Herbalife Nutrition Ltd. (NYSE: HLF) today reported financial
results for the second quarter ended June 30, 2021:
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HIGHLIGHTS
- Second quarter 2021 net sales of $1.6 billion, a 15% increase
compared to the second quarter 2020.
- Five of six geographic regions reported year-over-year net
sales growth in the quarter with four of six regions exceeding 20%
growth.
- Second quarter 2021 reported diluted EPS of $1.31 and adjusted1
diluted EPS of $1.522, compared to $0.82 and $0.972, respectively,
for the second quarter 2020. Second quarter 2021 reported and
adjusted earnings per share increased 60% and 57%, respectively,
compared to the second quarter 2020.
- Reported net income for the quarter of $144.2 million increased
25% compared to the second quarter 2020.
- Second quarter 2021 adjusted1 EBITDA of $262.1 million
represents the largest quarterly adjusted EBITDA result in Company
history.
- Updating FY 2021 guidance, including net sales guidance range
to 8.5% to 12.5% growth, and adjusted3 diluted EPS guidance range
to $4.70 – $5.10.
- Initiating FY 2021 adjusted3 EBITDA guidance of $875 million -
$935 million.
MANAGEMENT COMMENTARY
Herbalife Nutrition reported second quarter net sales of $1.6
billion, a 15% increase compared to the second quarter 2020. This
was the largest quarterly net sales result in Company history and
reflects the Company’s growth strategy and demand for Herbalife
Nutrition products.
“We delivered double-digit net sales growth for the fourth
straight quarter,” said John Agwunobi, Chairman and CEO of
Herbalife Nutrition. “All three of our core product categories grew
double-digits, which includes the Energy, Sports and Fitness
category, which increased 45% compared to the prior year.”
The demand for the Company’s full line of nutrition products
contributed to double-digit growth in over 50 of the Company’s
markets. In addition to the 45% growth in the Energy, Sports and
Fitness category, the Company’s targeted nutrition category, which
includes vitamins and supplements, grew by 19%, while the Company‘s
core weight management product category grew by 12% in the
quarter.
Five of the Company’s six regions experienced net sales growth
with four of the regions increasing by more than 20%. In North
America, net sales increased 7% compared to the second quarter of
2020. The Asia Pacific region had another quarter of substantial
growth, up 38% compared to the prior year, led by India which grew
93% this quarter compared to Q2 2020. This growth was a testament
to the Company’s distributors as pandemic conditions continued to
impact the Asia Pacific region.
Additionally, reported net income for the quarter of $144
million increased 25% compared to the second quarter 2020. The
company reported year-to-date net income of $292 million.
“Our second quarter adjusted EBITDA of $262 million was a record
for the second quarter in a row, resulting in over $500 million of
adjusted EBITDA generated during the first half of the year,” said
Alex Amezquita, Chief Financial Officer, Herbalife Nutrition.
The Company is also seeing a higher interest in the business
from young adults. Approximately two-thirds of new distributors and
preferred customers who joined Herbalife Nutrition during the
second quarter were millennials or Gen-Z.
The Company’s revised full year 2021 guidance calls for net
sales growth to be in a range of 8.5% to 12.5%, lowering the
midpoint by 150 basis points compared to prior full year 2021
guidance. The Company also updated full year 2021 adjusted3 diluted
EPS guidance to a range of $4.70 – $5.10, increasing the midpoint
by $0.05 compared to prior full year 2021 guidance. Agwunobi added,
“We are initiating full year 2021 guidance for adjusted EBITDA3 of
$875 million - $935 million, which highlights the ongoing
profitability and underpins the cash flow generation of our
business.”
____________________
1 Adjusted diluted EPS and adjusted EBITDA are non-GAAP
measures. See Schedule A – “Reconciliation of Non-GAAP Financial
Measures” for a detailed reconciliation of these measures to the
most directly comparable GAAP measure, and a discussion of why we
believe these non-GAAP measures are useful.
