Q1 2024 Nu Skin Enterprises Inc Earnings Call

May 8, 2024

Okay.

Operator: Good day. Thank you for standing by. Welcome to the Q1 2024 NU Skin Enterprise Earnings Conference Call.

Good day, Thank you for standing by welcome to the Q1 2020 for Nu skin Enterprises earnings Conference call.

Operator: 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 that 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.

Operator: 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 the session you will need a press star one on your telephone.

Operator: We'll then hear an automated message advising you. Your hand, just raised took Charlie Your question. Please press star. One 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 of Investor Relations. Please go ahead.

Scott Pond: 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. 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. Now, I'd like to turn the call over to Ryan.

Scott Pond: Thanks, Michelle and good afternoon, everyone today on the call with me are Ryan appear ski 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 anti.

Scott Pond: 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.

Scott Pond: We believe these non-GAAP numbers assist in comparing period results in a more consistent manner. Please refer to our investor website for any required reconciliation of non-GAAP numbers and now I would like to turn the call over to Ryan Thanks, Scott and Hello, everyone. Thanks for joining US today, having just returned from our top sales leader.

Ryan S. Napierski: 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 40th 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 plan.

Ryan S. Napierski: Alignment and activation all in event in Abu Dhabi, and Dubai 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 the progress update on our <unk>.

Ryan S. Napierski: Ongoing enterprise transformation vision strategy and plans.

Ryan S. Napierski: 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-gap earnings per share at the high end of our range.

Ryan S. Napierski: 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.

Ryan S. Napierski: And initiatives, which helped us deliver first quarter non-GAAP earnings per share at the high end of our range.

Ryan S. Napierski: Arise 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 NU Skin business, our new product innovations delivered solid results.

Ryan S. Napierski: Our rides business delivered another strong quarter with revenues up 57% to more than $62 million led by both our <unk> technology platform and Wasatch manufacturing business. The revenue contribution from <unk> accounted for approximately 15% of total enterprise revenue in the first quarter and we continue to expect to sell.

Ryan S. Napierski: To account for 20% to 25% of our overall mix by 2025.

Ryan S. Napierski: Looking at the performance of our core Nu skin business, our new product innovations delivered solid results <unk> Io and renew spa Io the holistic wellness and beauty devices, we launched recently along with <unk>, our personalized weight management system that also launched in 2023 contributed approximately.

Ryan S. Napierski: Agelok WellSpa IO and RenewSpa IO, the holistic wellness and beauty devices we launched recently, along with Agelok TRMe, our personalized weight management system that also launches in 2023, contributed approximately $42 million to our Q1 revenue. In Europe and Africa, there was a very favorable response to TRME during Q1.

Ryan S. Napierski: <unk> <unk> $42 million to our Q1 revenue.

Ryan S. Napierski: Europe and Africa, there was a very favorable response to TRP. 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.

Ryan S. Napierski: 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.

Ryan S. Napierski: In other regions, we continue to battle macroeconomic challenges, including heavy heavy inflationary pressures on consumer spending for premium goods, which together with our aggressive price increases from a year ago have hampered our customer an affiliate acquisition efforts.

Ryan S. Napierski: 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.

Ryan S. Napierski: 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.

Ryan S. Napierski: In South Korea consumer sentiment remains negative due to housing the housing market crisis, making it difficult to grow with customers and build the channel consumer sentiment is also a factor in Japan. In addition to significant FX pressure on our results.

Ryan S. Napierski: 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. Despite these headwinds, we remain committed to our long-term enterprise vision of transforming our core NU Skin business while building out RISE and our long-term beauty, wellness, and lifestyle ecosystem

Ryan S. Napierski: 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 lives sales conferences in Q3, our first multimarket in person events since COVID-19.

Ryan S. Napierski: Despite these headwinds we remain committed to our long term enterprise vision of transforming our core Nu skin business, while building out rise and our long term beauty wellness and lifestyle ecosystem.

Ryan S. Napierski: 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.

Ryan S. Napierski: <unk> approach to addressing the interrelated factors of stress sleep and cognitive performance that are impacting the well being of consumers in todays busy world. We're excited to preview mined 360 at our upcoming live events in Q3 with planned introductions of mine 360, a follow towards the end of the year and into <unk>.

Ryan S. Napierski: We're excited to preview Mind360 at our upcoming live events in Q3, with planned introductions of Mind360 to follow toward 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 for 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.

Ryan S. Napierski: 25.

Ryan S. Napierski: Channel activation within our core Nu skin business is a top priority for us and we're pleased to announce the promotion of Justin Kiesow 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 new <unk>.

Ryan S. Napierski: And in prior roles and has and has demonstrated.

Ryan S. Napierski: Great his commitment to our leader success.

Ryan S. Napierski: Justin is spearheading our efforts to retool our entire global sales organization and bring a much more rigorous lens to 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.

Ryan S. Napierski: 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 Reenergize the field we.

Ryan S. Napierski: <unk> these new initiatives to take route through the remainder of this year.

Ryan S. Napierski: 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're 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 market and 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.

Ryan S. Napierski: 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.

Ryan S. Napierski: 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 are product offering business model and operational footprint will be synchronized to enable broader market mid market appeal.

Ryan S. Napierski: 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.

Ryan S. Napierski: 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 R.I.S.E.

Ryan S. Napierski: 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.

Ryan S. Napierski: and our R.I.S.E. 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 NU Skin's core business while enabling other brands to grow. We are now applying this ecosystem to Beauty Bio 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.

Ryan S. Napierski: Growing out rides in our rides 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.

Ryan S. Napierski: Over the past several years, we've constructed the essential infrastructure, consisting of manufacturing technology and operations to support <unk> core business, while enabling other brands to grow we are now applying this ecosystem to beauty bio to enable it to scale and see additional opportunities to extend our comprehensive suite of.

Ryan S. Napierski: <unk> spanning product R&D.

Ryan S. Napierski: Our production packaging cutting edge technology, and logistics to the indie beauty and wellness industry for Influencers and creators.

Ryan S. Napierski: 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 independent brands. We are utilizing our capital to invest in additional manufacturing, services, capabilities, and opportunities to enable future growth. So in summary, the first quarter results were in line with guidance, and we are maintaining our 2024 outlook.

Ryan S. Napierski: 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.

Ryan S. Napierski: We are utilizing our capital to invest in additional manufacturing services capabilities and opportunities to enable future growth.

Ryan S. Napierski: So in summary, first quarter results were in line with guidance and we are maintaining our 2024 outlook from a topline perspective, we are acutely focused on channel activation with new incentives and continue to lean into our product strategy, including the upcoming launch of mine 360, as well as affordable luxury we are.

Ryan S. Napierski: 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.

Ryan S. Napierski: Also continued to invest in our rice business to accelerate growth and further and transform our enterprise to leverage our competitive advantages within the beauty wellness and lifestyle industries.

