Nu Skin Enterprises, Inc.

Good day, and thank you for standing by. Welcome to the Nu Skin third quarter 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. To ask questions during the session, you need to press star 11 on your telephone. You will then hear an automated message advising you your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand your conference over to your first speaker today, Scott Pond, VP of Investor Relations. Scott, you have the floor.

Thanks, Stacey, and good afternoon, everyone. Today on the call with me are Ryan Napierski, President and CEO, Connie Tain, 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 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.

Thanks, Scott. Good afternoon, everybody, and thanks for joining us on the call today. It's been an interesting year to date, to say the least, as we initiated a global strategic transformation at Investor Day earlier in the year, just prior to the economic turmoil that we're now facing. The third quarter proved more challenging than anticipated due to an increasingly difficult global environment and geopolitical complexities. We finished the third quarter at $538 million with a non-GAAP EPS of 47 cents. Four primary factors accounted for most of the shortfall versus our guidance. First, continued declines in mainland China due to the prolonged COVID-related disruptions, including expanded lockdowns throughout the country. Second, increasing weaknesses in South Korea related to economic pressures and company price increases. Third, persistent global inflationary pressures. And fourth, the strengthening of the U.S. dollar above expectations, placing pressure across our supply chain. Despite the current environment, we continue to execute on plans as we progress towards New Vision 2025 and becoming the world's leading integrated beauty and wellness company that's powered by our dynamic affiliate opportunity platform. In the third quarter, we began introducing LumaSpa IO, our new connected cleanse and treat device system. This input-output device introduction marks a major milestone for Nu Skin and the preliminary rollout of our Empower Me personalized beauty and wellness strategy as we gain greater data and insights about our customers' individual beauty and wellness journeys. The launch of LumaSpa IO, which is continuing into the fourth quarter, together with continued adoption of AgeLock Meta and BeautyFocus Collagen Plus, helped drive constant currency growth in four of our reporting segments, led by double-digit gains in Southeast Asia Pacific, as well as more modest growth in the Americas, Japan, and our Taiwan-Hong Kong segments. Our affiliate-powered social commerce strategy continued to show progress, especially in the U.S., helping us post 10 consecutive quarters of growth. Taiwan and parts of Southeast Asia that have adopted social commerce also achieved growth in the quarter. We'll continue to innovate around the model with initiatives like OnePrice, a new pricing model introduced with the LumaSpa I.O. that we anticipate will further our social commerce efforts by promoting affiliate productivity and retention. And regarding initiatives to advance our digital-first ecosystem, both Vera and Stella apps are now available in all markets. We continue to add languages, features such as product offer, and additional products available to purchase through these apps. Connecting LumaSpa IO with the Vera app provides direct customer feedback to optimize the efficacy of the device and products. Our ultimate goal with these apps is to provide an integrated beauty and wellness virtual experience to our customers and an increased ability for our affiliates to seamlessly build their businesses from the palm of their hands. From a geographic viewpoint, let me share some high-level perspectives on a couple of our key markets, and then Connie will provide additional detail in just a moment. We have reported the ongoing improvements in the geographic diversification of our business with no single market representing more than 20% of our revenue today. We believe this diversification will be beneficial given increasing global volatility and complexities. We anticipate challenges in China in the near to mid-term due to ongoing economic factors related to strict lockdowns in the market. We're working to counter these factors by making modifications to our business model to enable greater flexibility. We continue to work towards mid to long-term stability in this business as the environment improves. Mainland China now represents approximately 14% of our business. Our business in Korea experienced the setback in Q3 as we executed a local price increase to address growing inflationary pressures. We will be expanding our weight management offering there, which we believe will help improve the market into 2023. On a more positive note, four of our seven market segments reported constant currency growth, led by Southeast Asia Pacific, which experienced double-digit currency growth excuse me, double-digit constant currency results driven by a strong LumaSpa IO introduction and the ongoing rollout of Ageloc Meta, as well as the U.S., which posted another strong quarter and moderate growth in Japan, as well as Taiwan and Hong Kong. Despite the macroenvironmental uncertainties in the near to midterm, we remain focused on moving New Vision 2025 forward as we further our transformation to becoming the world's leading integrated beauty and wellness company. While it's too early to give details for 2023, I want to highlight a few specific strategic imperatives for the coming year that reinforce our vision. For our Empower Me strategy, we expect LumaSpa I.O. to continue ramping up over the next several quarters and are planning to introduce our next connected device, AgeLock Body I.O., in the second half of 2023. In the first half of the year, we'll also be rolling out enhancements to our TR90 weight management and body shaping line, with a more personalized approach called TR Me. We'll also continue to expand social commerce with additional initiatives that enhance our brand affiliates' productivity and retention, such as Bolt Kit offerings and new affiliate reward programs throughout the year. From a digital perspective, we'll continue to focus on enhancing capabilities and functionality across the Vera and Stella apps, leading to even deeper customer insights and engagement. and driving increased affiliate productivity. We'll also begin to deploy a new e-commerce platform together with our strategic partner Infosys that will further enhance our ability to drive social commerce globally. And lastly, during these challenging times, we are sharpening our focus, leaning into our core strengths, and leveraging the agility of our model to improve overall efficiencies across the company. We're making progress on our previously announced cost reduction plan as we realign capabilities and resources to deliver upon new vision 2025 and strengthen our financial position. We'll continue to evaluate the business in context of the global landscape, and I anticipate these efforts to result in approximately $100 million in cost savings this next year. Mark will speak through the details in just a moment. So these efforts together with our resilient entrepreneurial sales force give me confidence in the future of our business as we navigate these precarious times and remain focused on our long-term vision. So with that, I'll turn the time over to Connie.