Q2 2024 Nu Skin Enterprises Inc Earnings Call

August 8, 2024

[inaudible] Pond, Scott Pond, Scott

Operator: Good day, and thank you for standing by. Welcome to the NU Skin Enterprises second quarter 2024 earnings conference call.

Good day, and thank you for standing by.

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 to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Scott Pond, VP of Investor Relations. Please go ahead.

Speaker Change: Welcome to the new Skin Enterprises, second quarter 2024 earnings conference call.

Speaker Change: 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 to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised.

Speaker Change: To withdraw your question, please first star one one again. Please be advised that today's conference is being recorded. I would like to hand the conference over to your speaker, Scott Pond, VP of the Investor Relations. Please go ahead.

Scott Pond: Thanks Shannon, 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 forward-looking statements. These statements involve risks and uncertainties, and actual results may differ materially from those discussed or anticipated. Please refer to today's earnings release and our SEC filings for a complete discussion of these risks. Also, during the call, certain financial numbers may be discussed that differ from comparable numbers obtained in our financial statements. We believe these non-GAAP numbers assist in comparing period-to-period results in a more consistent manner. Please refer to our investor website for any required reconciliation of these non-GAAP numbers.

Scott Pond: Thanks, Shannon, and good afternoon, everyone.

Speaker Change: today on the call with me Ryan Napierski President and CEO.

Speaker Change: and James Thomas CFO. Today's call comments will be made that includes forward-looking statements.

Speaker Change: These statements involve risks and uncertainties, and actual results may differ materially from those discussed or anticipated. Please refer to today's earnings release and our SEC filings for a complete discussion of these risks.

Speaker Change: Also during the call, certain financial numbers may be discussed that differ from comparable numbers obtained in our financial statements.

Speaker Change: We believe these non-GAAP numbers assist in comparing period-to-period results in a more consistent manner.

Speaker Change: Please refer to our investor website for any required reconciliation of these non-GAAP numbers. And with that, I'd like to turn the call over to Ryan.

Ryan Napierski: And with that, I'd like to turn the call over to Ryan. Thanks, Scott. Hello, everyone.

Ryan Napierski: Thanks, Scott. Hello, everyone.

Ryan Napierski: Thanks for joining our call today. I'll start by providing a performance summary of Q2 and then share progress updates on our ongoing enterprise transformation, vision, strategy, and plan as we continue to evolve our core NU Skin business from a traditional direct selling model to a more expansive, integrated beauty, wellness, and lifestyle company, including our RISE ecosystem. The second quarter played out similarly to the first, with revenue slightly above the midpoint of our guidance, despite a stronger-than-anticipated FX headwind of over 4%.

Ryan Napierski: Thanks, Scott. Hello, everyone. Thanks for joining our call today.

Ryan Napierski: I'll start by providing a performance summary of Q2.

Ryan Napierski: and then share progress update on our ongoing enterprise transformation vision, strategy, and plan as we continue to evolve our core NU Skin business from a traditional direct-selling model towards a more expansive, integrated beauty, wellness, and lifestyle company, including our RISE ecosystem.

Ryan Napierski: The second quarter played out similar to the first with revenue slightly above the midpoint of our guidance despite a stronger than an anticipated FX headwind over 4%.

Ryan Napierski: Non-Gaps Earnings Per Share were near the top end of the range, reflecting continued progress to plan for our business transformation while managing costs and driving efficiencies. However, overall, the operating environment remains challenging for our core NU Skin business due in large part to macroeconomic factors and pressures on the direct selling industry itself. Despite these challenges, we were encouraged by sequential gains in several of our markets, including the U.S., South Korea, and parts of Southeast Asia Pacific. Most notably, we experienced year-over-year improving trends in paid brand affiliates globally, which translated into improving new sales leaders. China remained challenging due to macro trends in the market.

Ryan Napierski: Non-GAAP earnings per share were near the top end of the range reflecting continued progress to plan for our business transformation while managing costs and driving efficiencies.

Ryan Napierski: Overall the operating environment remains challenging for our core NU Skin business due in large part to macroeconomic factors and pressures on the direct selling industry itself.

Ryan Napierski: These challenges we were encouraged by sequential gains and several of our markets, including the U.S., South Korea and parts of South East Asia Pacific.

Ryan Napierski: Despite these challenges, we were encouraged by sequential gains in several of our markets, including the US, South Korea, and parts of Southeast Asia Pacific. Most notably, we experienced year-over-year improving trends in paid brand affiliates globally, which translated into improving new sales leaders.

Ryan Napierski: Most notably, we experienced year-over-year improving trends in paid brand affiliates globally, which translated into improving new sales leaders.

Ryan Napierski: Our Rise business continued to perform well, with revenue up 32% to nearly $68 million, accounting for over 15% of our second quarter total. Growth that Rides was led by our Maverly affiliate platform and our Wasatch Manufacturing business. RISE plays a critical role in our enterprise transformation that I'll speak to in a moment. And we expect revenue from RISE to continue to grow at a faster pace, reaching 20 to 25 percent of our overall revenue mix by 2025.

Ryan Napierski: China remains challenging due to macro trends in the market.

Ryan Napierski: Our RISE business continued to perform well, with revenue up 32% to nearly $68 million, accounting for over 15% of our second quarter total.

