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HERBALIFE LTD. (HLF)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 net sales were $1.259B, down 1.7% YoY due to 170 bps FX headwind; constant currency net sales were flat. Adjusted EBITDA was $173.6M with a 13.8% margin, modestly below last year due entirely to FX, while gross margin improved to 78.0% .
  • EPS beat and revenue missed consensus: Adjusted EPS was $0.59 vs S&P Global consensus ~$0.50*, while revenue was $1,259.1M vs ~$1,271.2M*; management raised FY 2025 net sales and adjusted EBITDA guidance, and lowered CapEx .
  • July volumes turned positive globally, with North America posting its first YoY volume growth month since April 2021—management cites momentum from MultiBurn and the Pro2col AI-assisted wellness platform beta launch .
  • Execution and debt reduction remain focal: credit agreement EBITDA was $192.4M, total leverage ratio held at 3.0x, $55M debt repaid in Q2; company targets reducing outstanding debt to $1.4B by 2028 .
  • Catalysts: Raised FY guidance; new product (MultiBurn) and platform (Pro2col) launches; distributor engagement programs; early signs of North America inflection; management expects enacted tariffs to be immaterial to 2025 results .

What Went Well and What Went Wrong

What Went Well

  • Adjusted EPS and adjusted EBITDA exceeded guidance; adjusted EPS was $0.59 and adjusted EBITDA was $173.6M, with constant-currency adjusted EBITDA $189.6M .
  • Product and platform innovation: July launch of MultiBurn (metabolic health) and beta unveiling of the AI-assisted Pro2col app; over 7,000 distributors enrolled in the beta, underscoring strong field engagement .
  • Distributor momentum and engagement: ~37,700 attendees at Q2 training events; four of five regions saw YoY growth in new distributors, led by Latin America (+16% YoY) .
  • Quote (CEO): “We delivered solid second-quarter results and raised our full-year net sales and adjusted EBITDA guidance” .

What Went Wrong

  • Reported net sales fell 1.7% YoY, near the low end of guidance, with FX headwinds of ~170 bps; adjusted EBITDA margin down 30 bps versus Q2 ’24 due to currency .
  • Volume softness persisted in several regions; e.g., Asia Pacific volumes -~3%, EMEA -~5%, North America volumes -~6% YoY in Q2, partially offset by pricing .
  • China remained challenged (reported net sales -2% YoY), and Mexico’s reported net sales -4% despite local currency growth, highlighting FX and mix pressures .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($USD Millions)$1,207.4 $1,221.7 $1,259.1
GAAP Diluted EPS ($)$1.74 $0.49 $0.48
Adjusted Diluted EPS ($)$0.36 $0.59 $0.59
Gross Profit Margin %77.8% 78.3% 78.0%
Adjusted EBITDA ($USD Millions)$150.0 $164.9 $173.6
Adjusted EBITDA Margin %12.4% 13.5% 13.8%
Net Income Attributable to Herbalife ($USD Millions)$177.9 $50.4 $49.3
Net Income Margin %14.7% 4.1% 3.9%
Q2 2025 vs ConsensusConsensus EstimateActual
Revenue ($USD Millions)1,271.2*1,259.1
EPS (Primary/Adjusted) ($)0.498*0.59

Values retrieved from S&P Global.*

Regional Net Sales ($USD Millions)Q2 2024Q2 2025
North America283.2 272.4
Latin America211.7 210.2
EMEA287.8 287.9
Asia Pacific416.7 408.6
China81.7 80.0
Worldwide1,281.1 1,259.1
KPIsQ1 2025Q2 2025
Net Cash from Operating Activities ($USD Millions)$0.2 $96.0
Capital Expenditures ($USD Millions)$18.3 $22.8
Credit Agreement EBITDA ($USD Millions)$192.0 $192.4
Total Leverage Ratio (x)3.0x 3.0x
FX Headwind (bps, YoY)480 bps 170 bps
Constant Currency Net Sales YoY (%)+1.4% 0.0% (flat)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales YoY (Reported)FY 2025(2.5)% to +2.5% (1.0)% to +3.0% Raised/Narrowed
Net Sales YoY (Constant Currency)FY 2025+0.5% to +5.5% 0.0% to +4.0% Narrowed (midpoint slightly reduced)
Adjusted EBITDA ($USD Millions, Reported)FY 2025625 – 655 640 – 660 Raised
Adjusted EBITDA ($USD Millions, Constant Currency)FY 2025690 – 720 685 – 705 Narrowed (slight downshift)
CapEx ($USD Millions)FY 202590 – 120 75 – 95 Lowered
Net Sales YoY (Reported/CC)Q3 2025n/a+0.5% to +4.5% (both) New
Adjusted EBITDA ($USD Millions)Q3 2025n/a150 – 160 (Reported); 155 – 165 (CC) New
CapEx ($USD Millions)Q3 2025n/a20 – 30 New