2 Second quarter 2021 results were impacted by China grant
income of approximately $0.5 million, or $0.00 per diluted share
and expenses related to the China Growth and Impact Investment
Program of approximately $5.2 million or $0.04 per diluted share.
Second quarter 2020 results were impacted by China grant income of
approximately $3.3 million, or $0.02 per diluted share and expenses
related to the China Growth and Impact Investment Program of
approximately $2.3 million or $0.01 per diluted share. Second
quarter 2020 adjusted results have been updated in Schedule A to no
longer exclude China grant income.
3 Adjusted diluted EPS and adjusted EBITDA are non-GAAP
measures. See the “Outlook” discussion below and the related
footnotes and Schedule A for additional information regarding
adjusted diluted EPS and adjusted EBITDA guidance.
Second Quarter 2021 Key
Metrics
Regional Net Sales and Foreign Exchange (“FX”) Impact
Region
Reported Net Sales 2Q’21
(mil)
Growth/Decline including FX
vs. 2Q’20
Growth/Decline excluding FX
vs. 2Q’20 (a)
North America
$
411.3
6.6%
6.2%
Asia Pacific
$
391.9
37.8%
32.8%
EMEA
$
367.7
22.4%
14.8%
China
$
175.8
(16.1%)
(23.5%)
Mexico
$
118.8
23.2%
5.9%
South & Central America (b)
$
86.8
23.3%
*
Worldwide Total
$
1,552.3
15.2%
*
South & Central America excl.
Venezuela (b)
$
86.3
23.2%
24.2%
Worldwide Total excl Venezuela
(b)
$
1,551.8
15.2%
10.0%
(a) Growth/decline in net sales excluding the effects of foreign
exchange is based on “net sales in local currency,” a non-GAAP
financial measure. See Schedule A – “Reconciliation of Non-GAAP
Financial Measures” for a discussion of why we believe adjusting
for the effects of foreign exchange is useful.
(b) Venezuela has been generally impacted by significant price
increases and erosion in foreign currency exchange rates. Venezuela
represents less than 1% of the Company’s consolidated net sales.
See Schedule A – “Reconciliation of Non-GAAP Financial Measures”
for a discussion of why we believe adjusting for Venezuela is
useful.
* Figure not meaningful due to significant foreign currency
fluctuations in Venezuela and the price increases implemented as a
result thereof that, when considered in isolation, have a
disproportionately large impact on the Company’s South and Central
American region and consolidated results. Amounts were 33.5% and
10.5% for South & Central America and Worldwide Total,
respectively.
Regional Volume Point Metrics
Volume Points
Region
2Q’21 (mil)
Yr/Yr % Chg
North America
505.6
2.7%
Asia Pacific
489.9
38.9%
EMEA
445.2
9.5%
China
106.6
(26.3%)
Mexico
214.7
0.6%
South & Central America
121.1
11.0%
Worldwide Total
1,883.1
9.5%
Outlook
Following is the Company’s third quarter and updated full year
2021 guidance based on current business trends:
Three Months Ending
Twelve Months Ending
September 30, 2021
December 31, 2021
Low
High
Low
High
Volume Point Growth (Decline) vs 2020
(4.5%)
1.5%
4.5%
8.5%
Net Sales Growth (Decline) vs 2020 (a)
(1.0%)
5.0%
8.5%
12.5%
Adjusted Diluted EPS (a) (b) (c)
$1.05
$1.25
$4.70
$5.10
Adjusted EBITDA ($ millions) (a) (b)
(c)
$205.0
$235.0
$875.0
$935.0
Cap Ex ($ millions)
-
-
$160.0
$200.0
Currency Fluctuation in
Guidance
- Guidance is based on the average daily exchange rates for the
first two weeks of July 2021.