Ryan Napierski: China remained challenging due to macro trends in the market. Our rise business continued to perform well with revenue up 32% to nearly 68 million, accounting for over 15% of our second quarter total. Growth that rise was led by our mavely affiliate platform and our WhatsApp manufacturing business. Rise plays a critical role in our enterprise transformation that I'll speak to in a moment, and we expect revenue from rise to continue to grow at a faster pace reaching 20 to 25% of overall revenue mixed by 2025.

Ryan Napierski: Growth that Rides was led by our Maverly affiliate platform and our Wasatch manufacturing business.

Ryan Napierski: RYSE plays a critical role in our enterprise transformation that I'll speak to in a moment. And we expect revenue from RYSE to continue to grow at a faster pace, reaching 20 to 25 percent of overall revenue mix by 2025.

Ryan Napierski: Let's dive deeper into both our NU Skin core and RISE businesses. In our core NU Skin business, new products, including Agelok Well Spa IO and Renew Spa IO, along with our TRME weight management system, were the main growth drivers delivering over $60 million of revenue in the quarter. Adding these new wellness, the new wellness IO devices to our cadre of beauty devices has resulted in NU Skin being named the world's number one company for beauty and wellness device systems by Euromonitor this past year. To date, our I.O.

Ryan Napierski: Let's dive deeper into both our NuSkin core and RISE businesses.

Ryan Napierski: In our core new skin business, new products including H. Lock Wells Spa I.O. and Renew Spa I.O. along with our TR-Me weight management system, where the main growth drivers delivering over $60 million of revenue in the quarter, adding these new wellness.

Ryan Napierski: Let's dive deeper into both our new skin core and rise businesses. In our core new skin business, new products, including age-locked well spa IO and renew spa IO, along with our TRME weight management system, where the main growth drivers delivering over $60 million of revenue in the quarter. Adding these new wellness, the new wellness IO devices to our cadre of beauty devices has resulted in new skin being named as the world's number one company for beauty and wellness device systems by EuroMonitor this past year.

Ryan Napierski: The new wellness IO devices to our cadre of beauty devices has resulted in new skin being named as the world's number one company for beauty and wellness device systems by your a monitor this past year.

Ryan Napierski: These devices have produced more than 20 million connected treatments and over 100 million data points that are helping us to better understand our consumers' unique habits and behaviors, which drive two to three times greater purchasing than that of non-connected device consumers. During the quarter, we continued to feel the impact of the challenging macro environment affecting consumer spending and customer acquisition in the majority of our regions, particularly for premium goods. Nevertheless, we were encouraged with sequential gains in several of our KPIs, including double-digit customer growth in our two largest segments, Americas and Mainland China, along with gains in sales leaders in the key markets of South Korea and Southeast Asia Pacific.

Ryan Napierski: Today our IO devices have produced more than 20 million connected treatments and over 100 million data points that are helping us to better understand our consumers' unique habits and behaviors which drive 2-3 times greater purchasing than that of non-connected device consumers.

Speaker Change: During the quarter, we continue to feel the impact of the challenging macro environment affecting consumer spending and customer acquisition in the majority of our regions, particularly for premium goods.

Ryan Napierski: During the quarter, we continue to fill the impact of the challenging macroenvironment affecting consumer spending and customer acquisition in the majority of our regions, particularly for premium goods. Nevertheless, we were encouraged with sequential gains in several of our KPIs, including double-digit customer growth in our two largest segments, the Americas and mainland China, along with gains in sales leaders in the key markets of South Korea and Southeast Asia Pacific. We just held our first in-person live event for our Western markets in over five years within the even larger events slated for Eastern markets in September.

Ryan Napierski: We just held our first in-person live event for our Western markets in over 5 years, with an even larger event slated for our Eastern markets in September. It was a great reminder of the power of getting together in person, and we were able to drive energy and alignment among our leaders as we shared three key initiatives. First, we previewed our next major product division, MIND360, a holistic approach to supporting cognitive health that will be launched around the globe over the next several quarters. Mind360 is built to serve customers who are seeking support for stress management, cognitive performance, and sleep in this rapidly growing $9 billion global cognitive health market.

Speaker Change: We just held our first in-person live event for our Western markets in over five years, with an even larger event slated for our Eastern markets in September . It was a great reminder of the power of getting together in person, and we were able to drive energy and alignment among our leaders as we shared three key initiatives.

Ryan Napierski: It was a great reminder of the power of getting together in person, and we were able to drive energy and alignment along our leaders as we shared three key initiatives. First, we previewed our next major product division, Mind360, a holistic approach to supporting cognitive health that will be launched around the globe over the next several quarters. Mind360 is built to serve customers who are seeking support for stress management, cognitive performance and sleep, in this rapidly growing $9 billion global cognitive health market.

Ryan Napierski: First, we previewed our next major product division, MIND360, a holistic approach to supporting cognitive health that will be launched around the globe over the next several quarters.

Mike 360: Mike 360 has built to serve customers who are seeking support for stress management, cognitive performance and sleep in this rapidly growing $9 billion global cognitive health market.

