HERBALIFE LTD

Previous wording

Global inflationary pressures and other macroeconomic factors such as foreign exchange rate fluctuations and geopolitical conflicts can impact our financial condition, results of operations and liquidity. For example, inflationary pressure impacts both our cost structures and our pricing. During the first quarter of 2024, we instituted price increases in certain markets to address region or market-specific conditions. We also instituted more localized price increases in 2023. We continue to examine our cost structure and assess additional potential incremental pricing actions in response to ongoing inflationary pressures.

Current wording

Global inflationary pressures and other macroeconomic factors such as foreign exchange rate fluctuations and geopolitical conflicts can impact our financial condition, results of operations and liquidity. For example, inflationary pressure impacts both our cost structures and our pricing. During the first half of 2024, we instituted pricing actions in certain markets to address region or market-specific conditions. We also instituted localized price increases in 2023. These actions are discussed further in the Sales by Geographic Region discussion further below. We continue to examine our cost structure and assess additional potential incremental pricing actions in response to ongoing inflationary pressures.

Previous wording

The specific number of Volume Points assigned to a product, which is generally consistent across all markets, is based on a Volume Point to suggested retail price ratio for similar products. If a product is available in different quantities, the various sizes will have different Volume Point values. In general, once assigned, a Volume Point value is consistent in each region and country and does not change from year to year. We use Volume Points for Member qualification and recognition purposes, as well as a proxy for sales trends, and therefore we generally keep Volume Points for a similar or like product consistent on a global basis. However, because Volume Points are a function of value rather than product type or size, they are not a reliable measure for product mix. As an example, an increase in Volume Points in a specific country or region could mean a significant increase in sales of less expensive products or a marginal increase in sales of more expensive products.

Current wording

The specific number of Volume Points assigned to a product, which is generally consistent across all markets, is based on a Volume Point to suggested retail price ratio for similar products. If a product is available in different quantities, the various sizes will have different Volume Point values. In general, once assigned, a Volume Point value historically has been consistent in each region and country and has not changed from year to year. For strategic reasons and to increase our Members’ ability to promote the business opportunity and stimulate volume growth, as described further below in the Latin America section of the Sales by Geographic Region, certain Volume Point values were adjusted during the second quarter of 2024 for most markets within the Latin America region, excluding Mexico. We use Volume Points for Member qualification and recognition purposes, as well as a proxy for sales trends, and therefore, generally, we have historically kept Volume Points for a similar or like product consistent on a global basis. However, because Volume Points are a function of value rather than product type or size, they are not a reliable measure for product mix. As an example, an increase in Volume Points in a specific country or region could mean a significant increase in sales of less expensive products or a marginal increase in sales of more expensive products.

Previous wording

In North America volume points decreased year over year and its total new members also decreased year over year. We continue to enhance our educational and motivational programs and promotions, and we have seen improvements in our new distributors during the first quarter of 2024 compared to 2023. Latin America continues to have difficult economic conditions including inflationary impacts on Members’ operations, and political and social instability in certain markets. EMEA’s Volume Point lesser decrease for the 2024 first quarter compared to 2023 reflects mixed performance across the markets in EMEA. EMEA results were also negatively impacted by inflationary pressure and other ongoing macroeconomic conditions on customer demand, as well as political and economic uncertainty across certain markets in the region. The Asia Pacific region saw Volume Point increases for the 2024 first quarter versus the 2023 period, led by continued growth in the India market, the largest in the region, and Vietnam. Such growth was partially offset by declines in other markets in Asia Pacific, particularly Indonesia. Such decline can be attributable in part, we believe, to weak economic climate and inflationary pressure that have led to a decline in customer demand. China saw Volume Point increases for the 2024 first quarter versus the 2023 period. This trend reflects, we believe, our Members continue to adjust their business approaches to a confluence of factors, including changes and enhancements we have made for our business and external conditions. Also, a surge of COVID cases late in 2022 and COVID related lock-downs had an adverse effect on our results and business recovery during the first quarter of 2023 which also drove the improvements in the first quarter of 2024 compared to the first quarter of 2023.

Current wording

North America's Volume Point decreased for the second quarter and first half of 2024 as compared to the same periods in 2023 and the decreases were less than the prior period decreases. In North America, we continue to enhance our educational, training, and motivational programs and promotions. Latin America had lesser Volume Point decreases for the second quarter and first half of 2024 as compared to the same periods in 2023. Latin America continues to have difficult economic conditions including inflationary impacts on Members’ operations, and political and social instability in certain markets; however, we have implemented certain pricing changes and marketing plan changes in most markets in the region, excluding Mexico, which we believe did positively impact many of the markets in Latin America. EMEA’s Volume Point decreased for the second quarter and first half of 2024 as compared to the same periods in 2023. We believe EMEA results were negatively impacted by inflationary pressure and other ongoing macroeconomic conditions on customer demand, as well as political and economic uncertainty across certain markets in the region. The Asia Pacific region saw a Volume Point decrease for the second quarter of 2024 versus the 2023 period but saw a Volume point increase for the first half of 2024 versus the 2023 period which was led by the continued growth in our India market, the largest market in the region. Such growth was partially offset by declines in other markets in Asia Pacific, particularly Indonesia and South Korea. China saw a Volume Point decrease for the second quarter of 2024 versus the 2023 period but saw a Volume point increase for the first half of 2024 versus the 2023 period. This trend reflects, we believe, our Members’ ability to continue to adjust their business approaches to a confluence of factors, including changes and enhancements we have made for our business and external conditions.

Previous wording

Our“contribution margins”consist of net sales less cost of sales and Royalty overrides.

Current wording

Our “contribution margins” consist of net sales less cost of sales, Royalty overrides, and service fees to our independent service providers in China, for the purposes of segment reporting specifically, as discussed further below and described in our Note 6, Segment Information, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Previous wording

Most of our sales to Members outside the United States are made in the respective local currencies. In preparing our financial statements, we translate revenues into U.S. dollars using average exchange rates. Additionally, the majority of our purchases from our suppliers generally are made in U.S. dollars. Consequently, a strengthening of the U.S. dollar versus a foreign currency can have a negative impact on our reported sales and contribution margins and can generate foreign currency losses on intercompany transactions. Foreign currency exchange rates can fluctuate significantly. From time to time, we enter into foreign currency derivatives to partially mitigate our foreign currency exchange risk as discussed in further detail in Part I, Item 3, Quantitative and Qualitative Disclosures about Market Risk, of this Quarterly Report on Form 10-Q.

