Herbalife Ltd.

Good afternoon, and thank you for joining the first quarter 2022 earnings conference call for Herbalife Nutrition Limited. On the call today is Dr. John Aguinovi, the company's chairman and CEO, John D. Simone, the company's president, Alex Amesquita, the company's chief financial officer, and Eric Monroe, the company's senior director, investor relations. I would now like to turn the call over to Eric Monroe, to read the company's Safe Harbor language.

Before we begin, as a reminder, during this conference call, we may make forward-looking statements within the meaning of the federal securities laws. These statements involve assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those discussed or anticipated. For a complete discussion of risks associated with these forward-looking statements in our business, we encourage you to refer to today's earnings release and our SEC filings, including our most recent quarterly report on Form 10-Q. Our forward-looking statements are based upon information currently available to us. We do not undertake any obligation to update or release any revisions to any forward-looking statement, or to report any future events or circumstances, or to reflect the occurrence of unanticipated events. In addition, during this call, certain financial performance measures may be discussed that differ from comparable measures contained in our financial statements prepared in accordance with U.S. generally accepted accounting principles referred to by the Securities and Exchange Commission as non-GAAP financial measures. We believe that these non-GAAP financial measures assist management and investors in evaluating our performance, and preparing period-to-period results of operations in a more meaningful and consistent manner, as discussed in greater detail in the supplemental schedules to our earnings release. A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release submitted to the SEC. These reconciliations, together with additional supplemental information, are available at the investor relations section of our website, Herbalife.com. Additionally, When management makes reference to volumes during this conference call, they are referring to volume points. I will now turn the call over to our chairman and CEO, John Aguinobi.

Good afternoon. Thank you for joining us on the call today. I'll jump right into our Q1 performance, where volume points for the quarter declined 7% compared to the prior year. This result was within our Q1 guidance range of down 9.5% to down 3.5%. Reported net sales for the first quarter declined 11% compared to the prior year, which was below our guidance range. The bridge between volume point and net sales results was driven by the unfavorable impact of foreign exchange rates during the quarter, as well as a shift in the geographic mix of revenue compared to our projections. We were able to deliver bottom line results at the high end of our guidance range. Reported earnings per share for the first quarter was 96 cents, and adjusted earnings per diluted share was 99 cents, near the top of our adjusted earnings per share guidance range of 80 cents to $1. Net income during the quarter was $98.2 million, resulting in adjusted EBITDA of $185.6 million, just above our adjusted EBITDA guidance range of $165 to $185 million. Overall, top-line results fell short of our expectations. From a macro perspective, we believe economic pressures from the inflationary environment and widespread geopolitical uncertainty has had an impact on our channel. Additionally, the current wave of the COVID-19 crisis in Asia Pacific and South and Central America negatively impacted the business during the quarter. And in China, the latest lockdowns have added to ongoing challenges in that market. Despite the adaptability and ingenuity of our distributor base, we've begun to see an emerging shift in behavior. Specifically, we've begun to see that as a group, the behavior of distributors that joined the business during the pandemic has diverged from historic trends. The number of distributors from this cohort that are ordering and recruiting is below last year and below expectations. However, on the positive side, This slowdown is primarily isolated to the collective performance of this pandemic-era group, as those that joined the business pre-pandemic continue to order at historical levels. Also on the positive side, we've not seen a material change in the behavior in our preferred customer segment as a whole. We believe this data, which shows consistent behavior within the pre-pandemic distributor cohort and our total preferred customer segment, demonstrates the continued strength of the foundation of our business. It also makes us believe that the return of in-person events and the numerous sales initiatives that we've implemented at a local level will act as a catalyst to improve the results. Most of the distributors that joined Herbalife during the pandemic have never been to an in-person event, and there is no substitute for gathering in person for learning, collaborating and motivating. As a result of the top-line trends observed during the first quarter and year-to-date, we are updating our guidance for the year. For the full year, we are lowering our net sales guidance to a range of down 10% to down 4%. Volume point guidance is being reduced to a range of down 12.5% to down 6.5%. Our updated guidance implies year over year, net sales will be flat in the second half of the year. And we will show growth for the fourth quarter. Our teams here at corporate and around the world are laser focused on achieving this growth. We are also focused on improving margins and controlling costs. As we discussed in detail last quarter, input cost inflation continues to be at historic levels, driving a significant rise in costs for ingredients, production and transportation of product. We are actively engaged on multiple fronts to support margin accretion. Today we're announcing that incremental pricing actions will be implemented globally in the second quarter. These price increases will partially offset the ongoing increases in input and freight costs. In addition to price, we are implementing cost control measures. We're being surgical in our approach to avoid any negative impact on sales or service to our distributors. These actions are in addition to the transformation program we announced last quarter. As such, we expect to see an improving EBITDA margin trend in the back half of 2022 compared to the first half of the year, and an accretive full year margin in 2023 compared to full year 2022. Before I turn it over to Alex, I want to say that we have an unwavering confidence in the resilience and strength of our businesses. And we're keenly focused on creating shareholder value through driving performance and returning to growth. I will now turn the call over to Alex.