Good afternoon, and thank you for joining the First Quarter 2017 Earnings Conference Call for Herbalife Limited. On the call today is Michael Johnson, the company's Chairman and CEO; Richard Goudis, the company's COO; John DeSimone, the company's CFO; and Alan Quan, the company's Vice President, Investor Relations. I would now like to turn the call over to Alan Quan to read the company's Safe Harbor language.

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 today's earnings release, and our SEC filings for a complete discussion of risks associated with these forward-looking statements in our business. We do not undertake any obligation to update or release any revisions to any forward-looking statement, or to report any future events or circumstances, or to reflect the occurrence of unanticipated events except as required by law. 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 that these non-GAAP financial measures assist management and investors in evaluating our performance and preparing period-to-period results of operations in a more meaningful and consistent manner as discussed in greater detail in the supplemental schedules to our earnings release. 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 volumes during this conference call, they are referring to volume points. I'll now turn the call over to our Chairman and CEO, Michael Johnson.

Goo afternoon everyone thank you for joining our first quarter 2017 earnings call. We started the year with better than expected financial performance on both the top and bottom line. While we are pleased with our results this quarter, we remain cautiously optimistic with our outlook for the full year. In the second quarter we have to overcome difficult comparisons for last year in the US, along with that go live of our agreement with the FTC. We need to continue to nurture growth back into our China business. While we work through these opportunities our new guidance reflects more favorable movement of the U.S. dollar and therefore, we have raised our outlook for the full year. In the first quarter of 2017, volume points increased 1% worldwide compared to last year. Total net sales for the quarter were $1.1 billion, a 2% decrease compared to the prior-year period but on a constant-currency basis, net sales were flat compared to the first quarter 2016. Our higher-than-expected volume performance this quarter was primarily driven by a 17% volume growth for China. This was a result of our members buying significantly more products in March ahead of our planned price increase on April 1. On the one hand, this confirms the strong customer demand for our nutrition product, however, the consequences that our second quarter in China volume will likely be impacted by this activity. Nevertheless, our long-term full-year outlook for the market remains positive and this is reflected in our guidance. Net income for the quarter was $85.2 million or $0.98 a share compared to net income of $95.8 million or $1.12 per share for the first quarter 2016. As we disclosed in our press release today, adjusted earnings for the first quarter was $1.24 per share compared to $1.35 per…

Thank you, Michael, and good afternoon, everyone. It's hard to believe this is Michael's last earnings call as CEO. Michael's passion for our mission has driven incredible growth for a company over the past 14 years. And today, more importantly, the Herbalife Nutrition brand is recognized worldwide for its nutrition products and personalized approach to supporting customers with their nutrition goals. Ever since we announced the change in leadership last November, Michael and I have been working closely together to ensure a smooth and seamless transition. Given our 13-year working relationship, it should come as no surprise that we have been joined at the hip during this critical period. I'm grateful for his encouragement, wisdom and friendship and I look forward to his continued partnership and our new roles to enhance shareholder value. As Executive Chairman, Michael will continue to provide us with his invaluable counsel and advice, his inspiration for our distributors along with his experience leading the Board. For the past 9 months, many of our executives, along with the entire North American management team and distributor leaders have focused on implementing new technologies along with new rules and procedures that will ultimately enhance distributor earnings under the FTC agreement here in the U.S. One of the exciting areas of advancement and one that we believe will create significant competitive advantage for us in the future is the way we are now capturing distributor and customer transactions and tracking product sales using newly developed technology tools. In close collaboration with our distributors, we have built and continued to enhance of these tools that we believe will allow us to leverage data, analytics and build an even stronger customer relationships and design better retention programs for our distributors. As our technology and tools have continued to improve in the…