Ryan Napierski: Second, we discuss plans to enhance our overall brand awareness, announcing our integrated brand building plans as we strive to build a greater presence wherever our customers seek to find us, including enhanced digital marketing and third-party marketplaces like Amazon. Improving overall brand awareness will lead to greater engagement and conversion for our customers and affiliates as we build synergistic value in the marketplace. Third, we announced our increasing efforts and focus to further penetrate developing and emerging markets around the globe, beginning with revised operating models in Latin America and some Southeast Asian markets beginning in the second half of this year. Developing markets represent more than half of the markets in which NU Skin currently operates and are significantly underrepresented in revenue and operating performance.

Ryan Napierski: Second, we discussed plans to enhance our overall brand awareness, announcing our integrated brand building plans as we strive to build greater presence wherever our customers seek to find us, including enhanced digital marketing and third-party marketplaces like Amazon. Improving overall brand awareness will lead to greater engagement and conversion for our customers and affiliates as we build synergistic value in the marketplace. And third, we announced our increasing efforts and focus to further penetrate developing and emerging markets around the globe, beginning with revised operating models in Latin America and some Southeast Asia markets beginning the second half of this year.

Ryan Napierski: Improving overall brand awareness will lead to greater engagement and conversion for our customers and affiliates as we build synergistic value in the marketplace.

Ryan Napierski: And third, we announced our increasing efforts and focused at further penetrate developing and emerging markets around the globe, beginning with revised operating models in Latin America and some Southeast Asia markets, beginning the second half of this year.

Ryan Napierski: Developing markets represent more than half of the markets in which the new skin currently operates and are significantly underrepresented in revenue and operating performance.

Ryan Napierski: Our revised operating plan will include a more localized product portfolio and business model that will enable us to reach a broader demographic than historically feasible through our current business model in these markets, as well as streamlined operations. We will leverage these learnings as we prepare for our previously announced exploration of the Indian market. Our team is very focused on building successful developing and emerging market business models that will take NU Skin's mission of being a global force for good by empowering people to improve lives to new markets around the world.

Ryan Napierski: Developing markets represent more than half of the markets in which NU Skin currently operates and are significantly underrepresented in revenue and operating performance. Our revised operating plan will include a more localized product portfolio and business model that will enable us to reach a broader demographic than historically feasible through our current business model in these markets, as well as streamlined operations. We will leverage these learnings as we prepare for our previously announced exploration of the India market.

Ryan Napierski: We will leverage these learnings as we prepare for our previously announced exploration of the India market.

Ryan Napierski: Our team is very focused on building successful developing and emerging market business models that will take NU Skin's mission of being a global force for good by empowering people to improve lives to new markets around the world. Shifting extra rise, as I mentioned previously, rise continues to perform at an accelerated pace as we invest in, build and scale these business tools towards long-term integrated beauty, wellness and lifestyle ecosystems. Rise is made up of several businesses ranging from technologies, manufacturing and more recently brands.

Ryan Napierski: Moving next to Rise, as I mentioned previously, Rise continues to perform at an accelerated pace as we invest in, build, and scale these business tools towards long-term integrated beauty, wellness, and lifestyle ecosystems. RISE is made up of several businesses ranging from technologies, manufacturing, and more recently brands. Every investment in RISE holds synergistic value to the other businesses in our ecosystem and plays a critical role in our long-term vision and strategy. One critical business within RISE is Mavely, our everyday influencer platform that connects more than 70,000 affiliates to over 1,200 beauty, wellness, and lifestyle brands in the United States.

Ryan Napierski: Shifting X to Rise, as I mentioned previously, Rise continues to perform at an accelerated pace as we invest in, build and scale these business towards long-term integrated beauty, wellness and lifestyle ecosystems.

Ryan Napierski: Rises made up of several businesses ranging from technologies, manufacturing and more recently brands. Every investment in Rides holds synergistic value to the other businesses in our ecosystem and play critical roles in our long-term vision and strategy.

Ryan Napierski: Every investment in Rise holds synergistic value to the other businesses in our ecosystem and play critical roles in our long-term vision and strategy. One critical business within Rise is Mavily, our everyday influence or platform that connects more than 70,000 affiliates to over 1200 beauty wellness and lifestyle brands in the United States. Mavily is rapidly becoming a leading affiliate brand platform, leveraging technology that enables brands to access our army of everyday influencers to share their brand via social media.

Ryan Napierski: One critical business within RISE is Maybelline, our everyday influencer platform that connects more than 70,000 affiliates to over 1,200 beauty, wellness, and lifestyle brands in the United States.

Ryan Napierski: Maverly is rapidly becoming a leading affiliate brand platform, leveraging technology that enables brands to access our army of everyday influencers to share their brands via social media. Leveraging machine learning and working to implement next-generation AI, Maybelline curates brands for its affiliates to share via social media, simple, fast, and easy. And we're leveraging the Maybelline platform to develop a NU Skin Maybelline app instance that will enable our affiliates to share NU Skin brands more easily while gaining access to hundreds of other brands to promote and share. Additionally, Maybelline enables the promotion of other R.I.S.E. brands such as Beauty Bio to Maybelline affiliates.

Ryan Napierski: Leveraging machine learning and working to implement next-generation AI, Mavely curates brands for its affiliates to share via social media, simple, fast, and easy.

