Nu Skin Enterprises, Inc.

Good day, and thank you for standing by. Welcome to the fourth quarter 2024 Nu Skin Enterprises Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. If you would like to withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to B.G. Hunt. Please go ahead.

Thanks, Lisa, and good afternoon, everyone. I'm B.G. Hunt, and would like to introduce myself as the new head of investor relations at Nu Skin. With nearly 20 years at Nu Skin, I've held positions in our global tax group, led our administrative services, helped build out our Southeast Asia headquarters, and will continue to head up our global treasury team. I've enjoyed my early interactions with you and look forward to working more closely to build our investment community as we continue to transform our business towards becoming the world's leading beauty, wellness, and lifestyle ecosystem. With the progress we've made in several areas, I'm excited to turn the time over to Ryan Napierski, President and CEO, and James Thomas, CFO, to share more on the details. Before I do that, let me point out that on today's call, comments will be made that include forward-looking statements. These statements involve risks and uncertainties, and actual results may differ materially from those discussed or anticipated. Please refer 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 and comparing period to period results in a more consistent manner. Please refer to our investor website, ir.newskin.com, for any required reconciliation of these non-GAAP numbers. And with that, I'd now like to turn the call over to Brian.

Hey, thanks, BG. Thanks, everyone, for joining the call from snowy Utah, where we're finally getting the snow that we need. Much needed here, but thanks for joining the call. I'll begin with an overview on our performance and then discuss our key priorities for 2025 as we continue to transform our journey towards becoming the world's leading integrated beauty, wellness, and lifestyle ecosystem. Our fourth quarter revenue came in above our guidance range with encouraging sequential growth from Q3 to Q4 in our core new skin business. Our adjusted earnings per share, excluding restructuring and other charges, also exceeded our projections. This momentum, combined with the continued strong performance from Rise, demonstrates progress in our transformational journey. In the quarter, we delivered constant currency growth in the Americas, improved profitability, and paid down debt of $40 million. While persistent headwinds remain in China and South Korea, the growth in Latin America and parts of Southeast Asia was particularly encouraging and demonstrates our developing market strategy is gaining traction. Our Q4 results were driven in part by the launch of our new Ageloc TrueFace Peptide Retinol Complex and the performance of RISE. Our newest TrueFace product launched in late 2024 and is demonstrating strong market acceptance. This innovative product leverages AI-discovered peptide technology to deliver retinol in a unique way, combining two types of retinoids for a powerful result in a gentle formula. The success of this launch reinforces our ability to meet evolving consumer demands in the premium beauty space while maintaining our commitment to innovative formulations. Our ride segments achieved 28% year-on-year growth in Q4. In January, we announced the strategic transaction of Maverly with Later and Summit partners for $250 million. This transaction generated a five-times return on our investments in 2021. and provides further validation of our RISE ecosystem strategy while also strengthening our balance sheet. Through our ongoing commercial relationship with Later, we'll maintain access to Maybelline's technology and social commerce capabilities to support our affiliate marketing business. So looking ahead to 2025, we have three strategic priorities as we work towards our long-term enterprise vision of becoming the world's leading beauty, wellness, and lifestyle ecosystem. First, strengthen our Nu Skin core business. Second, accelerate innovation of our I.O. intelligent beauty and wellness platform, including Rise. And third, improve our operational performance and efficiency. Let's dive deeper into each of these. First, strengthening our Nu Skin core business. Over the past few years following COVID, direct selling has seen perhaps the greatest level of disruption as consumers have shifted primarily to social online shopping. Social platforms have evolved their algorithms to maximize paid advertising revenue, pushing down authentic product recommendations on their platforms. In addition, the broader declining consumer sentiment in critical markets like China and South Korea has impacted premium beauty and personal care categories. Our teams are acutely aware of these trends and are actively evolving our core business to succeed in the future by enhancing our entrepreneurial business model, to more effectively reward affiliates for building their businesses in a social-first manner, while continuing to reward leaders for training and motivating their sales teams. This new business model combines the best of affiliate marketing with the power of Nu Skin leadership, and we plan to continue to roll it out with enhancements to various markets around the world throughout 2025 and beyond. We're also refining our product portfolio to better fit today's emerging consumer needs around the world to make room for exciting new product innovations like Mind360 Cognitive Health, our Cognitive Health line, which we began to launch in 2024 and will be launching in additional markets throughout 2025, as well as a full restage of our TrueFace Prestige Beauty line to be rolled out globally in 2025. Meeting consumers where