stephane: The 7% year over year decline in reported net sales in the second quarter was primarily driven by the U S market.

Stephane: As Stefan noted earlier in his opening remarks, new distributor recruiting is up year over year in the region.

John G. DeSimone: Several initiatives have been launched over the past few months. Courage recruiting, and activity from new distributors. While the recovery in North America has taken longer than we would have liked, we are seeing green shoots and are encouraged by them. Moving to slide 13.

Speaker Change: Several initiatives have been launched over the past few months to encourage recruiting activity from new distributors, while the recovery in North America has taken longer than we would have liked we are seeing green shoots and are encouraged by the gradual improvement.

Stephane: Moving to slide 13.

John G. DeSimone: We see drivers of our $10 million or 6% year-over-year increase in adjusted EBITDA. Q2 Adjusted EBITDA came in strong at $180 million. I have not seen results like this in seven years, testament to the work the team has done to right size and pull costs out of the business. The Impact from Favorable Gross Profit Margins I Mentioned Earlier, Partially Offset by Heroin, And as I stated last quarter, our employee bonus accrual is a headwind, and we expect the headwind to continue in the back half. Technology costs were up approximately $6 million year over year, primarily due to increased. Unfavorable Year-over-Year Currency, primarily related to the Argentinian Peso and Turkish Lira, drove an approximate.

Stephane: We see drivers or a $10 million or 6% year over year increase in adjusted EBITDA Q.

Stephane: Q2, adjusted EBITDA came in strong at $180 million with margin of 14, 1%.

Stephane: We've not seen results like this in seven quarters.

Stephane: Which is a testament to the work the team has done to rightsize and pull costs out of the business.

Stephane: Looking at the bridge the impact from favorable gross profit margins I mentioned earlier can be seen in the benefits of price increases partially offset by higher input costs.

Stephane: And as I stated last quarter, our employee bonus accrual is a headwind in Q2, and we expect the headwind to continue in the back half of 2024.

Stephane: Technology costs were up approximately $6 million year over year.

Stephane: Primarily due to increased SaaS hosting fees.

Stephane: Unfavorable year over year currency movements, primarily related to the Argentinian peso and Turkish lira drove an approximate.

John G. DeSimone: $11 million year-over-year reduction in adjusted EPS. Turning the slide forward, I'll provide an update on our capital. Since our last earnings call, we have paid down our revolver by $90 million.

Stephane: $11 million year over year reduction in adjusted EBITDA.

Stephane: Turning to slide 14.

Speaker Change: I'll provide an update on our capital structure.

Speaker Change: Since our last earnings call.

Stephane: We have paid down our revolver by $90 million as a reminder of what we previously reported in April we completed a $1 6 billion senior secured refinancing and repaid all amounts outstanding on our 2018 credit facility as well as more than half of the amount of outstanding on the 2025 notes.

John G. DeSimone: As a reminder of what we previously reported in April, we completed a $1.6 billion senior secured refinancing and repaid all amounts outstanding on our 2018, as well as more than half of the amount outstanding on the 2020. The net result of this transaction, or the, is that we pushed the vast majority of our debt maturities out to 2020, although only sizable maturities.

Stephane: The net result of this transaction or these transactions is that we pushed the vast majority of our debt maturities out to 2029.

Stephane: But the only sizable maturity, we faced prior to 2028 being the $262 million outstanding on the 2025 notes, which we remain on track to repay it.

John G. DeSimone: phase prior to 2028, being the $262 million out... 2025 Notes, and, as I noted earlier... Further, reduce our total leverage ratio to 3.5 times as of June 30, with the goal to achieve our target of three times by the end of 2025 following the repayment. Moving to slide 15. Reviewer, Outlook for the third quarter and year. For the third quarter, we expect net sales to be in the range of down four and a half Flat, Year, primarily driven by approximately 300 base. Unfavorable Eff. We expect Adjusted EBITDA to be in the range of 125.

Stephane: And as I noted earlier, we further reduced our total leverage ratio of 3.5 times as of June 30th.

Stephane: With the goal to achieve our target of three times by the end of 2025, following the repayment of the 2025 bonds.

Stephane: Moving to slide 15.

Stephane: I'll review, our outlook for the third quarter and full year.

Stephane: For the third quarter, we expect net sales to be in the range of down four 5% to flat year over year. This is primarily driven by approximately 300 basis points of unfavorable FX headwinds year over year.

Stephane: We expect adjusted EBITDA to be in the range of $125 million to $155 million.

John G. DeSimone: For comparison purposes, we have a large distributor event that took place in the third quarter of this year but was held in the fourth quarter of The year-over-year comparison is also negatively impacted by the current situation, partially offset by the favorable impact of the restructuring. This program was substantially complete as of June 30. Approximately $66 million of the implementation costs of this project were accrued in the first half of with only a small amount outstanding. From a cash standpoint, about $33 million has been paid so far, with about $35 million remaining to be paid. Planned Capital Expenditures for the Third Quarter are in a range of $35 to $45 million.

Stephane: For comparison purposes, we have a large distributor event that will take place in the third quarter of this year, which was held in the fourth quarter of last year.

Stephane: The year over year comparison is also expected to be negatively impacted by currency.

Stephane: Partially offset by the favorable impact of the restructuring program.

Stephane: This program was substantially complete as of June 30, approximately $66 million of implementation costs of this program were accrued in the first half of the year with only a small amount remaining from a cash standpoint about $33 million has been paid so far with about 35 million.

Stephane: Remaining to be paid in the back half of the year.

Stephane: Our planned capital expenditures for the third quarter or in a range of $35 million to $45 million.

John G. DeSimone: Based on our results for the first half of the year and the Outlook for the remainder, we have updated our guidance for full year 2024 net sales to be down 3.5% to up 1.5% for Versus Life, and we are raising our expectations for Full Year Adjusted EBITDA to a range of $560 million to $600 million.

Stephane: Based on our results for the first half of the year and the outlook for the remainder of the year. We have updated our guidance for full year 2024, net sales to be down three 5% to up one 5% versus last year, and we are raising our expectations for full year adjusted EBITDA to a range of $560 million.

Stephane: To $600 million as we are reaffirming our capex expenditures of 120, Duarte and $50 million.

John G. DeSimone: We are reaffirming our CapEx of 120 million. The increase in adjusted EBITDA expectations reflect our outperformance in Q2, partially offset by lower volume and unfavorable currency movements from our initial. As we look to the back half of the year, we expect capitalized SAS implementation to be in a range of $10 to $15 million.

Stephane: The increase in adjusted EBITDA expectations reflect our outperformance in Q2.

Stephane: Partially offset by lower volume expectations and unfavorable currency movements from our initial expectations in may.

Stephane: As we look to the back half of the year, we expect capitalized SaaS implementation costs to be in a range of $10 million to $15 million, which is incremental to our planned capex.

John G. DeSimone: Incremental to our plan. A couple of last comments before we open up the call for questions. Sales are a bit lower than we had expected and currency is more of a headwind. There are a lot of good things happening at Herbalife.

Stephane: A couple of last comments before we open up the call for questions.

Stephane: While sales were a bit lower than we'd expected and currency is more of a headwind than we expected. There is a lot of good things happening at herbalife that creating a strong foundation for growth.

John G. DeSimone: Creating a Strong Foundation for Growth. New Distributor Recruiting continues to grow versus the prior year, reversing 12 consecutive quarters, and that growth is coming from experience. Premier League is taking off, and the Mastermind Training Program is coming in. It's unlike anything ever done in the industry.

Stephane: New distributor recruiting continues to grow versus prior year, reversing 12 consecutive quarters of decline and that growth is coming from experienced distributors that know how to build businesses.

Stephane: Herbalife Premier League is taking off.

Stephane: And the mastermind training program is coming in August which is unlike anything ever done in the industry.

John G. DeSimone: We are taking training and accountability to a higher level. We are continuing to launch innovative products that resonate in local markets and align with, We have positive results from the pricing and compensation chain. We are expanding in most Latin America.

Stephane: We are taking training and accountability to a higher level than ever before.

Stephane: We are continuing to launch innovative products that resonate in local markets to align with consumer trends.

Stephane: We have positive results from the pricing and compensation changes we are piloting in most Latin American markets. Our sponsored athletes are important brand ambassadors.

John G. DeSimone: Sponsored Athletes, our important brand of, testament to our advanced nutrition delivered by our Our profit is strong, our restructuring program is substantially complete, and we are continuing to look at ways to further reduce our Leverage Ratio is 3.5 times, and our goal remains to get to three times at the end of next year following the payoff. And while our goal is three times bigger by the end of 2025, we don't plan to stop. We want to pay off a billion dollars in debt.

Stephane: A testament to our advanced nutrition delivered by our products are.

Stephane: Our profit is strong our restructuring program is substantially complete and we are continuing to look at ways to further reduce costs and expand margins.

Stephane: Our leverage ratio was three five times and.

Stephane: And our goal remains to get to three times at the end of next year.

Stephane: The payoff of the bonds.

Stephane: And while our goal is three times by the end of 2025, we don't plan to stop there.

Stephane: We want to pay off a $1 billion in debt.

Operator: Over the next 4-5 years, that'll be our primary focus. This concludes our opening remarks. Operator, please open the call. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Stephane: Over the next four to five years and transfer that value to equity holders and that'll be our primary use of our free cash.

