Financial Officer and Hale Holden, Barclays Managing Director and Head of U.S. High Yield Credit Research. Thank you all for being here for what I believe will be an engaging and insightful conversation. Before we begin today's fireside chat, I would like to direct you to Herbalife's cautionary statements regarding forward-looking statements included in our most recent Form 10-Q filing and earnings release, which are both available under the investor relations section of Herbalife's website. The Form 10-Q and earnings release included 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 fireside chat will be governed by this language. In addition, during today's fireside chat, we may discuss certain non-GAAP financial measures. These non-GAAP financial measures exclude certain unusual or non-recurring items that management believes impact the comparabilities of the periods referenced. Please refer to our historical earnings releases and presentation materials available under the investor relations section of Herbalife's website for additional information regarding these non-GAAP financial measures and the reconciliations to the most directly comparable GAAP measure. With that, I will now turn it over to Hale Holden of Barclays to begin today's discussion. Stephan, what's harder, talking to investors or talking to distributors? Investors, distributors, I spent 32.5 years doing it. Investors, it's been a couple of years now. All right. You've only recently become CEO. You've been on the executive suite at Herbalife for the last two years. Before that, you were a distributor, building your own Herbalife business from the ground up. You are now the first distributor-turned-CEO since the founder. Maybe talk to us about how that works for you and what your leadership approach is. In terms of leadership approach, I think the one thing is when you've spent over three decades focused on building a business that primarily is looking at going into the market and attracting people to your products and your services, and at the same time being a network marketing, multilevel marketing company, you're building an organization. I was hyper-focused to do those two things. I would say from a three-decade period of time where that is your sole focus, stepping into a position as an executive and now CEO, it's hard to take that focus away. It's something that even if I tried, I couldn't because I still think every single day about how we can, as a company now, go out and attract more customers, bring more customers into our ecosystem, attract more distributors, bring them into the ecosystem, and build a sustainable, growing business to the size and likes that I never experienced as a distributor because I wasn't in a position to actually impact the company. Do you think that gives you better credibility with the distributors as you talk to them? I think it gives them confidence to know. Who's pre-Stephan and post-Stephan? It absolutely gives more credibility. I would hope so. I would hope so. Okay. Let's talk a little bit about vision. Can you help us understand Herbalife's vision of being the world's health and wellness company, community, and platform? That's a big statement. It is, yeah. How should we as investors think about that ambition and how that drives John’s P&L? Let me just backtrack a little bit. I would say the last probably 15 years of my work being a distributor was really looking at what was taking place in the markets that I was in, which was pretty much across the world, and realizing that there were always or often shifts that would occur. I don't want to date myself, but I started in 1991 as a distributor. There really wasn't the internet the way it exists today. There was no internet in 1991. There probably wasn't within colleges and there was probably something, but I remember getting my first Mac 165, being very upset the next month when the 165c came out and it was actually a color screen, and then having email. I prodded you at $2,400. Oh my goodness. We're aging ourselves here. There was a time before you could actually send someone to a website. There was a time before someone could transact online. There was a time before someone could actually, like imagine when I started to do follow-up when I was living in Paris. If I wanted to talk to a customer in Nice, it used to cost $1 a minute or the equivalent of $1 a minute. Try to sell someone products or even follow them up at $1 a minute or train them on how to do the business. Through the three decades, there was a lot of technological advancement, just changes that happened, and learning to navigate those changes. By the way, some of them created a huge opportunity. You could send someone to a website instead of trying to explain to them, or you could actually call someone on Skype and it didn't cost you more than the internet connection. Social media came and instead of one of your clients and having their family maybe see the results or the colleagues at work, automatically 5,000 friends on Facebook could see the results. It created a big opportunity. We've had a lot of changes through the times and knowing how to adjust and adapt. To the question on the future and the platform, for us, it's a natural place for us to pivot into. We have a huge network of over 2 million distributors. We are the only direct sales company in the world that's ever built a hybrid model, meaning that we have over 60,000 brick-and-mortar locations where our products are sold out of and customers are interacting every single day with our distributors. We already have a huge network. We already are, in terms of health