they are from a price value perspective is critical, particularly as we lean into our developing market segments. With this in mind, we will be increasing our focus on Nu Skin's developing markets as we seek out new growth opportunities. Leveraging our simplified and focused business model in Latin America, which is responsible for driving significant year-over-year growth in Argentina, we will be leaning into these high potential yet underperforming markets in 2025 to accelerate performance. Together with ongoing expansion efforts in India as we continue to explore future opportunities, we believe the developing markets will play an increasingly significant role in strengthening our new skin core business in 2025 and years to come. Our second enterprise priority is to accelerate innovation of our I.O. intelligent beauty and wellness platform, including Rise. We recognize to truly meet the needs of beauty and wellness consumers around the globe, a company must gather, synthesize, and provide insights that demonstrate the difference of the products we produce to consumers. For the past several years, we have been building out our I.O.-connected beauty and wellness device systems platform, most recently with the launch of WellSpa and RenewSpa in the past two years. This intelligent platform now contains over 25 million connected treatments from nearly 500,000 connected devices with more than 100 million data points providing insights into behaviors and product usage within our IO platform. In 2025, we will begin integrating these topical insights together with data gathered from our biophotonic scanner as we build out a robust beauty and wellness insights database. These insights will power the AI engine behind our next innovation, Prism IO, our truly intelligent wellness device. Our scientists at Rise Labs, together with leading spectral imaging researchers, have developed a clinically substantiated, patent-pending technology that can accurately measure micronutrient absorption in the skin. This non-invasive puck device aims to answer perhaps the biggest question perplexing nutritional supplementation. Do my nutritional supplements actually work? And it provides this information at the touch of a fingertip. PRISM-IO is scheduled for limited release to top performing sales leaders around the world in the second half of 2025 with a global launch plan in 2026 as we look to further strengthen our Euromonitor acclaimed position. of being the world's number one company for beauty and wellness device systems. We will dive much deeper into Prism.io and our intelligent wellness journey in our upcoming earnings calls. And third, we will improve operational performance and efficiency around the globe as we align our business to what matters most, innovation, growth, and EPS. As we wrap up the previously announced restructuring, we have taken an acute approach to evaluating every line item of our business. Our team has surgically analyzed our extensive global product portfolio based upon strategic fit, volume, and margin as part of our multi-year plan to optimize our global portfolio by more than 50% by the end of 2025, improving inventory holdings, gross margin, and our total cost of fulfillment. Further, our finance and global leadership teams around the world have evaluated every market to optimize operations that will improve focus, execution, and profitability around the world. We're leveraging a streamlined model developed for Argentina and extended into Latin America in the past year, which has resulted in both revenue growth and improved profitability across the region. Our goal is to bring every market around the globe to our profitability targets in 2025. James will dive deeper into our performance optimization plan, which we anticipate will produce meaningful improvements to our overall operating margin in 2025 and the years to come. Just before I wrap up, I want to comment briefly on the transaction of Maverly, one of our Rise portfolio businesses announced earlier this year. Maverly represented approximately 4% of the company's revenue last year and transacted for $250 million. The sale of Maverly has strengthened our balance sheet in many different ways. At a recent investor conference, I was asked how such meaningful value creation was seemingly unnoticed in the market. My answer was that we have been vocal about rise over the past two years with specific call-outs for Maverly However, investors did not ascribe the full value of this asset. The follow-up question was then asked, what is most misunderstood about Nu Skin? My answer in short was that unlike most companies in the beauty and wellness space, our public market valuation is weighted more upon the channel by which our core Nu Skin business distributes our innovative products or services rather than being valued for the full suite of innovation and businesses across our enterprise. To be clear, we are proud of the direct selling heritage that we've built over 40 years, and I believe that a company should be viewed for its full suite of value drivers. For us, this includes the value inherent within our core Nu Skin business, including our innovative R&D engine, dedicated sales force, and our operational infrastructure in nearly 50 markets, as well as new and emerging businesses within Rise, including companies like LifeDNA, Wasatch Labs, and various other investments. Moving forward, it is incumbent upon us as management to continue highlighting potential breakthrough innovations like Maverly, including providing greater visibility into all other value drivers across the enterprise that propel us towards our vision of becoming the world's leading beauty, wellness, and lifestyle ecosystem. So with that, I'll turn the time over to James.