Operator: One moment while we compile the Q&A roster. Our first question will come from the line of Jeff Van Sinderen with Bee Riley. Your line is open.

Speaker Change: This concludes our opening remarks, operator, please open the call for questions.

Speaker Change: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment, while we compile the Q&A roster.

Speaker Change: Our first question will come from the line of Jeff Van <unk> Darrin with B Riley Your line is open.

Jeffrey Wallin Van Sinderen: Hi, great. Hi, everyone. So just wanted to focus on North America for a minute, if we could. I know that's been a little bit of a challenge to turn around, but you're adding new distributors. And are there other green shoots there that you might want to touch on?

Speaker Change: Great Hi, everyone. So just wanted to focus on North America for a minute if we could.

Stephane: A little bit of a challenge to turn around.

Speaker Change: But you are adding new distributors.

Speaker Change: Are there other green shoots there that you might want to touch on and I guess, where do you think you stand in that process and turning around the North American sales.

Stephan Paulo Gratziani: And I guess, where do you think you stand in that process of turning around North American sales? What do you think needs to happen for that to really come to fruition? I'll take that, Jeff.

Speaker Change: What do you think needs to happen for that to really come to fruition.

Stephane: I'll take that Jeff Thanks for the question.

Stephan Paulo Gratziani: Thanks for the question. So if we go back to what we've been kind of discussing as a theme, we have this very powerful model of nutrition clubs in the U.S., more than 10,000 locations. You know, I think a couple of quarters ago, we talked about 4.4 million customers in 2023, 55 million transactions, and 915 million dollars of business into these clubs. And yet, there's a huge opportunity for us because most of these transactions and most of these customers are really coming in to buy a healthy shake and energy tea, and a very small percentage of them are actually coming through and becoming, for example, preferred customers. The conversion is, you know, one to two percent on average for the club and even less in terms of distributors.

Jeff: So if we if we go back to what we've been kind of discussing is the theme is that we have this very powerful model of nutrition clubs in the U S. More than 10000 locations I think in a couple of quarters ago, we talked about $4 4 million customers in $2023 $55 million transactions $915 million.

Jeff: <unk> business into these clubs and yet there's a huge opportunity for us because most of these transactions and most of these customers, they're really coming in to buy a healthy shake and energy and a very small percentage of them are actually coming through and becoming for example preferred customers.

Jeff: The conversion is.

Jeff: 1% to 2% on average for the club.

Jeff: And even less in terms of distributors and so the big opportunity for US is really helping people go and build businesses that are not only going to do great from a transactional kind of more of a food service model that bring them into really a transformational result, and multi level marketing building organization.

Stephan Paulo Gratziani: And so the big opportunity for us is really helping people go and build businesses that are not only going to do great from a transactional kind of more of a food service model but bring them into really a transformational result and multi-level marketing building organization model. And so, when we take these 10,000 clubs, and we look at the conversion, and we look worldwide at what's happening, there's really a huge opportunity for us.

Jeff: Model and so when we take these 10000 clubs and we look at the conversion and we look worldwide at what's happening there is really a huge opportunity for US now. The question is how do we help.

Stephan Paulo Gratziani: Now, the question is, how do we help them, these club owners, who many of them are in this tab team, president team, millionaire team, get team group of people, how do we help them through this transition? How do we support them?

Jeff: These club owners, who many of them are on this tab team President millionaire team get team a group of people how do we help them through this transition how do we support them and so that's where this master mind really is the next level of support for all of these leaders.

Stephan Paulo Gratziani: And so that's where this mastermind really is the next level of support for all of these leaders. And again, you know, Michael spoke to it. John spoke to it. We've never done something like this. This is not something that exists in the industry. But the model for it, actually, in terms of a mastermind, it does exist.

Speaker Change: And again, Michael spoke to it John spoke to <unk>.

Speaker Change: Ever done something like this this is not something that exists in the industry.

Speaker Change: The model for it actually in terms of our masterminded does exist.

Stephan Paulo Gratziani: As you know, one of the reasons why we felt very strongly about creating a partnership or, you know, kind of a special relationship with Eric Borre is that he was already delivering a mastermind program to some of our top leaders. And, you know, they were paying thousands and thousands of dollars for that type of coaching and information. And so, to be able to put together a program with him and our top leaders to be able to deliver to potentially thousands of our leaders here in the United States, a very high-level program that is not a weekend event.

Speaker Change: No one of the reasons why we felt very strongly that creating a partnership or.

Speaker Change: Kind of a special relationship with Eric Boyer. He is because he was already delivering a mastermind program to some of our top leaders and they were paying thousands and thousands of dollars for that type of coaching and information and so to be able to put a program together with him and our top leaders.

Speaker Change: To be able to deliver to potentially thousands of our leaders here in the United States.

Speaker Change: High level program, which is not a weekend event, it's literally a program that's going to be carried out through the next couple of years to help them along every step in the process of really implementing the most successful models that are going to help with this transition and supporting them all the way through another part to this is a key account.

Stephan Paulo Gratziani: It's literally a program that's going to be carried out over the next couple of years to help them along every step in the process of really implementing the most successful models that are going to help with this transition and supporting them all the way through. Another part of this is a key account management program that we've never had before.

Speaker Change: Management program that we've never had before we're actually not only are there going to be getting the coaching and the content and the education on the different gmos and business models and flows but its going to be supported for looking at on a monthly basis, how everything is actually working so.

Stephan Paulo Gratziani: Where, actually, not only are they going to be getting the coaching and the content and the education on the different DMOs and business models and flows, but it's going to be supported through looking at, on a monthly basis, how everything is actually working. So, data and metrics are being shared, peer group accountability, which is part of pairing them up with other leaders that are doing similar types of businesses. So, they're sharing best practices. There's a certain dynamic that's fundamental and that works very, very well.

Speaker Change: Data and metrics being shared peer group accountability, which is part of pairing them up with other leaders that are doing similar types of businesses. So they're sharing best practice, because theres a certain dynamic.

Stephan Paulo Gratziani: So, that's how we're going to get there. Again, we see this opportunity as really, very big for us. You know, the customers are there.

Speaker Change: The mental and that works very very well.

Speaker Change: That's how we're going to get there again, we see this opportunity.

Stephan Paulo Gratziani: They're just really more of a transactional customer, and there's a huge opportunity for us to bring them in to be transformational customers, which is the foundation of what we do. So, I hope that answers your question. Okay, great. That's helpful.

Speaker Change: Really very big for us.

Speaker Change: Customers are there theyre, just really more of a transactional customer and there is a huge opportunity for us to bring them in to.

Speaker Change: Can be transformational customers, which is the foundation of what we do so I hope that answers your question.

Jeffrey Wallin Van Sinderen: And then I sort of have a multi-part question here, but I guess I'm trying to understand your Q3 guidance a little bit better. I know you indicated you booked most of the restructuring charges, you're adding new distributors, and your EBITDA was about $180 million in Q2. Realize there's more bonus accrual and 300 BIFs, I think you said, of FX Edwin, you're anticipating for Q3. But maybe you could just walk us through the thought process around your EBITDA guidance for entry Q3, which I think implies a down year over year, maybe what are the components kind of baked into the high end of guidance and what might cause you to come at the low end. Sure. Thanks, Jeff.

Speaker Change: Okay, Great. That's helpful. And then I sort of have a multipart question here, but I guess I'm trying to understand.

Speaker Change: Your Q3 guidance a little bit better.

Speaker Change: I know you indicated you booked most of the restructuring charges, you're adding new distributors EBITDA was about 180 in Q2 realize theres more bonus accrual and 300 bps. I think you said, a FX headwind you're anticipating for Q3.

Speaker Change: Maybe you could just walk us through the thought process around the EBITDA guidance range for Q3, which I think implies down year over year, maybe what are the components kind of baked into the high end of guidance on what might cause you to come into the law.

John G. DeSimone: So you hit on a couple of things. One is, you know, there's an FX component year over year. From an EBITDA standpoint, it's about a 7. For the back half of the year, it's $15 million.

Stephane: Sure. Thanks, Jeff So you hit on a couple of things. So one is.

Stephane: FX component year over year.

Speaker Change: From an EBITDA standpoint, it's about a seven for the back half of the year at $15 million split pretty equally between Q3 and Q4 right. So call it $7 5 million somewhere in that range for the impact to EBITDA from from currency.

John G. DeSimone: It's split pretty equally between Q3 and Q4, right? So call it $7.5 million, somewhere in that range for the impact on EBITDA from currency. Year-over-year, or actually versus what we thought a quarter ago. I'm sorry, that is versus what we thought a quarter ago. So that's just an impact on currency movements over the last year. Second, you talked about higher bonus accrual. We've talked about that in the past. Third, there are some unique events. Not unique events, but the timing of those events in Q3 is unique. So we have our single biggest distributor event for FCCC happening in Italy in August. That event usually takes place in Cuba.

Stephane: Year, we actually versus what we thought a quarter ago I'm, sorry that is versus what we thought a quarter ago. So that's just the impact from currency movements over the last three months.

Speaker Change: Second you talked about the higher bonus accrual we talked about that in the past third is there are some unique events.

Speaker Change: Unique events, but the timing of those events in Q3 is unique so we have our single biggest distributor event for our FCC happening in Italy in August.

Stephane: That event, usually takes place in Q4 and it took place in Q4 last year in Japan.