- For the third quarter 2021, net sales guidance includes a
projected currency tailwind of approximately 200bps,
adjusted(a)(b)(c) diluted EPS guidance includes a projected
currency tailwind of approximately $0.06 per diluted share, and
adjusted(a)(b)(c) EBITDA guidance includes a projected currency
tailwind of approximately $8 million, all versus the third quarter
2020.
- For the full year 2021, net sales guidance includes a projected
currency tailwind of approximately 220bps, adjusted(a)(b)(c)
diluted EPS guidance includes a projected currency tailwind of
approximately $0.15 per diluted share, and adjusted(a)(b)(c) EBITDA
guidance includes a projected currency tailwind of approximately
$20 million, all versus the full year 2020.
- Currency adjusted net sales, adjusted(a)(b)(c) diluted EPS, and
adjusted(a)(b)(c) EBITDA represent projections translated into US
dollars at currency rates equal to the average rates used to
translate 2020 third quarter and full year net sales and diluted
EPS and adjusted for items such as hedging gains/losses and
Venezuela to be directly comparable to 2020 values. See our
Company’s Form 10-Q for the three months ended June 30, 2021 and
Schedule A – “Reconciliation of Non-GAAP Financial Measures” for a
discussion of why we believe adjusting for the effects of foreign
exchange is useful.
Share Repurchase in Guidance
- With respect to guidance, the Company cannot accurately predict
the impact to its share base from any future share repurchases.
Accordingly, any impact thereof is excluded from the guidance table
above.
(a) Excludes any future potential Venezuela currency
devaluations and associated pricing and inflationary
consequences.
(b) Excludes the following items that cannot be accurately
predicted: any future potential ongoing tax effects from the
exercise or vesting of equity awards that could impact the
Company's tax rate due to the stock compensation accounting
standard, benefits from future potential China grant income, any
future potential dilution from the Company’s convertible notes due
in 2024, as well as any future impact of the China Growth and
Impact Investment Program.
(c) Adjusted diluted EPS and adjusted EBITDA guidance are
non-GAAP measures and exclude potential charges or gains that may
be recorded during the applicable period, such as, among other
things, loss contingencies, gain/loss on debt extinguishments and
refinancing, tax charges relating to tax law changes, net expenses
related to the COVID-19 pandemic, and other unanticipated charges
and event. The Company does not provide reconciliations of
forward-looking non-GAAP Adjusted EPS and adjusted EBITDA guidance
to net income, the comparable GAAP measure because the impact and
timing of these potential charges and gains cannot be determined
without unreasonable efforts due to their inherent historical
variability, complexity, and unpredictability. These items, which
are necessary for a presentation of the reconciliation to GAAP,
could have a potentially significant impact on the Company’s GAAP
results.
Earnings Conference Call
Herbalife Nutrition senior management will host an investor
conference call to discuss its recent financial results and provide
an update on current business trends on Tuesday, August 3rd, 2021,
at 2:30 p.m. PT (5:30 p.m. ET).
The dial-in number for this conference call for domestic callers
is (833) 962-1459, and (956) 394-3596 for international callers
(conference ID: 6962339). Live audio of the conference call will be
simultaneously webcast in the investor relations section of the
Company's website at http://ir.Herbalife.com.
An audio replay will be available following the completion of
the conference call in MP3 format or by dialing (855) 859-2056 for
domestic callers or (404) 537-3406 for international callers
(conference ID: 6962339). The webcast of the teleconference will be
archived and available on Herbalife Nutrition's website.
About Herbalife Nutrition
Ltd.
Herbalife Nutrition (NYSE: HLF) is a global company that has
been changing people's lives with great nutrition products and a
business opportunity for its independent distributors since 1980.
The Company offers high-quality, science-backed products, sold in
over 90 countries by entrepreneurial distributors who provide
one-on-one coaching and a supportive community that inspires their
customers to embrace a healthier, more active lifestyle. Through
the Company's global campaign to eradicate hunger, Herbalife
Nutrition is also committed to bringing nutrition and education to
communities around the world.