Current wording

Most of our sales to Members outside the United States are made in the respective local currencies. In preparing our financial statements, we translate revenues into U.S. dollars using average exchange rates. Additionally, the majority of our purchases from our suppliers generally are made in U.S. dollars. Consequently, a strengthening of the U.S. dollar versus a foreign currency can have a negative impact on gross profit and can generate foreign currency losses on intercompany transactions. Foreign currency exchange rates can fluctuate significantly. From time to time, we enter into foreign currency derivatives to partially mitigate our foreign currency exchange risk as discussed in further detail in Part I, Item 3, Quantitative and Qualitative Disclosures about Market Risk, of this Quarterly Report on Form 10-Q.

Previous wording

Net sales were $1,264.3 million for the three months ended March 31, 2024. Net sales increased $12.2 million, or 1.0%, for the three months ended March 31, 2024 as compared to the same period in 2023. In local currency, net sales increased 2.4% for the three months ended March 31, 2024, as compared to the same period in 2023. The 1.0% increase in net sales for the three months ended March 31, 2024 was primarily driven by a 6.6% favorable impact of price increases, partially offset by a decrease in sales volume, as indicated by a 3.6% decrease in Volume Points, a 1.4% unfavorable impact of fluctuations in foreign currency exchange rates, and a 0.8% unfavorable impact of sales mix.

Current wording

Net sales were $1,281.1 million and $2,545.4 million for the three and six months ended June 30, 2024, respectively. Net sales decreased $32.9 million, or 2.5%, and $20.7 million, or 0.8%, for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. In local currency, net sales increased 0.2% and 1.3% for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The 2.5% decrease in net sales for the three months ended June 30, 2024 was primarily driven by a decrease in sales volume, as indicated by a 6.0% decrease in Volume Points, a 2.7% unfavorable impact of fluctuations in foreign currency exchange rates, and a 0.6% unfavorable impact of sales mix, partially offset by a 6.6% favorable impact of price increases. The 0.8% decrease in net sales for the six months ended June 30, 2024 was primarily driven by a decrease in sales volume, as indicated by a 4.8% decrease in Volume Points, a 2.1% unfavorable impact of fluctuations in foreign currency exchange rates, and a 0.6% unfavorable impact of sales mix, partially offset by a 6.4% favorable impact of price increases.

Previous wording

Net income was $24.3 million, or $0.24 per diluted share, for the three months ended March 31, 2024, as compared to $29.3 million, or $0.29 per diluted share, in the three months ended March 31, 2023. The decrease in net income for the three months ended March 31, 2024 was mainly due to $16.3 million higher selling, general, and administrative expenses, $8.9 million of other operating income in 2023 relating to government grant income for China versus none in 2024, and $7.9 million higher income taxes; partially offset by $26.6 million higher contribution margin primarily driven by price increases and lower inventory write-downs, partially offset by unfavorable cost changes related to self-manufacturing and sourcing.

Current wording

Net income was $4.7 million, or $0.05 per diluted share, and $29.0 million, or $0.29 per diluted share, for the three and six months ended June 30, 2024, respectively. Net income decreased $55.2 million, or 92.2%, and $60.2 million, or 67.5%, for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The decrease in net income for the three months ended June 30, 2024 was mainly due to $41.8 million higher selling, general, and administrative expenses, $19.3 million higher interest expense, net, $14.4 million lower gross profit, and a $10.5 million loss on extinguishment of debt in 2024 related to the April 2024 debt refinancing transactions; partially offset by $17.6 million lower income taxes and $14.4 million lower royalty overrides. The decrease in net income for the six months ended June 30, 2024 was mainly due to $58.1 million higher selling, general, and administrative expenses, $10.1 million of other operating income in 2023 relating to government grant income for China versus none in 2024, $17.8 million higher interest expense, net, and a $10.5 million loss on extinguishment of debt related to the April 2024 debt refinancing transactions; partially offset by $15.2 million lower royalty overrides, $11.4 million higher gross profit primarily driven by price increases, and $9.7 million lower income taxes.

Previous wording

Net income for the three months ended March 31, 2024 included a $16.7 million pre-tax unfavorable impact ($12.2 million post-tax) of Restructuring Program expenses, primarily relating to employee retention and separation costs; $11.0 million pre-tax unfavorable impact ($8.9 million post-tax) of expenses relating to our new Digital Technology Program focused on enhancing and rebuilding our Member facing technology platform and web-based Member tools, and a $5.9 million pre-tax unfavorable impact ($3.9 million post-tax) of Transformation Program expenses, primarily relating to employee retention and separation costs.

Current wording

Net income for the three months ended June 30, 2024 included a $48.8 million pre-tax unfavorable impact ($33.1 million post-tax) of Restructuring Program expenses, primarily relating to employee retention and separation costs; $10.5 million pre-tax unfavorable impact ($7.9 million post-tax) of loss on extinguishment of debt related to the April 2024 debt refinancing transactions; $6.0 million pre-tax unfavorable impact ($6.1 million post-tax) of expenses relating to our new Digital Technology Program focused on enhancing and rebuilding our Member facing technology platform and web-based Member tools, and a $3.5 million pre-tax unfavorable impact ($3.0 million post-tax) of Transformation Program expenses, primarily relating to employee retention and separation costs.

Previous wording

Net income for the three months ended March 31, 2023 included a $27.3 million pre-tax unfavorable impact ($21.3 million post-tax) of Transformation Program expenses, primarily relating to employee retention and separation costs; and a $3.5 million pre-tax unfavorable impact ($3.3 million post-tax) of expenses relating to our new Digital Technology Program focused on enhancing and rebuilding our Member facing technology platform and web-based Member tools.

Current wording

Net income for the three months ended June 30, 2023 included a $10.1 million pre-tax unfavorable impact ($7.6 million post-tax) of Transformation Program expenses, primarily relating to employee retention and separation costs; and a $7.0 million pre-tax unfavorable impact ($6.5 million post-tax) of expenses relating to our new Digital Technology Program focused on enhancing and rebuilding our Member facing technology platform and web-based Member tools.

