Good afternoon, and thank you for joining the Fourth Quarter and Full Year 2017 Earnings Conference Call for Herbalife Limited. On the call today is Richard Goudis, the company's CEO; Des Walsh, the company's President; John DeSimone, the company's CFO; and Eric Monroe, the company's Director, Investor Relations. I would now like to turn the call over to Eric Monroe to read the company's Safe Harbor language.

Before we begin, as a reminder, during this conference call, comments may be made that includes 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, for additional supplemental information and 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 will now turn the call over to our CEO, Rich Goudis.

Good afternoon, everyone. Thank you for joining our call today. 2017 was a year of transition for our company as we implemented the FTC order and as you can see from our steadily improving performance in the third and fourth quarters, we believe we turned the corner in the second half of the year and our return to net sales growth in the fourth quarter was validation. Let me take a moment to share some key statistics that highlight the recovery in our largest market. The U.S. business was down 19% in the second quarter, the quarter when we implemented the final changes required by the FTC order. The U.S. business was down 17% in the third quarter and down just 8% in the fourth quarter and now even less in January. This is what happens when you have a business based on consumer demand and daily consumption and strong leaders who innovate and inspire their teams to persevere through transitions in their businesses. I want to take a moment to recognize and thank our amazing distributors and our employees who supported them for all their hard work and dedication to making sure Herbalife Nutrition is a recognized leader in the industry. And with this transition behind us, we're all really excited to move forward and return to volume point growth in the U.S. in 2018. John will review the financial results for 2017 in just a few moments, but for me and for our distributors, employees around the world, we are already out of the gate building a bigger and stronger company in 2018. So, let me share with you some of our key initiatives for 2018. I believe we are entering a period of transformation for our company. A period where we incrementally invest to leverage our robust…

Thank you, Rich. Today I'll start by discussing the company's fourth quarter and full year 2017 reported and adjusted results, which will include key market highlights. I will then review our first quarter and full year 2018 guidance and then conclude providing a brief update on our share repurchase program. Net sales of $1.1 billion represented an increase of 4.6% on a reported basis and an increase of 3.4% on a constant currency basis compared to the fourth quarter of 2016. Full year 2017 worldwide net sales of $4.4 billion represented the decline of 1.4% and 1.1% on a reported and constant currency basis respectively. Volume points for the fourth quarter 2017 were $1.3 billion, which represented a decrease of 1.8% compared to the fourth quarter of 2016 and was in line with our expectations. The 1.8% decline in volume points is a sequential improvement over the 5.6% decline last quarter and the 8.1% decline experienced in Q2. For the full year, worldwide volume points declined 3.6% to $5.4 billion compared to 2016. Both the EMEA and China regions experienced record volume point performances for the full year 2017. With respect to earnings, as a result of the Tax Cuts and Jobs Act or the U.S. Tax Act that was signed into law in December 22, 2017, the company recorded a provisional one-time non-cash charge of $153.3 million during the fourth quarter of 2017. This charge predominantly consists of foreign tax credits that the company will likely not be able to be realized under the new tax laws. Due to this non-cash charge during the fourth quarter, we reported a net loss of $63.4 million or $0.87 per diluted share compared to a reported net income of $99.4 million or $1.16 per diluted share for the fourth quarter 2016. However,…

Our first question is from the line of Doug Lane from Lane Research. Douglas Calder Lane - Douglas Lane & Associates LLC: Yes. Hi, everybody.

Hey, Doug. Douglas Calder Lane - Douglas Lane & Associates LLC: Excuse me. John, just following up on your stock repurchase comments, was there a reason why you weren't more aggressive in buying between third quarter earnings call and the end of the year?

Well, as a portion of time in there, where there is a waiting period after you put a 10b-5 in. So, our primary objective was to be in the market consistently through the closed period because this was an extra-long close window right, the year-end window was closed almost twice as long as the normal window. And to do that, we thought the best way was to do a 10b-5. Again in hindsight, you could say that because the stock ran out, we didn't execute as much as we wanted and we should have taken a different approach. But the objective was to spread it out during a closed window and it just didn't work out as planned, and so we've rolled our commitment into our forecast, so that people are still confident that we intend to buy back stock and we expect the $200 million to be our minimum. Douglas Calder Lane - Douglas Lane & Associates LLC: Great. And you still have what $700 million remaining, right?

