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Herbalife CEO breaks down Q2 earnings

Herbalife CEO John Agwunobi joins Yahoo Finance to discuss Herbalife's second quarter earnings as well as the company's plan for growth.

Video Transcript


SEANA SMITH: Herbalife just out with its earnings a few minutes ago, pretty solid results from the company. Its shares just a bit lower here after-hours. If we can take a look at the stock chart, up just around 1.5%, was the fourth straight quarter of year over year double-digit net sales growth for the company.

We want to bring in Herbalife CEO, John Agwunobi to talk a little bit more about the results that we just got in. John, it looks like strong numbers that you just reported this afternoon. I guess, what's your big takeaway from the quarter and also your reaction to the fact that the stock-- I know you don't want to make too much of the reaction here after-hours but it is moving to the downside after a pretty solid report.

JOHN AGWUNOBI: Yeah, it was actually a really good quarter for us. We were up a full 15% on net sales, $1.6 billion for the quarter. As you mentioned, it's our fourth straight quarter of double-digit growth. So we're feeling pretty good about it, with adjusted diluted earnings per share being up 57%. The teams worked hard around the world. I'll pass on kind of trying to interpret what the stock market's-- what they're saying with their current aftermarket stock price but I will tell you this, we're very pleased with the progress of our growth with the company, with where we were, and with where we're headed.

ADAM SHAPIRO: Where is your greatest growth is it North America or is it Asia-Pacific? Where in the globe?

JOHN AGWUNOBI: Well, what we're seeing, actually of our top six regions, four of them had growth greater than 20%. So it's broad-based, it's around the world. The US is right up there, obviously but really actually only one market was down and that would have been China. All the others had growth. We're really pleased with what we're seeing.

SEANA SMITH: What do you attribute that to, the drop that you saw in China?

JOHN AGWUNOBI: Yeah, you know, China has been a-- it's a very complex environment, very complex market. We've had a couple of quarters there where we haven't seen the growth that we wanted. We're seeing two things that are worrisome for us, the first is obviously, the signing up of new distributors or new we call them service providers in China. And the second of course, is their productivity, their activity rates but we believe that with our plan, our strategy that as we look to the future, we can resolve those issues as well.

ADAM SHAPIRO: Out of curiosity, I realize you're not going to have an issue with semiconductor chips but what about the ingredients that go into the herbal supplements, are you having any kind of supply chain bottlenecks that might pose a threat going forward?

JOHN AGWUNOBI: Yeah, I think like every company that's in the business of producing product that is consumed, there are issues with the transportation of ingredients and from the farm to the manufacturing plants, and from the manufacturing plants to the consumers. But like everyone else I think would point out, these things are expected to be transitory. We don't see them as a problem today, our inventory levels are where they should be, our customers have access to product, our distributors are able to get what they need to run their businesses. We're feeling good about things so far.

SEANA SMITH: What do you think about the sellers' aspect part of your business? I guess, are you able to attract the number of sellers that you wish and that you hope to have at this point in the recovery?

JOHN AGWUNOBI: Yeah, in almost every market around the world we're seeing a lot of people come to us first starting with our consumers, I think people are beginning to realize that health is important. And they're reaching for healthier nutrition in order to support their health. That's one of the good things that came out of the pandemic. I think people are more aware of health.

Our sellers, our distributors they are coming to us because they recognize that there's a growth marketplace out there. So so far, we're feeling pretty good about that. Obviously, there's work to be done in every market and especially in China but we're feeling good about our future.

ADAM SHAPIRO: Why did you lower the midpoint of your full-year 2021 guidance, by what was it 1.5%?

JOHN AGWUNOBI: Yes, 1.5%. So we are-- the truth is we're getting closer. We're getting-- we're halfway through the year now, we're able to focus more and give more precise guidance for the future. We raised our guidance on earnings per share by $0.05 as I recall. And so we're feeling pretty good about things, we're getting closer to the-- more precise as we reach out into the back half of the year now. So yeah, you know, it's just we're looking at the data, our forecasts get more precise and those are the numbers we present.

SEANA SMITH: And John, going back to the sellers, I mean, you really have a good pulse just on the reopening progress and what we're seeing play out nationwide. And of course, now some concerns of the Delta variant. From your perspective, I guess, how are things going and where are you seeing the most strength here in the US?

JOHN AGWUNOBI: Yeah, so I won't speak specifically to regions within the US because the market is a blend of things. But I will say that as you look around the world, some markets are going into lockdowns even as most are coming out. We've actually had a really good approach to this, our distributors around the world, our sellers, they're very flexible. They're entrepreneurs and they've been able to kind of step up and adapt and adjust as the pandemic has kind of had its way in different countries. We're feeling good about where we are now and that resilience, that entrepreneurship that we see in those guys, I think it's going to help carry us through whatever's left, whether it be Delta or whatever follows.