Previous wording

The Primary Reporting Segment reported net sales of $1,189.1 million for the three months ended March 31, 2024 representing an increase of $4.7 million, or 0.4%, as compared to the same period in 2023. In local currency, net sales increased 1.6% for the three months ended March 31, 2024, as compared to the same period in 2023. The 0.4% increase in net sales for the three months ended March 31, 2024 was primarily due to a 7.0% favorable impact of prices increases, partially offset by a decrease in sales volume, as indicated by a 4.2% decrease in Volume Points, a 1.2% unfavorable impact of fluctuations in foreign currency exchange rates and a 1.3% unfavorable impact of sales mix.

Current wording

The Primary Reporting Segment reported net sales of $1,199.4 million and $2,388.5 million for the three and six months ended June 30, 2024, respectively, representing a decrease of $26.6 million, or 2.2%, and $21.9 million, or 0.9%, respectively, as compared to the same periods in 2023. In local currency, net sales increased 0.5% and 1.0% for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The 2.2% decrease in net sales for the three months ended June 30, 2024 was primarily due to a decrease in sales volume, as indicated by a 6.2% decrease in Volume Points, a 2.7% unfavorable impact of fluctuations in foreign currency exchange rates and a 0.5% unfavorable impact of sales mix, partially offset by a 7.0% favorable impact of prices increases. The 0.9% decrease in net sales for the six months ended June 30, 2024 was primarily due to a decrease in sales volume, as indicated by a 5.2% decrease in Volume Points, a 1.9% unfavorable impact of fluctuations in foreign currency exchange rates and a 0.8% unfavorable impact of sales mix, partially offset by a 6.9% favorable impact of prices increases.

Previous wording

For a discussion of China’s net sales for the three months ended March 31, 2024, see the China section of Sales by Geographic Region below.

Current wording

For a discussion of China’s net sales for the three and six months ended June 30, 2024, see the China section of Sales by Geographic Region below.

Previous wording

As discussed above under “Presentation,” contribution margin consists of net sales less cost of sales and Royalty overrides.

Current wording

As discussed above under “Presentation,” contribution margin consists of net sales less cost of sales, Royalty overrides, and service fees to our independent service providers in China. Also, as discussed in Note 6, Segment Information, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q, in the second quarter of 2024, the Company changed its presentation of this segment reporting measure for its China segment. Historical information discussed below has been adjusted to conform with the current period contribution margin. This change had no impact on the Company's accompanying condensed consolidated statements of income and only impacts the China contribution margin amounts discussed below and the operating information table in Note 6, Segment Information, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Previous wording

The Primary Reporting Segment reported contribution margin of $501.2 million, or 42.1% of net sales, for the three months ended March 31, 2024, representing an increase of $18.7 million, or 3.9%, as compared to the same period in 2023. The 3.9% increase in contribution margin for the three months ended March 31, 2024 was primarily the result of an 11.7% favorable impact of price increases and a 1.4% favorable impact of lower inventory write-downs, partially offset by a 4.2% unfavorable impact of volume decreases, a 2.7% unfavorable impact of cost changes related to self-manufacturing and sourcing primarily related to increased raw material costs, and a 1.9% unfavorable impact of sales mix.

Current wording

The Primary Reporting Segment reported contribution margin of $513.7 million, or 42.8% of net sales, and $1,014.9 million, or 42.5% of net sales for the three and six months ended June 30, 2024, respectively, representing an increase of $6.1 million, or 1.2%, and $24.8 million, or 2.5%, respectively, as compared to the same periods in 2023. The 1.2% increase in contribution margin for the three months ended June 30, 2024 was primarily the result of an 11.6% favorable impact of price increases, partially offset by a 6.2% unfavorable impact of volume decreases, a 2.3% unfavorable impact of foreign currency fluctuations, and a 1.5% unfavorable impact of cost changes related to self-manufacturing and sourcing. The 2.5% increase in contribution margin for the six months ended June 30, 2024 was primarily the result of an 11.4% favorable impact of price increases, partially offset by a 5.2% unfavorable impact of volume decreases, a 1.9% unfavorable impact of cost changes related to self-manufacturing and sourcing, a 1.5% unfavorable impact of foreign currency fluctuations, and a 1.5% unfavorable impact of sales mix.

Previous wording

China reported contribution margin of $62.9 million for the three months ended March 31, 2024, representing an increase of $7.9 million, or 14.4%, for the three months ended March 31, 2024, as compared to the same period in 2023. The 14.4% increase in contribution margin for the three months ended March 31, 2024 was primarily the result of a 12.8% favorable impact of volume increases as indicated by an increase in Volume Points. As described in the China section of the Sales by Geographic Region below, if Volume Points were recognized consistent with the timing of when net sales are recognized in accordance with U.S. GAAP, the favorable impact of volume increases would have been 19.3%. In addition, the increase in contribution margin was driven by a 1.7% favorable impact of lower inventory write-downs, partially offset by a 6.1% unfavorable impact of foreign currency fluctuations and a 3.2% unfavorable impact of sales mix.

Current wording

China reported contribution margin of $27.9 million and $54.0 million for the three and six months ended June 30, 2024, respectively, representing a decrease of $2.7 million, or 8.8%, and an increase of $2.1 million, or 4.0%, for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The 8.8% decrease in contribution margin for the three months ended June 30, 2024 was primarily the result of a 3.9% unfavorable impact of foreign currency fluctuations, a 2.8% unfavorable impact of sales mix, a 1.8% unfavorable impact of volume decrease as indicated by a decrease in Volume Points, partially offset by a 2.0% favorable impact of cost changes related to self-manufacturing and sourcing. The 4.0% increase in contribution margin for the six months ended June 30, 2024 was primarily the result of a 4.6% favorable impact of volume increases as indicated by an increase in Volume Points and a 2.0% favorable impact of cost changes related to self-manufacturing and sourcing, partially offset by a 4.8% unfavorable impact of foreign currency fluctuations and a 2.6% unfavorable impact of sales mix. As described in the China section of the Sales by Geographic Region below, if Volume Points were recognized consistent with the timing of when net sales are recognized in accordance with U.S. GAAP, the favorable impact of volume increases would have been 7.6%.

