Good afternoon, and thank you for joining the Third Quarter 2025 Earnings Conference Call for Herbalife Limited. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the call over to Erin Banyas, Vice President and Head of Investor Relations, to begin today's call. You may begin.

Thank you, and good morning, good afternoon or good evening to everyone joining us. Joining us today are Stephan Gratziani, our Chief Executive Officer; and John DeSimone, our Chief Financial Officer. Before we begin today's call, I would like to direct you to the cautionary statement regarding forward-looking statements on Page 2 of our presentation and in our earnings release issued earlier today, which are both available under the Investor Relations section of our website. The presentation and earnings release include a discussion of some of the 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 call and presentation will be governed by this language. In addition, during today's call, we will be discussing certain non-GAAP financial measures. These non-GAAP financial measures exclude certain unusual or nonrecurring items that management believes impact the comparability of the periods referenced. Please refer to our earnings release and presentation materials for additional information regarding these non-GAAP financial measures and the reconciliations to the most directly comparable GAAP measure. And with that, I will now turn the call over to our CEO, Stephan Gratziani.

Thank you, Erin, and good afternoon, everyone. When we met last quarter, I reiterated our vision to be the world's premier health and wellness company, community and platform. I talked about how Herbalife was in motion, honoring our 45-year legacy while transforming for the future. This quarter, we made great progress against our strategy and we're turning the corner. Disciplined execution, strong operating fundamentals and aligned leadership are accelerating momentum and strengthening confidence in our path forward. We have a clear vision and we're executing against it. Let me walk you through the progress we made in Q3. The headline is clear. Herbalife returned to net sales growth in North America and on a worldwide basis. This is a significant milestone. For North America, it marks the first quarterly increase since the second quarter of 2021 and is a reflection of nearly 2 years of disciplined execution and foundational work across every level of the business. On a worldwide basis, it is our first quarter of net sales growth since Q1 of 2024. Q3 net sales were $1.3 billion, up 2.7% year-over-year and above the midpoint of our guidance range. On a constant currency basis, net sales were up 3.2% and towards the upper end of guidance. Adjusted EBITDA of $163 million exceeded guidance. We fully repaid the 2025 notes in September, leaving no significant debt maturities until 2028. We ended Q3 with a total leverage ratio of 2.8x, reducing our leverage beyond our 3x commitment. And while these results are encouraging on their own, they are just one part of the story. Herbalife's more than 2 million distributors across 95 markets are driving execution globally, capitalizing on health and wellness trends and delivering personalized nutrition at scale. With this foundation in place, we are moving faster, operating more efficiently…

Thank you, Stephan. Turning to our Q3 financial highlights on Slide 10. As Stephan mentioned earlier, the headline for the quarter is that we returned to net sales growth on a worldwide basis and North America delivered its first quarter of growth since the second quarter of 2021. This is a strong validation that our strategy is working. The actions we've taken to reinforce our distributor base, drive engagement and strengthen our fundamentals are translating into measurable results. We've now achieved year-over-year constant currency net sales growth in 6 of the last 8 quarters. This quarter, we built on that momentum, achieving constant currency net sales growth of 3.2% year-over-year, our strongest performance since the second quarter of 2021. Our third quarter performance reflects disciplined financial, operational and capital execution, strategic clarity and a focused commitment to deliver shareholder value. Moving to the financial highlights for the third quarter. Net sales were $1.3 billion, up 2.7% versus Q3 of 2024 and above the midpoint of our guidance range. On a constant currency basis, net sales increased 3.2% and came in toward the upper end of our guidance range. FX rates moved unfavorably during the quarter versus our assumptions, creating a 50 basis point year-over-year headwind. Adjusted EBITDA was $163 million, exceeding the high end of our guidance range of $150 million to $160 million. Adjusted EBITDA margin of 12.8% declined 60 basis points year-over-year, primarily due to approximately $5 million in China government grant income recognized in the third quarter of last year that did not repeat this quarter, along with some FX-related headwinds. CapEx for the third quarter was $21 million, at the low end of our guidance range of $20 million to $30 million. Capitalized SaaS implementation costs were approximately $7 million in the quarter. Gross profit margin…

[Operator Instructions] Our first question comes from the line of William Reuter with Bank of America.

My first question is a little bit of a housekeeping one or maybe not so much housekeeping. But capital allocation, you're now below your targets. You still continue to reduce debt by the end of '27 by, I don't know, another $600 million, $600-something million. How are you thinking about other uses of cash and allocation of that?