Ryan S. Napierski: Expense Prudence remains a critical focus in 2024, and while we made significant progress on these initiatives during the first quarter. There is still opportunities to drive further efficiency, including our SKU optimization plan to eliminate 25% to 30% of our skus by the end of 2025.

Ryan S. Napierski: Despite the challenging conditions in many of our markets in the near to midterm, 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. Thank you, Ryan.

Ryan S. Napierski: 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.

Ryan S. Napierski: Echo system 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.

James D. Thomas: Thank you, Ryan. And thanks to all of you for joining today. I'll provide a brief Q1 update and then speak to Q2 and 2024 guidance. For additional details, please visit our investor relations website. For the first quarter, we posted revenue of $417.3 million, which was at the midpoint of our previous guidance range and included a negative foreign currency impact of 3.8%, or $18.2 million, which created more pressure from our initial guidance.

James: Thank you Ryan and thanks to all of you for joining today I'll provide a brief Q1 update and then speak to Q2 in 2024 guidance for additional details. Please visit our Investor Relations website for the first quarter, we posted revenue of $417 3 million.

James D. Thomas: Which was at the midpoint of our previous guidance range and included a negative foreign currency impact of three 8% or $18 $2 million, which created more pressure from our initial guidance reported earnings landed near the top end of our guidance range at negative one or nine exclude.

James D. Thomas: Reported earnings landed near the top end of our guidance range at negative one cents or nine cents, excluding restructuring charges. Our gross margin was 70.5% compared to 72.3% in the prior year quarter. Gross margin for the NU Skin core business improved 50 basis points to 76.9% compared to 76.4% in the prior year quarter due to our SKU rationalization initiatives and targeted promotion. Selling expense as a percentage of revenue decreased to 36.8% compared to 39.1% in the prior year quarter.

James D. Thomas: Excluding restructuring charges, our gross margin was 75% compared to 72, 3% in the prior year quarter gross margin for the new skin core business improved 50 basis points to 76, 9% compared to 76, 4% in the prior year quarter due to our SKU rationalization.

James D. Thomas: <unk> initiatives and targeted promotion mix.

James D. Thomas: Selling expense as a percentage of revenue decreased to 36, 8% compared to 39, 1% in the prior year quarter for the new skin core business selling expense was 41, 7% flat with the prior year.

James D. Thomas: For the NU Skin core business, selling expense was 41.7% flat with the prior year. The lower overall growth margin and selling expense is due to growth in our rice segments, which now accounts for 15% of our business.

James D. Thomas: The lower overall gross margin and selling expense is due in growth.

James D. Thomas: Due to growth in our <unk> segment, which now accounts for 15% of our business.

James D. Thomas: General and Administrative Expense declined $9.3 million year-over-year and as a percentage of revenue was 29.9% compared to 27.8%. The increased percentage can be attributed to lower quarterly revenue levels. As previously discussed, we've been strategically evaluating our NU Skin core business and better aligning our operating costs to be in line with revenue. In the first quarter, we incurred an additional $7.1 million restructuring charge, and we will continue our cost efficiency plan through the next quarter with an anticipated $3 to $8 million of restructuring charges.

James D. Thomas: General and administrative expense declined $9 $3 million year over year and as a percentage of revenue was 29, 9% compared to 27, 8%. The increase percentage can be attributed to lower quarterly revenue levels. As previously discussed we've been strategically evaluating our new skin core.

James D. Thomas: <unk> and better aligning our operating costs to be in line with revenue in the first quarter, we incurred an additional $7 1 million restructuring charge.

James D. Thomas: We will continue our cost efficiency plan through next quarter with an anticipated $3 million to $8 million of restructuring charges. We continue to expect this cost efficiency plan to deliver annual savings of between 40% and $65 million before taxes, we will continue to seek business efficiencies in all areas and believe these <unk>.

James D. Thomas: We continue to expect this cost efficiency plan to deliver annual savings of between $40 and $65 million before tax. We will continue to seek business efficiencies in all areas and believe these actions will help us maximize cash flows, focus on improved margins, and enhance earnings per share going forward.

James D. Thomas: <unk> will help us maximize cash flows focus on improved margins and enhanced earnings per share going forward, our operating margin for the quarter was two 1% or three 8%, excluding restructuring charges compared to three 3% or five 4% excluding restructuring charges in the prior year.

James D. Thomas: Our operating margin for the quarter was 2.1% or 3.8% excluding restructuring charges, compared to 3.3% or 5.4% excluding restructuring charges in the prior year. Our interest expense was $7.3 million for the quarter, compared to $4.9 million in the prior year. The other income expense line reflects a $0.4 million expense compared to a $3.4 million gain in the prior year quarter. In the first quarter, our cash flow from operations rose to a positive $3.3 million, driven by a concentrated effort on inventory management, in contrast with the $22.1 million cash outflow in the same period last year.

James D. Thomas: Our interest expense was $7 3 million for the quarter compared to $4 $9 million in the prior year. The other income expense line reflects a zero point $4 million expense compared to a $3 $4 million gain in the prior year quarter.

James D. Thomas: In the first quarter, our cash flow from operations rose to a positive $3 $3 million driven by a concentrated effort on inventory management in contrast, with the $22 $1 million cash outflow in the same period last year.

James D. Thomas: Cash from operations is typically the lowest in the first quarter due to lower revenue levels in what is seasonally our slowest quarter, we've paid $3 million in dividends and paid down our outstanding debt $20 million in the quarter, we did not repurchase any stock and have $162 $4 million remaining on the current.

James D. Thomas: Cash from operations is typically the lowest in the first quarter due to lower revenue levels in what is seasonally our slowest quarter. We paid $3 million in dividends and paid down our outstanding debt by $20 million in the quarter. We did not repurchase any stock and have $162.4 million remaining on the current authorization.

James D. Thomas: <unk>.

James D. Thomas: Our tax rate for the quarter was 148.4% or 48.5%, excluding restructuring charges, compared to 22%. For the second quarter, we anticipate an elevated tax rate in the range of 45% to 55% and anticipate a projected 2024 annual tax rate of 25% to 35%. This annual rate reflects an anticipated higher global effective tax rate primarily due to the expected geographical mix of earnings during the year and the rate impact from our stock awards in Q1.

James D. Thomas: Our tax rate for the quarter was 148, 4% or 48, 5%, excluding restructuring charges compared to 22% for the second quarter, we anticipate an elevated tax rate in the range of 45% to 55% and anticipate a projected 2024 annual tax rate of 20.

James D. Thomas: 5% to 35% this annual rate reflects an anticipated higher global effective tax rate, primarily due to the expected geographical mix of earnings during the year and the rate impact from our stock awards in Q1 <unk>.