Previous wording

Management’s role, in-country and at the region and corporate level, is to provide Members with a competitive, broad, and innovative product line, offer leading-edge business tools and technology services, and encourage strong teamwork and Member leadership to make doing business with Herbalife simple. We continue to provide our Members with enhanced technology tools for ordering, business performance, and customer retailing to make it easier for them to do business with us and to optimize their customers’ experiences. Management uses the Marketing Plan, which reflects the rules for our global network marketing organization that specify the qualification requirements and general compensation structure for Members, coupled with educational and motivational programs and promotions to encourage Members to increase retailing, retention, and recruiting, which in turn affect net sales. Such programs include sales events such as Extravaganzas, Leadership Development Weekends and World Team Schools where large groups of Members network with other Members, learn retailing, retention, and recruiting techniques from our leading Members, and become more familiar with how to market and sell our products and business opportunities. Accordingly, management believes that these development and motivation programs increase the productivity of the sales leader network. The expenses for such programs are included in selling, general, and administrative expenses. We also use event and non-event product promotions to motivate Members to increase retailing, retention, and recruiting activities. These promotions have prizes ranging from qualifying for events to product prizes and vacations. In a number of markets, we have segmented our Member base into “preferred members” and “distributors” for more targeted and efficient communication and promotions for these two differently motivated types of Members. In certain other markets that have not been segmented, we use Member data to similarly categorize Members for communication and promotion efforts.

Current wording

Management’s role, in-country and at the region and corporate level, is to provide Members with a competitive, broad, and innovative product line, offer leading-edge business tools and technology services, and encourage strong teamwork and Member leadership to make doing business with Herbalife simple. We continue to provide our Members with enhanced technology tools, which includes updated brand sites, for ordering, business performance, and customer retailing to make it easier for them to do business with us and to optimize their customers’ experiences. Management uses the Marketing Plan, which reflects the rules for our global network marketing organization that specify the qualification requirements and general compensation structure for Members, coupled with educational and motivational programs and promotions to encourage Members to increase retailing, retention, and recruiting, which in turn affect net sales. Such programs include sales events such as Extravaganzas, Leadership Development Weekends and World Team Schools where large groups of Members network with other Members, learn retailing, retention, and recruiting techniques from our leading Members, and become more familiar with how to market and sell our products and business opportunities. Accordingly, management believes that these development and motivation programs increase the productivity of the sales leader network. The expenses for such programs are included in selling, general, and administrative expenses. We also use event and non-event product promotions to motivate Members to increase retailing, retention, and recruiting activities. These promotions have prizes ranging from qualifying for events to product prizes and vacations. In a number of markets, we have segmented our Member base into “preferred members” and “distributors” for more targeted and efficient communication and promotions for these two differently motivated types of Members. In certain other markets that have not been segmented, we use Member data to similarly categorize Members for communication and promotion efforts.

Previous wording

The factors described above help Members increase their business, which in turn helps drive Volume Point growth in our business, and thus, net sales growth. The discussion below of net sales details some of the specific drivers of changes in our business and causes of sales fluctuations during the three months ended March 31, 2024 as compared to the same period in 2023, as well as the unique growth or contraction factors specific to certain geographic regions or significant markets within a region during these periods. Net sales fluctuations, both Company-wide and within a particular geographic region or market, are primarily the result of changes in volume, changes in prices, or changes in foreign currency translation rates. The discussion of changes in net sales quantifies the impact of those drivers that are quantifiable such as changes in foreign currency translation rates, and cites the estimated impact of any significant price changes. The remaining drivers, which management believes are the primary drivers of changes in volume, are typically qualitative factors whose impact cannot be quantified. We use Volume Points as an indication for changes in sales volume.

Current wording

The factors described above help Members increase their business, which in turn helps drive Volume Point growth in our business, and thus, net sales growth. The discussion below of net sales details some of the specific drivers of changes in our business and causes of sales fluctuations during the three and six months ended June 30, 2024, as compared to the same periods in 2023, as well as the unique growth or contraction factors specific to certain geographic regions or significant markets within a region during these periods. Net sales fluctuations, both Company-wide and within a particular geographic region or market, are primarily the result of changes in volume, changes in prices, or changes in foreign currency translation rates. The discussion of changes in net sales quantifies the impact of those drivers that are quantifiable such as changes in foreign currency translation rates, and cites the estimated impact of any significant price changes. The remaining drivers, which management believes are the primary drivers of changes in volume, are typically qualitative factors whose impact cannot be quantified. We use Volume Points as an indication for changes in sales volume.

Previous wording

Net sales in the U.S. were $258.7 million for the three months ended March 31, 2024. Net sales decreased $30.5 million, or 10.5%, for the three months ended March 31, 2024, as compared to the same period in 2023.

Current wording

Net sales in the U.S. were $275.3 million and $534.0 million for the three and six months ended June 30, 2024, respectively. Net sales decreased $20.0 million, or 6.8%, and $50.5 million, or 8.6%, for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023.

Previous wording

Sales volumes declined for the three months ended March 31, 2024 compared to the 2023 prior year period. Emerging from pandemic conditions, we continue to have fewer new Members in the region. We are supporting Members with increased numbers of in-person events, new product launches, targeted communications and sales incentives, as well as modernizing our technological tools in order to enhance our Members’ ability to market and sell our products and promote business opportunities. Despite the total number of new Members decreasing, we have seen increases in our new distributors during the first quarter of 2024 compared to the first quarter of 2023. The region implemented 3.0% price increases during March 2024. During 2023, the region implemented 3.5% price increases during March 2023 and September 2023.

Current wording

Sales volumes continued to decline for the three and six months ended June 30, 2024 compared to the 2023 prior year periods. We continue to have fewer total number of new Members in the region during the three and six months ended June 30, 2024 compared to the prior year comparison periods. We are supporting Members with new product launches, a new training and recognition program, targeted communications and sales incentives, as well as modernizing our technological tools in order to enhance our Members’ ability to market and sell our products and promote business opportunities. Despite the total number of Members decreasing, we have seen increases in our new distributors during the second quarter and first half of 2024 compared to the same periods in 2023. The region implemented 3.0% price increases during March 2024. During 2023, the region implemented 3.5% price increases during March 2023 and September 2023.