For more information, please visit
IAmHerbalifeNutrition.com.
Herbalife Nutrition also encourages investors to visit its
investor relations website at ir.herbalife.com as financial and
other information is updated and new information is posted.
Forward-Looking Statements
This release contains “forward-looking statements” within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Although we believe that the
expectations reflected in any of our forward-looking statements are
reasonable, actual results could differ materially from those
projected or assumed in any of our forward-looking statements. Our
future financial condition and results of operations, as well as
any forward-looking statements, are subject to change and to
inherent risks and uncertainties, many of which are beyond our
control. Additionally, many of these risks and uncertainties are,
and may continue to be, amplified by the COVID-19 pandemic.
Important factors that could cause our actual results, performance
and achievements, or industry results to differ materially from
estimates or projections contained in or implied by our
forward-looking statements include the following:
- the potential impacts of the COVID-19 pandemic on us; our
Members, customers, and supply chain; and the world economy;
- our ability to attract and retain Members;
- our relationship with, and our ability to influence the actions
of, our Members;
- our noncompliance with, or improper action by our employees or
Members in violation of, applicable U.S. and foreign laws, rules,
and regulations;
- adverse publicity associated with our Company or the
direct-selling industry, including our ability to comfort the
marketplace and regulators regarding our compliance with applicable
laws;
- changing consumer preferences and demands;
- the competitive nature of our business and industry;
- legal and regulatory matters, including regulatory actions
concerning, or legal challenges to, our products or network
marketing program and product liability claims;
- the Consent Order entered into with the FTC, the effects
thereof and any failure to comply therewith;
- risks associated with operating internationally and in
China;
- our dependence on increased penetration of existing
markets;
- any material disruption to our business caused by natural
disasters, other catastrophic events, acts of war or terrorism,
cybersecurity incidents, pandemics and/or other acts by third
parties;
- noncompliance by us or our Members with any privacy laws,
rules, or regulations or any security breach involving the
misappropriation, loss, or other unauthorized use or disclosure of
confidential information;
- contractual limitations on our ability to expand or change our
direct-selling business model;
- our reliance on our information technology infrastructure and
manufacturing facilities and those of our outside
manufacturers;
- the sufficiency of our trademarks and other intellectual
property;
- product concentration;
- our reliance upon, or the loss or departure of any member of,
our senior management team;
- restrictions imposed by covenants in the agreements governing
our indebtedness;
- risks related to our convertible notes;
- changes in, and uncertainties relating to, the application of
transfer pricing, customs duties, value added taxes, and other tax
laws, treaties, and regulations, or their interpretation;
- our incorporation under the laws of the Cayman Islands;
and
- share price volatility related to, among other things,
speculative trading and certain traders shorting our common
shares.
We do not undertake any obligation to update or release any
revisions to any forward-looking statement or to report any events
or circumstances after the date hereof or to reflect the occurrence
of unanticipated events, except as required by law.
Results of Operations
Herbalife Nutrition Ltd. and Subsidiaries Condensed Consolidated
Statements of Income (In millions, except per share amounts)
Three Months Ended Six Months Ended
6/30/2021 6/30/2020
6/30/2021 6/30/2020 (unaudited)
North America
$
411.3
$
386.0
$
771.8
$
663.7
EMEA
367.7
300.3
721.9
559.0
Asia Pacific
391.9
284.3
795.3
614.0
Mexico
118.8
96.4
237.0
211.3
China
175.8
209.5
345.1
399.4
South and Central America
86.8
70.4
182.8
161.9
Worldwide Net Sales
1,552.3
1,346.9
3,053.9
2,609.3
Cost of Sales
323.2
272.8
637.5
518.5
Gross Profit
1,229.1
1,074.1
2,416.4
2,090.8
Royalty Overrides
485.8
406.9
959.8
788.1
Selling, General, and Administrative Expenses
505.9
480.8
1,012.6
1,029.8
Other Operating Income (1)
(0.5
)
(3.3
)
(16.4
)
(12.4
)
Operating Income
237.9
189.7
460.4
285.3
Interest Expense, net
36.8
28.8
74.3
53.8
Other Expense, net (2)
24.6
-
24.6
-
Income Before Income Taxes
176.5
160.9
361.5
231.5
Income Taxes
32.3
45.8
69.9
70.8
Net Income
$
144.2
$
115.1
$
291.6
$
160.7
Weighted-Average Shares Outstanding: Basic
108.0
137.9
108.2
137.9
Diluted
110.2
140.1
110.7
140.1
Earnings Per Share: Basic
$
1.33
$
0.84
$
2.70
$
1.17
Diluted
$
1.31
$
0.82
$
2.63
$
1.15
(1) Other Operating Income for the three
and six months ended June 30, 2021 and June 30, 2020 relates to
certain China government grant income.