James D. Thomas: Shifting focus now to guidance, in light of the continued economic pressures, challenges associated with our transformation of our business, and increased volatility in foreign exchange rates, we are reiterating 2024 revenue in the $1.73 billion to $1.87 billion range. We anticipate earnings per share of $0.77 to $1.16, or adjusted earnings of $0.95 to $1.35. Our guidance now assumes an increased foreign currency headwind of approximately 2% to 3%. We are projecting second quarter revenue of $420 million to $455 million, assuming a foreign currency headwind of approximately 3% to 4%, with reported earnings per share of $0.01 to $0.10 or $0.10 to $0.20, excluding restructuring charges. And with that, Operator, we'll now open the call to questions. Thank you.

Speaker Change: Shifting focus now to guidance.

James D. Thomas: In light of the continued economic pressures challenges associated with are transforming our business and increased volatility in foreign exchange rates. We are reiterating 2020 for revenue in the 173 billion to $187 billion range, we anticipate earnings per share of <unk> 77.

James D. Thomas: To $1 16, or adjusted earnings of 95 to $1 35, our guidance now assumes an increased foreign currency headwind of approximately 2% to 3%.

James D. Thomas: We are projecting second quarter revenue of $420 million to $455 million, assuming a foreign currency headwind of approximately 3% to 4% with reported earnings per share of one to 10.

James D. Thomas: Or 10 to 20, excluding restructuring charges and with that operator, we will now open the call up for questions.

Operator: Thank you. If you have a question at this time, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. One moment while we compile our Q&A roster. Our first question comes from the line of Chasen Bender with Citi. Your line is open. Please go ahead.

Speaker Change: Thank you.

Speaker Change: I have a question at this time, please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment, while we compile the Q&A roster.

Chasen Louis Bender: Our first question comes from the line of Jason Bender with Citi. Your line is open. Please go ahead.

Chasen Louis Bender: Great, thanks. Afternoon guys.

Chasen Louis Bender: Great. Thanks, Good afternoon guys.

Chasen Louis Bender: I wanted to first ask about kind of expectations for the remainder of the year.

Chasen Louis Bender: I wanted to first ask about your expectations for the remainder of the year. Looking specifically at the implied year-over-year currency growth, kind of based on the midpoint of the 2Q and the 2024 guidance, it seems to suggest that you guys are going to go from, you know, down nine and a quarter in the first half to about minus three in the second half. And if I look at, you know, the sales leaders, the customer accounts, and the affiliate numbers, even when adjusting for that change in qualification for affiliates, the trend looks like it's worsening.

Chasen Louis Bender: Looking specifically at the implied year over year currency growth kind of based on the midpoint of the QQ and at 2024 guidance. It seems to suggest that you guys are going to go from down 9% quarter in the first half to about minus three in the second half and if I look at the sales leaders the customer counts in the affiliate.

Chasen Louis Bender: Even when adjusting for.

Chasen Louis Bender: That change in qualification for affiliates the trend looks like it's worsening. So the question is whats really giving you confidence in Companys net.

Chasen Louis Bender: So the question is, you know, what's really giving you confidence in that second half improvement? And, you know, maybe can you just dimensionize, you know, any of the initiatives that you expect to contribute to that improvement?

Chasen Louis Bender: To the second half improvement and maybe can you just dimensionalize any of the initiatives that you expect to contribute to that improvement.

Ryan S. Napierski: Yeah, Chasen, a great question and happy to drive into the high-level side of that. And then James, if he has anything to add to it, that's great.

Speaker Change: Yes, Jason a great question and happy to drive into the high level side of that and then James if he has any debt to add to it that's great. So so really as I mentioned, we have our as we came out of.

Ryan S. Napierski: So really, as I mentioned, we have our, as we came out of the Top Leader Sales Alignment event in Q2, really got clarity around channel activation plans and incentives built towards the channel, which is exactly what you're highlighting, concerns around those KPIs leading into Q3 when we have our live events. We're really looking at these activation incentives We're looking at continued build-up of energy around India in open markets, to be clear, not in India itself but in markets where we are open, where there are local Indian populations, or what we call India eligible populations.

Ryan S. Napierski: The top leader sales alignment event in Q2.

Ryan S. Napierski: Really got clarity around channel activation plans and incentives built towards the channel, which is exactly what you are highlighting a.

Ryan S. Napierski: Concerns around those kpis, leading into Q3, when we have our live events. We're really looking at these activation incentives. We're looking at continued build of energy around India and open markets to be clear not in India itself, but in markets, where we are open where there are local India.

Ryan S. Napierski: In populations or what we call India eligible populations and then our new products hitting market in both mine 360, an affordable luxury which.

Ryan S. Napierski: And then our new products hitting the market, in both Mine360 and Affordable Luxury, which are both priced and positioned to help combat the inflationary effects that have been having on kind of customer and affiliate acquisition growth. So we've aligned, we've really aligned with the sales force to kind of attack at that level, both at the channel activation level and ensuring that we have the product ammunition to strengthen that as well. So that's kind of what we're looking at. I'd also say with RISE that we continue to expect to see favorable improvements there as well. James, anything you'd add? Yeah, I would just...

James: Are both priced and positioned to help combat the.

James: The inflationary effects that have been had on kind of customer and affiliate acquisition growth. So we've aligned we've really aligned with the sales force to kind of attack at that level. Both at the channel activation level and ensuring that we have the product ammunition to strengthen that as well.

James: So that's kind of what we're looking at I'd also say with rise we continue to expect to see.

Ryan S. Napierski: Favorable improvements there as well James anything you'd add yes, I would just call out the similar to what you did in the channel activation that we see.

James D. Thomas: Yeah, I would just call out that similar to what you did in the channel activation that we saw that we launched at the Sales Leader event, coming on strong in the back half of the year with the product in combination with the product introductions, and then seasonally, Q3 and Q4 have been stronger in the back half of the year in the beauty and wellness industry overall. And so that's built into our forecast, where we're still showing an overall decline in Q3, but on the high end guiding towards year over year growth on the high currently.

James D. Thomas: We launched at the sales leader event coming on strong in the back half of the year with the <unk> in combination with the product introductions and then seasonally.

James D. Thomas: Q3, and Q4 have been stronger on the back half of the year in the beauty and wellness industry overall, and so that's built into our forecast we're still showing overall decline in Q3, but on the high end guiding towards year over year growth on the high currently.

Chasen Louis Bender: Got it. That's helpful.

Chasen Louis Bender: And then just, Ryan, staying on your commentary about affordable luxury innovation, I wanted to give you an opportunity to kind of expand and elaborate on that, perhaps address what categories and, you know, how quickly the products that you're bringing to market are actually going to hit. And I guess, also, more strategically, can you just give us an update on how you're thinking about the price architecture of the portfolio? And, you know, whether this makes sense or whether it makes sense to expand the portfolio, you know, kind of meaningfully into this affordable, massive level, like you're doing now.

Speaker Change: Got it that's helpful. And then just Ryan staying on your commentary about affordable luxury innovation I wanted to give you an opportunity to kind of expand and elaborate on that perhaps address what categories and how quickly.