Previous wording

Net sales in Mexico were $140.9 million for the three months ended March 31, 2024. Net sales increased $13.1 million, or 10.3%, for the three months ended March 31, 2024, as compared to the same period in 2023. In local currency, net sales increased 0.2% for the three months ended March 31, 2024, as compared to the same period in 2023. The fluctuation of foreign currency exchange rates had a favorable impact of $12.8 million on net sales for the three months ended March 31, 2024. To a lesser extent, a volume decline was seen for the 2024 first quarter versus the prior year, attributable we believe to the cumulative impact of several years of declines in new Members and Sales Leaders. Macroeconomic conditions such as a slowdown in the economy and prolonged high interest rates have also created challenges for Members’ Nutrition Club operations, which continue to be an important DMO in the market. We are supporting Members with promotions that encourage volume, even at lower levels, for newer Members. During the second half of 2023 and in the first quarter of 2024, we have continued to experience importation delays in Mexico as a result of the government delaying timely approval of importation permits which has impacted certain of our inventory supply, which we believe adversely affected our net sales. To minimize the risk of disruption to our Mexico market, we continue to work closely with the Mexican government and have seen some improvements as additional importation permits were received. The market saw a 5.25% price increase during March 2024. During 2023, the Mexico market implemented 2% and 5% price increases during June 2023 and January 2023, respectively.

Current wording

Net sales in Mexico were $142.7 million and $283.6 million for the three and six months ended June 30, 2024, respectively. Net sales increased $4.2 million, or 3.0%, and $17.3 million, or 6.5%, for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. In local currency, net sales increased 0.1% and 0.1% for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The fluctuation of foreign currency exchange rates had a favorable impact of $4.1 million and $16.9 million on net sales for the three and six months ended June 30, 2024, respectively. To a lesser extent, a volume decline was seen for the second quarter and first half of 2024 versus the prior year. Macroeconomic conditions, such as a slowdown in the economy and prolonged high interest rates, have created challenges for Members’ and Members’ Nutrition Club operations, which continue to be an important DMO in the market.

Previous wording

Other markets across the region also saw volume declines for the three months ended March 31, 2024 versus the 2023 period. The region has seen difficult economic conditions as well as market-specific factors including political and social instability. Inflationary pressures, improving but remained elevated, and foreign exchange rate fluctuations in certain markets in the region have challenged our Members’ operations and customer demand. The sales volume declines in markets other than Mexico was greatest for Peru, Colombia, and Brazil. Promotional efforts within the region include increasing in-person activities, supporting on a market-by-market basis the Nutrition Club DMO, utilizing segmented promotions and sales incentives, and launching new products. The majority of the markets in the region instituted price increases to address market-specific conditions during the 2024 first quarter. We are also currently exploring additional measures to enhance the competitiveness of our product pricing, aiming to stimulate incremental growth in volume and to increase our Members’ ability to promote business opportunities.

Current wording

The region has seen difficult economic conditions as well as market-specific factors including political and social instability. Inflationary pressures, improving but remained elevated, and foreign exchange rate fluctuations in certain markets in the region have challenged our Members’ operations and customer demand. Promotional efforts within the region include increasing in-person activities, adding programs, supporting on a market-by-market basis the Nutrition Club DMO, utilizing segmented promotions and sales incentives, and launching new products.

Previous wording

The EMEA region reported net sales of $277.9 million for the three months ended March 31, 2024. Net sales increased $9.8 million, or 3.7%, for the three months ended March 31, 2024, as compared to the same period in 2023. In local currency, net sales increased 6.5% for the three months ended March 31, 2024, as compared to the same period in 2023. The 3.7% increase in net sales for the three months ended March 31, 2024 was primarily due to a 12.7% favorable impact of price increases, partially offset by 2.8% unfavorable impact of fluctuations in foreign currency exchange rates, a decrease in sales volume, as indicated by a 5.0% decrease in Volume Points, and a 0.4% unfavorable impact of sales mix. The EMEA region has no single market that accounts for a significant portion of our consolidated net sales.

Current wording

The EMEA region reported net sales of $287.8 million and $565.7 million for the three and six months ended June 30, 2024, respectively. Net sales decreased $1.8 million, or 0.6%, and increased $8.0 million, or 1.4%, for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. In local currency, net sales increased 3.5% and 4.9% for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The 0.6% decrease in net sales for the three months ended June 30, 2024 was primarily due to a decrease in sales volume, as indicated by a 9.7% decrease in Volume Points, and a 4.1% unfavorable impact of fluctuations in foreign currency exchange rates, partially offset by a 12.7% favorable impact of price increases. The 1.4% increase in net sales for the six months ended June 30, 2024 was primarily due to a 12.6% favorable impact of price increases, partially offset by a decrease in sales volume, as indicated by a 7.4% decrease in Volume Points, and a 3.5% unfavorable impact of fluctuations in foreign currency exchange rates. The EMEA region has no single market that accounts for a significant portion of our consolidated net sales.

Previous wording

Volumes declined, to a lesser extent, across most EMEA markets during the three months ended March 31, 2024 versus the 2023 period. Economic conditions across the region, including inflation in certain markets, weakened consumer confidence, and foreign exchange rate fluctuations, as well as political uncertainty in certain markets appear to be further hindering business recovery. The volume declines across the EMEA markets during the three months ended March 31, 2024 versus the 2023 period were led by Russia and Spain, partially offset by increases in Kazakhstan. Our Russia entity had no sales during the 2024 first quarter due to the suspension of product shipments to our Russia entity where its inventory had been fully depleted as of September 30, 2023; therefore our Russia entity will not have any product sales in future periods while its inventory remains fully depleted. As a result, Russian Members purchasing products in Kazakhstan, among other neighboring markets, has led to an increase in volume in Kazakhstan.

Current wording

Volumes declined, across most EMEA markets during the three and six months ended June 30, 2024 versus the 2023 period. Economic conditions across the region, including inflation in certain markets, weakened consumer confidence, and foreign exchange rate fluctuations, as well as political uncertainty in certain markets appear to be further hindering business recovery. The volume declines across the EMEA markets during the three and six months ended June 30, 2024 versus the 2023 period were led by Spain, Türkiye, and Russia. Our Russia entity had no sales during the first half of 2024 due to the suspension of product shipments to our Russia entity where its inventory had been fully depleted as of September 30, 2023; therefore our Russia entity will not have any product sales in future periods while its inventory remains fully depleted. As a result, Russian Members purchasing products in Kazakhstan, among other neighboring markets, has led to increases in volume in Kazakhstan in previous quarters despite having decreases in volume during the three and six months ended June 30, 2024 compared to the prior year periods. During the third quarter of 2024, the Kazakhstan market is increasing its pricing that could negatively impact future sales in this market.