Ryan Napierski: Leveraging machine learning and working to implement next generation AI, Mavily curates brands for its affiliates to share by a social media, simple fast and easy. And we're leveraging the Mavily platform to develop a new skin Mavily app instance that will enable our affiliates to share new skin brands more easily while gaining access to hundreds of other brands to promote and share. Additionally, Mavily enables the promotion of other Rise brands such as Beauty Bio to Mavily affiliates.

Speaker Change: And we're leveraging the Maybelline platform to develop a NU Skin Maybelline app instance that will enable our affiliates to share NU Skin brands more easily while gaining access to hundreds of other brands to promote and share.

Speaker Change: Additionally, Mavily enables the promotion of other rise brands such as Beauty Bio to Mavily affiliates.

Ryan Napierski: We anticipate that affiliate marketing will continue to outpace virtually all other forms of advertising and promotion, and we believe that our approach to integrated affiliate marketing via Maverly will become a more meaningful player in this rapidly changing industry. In addition to Maverly, the benefits of vertical integration across manufacturing and our owned and partnered brands enable us to accelerate product innovation and speed to market as we move more quickly to keep pace with consumer trends in beauty and wellness. RISE also provides this optionality to drive brand awareness and engagement, meeting more consumers where they discover and shop.

Speaker Change: We anticipate that affiliate marketing will continue to outpace virtually all other forms of advertising and promotion, and we believe that our approach to integrated affiliate marketing via Maverly will become a more meaningful player in this rapidly shaping industry.

Ryan Napierski: We anticipate that affiliate marketing will continue to outpace virtually all other forms of advertising and promotion and we believe that our approach to integrated affiliate marketing via Mavily will become a more meaningful player in this rapidly shaping industry. In addition to Mavily, the benefits to vertical integration across manufacturing and our own and partnered brands enables us to accelerate product innovation and speed to market as we move more quickly to keep pace with consumer trends in beauty and wellness. Rise also provides us optionality to drive brand awareness and engagement, meeting more consumers where they discover and shop. We continue to invest in Rise as a critical innovation accelerator for our overall enterprise transformation strategy.

Speaker Change: In addition to Maybelline, the benefits to vertical integration across manufacturing and our owned and partnered brands enables us to accelerate product innovation and speed to market as we move more quickly to keep pace with consumer trends in beauty and wellness.

Speaker Change: RISE has also provide this optionality to drive brand awareness and engagement, meeting more consumers where they discover and shop. We continue to invest in RISE as a critical innovation accelerator for our overall enterprise transformation strategy.

Ryan Napierski: We continue to invest in RISE as a critical innovation accelerator for our overall enterprise transformation strategy. Leveraging the expertise of companies within RISE has been instrumental in accelerating our innovation agenda for product and device research and development, sustainability, and supply chain capabilities. We'll continue to expand on this and share progress with you in the coming quarters. So, in summary, our enterprise transformation remains on track with second quarter results in line with guidance and at the halfway point of 2024.

Speaker Change: Leveraging the expertise of companies within RISE has been instrumental in accelerating our innovation agenda in product and device research and development, sustainability, and supply chain capabilities.

Ryan Napierski: Energy. Leveraging the expertise of companies within RISE has been instrumental in accelerating our innovation agenda in product and device research and development, sustainability and supply chain capabilities. We'll continue to expand on this and share progress with you in the coming quarters.

Speaker Change: We'll continue to expand on this and share progress with you in the coming quarters.

Speaker Change: So, in summary, our enterprise transformation remains on track with second quarter results in line with guidance and at the halfway point of 2024. We've continued to demonstrate our ability to adapt to challenges and deliver within expectations.

Ryan Napierski: We've continued to demonstrate our ability to adapt to challenges and deliver within expectations. We're focused on accelerating innovation across our NU Skin core business with our Mind360 product division, an enhanced business model for developing and emerging markets, and integrated brand building efforts. We're also investing in key enterprise growth initiatives, including Maverly and several other businesses in RISE, which continue to deliver strong growth. We have a long runway into the future and provide us with synergistic tools and capabilities that we can leverage across the enterprise.

Ryan Napierski: So in summary, our enterprise transformation remains on track with second quarter results in line with guidance and at the halfway point of 2024. We've continued to demonstrate our ability to adapt to challenges and deliver within expectations. We're focused on accelerating innovation across our new skin core business with our mind 360 product division and enhanced business model for developing and emerging markets and integrated brand building efforts. We're also investing in key enterprise growth initiatives, including Mavily and several other businesses in RISE which continue to deliver strong growth.

Speaker Change: We're focused on accelerating innovation across our NuSkin core business with our MIND360 product division, an enhanced business model for developing in emerging markets, and integrated brand building efforts.

Speaker Change: We're also investing in key enterprise growth initiatives, including Maverly and several other businesses in RISE, which continue to deliver strong growth. We have a long runway into the future and provide us with synergistic tools and capabilities that we can leverage across the enterprise.

Ryan Napierski: Operationally, we continue to focus on managing costs and driving efficiency throughout our ongoing transformation. Despite the persistence of macroeconomic headwinds, we remain focused on executing our long-term vision of becoming the world's leading integrated beauty, wellness, and lifestyle ecosystem. So with that, I'll turn the time over to James to cover the second quarter results in more detail along with our guidance, and then we'll open it up for questions. Thank you, Ryan.

