Herbalife Reports Decline in Net Sales and Net Income in Q3 2024, Despite Increase in Net Income

Herbalife Ltd. reported its financial results for the third quarter and the nine months ended September 30, 2024, revealing a decline in net sales and net income compared to the previous fiscal period. For Q3 2024, net sales were $1,240.3 million, a decrease of 3.2% from $1,281.3 million in Q3 2023. For the nine months, net sales totaled $3,785.7 million, down 1.6% from $3,847.4 million in the same period last year. The decline in sales was attributed to a 5.4% decrease in Volume Points and unfavorable foreign currency exchange impacts, although partially offset by price increases.

Despite the drop in sales, net income for Q3 2024 increased to $47.4 million, up 10.7% from $42.8 million in Q3 2023. This increase was primarily due to lower selling, general, and administrative expenses and reduced royalty overrides. However, net income for the nine months ended September 30, 2024, fell to $76.4 million, a significant decrease of 42.1% from $132.0 million in the prior year, driven by higher expenses and a loss on extinguishment of debt.

Herbalife's total current assets decreased to $1,244.6 million as of September 30, 2024, from $1,399.3 million at the end of 2023. Total assets also declined to $2,653.5 million, down from $2,809.4 million. Current liabilities increased slightly, while long-term debt decreased to $1,977.9 million from $2,252.9 million, contributing to an improved total shareholders’ deficit of $(954.2) million, compared to $(1,060.3) million at the end of 2023.

The company has been actively managing its debt, having issued $800.0 million in senior secured notes in April 2024 and entering into a new credit facility. The weighted-average interest rate for borrowings under the new facility was reported at 10.05% as of September 30, 2024. Additionally, Herbalife initiated a Restructuring Program in Q1 2024 aimed at enhancing operational efficiency, with total pre-tax expenses incurred through September 30, 2024, amounting to approximately $68.2 million.

In terms of product performance, the weight management category remained the largest contributor to sales, generating $689.7 million in Q3 2024. The company continues to face challenges in various markets, particularly in China, where sales decreased significantly due to economic difficulties. Overall, Herbalife's strategic focus on pricing adjustments and operational restructuring reflects its response to current market conditions and financial performance challenges.