John G. DeSimone: Place in Q4. That event's a pretty meaningful event, and plus, we do have the unique Mastermind event that's happening in August that adds to that. So, and lastly, I'll say some advertising and promotion. Spent that was underspent in Q2 got moved. Q3. So those are the big drivers of In addition to, you know, you saw the sales guidance, a little bit less sales. If I had to just recap, slightly lower sales, FX, those are by far the two biggest impacts, and then some movement on the expense line with bonuses and events. Okay, great. Thanks for taking my questions and answers. I'll pick up the rest later.

Stephane: That event pretty meaningful event.

Stephane: Plus we do have the unique mastermind event that's happening in August.

Stephane: Add some expenses and so.

Stephane: And lastly, I'll say, some advertising and promotion.

Stephane: <unk> expense that was unexpected in Q2 got moved to Q3. So those are the big drivers.

Stephane: In addition to.

Stephane: You saw the sales guidance little less sales has an impact too. So if I had just recap slightly lower sales.

Stephane: <unk> does not by far the two biggest impacts and then some movement on the on the.

Stephane: Expense line with bonus and events in advertising and promotion.

Speaker Change: Okay, great. Thanks for taking my questions.

Speaker Change: I'll take the rest offline.

Stephane: Okay.

Stephane: Thank you one moment for our next question.

Jeffrey Wallin Van Sinderen: Thank you. One moment for our next question, and that will come from the line of Chasen Bender with Citi. Your line is open. Great, thanks. Afternoon, everyone.

Speaker Change: And that will come from the line of Jason Bender with Citi. Your line is open.

Chasen Louis Bender: John, just to stay on the guidance theme, for my first question, I was hoping you could elaborate a little bit more on the change in full-year guidance. 2Q net sales came in about $50 million below the midpoint of the guide, and it looks like the implied 2H24 net sales guidance came down about $125 million. I know you clearly called out FX a little bit worse, but on the other hand, you also have productivity going well.

Chasen Louis Bender: Great. Thanks afternoon, everyone.

Chasen Louis Bender: John just to stay on the guidance theme for my first question I was hoping you could elaborate a little bit more on the change in our full year guidance <unk> net sales came in about 50 million below the midpoint of the guide and it looks like the implied to age 24 net sales guidance came down about 100.

Speaker Change: $25 million.

John G. DeSimone: You're launching new productivity initiatives with this mastermind class, so maybe you can just give us some additional perspective on what's driving that additional $75 million lower sales outlook for the second half of the year. Yeah, I mean, there are two primary drivers.

Speaker Change: I know clearly you called out FX, a little bit worse, but on the other hand, you also have productivity going well youre launching new.

Speaker Change: Productivity initiatives with the mastermind class. So maybe you can just give us some additional perspective on what's driving that issue was $75 million lower sales outlook in the second half.

John G. DeSimone: So lower volume. That comes from a handful of countries that underperformed in Q2 versus our expectations, so we changed our expectations. So, you know, China, and we can talk more about China, but China, because of the program they've implemented, the transition. It takes a little longer to grow because it's focused on customers, but it's strong, but we changed the expectations to China, Indonesia, Turkey, to name a few, so just a few countries. So that's the volume.

Speaker Change: Yes, I mean, its two primary drivers so lower volume expectations that comes from a handful of countries.

Speaker Change: That underperformed in Q2 versus our expectations that we changed the expectations going out right and so China.

Speaker Change: China, and we can talk more about China, but China.

Speaker Change: Because of the program they implemented the transition is just.

Speaker Change: It takes a little longer to growth because focus on customers, but it's strong, but we changed your expectations for China, Indonesia, Turkey.

Speaker Change: To name a few so just a few countries. So that's volume that by far has the biggest impact on.

John G. DeSimone: That by far has the biggest impact on the back half of the year, probably a $25 million impact in the back half of the year for profit, and a bigger impact on that sale, from just the midpoint of guidance. And then currency. Currently, we are at a three and a basis point impact in the year-over-year guidance. That's a meaningful change from where we were a quarter ago. And then in terms of pricing, obviously, pricing was once again a strong contributor to overall net sales growth in the quarter, but you called out this pilot program in Latin America whereby you took a reduction in that price across most countries ex-Mexico.

Speaker Change: The back half of the year, probably at $25 million impact in the back half of the year for profit.

Speaker Change: The bigger impact net sales you can you can.

Speaker Change: Determined from the just the midpoint of guidance and then currency currency is a 300 basis points impacted the year over year.

Speaker Change: Guidance.

Speaker Change: And that's a meaningful change from where we were a quarter ago.

Speaker Change: Got it.

Speaker Change: And then in terms of pricing, obviously pricing was once again, a strong contributor to overall net sales growth in the quarter, but you called out. This pilot program in Latin America, whereby you took a reduction in net price across most countries ex Mexico.

Speaker Change: I was hoping you could expand a little bit on that what are the benchmarks you are looking for in terms of.

John G. DeSimone: I was hoping you could expand a little bit on that, you know, what are the benchmarks you're looking for in terms of success that would then lead you to roll that out more globally and related? What sort of timeline might we see you make those judgment calls on and subsequently roll that out to other markets? Yeah, that's a great question.

Speaker Change: Success that would then lead you to roll that out more globally and related what sort of timeline might we see you make those judgments calls on and subsequently rolled that out to two other markets.

John G. DeSimone: So let's start with the strategy behind the changes that were made. Historically, at Herbalife, we've had pretty much the same approach to pricing and the compensation system for our distributors. And the reality is, that's not really a level playing field, given the socioeconomic differences across the 95.

Speaker Change: Yes, that's a great question, so let's start with the strategy behind the changes that were made.

Speaker Change: Historically.

Speaker Change: Herbalife, we've had pretty much.

Speaker Change: Much the same approach to pricing and the compensation system to our distributors globally.

Speaker Change: And the reality is that's not really a level playing field, giving that socioeconomic differences across the different 95 markets that we're in.

John G. DeSimone: So what we did in most of Latin America, of South America, in Central America was lower the price so we could reach more consumers. That was one thing. Second,

Speaker Change: So what we did in <unk>.

Speaker Change: Most of Latin America, South America, specifically.

Speaker Change: America was.

Speaker Change: Lower the price to reach more consumers that was one thing.

Speaker Change: Second <unk>.

John G. DeSimone: Lower the compensation plan earned by distributors and us, by the way, right down. It's a little bit lower margin percentage for everybody. And third, actually make it easier for the distributor then to qualify for going up the marketing plan because the average purchase per customer in some of the poorer countries is pretty low. And so, to reach the thresholds that had previously been set, they need a lot more customers than a lot of other countries. And that creates more effort and almost an unlevel playing field.

Speaker Change: The compensation plan earned by distributors and us by the way, it's a little bit lower margin percentage for everybody.

Speaker Change: And third actually make it easier for the distributed into qualified going up the marketing plan because the average purchase for a customer in some of the poorer countries is pretty low and so to reach the threshold that had previously been set they need a lot more customers than a lot of other countries do.

Speaker Change: And that creates more effort and almost an unlevel playing field. So what we're ultimately trying to do is optimize those variables within a country to maximize the earnings and that means the earnings to the company.

John G. DeSimone: So what we're ultimately trying to do is optimize those variables within a country to maximize earnings, and that means earnings for the company and earnings for distributors. So the measure for success is, are we generating enough increase in volume to not only offset the price decrease but that we're all putting more money in the bank at the end of the day by making these changes? So that's the objective. I think it's strategic.

Speaker Change: And the earnings for distributors. So the measure for success is.

Speaker Change: Is are we generating enough increase in volume to not only offset the price decrease but that were all putting more money in the bank at the end of the day by making these changes so thats. The objective I think strategically I think it's an important pillar for the future.

John G. DeSimone: I think it's an important pillar for the future. The leaders, distributor leaders, in SAMCAM are very motivated. They've agreed to this. It's been a multi-year initiative, and we're excited about it. And we'll look at what the results are to determine if it expands and where. And I think there'll be a little bit of pull from distributors in certain markets once they see the results in SAMPAM, that will say, I think our market fits that too. Can we have it?

Sam Cam: The leaders distributor leaders and Sam Cam are very motivated.

Sam Cam: They have agreed with this.

Sam Cam: It's been a multi year initiative.

Sam Cam: And we're excited about it and we'll look at what the results are to determine if it expands that werent experience too and I think there'll be a little bit of pull from distributors in certain markets. Once they see the results in same Tam that will say I think our market fits that too can we have it in which case, we will look at the variables that need to change.

John G. DeSimone: In which case, we'll look at the very, I think strategically it's an important element of future growth, but we're just starting. Got it. That's a helpful color.

Sam Cam: Those markets. So I think strategically it is an important element of future growth.

Sam Cam: Just starting out.

Speaker Change: Got it.

Speaker Change: Helpful Color and then if I can ask just one more.

Speaker Change:

Speaker Change: Four.

Chasen Louis Bender: And then, if I can ask just one more question, about the top line growth and how to think about it. You know, you obviously are introducing this new program for the tab sales leaders, which seems like it should be a benefit, but clearly, that's focused on sales leaders who already seem like they're probably pretty productive versus you have a bunch of incoming new sales leaders who are probably going to need help, you know, quote unquote, leveling up.

Speaker Change: The topline growth and how to think about it.