and wellness, very much spread across the world with this very large network. What we haven't been as of yet and where we're moving to, and I guess we'll talk about some of that today, is really developing a modern-day platform, the likes of other platforms today. For example, whether it be Airbnb or Uber or DoorDash or eBay, Amazon, these are all platforms that on one end interact with customers and on the other end interact with the service providers. That's our model. We've been for 45 years, the company, the platform, interacting with distributors and not so much with customers because our distributors were the ones that interacted with the customers. To become a modern-day platform, to become that health and wellness company, community, and platform, it really is bringing the company to become a digital-first company and connect the tens of millions of customers that we currently have, plus the tens of millions of future with the company so that we can provide more service and value to them. At the same time, with the over 2 million distributors, do the same thing in terms of being business owners. That means for us as a company really becoming a digital-first company. Although we're a nutrition company, I think if you look at health and wellness and where the world is going to, we were talking about it earlier, everyone is connected today, or not everyone. A lot of people are connected. It used to be that I would wake up in the morning and I'd say I slept well. Now I wake up in the morning and I look at my phone and I look at my WHOOP data and I see if I had how many hours of REM, how many hours of deep. It's just part of where things are going. We believe that we're at the right place because we have the existing network to be able to really become the platform that aggregates. I think for us, this is a very clear next step and what would be a very logical next step for ourselves. Before we talk about some of the acquisitions you've done, how difficult is it going to be to bring your distributors along with this journey? Because some of them, when you start adding in more tools or I don't want to say DTC because it's not in your model, but more interactivity, perhaps they can get a little upside down. Yeah, some of our distributors went there first. Okay. Many of the distributors were already wearing the wearables, already doing research, already doing biohacking because they are health and wellness enthusiasts. They follow the market. A percentage of them, if you think about it, is on a spectrum; they're already very high on that end of the spectrum. A lot of them are not. One of the advantages that we have as a company is we are in 95 markets. The United States is a very sophisticated market. In Europe, very sophisticated, a lot of competition, a lot of knowledge, a lot of information. If you go to India, where it's our largest market currently, the company is looked at as a premium brand. There's not a huge amount of competition that's there, although they're very tech-savvy. There's a lag between the U.S., for example, in terms of technology and adoption and India. To make this happen, first of all, for the more sophisticated markets and the more sophisticated consumers is important because if not, you look like a company that's basically a mid-level company. Our distributors, a lot of them are excited about the new technology and the platform and the acquisitions that we made because it gives them a way to go to market with something that's exciting that can talk to a larger spectrum of people. At the same time, to your point, the core business, that's not everybody, which by the way is a good thing because two years from now, it'll be even more. Three years from now, it'll be even more. We will, by then, for the majority of people, be offering the products and services that they're accustomed to, that the market in general has. It's just become part of what the mainstream is doing. All right, on the acquisitions that you've done, and for those that may be reading a transcript later, we're going to insert sarcasm quote-quote here, but I assume that a master of the universe, sellside banker, came into your office and was like, these are the acquisitions you should do and sourced them for you with a 50-page deck, and that's why you bought into them? Not really. No? How did you source them? One of the things that I did when I came into the company is I wanted to get in touch with what was happening in the industry. One of the first things that I did was go to an industry event where all of their direct sellers were coming together. At that event, through networking, like a lot of times what happens at events, I met a very interesting individual who was speaking about actually AI at the conference and omnichannel and was the president of a smaller direct sales company. We started to get to know each other. We kind of had a shared vision. He was based in California, so we would go on hikes and talk about business. It really came out of a conversation about the vision for Herbalife to become that platform. What ended up happening, he said, that's so crazy because that's really what we're focused on is developing the technology to do the same thing. It actually started through a networking event and through just building a relationship and through just this common vision. That's really what led to the acquisitions. John at that point stepped in and we started to really look at it from a strategic standpoint for the company if this was something that we wanted to do and aligned with us. Yeah, look, I think it connects to Stephan's vision even