Herbalife Ltd.

Good afternoon, and thank you for joining the fourth quarter and four-year 2023 earnings conference call for Herbalife Limited. During the company's opening remarks, all participants will be in a listen-only mode. Following the opening remarks, we will conduct a question-and-answer session. As a reminder, today's conference is being recorded. I would now like to turn the call over to Aaron Baez, Vice President and Head of Investor Relations, to begin today's call.

Thank you, Tawanda, and good afternoon, good evening, everyone. Joining us today are Michael Johnson, our chairman and chief executive officer, Stefan Graziani, our president, and Alex Amaskita, our chief financial officer. Before we begin today's call, I would like to direct you to the cautionary statement regarding forward-looking statements on page two of our presentation and in our earnings release issued earlier today, which are both available under the investor relations section of our website. The presentation and earnings release 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 Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. 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 non-recurring items that management believes impact the comparability of the periods referenced. 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.

Thank you, Erin, and happy Valentine's Day, everybody. You know, you guys, when I returned to Herbalife in late 2022, we met in Cairo immediately. It was the 1st of November, and we set out a vision for Herbalife. And that vision is to be the world's premier health and wellness company, community, and platform. We're working on it, and we're working towards it. the results are getting very exciting 2023 though was a very challenging year we all know that so we laid out a plan to have net sales growth by the fourth quarter which we delivered our year-over-year net sales trend improved every quarter in 2023 we modernized our brand we updated our look and we modernized our digital atmosphere We enhanced our data management and transactional capabilities. We launched new websites in markets representing 70% of our sales. On the product front, we introduced 17 innovative products that supported our distributors' businesses, and we launched our first-ever vegan line. And it was so successful, the demand higher anticipated, we experienced out-of-stocks. Not proud of that, but it's been a great line with great success. We had strong cash generation. Our 2023 free cash flow exceeded 2022. We paid down debt ahead of schedule. Our transformation program, we took out $115 million out of SG&A, which exceeded the $70 million we set out to achieve. We did this through an aggressive back office consolidation. This helped us build out centers of excellence in Krakow, Guadalajara, Bangalore, and Kuala Lumpur. We employed an aggressive distributor engagement plan. Between corporate and distributor events, we're back in action. Our retention is up. Those are the news points from 2023. So now let's focus on where we're going in 2024. We know the road ahead. Our top line sales and recruiting of new distributors and customers is our number one focus. Bringing stuff on end to work with an incredible team of executives here is helping Herbalife get closer to the market, dive into analytics and data to support distributor businesses for insights and opportunity. It's allowing us to maximize sales and business opportunity through customer and distributor acquisition, productivity, and retention. We are deploying account management teams more aggressively in the field to work closely with distributors to support their distributor methods of operations in more aggressive manners. We are investing and positioning ourselves for growth through 2024. Based on our line of sight today, we are forecasting this year to be relatively flat. With that said, stay tuned. USA is our major focus. We get it. It's our home court. It's important to all of our stakeholders, to you, our investors, to our employees, and our distributors. We are in this to succeed, to get growth back into North America. We need to drive top-line growth here in the USA to get deeper and closer to the market, which is what we are doing. Great product for the market. Already mentioned the vegan line, which is an exciting product for us, opening up new customers, new distributors, and new opportunity. In the GLP world, we've just launched Nutrition Companion product combos. It is positioned to meet market demand. It's ready to support our distributors and respond to any demands they have from their customers in the marketplace. Distributors are looking at unique ways to work with their local markets alongside GLP-1 providers. There's going to be more news about this as the year unfolds. We are ready to support them in their innovation, and they bring it to us, and they enhance their markets locally. We have studied this market very, very closely. We're also excited about the CDC Diabetes Prevention Program, which allows our distributors to be more deeply trained in offering their customers a lifestyle change enhanced by weight loss and behavioral modifications. So let's summarize North America. I'm spending a lot of time there because it's so important to us. Get recruiting up. Get customers and distributors. Get more of them into Herbalife with great products, with great business opportunity, and with great innovation in our company. Get closer to our distributors and their methods of operation. Deliver a robust suite of digital and data tools that will enhance distributors' business opportunity. And deploy our events specific to DMO training. We are creating the distributor training unique to Herbalife that Stefan will detail. This will be something unique to our company and that we're very, very excited about. Let's take a look at the other major markets. We're in China. We're back in action. We have reemerged past the pandemic, post the pandemic, and past the pandemic. There has been a large amount of time spent by Stefan, the China team, and myself to engage with our China leadership, both distributors and executives, to support our business there. You see good things on the horizon in China. India continues to grow. We have a great management team there, localization of product and business opportunity, and a highly energized distributor organization that continues to push the business forward. In Mexico, we're moving forward from supply chain challenges experienced in the latter part of 2023. We limited the shortfall by working diligently, engaging with the Mexican authorities. Like North America, we're obsessively focused on both top-line growth and margin expansion. This week, we announced an incredible new relationship with the Mexico Olympic Committee. This is very exciting. It builds our brand and standing in Mexico. Some of our products will be branded with the Olympic logo. We are the supplying product partner for athletes. We are providing our science and doctor support for the Mexican Olympic Committee and athletes. This is in addition to our partnerships with the National Olympic Committees of Israel, Vietnam, Greece, and Italy. These partnerships, along with our global athletic sponsorships, including Cristiano Ronaldo and Burak Kohli, enhance our brand universally and are in line with our healthy active lifestyle values. These are great for our distributors, our customers, and our brand. So before I turn it over to Stefan, let me reiterate our goals for 2024. Sales, sales, sales, sales. Getting our organization more effective and deployed to enhance our distributors' acquisition of customers and new distributors. margin, maniacal, about cost efficiency and proper alignment of resources. And finally, let me turn to the balance sheet. This year, we will refinance our senior credit facility, and we will use our excess cash to continue to pay down debt. Now, before I turn it over to Stefan, let me just do a quick introduction of him. When we brought Stefan in to work with this management team, our whole goal was to get closer to the market, to have a distributor voice mind and mindset inside our company. His deep well of experience and knowledge has helped us already massively. He's proved to be a transformative leader, and I'm proud that we promoted him to president this year. So, Mr. President, on to you. Thank you, Michael.