We have $700 million remaining, we've got $1.3 billion in cash. We do have debt due beginning next August 2019, so a-year-and-a-half away. And so, we're going to work on – everything kind of works in conjunction. We generate a lot of cash, we've got some debt that we would like to refinance for both better terms and different maturity profile. Right now our maturity profile is tied to two key dates, it's next August and then the majority and the Term Loan B, so we'll have to stagger that a little that a little, so we will be working on that simultaneously while we consider different options to buy back stock. Douglas Calder Lane - Douglas Lane & Associates LLC: Okay, fair enough. Now moving on, I know you didn't put a currency comment in your 2018 outlook. I think last time in the third quarter, you were looking for a positive 1.2% of sales and a positive $0.10 to EPS. Just directionally, is that about where we are today or is it a little bit more favorable than that. Just I guess – just it's not giving exact numbers, I don't know?

Well, so the guidance ranges don't change much and long as we added constant currency when there was huge volatility and we'll add it again should it be relevant, it's actually $0.13 of benefit next year, so not materially different than it was in the previous guidance. So, that – there – it's been for simplification reasons, removed, but we will still give it on the call. Douglas Calder Lane - Douglas Lane & Associates LLC: Well, no – and that's a good thing, not to have to talk about it every quarter. I understand that. And then, can you talk – I mean, based on my original forecast, I think the biggest upside was in China. Could you just drill down a little bit more on how China is progressing? What did you see – was it the upside to your expectations as well, and what were the key drivers behind the good performance out of China?

Yeah, China is a good market for us, obviously it was an interesting year, we had a lot of management changes. There was some governmental noise around the industry that ended during the fourth quarter, and we've also implemented some changes. And so, you'll see total number of new service providers that significantly increased, so I'll kind of put into buckets, I think this might be the best way to look at China. So, we launched the growth fund. That growth fund is tied – you know money is fungible, but it's tied to the grants we got from the government part of the agreement with the government is that that gets invested in China and it's created a challenge I think for us to be able to provide investors with enough information to match the two so this is the best way to match the two and also give our distributors in China the confidence on where this money is going to be spent. So, that's one bucket. Another bucket, as you know in China, we've got direct sellers and we also have non-direct sellers, right. Service provides are outside of direct selling, and we also have directs on the product, and non-directs on a product. So, one of the changes we made in December was we offered a pathway for direct sellers to move into service providers more easily and that gives them better access to the non-direct selling product, which the direct sellers don't have as much access to. So, that help people become a service provider more quickly. And then recently, we just announced a promotion, it will be a 5-month test promotion to try and drive more economic opportunity to newer SPs. SPs make money through the economic models, building on hours. We try to equate those hours to approximately what somebody would make if they were in another country. What we've added in conjunction which is strategy around training and education is we had a promotion to allow SPs to become eligible for paid training as a way to earn more a little earlier in the journey in conjunction with the strategy to have more educated and trained distributors everywhere. And so, it's a great – very exciting time in China for that reason. Always a lot of local competition in China. So, I think it's great that we continue to strengthen our business, but we're excited about it. Again, Q1 is going to be a tough comp, so let's keep our expectations in line. Q1 last year had the price increase that we announced in the second week of March that was effective April 1, so we had 40 to 45 million volume points go forward into the first quarter that will not get repeated this year. So, it's really a second quarter story going forward is China. Douglas Calder Lane - Douglas Lane & Associates LLC: Okay that's helpful. Thanks, John.

And our next question is from the line of Tim Ramey from Pivotal Research.

Thanks so much. Couple of questions on the tax rate, I think I'm understanding that you've essentially got a situation where you need to shift costs perhaps to non-U.S. markets, particularly China to get more benefit from the new tax rate. First, would you kind of consume that or confirm that that that's a strategy and something you'll be working on. And any thoughts on how that might look as the year plays out?

So, you're right, and part of your answer is right, I think thematically it's correct and that we have a structure designed for one tax code and now the tax code changed, we're not getting the foreign tax credit or at least the benefit of the foreign tax credits that we would have had under the old law. What I would disagree with you is when you say, China I think overall holistically we have to use some tax planning, there's a lot of work to be done on that side. I think there's opportunity. The opportunity is really going to be a 2019-plus event, because it's going to take time to execute whatever strategy we need to execute in order to maximize the opportunity for us. But, for the most part, thematically you're right.