(2) Other Expense, net for the three and
six months ended June 30, 2021 relates to loss on the
extinguishment of the 2026 Notes.
Herbalife Nutrition Ltd. and Subsidiaries Condensed Consolidated
Balance Sheets (In millions) (Unaudited)
Jun 30,
Dec 31,
2021
2020
ASSETS Current Assets: Cash and cash equivalents
$
837.5
$
1,045.4
Receivables, net
107.4
83.3
Inventories
538.3
501.4
Prepaid expenses and other current assets
169.0
145.7
Total Current Assets
1,652.2
1,775.8
Property, plant and equipment, net
399.3
390.2
Operating lease right-of-use assets
228.4
222.8
Marketing-related intangibles and other intangible assets, net
313.0
313.3
Goodwill
99.0
100.5
Other assets
274.8
273.5
Total Assets
$
2,966.7
$
3,076.1
LIABILITIES AND SHAREHOLDERS' DEFICIT Current
Liabilities: Accounts payable
$
105.4
$
88.7
Royalty overrides
346.4
358.2
Current portion of long-term debt
26.4
22.9
Other current liabilities
610.0
657.5
Total Current Liabilities
1,088.2
1,127.3
Non-current liabilities: Long-term debt, net of current
portion
2,752.8
2,405.5
Non-current operating lease liabilities
210.1
206.7
Other non-current liabilities
206.8
192.7
Total Liabilities
4,257.9
3,932.2
Commitments and Contingencies Shareholders' deficit:
Common shares
0.1
0.1
Paid-in capital in excess of par value
306.1
342.3
Accumulated other comprehensive loss
(192.3
)
(182.2
)
Accumulated deficit
(1,076.2
)
(687.4
)
Treasury stock
(328.9
)
(328.9
)
Total Shareholders' Deficit
(1,291.2
)
(856.1
)
Total Liabilities and Shareholders' Deficit
$
2,966.7
$
3,076.1
Herbalife Nutrition Ltd. and Subsidiaries Condensed
Consolidated Statements of Cash Flows (In millions) (Unaudited) Six
Months Ended
6/30/2021 6/30/2020 CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
$
291.6
$
160.7
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
53.5
49.9
Share-based compensation expenses
27.9
22.5
Non-cash interest expense
14.4
12.8
Deferred income taxes
7.3
9.7
Inventory write-downs
13.2
8.1
Foreign exchange transaction loss
9.4
7.1
Loss on extinguishment of debt
24.6
-
Other
(0.2
)
1.2
Changes in operating assets and liabilities: Receivables
(25.5
)
(33.7
)
Inventories
(57.0
)
(19.4
)
Prepaid expenses and other current assets
(29.6
)
(18.4
)
Accounts payable
16.8
9.5
Royalty overrides
(7.0
)
29.5
Other current liabilities
(53.8
)
140.3
Other
1.3
5.2
NET CASH PROVIDED BY OPERATING ACTIVITIES
286.9
385.0
CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property,
plant and equipment
(68.4
)
(49.6
)
Other
-
0.2
NET CASH USED IN INVESTING ACTIVITIES
(68.4
)
(49.4
)
CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings from senior
secured credit facility, net of discount
345.0
30.2
Principal payments on senior secured credit facility and other debt
(205.5
)
(10.6
)
Proceeds from senior notes
600.0
600.0
Repayment of senior notes
(420.7
)
-
Debt issuance cost
(7.4
)
(6.8
)
Share repurchases
(733.2
)
(26.0
)
Other
2.0
1.6
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
(419.8
)
588.4
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS, AND
RESTRICTED CASH
(6.4
)
(23.4
)
NET CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
(207.7
)
900.6
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD
1,054.0
847.5
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD
$
846.3
$
1,748.1
Supplemental Information
SCHEDULE A: RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited and unreviewed), (All tables provide Dollars in
millions, except per Share Data)
Adjusted Net Income, Adjusted Diluted EPS and Adjusted
EBITDA
In addition to its reported results and guidance calculated in
accordance with GAAP, the Company has included in this release
adjusted net income, adjusted diluted EPS and adjusted EBITDA,
