Nu Skin Enterprises, Inc.

Ladies and gentlemen, thank you for standing by. And welcome to the Q1 2020 New Skin Enterprises earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. So if there's a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Scott Pond. Vice President of Investor Relations. Thank you. Please go ahead, sir.

Thanks, Christy, and good afternoon, everyone. Today on the call with me are Rich Wood, Chief Executive Officer, Ryan Napierski, President, Mark Lawrence, Chief Financial Officer, and Dr. Joe Chang, Chief Scientific Officer. On today's call, comments will be made that include some forward-looking statements. These statements involve risks and uncertainties, and actual results may differ materially from those discussed or anticipated. Please refer to today's earnings review and our SEC filings for a complete discussion of these risks. Also, during the call, certain financial numbers may be discussed that differ from comparable numbers obtained in our financial statements. We believe these non-GAAP financial numbers assist in comparing period-to-period results in a more consistent manner. Please refer to our investor page at ir.newskin.com for any required reconciliation of non-GAAP numbers. And with that, I'll turn the time over to Rich.

Thank you, Scott, and good afternoon, everyone. Thank you for taking some time to join with us today. Last time we spoke about our results in early February, we mentioned the difficulty of predicting the impact of coronavirus on our business. Since then, what began as a regional outbreak has grown into a global pandemic. On behalf of the entire team at Nu Skin, our hearts go out to all those impacted. And we are grateful for the efforts of healthcare workers, first responders, and essential workers around the world. For our part, we are diligently working to protect the health and safety of our employees, our sales leaders, and communities around the world, including significant donations to support COVID-19 relief efforts. While Nu Skin is not immune to a disruption of this magnitude, we are fortunate to have a flexible business model Built on empowering people to work remotely. For example, more than 80% of our revenue globally is already processed online. We also learned valuable lessons in 2019 when government actions significantly restricted meetings and gatherings for much of the year in mainland China. This experience has helped prepare our business and sales representatives to operate in today's reality. This is demonstrated by the fact that we produced first quarter results above our guidance with revenue of $518 million and earnings per share of 36 cents, including a 2% foreign currency headwind. Our dedicated and resilient sales leaders remain focused on building their businesses and providing top-notch service to their customers. Our customer numbers held steady on a sequential basis, which is notable given the sequential nature and the cyclical nature of our business where the first quarter typically shows a sequential decline. While our sales leader numbers were down year over year, primarily due to the decline during 2019, we are pleased that the seasonal decline in the first quarter was slightly better than typical. We also experienced stronger than anticipated demand for our nutrition supplements and have seen strong customer activity in the first quarter, giving us optimism for the remainder of this year. As expected, our mainland China business was down for the quarter. We have a deep understanding of the Chinese market, and throughout 2019, we implemented creative strategies to improve customer sentiment and provide digital tools to assist in training and developing the sales network. On the strength of our institutional knowledge, the power of our products, and the easing of the pandemic-related restrictions in China, we are seeing gradual signs of improvements in the second quarter, and expect this to continue throughout the balance of the year. In other markets, we're proud of the way our sales leaders have stepped up to the challenge. While COVID-19 had more impact in the Americas and the EMEA markets than anticipated from the time we gave our previous guidance, sequentially the global business held stable with improving customer and sales leader activity. Additionally, with strong product launches slated for the back half of 2020, we expect these markets to also return to growth by the fourth quarter. Our manufacturing segment performed well given the circumstances. The segment declined modestly, largely due to supply chain disruptions on certain ingredients and packaging materials from third-party suppliers caused by pandemic-related shutdowns. Our strategic investment in these businesses has enabled our new skin product supply chain to be stable at a time when others are being significantly disrupted. During the quarter, we invested in additional equipment and capacity, which will add to our manufacturing capabilities and growth opportunities later in this year. Finally, our business generated solid cash from operations in Q1, and the strength of our balance sheet enabled us to return value to our shareholders by 10%. Increasing our dividend for the 19th straight year and repurchasing shares. While no one can be certain of the severity or duration of this global COVID-19 impact, we have a strong financial position and a business model that benefits our customers, sales leaders, and employees while prioritizing their health and safety. Overall, based on the trends we are seeing in Q1 and through April, we continue to feel confident about the future of our business, and are executing on our plans which we believe will generate growth in the second half of this year. We will continue to invest in customer and sales leader initiatives as well as our strategic manufacturing capabilities and see a great future ahead. I will now turn the call over to Ryan to provide more detail around our global business and our product launch plans. Ryan.