Previous wording

Focus areas for Herbalife and our Members in the region include branding and promotions, supporting increased numbers of in-person events, launching new products, strengthening the Nutrition Club DMO in certain markets, and other promotional initiatives to incentivize sales. The majority of the markets in the region instituted price increases to address market-specific conditions during the three months ended March 31, 2024.

Current wording

Focus areas for Herbalife and our Members in the region include promotions and events, launching new products, enhancing both online and in person training programs and meetings to help Distributors improve their business, supporting Nutrition clubs and other DMOs, and other promotional activities in order to grow our sales in the region. The majority of the markets in the region instituted price increases to address market-specific conditions during the six months ended June 30, 2024.

Previous wording

The Asia Pacific region, which excludes China, reported net sales of $431.2 million for the three months ended March 31, 2024. Net sales increased $17.6 million, or 4.3%, for the three months ended March 31, 2024, as compared to the same period in 2023. In local currency, net sales increased 6.9% for the three months ended March 31, 2024, as compared to the same period in 2023. The 4.3% increase in net sales for the three months ended March 31, 2024 was primarily due to an increase in sales volume, as indicated by a 4.6% increase in Volume Points, and a 3.7% favorable impact of price increases, partially offset by a 2.6% unfavorable impact of fluctuations in foreign currency exchange rates and a 2.2% unfavorable impact of sales mix.

Current wording

The Asia Pacific region, which excludes China, reported net sales of $416.7 million and $847.9 million for the three and six months ended June 30, 2024, respectively. Net sales decreased $9.1 million, or 2.1%, and increased $8.5 million, or 1.0%, for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. In local currency, net sales increased 1.6% and 4.2% for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The 2.1% decrease in net sales for the three months ended June 30, 2024 was primarily due to a 3.7% unfavorable impact of fluctuations in foreign currency exchange rates, and a decrease in sales volume, as indicated by a 1.9% decrease in Volume Points, partially offset by a 3.7% favorable impact of price increases. The 1.0% increase in net sales for the six months ended June 30, 2024 was primarily due to an increase in sales volume, as indicated by a 1.2% increase in Volume Points, and a 3.7% favorable impact of price increases, partially offset by a 3.2% unfavorable impact of fluctuations in foreign currency exchange rates.

Previous wording

Net sales in India were $203.5 million for the three months ended March 31, 2024. Net sales increased $24.9 million, or 13.9%, for the three months ended March 31, 2024, as compared to the same period in 2023. In local currency, net sales increased 15.1% for the three months ended March 31, 2024, as compared to the same period in 2023. The fluctuation of foreign currency exchange rates had an unfavorable impact of $2.0 million on net sales for the three months ended March 31, 2024. Sales volumes have increased in India in recent years as we continue to promote our brand, such as through sports sponsorships, in-person events, strengthening the Preferred Customer program and making it easier for our Preferred Customers to convert to Distributors in India. The India market had no price increase during the three months ended March 31, 2024. During 2023, the India market implemented a 4.5% price increase during November 2023.

Current wording

Net sales in India were $204.6 million and $408.1 million for the three and six months ended June 30, 2024, respectively. Net sales increased $15.2 million, or 8.0%, and $40.1 million, or 10.9%, for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. In local currency, net sales increased 9.7% and 12.3% for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The fluctuation of foreign currency exchange rates had an unfavorable impact of $3.1 million and $5.1 million on net sales for the three and six months ended June 30, 2024, respectively. Sales volumes have increased in India in recent years as we continue to promote our brand, such as through sports sponsorships, in-person events, introducing new product line for skin care, strengthening the Preferred Customer program and making it easier for our Preferred Customers to convert to Distributors in India. The India market had no price increase during the six months ended June 30, 2024. During 2023, the India market implemented a 4.5% price increase during November 2023.

Previous wording

Net sales in Vietnam were $75.6 million for the three months ended March 31, 2024. Net sales increased $4.5 million, or 6.3%, for the three months ended March 31, 2024, as compared to the same period in 2023. In local currency, net sales increased 10.9% for the three months ended March 31, 2024, as compared to the same period in 2023. The fluctuation of foreign currency exchange rates had an unfavorable impact of $3.2 million on net sales for the three months ended March 31, 2024. The sales volume increase for the three months ended March 31, 2024 versus the 2023 period was partially driven by, we believe, the comparison to a 2023 first quarter that included lower level of sales as a result of a January 2023 increase in the local value added tax rate which may have had an adverse impact to our net sales during the first quarter of 2023. Members’ Nutrition Club operations continue to be an important DMO in the market which management continues to support and monitor, and we believe, macroeconomic conditions in the market continue to create challenges. The market implemented a 3.5% price increase in March 2024. During 2023, the Vietnam market implemented a 3% price increase during March 2023. Further, changes to direct-selling regulations in the market were approved by local government in April 2023; we continue to work closely with Vietnam government and monitor these regulations and any impact they may have on our business in Vietnam.

Current wording

Net sales in Vietnam were $62.9 million and $138.5 million for the three and six months ended June 30, 2024, respectively. Net sales decreased $3.2 million, or 4.8%, and increased $1.3 million, or 0.9%, for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. In local currency, net sales increased 2.7% and 6.9% for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The fluctuation of foreign currency exchange rates had an unfavorable impact of $5.0 million and $8.2 million on net sales for the three and six months ended June 30, 2024, respectively. The sales volume was flat for the three months ended June 30, 2024 versus the 2023 period but sales volume increased for the six months ended June 30, 2024 versus the 2023 period and was partially driven by, we believe, the comparison to a 2023 first quarter that included lower level of sales as a result of a January 2023 increase in the local value added tax rate which may have had an adverse impact to our net sales during the first quarter of 2023. Members’ Nutrition Club operations continue to be an important DMO in the market which management continues to support and monitor, and we believe, macroeconomic conditions in the market continue to create challenges. The market implemented a 3.5% price increase in March 2024. During 2023, the Vietnam market implemented a 3% price increase during March 2023. Further, changes to direct-selling regulations in the market were approved by local government in April 2023; we continue to work closely with Vietnam government and monitor these regulations and any impact they may have on our business in Vietnam.

