Nu Skin Enterprises, Inc.

Good day, and thank you for standing by. Welcome to the Q1 2025 News and Enterprises Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To answer your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, B.G. Hunt. You may go ahead.

Thanks, Lisa, and good afternoon, everyone. I'm joined by Ryan Napierski, President and CEO, and James Thomas, CFO. We're excited to share Nu Skin's results from Q1 of 2025. Before I turn the time over to Ryan, 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 in 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 like now to turn the call over to Brian. Thanks, BG.

Thanks, everyone, for joining the call. I'll begin with an overview of our Q1 performance and then provide an update on our key priorities for 2025 as we pursue our mission of being a global force for good by empowering people to look, feel, and live better lives. Having just returned from our Japan live event and our America's success trip in Paris, I'm increasingly optimistic about the company's future in spite of near-term macro environmental factors as we remain focused on our mission. We have a strong partnership with our amazing sales leaders and experienced management team who have proven to innovate and exercise resilience in the face of challenges. We achieved first quarter revenue at the high end of our guidance range due in part to improving business trends in certain markets and exceeded our earnings expectations for adjusted earnings per share as we effectively control expenses around the world. We experienced significant growth in Latin America as our developing market strategy continues to take hold in that region. Those gains were offset by the US and Canada related to the increasing macro pressures on the business. We are pleased to see improving trends in our KPIs in both South Korea and China as we continue to stabilize these important markets. And Europe and Africa demonstrated improving results related to the implementation of our enhanced sales performance plan. And we were pleased to see growth in several markets in Southeast Asia Pacific, though Indonesia reported additional headwinds during the quarter. Japan remained relatively consistent on a local currency basis as we continue to develop our stable consumer base. Our ride segments performed well during the quarter with 10% year-over-year growth in manufacturing and growing interest in LifeDNA, one of our upcoming enterprise innovations that I'm excited to talk with you about as we delve deeper into our intelligent wellness platform strategy that I'll speak to in just a moment. Overall, we continue to experience macroeconomic pressures as consumers remain cautious in their purchasing behaviors for premium beauty and wellness products amid uncertainty around the potential impact of tariffs on inflation and driving down consumer sentiment around the world. Looking ahead, you may recall that we outlined three strategic priorities for 2025. First, strengthening our core Nu Skin business. Second, accelerating innovation related to our I.O. intelligent beauty and wellness platform. And third, improving our operational performance and efficiency. Collectively, our progress on these priorities will help us continue to move closer towards our long-term beauty, wellness, and lifestyle ecosystem vision. So let's dive deeper into each priority. First, in terms of strengthening our core business, we remain wholly committed to our mission of empowering people around the world to look, feel, and live better lives, via our rewarding entrepreneurial business opportunity. We recently achieved a major milestone that very few companies in our industry ever achieved, surpassing $20 billion in sales compensation paid to our sales force. While direct selling continues to evolve in terms of the how we do business, the why of our mission is as strong today as it ever has been. We're focused on continuously enhancing our sales compensation plan to more effectively reward our brand affiliates for building their businesses in a social-first manner, while maintaining our commitment to rewarding our global sales leaders for training and motivating their sales teams. Our latest sales performance plan is showing improving trends in South Korea, Europe, and Pacific markets, while we continue to optimize it in North America. Evolving our leadership-driven, customer-obsessed model is critical to ensuring the vibrancy of our business as we look into the future of how consumers are engaging with beauty and wellness brands via social media first. We're also strengthening our core business by more assertively pursuing our developing market strategy. This simplified and focused business model is driving strong 144% year-on-year growth in Latin America and is driving improved profitability as well. A streamlined product portfolio priced affordably at retail together with an enhanced compensation plan and a scalable operating infrastructure powered by our dynamic group of dedicated sales leaders enables a more focused and profitable approach to growth in the market. We look forward to applying learnings from this model to strengthen developing markets in Europe and Southeast Asia Pacific. We will be leveraging these learnings as we expand into India later this year. India holds enormous mid- to long-term potential with its 1.4 billion population, highly entrepreneurial tendencies, and rapidly expanding beauty and wellness industries. We plan to enter with a pre-launch for qualified brand representatives