Ryan Napierski: We have a long runway into the future and provide us with synergistic tools and capabilities that we can leverage across the enterprise. Operationally, we continue to focus on managing costs and driving efficiencies throughout our ongoing transformation. Despite the persistence of macro economic headwinds, we remain focused on executing our long-term vision of becoming the world's leading integrated beauty wellness and lifestyle ecosystem.

Speaker Change: Operationally, we continue to focus on managing costs and driving efficiencies throughout our ongoing transformation.

Speaker Change: Despite the persistence of macroeconomic headwinds, we remain focused on executing our long-term vision of becoming the world's leading integrated beauty, wellness, and lifestyle ecosystem.

Speaker Change: So with that I'll turn the time over to James to cover second quarter results in more detail Along with our guidance, and then we'll open it up for questions. Thanks

Ryan Napierski: So with that, I'll turn the time over to James to cover second quarter results in more detail along with our guidance and then we'll open it up for questions.

James Thomas: I'll provide a brief Q2 update and then speak to Q3 and 2024 guidance. For additional details, please visit our Investor Relations website. For the second quarter, we posted revenue of $439.8 million, or $1 million, which was at the midpoint of our previous guidance range and included a slightly larger than expected negative foreign currency headwind of 4.2% or $21 million. Reported earnings were negative $2.38 or $0.21 excluding restructuring and impairment charges

James Thomas: Thank you, Ryan. Thanks to all of you for joining today. I'll provide a brief Q2 update and then speak to Q3 and 2024 guidance. For additional details, please visit our Investor Relations website. For the second quarter, we posted a revenue of $439.8 million.

James Thomas: Thank you, Ryan. Thanks all of you for joining today. I'll provide a brief Q2 update and then speak to Q3 in 2024 guidance.

James Thomas: For additional details, please visit our investor relations website. For the second quarter, we posted a revenue of 439.1 million dollars which was at the midpoint of our previous guidance range and included a slightly larger than expected negative foreign currency headwind of 4.2 percent or 21 million dollars. Reported earnings were negative $2.38 or 21 cents excluding restructuring and impairment charges. Our growth margin was 70 percent compared to 72.9 percent in the prior year quarter.

James Thomas: $1 million, which was at the midpoint of our previous guidance range and included a slightly larger than expected negative foreign currency headwind of 4.2% or $21 million.

James Thomas: Report it earnings, we're negative $2.38 or 21 cents, excluding restructuring and empowerment charges.

James Thomas: Our gross margin was 70% compared to 72.9% in the prior year quarter. Our overall gross margin continues to be impacted by growth in our RISE business, which carries a lower gross margin. Gross margin for the NU Skin core business was 76.1% compared to 77.2% in the prior year quarter. This decline in margin can largely be attributed to the geographic shift of revenue in the core business and fixed overhead costs on lower volume. We're accelerating our SKU rationalization project and expect to see sequential improvements in gross margin with an approximate 20% reduction in our overall SKU count by the end of 2024.

James Thomas: Our overall growth margin continues to be impacted by growth in our right business which carries a lower growth margin. Gross margin for the new scheme core business was 76.1 percent compared to 77.2 percent in the prior year quarter. This decline in margin can largely be attributed to the geographic shift of revenue in the core and fixed overhead cost on lower volume. We're accelerating our rationalization project and expect to see sequential improvements in gross margin with an approximate 20 percent reduction in our overall skew count by the end of 2024.

James Thomas: Gross margin for the new seen corp business was 76.1% compared to 77.2% in the prior year quarter. This decline in margin can largely be attributed to the geographic shift of revenue in the core and fixed overhead costs on lower volume.

James Thomas: We're accelerating our skew rationalization project and expect to see sequential improvements in gross margin with an approximate 20% reduction in our overall skew count by the end of 2024.

James Thomas: Selling Excess, as a percentage of revenue, was 37.7% compared to 37% in the prior year quarter. For the NU Skin core business, selling expense was 42.2% compared to 40.2% in the prior year period. Our core NU Skin selling expense typically ranges between 40% to 42% with a slight increase mainly attributed to enhancements made to the compensation plan targeting customer and affiliate acquisition. General and administrative expense declined nearly $20 million due to the continued execution of our cost efficiency program, related restructuring activities in the quarter, and bringing overall operating costs more in line with current revenue levels.

James Thomas: Selling Excents

James Thomas: as a percentage of revenue was 37.7% compared to 37% in the prior year quarter. For the NU Skin core business, selling expense was 42.2% compared to 40.2% in the prior year period.

James Thomas: Selling expense as a percentage of revenue was 37.7 percent compared to 37 percent in the prior year quarter. For the new scheme core business selling expense was 42.2 percent compared to 40.2 percent in the prior year period. Our core new scheme selling expense typically ranges between 40 percent to 42 percent with a slight increase mainly attributed to enhancements made to the compensation plan targeting customer and affiliate acquisition. General and administrative expense declined nearly $20 million due to the continued execution of our cost efficiency program, related restructuring activities in the quarter, and bringing overall operating costs more in line with current revenue levels.

James Thomas: Our core NU Skin selling expense typically ranges between 40% to 42%, with a slight increase mainly attributed to enhancements made to the compensation plan targeting customer and affiliate acquisition.

James Thomas: General and administrative expense declined nearly 20 million dollars due to the continued execution of our cost efficiency program, related restructuring activities in the quarter, and bringing overall operating costs more in line with current revenue levels.