Previous wording

Across most of the region’s other markets sales volume was down for the three months ended March 31, 2024 as compared to the 2023 period, most significantly for Indonesia. We continued to see lower levels of member retention and new Members for some markets as Members’ Nutrition Club operations recover from macroeconomic conditions including inflationary pressure and high interest rates in certain markets that have also challenged some areas of customer demand. Our efforts in the region include promotional initiatives to incentivize sales, launching new products, and expanding successful country initiatives throughout the region. Some markets in the region instituted price increases to address market-specific conditions during the three months ended March 31, 2024.

Current wording

Across most of the region’s other markets sales volume was down for the three and six months ended June 30, 2024 as compared to the 2023 periods, most significantly for Indonesia and South Korea. We continued to see a decline of new Members for some markets. In addition, as Members’ Nutrition Club operations continue to recover from macroeconomic conditions including inflationary pressure and high interest rates in certain markets that have also challenged some areas of customer demand. Our efforts in the region include programs and promotional initiatives to incentivize sales, and launching new products. Most markets in the region instituted price increases to address market-specific conditions during the first half of 2024.

Previous wording

The China region reported net sales of $75.2 million for the three months ended March 31, 2024. Net sales increased $7.5 million, or 11.1%, for the three months ended March 31, 2024, as compared to the same period in 2023. In local currency, net sales increased 16.7% for the three months ended March 31, 2024, as compared to the same period in 2023. The 11.1% increase in net sales for the three months ended March 31, 2024 was primarily due to an increase in sales volume, as indicated by a 12.8% increase in Volume Points. As described further above, Volume Points are generally recognized when a Member pays for an order, while net sales are generally recognized when product is delivered and when control passes to the Member or customer. If Volume Points were recognized consistent with the timing of when net sales are recognized in accordance with U.S. GAAP, the increase in sales volume would have been 19.3% as there was a more favorable timing difference between net sales and volume point recognition during the three months ended March 31, 2024 as compared to the same period in 2023. The 19.3% increase in sales volume was partially offset by a 5.6% unfavorable impact of fluctuations in foreign currency exchange rates, and a 2.6% unfavorable impact of sales mix. The China region had no price increase during the three months ended March 31, 2024 and during the twelve months ended December 31, 2023.

Current wording

The China region reported net sales of $81.7 million and $156.9 million for the three and six months ended June 30, 2024, respectively. Net sales decreased $6.3 million, or 7.2%, and increased $1.2 million, or 0.8%, for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. In local currency, net sales decreased 4.0% and increased 5.0% for the three and six months ended June 30, 2024, respectively, as compared to the same periods in 2023. The 7.2% decrease in net sales for the three months ended June 30, 2024 was primarily due to a 3.2% unfavorable impact of fluctuations in foreign currency exchange rates, a 2.8% unfavorable impact of sales mix, and a decrease in sales volume, as indicated by a 1.8% decrease in Volume Points. The 0.8% increase in net sales for the six months ended June 30, 2024 was primarily due to an increase in sales volume, as indicated by a 4.6% increase in Volume Points, partially offset by a 4.2% unfavorable impact of fluctuations in foreign currency exchange rates, and a 2.6% unfavorable impact of sales mix. As described further above, Volume Points are generally recognized when a Member pays for an order, while net sales are generally recognized when product is delivered and when control passes to the Member or customer. If Volume Points were recognized consistent with the timing of when net sales are recognized in accordance with U.S. GAAP, the increase in sales volume for the six months ended June 30, 2024 would have been 7.6% as there was a more favorable timing difference between net sales and Volume Point recognition during the six months ended June 30, 2024 as compared to the same period in 2023. The China region had no price increase during the three months ended June 30, 2024 and during the twelve months ended December 31, 2023.

Previous wording

The sales volume increase for the three months ended March 31, 2024 versus the 2023 period was partially driven by the comparison to a 2023 first quarter that includes lower level of sales as a result of pandemic related conditions. Sales volume increases were also attributable to, we believe, our continued enhancement to our qualification requirements and promotion programs in the China market, as well as Members’ ability to adjust their business approaches to these changes. The frequency and attendance of our and our Members’ in-person training and sales meetings, which are important to the business as they are a central channel for attracting and retaining customers, providing personal and professional development for our Members, and promoting our products, are stabilizing, but continue to be below pre-pandemic levels.

Current wording

We believe our continued enhancement to our qualification requirements and promotion programs and training and recognition program have had a positive impact to our China market. The frequency and attendance of our and our Members’ in-person training and sales meetings, which are important to the business as they are a central channel for attracting and retaining customers, providing personal and professional development for our Members, and promoting our products, are stabilizing, but continue to be below pre-pandemic levels. Other focus areas for China include enhancing our digital capabilities and offerings, such as improving the integration of our technological and enhanced tools to make it easier for our Members to do business, encouraging a customer-based approach through customer loyalty programs to engage customers, and supporting Nutrition Clubs. We have expanded our product line for the China market and continue to conduct sales promotions in the region.

Previous wording

Net sales for the significant product categories remained relatively flat and had slight increases for the three months ended March 31, 2024 as compared to the same period in 2023. The trends and business factors described in the above discussions of the individual geographic regions apply generally to all product categories.

Current wording

The trends and business factors described in the above discussions of the individual geographic regions apply generally to all product categories.

Previous wording

Gross profit was $979.3 million and $953.5 million for the three months ended March 31, 2024 and 2023, respectively. Gross profit as a percentage of net sales was 77.5% and 76.2% for the three months ended March 31, 2024 and 2023, respectively, or a favorable net increase of 131 basis points.

Current wording

Gross profit was $998.0 million and $1,012.4 million for the three months ended June 30, 2024 and 2023, respectively, and $1,977.3 million and $1,965.9 million for the six months ended June 30, 2024 and 2023, respectively. Gross profit as a percentage of net sales was 77.9% and 77.0% for the three months ended June 30, 2024 and 2023, respectively, or a favorable net increase of 85 basis points, and 77.7% and 76.6% for the six months ended June 30, 2024 and 2023, respectively, or a favorable net increase of 107 basis points.

Previous wording

The increase in gross profit as a percentage of net sales for the three months ended March 31, 2024 as compared to the same period in 2023 included the favorable impact of price increases of 154 basis points; the favorable impact of lower inventory write-downs of 59 basis points; the favorable impact of foreign currency fluctuations of 13 basis points; favorable changes in sales mix of 7 basis points; and favorable other cost changes of 5 basis points; partially offset by unfavorable cost changes related to self-manufacturing and sourcing of 107 basis points primarily related to increased raw material costs.