Okay. And as we think about volume points going forward, the big picture is pretty positive; first quarter slow start. Can you put any more geographic color around it? Do you expect Mexico will have an easy second half comp? I presume that will be a source of strength. Any other things you would call out that look interesting from a company mix perspective?

Interesting that we're seeing pretty broad positive trends. I think maybe the biggest challenge might be South America, but even those trends are starting to improve. So, it's – I wouldn't call out anything specific. I think we're looking for sequential improvements back half of the year versus the front half the year in 2018 in virtually every region.

Okay. Thanks so much.

Thanks, Tim.

And our next question is from the line of Michael Swartz from SunTrust.

Hey. Good evening, guys. I guess John, just wanted to dig into the updated guidance. You didn't change anything really with regards to the full year and I'm just wondering some of the moving parts within there. Looks like tax rate is a little worse, obviously you're embedding some share buybacks a little bit of currency. So, the way that I am looking at it looks like about $0.10, $0.20 maybe delta versus prior guidance, just operationally. Can you kind of walk through what that is? Were there some costs that slipped out of the fourth quarter into 2018?

Let me just, the hidden syrup, (35:33) it's almost exclusively tax rate offset by the buyback. So, operationally the numbers don't change hardly at all, right. Yeah. Okay. So, I think currency went from a $0.10 benefit to a $0.13 benefit which is immaterial. Other than that, we hit our Q4 volume guidance almost in the middle of guidance, we haven't changed anything for 2018 although we're excited about the trends and therefore that doesn't change the profile of the P&L at all other than the implementation of the U.S. Tax Act that rolled into the model.

Okay. And then just on the IT systems investments you're making, you called out Salesforce, Oracle. Could you talk about, I guess that process and I think before you said that was about $10 million or so incremental spend in 2018, is that still the plan?

Yes. Numbers haven't changed, correct.

Okay. That's it from me, for now. Thanks.

Thanks, Michael.

Our next question is from the line of Beth Kite from Citi.

Terrific. Hello, everyone. I was just wondering if we could actually go back to the South America and Central America region, the 17% local currency sales growth in the fourth quarter was just so strong, can you help us understand which countries drove that?

Yeah. Look, it's – I think with South America you maybe focus on volume points because you've got a Venezuelan situation even though we don't do a lot of volume in Venezuela. The currencies move so much that it really skews the constant currency number in that region. I don't even know what it's up to now, might be up to 25,000 to 100,000, started the year at 2,000 or something. So, it's not a perfect look because along with the devaluation, we have price increases, and so the price increases wouldn't happen without the devaluation. So, if you take Venezuela out of the situation, the 17% drops to 1.5%, which is much more in line with probably what you're expecting.

Got it. Got it. And then that syncs a little bit more too with the average sales leader numbers. Okay, great, great. Okay. And then for the U.S., just in light of three quarters now effectively with the new terms of the consent order, can you dig in a little bit more for us in terms of both personal consumption as that I think had been a pressure point early on, and how are you tracking towards getting up to that $200 monthly spend sort of personal consumption? And then also because preferred members are such an important component, can you help us understand sort of how the purchase habits have been because I think that kind of might tie just a recalibration you have coming up in May for personal consumption?

Well, on the internal personal consumption of distributors, we're still on the education path even as recently as January, there was a misunderstanding as to how it actually works. So, I think, there's lots of – that's probably one area where there is opportunity and it's I think, it's going to get better. But, we didn't see much movement in it during the back half of last year like we had hoped. So, to me that is for me anyway is upside because I do think there is opportunity on there, mostly from education and probably doesn't require a lot of anything else. As far as purchasing habits of preferred members, Rich talked about some of the things that we're seeing on types of products people buy how that turns into retention and productivity and what we're seeing is the wellness consumer sticks with this longer, buys more, more active, because they buy more frequently. They buy in larger amounts and they stick with us longer and so we're in the infant stage of learning how to use that data and that's the goal of sales force is to bring in some intelligence – automated intelligence to help us do that, so we didn't have to recreate it, but we are starting to learn a lot about our consumers through that process.

Got it. And then, can you remind me, and I apologize if I should know this, but the – you had a big number of new preferred members, for instance that came in the first quarter of 2017, the 63,000. Do those folks – do they re-up now here in first quarter of 2018, and kind of does that happen in each quarter of the year on a year-ago basis for the new preferred members that come in or can you just remind me of that process?