Chasen Louis Bender: The products that you are bringing to market are actually going to hit and I guess also more strategically can you just give us an update on how youre thinking about the price architecture of the portfolio and whether this makes sense or whether it makes sense to expand the portfolio kind of more meaningfully into this affordable masstige level like.

Ryan: You're like you're doing now.

Ryan S. Napierski: Yeah, no, exactly. Right on point there. Maybe I'll start by describing the portfolio architecture, Chasen, then go to what we see in the second half. We've really been looking at this for quite some time, obviously, with inflation pressuring consumers around the globe, as we've seen it, and the effects that that has on channel growth, because if you can't get customers, you can't grow the channel, you know, as a new business entrepreneur.

Speaker Change: Yes, no exact exactly.

Speaker Change: Right on point, there, maybe I'll start by describing the portfolio architecture Chase and then go to kind of what we see in the second half coming.

Ryan S. Napierski: We've really been looking at this for quite some time, obviously with inflation being pressuring consumers around the globe as we've seen it and the effects that that has on channel growth because if you can't get customers you can't grow the channel.

Ryan S. Napierski: As a new business entrepreneur and so we've really been looking at this our global product team led by Steve Hatch. It has put together a portfolio architecture that really helps us span better from the premium area, which is where we've always been focused from devices and premium goods down.

Ryan S. Napierski: And so we've really been looking at this; our global product team, led by Steve Hatchett, has put together a portfolio architecture that really helps us span better from the premium area, which is where we've always been, you know, focused on devices and premium goods, down to this, this new tier, which kind of gets to that mastige or affordable luxury level. We are actually our research and development engine here at NU Skin, and with our manufacturing partners, it is very robust.

Ryan S. Napierski: This this new tier, which kind of gets to that masstige or affordable luxury level. We actually are our research and development engine here at Nu skin and with our manufacturing partners is very robust in this area, we manufacture for hundreds of brands.

Ryan S. Napierski: In this area, we manufacture for hundreds of brands, and so we are fairly familiar with the trends that are taking place, what is and isn't selling. And so, utilizing that kind of expanded data and insights, where we've, we've looked at our second half portfolio, there are multiple product innovations that fit within that call it the affordable luxury range, which can really range really from that 10 to $30 price point.

Ryan S. Napierski: And so we have we're fairly familiar with the trends that are taking place what is and isn't selling and so with utilizing that kind of that expanded.

Ryan S. Napierski: Data and insights.

Ryan S. Napierski: We've looked at our second half portfolio, there are multiple product innovations that fit within that call. It the affordable luxury range, which can range really from that 10 to $30.

Ryan S. Napierski: Price point, and so we really are making intentional effort to expand the portfolio as well as reduce skus. So that clearly means we're going after as we said that 25% to 30% of overall skus a lot of that is eliminating.

Ryan S. Napierski: And so we really are making an intentional effort to expand the portfolio, as well as to reduce SKUs. So that clearly means we're going after, as we said that 25 to 30% of overall SKUs, a lot of that is eliminating products that are in the premium prestige levels that simply aren't selling with today's customers or selling at lower quantities and replacing those with the mastige or the or what we call affordable luxury.

Ryan S. Napierski: Products that are in that the premium prestige levels that simply arent selling with today's customers or selling at lower quantities and replacing those with the masstige or the or the what we call affordable luxury so that's kind of how we're approaching the portfolio side. It's a much more robust approach we think it has much.

Ryan S. Napierski: So that's kind of how we're approaching the portfolio side. It's a much more robust approach, and we think it has much better appeal for the next three or four years. I mean, inflation, while that stabilized, clearly the pressure on the consumer wallet is still high.

Ryan S. Napierski: <unk> appeal for the next three years or four years, I mean inflation, while that stabilized clearly the pressure on the consumer wallet is still high and so we need to play much better in that area and that's what we're looking at now for second half again. The good news is that from a from an R&D perspective, our teams have been cranking on <unk>.

Chasen Louis Bender: And so we need to play much better in that area. And that's, that's what we're looking at. Now, for the second half, again, the good news is that from an R&D perspective, our teams have been cranking out product innovations, and we have dozens of products, and at any time that we're able to launch them, the challenge is really getting alignment with our sales force so that when we launch a new product, it actually gets the right stage time that it needs for an understanding of how to sell it, the USPs, all of that

Chasen Louis Bender: Product innovations.

Chasen Louis Bender: Dozens of products than at any time that we're able to launch that the challenge is really getting alignment with our sales force. So that when we launch a new product it actually gets the right stage time.

Chasen Louis Bender: That it needs for an understanding of how to sell it the USPS all of that.

Chasen Louis Bender: And so this is important for our live events in both East and West, at those events where we'll have those opportunities to explain these products, how they work, why they work the way they work, what the quality rationality is. Because clearly, while we go to more of an affordable luxury level, we do not sacrifice quality. We're taking more of an elemental level approach to innovation rather than having comprehensive innovations that might do six or eight different customer benefits, really focusing on the one or two benefits that matter most so that we can sustain high quality and sustain innovation, but at a more targeted and price conscious level. And so those products are coming out in Q3.

Chasen Louis Bender: This is important for our live events in both east and West.

Chasen Louis Bender: At those events, where we will have those opportunities to explain these products how they work why they why they work the way they work what the quality rationale is because clearly while we go to <unk>.

Chasen Louis Bender: A more of a.

Chasen Louis Bender: <unk>.

Chasen Louis Bender: And affordable luxury level, we do not sacrifice on quality.

Chasen Louis Bender: We're taking more of an elements.

Chasen Louis Bender: Level approach to innovation, rather than having comprehensive innovations that might do six or eight different customer benefits really focusing on the one or two benefits that matter. Most so that we can sustain high quality sustained innovation, but a more targeted and price conscious level and so.

Chasen Louis Bender: Those products are coming out in Q3.

Chasen Louis Bender: Gotcha, that's a really helpful color. And then, if I can just sneak in one more on the cost saving side, it seems like that's one area where you're making some really good progress. And I know you mentioned the skew rationalization, but I was hoping you could expand on that and maybe contextualize and dimensionalize for us the other areas where you're seeing the biggest savings opportunities. And I guess related to that, you mentioned rise as an area of focus, but perhaps you could expand on how you're thinking about reinvestment and the level of reinvestment in the business as those savings are realized.

Speaker Change: Got you.

Speaker Change: That's really helpful color and then if I can just sneak in one more on the cost savings side. It seems like that's one area, where you are making some really good progress and I know you mentioned the SKU rationalization, but I was hoping you could expand on that and maybe contextualize and dimensionalize for us the other areas where youre seeing.

Chasen Louis Bender: <unk>, the biggest savings opportunities and I guess related to that.

Chasen Louis Bender: Again, you mentioned rise as an area of focus, but perhaps expand on how youre thinking about reinvestment in the level of reinvestment in the business.