Thank you, Rich. Today I'll start by discussing the company's first quarter 2017 reported and adjusted results, which will include key market highlights. I will then review our second quarter and full-year 2017 guidance and we'll conclude by providing an update on our share repurchase program. Volume points for the first quarter 2017 grew 1% compared to the first quarter of 2016, while reported net sales in the first quarter decreased 2% to $1.1 billion. Constant currency net sales were flat compared to the first quarter in 2016. Volume and sales performance in the quarter exceeded our Q1 guidance, largely driven by higher-than-anticipated volume in China during the month of March. As stated in our press release, China significantly exceeded expectations, primarily due to the timing differences in sales and volume, which resulted from a price increase announced in March 2017, effective April 1, 2017, that we believe shifted member purchases into the first quarter that would likely have been made in the second quarter of this year. The expected negative impact to the second quarter sales in volume is included in our current guidance. I will provide additional guidance detail later in the call. Reported net income for the quarter was $85.2 million or $0.98 per diluted share compared to the reported net income of $95.8 million or $1.12 per diluted share for the first quarter 2016. Adjusted diluted EPS for the first quarter was $1.24 per diluted share compared to $1.35 per diluted share for the first quarter 2016. Reported and adjusted EPS both exceeded the high end of our first quarter guidance by $0.28 and $0.29, respectively. This feat was driven by approximately $0.18 from better-than-expected performance in China. The adjusted EPS figures, exclude items we consider to be outside of normal company operations while we believe…

Thanks, John. Before we all open the call for Q&A, I wanted to convey some closing comments. We've had an amazing success over the past 14 years thanks to our incredible and passionate distributors who are amazing entrepreneurs and continue to pioneer new ways to reach customers and a special thanks to our 8,000 employees who ensure we deliver quality products catering to our distributors and customers' needs. We are deeply grateful for the dedication and hard work and the relentless passion they bring each day to make Herbalife the premier nutrition Company the world. We have stood together through every twist and turn in our journey and throughout it all, we've built Herbalife bigger, better and stronger. I'm extremely proud of what we've done together and I can't wait to see what the future holds for our Herbalife. Thank you. And now, operator, we can open the call for questions.

[Operator Instructions] Our first question comes from the line of Tim Ramey with Pivotal Research group.

Thanks so much and congratulations and again thanks Michael for tremendous leadership. I wanted to get into a couple of questions on share repurchase, glad to see you did some which was more modest than I thought you could have done at a pace of kind of 60 million a month. Is there a rationale why the pace is perhaps more measuring than we would've thought?

Well, as we said on the call Tim, most of the buyback was done through 10b5. There were certain parameters in the 10b5 that could create acceleration or deceleration of a certain amount. Stock, obviously, moved up during the quarter and that certainly had an impact on the quantity that we were buying. So once you get in a quiet period, you kind of lose control, you set up a 10b5 based on the circumstances as you see them before the window closes, the window closed pretty quickly after earnings last time because year-end earnings is pretty late in the cycle. I want to say we might have had 20 calendar days, it's that long before we set the 10b5 in. And so once we put the 10B5 in, you live with it. So that's probably why it was a little bit lower than what you were thinking.

Okay, but the window reopens and you can adjust the parameters presumably in a couple of days?

Correct.

Okay. The ASU 2016-09, I think if I'm not mistaken there's a corresponding impact on shares, I was just trying to think through with the EPS impact was in implementation there. Can you discuss that at all?

Yes, first of all, I don't think it should, but it does impact share base. Basically, when you use the treasury stock method for determining diluted shares, in the past, you get tax benefit that created an assumption that you have cash then you assume you would use that cash to buy back stock, which in our case we would. Because the - there is no economics change in this, just the new pronouncement requires that you can a longer get that benefit in our assumptions for us that was 0.5 million shares in share-based, to be a little more direct.

Okay, and I had kind of postulated and I don't know your comments so far would clear it out, but I wondered if kind of the extreme engagement that you had with distributors over the last couple of quarters, actually sort of reenergized troops a bit as opposed to the example, Rich cited of the comp plan changes in 2014 where the negative effect was more pronounced. They might be asking you to just pontificate, but do you think that was true to any degree?

Tim, this is Des. Look experiences taught us that our distributors respond extremely well to challenges and adversity that's always been the pattern over the last 37 years, and will continue to be so certainly the degree of involvement of partnership, the calls, the meetings that has certainly been a factor in what we're seeing but, look, the reality is that we're facing a very difficult comp in the second quarter. Obviously, second quarter 2016, the highest volume quarter in the U.S. in Herbalife's history, April was the largest single month in the U.S. So obviously if you go through it in the second quarter, confident about the FTC implementations that just recognized the rate of the comp that we're going into.