Yes. To be clear, there were 2 debt goals. There was a short-term debt goal and a longer-term debt goal. The short-term debt goal that we announced last year -- early last year was that we wanted our leverage ratio to be below 3x by the end of this year. That's a short-term goal. And the reason is we -- I don't think we should ever be higher than 3x and we got there for a number of reasons. And so we wanted to get that as a baseline. Then we further said, that's not our end point. That's our short-term goal. The longer-term goal is to pay down debt by $1 billion from the time we set it a year ago until the end of 2028 because we generate a lot of cash and we continue to expect to generate a lot of cash. And that's our #1 use after our internal investments is to buy down cash. So are we tracking ahead of -- obviously, we track ahead of the leverage goal. We achieved 2.8x already. On the long-term goal, we paid a lot back and we're probably tracking ahead of that goal, too, which means we have some additional cash that we're likely to generate beyond the needs to pay down the $1 billion. What we do with that will, first and foremost, be how can we drive value in the business and other opportunities to invest in certain things in the business. And then beyond that, we'll make decisions circumstantially.

Got it. And then secondly, with these new product introductions, they certainly sound extremely exciting. You're spending a lot of time on them. I'm wondering if there are going to be costs associated with getting your distributors up to speed on the usage of them that will result in elevated SG&A next year that will have returns in subsequent years? Or if you think that kind of your natural distributor event cadence or extravaganza cadence will be sufficient to educate them?

There's nothing outside of the normal scope of distributors learning about the products and through the education format that we have that they're able to go to market with. So yes, I don't see any type of an increase.

Our next question comes from the line of Christina with Mizuho.

Just want to ask about, can you share some of the early responses from the Pro2col beta group? Any interesting takeaways from the testers so far?

It's been really a great process with the beta group. Obviously, these are distributors who are engaging. So they're kind of like our super users and when you hear about the number of miles or steps logged and the amount of meals and they're engaging at a very high level with the app. The process for us is really to get their feedback. That was -- that's been step one because they're helping us to formulate the features so that when we go to market, it's things that they can leverage and things that they're already doing with coaching and understanding how to actually engage with the customer to be able to get the biggest opportunity, as many sales as possible, a stickier customer, upgrading customers on to other products. So the takeaway for us has really been the process has been amazing. The feedback that they're giving, the suggestions. When you aggregate close to 8,000 distributors and their ideas and how they're interacting with it, it's just there's a certain level of richness in the information and the data. Next step for us is obviously to move towards customers. And that's why we opened up the beta now for customers of those distributors in the beta because customers are different than distributors. They experience different things. The distributors will be interacting with them. So we'll be having insights from customer data, but also the distributors who have their customers who are participating in the protocol app as well. So it's been a great process for us.

Yes. And then maybe another one on the new distributor growth, which is pretty strong in the quarter for North America. So did you kind of see some kind of early signs of progress on the productivity side?

Yes. I don't -- from a productivity standpoint, I think it's in line with traditionally what's happening. I think the growth in the new distributor, it's coming from the excitement that they have, number one, about what's coming in the future and the way things are looking. It's also a lot of work that's been taking place, all of the things that we mentioned, the Diamond Development Mastermind, the key account management program where we're working with the leaders. They are figuring out in their DMOs. There's been this reengagement with the Herbalife Premier League of getting people back focused on business building as well. So it's really an excitement, obviously, about the product launches that we've had. Multiburn was, I would just say, very, very well accepted and it's creating kind of a new focus really and I would say around weight loss, where quite honestly, we've been probably more of a healthy active lifestyle. And having this product really brought a focus on weight loss, which has seen -- we see it as an added benefit.

Okay. Maybe last one for me. So on the new skin care product, can you share like how the AI was developed? Was it like built in-house? Or is it kind of through a partnership? And do you see that kind of like AI interaction expanding across the rest of the product line?

Yes. So it was in partnership. We customized based on our products and our needs as well. And it's really interesting to watch the engagement. We -- I don't have the exact figures, but I know in the first few weeks, we were over 100,000 scans actually, which was quite impressive. And it's something that when people see the data and especially when they are going to use a product and come back and scan to see the difference, it just gives a way of interacting, which is very effective. And obviously, technology today is very important and leveraging it is one of the key pillars that we're building on.

Our next question comes from the line of Karru Martinson with Jefferies.

When we look at the volume growth, which is encouraging to see you guys return, are there product categories that are driving it? And how should we think about that against kind of like the traditional mix of products that you used to be selling?