Chasen Louis Bender: Those savings are realized.

Ryan S. Napierski: Yeah, so really, two questions there that we'll address. Cost savings and SKU rationalization are really, really important, obviously. Operating in nearly 50 countries around the globe, it's fairly easy to have SKU proliferation. And so again, the same team, the global product team, as they do this portfolio analysis, they go literally product by product, SKU by SKU, market by market, to determine which contributions are acceptable and which are not. Looking at R&D, and I should be clear on this, because of this manufacturing entity and Steve Hatchett coming from that world, he has an extremely in-depth view on total cost of fulfillment, going all the way to raw goods and leveraging manufacturing capabilities to span not only the NU Skin business but drive down raw materials across businesses. So this is a very comprehensive A to Z approach.

Chasen Louis Bender: Yes.

Chasen Louis Bender: So really two questions there that will approach cost savings.

Ryan S. Napierski: SKU rationalization is really really important obviously operating in.

Ryan S. Napierski: Nearly 50 countries around the globe.

Ryan S. Napierski: It's fairly easy to get skewed.

Ryan S. Napierski: SKU proliferation, and so again the same team the global product team as they do this portfolio analysis, it's going literally product bright product SKU by SKU market by market to determine which which contributions are acceptable and which are not.

Ryan S. Napierski: Looking at R&D and I should be clear on this are are because of this manufacturing entity and Steve hatch it coming from that world. He has an extremely in depth view on total cost of fulfillment going all the way to raw goods and leveraging manufacturing capabilities to span not only the new.

Ryan S. Napierski: <unk> business, but drive down raw materials across businesses and so this is a very comprehensive Adas Z approach a lot of the cost savings that you saw the gross margin improvement of 50 basis points. Most of that actually has is coming through a more rigorous approach on discounts and promotions.

Ryan S. Napierski: A lot of the cost savings that you saw in the gross margin improvement of 50 basis points. Most of that is actually coming through a more rigorous approach to discounts and promotions. And the SKU optimization will be future forward savings. And so I think it's really important to note that the benefits on gross margin are related to SKU optimization, but those benefits, I think, are forthcoming at a better level as the... SKU elimination then rolls through the actual purchasing cycle to inventory, if that makes sense.

Ryan S. Napierski: And the SKU optimization will be future forward savings and so I think it's really important to note that the benefits on gross margin are related to SKU optimization, but there those benefits I think are forthcoming at a better level.

Ryan S. Napierski: As as the SKU elimination, then rolls through the actual purchasing at purchasing cycle to inventory if that makes sense. So we do see SKU reduction again, 25% to 30% as our focus including adding new products and the affordable luxury space in the mine 360 lines and then.

Ryan S. Napierski: So we do see SKU reduction, again, 25% to 30% is our focus, including adding new products in the affordable luxury space and the Mind360 lines, and then being very aggressive on ineffective or less effective discounts and promotions, which, by the way, don't always work well for the sales force anyway, right? If there are too many promotions, they don't know what to focus on. So that's kind of the cost saving side. James, anything you would add to that?

Ryan S. Napierski: <unk> been very aggressive on ineffective or less effective discounts and promotions, which by the way don't always work well for the sales force anyways right. If there's too many promotions they don't know what to focus on.

James: That's kind of cost savings side.

Ryan S. Napierski: James anything you would add to that.

James D. Thomas: You touched on the one, you know, Chasen, for you. The savings from the SKU rationalization really is a forward savings because we're trying to mitigate the offset of the inventory levels that we currently have on hand for those existing products and making sure that we have runway for those products, but as we work through them, that's when we'll start to see those additional savings, which we're already starting to see in several of the products that have gone through in the quarter. In the quarter, but more savings are expected to come out past out in through 2020.

James: You touched on the one Jason for you.

James D. Thomas: The savings from the SKU rationalization really as a forward savings because we're trying to mitigate.

James D. Thomas: The offset of the inventory levels that we currently have on hand off those existing products and making sure that we have runway for those products, but as we worked through them. That's when we'll start to see those additional savings, which we're already starting to see in several of the products that have gone through in the quarter, but more savings to come out past.

James D. Thomas: Through 2025.

Ryan S. Napierski: And I think on the RISE side, you asked about what we do with the savings. This is the, and this is probably James's forte in how he scrutinizes every dollar that we're spending. And James always goes through the philosophy on cash management, but it's the same for the revisit, reinvest in growth. So wherever we need to grow, that's our top priority. RISE clearly, as we talk about additional infrastructure and capability services to build out there. We're clearly focusing on investment there. We continue to focus on product innovation. It's the heart, the core of the NU Skin core business. It's also at the heart of what we're doing on Rise.

Speaker Change: And I think on the right side, you had asked about what do we do with the savings that this is the and this is probably James's forte in how we how we scrutinize every dollar that we're spending.

Ryan S. Napierski: And James I always goes through the <unk>.

Ryan S. Napierski: Our philosophy on cash management, but it's the same for the visit reinvest in growth. So wherever we need to grow that's our top priority rise clearly as we talk about additional infrastructure capability services to build out there. We're clearly focusing on investment there we continue to focus on product innovation. It's the.

Ryan S. Napierski: Art.

Ryan S. Napierski: The heart of the new skin core business. It's also the heart of what we're doing on rises it's all around innovation and new technology. So a lot of the cost savings to go back to that and then of course as we continue to be very focused on shareholder value. We recognize that the stock price has been challenged and pressured as earnings have come.

Ryan S. Napierski: It's all around innovation and new technology. So a lot of the cost savings go back to that. Then, of course, as we continue to be very focused on shareholder value, we recognize that the stock price is being challenged and pressured as earnings have come down. We're very focused on returning the shareholders, as we do, in accordance with as we invest in the business and make that happen. So, you know, James, any additional color you'd put on investment? The only other addition that I would add to that, Ryan, is just international market expansion through India. Oh, yeah; we should have called that out.

Ryan S. Napierski: Down.

Ryan S. Napierski: We're very focused on returning to shareholders as we do in accordance as we invest in the business and make that happen. So.

Ryan S. Napierski: James any additional color you put on.

Speaker Change: The other addition that I would add to that Ryan is just international market expansion through India.

Ryan S. Napierski: Yes.

Ryan S. Napierski: For the core, to give the core some legs to respond in terms of where we're currently at. That's a big part of that move forward with the incentive programs that are in place. Yeah, and Chasen, I will touch on James's point about India because I said that earlier, but truly, new skin has always been in the premium and developed market arena, right? Our biggest markets tend to be those that are more developed economically.

Ryan S. Napierski: Call that out for the corps to get the core gift of course, some some legs to respond in terms of where we're currently at that's a big part of that go forward with the incentive programs that are in place and Jason I will I will tag on James his point about India, because I said that earlier, but truly new skin has always.

Ryan S. Napierski: Played in our premium and developed market arena right. Our biggest markets tend to be those that are more developed economically.