Speaker Change: You obviously are introducing this new program for the Tad sales leaders, which seems like it should be a benefit but clearly thats focused on sales leaders, who already seem like theyre, probably pretty productive versus you have a bunch of incoming new sales leaders.

Speaker Change: Who are probably going to need help quote unquote leveling up. So the question is how should I think about the.

Chasen Louis Bender: So the question is, how should I think about the stepping up of productivities of new sales leaders versus the existing established ones in terms of the sustainability of growth over call it the mid to longer term? Great, Chasen, I'll take this one.

Speaker Change: The stepping up of productivity.

Speaker Change: New sales leaders versus the existing established ones in terms of the sustainability of growth over call. It the mid to longer term.

Stephan Paulo Gratziani: So it actually is a top down and bottom up approach, right? So you're absolutely right. First of all, supporting the top level leaders. They're the ones that are responsible for the go-to-market strategies, right? And they're the ones that bring in the new distributors. And they're the ones, ultimately, because they're in their organizations that have a level of responsibility to make sure that they have the skills that are necessary.

Speaker Change: Great Jason I'll take this one so it actually is a top down and bottom up approach right. So youre absolutely right first.

Speaker Change: First of all supporting the top level leaders. They are the ones that are responsible for the go to market strategies and they are the ones that bring in the new distributors and they're the ones ultimately because they are in their organizations that have a level of responsibility to make sure that they have the skills that are necessary.

Stephan Paulo Gratziani: We're looking at supporting them right now to make sure that, especially the go-to-market strategies are relevant and the most effective that they can be. And by the way, part of that, and I would say one of the benefits of being as geographically spread as we are, is that we have certain DMOs or models that are created or adopted and adapted in certain markets. Like currently, in the United Kingdom right now, out of the entire company, we have one of the best performing models, which is a version of a nutrition club.

Speaker Change: We're looking at right now supporting them to make sure, especially the go to market strategies are relevant in their most the most effective that they can be in and by the way part of that and I would say one of the benefits of being as geographically spread as we are is that we have certain deal.

Speaker Change: <unk> is our models that are that are created or adopted and adapted in certain markets. Like currently in the United Kingdom right now out of the entire company. We have one of the best performing models, which is a version of a nutrition club they call. It a breakfast budget club and it is actually probably everything that's happening around the <unk>.

Stephan Paulo Gratziani: They call it a breakfast budget club, and it is actually, out of probably everything that's happening around the world right now, creating the largest amount of recruitment, and has some of the highest productivity that's taking place, that has qualified the most amount of TAB team members over the last three or four years.

Speaker Change: World right now, creating the largest amount of recruitment has some of the highest productivity. That's taking place that qualified the most amount of tag team over the last three or four years and there is a lot of different countries that could benefit from a model like that because it fit.

Stephan Paulo Gratziani: And there are a lot of different countries that could benefit from a model like that because it fits. And so being able to transfer the details of the model to have people really understand to the extent that they need to, to be able to implement it, and then support them through the process, that's something that, unless we as a company are facilitating the communication, the education, and supporting it, it doesn't sometimes happen very naturally because you'd have to know someone in the UK to have a connection with the person that's actually doing that Go to the United Kingdom, get the information, come back, download it all, and try to understand and implement it.

Speaker Change: Being able to transfer or transferred the details of the model to have people really understand to the extent that they need to to be able to implement it and then support them through a process, that's something that unless we as a company are facilitating the communication the education and supporting it it doesn't sometimes happen.

Speaker Change: Very naturally because you'd have to know someone in the UK to have a connection with the person that's actually doing that.

Unknown Executive: The United Kingdom get the information comeback downloaded I'll try to understand and implemented so we want to do that from the from the top down and Thats part of this program is going to allow us to do the mastermind and then at the same time, we are having Premier League training, Eric we are looking at success builders in new.

Stephan Paulo Gratziani: So, you know, we want to do that from the top down. And that's part of this program is going to allow us to do the mastermind. And then, at the same time, we have Premier League training.

Stephan Paulo Gratziani: Eric, you know, we are looking for success builders and new distributors and an onboarding process. And so, you know, this will be, you know, a holistic, integrated approach. And, you know, it's not just top down here.

Unknown Executive: Distributors and an onboarding process and so this will be.

Unknown Executive: Holistic integrated approach and it's not just top down here, we will go bottom up now it's going to take time and the process.

Stephan Paulo Gratziani: We will go bottom up. Now, it's going to take time in the process. You know, we've been at this, you know, with Eric, for just, just four or five months now. And this is a longer-term process for us. But, you know, your point is very, very well taken.

Speaker Change: We've been at this for.

Speaker Change: Or was there just just for five months now and this is a longer term process for us, but your point is very very well taken and it's something that not only are we considering but we have plans to rollout.

Chasen Louis Bender: And it's something that not only are we considering, but we have plans to roll out. Got it. I really appreciate all that detail.

Speaker Change: Got it really appreciate all that detail I'll pass it on from here.

Stephan Paulo Gratziani: I'll pass it on from here. Thank you. Thank you. One moment for our next question. Our next question will come from the line of Hale Holden with Berkley. Hi, good evening.

Speaker Change: Thank you. Thank you one moment for our next question.

Speaker Change: Our next question will come from the line of Hale Holden with Barclays.

Hale Holden: John, that billion dollar debt paydown target over the next four to five years felt like it was a new, new news to me. Is the expectation that you guys would sort of pay as you go every quarter over the next couple years and chip away at it or, take it, take it more and in smaller chunks. So that, well, it is new news.

Hale Holden: Hi, good evening.

Hale Holden: John.

Hale Holden: Billion debt Paydown target over the next four to five years felt like it was a new.

John Joseph Baumgartner: New new to me.

Speaker Change: Is the expectation that you guys have sort of a pay as you go every quarter.

Speaker Change: Over the next couple of years and chip away at it or.

Speaker Change: Take it take it more in.

Speaker Change: In chunks.

Speaker Change: Well it is.

Speaker Change: New news.

John G. DeSimone: Okay, is that we're committed to paying down a billion dollars in the next four to five years. Once we pay down the 2025s, what are we going to do with that free cash? Are we going to buy back stock? And we just want to make it clear that we continue at this point, given the cost of debt and the tax friction of it, that we think, under the current circumstances, the best option is to pay down debt.

Speaker Change: Is that we're committed to paying down $1 billion next four to five years I think there was that question. That's been coming up is once we pay down. The 2025. So what are we going to do with that free cash are we going to buy back stock.

Speaker Change: We just want to make it clear that we continue at this point given the cost of debt and the tax friction of it that we think under the current circumstances. The best options to continue to pay down debt. So I think thats an important takeaway from the call.

John G. DeSimone: So I think that's an important takeaway from the call. And I think that it just transfers across. So, you know, I think that's a good idea. Second, how we do that will be circumstantial. It all depends on the maturities of the debt and what the penalties are for buying back early and how much cash we're generating, so I'd like to do it, quarter by quarter, to the extent that we can and to the extent that we can because of the interest. Great. Thank you very much.

Speaker Change: I think that it just transfers diet equity holders.

Speaker Change: I think thats a good backstop.

Speaker Change: Second how we do that will be circumstantial.

Speaker Change: It all depends on the maturities of the debt and what the penalties are for buying back early and how much cash we're generating so.

Speaker Change: Well I'd like to do it.

Speaker Change: Quarter by quarter to the extent that we can and does the economics work out because the interest cost are pretty hot.

Speaker Change: Great. Thank you very much I appreciate it.

Hale Holden: I appreciate it. Thank you. One moment for our next question, and that will come from the line of Linda Bolton Weiser with D. A. Davidson. Your line is open.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And that will come from the line of Linda Bolton Weiser with D. A Davidson your line is open.

Linda Ann Bolton: Yes, hello. Um, so I was wondering if you could give a little more color on Asia Pacific. I think you explained the weakness in China, and you mentioned a few countries in the Asia Pacific that you lowered the projections for. But I mean, it was really quite a bit worse than we had projected against an easier prior year comparison than in the first quarter. So I'm just wondering, like, are macroeconomic factors or something in the execution there? Or what? Can you give give a little more color there?

Speaker Change: Yes Hello.

Speaker Change: I was wondering.

Speaker Change: If you could give a little more color on.

Speaker Change: Asia Pacific I think you explained the weakness in China, and you mentioned a few countries in Asia Pacific that you lowered the projections for but I mean, it was really quite a bit worse than we had projected against an easier prior year comparison than in the first quarter. So I'm just wondering like isn't it.

Speaker Change: Macroeconomic factors or something in the execution, there or what can you give a little more color there.

Stephan Paulo Gratziani: Sure. Thank you, Linda. A couple of different places.

Linda: Sure. Thank you Linda.

Stephan Paulo Gratziani: Number one, in Taiwan, we had a bit of a stock issue with one of the products. Actually, that is a main driver for one of the large organizations there that, You know, has a lot of, you know, growth. So that didn't help us. Taiwan had a little bit of an impact. Indonesia, another market that, by the way, is a very, very, very big market, had a lot of clubs that closed during COVID. And I hate to talk about COVID because it seems like it's so far in the past now.

Speaker Change: So a couple of different places number one in Taiwan, we had a bit of stock issue with one of the products actually that is the main driver for one of the large organizations there.

Speaker Change: It has a lot of growth so that didn't help us Taiwan had a little bit of an impact.