Got it, and just one more while I got you the forecasted ETR for the full year, does that assume any future benefits from - I think you said it didn't assume future benefits from the ASU 1 6?

Yes, it does not. We don't do a projection on equity exercises. Those are decisions made by employees. And so - and by the way, it could be positive or negative, right? In our case, I'd agree it to be positive. Basically, it's any difference between the intrinsic value at grant date and the true value at exercise date goes to the P&L so in our case that would be a benefit given the likelihood of stock exercises but we do not project it.

Okay, got it. Thanks so much.

And your next question comes from the line of Mike Swartz with SunTrust.

Hi, good evening guys. I apologize if you've already gone through this, been hopping between calls, but the - in the China business it sounds like, John, what you said was essentially the underlying trend in volume points was similar to the fourth quarter, if I do the quick math it looks like it was down about 10 if we exclude the shift due to the pricing action. So maybe you can give us just a sense of kind of what's going on in the business there and maybe how to think about that as we move through the year?

Yes, Mike hi. This is Des. So listen basically we've engaged a lot of focus on China. We've got a whole team focused on this. We've had some of our international people relocate are working with the local team there because, again, the fundamental challenge that we reflected and the past were still there but we are very actively engaged on that. The confidence that we take from what happened, obviously, with this pull forward because of the price increase if it's an indication of a significant engagement of our sales force in China and the strong consumer demand for our products. So both of those are very positive and then in terms of the trends, in terms of focus on clubs, on best practices, on reengaging with our customers, on using social media as a supplement rather than a way for doing business, all those initiatives are still in place and will continue.

If I could just build on that, just because, if you choose any quarter, we've got a couple things going on that's going to make it challenging from a comp standpoint. One is, in China, we have a lot of our members pulled a lot of volume into Q1, which will certainly hurt the comp in Q2. And then U.S., as Des said, Q2 last year was the record high for the business and April with the record month. And so we've got to comp that and at the same time we are going live with the tools for the FTC agreement and the nuance between ending in April without the requirement, even though we're using them and starting without the requirement to use them. So we do think Q2 is the bottom for both of those markets, but Q2 is a difficult comparable.

Okay, that's helpful. And then maybe just an update on the Tasly JV partnership that you announced, I believe it was last quarter, where we stand today and just maybe timing of - I know you guys are coming up with some new products, so timing of when maybe you start to roll that out?

I'll start with your second part first. So what we said in the last call, we're still consistent with what we are today, which is it's much more of a next year benefit. The Tasly joint venture, as we announced, it was a letter of intent, I think. It's not yet done, it's close, we are working diligently to get it done. And when it's done, we'll have a say.

Okay. That's it, thanks.

Your next question comes from the line of Beth Kite with Citi.

Terrific, hello everyone. I had one question still on China before moving to a couple of other markets. I just wanted to understand so the price changes that went into effect during April, does that present risks and so much as the market is already going through a little bit of turmoil in general, what was logic behind that? And are you concerned that the higher prices pose a greater challenge?

We don't, Beth. The last price increase which took in China was in 2011 on a worldwide basis, our general philosophy is price increases on a regular basis, at or below the rate of inflation. We see significant strength in terms of our underlying business in China. And so frankly, the 5% price increase really just takes into account what has happened in recent years in terms of inflation and so on. We've got a high group of highly engaged leaders there, I think that was evidenced in what we saw in March in terms of that, the impact of that price increase and then reaching out to current and former customers and so they know what to focus on going forward.

Got it. Fair enough. For the EMEA region, where the locally currency sales were 6%. The couple of countries you cited in the queue were down slightly below that. Could you help us understand some of the countries in there that were stronger?

Are you looking for - sorry, I didn't understand the question, total sales reps, average active can you just...

I'm sorry, I'm thinking about local currency sales growth and just the driver in EMEA just to sort of think about that for the rest of the year, which countries since Russia was 4% and Italy 4% and Spain 4%. What were some other ones that prep stronger as you comp some tougher local currency sales growth the next couple of quarters?

