Nu Skin Enterprises, Inc.

Good day and thank you for standing by. Welcome to the 3rd Quarter 2021 New Skin Enterprises Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question during that time, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your first speaker for today, Scott Pond. Thank you. Please go ahead.

Thanks, Anne, and good afternoon, everyone. Today on the call with me are Ryan Napierski, President and CEO, Connie Tang, Chief Global Growth Officer, and Mark Lawrence, CFO. 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 release and our SEC filings for 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 website for any required reconciliation of non-GAAP numbers. And with that, I'll turn the call over to Ryan.

Thanks, Scott. Good afternoon, everyone. We really appreciate you joining the call today. This is my first earnings call as NuSkin's CEO, so I'd like to take a few minutes to share my perspectives on our business, both historically and for the future, as we work to further transform our business towards our vision of becoming the world's leading Innovative beauty and wellness company powered by our dynamic affiliate opportunity platform. Nu Skin has a rich heritage of building innovative beauty and wellness products for nearly four decades, including billion-dollar brands like Nu Skin Personal Care, PharmaNex, and AgeLock. However, the value of our business has often been defined through the narrow lens of our historic direct selling distribution channel. But when you examine our business for what it is becoming, we are better described as a beauty and wellness company that connects consumers to innovative products that help them look, feel, and live better through our trusted brand affiliates via our socially enabled digital platform. Affiliate powered, direct to customer, social commerce. Nu Skin is fundamentally a beauty and wellness company based on our global reputation for high quality, innovative products, and deep consumer connections. We provide a holistic inside-outside approach backed by robust R&D and scientific rigor, which very few companies provide. And we are a category leader for beauty device systems, according to Euromonitor, for four years running, which provides a very unique opportunity for us as we expand our device ecosystem moving forward. We're now engaged in transforming our business from a traditional direct selling company to to becoming the world's leading beauty and wellness company powered by our dynamic affiliate opportunity platform. There are three key strategic imperatives that will enable our next era of growth. First, we will launch Empower Me, our personalized beauty and wellness strategy as we begin to connect our beauty device systems to our expanding digital ecosystem beginning in 2022. Second, We'll continue to evolve our go-to-market approach from a traditional direct selling business model to an emerging affiliate-powered social commerce business model around the globe. And third, we'll expand our digital platform with an enhanced dot-com experience as well as two new apps, Vera for our customers and Stella for our affiliates. Let me give a bit more context on our work in each of these three strategic areas. Building upon our leadership position as the world's number one beauty device systems brand, we will expand our device systems by introducing next-generation connected devices beginning in 2022. The beauty device category continues to be the highest growth sector in beauty and personal care, and we believe that our connected device strategy will further expand our share of that category. Our products are loved by well more than a million registered customers today and and many more unregistered customers around the globe. And through Empower Me Personalized Beauty and Wellness, we will be able to connect even more customers, nurture deeper engagements, and build stronger community of brand lovers, which will result in greater lifetime value. We aspire to achieve what other great device companies like Apple, Amazon, and Peloton have done, making us the leader in connected beauty and wellness. Next, social commerce is disrupting traditional e-commerce, just as e-commerce disrupted retail more than 20 years ago. Global research estimates that social commerce will expand from approximately $500 billion in 2020 to $3.4 trillion by 2028, with nearly 70% of that stemming from Asia. The power of influencer and affiliate marketing is now regarded as the next generation advertising model by most leading beauty brands. This is where Nu Skin wins. Our route to market has always been through micro-influencers well before social media. We're evolving our business model to further leverage social scale and reach for our authentic affiliate marketing channel around the globe, including further refinements to our sales incentives, campaigns, and promotion plans. This leads to the third strategic imperative, extending our digital platform. which currently accounts for more than 90% of Nu Skin's revenues. To fully capitalize on both our Empower Me personalized beauty and wellness product strategy and our affiliate-powered social commerce business model, we will continue to invest in our digital ecosystem by developing new tools to empower our customers and affiliates. These include our WeShop Tencent-powered social commerce tool set that began rollout in Q3 in China to help drive customer acquisition, Vera, our product personalization app, which is being expanded with new functionality to enable deeper customer engagement. And our newest app, Stella, which will contain my site and product offer, our most popular affiliate tools, which is in beta test now. We're expanding our social commerce capabilities within both of these apps through our recent acquisition of Maverly, an emerging social commerce technology company, that will help our affiliates more effectively share and sell products via social media, and will continue to make investments that drive growth and advance the business objectives for Nu Skin, providing value creation potential for the overall enterprise. This multi-year transformation will lead Nu Skin into a new era of growth and opportunity as we evolve from our traditional direct selling roots to become the world's leading beauty and wellness company, powered by our dynamic affiliate opportunity platform. Our sustained growth in the West over a strong 2020 gives us confidence that our strategy is directionally accurate. As we continue to execute our plans, I'm confident you will begin to see the business through a much broader lens with a significantly larger total addressable market. We'll share more about our long-term strategy and an upcoming Q1 Investor Day. We'll also introduce additional metrics we believe to be instrumental in evaluating our evolving business and and provide measurable milestones to track our progress against our transformation objectives. Now let me share some thoughts on the third quarter results before turning it over to Connie and Mark for additional detail. As we stated in our pre-release, we were disappointed with our third quarter revenue, which was lower than anticipated due to COVID Delta variant disruptions. Unexpected government restrictions interrupted selling and promotional activities in several markets, specifically in mainland China and Southeast Asia. China continues to be a challenging market due to macro-environmental factors. Nevertheless, it continues to hold enormous potential for beauty and wellness brands and will continue to explore additional approaches to market to rejuvenate growth in the midterm, including our Tencent WeShop partnership. Additionally, macroeconomic issues in Latin America and extended summertime return to vacation patterns in Europe affected our performance as well. Despite these headwinds, we were pleased with 46% reported year-to-date growth in EMEA and see a bright future ahead as this market continues to lean into social commerce. We were pleased with steady gains in the U.S. driven by social commerce expansion and the launch of Beauty Focus Collagen Plus. We also experienced double-digit growth in Korea related to TR90 body shaping system campaigns and various affiliate promotional initiatives. Both markets are well positioned for future growth. For Q4, we are now focused on the rollout of beauty-focused Collagen Plus and PharmaNex Meta in most of our markets. Collagen Plus leverages our unique inside-outside R&D capabilities to enter the growing $53 billion global beauty supplements market. Meta is particularly interesting for us given the growing metabolic health challenges around the world. Both products hold great potential as we roll them out this quarter. So in summary, while the third quarter was a near-term setback, we remain on track to growth 3% to 5% this year on top of a strong 2020. In fact, our two-year growth is projected to be 10% to 11%. As we further our strategic transformation, we anticipate challenges along the way, but I'm very optimistic about our future as we lead the beauty and wellness industry into a new era of connected consumerism with Empower Me through our dynamic affiliate-powered social commerce model. We have the right vision, strategy, and plans to achieve it, and we have built the right team who will lead Nu Skin into the future. In fact, we were pleased to be recognized this past month by Forbes on its list of the world's top female-friendly companies. And with that, I'll turn the call over to Connie Tang for some additional insight on our market performance, and then Mark for a review of our financials and our updated 21 guidance. Connie is new to all of you, but not new to business transformation, global markets, or our industry. She's spent almost her entire career in beauty and wellness, and has been a significant addition to our Nu Skin leadership team over the past several months as we partner together to transform our global business. You'll then hear from Mark, whom you all know and is also a transformational leader, coming out of Silicon Valley and the connected devices world of Amazon Lab 126, which provides critical perspective and experience for our future direction. So Connie, with that, take it away.