Denise: Denise you another market that by the way very very very big market, but.

Stephan Paulo Gratziani: But the speed at which they've been opening up or reopening, and also just the engagement that's being created, it's just taking a little bit longer than we were hoping for. And so Indonesia, Taiwan, you know; those are kind of the main ones.

Denise: Had a lot of that did close during COVID-19 and I hate to talk about COVID-19 because it seems like it so far in the past now, but the speed at which they have been opening up of reopening.

Denise: And also just the engagement that's being created.

It's taking a little bit longer than we were.

Denise: We were hoping for.

Denise: Indonesia, Taiwan those are kind of the main one let me just talk a little bit about China, because I think China.

Denise: Really very important that we made a conscious decision to really for the first time because in China. They never had a preferred customer program. It really had a benefit to preferred customers in China when they sign up as a preferred customer unlike anywhere in the entire world. There is no discount there.

Stephan Paulo Gratziani: Let me just talk a little bit about China because I think China is, it's really very important that, you know, we made a conscious decision to really, for the first time, because in China, they never had a preferred customer program that really had a benefit for preferred customers. In China, when they sign up as a preferred customer, unlike anywhere in the entire world, there's no discount, there's really no benefit. And so we knew that that was an area that we needed to really focus on.

Speaker Change: Theres really no benefit.

Speaker Change: And so we knew that that was an area that we needed to really focus on because it's a huge consumer market.

Speaker Change: The opportunity there in terms of consumers, it's just very very big and so we developed.

Stephan Paulo Gratziani: Because it's a huge consumer market. I mean, the opportunity there in terms of consumers is just very, very big. And so we developed a loyalty program there that, for the first time, actually benefits preferred customers. And that's why we really focused on preferred customers, even when we launched the Premier League. And it's been, you know, I'll get a little bit of information on it, but in Q2 over Q1, we had a significant increase in the number of preferred customers and over last year as well.

Speaker Change: Our loyalty program there that for the first time actually benefits preferred customers and that's why we really created the focus on the preferred customers, even when we launched the Premier League.

Speaker Change: And it's been.

Speaker Change: I'll give a little bit of information on it but.

In Q2 over Q1, we had a significant increase in the amount of preferred customers and over last year as well and more importantly, what it did is it really drove the purchasers in China.

Stephan Paulo Gratziani: And more importantly, what it did is it really drove the purchasers in China an increase of over 30%, not only over Q1, but also 30% over Q2 of last year. And so it's a transition for us, because obviously, when you're bringing in more customers, maybe they're a little bit less productive in terms of what they're purchasing, compared to a sales representative. But as you build that foundation, what it does for us is it allows a lot of people and by the way, this is in India, this is one of the success, you know, factors in India, that the more customers you have, the longer they're on the product, the better results they have, the more they talk about the brand and become kind of raving fans, it just builds this foundation for them to later become sales representatives and to carry the brand and to then become active because they themselves, you know, really had a benefit and, you know, are tied to the company's products.

Speaker Change: An increase of over 30% not only over Q1, but also 30% over Q2 of last year and so it's a transition for us because obviously when youre, bringing in more customers, maybe they're a little bit less productive in terms of what they are purchasing.

Speaker Change: To a sales representative and as you build that foundation what it does for US is it allows a lot of people and by the way. This is in India. This is one of the success.

Speaker Change: Factors in India that the more customers you have the longer they are on the products. The better results. They have the more they talk about the brand and become kind of raving fans. It just build this foundation for them to later become sales representatives and to carry the brand and to then become active because they themselves.

Speaker Change: We had a benefit in.

Speaker Change: Are tied to the company's products and so these are some of the things that.

Stephan Paulo Gratziani: And so, you know, these are some of the things that, you know, are going to take a little bit of time. It's, you know, a transition, but it's an exciting future and direction for us as a company. Okay, thank you for all that.

Speaker Change: Are going to take a little bit of time, it's a transition but.

It's an exciting future and direction for us as a company.

Linda Ann Bolton: Um, can I also ask? At the North American Convention, you, I guess, announce the success builder level or new, new initiative, I guess you could call it. So that's designed to speed up the process of getting new distributors up to a higher discount level. And I guess you explained that it peels off some profit from upline distributors in order to pay lower down ones more. So I'm just wondering, conceptually, if there's more of that that needs to go on in the organization as a mature direct selling company, do you need to kind of, I guess, take away from some of the higher level distributors in order to incentivize them to drive growth more at the lower levels?

Okay. Thank you for all that.

Speaker Change: Can I also ask.

Speaker Change: So at the North American Convention.

Speaker Change: You.

Speaker Change #100: I guess announced a success build our lead.

Speaker Change #100: The level or new New initiative, I guess, you could call. It so that's.

Speaker Change #101: Designed to speed up the process of getting new distributors up to a higher <unk>.

Speaker Change #101: Count level.

Speaker Change #102: And I guess, you explained that it kills off some profit.

Speaker Change #103: From applying distributors in order to pay lower down one more so I'm just wondering conceptually if there's more of that that needs to go on in the organization as a mature direct selling company do you need to kind of.

Speaker Change #104: I guess take away from some of the higher level distributors in order to incentivize to drive growth more at the lower level. So is that something where more needs to be done even in the future.

Stephan Paulo Gratziani: Is that something where more needs to be done even in the, Yeah, Linda, so I wouldn't say that the factor of taking away from the higher levels to give to the lower levels is really what it does, because if you think about it, the more people that come into the business and that become successful, that are financially, you know, just achieving a certain level of success, they stay in the business, right? And then there's this aspect of just compounding, because you're keeping a greater percentage, they're more productive.

Speaker Change #105: Yes, so I wouldn't say that it's a factor of taking away from the higher levels to give to the lower levels really what it does because if you think about it.

Speaker Change #105: The more people that come into the business and it becomes successful that are financially.

Speaker Change #105: Just achieving a certain level of success they stay in the business right and then there is this aspect of just compounding because youre, keeping a greater percentage they're more productive.

Stephan Paulo Gratziani: It's really, I think, as we look at the company, and John spoke to that a little bit earlier, making sure that the opportunity, you know, in a company that's as diverse as we are in all the markets, is attractive, that people can join, that they can very quickly get to a point where they're making enough money, that they want to stay around, and they want to grow to that next level, because the opportunity is exciting So, you know, these are some actions we're taking now.

Speaker Change #105: It's really I think as we look as a company and John spoke to it a little bit earlier, it's making sure that the opportunity.

John Joseph Baumgartner: And in a company that's as diverse as we are in all the markets that it's attractive that people can join but they can very quickly get to a point, where they're making enough money.

Speaker Change #107: Want to stay around and they want to grow to that next level because the opportunity is exciting and interesting for them.

Speaker Change #106: These are some actions we're taking now another aspect or is it it's taken a while just as an example.

Stephan Paulo Gratziani: Another aspect of it is that it's taken a while, just as an example, you know, in LATAM, outside of Mexico. It's not like this is a new idea to make some of these adjustments, but it's taken a little bit of time for the leadership to maybe understand that the way we've done things in the past needs to change a little bit.

Latam outside of Mexico.

It's not like this is a new idea to make some of these adjustments, but it's taken a little bit of time for the leadership to maybe understand that the way we've done things in the past needs to change a little bit. So we're following the distributor lead on this and where the requests are coming for so to answer your question I believe there will be more of this at the right time and the right.

Stephan Paulo Gratziani: So we're following the distributor lead on this and where the requests are coming from. So to answer your question, I believe there will be more of this at the right time and in the right way to support the market. And overall, more people joining, more people becoming successful, more people making money, more people staying around longer and bringing other people in, it's good for the business overall. And so this is really the objective and what we're trying to accomplish with this. OK, and then, Can I just ask, too, about the Premier League... You know, I learned, you know, I guess more about it at the extravaganza. And it sounds great and all that.

Speaker Change #106: Way to support the market and overall more people joining more people, becoming successful more people, making money more people staying around longer and bringing other people. It's good for the business overall and so this is really the objective and what we're trying to accomplish with this.

Okay.

Speaker Change #108: And then.

Linda Ann Bolton: But I'm still not sure I understand other than bragging rights and hats and different merchandise they can order. And I guess maybe the Air Hori training more they get access to that. What else does the Premier League give to somebody who hits that?

Can I just ask too on the Premier League.

Speaker Change #109: I guess more about it at the extravaganza and it sounds great and all that but I'm still not sure I understand other than bragging rights that have different merits. They can order and I guess, maybe the Eric worry training, where they get access to that what else does the Premier League give to somebody who hits.

Speaker Change #108: Yeah.

Stephan Paulo Gratziani: Yeah, so I would say the training is the most important thing, right? They are, number one, part of an elite group that, you know, if we look at it, they're actually out there. They've brought a significant number of people in, they're focused on this on a yearly basis. So they are really the builders.

Speaker Change #108: Yes.

Speaker Change #110: I would say the training is the most important thing right. They are number one part of an elite groups that havent.

Speaker Change #111: We look at it they are actually out there they've brought a significant amount of people in their focus on this on a yearly basis. So they are really the builders so having access to and we just had by the way the first.

Speaker Change #111: And the excitement.

Speaker Change #111: And the energy and the focus was really amazing from our distributor leaders. There were qualified so the training number one is very important the swag as nice by the way if there is a differentiator there.

