http://www.morningstar.com/earnings/19310543-herbalife-ltd-hlf-q3-2010.aspx

Herbalife Ltd HLF
Q3 2010 Earnings Call Transcript

Transcript Call Date 11/02/2010

Operator: Good morning and thank you for joining the Third Quarter 2010 Earnings Conference Call for Herbalife Ltd. On the call today is Michael Johnson, the Company’s Chairman and CEO; the Company’s president, Des Walsh; John DeSimone, the Company’s CFO; and Brett Chapman, the Company’s General Counsel.

I would now like to turn the call over to Brett Chapman, to read the Company’s safe harbor language.

Brett R. Chapman - General Counsel: Before we begin, as a reminder, during this conference call, comments may be 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 may be discussed that differ from comparable measures contained in our financial statements, prepared in accordance with 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.

Michael O. Johnson - Chairman and CEO: Good morning, everyone, everywhere in around the world and welcome to our third quarter 2010 earnings call and analyst day. I just wanted to open that way, because we have so many distributors in 73 different countries, who speak so many different languages and so many different investors and analysts, who are following us from all over the world.

The positive momentum we've been experiencing in our business continued as we had another very strong quarter driven by net sales growth of 14.7% and volume point growth of 13.5%. Underscoring the broad strength in our business, we experienced both volume point growth and increases in average active sales leaders in all six of our regions during the quarter.

Average active sales leader, our measurement of distributor engagement, increased 12% in the quarter, which we believe reflects positive momentum. By the way of comparison, it's been more than four years since we've experienced simultaneous volume growth in all of our regions. The ongoing transition to daily consumption focused DMOs continues to have a positive impact on our business.

For the third quarter, we announced suggested earnings per share of $1.17 which is 38% above Q3 2009 adjusted EPS. This strong growth in bottom line performance is driven primarily by a double-digit volume growth and our margin improvement. Our distributors' successful use of sustainable business methods, creating long-term customers, who are consuming Herbalife products daily, continues to be the primary driver of our growth.

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