performance measures that the Securities and Exchange Commission
defines as “non-GAAP financial measures.” Adjusted net income,
adjusted diluted EPS and adjusted EBITDA exclude the impact of
certain unusual or non-recurring items such as non-cash interest
expense and amortization associated with the Company’s convertible
notes, expenses related to regulatory inquiries and legal accruals,
debt issuance costs and losses on extinguishment of debt, as
further detailed in the reconciliations below. Management believes
that such non-GAAP financial measures, when read in conjunction
with the Company’s reported results, calculated in accordance with
GAAP, can provide useful supplemental information for investors
because they facilitate a period to period comparative assessment
of the Company’s operating performance relative to its performance
based on reported results under GAAP, while isolating the effects
of some items that vary from period to period without any
correlation to core operating performance and eliminate certain
charges that management believes do not reflect the Company’s
operations and underlying operational performance. The Company’s
definition and calculation as set forth in the tables below of
adjusted net income, adjusted diluted earnings per share and
adjusted EBITDA may not be comparable to similarly titled measures
used by other companies because other companies may not calculate
them in the same manner as the Company does and should not be
viewed in isolation from nor as alternatives to net income or
diluted EPS calculated in accordance with GAAP. The Company does
not provide reconciliations of forward-looking non-GAAP adjusted
EPS and adjusted EBITDA guidance to net income, the comparable GAAP
measure, because the impact and timing of the potential charges and
gains cannot be determined without unreasonable efforts due to the
inherent historical variability, complexity, and unpredictability.
These items, which are necessary for a presentation of a
reconciliation to GAAP, could have a potentially significant impact
on the Company’s GAAP results.
In addition, China grant income is no longer excluded from the
Company’s adjusted results and prior period information has been
updated to reflect the current period presentation.
Currency Fluctuation
Our international operations have provided and will continue to
provide a significant portion of our total net sales. As a result,
total net sales will continue to be affected by fluctuations in the
U.S. dollar against foreign currencies. In order to provide a
framework for assessing how our underlying businesses performed
excluding the effect of foreign currency fluctuations, in addition
to comparing the percent change in net sales from one period to
another in U.S. dollars, we also compare the percent change in net
sales from one period to another period using “net sales in local
currency.” Net sales in local currency is not a U.S. GAAP financial
measure. Net sales in local currency removes from net sales in U.S.
dollars the impact of changes in exchange rates between the U.S.
dollar and the local currencies of our foreign subsidiaries, by
translating the current period net sales into U.S. dollars using
the same foreign currency exchange rates that were used to
translate the net sales for the previous comparable period. We
believe presenting net sales in local currency is useful to
investors because it allows a meaningful comparison of net sales of
our foreign operations from period to period. However, net sales in
local currency measures should not be considered in isolation or as
an alternative to net sales in U.S. dollar measures that reflect
current period exchange rates, or to other financial measures
calculated and presented in accordance with U.S. GAAP.