Yes, listen, Beth. What's driving growth in EMEA is the continued adoption - successful adoption of the marketing plan changes that we put in place a couple of years ago, to focus on daily consumption. So markets like Italy, that have always been solidly based as they continue to lead that trend, we're also seeing some other Western European markets, we're pleased with what's happening in Germany that has been flat for so many years, return to growth. So basically, just continuation of the same strategies that you're going to see just continue to evolve.

Okay, great. And then I think, keep walking around the road for 2 more countries specifically. Brazil, what - it feels like you have such a good fix on what you want to go about changing in China. Where are you in your decision-making or plans to execute to potentially reaccelerate growth in Brazil?

So look, we have a lot of things happening in Brazil, Beth, but the reality in Brazil, unfortunately, is that it's a very different economic and geopolitical situation to China. Obviously, a lot of distractions there the majority of our business in Brazil is done with credit cards because most orders are placed online. I think you may know in Brazil, you're facing interest credit card interest of 30% a month. So the amount of cash that's available in the market both for our distributors and for consumers is just greatly restricted simply because of the economic environment. And although we continue to see our high levels of distributor engagement and lots of activity, lots of initiative, the reality is that you've got to just a very tough environment to do business in there. And frankly, that's likely to continue for the rest of this year.

Okay, great. And then even in U.S., you did some great data points in terms of preferred members and receding and the like. Do you have a sense across your nutrition clubs here in the U.S., how many nutrition club owners are kind of like ready to go in terms of - do you still have to reach x percent to really teach them the new tools and train them per se?

So Beth, this is Rich. I think that if you look at the receipt information we give you and have on over 2.2 million receipts last month was encouraging to us and it tells us and a lot of those of were Nutrition Clubs receipts tells us that this continues to have upside as far as engagement. And as you know, April was not to go live month. We expect more receipts in the month of May when it actually will affect how we compensate our distributors. So like anything, like that telephone game we played back in kindergarten, it's going to take time. We have a war room, our distributors are active. This is job 1 for everybody right now in the month of May to make sure that we can get as higher receding percentage as possible and our clubs will lead the way.

Great. Okay, thank you. And then one last question for John on guidance. So I think that basically for the incremental $0.40, it sounds like a large part of that is FX, maybe some of the tax changes, specially seeing that great benefit hit in the first quarter, were there any sort of offsets, anything turn more negative or was everything kind of just more incremental and positive?

I'll try to roll it forward, right, so it's $0.40 on the high end and the low end. We beat the high-end by $0.29 in Q1, $0.18 of that is timing from China so you've really got $0.11 in Q1, we took the year by $0.40 and an incremental $0.29, $0.26 if it's currency. So the rest of the $0.03 is tax rate, a lot of which was already booked in Q1 because of the excess tax benefit on comp plans --. So the $0.03 is made up by a handful of things that go each way, but nothing material that's a negative offset.

Alright. Thank you so much.

We have no further questions in queue at this time.

Let me do a quick closing here and it's going to be probably slightly emotional for me because I think you all know it's been an honor for me to lead this incredible company over the past 14 years. For those who have been shareholders with us a long time, you've seen us evolve as a company from 50 to 94 countries. We're 5 times greater in the increase of our market cap, but above all, we're closer and more engaged relation - we have a closer and more engaged relationship with our distributor leaders, our employee team and a few for our investors. And with all of our investment in infrastructure and all the different things that we're doing, we're incredibly well-positioned for the future. This is a great future ahead for us and I look forward to be engaged and part of it to help build our company stronger and better and as a shareholder, my interest, I think you know are aligned with all of yours. As Vice Chair of this company going forward, I'm curious in helping our company continue on a journey to be a positive and impactful member of the community, where we live and work. It's my next chapter in my Herbalife. So many thanks to you for your support and enthusiasm over the years and for the shared confidence we all have for incoming CEO, Rich Goudis. That confidence is extremely high across the breadth of this company and with our distributors. And to our distributors, we just mentioned our customers and employees, a heartfelt thank you. And as I say to our team, onward and upward. And on behalf of Rich and the team, we look forward to being with you next quarter. Thank you.

Thank you for your participation. This does conclude today's conference call and you may now disconnect.