Ryan S. Napierski: We are, as I said, putting intense focus on our partners locally in India. We manage the Infosys, the deep partnership we have there, we announced last quarter. Further going there, they're obviously digital experts in the field.

Ryan S. Napierski: As I said, we are putting intensive focus with our partners.

Ryan S. Napierski: <unk> in India, we manage the <unk>.

Ryan S. Napierski: Infosys deep partnership we have there we announced last quarter further going there, they're obviously digital experts in the field, we're taking a very a very intentional approach there.

Ryan S. Napierski: We're taking a very intentional approach there to be able to hit the right point in that market, which is obviously a very large market, 1.4 billion people, growing middle class, very astute, very educated, strong technological prowess. And as we do that, we see those benefits going into developing markets where, to date, we haven't been as successful. Latin America is a great case in point where there's an enormous opportunity for us in our core business, and we've yet to tap that.

Ryan S. Napierski: To be able to.

Ryan S. Napierski: Hit the right point in that market, which is growing obviously, a very large market one 4 billion people growing middle class.

Ryan S. Napierski: <unk> very educated strong technology prowess.

Ryan S. Napierski: And as we do that we see those benefits.

Ryan S. Napierski: Going into developing markets, where to date, we havent been as successful Latin America is a great case in point.

Ryan S. Napierski: Where there is an enormous opportunity there in our core business and we've yet to tap that and so how do we expand there southeast Asia. When you look at Indonesia, Malaysia, when we look at East Europe, when we look at future Africa, Middle East et cetera, Theres, just a lot will.

Ryan S. Napierski: And so how do we expand there? Southeast Asia, when you look at Indonesia, Malaysia, when we look at East Europe, when we look at future Africa, the Middle East, et cetera, there's just a lot where we'll be learning. So we see India as being very much a learning opportunity for us. Of course, in the mid to long term, this is something that we're very focused on, but we're doing the work now that we believe will benefit even in our current markets, which are developing markets. So yeah, a big investment there.

Ryan S. Napierski: I'll be learning, so we see India as being a very much a learning opportunity for us of course in the mid to long term. This is this is something that we're very focused on but we're doing the work now that we believe will benefit even in our in our current markets developing markets. So yeah big investment there.

Chasen Louis Bender: Gotcha. Really helpful, Culler. Thanks so much, guys. I'll pass it on from there.

Speaker Change: Got you really helpful color. Thanks, so much guys I'll pass it on from there.

Operator: Thank you. Thanks, Chasen. Thank you.

Speaker Change: Thank you thanks, Jason Thank you.

Operator: Thank you, and one moment as we move on to our next question. Our next question is going to come from the line of Sidney Wagner with Jeff Rays. Your line is open. Please go ahead.

Speaker Change: And one moment as we move on to our next question.

Operator: Our next question is going to come from the line of Sidney Wagner with Jefferies. Your line is open. Please go ahead.

Sydney A. Wagner: Hi, This is sidney on for Ashley.

Sydney A. Wagner: You noted macro pressure weighing on customer or an affiliate growth, but also called out strength in some of your higher price point connected products can you, maybe just give more color on that dynamic and kind of what youre seeing in terms of macro related spending behavior from your consumers.

Sidney Wagner: Yeah, it's a really interesting market, as you know, right? Luxury goods continue to move in certain respects, in automobiles and bags, handbags, and the like. Our connected device business continues to do well. It continues to be the number one cited social media, you know, eyeball attraction on social media, obviously, because of the appeal of the LumaSpa and now RenewSpa and the US WellSpa.

Sydney A. Wagner: Yes, it's a really interesting market as you know right luxury goods continue to move in certain certain regards in automobiles and bags handbags and alike are connected device business continues to do well.

Sidney Wagner: It continues to be the number one sided social media.

Sidney Wagner: Eyeball attraction on social media, obviously for the the appeal of the luminous Spa and now renew spa in the U S Wells fall, we get a lot of.

Sidney Wagner: Attraction to that and people really aspire to.

Ryan S. Napierski: We get a lot of appeal from that, and people really aspire to purchase them. But nobody can really deny, you know, as we look around the globe, pressures in China, pressures in Korea, pressures in Japan, even in the US, as we see that real CPI, you know, these reports that are coming out, no one can deny that inflation has been well beyond what's reported in some of these reports.

Sidney Wagner: Purchased those but nobody can really deny.

Ryan S. Napierski: As we look around the globe pressures in China pressures in Korea pressures in Japan, even in the U S. As we see that that that real CPI. These reports that are coming out.

Ryan S. Napierski: No one can deny the inflation has been well beyond probably what's reported in in some of these reports and we see that floating through our business as people have to make trade off decisions around utility bills versus the next new skin innovation and so we're very focused on the affordable luxury.

Ryan S. Napierski: And we see that floating through our business as people have to make trade-off decisions around utility bills versus the next NU Skin innovation. And so we're very focused on the affordable luxury space. We've also, by the way, built Mind360 to be very price conscious. So this is what I'm excited about because these are innovations that are needed by the mass markets, the stress, and that, you know, the needs there at the customer level. So we're being very intentional. We're being very deliberate.

Ryan S. Napierski: Place. We've also by the way built in mind $3 60 to be very price conscious. So this is I am excited about that because these are innovations that are needed by the mass market stress.

Ryan S. Napierski: The needs there at the customer level, so we're being very intentional we're being very deliberate.

Ryan S. Napierski: You know, as we look out to the future, obviously, inflation doesn't increase. Prices generally don't roll off, right?

Ryan S. Napierski: As we look out to the future, obviously inflation doesn't increase prices generally don't roll off right.

Ryan S. Napierski: You see very few companies that roll back pricing as like Walmart, for instance, try to do as a retailer. In most markets, once the pricing of raw goods is in this system, it typically is hard to pull back out. So it's really upon us to figure out how to innovate new solutions to market that fill the customer need at the right price point. And so we see as our ability to impact consumers at a more price-appropriate level with new product innovations is alleviating.

Ryan S. Napierski: You see very few companies that rolled back pricing as like Walmart for instance tried to do as a retailer most most markets once the pricing of raw goods is in the system. It typically is is hard to pull back out. So it is really upon us to figure out how to innovate new solutions to market that field the customer need.

Ryan S. Napierski: Need at the right price point, and so we see as where as our ability to impact consumers at a more price appropriate level with new product innovations, we see that alleviating and then at the macro level, obviously as wages increase overtime, which which we we see that that's continuous.

Ryan S. Napierski: And then at the macro level, obviously, as wages increase over time, which we know, we see that that's continuously going on. We see purchasing capabilities improving around the world. So our approach right now is to control what we can control. What we can control is product innovation. And that's where we're focused on new products coming to market at the right price point to give consumers what they need and do it at a better level. All the while, I think devices will continue to be a strong appeal because people the demand for those is high and the interest in social media continues to be very strong. Ryan, I just want to say

Speaker Change: Going on.