Current wording

The increase in gross profit as a percentage of net sales for the three months ended June 30, 2024 as compared to the same period in 2023 included the favorable impact of price increases of 155 basis points; and the favorable impact of foreign currency fluctuations of 13 basis points; partially offset by unfavorable cost changes related to self-manufacturing and sourcing of 56 basis points; the unfavorable impact of higher inventory write-downs of 9 basis points; unfavorable changes in sales mix of 7 basis points; and unfavorable other cost changes of 11 basis points.

Previous wording

Royalty overrides were $415.2 million and $416.0 million for the three months ended March 31, 2024 and 2023, respectively. Royalty overrides as a percentage of net sales were 32.9% and 33.2% for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Royalty overrides were $415.3 million and $429.7 million for the three months ended June 30, 2024 and 2023, respectively, and $830.5 million and $845.7 million for the six months ended June 30, 2024 and 2023, respectively. Royalty overrides as a percentage of net sales were 32.4% and 32.7% for the three months ended June 30, 2024 and 2023, respectively, and 32.6% and 32.9% for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

The decrease in royalty overrides as a percentage of net sales for the three months ended March 31, 2024 as compared to the same period in 2023 was primarily due to higher net sales in China as a proportion of our total worldwide net sales. The majority of service fees to our independent service providers in China are included in selling, general, and administrative expenses while Member compensation for all other countries is included in Royalty overrides.

Current wording

The decrease in royalty overrides as a percentage of net sales for the three and six months ended June 30, 2024 as compared to the same periods in 2023 was primarily due to favorable changes in mix of products and countries. Generally, royalty overrides as a percentage of net sales may vary from period to period due to changes in the mix of products and countries because full royalty overrides are not paid on certain products and in certain countries. In addition, the majority of service fees to our independent service providers in China are included in selling, general, and administrative expenses while Member compensation for all other countries is included in Royalty overrides which could also impact royalty overrides as a percentage of net sales.

Previous wording

Selling, general, and administrative expenses were $492.2 million and $475.9 million for the three months ended March 31, 2024 and 2023, respectively. Selling, general, and administrative expenses as a percentage of net sales were 38.9% and 38.1% for the three months ended March 31, 2024 and 2023, respectively.

Current wording

Selling, general, and administrative expenses were $502.3 million and $460.5 million for the three months ended June 30, 2024 and 2023, respectively, and $994.5 million and $936.4 million for the six months ended June 30, 2024 and 2023, respectively. Selling, general, and administrative expenses as a percentage of net sales were 39.2% and 35.0% for the three months ended June 30, 2024 and 2023, respectively, and 39.1% and 36.5% for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

The $16.3 million increase in selling, general, and administrative expenses for the three months ended March 31, 2024 as compared to the same period in 2023 was driven by $14.4 million in higher professional fees primarily from expenses related to the Digital Technology Program, $9.4 million in higher labor and benefits costs, partially offset by $3.9 million in lower foreign exchange losses and $3.8 million in lower Member event and promotion costs. The increase in labor and benefit costs includes higher employee bonus accruals and expenses related to the Restructuring Program which were partially offset by lower expenses related to the Transformation Program.

Current wording

The $41.8 million increase in selling, general, and administrative expenses for the three months ended June 30, 2024 as compared to the same period in 2023 was driven by $46.1 million in higher labor and benefits costs, $11.1 million in higher professional fees primarily from expenses related to the Digital Technology Program, partially offset by $8.9 million in lower Member event and promotion costs, and $5.3 million in lower advertising and sponsorship costs. The increase in labor and benefit costs includes higher expenses related to the Restructuring Program, higher employee bonus accruals, partially offset by lower expenses related to the Transformation Program.

Previous wording

We did not recognize any government grant income related to our regional headquarters and distribution centers within China during the three months ended March 31, 2024.

Current wording

We did not recognize any government grant income related to our regional headquarters and distribution centers within China during the three and six months ended June 30, 2024.

Previous wording

The $8.9 million of other operating income for the three months ended March 31, 2023 consisted of $8.9 million of government grant income for China (See Note 2, Significant Accounting Policies, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q).

Current wording

The $1.2 million of other operating income for the three months ended June 30, 2023 consisted of $1.2 million of government grant income for China (See Note 2, Significant Accounting Policies, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q).

Previous wording

The decrease in interest expense, net for the three months ended March 31, 2024 as compared to the same period in 2023 was primarily due to a decrease in our overall borrowings, an increase in capitalized interest, and an increase in interest income earned, partially offset by an increase in our weighted-average interest rate. As a result of the $1.6 billion debt refinancing transactions described further in Note 15, Subsequent Events, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q, we expect our weighted-average interest rate to increase in future periods and therefore we expect our interest expense and total interest expense, net to increase in fiscal year 2024 compared to fiscal year 2023.

Current wording

The increase in interest expense, net for the three and six months ended June 30, 2024 as compared to the same periods in 2023 was primarily due to an increase in our weighted-average interest rate as a result of the April 2024 debt refinancing transactions described further in Note 4, Long-Term Debt, to the Condensed Consolidated Financial Statements included in Part I, Item 1, Financial Statements, of this Quarterly Report on Form 10-Q.

Previous wording

Income taxes were $9.7 million and $1.8 million for the three months ended March 31, 2024 and 2023, respectively. The effective income tax rate was 28.5% and 5.8% for the three months ended March 31, 2024 and 2023, respectively. The increase in the effective tax rate for the three months ended March 31, 2024 as compared to the same period in 2023 was primarily due to changes in the geographic mix of the Company's income and a decrease in tax benefit from discrete events.

Current wording

Income taxes were $7.5 million and $25.1 million for the three months ended June 30, 2024 and 2023, respectively, and $17.2 million and $26.9 million for the six months ended June 30, 2024 and 2023, respectively. The effective income tax rate was 61.5% and 29.5% for the three months ended June 30, 2024 and 2023, respectively, and 37.2% and 23.2% for the six months ended June 30, 2024 and 2023, respectively. The increase in the effective tax rate for the three months ended June 30, 2024, as compared to the same periods in 2023, was primarily due to changes in the geographic mix of our income and an increase in tax expense from discrete events. The increase in the effective tax rate for the six months ended June 30, 2024 as compared to the same period in 2023 was primarily due to changes in the geographic mix of our income, partially offset by an increase in tax benefits from discrete events.