James Thomas: As a percent of revenue, G&A for the quarter was 26.9% compared to 27.4% in Q2 2023. Over the past several years, our core NU Skin business has faced challenges due to global economic downturns, the rising cost of capital, and overall direct selling industry pressure. These factors contributed to a depressed market valuation, which resulted in a non-cash goodwill and intangibles impairment of $141 million, mainly across the NU Skin reporting unit.

James Thomas: As a percent of revenue, G&A for the quarter was 26.9%, compared to 27.4% in Q2 2023.

James Thomas: Additionally, in the second quarter, we incurred $8.4 million in restructuring charges and plan to extend our restructuring program as we continue to evolve our operating footprint as we transform our business. Our operating margin for the quarter was negative 28.6 percent, or 5.4 percent, excluding restructuring and impairment charges, compared to 8.5 percent in the prior year quarter. Interest expense was $6.7 million for the quarter, compared to $5.8 million in the prior year.

James Thomas: As a percent of revenue, GNA for the quarter was 26.9%, compared to 27.4% in Q2 2022-2023. Over the past several years, our core new skin business has faced challenges due to global economic downturns, the rising cost of capital, and overall direct selling industry pressures. These factors have contributed to depressed market valuation, which resulted in a non-cash goodwill and intangibles impairment of $141 million, mainly across the new skin reporting units. Additionally, in the second quarter, we incurred $8.4 million in restructuring charges and plan to extend our restructuring program as we continue to evolve our operating footprint as we transform our business.

James Thomas: Over the past several years, our core NU Skin business has faced challenges due to global economic downturns, the rising cost of capital, and overall direct selling industry pressures.

James Thomas: These factors have contributed to a depressed market valuation, which resulted in a non-cached good-will and intangibles impairment of $141 million, mainly across the new skin reporting units.

James Thomas: Additionally, in the second quarter, we incurred $8.4 million in restructuring charges and plans to extend our restructuring program as we continue to evolve our operating footprint as we transform our business.

James Thomas: Our operating margin for the quarter was negative 28.6 percent, or 5.4 percent excluding restructuring and impairment charges, compared to 8.5 percent in the prior year quarter.

James Thomas: Our operating margin for the quarter was negative 28.6%, or 5.4%, excluding restructuring and impairment charges, compared to 8.5% in the prior year quarter. Interest expense was $6.7 million for the quarter, compared to $5.8 million in the prior year. The other income expense line reflects $0.6 million in income, compared to $0.4 million in the prior year quarter. In the second quarter, we continue to make strides in our inventory management and portfolio optimization plan, which helps generate healthy cash flows from operations of $51.2 million, which also generated free cash flow of $43.1 million in the quarter.

Speaker Change: Interest Expans was $6.7 million for the quarter compared to $5.8 million in the prior year. The other income expense line reflects $0.6 million being come compared to $0.4 million being come.

James Thomas: The other income expense line reflects $0.6 million of income, compared to $0.4 million in the prior year quarter. In the second quarter, we continued to make strides in our inventory management and portfolio optimization plan, which helped generate healthy cash flows from operations of $51.2 million, which also generated free cash flow of $43.1 million in the quarter. We paid $3 million in dividends, and paid down $25 million of our outstanding debt during the quarter. We did not repurchase any stock, and we have $162.4 million remaining on our current authorization.

Speaker Change: in the prior year quarter.

Speaker Change: In the second quarter, we continue to make strides in our Inventory Management and Portfolio Optimization Plan, which helped generate healthy cash flows from operations of $51.2 million, which also generated free cash flow of $43.1 million in the quarter.

Speaker Change: We paid $3 million in dividends, paid down 25 million of our outstanding debt during the quarter. We did not repurchase any stock and have $162.4 million remaining on our current authorization.

James Thomas: We paid $3 million in dividends, paid down $25 million of our outstanding debt during the quarter. We did not repurchase any stock and have $162.4 million remaining on our current authorization. Our tax rate for the quarter was 10.2%, or 41.4%, excluding restructuring charges, compared to 27.5%. For both the third quarter and the year, we anticipate an adjusted tax rate of 36% to 42%. This annual rate reflects an anticipated higher global effective tax rate, primarily due to the expected geographical mix of our earnings.

James Thomas: Our tax rate for the quarter was 10.2%, or 41.4% excluding restructuring charges, compared to 27.5%. For both the third quarter and the year, we anticipate an adjusted tax rate of 36% to 42%. This annual rate reflects an anticipated higher global effective tax rate, primarily due to the expected geographical mix of our earnings.

Speaker Change: Our tax rate for the quarter was 10.2% or 41.4% excluding restructuring charges compared to 27.5%.

Speaker Change: For both the third quarter and the year, we anticipate an adjusted tax rate of 36% to 42%. This annual rate reflects an anticipated higher global effective tax rate, primarily due to the expected geographical mix of our earnings.

James Thomas: Shifting attention now to guidance, based on our first half performance in 2024 at the midpoint of our prior guide, increased FX pressure, and the current state of the business, we are tightening our annual guidance. We now expect 2024 revenue in the 1.73 to 1.81 billion dollar range with earnings per share of negative $2.01 to negative $1.81 or adjusted earnings of $0.75 to $0.95. Our guidance now assumes increased foreign currency headwinds of approximately negative 4% to negative 3%.

