Herbalife Ltd. (HLF)
Q3 2011 Earnings Call
November 1, 2011 11:00 am ET
Brett Chapman - General Counsel
Michael Johnson - Chairman & CEO
Des Walsh - President
John DeSimone - CFO
Per Ostlund - Jefferies & Company
John San Marco - Janney Capital Markets
Mike Schwartz - SunTrust
Linda Bolton Weiser - Caris
Timothy Ramey - D.A. Davidson
Scott Van Winkle - Canaccord Adams
Anand Vankawala - Avondale Partners
Chris Ferrara - Bank of America-Merrill Lynch
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I would now like to turn the call over to Brett Chapman to read the company's Safe Harbor language.
Before we begin, as a reminder, during this conference call, comments maybe made that include some forward-looking statements. These statements involve risk and uncertainty and as you know actual results may differ materially from those discussed or anticipated.
We encourage you to refer to yesterday's earnings release and our SEC filings for a complete discussion of risks associated with these forward-looking statements and our business. In addition, during this call certain financial performance measures maybe discussed that differ from comparable measures contained in our financial statements prepared in accordance with the U.S. Generally Accepted Accounting Principles, referred to by the Securities and Exchange Commission as non-GAAP financial measures.
We believe these non-GAAP financial measures assist management and investors in evaluating and comparing period-to-period results of operations in a more meaningful and consistent manner. Please refer to the Investor Relations section of our website, herbalife.com to find our press release for this quarter which contains a reconciliation of these measures. Additionally when management makes reference to volume during this conference call they are referring to volume points.
I'll now turn the call over to Michael.
Thanks Brett. Good morning everyone and welcome to our third quarter earnings call. Today we are very pleased with the record results that we reported yesterday, specifically the sixth consecutive quarter of double digit top line growth. We would like to take this moment to congratulate our distributors who are once again leading the way through increased engagements and improved activity and of course our employees who remain keenly focused on the servicing and the needs of our distributors.
For the first time in our history the company exceeded 1 billion volume points in a single quarter. We continue to believe that our top line growth is a result of strategically pursuing three large global mega trends, first the global obesity epidemic which shows no sign of letting up. In fact last month the Red Cross reported that more people died in the past year from complications associated with obesity than those that died as a result of being malnourished.
Secondly anti-aging. People today are living longer and desire to take more control of their personal health regimens. And lastly earning extra income, whether it is here in the US or developed markets where underemployment is as big an issue as unemployment or in emerging markets where people want to improve their social economic stature, the pursuit for supplemental income, that’s seemingly universal.
Herbalife is uniquely positioned to capitalize on these three mega trends through our products and our business opportunity. We believe it’s the confluence of these mega trends along with our products and our distribution and compensation plan that continue to positively differentiate our company. On the product front, we continue to build our leading position in the global weight management category, to provide solutions for healthy weight management.
As a result, the company’s global market share in the meal replacement and slimming category, increased from 29% in 2009 to 33% last year and we expect with double-digit growth in our weight management product category that our market share could easily increase for 2011. We’re building off this leadership position in the weight management category by introducing products that’s centered around our core competencies such seasonal flavors of our Formula 1 Shakes. Our new Prolessa Shake boost to help with both satiety and fat burning as well as our new line of Herbalife24 products. While it is very early, we continue to be very excited about the Herbalife24 line which we officially launched at the recent US and EMEA extravaganza.
The Herbalife24 product line is a sports performance line that will likely appeal to an expanded customer base, adding to that of the traditional Herbalife products. Our strategy behind the introduction of Herbalife24 includes the potential to attract a new category or demographic of distributor to drive brand awareness and distributor confidence to continue to leverage our team athletic and events sponsorship.
One of the first things you learn at Herbalife is use, wear, talk. And that message is stressed in everything we do, you use the product, you wear the brand and you talk to people. It’s no different with me, or any distributor in our company. Our business is based on product results and personal testimonials.
Ever since joining Herbalife, I’ve had my own personal testimonial by our Formula 1 Shake and other products, and in this quarter I added another personal testimonial for our new, Herbalife24 line.
Recently I competed in the Leadville 100. It’s a 100-mile mountain bike race in the Colorado Mountains. Herbalife had a team of 30 riders competing, and this year, with the help of our Herbalife24 line, I was able to beat my 2010 time by almost 69 minutes. Now I have my own testimonial.