Nu Skin Enterprises, Inc.

Good day and welcome to the first quarter 2022 New Skins Enterprises Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Scott Pond, Vice President of IR. Please go ahead.

Thanks, Betsy, 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 risk, 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 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 website for any required reconciliation of non-GAAP numbers. And with that, I'll turn the call over to Ryan.

Hey, thanks, Scott. Good afternoon, everybody. Thanks for joining the call today. We remain acutely focused on New Vision 2025 and our strategic transformation that we laid out with each of you at our investor day in February. This evolution of our business is vital to our long-term success as we lean into the rapidly evolving commercial landscape and we take advantage of emerging market trends such as product personalization, social commerce, and the gig economy in order to rejuvenate sustained growth in the coming years, all in spite of these near-term disruptions we're seeing in the market. For the first quarter, we were pleased to report strong results, including revenue of $604.9 million, which exceeded the high end of our prior guidance by approximately $15 million. First quarter earnings per share also came in slightly above our prior guidance at $0.76, due in large part to the revenue beat. Our outperformance was driven by solid gains in the U.S., Taiwan, and Southeast Asia, and continued effective product rollouts, including AgeLock Meta, and Beauty Focus Collagen Plus, which both performed well in the quarter. These two product introductions helped to further strengthen the wellness side of our business, improving from 35% of revenue to 44% year over year. We're particularly encouraged with our results considering the continued global pandemic disruptions, including increasing lockdowns in China, the conflict in Europe, and global economic challenges. Now, let me give you some brief thoughts on a couple of our key regions. Unforeseen global factors of heightened uncertainty in both EMEA and China. We're deeply saddened by the unfortunate situation in Ukraine and recognize the profound impact that these events are having on many people around the world. On March 4th, we announced suspension of our limited operations in Russia and Ukraine and and are experiencing some softness in EMEA due to the broader distractions associated with the war in this part of the world. In mainland China, we remain optimistic in our long-term view of this market's substantial potential for our unique beauty and wellness products. However, operations in the latter part of first quarter were impacted by COVID-related lockdowns and other factors, and we anticipate these disruptions and the loss of momentum to impact our Q2 and annual results. In other regions, the rollout of Meta and Collagen Plus and other new products coupled with the continuing advancement of our social commerce initiatives remain encouraging, contributing to return to growth in Southeast Asia and continued growth in the US and Taiwan. Connie will provide a bit more context in just a few minutes. Nevertheless, given the global uncertainties in China, EMEA and the broader economy, we're lowering our outlook for 2022 by approximately $150 million. Now, in spite of this and the short-term challenges, we remain focused on the transformation of our business with New Vision 2025. Let me provide just a bit more context on that. While still in the early stages, we're fully engaged in this major strategic transformation to capitalize upon the commercial shifts of product personalization and beauty and wellness, social commerce, and the gig economy. Our transformation from traditional direct selling to becoming the world's leading integrated beauty and wellness company powered by our dynamic affiliate opportunity platform is all about defining a new framework for our company to win in this evolving landscape. For the first time in three years, we are preparing to meet with our team elites in London to align with our top global sales leaders around New Vision 2025 projects. and our three strategic imperatives, Empower Me, affiliate-powered social commerce, and our digital ecosystem. Let me just briefly talk about progress on each of the three. Our Empower Me personalization beauty and wellness strategy is intended to provide consumers with deeper insights into their individual skin care and body care needs. IoT-connected devices will be a key aspect of Empower Me, beginning with the launch of LumaSpa IO in early Q3 2020. followed by some limited previews of body I.O. beginning in Q4. Now these unique input-output devices will enhance the consumer experience and forge even stronger connections with the company through enhanced personalization of product and content curation, improving customer loyalty and lifetime value. Next, affiliate-powered social commerce builds on our roots of person-to-person marketing to amplify messaging around authentic personal recommendations from our roughly 250,000 paid affiliates by leveraging social media scale and reach. In 2022, we are leveraging key learnings from our Western markets as we refine our product promotions cadencing, introduce a new global pricing model, beginning with LumaSpa IO, and further train our sales force around the globe to embrace this new social commerce model. Thirdly, we continue to build out our digital-first ecosystem with the introduction of Vera and Stella apps towards the end of the first quarter. The Vera app leverages AI and machine learning to guide consumers through their personalized beauty and wellness journeys, while the Stella app enables brand affiliates to easily access key information and tools to better manage and build their businesses, all from their mobile devices. Both apps were introduced in English at the end of the quarter, and other languages and capabilities will be added throughout 2022. Now, to help you better understand our transformation and measure progress along the way, we committed in February to providing greater transparency into additional key drivers. Our first notable change is to begin reporting the number of paid affiliates, which is a broader segment of our sales force who actively share products with customers on a much more flexible basis and who act as a pipeline for future sales leaders. Connie will describe that a bit in just a couple of minutes. I'm also pleased to report our ongoing ESG efforts as we seek to improve people's lives and the world in which we all live. We recently released our fourth annual sustainability report where we highlighted our progress in several key areas, including the reduction of 131 tons of plastic and more than 34 tons of paper in 2021 due to packaging changes to more than 60 products and other related initiatives. In addition, the two Communitas Awards we recently received further reflect our tremendous commitment to our entire organization towards corporate social responsibility. Nu Skin also continues to lean into diversity, equity, and inclusion as we're pleased to be named to Forbes list of the world's top female-friendly companies, for 2021, as well as their list of America's best employers for 2022, where we rank number two within packaged goods, and number 57 out of 500 mid-sized companies overall. So in summary, while there are near-term uncertainties with China, Europe, and the broader economy, there are also new opportunities arising as our world continues to evolve. I'm optimistic about the future as we work towards New Vision 2025. Our agile model is built on a strong foundation and is globally diversified, which helps to mitigate risks and enables us to continually find new pathways for growth. In the early phases of New Vision 2025, I really am as confident as ever in our future as we leverage our capabilities and resources to transform to becoming the world's leading integrated beauty and wellness company, powered by our dynamic affiliate opportunity platform. So with that, I'll turn it over to Connie to provide some additional insight on market performance. Connie?