Stephan Paulo Gratziani: So having access to, and we just had, by the way, the first call, and the excitement and the energy and the focus were really amazing from our distributor leaders who were qualified. So the training, number one, is very important. The swag is nice, by the way, if there's a differentiator there.

Speaker Change #111: It's also aspirational.

Speaker Change #111: Everyone. That's a business builder wants to be a part of the program and so we've seen actually we've raised our numbers in terms of how many people have qualified and.

Stephan Paulo Gratziani: It's also aspirational. Everyone that's a business builder wants to be a part of the program. And so, you know, we've seen, actually, we've raised our numbers in terms of how many people have qualified. And, you know, if we look at this time last year or at our estimates this year, it's three, four, five times over what people would have done typically and how many would have qualified last year.

Speaker Change #111: We look at this time last year with our estimates this year.

Speaker Change #111: It's 345 fold over what people would have done typically and how many would have qualified last year. So just by having the program in having a focus it starts to create a certain amount of energy thats put towards building.

Stephan Paulo Gratziani: So just by having the program and having the focus, it starts to create a certain amount of energy that's put towards building business. And I think that's why you see in the numbers of recruiting that it actually happened higher with the higher levels of leadership, which just means more engaged, more focused leadership, which has a lot of positive knock-on effects. Actually. So, yes, it's more than swag.

Speaker Change #111: Business and I think that's why you see in the numbers of recruiting that it actually happened higher with the higher levels of leadership, which just means more engaged more focused leadership, which is.

Speaker Change #111: What a positive knock on effects actually so yes, it's more than just flag the training it's the focus.

Speaker Change #111: Focused on building and scaling businesses for our leaders so a lot of different areas, where this is going to be impactful.

Stephan Paulo Gratziani: It's the training. It's the focus. It's, you know, focused on building and scaling businesses for our leaders. So, you know, a lot of different areas where this is going to be impactful. Thank you.

Speaker Change #112: Thank you one moment our next question.

Operator: One moment for our next question, and that will come from the line of John Baumgartner with Mizuho Securities. Your line is open. Good afternoon.

And that will come from the line of John Baumgartner with Mizuho Securities. Your line is open.

John Joseph Baumgartner: Thanks for the question. Maybe first off, I wanted to come back to distributor growth, which remains pretty strong. You know, exiting Q1, when the numbers, I guess, you know, first started to pop, I think it was too soon to really ascertain the drivers of that growth. And yeah, at this point, do you have any greater visibility into the catalyst for that growth? Is it, is it simply the Eric Worre factor?

Speaker Change #113: Good afternoon, and thanks for the question.

John Joseph Baumgartner: Maybe first off I wanted to come back to the distributor growth, which remains pretty strong.

John Joseph Baumgartner: Exiting Q1, when the numbers I guess first started to pop I think it was too soon to really ascertain the drivers of that growth and at this point do you have any greater visibility into the catalyst for that is it is it simply the Eric worry factor or are there any other factors out there you think might explain the growth of the Q3.

Stephan Paulo Gratziani: Or are there any other factors out there you think might explain the growth of Q3? Yeah, I'll take that, John. So number one, when we talked about it, because obviously, we were giving kind of an initial indication into April, and, you know, early, it was very early, like you're saying, there was some, I would say, novelty, like we talked about, it was a new program, people focused on it. But what's really promising is that we saw that it really settled into increased recruiting, maybe not as much as in the first month. But the focus of them qualifying and building for the Premier League definitely has been a driver for that, you know, access to Eric has also been a driver.

Speaker Change #114: Yes, I'll take that John So number one when we talked about it because obviously, we were giving kind of initial into April.

Speaker Change #115: Earlier it was very early like you are saying.

Speaker Change #116: There were some I would say novelty like we talked about it was a new program people focused on it but what's really promising is that we saw that it really settled into increased recruiting maybe not as much as in the first month, but the focus of them qualifying and building for the Premier League definitely has been a driver for that.

Speaker Change #116: Access to Eric also has also been a driver. So we're seeing the focused which I think is the most important thing and it's a focus on our long term business building and not just hey, let me qualify for something and it's just a short term because this is a long this is a long program.

Stephan Paulo Gratziani: So, you know, we're seeing the focus, which I think is the most important thing. And it's a focus on long-term business building. And not just, hey, let me qualify for something.

Speaker Change #116: This is every single year. It will have a qualification to remain in the program and to have access to the training. So I would say that part of it is definitely there is a new program there is access to training and support.

Stephan Paulo Gratziani: And it's just for the short term because this is a long, you know, this is a long program. This is every single year; they will have a qualification to remain in the program and to have access to the training. So, you know, I would say that part of it is definitely that there's a new program, and there's access to training and support. One of the things, and it's a little bit early to talk about, because there's training that everyone that qualifies for the Premier League that they have access to, the Mastermind program, it's eventually going to end up being the same people that would be a part of it because the productivity of the group in the Mastermind will be the most productive.

Speaker Change #116: One of the things and it's a little bit early to talk about because there is a training that everyone that qualifies for primarily that they have access to the mastermind program. It's eventually going to end up being the same people that would be a part of it because of the productivity of the group and the mastermind will be the most productive and.

Stephan Paulo Gratziani: And so eventually, we see that these two programs will merge. And really, it just becomes this long-term, higher level, higher supported business builder program for the most committed, productive people, which will drive leadership in the company. So, you know, I hope that answers the question. But it's more than just this little thing that we're throwing out. There's a long-term plan for this and a level of support that, you know, we've never done as a company before on a lot of levels. Okay, okay, great.

Speaker Change #116: So eventually we see that these two programs will emerge and really it just becomes this long term higher level higher supported business builder program for the most committed productive people, which will drive the leadership in the company. So I hope that answers the question but.

Speaker Change #116: It's more than just this little thing that we're throwing out there as a long term plan for this and a level of support that.

Speaker Change #116: We've never done as a company before on a lot of levels.

John Joseph Baumgartner: And then a follow up for John, coming back to the price adjustments in LATAM, your follow up explanation makes sense in terms of the model. But this is a market where I think cumulative pricing is probably up around 7% since the beginning of COVID, give or take. And I just wanted to better understand the catalyst for this change. Were you receiving feedback that prices just became too high, whether for the category or the channel, or is this initiative something that you're sort of jumpstarting from the inside and then pushing outward? Well, I think it started about five to six, maybe even more years ago, and it actually started from an initiative by Michael...

Speaker Change #116: Okay, Okay, Great and then a follow up for John coming back to the price adjustments in Latam.

John: You follow the explanation makes makes sense in terms of the model, but this is a market where I think cumulative pricing is probably up around 30% since the beginning of Kobe give or take and I just wanted to better understand the catalyst for this change were you receiving feedback that prices just became too high whether for the category of the channel.

Speaker Change #117: Or is this initiative something that youre sort of jump starting from the inside and then pushing outward.

John: Okay.

Well I think it started about five to six maybe even more years ago.

John: And actually started from an initiative Michael.

John G. DeSimone: Pushed over to me at the time regarding the pricing of our products in certain markets because in certain markets, our products seemed to only be able to skim the top surface. And that was because of the amount of payout we had to make associated with it. So it started with us, and it started with years of communication without a distributed leader.

John: Pushed over to me at the time.

Michael O. Johnson: Regarding pricing of our products in certain markets.

Speaker Change #118: Because in certain markets, our products seem to only be able to skins top surface of consumers.

Speaker Change #119: And that was because of the amount of payout we had to make associated with those products. So it started with us and he started with years of communication with our distributor leaders.

John G. DeSimone: Trying to build confidence in what we were trying to do, trying to share in the risk associated with it, and recognizing that a lower price with a different payout could actually be more profitable from a dollar standpoint to them and us if we could reach, And so I think, I started out maybe from the inside out. But what's happened in the recent past is it's been more outside in now pulling in. It's a thought process.

Speaker Change #119: I'm trying to build confidence in what we were trying to do trying to share in the risk associated with it and recognizing that a lower price with a different payout can actually be more profitable from a dollar standpoint to them and to us. If we can reach more consumers and so I think it started out maybe from inside out but what's happened.

Speaker Change #119: In the recent past, it's been more outside in pulling out of those ideas.

John G. DeSimone: If you do scale this more broadly, I guess now it's not going to have that much of a margin impact on the overall model. But if you roll this out more broadly, where it may have an impact on margins, is the thinking that with the restructuring savings you have, the transformation program, you can basically sort of absorb that kind of downward reset margin without having an impact on the bottom line. Is that basically the thought process?

Speaker Change #120: Is the thought process. If you do scale is more broadly I guess now it's not going to have that much of a margin impact on the overall model, but if you roll this out more broadly where it may have an impact on margin is the thinking that with the restructuring savings you have the transformation program you can basically sort of absorb that kind of.

Speaker Change #120: Downward reset in margins without having the impact at the bottom line is that basically the thought process that gives you the kind of flexibility to be more creative on pricing.

John G. DeSimone: It gives you the kind of flexibility to be more creative in the pricing. So, I mean, I think we can more than offset it. So I think there's pluses and minuses to this, right? So gross profit actually has more of these types of. Pushed out, then you'll see maybe a negative impact on gross profit, but you won't see nearly as much of a negative impact on contribution margin because the payout structure is distributed.

Speaker Change #121: So I mean.

Speaker Change #122: I think we can more than offset it so I think there's pluses and minus in this space.