Yeah. So, Beth, this is Des. So, for the group that actually transitioned over, so as you know we bifurcated our distributor base and we gave people the option to elect to become preferred members. So, for those people who are elected to transfer over who were formerly distributors, effectively we grandfathered those on an ongoing status assuming that they actually make a certain minimum number of purchases during the year. So, for that group, there isn't a requalification, they will remain as preferred members simply based on a – on an annual purchase. For our new preferred members, people who joined after January under the new program, they have the same annual renewal requirement as anyone else. And so, that's something that will happen each year and we'll continue to monitor them each year thereafter.

Okay. Perfect. Thank you, thank you. And one more kind of country-based question for China, I know you spoke to it a bit with Doug's question, but did you say how the nutrition club count is tracking, where you – are you at a point now where you're growing nutrition clubs again in the country?

I believe it's about flat. It's been flat now for a couple of quarters, which is an improvement of the trend we saw for the prior quarters. I do think that our growth fund will help with that. So, we'll see the tracker for the next couple of quarters and hopefully we'll see some improvement.

Okay, perfect. And I have just two last questions, if I may quickly. One for the guidance, is there any embedded expectation for price increases kind of anything major like you did in China last April that's currently in the guidance that we have for this year?

So we have pricing – see, major – first of all, generally when we take a price increase we don't get the material impact that we had in China and we do price increases frequently in different markets. So, we'll get some flow forward but not the extent of virtually a whole month's worth of pull-forward that we had in China. But yeah, we have price increases embedded in different markets at different rates. But, do I think any of them are material? I don't think there are anything material.

Okay. And then John, could you help us I know last time you talked about gross margin kind of a little bit visible into 2018, but especially helping us to understand it was probably going to have some pressure here in the first quarter just because of some FX, the lack of FX benefits, if for nothing else. Can you just kind of talk us a little bit through again the gross margin progression that you're expecting in 2018?

Yeah. Well, actually the biggest impact early in the year is lower production. So, we had an inventory reduction program that we put in place. And to give you some numbers around that, it could take about 5 to 6 months lag on inventory production variances hitting the P&L. So, you really got to look at the last 6 months of 2016, to understand what happened in the beginning of 2017 and then you look at the last 6 months of 2017 to see what happens in 2018. And so, if you can follow me if you look at our statement of cash flow through the back half of the year of 2016. We built – and I take statement of cash flows because it takes out currency, we built around $70 million of inventory in the balk-half of 2016, which whenever sales starts to miss your forecasts, which is when that – that's when we started to miss, you overbill. In the back half of this fiscal 2017, we actually reduced inventory by $30 million, that's $100 million of lower production. And you take the labor and overhead of that, that goes on the balance sheet and rolls on out in the subsequent 5 months to 6 months. So, that lower it – from a comparison standpoint, that lower production in the back half of 2017 compared to the back half of 2016 will impact Q1 by $0.10 and it's also – it's gross margin line. It will continue into Q2 and then you'll see improvement in margins in the third and fourth quarter from production. So, that's what I tried to talk about last time, I didn't have the full production numbers because we hadn't been through the full – the year yet, but now that we have gone through the year, I have those numbers. So what you'll see is higher cost sales or lower gross margin to begin in the year improving as you go up through the year.

Got it. Just what I needed. Thank you so much. Appreciate your time.

And I think...

I think, there aren't any anymore questions, so I'm going to pass it over to Rich for closing remarks.

Okay. Great. Thanks, John. And thanks everybody for listening in. I just have had five key points I guess to close. Number one, I think you can see in our performance and our guidance that we turned the corner in 2017. Number two, hopefully you can hear in our commentary today, in our – in the Q&A, we have tremendous pride and confidence in our business and our growth strategies. Point number three, hopefully you understand as well, we have amazing distributor engagement and that's highlighted by I think some of the feeling that we have now coming out of some really key leadership meetings early in the year and we pre-announced our volume to help engage with our distributor leaders and really hit the ground, running really hard in 2018. Point number 4, I think from a performance and fundamental perspective, this is the year that investors really get rewarded for being long-term investors in Herbalife. And then lastly number 5, hope that you can tell by the tone here; we're just really excited about this transformation that we see underway this digital transformation is just really exciting and we look forward to speaking to you in May. Have a great day, everybody.

Ladies and gentlemen, this does conclude the conference call. Thank you greatly for your participation. You may now disconnect.