Speaker Change: Shifting attention now to guidance based on our first half performance in 2024 at the midpoint of our prior guide, increased FX pressure and the current state of the business. We are tightening our annual guidance.

James Thomas: Shifting attention now to guidance, based on our first half performance in 2024, at the highest, we are tightening our annual guidance. We now expect 2024 revenue in the $1.73 to $1.81 billion range with earnings per share of negative $2.01 to negative $1.81 or adjusted earnings of 75 cents to 95 cents. Our guidance now assumes increased foreign currency headwind of approximately 4%, to negative 3%. We are projecting third quarter revenue of $430 million to $465 million, assuming a foreign currency headwind of approximately 4% to 3%, with reported earnings per share of $0.8 to $0.18 or adjusted earnings of $0.15 to $0.25.

Speaker Change: We now expect 2024 revenue in the 1.73 to $1.81 billion range with earnings per share of negative $2.1 to negative $1.81 for adjusted earnings of 75 cents to 95 cents.

Speaker Change: Our guidance now assumes increased foreign currency headwinds of approximately $4 billion.

James Thomas: We are projecting third-quarter revenue of $430 million to $465 million, assuming a foreign currency headwind of approximately 4% to 3%, with reported earnings per share of $0.08 to $0.18 or adjusted earnings of $0.15 to $0.25. Looking ahead, we are confident in our ability to navigate the challenges and opportunities that lie before us. Our solid balance sheet and strong cash flow position us well to invest in growth initiatives while returning value to our shareholders. We will continue to execute our enterprise vision and strategy with discipline and focus, ensuring that we remain well positioned for success. And with that, Operator, we'll now open up the call for questions.

Speaker Change: negative 4% to negative 3%.

Speaker Change: We are projecting third quarter revenue of $430 million to $465 million, assuming a foreign currency headwind of approximately 4% to 3%. With reported earnings per share of...

Speaker Change: 8 cents to 18 cents or adjusted earnings of 15 cents to 25 cents.

Speaker Change: Looking ahead, we are confident and our ability to navigate the challenges and opportunities that lie before us.

Speaker Change: Our solid balance sheet and strong cash flow position us well to invest in growth initiatives while returning value to our shareholders. We will continue to execute our enterprise vision and strategy with discipline and focus, ensuring that we remain well positioned for success.

James Thomas: Looking ahead, we are confident in our ability to navigate the challenges and opportunities that lie before us. Our solid balance sheet and strong cash flow position as well to invest in growth initiative while returning value to our shareholders. We will continue to execute our enterprise vision and strategy with discipline and focus, ensuring that we remain well positioned for success.

Speaker Change: And with that, Operator, we'll now open up the call for questions.

Speaker Change: Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced.

Operator: And with that, our operator will now open up the call for questions. Thank you.

Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Our first question comes from the line of Chase Bender with Citi. Your line is now open.

Speaker Change: To withdraw your question, please press star 11 again.

Operator: As a reminder to ask a question, please press star 111 on your telephone and wait for your name to be announced. To withdraw your question, please press star 111 again.

Speaker Change: Our first question comes from the line of Chase Bender with Citi. Your line is now open.

Chase Bender: Great, thanks. Afternoon, guys.

Chase Bender: Great, thanks!

Chasen Bender: Our first question comes from the line of Chasen Bender, which city your line is now open. Great. Thanks. Afternoon, guys.

Chase Bender: Epamine Guys, I wanted to first ask if you could give a little bit more detail about this new skin Napoli app.

Ryan Napierski: I wanted to first ask if you could give a little bit more detail about this new skin, neighborly app and explain how it will work, specifically from the perspective of a sales leader. Once I have it in hand, how do I operate it? What does it mean? And how do I interface with it? But then at a higher level, obviously you are launching products like 9 360. You have more affordable luxury.

Chase Bender: and explain how it'll work specifically from the perspective of a sales leader. Once I have it in hand, how do I operate it? What does it mean? And how do I, how do I interface with it? But then at a higher level,

Ryan Napierski: But then at a higher level, obviously, you are launching products like Mind360, you have more affordable luxury, you have this new app coming online. It seems like there's a lot coming at sales leaders, really, one at a time, they need to get back to basic blocking and tackling. So just generally, how do you think about balancing all of these launches with competing attention versus stabilizing the cord?

Speaker Change: Obviously, you are launching products from like 9 360, you have more affordable luxury, you have this new app coming online.

Speaker Change: It seems like there's a lot coming at sales leaders, really one at a time, they need to get back to basic blocking and tackling.

Ryan Napierski: You have this new app coming online. It seems like there's a lot coming at sales leaders. Really one at a time, they need to get back to basic blocking and tackling. So just generally, how do you think about balancing all of these launches with competing attention versus stable as the stabilizing the core of the business? Yeah, Chas. Good questions. We'll walk through a couple of those things quickly. Yeah. So the mavely app, if you go to the app store today, you can download a mavely app and walk through how it works in terms of curating brands as an individual, you know, everyday affiliate stands up.

Speaker Change: So, just generally, how do you think about balancing all of these launches with competing attention versus stabilizing the core of the business?