In addition, the impact of foreign currency fluctuations in
Venezuela and the price increases the Company implements as a
result of the highly inflationary economy in that market can each,
when considered in isolation, have a disproportionately large
impact to the Company’s consolidated results despite the offsetting
nature of these drivers and that net sales in Venezuela, which
represent less than 1% of the Company’s consolidated net sales, are
not material to our consolidated results. Therefore, in certain
instances, the Company believes it is helpful to provide additional
information with respect to these factors as reported and excluding
the impact of Venezuela to illustrate the disproportionate nature
of Venezuela’s individual pricing and foreign exchange impact to
the Company’s consolidated results. However, excluding the impact
of Venezuela from these measures is not in accordance with U.S.
GAAP and should not be considered in isolation or as an alternative
to the presentation and discussion thereof calculated in accordance
with U.S. GAAP.
The following is a reconciliation of net income, presented and
reported in accordance with U.S. generally accepted accounting
principles, to net income adjusted for certain items:
Three Months Ended Six Months Ended 6/30/2021 6/30/2020 6/30/2021
6/30/2020 (in millions) Net income, as reported
$
144.2
$
115.1
$
291.6
$
160.7
Expenses related to regulatory inquiries and legal accruals (1) (2)
(3)
-
0.8
-
85.3
Non-cash interest expense and amortization of non-cash issuance
costs (1) (2) (4)
5.9
5.5
11.6
10.7
Debt issuance costs related to the senior secured credit facility
amendment (1) (2) (5)
-
-
1.1
0.5
Net expenses related to COVID-19 pandemic (1) (2)
4.5
6.1
9.3
11.9
Loss on extinguishment of debt (1) (2) (6)
24.6
-
24.6
-
Non-income tax items, net (1) (2) (7)
(7.4
)
-
(7.4
)
-
Income tax adjustments for above items (1) (2)
(4.3
)
8.2
(5.5
)
(10.2
)
Net income, as adjusted
$
167.5
$
135.7
$
325.3
$
258.9
The following is a reconciliation of diluted earnings per
share, presented and reported in accordance with U.S. generally
accepted accounting principles, to diluted earnings per share
adjusted for certain items. Three Months Ended Six
Months Ended 6/30/2021 6/30/2020 6/30/2021 6/30/2020 (per share)
Diluted earnings per share, as reported
$
1.31
$
0.82
$
2.63
$
1.15
Expenses related to regulatory inquiries and legal accruals (1) (2)
(3)
-
0.01
-
0.61
Non-cash interest expense and amortization of non-cash issuance
costs (1) (2) (4)
0.05
0.04
0.10
0.08
Debt issuance costs related to the senior secured credit facility
amendment (1) (2) (5)
-
-
0.01
-
Net expenses related to COVID-19 pandemic (1) (2)
0.04
0.04
0.08
0.08
Loss on extinguishment of debt (1) (2) (6)
0.22
-
0.22
-
Non-income tax items, net (1) (2) (7)
(0.07
)
-
(0.07
)
-
Income tax adjustments for above items (1) (2)
(0.04
)
0.06
(0.05
)
(0.07
)
Adjusted diluted earnings per adjusted share (8)
$
1.52
$
0.97
$
2.94
$
1.85
The following is a reconciliation of net income, presented
and reported in accordance with U.S. generally accepted accounting
principles, to EBITDA and adjusted EBITDA:
Three Months Ended Six Months Ended 6/30/2021
6/30/2020 6/30/2021 6/30/2020 (in millions)
Net income, as reported
$
144.2
$
115.1
$
291.6
$
160.7
Interest Expense, net
36.8
28.8
74.3
53.8
Income Taxes
32.3
45.8
69.9
70.8
Depreciation and amortization
27.1
25.7
53.5
$
49.9
EBITDA
$
240.4
$
215.4
$
489.3
$
335.2
Expenses related to regulatory inquiries and legal accruals (1) (2)
(3)
-
0.8
-
85.3
Net expenses related to COVID-19 pandemic (1) (2)
4.5
6.1
9.3
11.9
Loss on extinguishment of debt (1) (2) (6)
24.6
-
24.6
-
Non-income tax items, net (1) (2) (7)
(7.4
)
-
(7.4
)
-
EBITDA, as adjusted
$
262.1
$
222.3
$
515.8
$
432.4
(1) Based on interim income tax reporting
rules, these expenses are not considered discrete items. As a
result, the Company's full year effective tax rate is impacted by
these items. When applying the full year effective tax rate to
year-to-date income, the Company's year-to-date tax provision
recorded with respect to these non-GAAP adjustments is different
from the forecasted full-year tax provision impact of these items.
