# Dear Shareholders

_Source: `DeepSeekOCR_Ardian_pruned_1k/consumer-defensive-packaged-foods/NYSE_HLF_2021/NYSE_HLF_2021.mmd` · pages 1-7_

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Dear Shareholders,

At the time of this writing, we are deeply saddened by the war we are witnessing in Ukraine. Our hearts are with the Ukrainian people, and we stand with the international community in calling for a peaceful end to this conflict. Herbalife Nutrition is currently providing nutrition products and financial assistance to organizations supporting impacted communities.

In 2021, we continued our focus on improving communities around the world, which led to strong business performance and growth. Our results were driven by global trends, the demand for our nutrition products and the unstoppable force of our employees as well as our distributors, who grew their businesses and delivered for their customers.

These drivers of growth, underpinned by our business model and strategy, helped us achieve another good year with global net sales of \(5.8 billion, with four of our regions and the majority of our individual markets experiencing year-over-year net sales growth. We are strongly encouraged by this performance and are looking forward to 2022.

In 2021, we repurchased approximately 20.4 million shares for a total of approximately $982.7 million. We will continue to keep a sharp focus on capital allocation and enhancing shareholder value as we look to deploy excess cash to the approximately $1.1 billion remaining on our share repurchase program in the coming years.

Our team launched over 400 SKUs last year across our regions, and our products were once again recognized when we were recently named "The World's #1 Health Shake!" and "The #1 Brand in Active and Lifestyle Nutrition" by Euromonitor International. We also maintained the #1 ranking in four other categories, including weight management and wellbeing \( ^{3} \) ; and for the fifth consecutive year, we are the world's top brand in weight management \( ^{4} \) , meal replacements \( ^{5} \) , and meal replacement and protein supplements combined \( ^{6} \) .

Training and education continued to be an important growth vehicle for distributors. In 2021, over 150,000 distributors across our regions attended virtual trainings. As different parts of the world reopen, we look forward to resuming in-person events and activities. In addition, we added four distributorships to our highest distributor level, Chairman's Club.

Our employees have shown strength and resilience while staying committed to our values and culture. As a testament to this, Herbalife Nutrition was selected as one of America's Best Midsize Employers in the 2022 Forbes' rankings, and the Company placed top ten in our industry category. We were also named the "Most Honored Company" in the 2022 Institutional Investor All-America Executive Team Rankings in the mid-cap food retailers sector – one of only 12 companies in the mid-cap sector that achieved first place across every category.

## Growth In 2022 and Beyond

In 2022, we will continue to execute on our strategic plan, which is designed to deliver predictable growth for our shareholders, increase market share in our core categories, and achieve greater customer retention and distributor success. This plan also reflects a shift in our operating principles to empower regions to own their success and drive decision-making. We believe this approach will help regions execute on initiatives that reflect the priorities of distributors and their customers. Delivering on this plan will be a collective effort across the Company.

However, we must account for the impact of higher costs due to inflation, including cost increases in our supply chain with respect to raw materials, shipping costs and labor at our manufacturing facilities. We anticipate that we can partially offset cost increases in our supply chain by executing on our pricing strategy, which is to increase prices in a way that keeps up with local CPI in each of our markets.

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Our efforts to improve margins through productivity and efficiency improvements within our business operations are also anticipated to help offset the near-term margin pressure that we face. One specific opportunity to achieve this is through our transformation program, a structural realignment of both the front and back office, with the goal of ensuring our infrastructure processes and organizations are efficient and scalable to support our business growth. For the first phase of the program, the Company expects total pre-tax charges in the range of \(25 million to \)30 million, which will result in annual incremental savings in the range of \(10 million to \)15 million. We're also assessing a second phase of the program, which we're preliminarily planning for 2023 and anticipate that it will result in annualized savings in the same magnitude as the first phase.

## Products

Global and regional trends, along with consumer needs and preferences, continue to drive our product strategy. We are focused on maintaining our category leadership in Weight Management, accelerating growth in Health and Wellness and becoming a top 10 global brand in Sports Nutrition. Our team has continued to focus on localized product innovation to create products that resonate with consumers. Examples of this innovation include an acai protein bowl launched in Brazil, a Vegan Protein Drink Mix introduced in Europe, our vitilife product line in India and the Herbalife SKIN \( ^{\circledR} \)  LycoGlow \( ^{TM} \)  supplement in North America. We'll continue to explore exciting new categories, which includes our first ever Vegan product line planned to launch in early 2023. Great tasting products that are safe and beneficial continue to be our priority as we operate 10 Quality and R&D locations globally, including our newest facility in India.

## Digital

Being the easiest and most trusted way to start and grow a business drives our digital strategy. In the long-term, we are building a new infrastructure to support a simpler, modern and more user-friendly experience. This will include upgrading website functionality, enhancing mobile applications, bolstering e-commerce capabilities, and holistically facilitating the distributor digital journey. Our digital strategy is also supporting customer retention. The Preferred Customer Program, which launched in 20 markets last year, is now in 34 markets globally representing approximately 80% of the Company's volume point sales. Also, in Mexico we recently increased the frequency of distributor commissions which now enables distributors to receive their commissions on a weekly basis instead of a monthly basis. This change is an opportunity for our salesforce to receive their earnings more frequently and increase the value that the business opportunity represents to distributors. We will evaluate this program for use in other markets following this initial implementation. And, our digital tools continue to enable distributor growth and success. Our HN Grow App has expanded to 44 countries since its launch in 2019, and last year we launched our BizWorks Mobile application, which is now live in 93 countries and has an average of 1.4 million visits every month.

## Brand

Our brand is woven into every fabric of our strategic plan, and we will continue to enhance and protect the brand experience for distributors and their customers. For the past two years, we have reflected on how our brand helps to drive value in the marketplace. This year, we expect to launch a refreshed brand positioning of our purpose, vision and values that will help us to increase awareness and familiarity of our brand while driving greater trust. This new framework further integrates our brand into our culture and inspires everyone to nourish the potential in everyone for a healthier future.

## Global Responsibility

Given our global reach, expertise in nutrition and ability to provide economic opportunities, our commitment to social responsibility has helped us improve lives and communities for more than four decades. The Herbalife Nutrition Foundation \( ^{*} \)  awarded more than 5 million to community-based charitable organizations in 59 countries and reached over 200,000 people in 2021. We also took an important step forward with the release of our

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first-ever Global Responsibility Report, which highlighted our initiatives to support progress and growth in communities worldwide, including our commitment to ensuring a diverse, equitable, and inclusive working environment. Our efforts focus on three key areas: (1) nourishing healthy communities by partnering with leading global organizations, (2) nourishing economic opportunities by promoting entrepreneurship in underrepresented communities and, (3) nourishing a thriving planet by reducing our carbon footprint, emphasizing sustainable packaging and investing in new, eco-friendly technologies. No action is too small, and I'm pleased to highlight our 50x50 initiative – which has the goal of achieving 50 million positive impacts across our Global Responsibility programs by 2030, our 50 \( ^{th} \)  anniversary.

At Herbalife Nutrition, our success has been premised on improving communities, and I've never felt so optimistic about the difference we are making. From enabling people to live healthier lives to providing economic opportunities through our direct selling business model, we've helped millions around the world make positive changes. I joined this company over 6 years ago and working here continues to be a deeply rewarding experience. We are now entering a new era with a new focus, new initiatives and new products, all centered on the goal of becoming the most trusted nutrition and lifestyle company in the world. As always, thank you for your support.

![](images/3_0.jpg)

John O. Agwunobi

Chairman and Chief Executive Officer