Speaker Change #122: So gross profit actually as more of these types of pilots us pushed out.

Speaker Change #122: Then youll see maybe a negative impact to gross profit, but you won't see nearly as negative an impact the contribution margin because of the payout structure to distributors also changes and then we can reduce our SG&A. So that's kind of a plus when you think of the countries. We're doing this with.

Stephan Paulo Gratziani: And then we can reduce our SG&A expenses. So that's kind of the plus thing when you think of the countries we're doing this with; they're not necessarily these big countries that make up the majority of our sales. But it does offer an opportunity to some of the smaller countries that may in fact be small, because the pricing only reaches, you know, the top. And John, just to add on to this also, one of the things that we're seeing, because it does make the opportunity more interesting for people, is that it really does help to drive recruitment growth because the opportunity is more interesting. And I think if you look at the Latin American numbers, it's kind of leading the worldwide in terms of recruiting.

Speaker Change #122: Not necessarily these big countries that make up the majority of our sales, but it does offer an opportunity to some of the smaller countries that may in fact be small because the pricing on the regions.

Speaker Change #122: The top tier consumer.

John: And John just to add onto this also one of the things that we're seeing because it does make the opportunity more interesting for people is that it really does help to drive also recruiting growth because the opportunities more interesting and I think if you look at the Latin American numbers, its kind of leading in the worldwide in terms of the Ricky.

John G. DeSimone: And so that's really opportunity driven, right? So people are more excited about the opportunity. They go talk to more people.

Speaker Change #123: <unk> and so that's really opportunity driven right. So people are more excited about the opportunity to go talk to more people. There's more customers that are coming in because the products are more affordable. So what ends up happening is that actually drives that which more people buying more products.

John G. DeSimone: There are more customers that are coming in because the products are more affordable. So what ends up happening is that actually drives that, which is, you know, more people buying more products. That's what we're looking for. So there's also that aspect of it that's important. Great. Thanks for your time.

Speaker Change #123: That's what we're looking for so there's also that aspect of it that's important.

Speaker Change #124: Great. Thanks for your time.

Speaker Change #124: Thank you. Thank you one moment for our next question.

John Joseph Baumgartner: Thank you. Thank you. One moment for our next question, and that will come from the line of Karru Martinson with Jeffreys. Your line is open. Good afternoon.

Karru Martinson: And that will come from the line of Kerry Martinsen with Jefferies. Your line is open.

Karru Martinson: Just following up on that, I mean, how are we thinking about pricing and the impact of inflation for the second half of the year? I mean, we'll continue to, you know, take the price increases for CPI, our look, take what let's take Latin America or Central and South America out of it. In general, we'll continue to take price at the local level. That continues to be our strategy until we make a shift to something we didn't solve.

Karru Martinson: Good afternoon.

Karru Martinson: Just following up on that I mean, how are we thinking about pricing and the impact of inflation for the second half of the year.

Speaker Change #126: Alright, we will continue to take the price increases received.

Speaker Change #128: It takes.

Speaker Change #127: Tim I'll take Latin America, Central and South America out of this comment in general will continue to take price at local CPI.

Speaker Change #127: That continues to be our strategy until we make a shift like something we did in south and Central America. So thats going to continue in the back half of the year.

Karru Martinson: So that's going to continue in the back half of the year. And so that was in our guidance. A quarter ago, nothing had changed with respect to our net sales guidance relative to price for the second half of the year versus where we were a quarter ago.

Speaker Change #127: And so that was in our guidance.

Speaker Change #127: Nothing's changed with respect to our net sales guidance relative to price for the second half of the year versus where we were a quarter ago.

John G. DeSimone: The things that have changed, the primary drivers of, again, I'm going to repeat this because I think it was asked in a couple of different ways and we started looking at it compared to last year and compared to last quarter and compared to last guidance. What's Changed in Net Sales Guidance for the Back Half of the Year? This is where we were a quarter ago, um... Lower volume in some of the countries Stephan talked about, and that has an impact on that, and an incremental cost from currency. For example, in the third quarter, there was a 200 basis point negative impact on net sales versus what we thought when we gave guidance. Quote and Go

Speaker Change #127: Things that have changed the primary drivers of again I repeat this because I think it was asking a couple of different ways.

Speaker Change #127: Looking at it compared to last year, and compared to last quarter and compared to last guidance.

Speaker Change #127: Whats changed in net sales guidance for the back half of the year versus where we were a quarter ago.

<unk>.

Stephane: Lower volume and some of the country's stephane talked about and there is an impact of that.

Stephane: And incremental cost from currency for example in the third quarter. There was a 200 basis point negative impact to net sales versus what we thought when.

Stephane: When we gave guidance.

Stephane: So even though.

Karru Martinson: We didn't give specific Q3 guidance at the end of last quarter. Inherent in our guidance for Q3, we have now that currency has now impacted us at a negative $200. That those are the drivers for the change in net sales quarter over quarter, quarter versus last guidance, and even last year. It's mostly volume.

Stephane: We didn't give specific Q3 guidance at the end of last quarter inherent in our guidance for Q3.

Stephane: We have now currency is now impacted at a negative 200 basis points that those are the drivers for the change in net sales quarter over quarter quarter versus last guidance and even last year. It is volume.

Stephane: It's mostly volume and currency.

John G. DeSimone: Certainly understood. Just on the cash generation, the debt paydown here, we're still on track to repay, I think you said last quarter, two-thirds of the 25s with cash generated this year and then the remainder for next year, correct? Well, it's not exactly the way I said it, what I didn't talk about when we would repay.

Speaker Change #129: Certainly understood.

Just on the.

Speaker Change #130: The cash generation the debt pay down here.

Speaker Change #131: We're still on track to repay I think you said last quarter two thirds of the 20 fives with cash generated this year and then the remainder.

Speaker Change #134: For next year correct.

John G. DeSimone: I talked about when we would generate the cash to be able to, and what I said is we expect to generate about two-thirds of the cash needed to pay the $262,000 this year, and we're still on track for that. And of course, you know, we did just sell, as you can see in our subsequent event, we sold an administrative building for $38 million. We've got that captioned too, so that also helps. But it doesn't mean we're going to pay it down this year.

Speaker Change #132: Well, it's not.

Speaker Change #133: Not exactly the way I said it.

Speaker Change #135: I didn't talk about when we will repay I talked about when we will generate the cash to be able to repay.

Speaker Change #133: Understood.

We expect to generate about two thirds of the cash needed to pay the 262 down this.

Speaker Change #133: This year and we're still we're still on track for that and of course, we.

Speaker Change #133: We did just so you can see in our subsequent event, we sold an administrative building for $38 million or so.

Speaker Change #133: We get that cash into so that also.

Speaker Change #133: Helps but it doesn't mean, we're going to pay down this year just the whole purpose of the comment was to get investors comfortable that we're generating enough cash to be able to pay downward in steel.

Karru Martinson: Just the whole purpose of the comment was to get investors comfortable that we're generating enough cash to be able to pay it down. Understandable. And that was actually my follow-up question: was the $38 million of proceeds eventually going to debt repayment, correct? It's fungible, right?

Speaker Change #133: Understood.

Speaker Change #136: And my follow up was 38 million.

Speaker Change #137: Proceeds eventually will go to debt repayment correct.

John G. DeSimone: I mean, we have it goes in our cash pool; our cash pool is fungible. It just means we have more cash than we would have had without having it. Thank you very much. I appreciate it.

Speaker Change #138: It's fungible right I mean, we have.

Speaker Change #139: It goes in our cash flow our cash pooling fungible.

It means we have more cash than we would've had been out of the building.

Speaker Change #140: Thank you very much I appreciate it.

William Michael Reuter: Thank you. One moment for our next question. That will come from the line of William Reuter with Bank of America. Your line is open. Hello, I have two.

Speaker Change #140: Thank you one moment our next question.

Speaker Change #140: That will come from the line of William Reuter with Bank of America. Your line is open.

William Michael Reuter: The first thing is the difference in distributor trends between the new distributors that you're getting, which are very positive, and then the total numbers. Can you lay that out a little bit more clearly? I'm still a little confused about it, and I've got a couple questions about it.

William Michael Reuter: Hello, I have two the first the difference in the distributor trends between.

Speaker Change #142: The new distributors that you're getting which are very positive.

William Michael Reuter: And then the total numbers can you lay that out a little bit more clearly I'm still a little confused on it and I've gotten a couple of questions about it.

Stephan Paulo Gratziani: To Bill, you're asking about the new versus the total? Yeah, I mean, I don't remember the verb you use, but or the adjective you use, but when you were discussing recruitment, those trends were very good. But when you look at the total numbers, like the net numbers, they are not quite as favorable. And if you could bridge those two, those two different numbers.

William Michael Reuter: Familiar youre asking about the new versus the total.

William Michael Reuter: Yes.

William Michael Reuter: Right.

Speaker Change #143: And I don't remember the verb you used but are the adjective you used but when you were discussing the recruitment.

Speaker Change #144: Those trends were very good.

Speaker Change #145: But when you look at the total numbers and that numbers are not quite as favorable and if you could ridge those two those two different numbers.

William Michael Reuter: I don't think we talked about the total. Maybe I was talking about something else, just to be sure. I don't think we discussed total numbers. Okay, I thought that there were active numbers in your slides that I was looking at prior to the call where the difference in the trends versus the recruiting numbers would be different. Is that not the case?