before he became CEO. Just by way of setup, one of our core assets is our reach into local communities on a global scale. We have over 2 million distributors, we have over 60,000, almost 64,000 nutrition clubs, that's brick-and-mortar locations around the globe. Part of the vision to leverage that asset was to digitize it. It's a very analog business that we've been operating. One way to digitize it is through this application that connects customers through distributors to the company. That piece was missing. There's a ton of value that can be created with that data, with that connection that can increase the long-term value, lifetime value of a customer and create long-term sustainable growth. That was the goal. Stephan had the vision before he even met this individual he's talking about. What he found was that the company that we ultimately acquired had a big head start on us on that digital application. That's why we ultimately purchased it. Before we talk about what you bought, the last time the company did an acquisition before 2025, John, was when? We've done a couple of small ones, nothing announceable, but pretty small. We did one, I think, in 2019. It was an ingredient company. We have this asset. There are two types of acquisitions that really, and they're all going to be small, but that really fit what would help create value for Herbalife's core business. One is, and both have to do with leveraging that asset of our distributor base and their reach into the local communities with customers. One is product. If I go back, it might have been 15 years ago, we acquired a sports brand. It might have been a little less than that. That was an opportunity to acquire a company that had great science but didn't have distribution. What did we have? We had the distribution. We acquired the sports line. That was a huge opportunity for us and a very successful one. In 2019, it was an ingredient company that we could roll out into our nutrition clubs in the U.S. We acquired that one. In this case, it's a little bit of both. It's the technology that can help leverage that distribution asset and create more value from the consumers. There's also some products that came along with the acquisition. All right. That was the sports nutrition that I was thinking about. I had missed the ingredient companies, but you've got ProveIt, Pro2col, and Link BioSciences, all somewhat connected. You've got a controlling interest in Link BioSciences. Maybe walk through what all three of those do and how they fit in and what you're hoping to get from them. I'll start and you can jump in if you want. I mean, it looks like three acquisitions, but it was really one transaction. Those three companies were very connected to each other. ProveIt was a direct seller. They were investing in the Pro2col app and tied to Link BioSciences as a way to grow their business. For us, it was a package deal. It comes with three different components. It comes with the digital product, which will meaningfully, we think, drive Herbalife sales. It came with Link BioSciences, which we bought a controlling interest of, which is really personalized nutrition, which is incredibly helpful for Herbalife. It came with ProveIt, which has product that we can use and a distributor network that we want to bring over. It really does fit three different kind of legs of our growth strategy, even though it's kind of one transaction. Yeah, I think the piece that is interesting that we haven't really maybe gone a lot into is the personalized nutrition piece. If you think of the way Herbalife and most every other company in terms of nutrition supplementation works, they come up with formulations, they manufacture, and they sell to many. Yes, it could be specific to a woman or a man or specific to some type of benefit someone's looking for, but it's a formulation of one to many. If you think of where we believe the world is going to go and where nutrition will end up going, it will become more personalized. This technology and the development of this was a process of eight years. We now have controlling interest in this process, and it is a way of formulating a one-to-one formulation. If you can imagine, I don't know how many of you in the room, how many of you take supplements? Just raise your hand. How many of you take supplements? Okay, pretty much everybody. How many of you have more than two supplements on your kitchen counter or more than three, more than four, more than five? Okay, we have five over here. How many do you have? Just a number. Nine. Okay. You have nine supplements. How many do you have, Stephan? Probably about 17. If you think of nine or five supplements that you have, there's a reason why you bought them. You heard about something, someone you met is using something, you got educated on something, and you decided to buy these supplements. You have these five or nine different supplements sitting on the counter. If you think about the future, the way the future will look is just think about taking a photo of all of the labels on the supplements and actually being able to onboard and say, "I'm a man or I'm a woman. I have this goal. Maybe I have these conditions. You know, this is what my activity, my behavior is like." It takes all of that information. You can imagine that in some of the supplements that you have, you have some redundancy. There are some ingredients that are in some that are also in others, but they're sold as units. What the AI can do and the algorithm can do and what it currently can do is look at everything that you're taking in with the inputs and come up to a one-to-one