Yes. I'll take that one. I mean, there's a little bit of skewing mix toward healthy active lifestyle products, fit products and a little bit toward -- and this is a global comment and a little bit toward targeted nutrition and a little less on weight loss. That's been a trend now for a few years. And that's still the trend globally. But in the U.S., with the launch of Multiburn, it brought some of that focus on weight loss back and it took a little share in the U.S. versus our kind of historical rate. But it's not a revolutionary shift.

Okay. And then when we think about the sales mix that you called out, just a modest decline there. I mean, are some of these categories more profitable than others? Or how do you look at the mix going forward?

Some product lines are more profitable than others. Some countries are more profitable than others. I mean, when you run a global business with net-net thousands of SKUs, there's always a profit differential. So I wouldn't say -- it can be significant, but there's nothing specific to call out.

Okay. And then there was talk a couple of quarters ago, we had been looking at GLP-1, certainly incorporating it into the thought process. Is there anything that we should be highlighting there? Or how has that thinking kind of evolved?

Karru, I would say it's still the same thinking, right? So if people want -- they don't want to go down the GLP-1 route, we want to give them a natural alternative, right? So that's Multiburn as an example. If people want to go down the GLP-1 route, we want to be able to help them and make sure they're getting the protein, they're supporting their muscle mass, their bone density. So we want to be there to accompany them down that road. If they've been on GLP-1s and now they want to transition off and they don't want to just fall back into the same situation and gain the weight back, we want to be there on the off-ramp, supporting them to get on a better nutrition, better lifestyle so they can have a sustainable result. That remains the way that we are approaching the GLP-1 in the marketplace. And I would say that that has been something that's been a great strategy so far. It continues to be a great strategy. And obviously, with Multiburn now we're seeing an uptick in the focus of people that are interested in losing weight and our distributors are gaining some market share there.

Our next question comes from the line of Hale Holden with Barclays.

I just had 3 quick ones. The Mastermind rollout to India, that's been a pretty successful program for you. In other parts of the world, can you just give us a sense of what you're looking or what you think success would look like there?

Well, I was personally there in India when we launched. It's kind of interesting. I think this is the first time that we've ever had a program like this. And India, as you know, has grown substantially over the last decade. Huge influx of leaders and never having this level of training, especially in this format before, I think it was very impactful. The feedback from the leaders there was that this was something that was really needed to be able to continue the growth that they've experienced in the past and to see the continuing sustainable growth there. So I can just tell you, personally, there was a lot of feedback and energetically, it was really an amazing event. They're already very motivated, excited. They value the opportunity. They're very hard working. So it was something that was hugely beneficial. We are going to evolve the program. Obviously, we've been doing this now since August of 2024. So the content, the structure, the support, the tools that we're using, it's evolving and we'll continue to expand the program. So we have some additional markets coming online this year. And it's, I'd say, something that's fundamentally and foundationally that's supporting the growth that we're having.

Okay. The beauty slide that you guys flagged, it's certainly exciting. And I think it's just been a while since I've seen you highlight things in that category. Is the intention there to bring it to more countries? Or you're just highlighting it because it's working in South Korea?

Yes. It's interesting. We actually launched it in EMEA. And there was a demand. Actually, to your point, it's not a product line or category specifically that we've focused on a lot. But when you have over 2 million distributors who are all using, for the most part, skin care and interested, you start to have certain markets where they just are like, listen, as a company, we need to do something. And the way we do things here is we do it and we go out and find the best technology, the most clinically proven. And that's what led us to South Korea. And the launch in EMEA, again, this is also part of the dynamics of our business, it didn't take very long for that ripple effect to kind of spread around the world. So we have got another market that's coming online very quickly and we have other markets that are already -- they're asking for it. Just the one thing that I would say is that there's also within the distributor network in certain markets, pockets of distributors who like to focus on this specifically as a DMO. Notably in Turkey, as an example, they've been doing -- we do nutrition clubs around the world. They actually implemented skin clubs. So it's also one of the things that led us down this pathway. But I could say that the launch was very successful and the demand is there. So this will be something that we will be expanding. And we're going to evaluate, obviously, timing and everything. But yes, it is our goal to expand this around the world.

So I guess the reason I was asking is because it's a very different product line than the Pro2col launch. I was wondering if it -- if you have the ability, I guess, to walk and chew gum at the same time or if it would distract distributors or if it's just different markets?