As a consequence, adjustments to the year-to-date and quarterly tax
impacts will be recorded as the adjusted full year effective tax
rate is applied to income in subsequent periods. Additionally,
adjustments to items unrelated to these non-GAAP adjustments may
have an effect on the income tax impact of these non-GAAP
adjustments in subsequent periods. The Company plans to update the
income tax impact of these items in subsequent interim reporting
periods.
(2) Excludes tax (benefit)/expense as follows: Three Months Ended
Six Months Ended 6/30/2021 6/30/2020 6/30/2021 6/30/2020 (in
millions) Expenses related to regulatory inquiries and legal
accruals
$
-
$
8.1
$
-
$
(9.0
)
Non-cash interest expense and amortization of non-cash issuance
costs
0.1
0.5
0.2
0.6
Debt issuance costs related to the senior secured credit facility
amendment
-
-
(0.2
)
(0.1
)
Net expenses related to COVID-19 pandemic
(0.8
)
(0.4
)
(1.9
)
(1.7
)
Loss on extinguishment of debt
(5.3
)
-
(5.3
)
-
Non-income tax items, net
1.7
-
1.7
-
Total income tax adjustments
$
(4.3
)
$
8.2
$
(5.5
)
$
(10.2
)
Three Months Ended Six Months Ended 6/30/2021
6/30/2020 6/30/2021 6/30/2020 (per share) Expenses related
to regulatory inquiries and legal accruals
$
-
$
0.06
$
-
$
(0.06
)
Non-cash interest expense and amortization of non-cash issuance
costs
-
-
-
-
Debt issuance costs related to the senior secured credit facility
amendment
-
-
-
-
Net expenses related to COVID-19 pandemic
(0.01
)
-
(0.02
)
(0.01
)
Loss on extinguishment of debt
(0.05
)
-
(0.05
)
-
Non-income tax items, net
0.02
-
0.02
-
Total income tax adjustments
$
(0.04
)
$
0.06
$
(0.05
)
$
(0.07
)
(3) Includes legal accrual recorded during
the six months ended June 30, 2020 of $83.0 million relating to the
SEC and DOJ investigations on the FCPA matter in China as described
in the Company's Form 10-Q for the three months ended June 30,
2021.
(4) Relates to non-cash expense on the
Company's 2.625% convertible senior notes due 2024.
(5) The 2021 amount relates to costs
incurred in the amendment of the senior secured credit facility,
which, among other things, reduced the interest rate for borrowings
under the Term Loan B. The 2020 amount relates to costs incurred in
the amendment of the senior secured credit facility which, among
other things, extended the maturity, increased borrowings and
reduced interest rate of both Term Loan A and 2018 Revolving Credit
Facility. There is no per share amount for 2020 due to
rounding.
(6) Relates to the loss on the
extinguishment of the senior notes due 2026.
(7) Relates to certain non-income tax
assessments, recoveries and credits.
(8) Amounts may not total due to
rounding.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210803006072/en/
Media Contact: Jennifer Butler VP, Media Relations
213.745.0420
Investor Contact: Eric Monroe Senior Director, Investor
Relations 213.745.0449
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