in Q4 of this year with a formal market launch to follow in mid-2026. We will enter the market with a suite of locally manufactured beauty and wellness products tailored to India consumer needs, and a localized version of our global sales compensation plan that rewards Indian affiliates for the promotion of selling new skin products and building sales teams. We are working with our partners at Infosys to also provide a digital-first experience tailored to the unique market dynamics. We're excited to enter this rapidly developing market where micro-entrepreneurship is a central driver to their economic growth. Our second priority in 2025 is to accelerate innovation with the introduction of Prism IO, our truly intelligent wellness platform. We've been preparing for this opportunity for more than 20 years of collective scientific studies and research and development. With recent technological advancements in machine learning and artificial intelligence, we are now reaching a point of enabling us to realize this vision in a more integral way that will enhance our ability to develop even deeper relationships with our consumers and make more intelligent product recommendations and subscriptions to improve customer retention and overall lifetime value. This will then further empower our brand affiliates and sales leaders to grow their intelligent beauty and wellness businesses. To better understand the future, I need to describe the foundation upon which Prism IO is built. More than $485 billion of nutritional supplements were consumed around the world in 2024, growing at 6.4% per year, with little to no way of knowing whether these supplements are actually improving one's overall health. Prism IO is built upon technology Nu Skin first launched in 2003 with the biophotonic scanner to non-invasively measure carotenoid levels in the skin. Carotenoids are an important source of antioxidants that are widely understood as a critical biomarker for fruit and vegetable intake, and a key indicator of overall cellular health. We have since amassed one of the world's largest antioxidant databases with more than 20 million scans across more than 50 countries, which provides us with significant insights into the critical biomarker throughout the world. Fast forward to 2021 when we took our Euromonitor-acclaimed world's number one beauty and wellness device systems and began connecting them with the launch of AgeLock LumaSpa I.O., followed by AgeLock WellSpa IO or RenewSpa IO. With these connected devices, we have now added more than 28 million treatments from nearly 500,000 devices with more than 100 million data points providing further beauty and wellness insights into behaviors and product usage within our IO wellness platform. In 2025, we will take the next significant step in accelerating our business out of our intelligent beauty, excuse me, our intelligent wellness platform with the introduction of Prism IO, a palm-sized device that accurately measures the carotenoid levels in your skin via the fingertip to provide insight into consumers about their overall antioxidant score. Leveraging our extensive aging science database and powerful AI capabilities, our customers can receive intelligent insights into their healthy lifestyle and as well as product recommendations to improve their antioxidant score and assist in overall healthier living. We will also leverage macro insights from this intelligent wellness platform to develop more customized nutrition solutions for consumers based upon geographic and dietary micronutrient needs. We anticipate incorporating deeper insights acquired via genetic testing from LifeDNA into our intelligent wellness platform as part of our next phase of development anticipated to be in 2026 and 2027, as we further build out this holistic wellness ecosystem. We'll begin to roll out our PRISM I.O. in limited quantities for qualified sales leaders during Q3 and Q4 of this year, followed by leader launches around the globe in the first half of 2026, with broader-based consumer distribution thereafter. The launch of PRISM-IO will be accompanied by restages of our leading nutrition supplement LifePak line, incorporating updated formulas to meet geographic dietary needs at various pricing tiers to meet different customer segments across our developed, developing, and emerging markets. As more consumers get their intelligent antioxidant score with PRISM-IO, we anticipate nutritional supplement purchases and subscriptions will increase, driving incremental revenue and retention which will result in a greater customer lifetime value and will also provide greater opportunities for our sales force to grow their independent beauty and wellness businesses. And our third priority for 2025 is improving operational performance and efficiency. I'm pleased with the ongoing efforts to steadily improve profitability as we deploy our product portfolio and expense optimization efforts around the world. We're making steady progress towards our improving gross margin target for the core business as well as our broader market profitability improvement efforts. Let me turn the time over to James now who will dive deeper into our progress on this critical priority and to take you through our financial performance in Q1 and outlook for the remainder of this year. He'll also cover how we are strengthening our balance sheet and overall financial position as we seek to improve shareholder value through steadily improving revenue performance and earnings per share. James?