Management noted the constant currency midpoint was trimmed largely because Q2 came in below the CC midpoint, despite Q3 projecting YoY growth and Q4 implied growth in the internal math .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/Technology InitiativesAnnounced acquisitions: Pro2col, Link BioSciences; plan for beta in late July; platform to deliver personalized protocols Pro2col beta launched; 7,000+ distributors enrolled; app pillars (measure/do/take/community); planned Q4 U.S./PR commercial launch; staged expansion in 2026 Accelerating
Product PerformanceStrong innovation pipeline; ketone category via Pruvit assets; distributor programs supporting adoption MultiBurn launched; early sales outpacing expectations; monthly subscription option introduced Improving
Regional TrendsQ4/FY constant currency growth; mixed region dynamics; volume point adjustments Sequential improvement across all five regions; North America – first positive YoY volume month since Apr’21 (July) Improving
Tariffs/MacroGuidance framed with tariff assumptions; FX headwinds notable Includes preliminary tariff impacts; management expects immaterial effect to FY 2025; FX still hurt Q2 EBITDA by ~$16M Stabilizing (tariffs immaterial), FX easing later
Regulatory/LegalOngoing FTC consent order highlighted in risk disclosures Continued risk disclosures; focus on compliance; AI/privacy controls noted Stable
R&D / Health FeaturesGrounding in science-backed products; plans to personalize supplements via Link Bio’s tech Healthy lifespan supplement with Niagen in beta bundle; personalization roadmap including at-home tests and custom formulations Advancing

Management Commentary

  • CEO: “Herbalife is entering a pivotal new era… the beta release of our AI‑assisted Pro2col app… marks a bold and powerful first step” .
  • CEO: “With the launch of MultiBurn™, the beta unveiling of our AI-assisted Pro2col™ app… we’re taking bold steps that reinforce our commitment to innovation, transformative growth and long-term value creation” .
  • CFO: “Net sales were in line with our expectations, while adjusted EBITDA exceeded our expectations… we remain firmly on track to reduce our outstanding debt to $1.4 billion by the end of 2028” .
  • CFO on FX: Q2 adjusted EBITDA slightly below last year driven entirely by FX; constant currency adjusted EBITDA was $190M, reflecting underlying strength .
  • CFO on tax: Adjusted effective tax rate declined to 27.7% in Q2; FY 2025 adjusted ETR guided to 27–28% .

Q&A Highlights

  • Pro2col monetization: App designed as a value-add across existing portfolios and as a premium, digitally-enabled offering; subscription model economics slightly differ on first vs refill shipments; limited impact near term given initial U.S.-only launch .
  • Pricing strategy: Price increases moderated vs 2024; taken in line with market to limit risk; no material competitive pressure observed; value proposition enhanced by digital support tools .
  • Guidance mechanics: FY CC midpoint narrowed primarily due to Q2 undershooting CC midpoint; Q3 projects YoY growth, and implied Q4 growth as well .
  • FX translation lag: Top-line translation immediate, COGS impact lags one inventory turn; weaker USD benefit to margins expected to show more fully in 2026H1 if rates persist .
  • Balance sheet/refinancing: Considering refinancing post April call protection if conditions permit; leverage now under 3x vs ~3.9x a year prior, with margin improvement .

Estimates Context

  • Q2 2025 comparison: Adjusted EPS $0.59 vs ~$0.50* (beat), revenue $1,259.1M vs ~$1,271.2M* (miss). Adjusted EBITDA exceeded company guidance; FX drove the YoY EBITDA margin compression .
  • FY 2025 context: Company raised reported net sales (to -1% to +3%) and adjusted EBITDA ($640–$660M), while narrowing constant currency ranges; consensus FY EPS ~2.12* sits above H1 run-rate, implying back-half acceleration consistent with management’s guidance .

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Underlying fundamentals improving: Sequential region trends and July momentum (first North America YoY volume growth since Apr’21) suggest potential top-line inflection in 2H25 .
  • Raised FY guidance with lower CapEx: Net sales (reported) now -1% to +3%; adjusted EBITDA $640–$660M; CapEx cut to $75–$95M, reflecting disciplined capital allocation and tech spending optimization .
  • Innovation-driven catalysts: MultiBurn and Pro2col beta with 7,000+ distributor participants position HLF for enhanced engagement, personalization, and potential subscription monetization in Q4 launch and 2026 expansion .
  • FX headwinds subsiding into 2026H1: EBITDA margin pressure this quarter was FX-driven; if USD weakness persists, margin benefits should appear after inventory turn lag .
  • Debt trajectory intact: Credit agreement EBITDA $192.4M and 3.0x leverage; continued repayments, $147.3M of 2025 notes targeted for payoff by maturity, and long-dated maturities thereafter .
  • Tariffs appear manageable: Enacted tariffs included in guidance; management expects immaterial impact to FY 2025 results .
  • Trading setup: Near-term stock narrative likely keyed to 2H execution—North America recovery, Q4 Pro2col commercialization, sustained EPS beats vs consensus, and visible deleveraging progress .

Why the Quarter Landed Where It Did

  • Revenue softness primarily reflects FX (170 bps headwind) with flat constant currency sales; pricing added ~70 bps to gross margin, offset by FX (~60 bps) and small input cost inflation (~10 bps) .
  • Adjusted EBITDA margin decline (-30 bps YoY) was FX-driven; on a constant-currency basis, adjusted EBITDA rose to $189.6M, supporting the raised FY EBITDA guidance .
  • Distributor engagement remained robust; however, tougher recruiting comparisons vs April 2024 kept Q2 new distributor growth flat worldwide despite regional gains (LatAm +16%) .

Non-GAAP adjustments: Adjusted EPS and net income exclude restructuring, tech program costs, and net deferred tax effects from corporate entity reorganization (partially reducing cash taxes over time) .