Herbalife Ltd.

Good afternoon, and thank you for joining the third quarter 2024 earnings conference call for Herbal Life 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 call is being recorded. I would now like to turn the call over to Erin Baez, Vice President and Head of Investor Relations, to begin today's call. You may begin.

Thank you, and good afternoon, good evening, everyone. Joining us today are Michael Johnson, our Chairman and Chief Executive Officer, Stefan Graziani, our President, and John DeSimone, 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 the Private Securities Litigation Reform Act of 1995. 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.

Greetings, everyone. Thank you for joining us on the call today. We reinforce the strength of our financial foundation in the third quarter with both strong cash flows and adjusted EBITDA performance as we continue our journey to grow our sales. Our constant currency sales are basically flat. However, we are seeing positive trends in recruiting as we rebuild the base of our distributors and customers, which is giving us confidence for growth in the future. So let's take a look at our financial highlights, which John DeSimone will talk about in more depth later on our call. On a reported basis, quarter three net sales were 1.2 billion, which is in line with our guidance range. Quarter three adjusted EBITDA of 167 million exceeded our guidance, and our adjusted EBITDA margin is up 70 basis points versus Q3 of 2023. We saw strong cash generation in the quarter with operating cash flow of 100 million. We paid down 85 million of debt and further reduced our total leverage ratio to 3.3 times. This is part of our strategy to reduce total debt by $1 billion in under five years. In today's rapidly changing business environment, we understand the importance of evolving to meet the changing needs of the marketplace. We've modernized our brand, our business opportunity, and our products. We've accomplished a lot, and we will continue to establish ourselves as the world's premier health and wellness company, community, and platform. Our efforts have resulted in some very positive trends, including increased distributor engagement, recruitment, and activity. New distributors joining our business was up 14% year over year worldwide, representing our second consecutive quarter of year over year distributor growth following 12 quarters of recruiting decline. Distributors, as you know, are our sales force. In a consistent increase in recruiting, has historically been a sign of future sales growth. Simply put, a bigger sales organization means bigger sales. And we're investing in distributor success in significant new ways. Under Stephan's leadership, we've customized our training programs, mobilized our organization to include key account managers, and taken the best ideas from our most successful distributors and shared them with distributors worldwide. We're also localizing our marketing plan, enhancing our selling opportunity to make it easier for new distributors to get into the business, begin earning money quickly, and sustainably grow their businesses. It's going to take a little time to replenish our distributor base and get new distributors fully trained, motivated, active, and productive. With that said, momentum is building. More people attended extravaganza events worldwide this year versus 2023. And with the support of training programs like the Herbalife Premier League and our new Diamond Develop Mastermind program, we're more focused on training than ever before. The Mastermind program kicked off in the U.S. and was led by Stephan and supported by network marketing industry leader Eric Worre. We plan to expand the program to our distributor leaders in Asia Pacific in January with additional markets to follow later in the year. This new approach to training and support reinforces the significance of bringing Stefan with his years of field experience into the company as an executive. You're going to hear more from Stefan about the trends we're seeing and the initiatives we have underway in just a minute. Furthering our commitment to our distributors and to health and wellness, we've achieved a milestone in our Herbalife lifestyle program for type 2 diabetes prevention. with our first group of distributor leaders becoming certified lifestyle coaches. Herbalife is the only direct seller listed on the CDC's National Registry of Recognized Diabetes Prevention Programs. These newly trained distributor lifestyle coaches will now be able to offer the program to customers directly and through healthcare professionals. This is a huge step towards enhancing our leadership and our credibility. We're also enhancing our customer offerings by launching products that broaden our portfolio, expand our customer reach, and meet market-specific needs and preferences. In quarter three, we launched a line of Herbalife gels in EMEA, which meet stringent European Food Safety Authority standards. We also launched Herbalife 24 Prolong Energy Gel in EMEA, which was formulated alongside world-leading sports scientists and is, quote, informed, sports certified, meaning that it's tested for banned substances. Just as we believe in investing in the health of people through our products, we strongly believe in investing in the health of our planet through our sustainability initiatives. Limiting our impact on the planet is more important to the company, our distributors, and our employees as ever before. It's a principle we all live by. As an example, in quarter three, we transitioned Herbalife 24 Rebuild Strength from a plastic canister to a new modern packaging design in a pouch format for the EMEA region. The key benefits of this transition include reducing the amount of plastic we use, increasing efficiency due to lighter shipping weight, reducing our overall carbon footprint, and promoting sustainability. This is part of our broader repackaging effort, which you'll hear more about in the future. And as you know, Herbalife 24 is designed for peak performance and is trusted by many of the world's best athletes. including superstars like our own Cristiano Ronaldo. We just concluded our Feeling the Best campaign, which culminated with the 2024 Summer Olympics and Paralympics. Individual teams and athletes sponsored by Herbalife returned home with 11 medals, and the Olympic and Paralympic committees we sponsored from India, Italy, Greece, Mexico, Israel, and Vietnam earned a total of 74 medals. We're super proud of our global Herbalife athletes and congratulate all of them on their success. We're also really proud of the LA Galaxy and our long-term partnership there. In fact, Herbalife is the first and longest-running jersey sponsor in Major League Soccer. And our products are deeply embedded in the nutrition program of the Galaxy players. Their performance is because of our products and their wills. Our worldwide distributor community is excited about the playoffs. They're pulling hard for the Galaxy. and their quest for the MLS Cup. Herbalife was also among the first to recognize the power of women in sports, and we have sponsored female athletes and teams for nearly 20 years. We are better leveraging these sports sponsorships through campaigns like our new HER campaign, which highlights our long-time commitment. The campaign kicked off this month, and you can check it out on our U.S. social media channels. The campaign will launch globally in March of 2025 in conjunction with International Women's Day. Women make up approximately 70% of direct selling worldwide, and we want to inspire more women to use our products, join our business, and become part of our wonderful community. Our community of distributors and customers is one of the most powerful aspects of Herbalife. It provides us with a unique opportunity to bring people together in person. The power of this community was evident when more than 4,900 Herbalife independent distributors, fitness enthusiasts, and employees came together on September 21st and set a new Guinness World Records title for the largest high-intensity interval training class across multiple venues. There were also more than 11,000 people from all over the world who joined to work out virtually via Herbalife's YouTube live stream. While other companies today are looking for ways to eliminate people from their business, at Herbalife, we want to bring more people in. We're inclusive. We believe in the power of all people, and we're providing them with the opportunity to get healthy, make money, and join a community. And once they join us, we're doing more than ever to help them succeed. So let me turn it over to Stefan, who will give you more details about how we're doing it.