Herbalife Ltd. — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales reached $1.35 billion for the quarter, representing a 6.0% year-over-year increase, or 7.6% on a constant currency basis.
• Net income attributable to Herbalife was $58.8 million, with a net income margin of 4.4%; adjusted net income was $68.5 million with a margin of 5.1%.
• Adjusted EBITDA was $182.4 million, up 70 basis points year-over-year to a margin of 13.5%; adjusted EBITDA on a constant currency basis was $193.4 million.
• Diluted EPS was $0.55, an increase of $0.13 year-over-year; adjusted diluted EPS was $0.64, up $0.14 year-over-year.
• Year-to-date net cash provided by operating activities was $298.0 million, an increase of $63.0 million compared to the prior year period.
• Capital expenditures for the nine months ended September 30, 2026, were $40.7 million.
• Net interest expense savings were $19.1 million year-over-year in the third quarter due to refinancing.
• Gross profit margin was 77.3% in the third quarter, down from 77.7% in the prior year period.
• As of September 30, 2026, the company held $409.2 million in cash and cash equivalents and $2.0 billion in total debt, resulting in a net leverage ratio of 2.0x.
• Credit Agreement EBITDA for the quarter was $198.9 million.

Guidance and Future Outlook:

• Full-year 2026 net sales guidance has been revised upward on both reported and constant currency bases.
• Full-year 2026 adjusted EBITDA guidance is maintained on a reported basis but increased on a constant currency basis.
• Fourth quarter 2026 guidance includes net sales growth of +0.5% to +4.5% year-over-year (reported) and +2.5% to +6.5% (constant currency).
• Fourth quarter 2026 adjusted EBITDA guidance is $145 million to $165 million (reported) and $155 million to $175 million (constant currency).
• Fourth quarter 2026 capital expenditures are guided at $13 million to $23 million.
• Full-year 2026 capitalized and prepaid SaaS implementation costs are expected to be $35 million to $45 million, excluded from capital expenditures.
• Full-year 2026 depreciation and amortization, including amortization of SaaS implementation costs, is guided at $135 million to $145 million.
• Full-year 2026 adjusted effective tax rate is expected to be approximately 35%.

Business Segments and Product Lines:

• North America net sales increased 1.7% year-over-year, marking the second consecutive quarter of growth in the region.
• Latin America net sales grew 9.0% year-over-year (5.1% on a constant currency basis).
• Asia Pacific net sales grew 18.4% year-over-year (26.1% on a constant currency basis).
• EMEA net sales declined 4.9% year-over-year (5.2% on a constant currency basis).
• China net sales declined 22.0% year-over-year (26.4% on a constant currency basis).
• The company reported its fifth consecutive quarter of year-over-year net sales growth on both reported and constant currency bases.
• Growth was primarily driven by increased sales volume, partially offset by 160 basis points of foreign currency headwinds.

Market and Competitive Landscape:

• The company operates in more than 90 markets through independent distributors.
• Management highlighted a disciplined and balanced approach to capital allocation amidst a competitive business environment.
• The company continues to execute a roadmap for its business opportunity and digital platforms with measurable success metrics.

Risks and Challenges:

• Foreign exchange fluctuations continue to impact reported results, with the third quarter showing 160 basis points of FX headwinds.
• Gross margin was impacted by sales mix pressure and cost changes related to self-manufacturing and sourcing.
• Risks include global economic conditions, inflation, tariffs, and the ability to attract and retain members.
• Regulatory risks include the FTC Consent Order, product liability claims, and compliance with laws in China and other international markets.
• Operational risks involve sourcing ingredients, cybersecurity, and the integration of artificial intelligence.

Management Commentary and Tone:

• Scott Schaefer, CFO, stated that third-quarter net sales and adjusted EBITDA both exceeded guidance, with adjusted EBITDA margin expanding 70 basis points year-over-year.
• John DeSimone, Interim CEO, emphasized priorities of disciplined execution, profitable growth, and a focused roadmap for digital platforms.
• Management expressed confidence in the ability to return capital to shareholders through share repurchases while continuing debt reduction.
• The tone reflected confidence in the transformation progress, noting strong profitability and robust operating cash flow.

Other Key Points:

• The Board authorized a new share repurchase program of up to $250 million over three years, to be executed systematically and opportunistically beginning in the fourth quarter.
• Scott Schaefer was appointed Chief Financial Officer, effective November 1, 2026.
• John DeSimone was appointed Interim CEO, effective November 1, 2026.
• A search for the Company's next Chief Executive Officer is ongoing, overseen by a Board committee.
• No shares were repurchased under the new program during the third quarter.
• The company announced a share repurchase program in September 2026.
• The company recognized a loss on extinguishment of debt of $94.6 million for the nine months ended September 30, 2026.
• The company reclassified selling expenses and royalty overrides in the consolidated statements of income effective in the fourth quarter of 2025.