Nu Skin Enterprises, Inc.

Good day. Thank you for standing by. Welcome to the Q1 2024 Nu Skin Enterprise 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 a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Scott Pond, Vice President, Investor Relations. Please go ahead.

Thanks, Michelle, and good afternoon, everyone. Today on the call with me are Ryan Napierski, President and CEO, and James Thomas, 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 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 now I'd like to turn the call over to Ryan.

Thanks, Scott. Hello, everyone. Thanks for joining us today. Having just returned from our top sales leader alignment and activation all-in event in Abu Dhabi and Dubai, I'm eager to provide an update on the state of our business as we enter our 40-year anniversary, pursuing our mission of being a global force for good by empowering people to look, feel, and live better lives. I'll provide a performance summary for Q1, as well as a progress update on our ongoing enterprise transformation vision, strategy, and plans. Our results for the first quarter were in line with guidance. At a high level, our business is on track with established expectations, and we are maintaining our full year outlook. Revenue for the quarter was in the middle of our guidance range, despite experiencing more FX pressure than we had anticipated. We were also pleased with our progress on expense reduction initiatives, which helped us deliver first quarter non-GAAP earnings per share at the high end of our range. Our RISE business delivered another strong quarter with revenues up 57% to more than $62 million, led by both our Mabley technology platform and Wasatch manufacturing business. The revenue contribution from RISE accounted for approximately 15% of total enterprise revenue in the first quarter, and we continue to expect this segment to account for 20% to 25% of our overall mix by 2025. Looking at the performance of our core NuSkin business, our new product innovations delivered solid results. Ageloc WellSpa IO and RenuSpa IO, the holistic wellness and beauty devices we launched recently, along with Ageloc TRMe, our personalized weight management system that also launched in 2023, contributed approximately $42 million to to our Q1 revenue. Europe and Africa, there was a very favorable response to TRME during Q1. There were also positive trends in a handful of our Southeast Asia Pacific markets, and we were encouraged by continued improvements in our sales leader trend in mainland China, despite a generally tepid macroeconomic climate. In other regions, we continue to battle macroeconomic challenges, including heavy inflationary pressures on consumer spending for premium goods. which together with our aggressive price increases from a year ago have hampered our customer and affiliate acquisition efforts. In the Americas region, our subscription business in North America continues to be pressured by these factors, and we're making some adjustments to our model in Latin America to counter macro forces, particularly in Argentina. In South Korea, consumer sentiment remains negative due to the housing market crisis, making it difficult to grow customers and build the channel. Consumer sentiment is also a factor in Japan, in addition to significant FX pressure on our results. So to combat these external factors, we are placing more emphasis on product innovation in the affordable luxury space, and we will be introducing several new products at our upcoming West and East live sales conferences in Q3, our first multi-market in-person event since COVID-19. Despite these headwinds, we remain committed to our long-term enterprise vision of transforming our core new skin business while building out rise in our long-term beauty, wellness, and lifestyle ecosystem. As I mentioned earlier, we just returned from our meetings with our top leaders where there was a palpable level of energy and excitement about the future. We introduced our next major product innovation, Mind360, a new division targeted at the rapidly growing $10 billion cognitive health market. Mind360 takes a holistic approach to addressing the interrelated factors of stress, sleep, and cognitive performance that are impacting the well-being of consumers in today's busy world. We're excited to preview Mind360 at our upcoming live events in Q3, with planned introductions of Mind360 to follow towards the end of the year and into 2025. Channel activation within our core Nu Skin business is a top priority for us, and we're pleased to announce the promotion of Justin Kiesel as our new president of global sales. Justin has been leading the work to expand our affiliate model across the Americas over the past several years. He has extensive sales leadership experience, both at Nu Skin and in prior roles, and has demonstrated his commitment to our leader's success. Justin is spearheading our efforts to retool our entire global sales organization and bring a much more rigorous lens to the sales performance management and channel activation. To this end, we recently launched a new series of incentives, including a new customer acquisition and leadership performance program to re-energize the field. We anticipate these new initiatives to take root through the remainder of this year. Also, let me quickly give an update on last quarter's announcement of our intent to enter India, one of the fastest-growing direct-selling markets in the world. We are taking a very new approach to this high-potential emerging market that will enable us to reach a much wider array of customers and entrepreneurs. Our product offering, business model, and operational footprint will be synchronized to enable broader mid-market appeal. We are just beginning to activate our channel towards a targeted market opening in 2025 with a digital first approach that is more agile and will enable us to scale more quickly throughout the market. We see India and our emerging market business model as a gateway to many new markets in the future and anticipate these learnings will help us delve deeper into second and third tier markets within Latin America, Southeast Asia, and China. Growing out Rise and our Rise business is a critical element of our overall enterprise vision as we seek to build out the world's leading beauty, wellness, and lifestyle ecosystem. Over the past several years, we've constructed essential infrastructure consisting of manufacturing, technology, and operations to support NuSkin's core business while enabling other brands to grow. We are now applying this ecosystem to BeautyBio to enable it to scale and see additional opportunities to extend our comprehensive suite of services spanning product R&D, production, packaging, cutting-edge technology, and logistics to the indie beauty and wellness industry for influencers and creators. We see great potential for this influencer incubator over the mid to long term, and we are well positioned to capitalize on these opportunities as we lean into the disruption of the beauty and wellness industry due to social influencers and indie brands. We are utilizing our capital to invest in additional manufacturing, services, capabilities, and opportunities to enable future growth. So in summary, first quarter results were in line with guidance, and we are maintaining our 2024 outlook. From a top-line perspective, we are acutely focused on channel activation with new incentives and continue to lean into our product strategy, including the upcoming launch of Mine360, as well as affordable luxury. We also continue to invest in our RISE business to accelerate growth and further transform our enterprise to leverage our competitive advantages within the beauty, wellness, and lifestyle industries. Expense prudence remains a critical focus in 2024. And while we made significant progress on these initiatives during the first quarter, there are still opportunities to drive further efficiency, including our SKU optimization plan to eliminate 25 to 30% of our SKUs by the end of 2025. Despite the challenging conditions in many of our markets in the near to mid-term, we remain focused on executing our long-term vision of becoming the world's leading integrated beauty and wellness ecosystem. And with that, I'll turn the call over to James to cover the first quarter results in more detail along with our guidance. James?