Yes. No, it's -- so here's what I would say. Consumption is one thing. Again, when you have 2 million distributors that are consumers, much rather have them consuming our products than in the category than buying them anywhere else, number one. Number two, our model is predicated on people getting results, liking something and wanting to share it. So we know that there will be a benefit to having especially an advanced product like this in skin care line, just in terms of the usage and the sales that will happen like accessory sales. Then you have distributors certain that are going to do it as a DMO. And so we don't see this as a distraction. We think certain distributors and markets are going to naturally gravitate towards this and figure out in their models. By the way, we've had this in the past. Brazil was a very -- out of all of our markets are very focused on skin care. And there's just countries and certain leadership that it's part of their market. But we don't see it as a distraction at all or something that's going to be too difficult in terms of what we're trying to accomplish overall with Pro2col.

[Operator Instructions] Our next question comes from the line of Doug Lane with Water Tower Research.

The one number that did stand out for me was that North American number. I mean, you mentioned the 480 basis points acceleration sequentially, but just going back beyond that, it was down 4% in the first quarter, 3%, 6%. So it's just kind of was steady state in that mid-single digit decline and all of a sudden it jumped up to 1%. So I'm wondering, a), did you expect that? And b), what was driving that?

This is John. Let me start and if Stephan wants to add, he can. But as you said, U.S. has been getting stronger now quarterly for 2 years, but the numbers were pretty weak. And we had a really big jump in the third quarter, both from a net sales standpoint, also a volume standpoint. That actually exceeded our expectations, right? Some of that is -- it was elevated because of the event in July. We launched a lot of products in July. And if you remember on the last call, we said July actually had volume growth in the U.S. For the quarter, the U.S. ended up flat with volume, which means we had a great July. We had a tremendous August and September, not quite flat, though. So that's kind of the new baseline. I think we did make a jump. I'm not sure Q4 will exceed Q3 or maybe even be at the levels of Q3, but meaningfully higher than the run rates we had prior to our July extravaganza. So I think we've hit a new baseline in the U.S. and so that's exciting.

Okay. And then looking at the cash generation here, you've got cash from operations going up, you've got CapEx going down. You're ahead of your debt reduction targets. Is there any room to accelerate stock buyback, maybe not be at the pace it was in the past, but maybe more than it's been recently?

It's not a priority right now, Doug. Our priorities are pretty well laid out. One is support the new strategy of the business. Two is continue to pay down debt. We want to get our net debt down to under $1 billion, which is really getting our gross debt down to $1.4 billion by the end of 2028. That's our goal. We are tracking ahead of that. What we do with the excess cash that we're generating beyond what's needed to pay that goal is something that we will determine over time, but buybacks are not a priority right now.

Okay. You've been fairly consistent with that message. And just one last thing. You talked a lot about the products, which are very exciting, but also the opportunity for subscription revenue. How is the move towards building up a subscription revenue base going?

Yes, Doug, I'll take that one. We believe that there is a big place in the future for subscription revenue. So for that, obviously, we've introduced Multiburn in the U.S. now. We have certain products that are available for subscription within the Pro2col app. Obviously, when we move to personalized formulated, it would be based on subscription also. We just look at companies in the industry and subscription is just a huge part of businesses today. So for us, where we are -- this is part of our vision. This is part of where we're going. We're building all of the things that are needed for that in terms of the commerce capabilities and the products and having it all tied to the service. So I'll just say it's en route. It's a big part of what we believe is going to bring a lot of value in the future and we are just going to keep building quarter-on-quarter to where we want to go.

Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Stephan for closing remarks.

Thank you. Number one, I just want to say that if you don't know it and I imagine that you do if you're listening, is that Herbalife is a very special company. I can say this because it's been 34 years of my life that I've been a part of this company. I've been on the side of building a business and interfacing and interacting with customers on a daily basis and distributors and across many, many markets and seeing the passion and the mission and the drive that they have to be agents of change to actually, because of their own individual experience, want to share and impact other people's lives. And so number one, special company, 45 years, over 2 million distributors, 60,000-plus nutrition clubs, physical brick-and-mortar locations around the world. We are different than, I would say, every other company in the direct sales channel. We are not only bigger, we're diversified and we have probably the largest network effect and more reach than any other company in the world. Now having said that, we are a direct sales company. And that is a super power when it comes to selling products to people that are going to be ingesting something, changing some behavior that's going to help them to become healthier and having the support of a coach, a distributor, someone that cares about them, this is something that's very special to Herbalife. What we're doing as a company is we are technically and technologically enabling our distributors, aggregating personal data information supported by AI and analytics, personalizing and empowering support through technology in a way with the things that we're launching, the new coach dashboards to be able to give distributors even more capability of following up their customers and helping them reach their goals…

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.