Herbalife Ltd. Barclays 19th Annual Global Consumer Conference

I'm Samantha Holloway, Head of Investor Relations at Herbalife, and I'm joined by John DeSimone, our Chief Financial Officer and incoming Interim CEO. Scott Schaefer, our Senior Vice President of Finance and Transformation and incoming CFO. Before we begin, I would like to direct you to the cautionary statement regarding forward-looking statements that is available under the investor relations section of Herbalife's website. This fireside chat will include a discussion of some of the more important factors that could cause results to differ from those expressed in any forward-looking statement within the meaning of the Private Securities Litigation Reform Act of 1995. As is customary, the content of today's presentation will be governed by this language. In addition, during today's presentation, we may discuss 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 referenced.

Please refer to our investor relations website for additional information regarding these non-GAAP financial measures and the reconciliations to the most directly comparable GAAP measure. With that, I'll hand it back over to Hale.

Yeah, sure. For those who are unfamiliar with what's happened in the last few years, about three years ago, we had one of our top distributors, our second-most successful distributor in the 46-year history of the company, join as an employee. We were going through some post-pandemic challenges, as was our industry, and he was bringing a distributor perspective in. He came in as chief strategy officer, then president, and then CEO. He brought that unique angle that helped us create a vision and a strategy for the longer term. We've announced that he's going back to running his distributorship at the end of October. Incredibly grateful for the insight he brought in, for the new vision and strategy. Company's in a much better place today than it was coming out of the pandemic. Nine of our last 11 quarters, we've had local currency net sales growth.

The last four quarters, we had reported net sales growth. We have had volume growth in the last four quarters. Our balance sheet has been strengthened. 3 years ago, our leverage ratio was 3.9, gross leverage ratio. Now it is 2.7 or 2.8, in that range. We have got a new debt deal, saving a lot of money of interest. We are in a much better spot right now for Stephan now to return. Stephan is the person we are talking about, who is our current CEO, to return back to his distributorship. At the same time, just prior to this, we announced a CFO transition. When I came back to the CFO. For my background, I was CFO from 2010 to the middle of 2018. Had a couple other roles with the company after that. Semi-retired, came back in early 2024.

One of my objectives when I came back, in addition to strengthening the balance sheet, was to hire a successor. About a year ago, Scott came in, and we are very comfortable that he is the right person. We announced my retirement at the end of the year, and Scott was going to jump in on January 1st. Those two transitions were actually disconnected. I think it was fortuitous because with Stephan going back to his distributorship, I have already had a replacement. For me, I am stepping in as an interim CEO. I have been at the company for 18 years. I know the company very well. I am no longer retiring on December 31st. I will be interim for as long as it takes to find the right candidate. I think that is an important takeaway for the audience. I understand the business. We have got an incredibly strong executive team.

I will be here for as long as it takes, and I will be here for whatever transition a new CEO, whatever help they need. We are doing this in a position of financial strength, right? This is not a traditional CEO transition. In fact, we are not even losing Stephan, who is our current CEO. He is our number two distributor. In his organization, he has about half a billion USD in revenue. He has not been able to run that distributorship as CEO. It has to go in a trust. Now he gets to go back and run that distributorship, and that is one of the reasons for such a quick transition. That is just some context around the situation and both Stephan's situation, my situation, and Scott's situation.

Again, for some context, our core business is doing very well. Like I said, last four quarters, we've had volume growth, strong net sales growth. There is a vision, and the foundation of that vision is we've got 6 million members. Members are somebody who's a distributor or a preferred customer that can buy directly from us. In addition, we have millions of additional customers. When we talk about Nutrition Clubs, which we'll talk about at some point today, these are consumers coming into a fixed location to buy basically a single serve of our product. in the U.S. alone, we have 4 million customers that are not distributors. In just the U.S. alone. We have reach into tens of millions of customers, if you extrapolate out the U.S. customer base. We believe the next wave in health and wellness nutrition is personalization.

Herbalife's been grounded in personalization since it started. Our distributors ultimately create a personalized program for their customers to be successful, but it's more of a curated program. The vision going forward is more of a formulated, personalized product. Taking the data consumers have available to them today is exponentially greater than the data they've had available just a decade or 2 decades ago. It used to be just a scale, or you measure how many bench presses you could do, or there was measurements, but it was minimal. The amount of data a consumer has today with their ability to get blood work. I mean, blood work is a commodity. Anybody can go get their own biomarkers. What do you do with that data?

We want to own the space where we can take that data, whether it's biomarker data or just survey data, where you answer a series of questions, and we can create a product specifically for your needs. That is an important part of our strategy, and that's not going to change. It's a spectrum. We're personalized today on a curated standpoint. We want to go to personally formulated. We think we have the foundation for it because we've got the millions of customers. We'll have the ability to get the data. There's going to be a journey to get there on that spectrum, but that's an important part of our future.

WHOOP or Oura Ring, I mean, the amount of data is a bit. What do you do with the data? That's the confusing part for consumers. We want to be the experts that say, "Take that data. Here's what you do to improve it and reach your goals.