formulation. Think of putting the five maybe on the side or the nine on the side, or maybe if you're taking some omegas or something like that, you're going to still need to take those because they wouldn't be functional in that. That is the power of personalized, individualized nutrition formulated on a one-to-one basis. Now we have the majority interest in this manufacturing process and technology. It is going to give us access to a broader spectrum of customers. It's the beginning. It is something also that we believe will be playing a very important role in the future. It was an opportunity for us as a company to jump ahead and be leading in something where we believe science and technology and nutrition is going to go in the future. It's all of the pieces together. How do the distributors get? I have my own distributor. I connect with her and she convinces me that this is a good idea for me. We have to take my biomarkers in theory. Presumably, you don't want her taking my blood. How do I input myself into the? Yeah, it's really interesting because if you look at it, and I don't know if you know what your Instagram reel looks like or where you spend time, but you know. It's scary. It's scary, right? The Function Healths of the world, I don't know if you are listening to podcasts or the types of things that you listen to, but there is a pretty quickly advancing world of biomarkers and concierge health and wellness and support. Obviously, we're not doctors. What we want to do as a company is make available services and products at scale and less expensive for customers and for our distributors to be able to go to market with something. I will tell you that we're in the process right now of looking at different types of testing. These would be at-home tests so people don't have to, and we're not doctors. It's making the service available to them so they can have access to it in an easy way. Unlike some of the other companies, Function, for example, is a newer company. What they've done is that they've built a platform to be able to give people access to go and to get their blood drawn and then to give them the information and connect them to someone that can help them. Think of Herbalife as a platform aggregating whether it's wearables, whether it's different services and information, and being the place that also holds information and can personalize and customize your nutrition aspect, but also have a coach and be a part of a community. We were talking earlier that for you, the WHOOP, the biggest aspect is the community. That's our superpower. That's our strength. That's what we've built 45 years of. It's what really makes a difference in people's lives when they're actually going for any type of objective. Like we were talking about it earlier, whether you keep the WHOOP or not, and whether you up the membership, what you love about it is the community. That's really the aspect of Herbalife that makes it work because the individual relationship and the community and the support, it's, do you know how you should, how many cups of water you should drink? Do you know what you should eat? Do you know when you should stop eating? We all know those things. The question is, what does it take to do it? Right. Because you keep bringing the WHOOP up, the WHOOP is a subscription model for me. I pay once a year. They do have the medical aspect they haven't rolled out. What's the revenue opportunity? What's the revenue model for Pro2col and how does it fit with the current distributor base? Sure. I'll start. I'll put it into four buckets just to keep it easy to memorize. It's a health and wellness app for those who are unfamiliar with it. That in itself will be a revenue-generating opportunity for us because the app adds value. I don't want to forget this, so I'm going to say it now. One of the differentiating factors for Herbalife with this app that most other companies don't have is we already have the customers. We already have 2 million distributors with tens of millions of customers looking for the app. We don't have a CAC issue. It's almost no cost to get those customers. They're looking for this app. That app itself can generate revenue. That's one. Two, there are products we're launching through the app that will be incremental product sales that we don't have today. When we launched the app in beta form last month, we launched a new product also with it. That's another opportunity for incremental sales. Three, subscription revenue. It's kind of a subset of the other ones, but I like for it to stand out because a lot of companies in our business have a large% of their revenue drive to subscription sales. We have almost none, but these products lend themselves to subscription sales. It's a little more recurring revenue, very more easily predictable. Lastly, and I actually think what's going to be the most value in the near term is the acquisitions and the launch of the app has generated a lot of energy within our salesforce in general. We're seeing that activity translate into more Herbalife sales, right? Which is just an energy infusion into the distribution network. We've seen that before, how you mentioned Herbalife24. When we bought the sports line, the value created through our distributor network was much greater than just the sales of the sports products. I think that's what we're going to see with the Pro2col. Presumably, you can sell the sports products through Pro2col too at some point. Yeah, there's a lot of crossover sales that'll happen. There's a lot more opportunities, but those are the four simple buckets to remember, right? There'll be incremental