Ryan S. Napierski: We see purchasing capabilities.

Ryan S. Napierski: Proving around the globe. So our approach right now control what we can control what we can control is product innovation and that's where we're focused on new products coming to market at the right price points.

Ryan S. Napierski: Give consumers what they need and do it at a better level all the while I think devices will continue to be a strong appeal because people the demand for those are high and the interest on social media as it continues to be very strong.

James D. Thomas: Ryan, I'd add, I just... I was going to say, I would just add one point to that on the devices. When we look at our current quarter results, quarter over quarter, we went from devices making up 14% of our revenue to this quarter, 17% of our revenue. So, we continue to have strong demand for our devices. And what we look forward to in the back half of the year is that, in combination with affordable luxury, to Ryan's point of playing in both market spaces, we hope to garner some traction through that.

Ryan S. Napierski: Renato.

Ryan S. Napierski: Just.

James D. Thomas: I was going to say I would just add one point to that on the devices. When we look in the current quarter over quarter results quarter over quarter. We went from devices made up 14% of our revenues for this quarter or 17% of our revenue. So continues to have strong demand for our devices and what we look forward to in the back half of the year.

James D. Thomas: That in combination with affordable luxury to Ryan's point of playing in both market spaces, we hope to garner some traction through the.

Ryan: Thanks Sidney.

Operator: Thank you, and one moment as we move on to our next question. Our next question comes from the line of Linda Bolton Weiser with DA Davidson. Your line is open. Please go ahead.

Speaker Change: Thank you and one moment as we move on to our next question.

Speaker Change: Our next question comes from the line of Linda Bolton Weiser with D. A Davidson. Your line is open. Please go ahead.

Linda Ann Bolton: Yes, hi. Um, so I was wondering, um, if you could, um, maybe remind us, um, in terms of the beauty device business, that you bought the one that's distributed at retail. I think it's Ulta. How is that informing your rest of your business or core business? Like, I kind of need a refresher on what your intent was, like, was it to get the technology or the marketing know-how? Just, um, what was the intent there? And how is that going? Are you getting out of it? What was your desired outcome in terms of that acquisition? Thanks. Yeah, great.

Speaker Change: Yes, hi.

Linda Ann Bolton: Just wondering if you could.

Linda Ann Bolton: Maybe remind us.

Linda Ann Bolton: In terms of the beauty device business that you bought the one that.

Linda Ann Bolton: Turning to the retail I think it's been Alta.

Linda Ann Bolton: How is that informing your rest of your business our core business.

Linda Ann Bolton: I kind of need a refresher here on what your intent was like is it to get the technology or the marketing knowhow.

Linda Ann Bolton: What was the intent there and how is that going are you getting out of it.

Linda Ann Bolton: You wanted in terms of that acquisition.

Ryan S. Napierski: Yeah, great question, Linda. Good to hear from you as well. Thanks for joining us. Yeah, so Beauty Bio is the name of the company that we acquired last year, and we're now in our third quarter with the team, so we're still kind of learning and growing that business. They also have very good insight into the Omni approach. Jamie O'Banion and his team, they're a small and agile but well-informed team across the Omni space, which we believe is very helpful across the RISE ecosystem, and so that's really helpful.

Speaker Change: Yes, great Great question, Linda good to hear from you as well thanks for joining.

Ryan S. Napierski: So beauty bio is the name of the company that we acquired last year and it's we're now in our third quarter.

Ryan S. Napierski: With the team. So we're still we're still kind of learning and learning that business. It's a really interesting business for a lot of reasons.

Ryan S. Napierski: One as you mentioned they have they have unique IP that we that we don't have our patents that we don't we didn't have previously and we continue to aspire to be the beauty device leader across the board. So we want that capability.

Ryan S. Napierski: That's great. They also have very good insight into the omni approach, Jamie Obanion and team are they're a small and agile, but well informed team across the omni space, which we believe is very helpful across the rise ecosystem.

Ryan S. Napierski: And the third part of that, and maybe it's a subset of this, is that it is an influencer-led brand, so Jamie herself, the brand was born out of kind of her own views of beauty, and this, as you know, in the beauty and wellness space for the largest beauty companies, is quite unique, quite an interesting disruption of how influencers are disrupting these traditional beauty brands. We've often felt for a long time that if we could take the best of NU Skin, which is a bunch of affiliates out there marketing beauty and wellness products, and then find indie brands that are founded by influencers themselves to learn how to play across those worlds over time, I think it's the greatest opportunity in beauty and wellness, period.

Ryan S. Napierski: And so that's really helpful and the third part of that and maybe it's a subset of this is is it is an influencer led brands. So Jamie herself. The brand was born out of kind of her own views of beauty and this as you know in the in the beauty and wellness space for the largest beauty companies is quite.

Ryan S. Napierski: Quite an interesting disruption of how influencers are disrupting these traditional beauty brands, we've often felt for a long time, if we could take the best of new skin, which is a bunch of affiliates out there marketing beauty and wellness products and then find indie brands that are founded by Influencers themselves.

Ryan S. Napierski: To learn how to play across those worlds over time, I think it's the greatest opportunity in beauty and wellness period. So for us beauty bio it's very much we're learning the business. We're learning a lot of things around omni and the Ulta Sephora relationships other great retailer partners that are important.

Ryan S. Napierski: For us, Beauty Bio, it's very much that we're learning the business. We're learning a lot of things around Omni and Ulta, the Sephora relationships, and other great retail partners that are important. For me, the most important part of it is this influencer and creator disruption that's happening in beauty and leveraging the insights and the know-how there as we continue to build out this. I alluded to it or mentioned it in my comments, but this influencer incubator, we think this is a real opportunity for the midterm.

Ryan S. Napierski: For me the most important part of it is is this influencer and creator.

Ryan S. Napierski: Disruption, that's happening in beauty and leveraging the insights and the Knowhow there as we continue to build out this.

Ryan S. Napierski: I alluded to or mentioned it in my in my comments, but this influencer incubator. We think this is a real opportunity for the mid term and I think beauty brands and wellness brands around the globe need to be paying very particular attention to.

Ryan S. Napierski: I think beauty brands and wellness brands around the world need to be paying very particular attention to the influencer segment, and how do you help brands stand up in a very competitive red ocean space when they have a captured audience because they're an influencer themselves, and all influencers are looking to monetize those brands? How do you institutionalize a mechanism to do that? That's what we're calling the Rise Influencer Incubator business.

Ryan S. Napierski: Two the Influencer segment, and how do you help brands stand up.

Ryan S. Napierski: And in a very competitive red Ocean space when they have a captured audience because they are an influencer themselves.

Ryan S. Napierski: And all the Influencers are looking to monetize those brands, how do you institutionalize, it and or a mechanism to do that that's what we're calling the rights Influencer EQ beta business.

Ryan S. Napierski: Okay.