I don't yes, I don't think we've talked about the total maybe I was talking about something else just to be sure.

Speaker Change #145: I don't think we discuss total numbers.

Speaker Change #146: Okay I thought that there were active numbers in your slides that I was looking at.

Speaker Change #147: Prior to the call that the difference in the trends versus the recruiting numbers would be different is that not the case.

Stephan Paulo Gratziani: Well, the recruiting numbers start to add up, right? So it's cumulative over time. So if you're bringing in an X amount one month, and you're adding another, you know, group the next month, the next month, and the activity rate actually is those that are stopping being active and those that are joining that are starting to be active. So, yeah, we didn't specifically talk about that, but what ends up happening is when you've had those 12 quarters of decline in recruiting, there's a tail to it

Speaker Change #148: Well the recruiting numbers start to add on rates. So it's the cumulative over time. So if you are bringing in X amount one month and Youre, adding another group next month and next month and the activity rate actually is.

Speaker Change #148: Is that are.

Speaker Change #148: Stopping being active and those that are joining that are starting to be active. So we didn't specifically talk about that but what ends up happening is when you've had those 12 quarters of decline in recruiting theres a tail to it right. So you actually have less and less people over time now we're starting to add in and Thats why we made the comment that.

Stephan Paulo Gratziani: So, you actually have fewer and fewer people over time. Now we're starting to add in, and that's why we make the comment that that's one quarter, you know, is the beginning of the journey. What ends up happening is that you end up having, as you add on consecutive quarters and consecutive months, you'll reach the inflection point, right?

Speaker Change #148: One quarter is the beginning of the journey what ends up happening is that you end up having as you add on consecutive quarters in consecutive months Youll reach the inflection point right there'll be this this time at which kind of is the consecutive 12 quarters kind of starts to run out and then all of the add on.

William Michael Reuter: There'll be this time at which the consecutive 12 quarters kind of start to run out, and then all the add-ons meet at that point, and then that's the inflection point. So, you may not be seeing it driving now in the overall total active numbers, but eventually that point will come. Okay. And then I guess my second question is, when you talk about a billion dollars of debt reduction, and then you also have this three times the target by 25, it seems to imply that your leverage target post-25 is lower than three times.

Speaker Change #148: At that point and then that's the inflection point and so you may not be seeing it driving now in the overall total active numbers, but eventually that point will come.

Speaker Change #149: Okay, and then I guess my second question is when you talk about $1 billion of debt reduction and then you also have this three times target by 25, it seems to imply that your leverage target post 'twenty five is lower than three times is it your goal to ultimately operate with a list last levered balance.

William Michael Reuter: Is it your goal to ultimately operate with a less levered balance sheet in 26 and 27 versus the kind of target you've set out there for 25? Well, that's the outcome of what we said. I mean, our goal is situational. It's based on the cost of debt, the tax friction with the debt, and what the best use of our cash is.

Speaker Change #149: Sheep, and 26 and 27%.

Speaker Change #150: Versus your kind of target that you've set out there for 25.

John G. DeSimone: And as we stand here right now, we think the first goal of 3.0 was consistent with where we were historically for a goal, and we wanted the investors to know we think we can get there next year, and that's an opportunity. Today, the new information is, but we don't want to stop there. We actually do want to keep paying down debt. Not because we want to be below 3.0, but it's because the economics suggest that the best use of our cash is to pay down debt, which will result in us... I think it's the same way; different ways of getting to the same place.

Speaker Change #151: Well that's the that's the outcome of what we said I mean, our goal is.

Speaker Change #152: Situational based on the cost of debt the tax friction with the debt.

Speaker Change #153: What's the best use of our cash is and as we stand here right. Now we think it will continue to pay down debt. So the first goal of three point.

Speaker Change #153: It was consistent with where we were historically for a goal and we wanted to investors to know we think we can get there next year and Thats our goal.

Speaker Change #153: Today, the new information is but we don't want to stop there, we actually do want to keep paying down debt not because we want to be below 3.0, it's because the economics suggest that the best use of our cash is to pay down debt, which will result in us being below three point out.

William Michael Reuter: Okay. Thanks a lot. Have a good night. Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call over to Mr. Michael Johnson for any closing remarks. Hey, thanks, everybody, for your questions. We appreciate you being with us today. You know, Herbalife is super cool, super interesting. I've been here for a long time, and we're all focused on one thing. We know we've got to get the top line up in this company. It is goal number one.

Speaker Change #153: Great.

Speaker Change #154: I think it's the same way different ways of getting to the same place. Okay. Thanks, a lot have good night.

Thank you I'm showing no further questions in queue at this time I would now like to turn the call over to Mr. Michael Johnson for any closing remarks.

Michael O. Johnson: Hey, Thanks to everybody for your questions. We appreciate you being with us today.

Herbalife is super Cool Super interesting company.

Michael O. Johnson: Been here for a long time and we're all focused on one thing we know we've got to get the top line up in this company. What it is it is goal number one it is in everybody's DNA inside the company and the agreements for that growth or with US. We've got the best management team by far in the industry. We're focused we're nimble we're organized.

Michael O. Johnson: It is in everybody's DNA inside the company, and the ingredients for that growth are with us. We've got the best management team by far in the industry. We're focused. We're nimble. We're organized. We've got a global footprint. Stephan talked about it.

Scott: We've got a global footprint Scott talked about it that gives us incredible opportunity, we've got more engagement with distributors today on training, especially with the North American mastermind program with Eric and Stephane and many successful distributors joining together to provide higher level of training than ever before this is going to be something.

Michael O. Johnson: That gives us an incredible opportunity. We've got more engagement with distributors today on training, especially with the North American Mastermind Program with Eric and Stephan and many successful distributors joining together to provide a higher level of training than ever before. This is going to be something very, very unique and very opportune.

Scott: Very very unique and very opportunistic recruiting.

Michael O. Johnson: Recruiting, it's up after 12 quarters of decline. That is a headline for us. That's great news. It's a vital lead indicator.

Speaker Change #156: After 12 quarters of decline that is a headline for us that's great news and kept vital lead indicator. These new distributors as they get up to speed. The results are going to follow we're confident Matt and as Jay mentioned, our financial Foundation is strong and improving just came in on the question there.

Michael O. Johnson: These new distributors, as they get up to speed, the results are going to follow. We're confident in that. And as J.D.

Michael O. Johnson: mentioned, our financial foundation is strong and improving. I just came in on the question there. You know, if you asked me that question, I want to get rid of as much debt as possible. But J.D.

Speaker Change #157: Ask me that question I want to get rid of as much data as possible, but J D said, it incredibly well, which is what's the best use of cash at the moment that we have it in order to make our balance sheet stronger and our investors share even better our new management structure, it's focused on delivering nutrition products and digital tools to working side our customer.

Michael O. Johnson: said it incredibly well, which is, what's the best use of cash at the moment that we have it in order to make our balance sheets stronger and our investor share even better. Our new management structure is focused on delivering nutrition products and digital tools to work inside our customer distributors, our distributor, excuse me, DMOs, and our customer preferences. You know, and then I started this way, but I've experienced a lot at Herbalife in 21 years.

Speaker Change #157: Distributors or distributor excuse me demos in our customer preferences.

Michael O. Johnson: And as I said at the beginning, this management team is more focused and more knowledgeable about the field than, frankly, almost any management team we've had. We've had some great ones. And they know the distributors, and they understand the business.

Speaker Change #158: And then I started this way, but I've experienced a lot at herbalife in 21 years and as I said at the beginning of this management team is more focused and more knowledgeable of the field and frankly, almost any management team we've had some great ones.

Michael O. Johnson: That's the benefit of having Stephan inside the company to make sure every move we make is focused on distributor success and building that top line. We're more focused, and we're stronger than ever inside the company. With the team working closely together, top line growth is coming.

Speaker Change #158: And they know the distributors and they understand the business that's the benefit of having Stefan inside the company to make sure every move we make is focused on distributor success and building that topline where more focus and we're stronger than ever inside the company.

Michael O. Johnson: So I want to thank all of our, we've got a lot of employees and distributors who listened to this call. I want to thank them because this has been a very interesting first part of the year. We've laid off some folks. We've reorganized the company. We've become incredibly focused on making sure that every move we make in this company delivers results. So I want to thank you and, of course, our millions of customers for your support.

Speaker Change #158: With the team working closely together the topline growth I know, what's coming so I want to thank all of our I mean, we've got a lot of employees and distributors, who listen to this call I want to thank them. Because this has been a very interesting first part of the year, we've laid off some folks we've reorganized the company we've gotten incredibly focused on.

Speaker Change #158: Making sure that every move we make in this company delivers results.

Michael O. Johnson: And it wouldn't be me unless I said it at the end. Hey, let's go Herbalife. Thanks, guys. Appreciate it. This concludes today's program. Thank you all for participating. You may now disconnect.

Speaker Change #158: I want to thank you and of course, our millions of customers for your support and it wouldn't be me unless I stated at the unpaid let's go herbalife. Thanks, you guys I appreciate it.

Speaker Change #159: This concludes today's program. Thank you all for participating you may now disconnect.

Speaker Change #159: Okay.

Speaker Change #159: [music].

Speaker Change #159: Okay.

Speaker Change #159: [music].

Yes.

[music].