opportunities beyond that. I think it's also important to level set that it's probably a revenue opportunity not for 2025, but for outer years. We launched it in beta form last month, or it was actually July. It'll be relaunched commercially in the U.S. sometime in Q4, maybe in two stages, and then roll it out into other regions next year. Yeah, it's much more of a 2026 event. It'll have a little impact in 2025, with the exception of that indirect energy infusion. You'll see more of that this year. Okay. Let's talk a little regionally. North America, we've seen net sales trends improve. You mentioned on the last earnings call that July was the first instance of a year-over-year volume growth in North America since April 2021, which for me was a big deal. Maybe you can walk through what you're doing with the nutrition clubs or with North America generally that's driving some of the stability and how we get back to small growth there, I guess. Yeah, I mean, I'm going to step back for a second and do a little setup and then answer the question. Over the last seven quarters, we've had five of those quarters with constant currency net sales growth on a global basis. The two quarters that didn't grow on a constant currency basis were down 10 bps and 30 bps, so pretty close to flat. Sales have been stabilized, at least on a constant currency basis globally. We've had a headwind for currency that's now turning into a tailwind, so that's nice. Within that global number, there was a big drag from the U.S., right, from North America, who was underperforming. Their volume was down 8% in Q1, 6% in Q2. In July, it was the first quarter of volume growth we've seen, as you said, in over four years. Some of that is that energy infusion that took place with the launch. Some of it is we launched some new products. We did want to, it doesn't mean we're going to necessarily have volume growth in North America in the third quarter, but definitely meaningful sequential improvement in Q3 over Q2. It doesn't mean we won't have volume growth. I just don't know if it'll extend to full volume growth. It's a sign of the stability being rebuilt in the U.S. I think that's important for our investors that are in the U.S. I think showing the U.S. that can turn around, be stable, and then inflect into growth builds credibility into the whole business. I think it's super important for a lot of reasons. Yeah. Let's just leave that there. Stephan, maybe you could talk about the nutrition clubs and how that has improved and some of the stuff you're doing there to convert customers. Yeah, so. Longer-term customers, you know. I think the business in the U.S., a good part of it is based in the nutrition club model, which is a fantastic model. I mean, you know, we have approximately 10,000 nutrition clubs in the U.S., 4 million consumers walking in and purchasing some 50 million transactions. It's a great business. It's a great recurring revenue. It's great for the distributors. Where the opportunity lies is in the conversion of those customers walking in to actually be customers that will buy something and start using it at home, to put the supplements on their counter. What we find is that because of the model of the nutrition clubs, which is super strong, it's more of a consumption-based, basically sale. It's transactional. Someone comes in at lunchtime, they have a shake, they maybe have a tea, they go home, they may come back twice a week, three times a week. It's great. We love it. Having the time to bring them into a conversation about their health and their wellness, it's not something that's easily done from the person behind the counter who's trying to just at lunchtime serve 50 or 60 or 70 customers. There's a huge amount of excitement from the distributors, especially some of the leaders who have very large organizations that see Pro2col as a way for them to start a simple conversation. Just to kind of back to my past as a distributor, a lot of what I spent time on, especially the last four or five years, was developing a lot of digital marketing and tools and sales processes because the company didn't really offer those things. It was my responsibility as a distributor. I had to figure out how to go after the customer and to bring them in and to convert. First time ever as a company, not only are we launching the application, but we're also launching a tool set for all of the distributors, including nutrition club owners, to be able to attract and bring customers into a flow. Something as simple as a QR code that sits at the cash register that says, "Answer nine questions about your health and receive $4 off your next visit." That gets them into a process of answering some questions so that now there can be an engagement process and that's semi-automated and can bring someone through and actually have them looking at their health and wellness and offering them a solution. The nutrition club business is super strong. We're seeing recovery there. At the same time, we know that there's this huge opportunity because the 4 million customers, a very small percentage of them are brought in to be consumers for the health and wellness part outside of the transactional part. That's just one element. There are other elements. I would say it's very promising for the U.S., and we're very excited. We, as we committed to commercialize in Q4, I think by the time we get through the first quarter of next year, we're going to have the data of all the customers that have come in. We will, for the first time in 45, 46 years, have two types of customers: customers that have come through this process