Linda Ann Bolton: And then I just had a question about the MIME 360 product line. I guess I'm just wondering, I mean, on the supplement side of your business, I believe you have products that are sort of addressing those needs. Maybe I'm mistaken, but maybe you could describe how this launch is different. Does it put together several different products in a suite of products that people will buy? Or, like, are these actually in ingestible form, you know, products like what? Maybe maybe just give a little more color on what they are.

Ryan S. Napierski: And then I can think.

Ryan S. Napierski: A question on the line 360.

Linda Ann Bolton: The product line.

Linda Ann Bolton: I guess I'm, just wondering I mean on your supplement side of your business.

Linda Ann Bolton: I believe you have products that are sort of addressing those needs maybe im mistaken, but maybe you could describe like how this launch is different does it put together several different products in that suite of products that people will buy or like are these actual.

Linda Ann Bolton: And Jessica before them.

Linda Ann Bolton: Products like <unk>.

Linda Ann Bolton: Maybe just give a little more color on what they are.

Ryan S. Napierski: No, you hit the nail on the head, Linda. In fact, by the way, I should mention to anyone, if you are interested in attending our live event, again, it's West Live, so it's not our traditional global event because we have challenges with visas now post-COVID, but it's a West Live event, and you're all welcome to come. Just contact Scott Pond, and he can get you information, and we'll certainly help out.

Linda Ann Bolton: Yes.

Speaker Change: You hit you hit the nail on the head Linda in fact by the way I should mention anyone if you are interested in attending our live event again, its a west lives. So it's not our traditional global event, because we have challenges with visa is now post COVID-19, but its a west live event and Youre all welcome to come just contact Scott Pond.

Ryan S. Napierski: And he can get your information and that will certainly help out the mine 360 itself, yes, very much what is different we do have farm <unk>.

Ryan S. Napierski: The Mind360 itself, yes, very much what is different is that we do have Pharmanext R&D and Pharmanext products that address specific concerns in the cognitive health space, sleep, stress, etc. But we've never had a holistic approach that really, an interrelated approach to developing this space. What we mean by that is, if you think through the consumer lifestyle, a lack of sleep impacts stress levels, it impacts cognitive performance, memory, you know, recognition, etc. So if you're not sleeping well, it has effects on your cognitive performance. If your cognitive performance isn't working well, it impacts your stress, which impacts your sleep.

Ryan S. Napierski: R&D in pharma next products that address specific concerns in the cognitive health.

Ryan S. Napierski: Space sleep.

Ryan S. Napierski: Stress et cetera, we've never had a holistic approach that really and interrelated approach to developing this this space and what we mean by that is if you think through the consumer life style, a lack of sleep impacts stress levels. It imply impasse.

Ryan S. Napierski: <unk> cognitive performance memory.

Ryan S. Napierski: Recognition et cetera, so if you're not sleeping well it has effects on your cognitive performance if youre cognitive performance isn't working well it impacts your stress, which impacts your sleep. So these products have been developed in a holistic forms so that they all interrelate and attack the broader.

Ryan S. Napierski: So these products have been developed in a holistic form so that they all interrelate and address the broader lifestyle comprehensively. In terms of delivery form, we're pretty excited about that. The They're taking multiple forms. So not only will they be in supplement form, but there will be gummies as part of this, which we know for the 20s and 30 year-old segments are much more popular. We even have drinkable tea-type mix-ins.

Ryan S. Napierski: <unk> lifestyle.

Ryan S. Napierski: Comprehensively in terms of delivery form we're pretty excited about that.

Ryan S. Napierski: They're taking multiple forms so not only will they be in supplement form, but there will be gummies as part of this which we know for the 20 to 30 year old segments are much more popular we even have drinkable T type mix ins.

Ryan S. Napierski: And so it's a pretty customized approach that we're taking. And the last thing I'll say about Mind360 is we're taking sustainability to a whole new level across our business with the packaging. We're taking a wholly new approach, packaging much more sustainable, the imprint on the planet's going to be so much better with these products. And so we're excited about that approach as well.

Ryan S. Napierski: So it's a pretty core.

Ryan S. Napierski: Customized approach that we're taking and the last thing I'll say about mined 360 is we're taking sustainability to a very to the next level across our our business with the packaging, we're taking a wholly new approach packaging much more sustainable they're economic.

Linda Ann Bolton: Okay, thank you very much.

Linda Ann Bolton: The implant imprint on the plan thats going to be so much better with these products and so we're excited about that approach as well.

Linda Ann Bolton: Okay. Thank you very much.

Ryan S. Napierski: Thanks Linda, I appreciate it. It looks like we are through the questions, and I appreciate that additional. Those questions are helpful for us as well to fine-tune what we present on the call. So, thank you for the questions. Let me just wrap up by saying that it's been interesting. I've been on this journey with NU Skin for 29 years, but we've been in business for 40 years. And we've been in the business of being a global force for good by empowering people to look, feel, and live better lives.

Speaker Change: Thanks, Linda appreciate it it looks like it looks like we are through the questions and I appreciate that additional both those questions are helpful for us as well.

Ryan S. Napierski: To fine tune, what we present on the call. So thank you for the questions. Let me just wrap up by by saying that it's it's been interesting I have been on this journey with Nu skin now 29 years, but we've been in business for 40 years and we've been in the business of being a global force for good by empowering people to look feel and live better lives I can tell you.

Ryan S. Napierski: I can tell you coming out of Dubai with our sales leadership team, the energy. I'm feeling a new sense of energy in the market. The macros are still not great, not favorable, but our sales force is very much aligned and committed to this vision or this mission of the company, and our vision of becoming the world's leading beauty, wellness, and lifestyle ecosystem as we continue to evolve our NU Skin core business.

Ryan S. Napierski: Coming out of Dubai, with our sales leader team the energy I'm, feeling a new sense of energy.

Ryan S. Napierski: In the market the macros are still not great not favorable but our sales force is very much aligned and committed to this vision or this mission of the company and our vision of becoming the world's leading beauty wellness and lifestyle ecosystem as we continue to evolve our new skin core business and expand our capabilities through rise we saw.

Ryan S. Napierski: And expand our capabilities through RISE. We see the world coming together in this ecosystem to be much brighter. So I just appreciate your time and attention to NU Skin. And we look forward to providing better and better results and a greater shareholder value return as we realize the benefits of this vision. So thank you all. We look forward to updating you next month or next quarter on the call.

Ryan S. Napierski: See the world coming together in this ecosystem duty much brighter. So I just appreciate your time and attention to new skin and we look forward to providing better and better results in greater shareholder value return as we realize the benefits of this vision. So thank you all we look forward to updating you next month or next quarter on the call.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Ryan S. Napierski: Bye.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Operator: Okay.

Operator: Yes.

Operator: Okay.

Operator: [music].

Q1 2024 Nu Skin Enterprises Inc Earnings Call

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