and then customers that have come through other processes, and being able to look at their behaviors, the retention of those customers, the volumes that they're purchasing, the LTV, and start making comparisons. It's an iterative process. It's just the beginning for us, and that is the beginning of this modern platform that we are developing into as a company. All right. I'm going to skip around my question list here a little bit because we've got four minutes left. GLP-1's friend or foe? I would say friend. I think that it's something that, number one, people are focused on weight loss. By the way, I say friend for us. I don't know if it's the $2 billion lawsuits and the 1,800 people currently that are, you know, in the process of the suit, if it's friendly in that way. I think that there's a lot that we don't know yet. I think that as a company, we have basically three ways we look at it. If people want to be on GLP-1s, we want to support them. We want to make sure their bone health, their muscle retention, that they're getting good nutrition. If they're not eating, if they're eating less, they're getting the best nutrition possible. We want to be there as a support if they choose to go down that route. If they choose not to go down the route and they want a more natural solution, we're going to be there for them. If they choose to go down that route and then as they come off the off-ramp and now they want to maintain, because they don't want to do that for the rest of their lives, we'll be there to meet them at the off-ramp. For us, we want to be there and support no matter what, wherever someone's at in their journey. That's the most important thing. This is not a $2 billion lawsuit against you, though, right? No, no, no. Otherwise, away. Correct. Yeah. Novo Nordisk. Okay. And Ozempic. Yeah. Yeah. Thanks for the. Yeah, I appreciate it. Problem. For the transcript, thank you very much. No sarcasm quotes there. John, can we talk about guidance for a little bit? Sure. Because the company had a couple of years, really in between your tenure, that guidance was a little rocky or not achievable, but now you've got three quarters of hitting guidance. I think one of the things that some investors have is how is your ability to predict quarter annual guidance and how you feel that you have a handle on it or not a handle on it when you provide it to the street? I like the way you started the question that, you know, we've exceeded our EBITDA guidance now for six or seven straight quarters. We have a tight control on expenses. We have a tight control on anything capital that goes out the door. We have a very robust forecasting process. I think when it comes to revenue, it's a little, you know, a little more risk on the revenue side. Although we've gotten really good and the models are converging, we use a lot of different models to predict revenue and they've been converging. We've been really good on revenue projections too. On EBITDA, I want to say we run it like a PE firm. All new hires go through a new hire committee of executives. There's a small group of executives that control spending really well and that's how we were able to, so we have a robust forecast process and we have a really tight control on spending. Which, given the amount of countries that you operate in and the fact that you don't fully control or you don't control your sales force. It doesn't matter what country you're in, if you want to hire somebody new, even a replacement, it comes through a small group of corporate committee. We meet every two weeks. Everything gets relooked at in the eyes of, oh, I have to present it to the Executive Committee. Do I really need it? That in itself is a good control. We do the same thing with intake for tech requests. Like I said, it's almost like a PE mindset inside. Let's talk about, in the last 30 seconds you have here, valuation of your stock. It's been up, it's been down, it's been sideways. I'll happily take it. You know, we met with an investor today who said our valuation is abysmally low. That's true. For a company that generates a lot of cash, we generate cash. Even in our lean years, we generated cash. For a company that is stable in sales, for having EBITDA multiple of what we have is unheard of. I think that's just nothing but opportunity. The thesis that I would put forward that I think creates value for shareholders is, I'll put it in four buckets. One is we're going to pay off a lot of debt. That money transfers, that value transfers from debt holders to equity holders. You could double the stock just based on what we've committed to pay down debt between now and the end of 2028. Second is margin enhancement. We went from 11.3% adjusted EBITDA in 2023 to 12.7% last year, and we're going to beat that this year. Our margins are coming back. Our sales have stabilized, hopefully inflecting to growth. This is the first quarter, I think, we're guiding to net sales growth since I've been back. All of that should lead to an EBITDA multiple that, at worst case, goes from abysmally low to low, and you can make a lot of money, right? I mean, there's just a real opportunity. I think once the U.S., again, we started to see some strong numbers in the U.S., Aaron and I will get on the road, meet more investors, tell the story. We're starting to get more access to investors, and I think that's important for getting the multiple up, which I think is really where the value can be created. All right, I think that's it. We have you guys in the breakout for anybody who wants to join around the corner. Thank you very much. Thank you. Thank you. Thank s.