Ryan Napierski: Yeah, Chase, good questions. We'll kind of walk through a couple of those things quickly. Yeah, so the Maybelline app, if you go to the app store today, you can download the Maybelline app and walk through how it works in terms of curating brands as an individual, you know, everyday affiliate sign up. So as we're looking towards NU Skin, the NU Skin Maybelline instance of that, NU Skin affiliates, as we build this out and put it into the market, they'll be able to download the app and go through a very similar experience curating the brands that work for them.

Speaker Change: Yeah, Chase, good questions. We'll kind of walk through a couple of those things quickly. Yeah, so the Mavely app, if you go to the...

Speaker Change: App Store today, you can download a Maybelline app and walk through, you know, how it works in terms of curating brands as an individual, you know, everyday affiliate stands up.

Ryan Napierski: So as we're looking towards new skin, the new skin mavely, instance of that, new skin affiliates as we build this out and put it into the market. They'll be able to download the app and go through a very similar experience curating the brand that worked for them. Then they'll be able to, you know, it's a simple, you know, post and share technology that, you know, works with links that, and it's pretty smooth, pretty easy to share.

Speaker Change: So as we're looking towards Newskian, the Newskian Mavily, instance of that, Newskian affiliates, as we build this out and put it into the market, they'll be able to download the app.

Ryan Napierski: Then they'll be able to, you know, it's a simple, you know, post and share technology that works with links, and it's pretty smooth, pretty easy to share. So that's kind of how you basically share those brands and then get access to other beauty wellness lifestyle brands on the Maybelline app. So pretty straightforward that way.

Speaker Change: and go through a very similar experience, curating the brands that work for them, then they'll be able to, you know, it's a simple...

Speaker Change: Post and Share technology that works with links, and it's pretty smooth, pretty easy to share. So that's kind of how, it's a simpler way to basically share those brands and then get access to other Beauty Wellness Lifestyle brands on the Maybelline app. So pretty straightforward that way.

Ryan Napierski: As far as the focus of the field, and we totally agree with you, that's a lot of our discussion in-house: how do we ensure that we continue to innovate while enabling our sales force to, you know, focus on those back-to-basics principles? In fact, a big part of our live event theme and discussions were around getting back to basics, which is really sharing products you love with people and getting them to do the same. That's really just the basic fundamentals.

Ryan Napierski: So that's kind of how it's a simpler way to basically share those brands and then get access to other beauty wellness lifestyle brands on the mavely app. So pretty straightforward that way. As far as the focus of the field, and we, you know, totally agree with you, that's a lot of our discussion in houses. How do we, how do we ensure that we continue to innovate while enabling our sales force to, you know, focus on those back to the basics principles.

Speaker Change: As far as the focus of the field, and we totally agree with you, that's a lot of our discussion in-house, is how do we ensure that we continue to innovate while enabling our sales force to focus on those back-to-the-basics principles.

Speaker Change: A big part of our live event theme and discussions were around back-to-basics, which is really sharing products you love with people and getting them to do the same. That's really the basic fundamental. So as we look to new products into the market,

Ryan Napierski: In fact, a big part of our live event theme and discussions were around back to basics, which is really sharing products you love with people and getting them to do the same. That's really the basic fundamental. So as we look to new products into the market, whether it is, you know, affordable luxury, whether it's mind 360. These are additional products for them to share with people that they love and get them to do the same.

Ryan Napierski: So as we look to new products into the market, whether it is, you know, affordable luxury, whether it's Mind360, these are additional products for them to share with people that they love and get them to do the same. So it's not as much about adding new products in for them to focus on. Typically, people, especially in the affiliate marketing world, they gravitate toward products that they relate to most. So they're not all moving the same things.

Speaker Change: Whether it is, you know, affordable luxury, whether it's mine 360, these are additional products for them to share with people that they love and get them to do the same. So it's not as much about, you know, adding new products in for them to focus on typically people or, you know, especially in the affiliate marketing world, they orient to products that they relate to most.

Ryan Napierski: So it's not as much about, you know, adding new products in for them to focus on typically people, orient, especially in the affiliate marketing world. They orient to products that they relate to most. So they're not all moving the same thing. And you can even see that with some of our new product launches in the last five or six years. It's the world has kind of changed quite a bit where historically we would launch a new product and nearly the entire sales force would focus on that one new product.

Ryan Napierski: And you can even see that with some of our new product launches in the last five or six years. The world has kind of changed quite a bit where, historically, we would launch a new product, and nearly the entire sales force would focus on that one new product. That's really not how the affiliate world works anymore.

Speaker Change: They're not all moving the same thing. You can even see that with some of our new product launches in the last five or six years.

Speaker Change: The world has kind of changed quite a bit where historically we would launch a new product and Nearly the entire sales force would focus on that one new product. That's really not how the affiliate

Ryan Napierski: It's more of identifying products that relate to you and relate to your target customer as a social influencer and micro-influencer. And so having those optionalities, or the optionality of additional products to select from, then enables them to build their business their way, so to speak. So we are mindful of the balance and going back to basics. Again, going back to basics simply means sharing products you love with people and getting them to do the same. That is the basics, regardless of the product we put in front of them. We're targeting products that enable them to reach broader demographics and broader target markets, if that makes sense. Got it. Yeah.

Speaker Change: in the ring.

Speaker Change: Works any longer. It's more of identifying products that relate to you and relate to your target customer as a social influencer and micro influencer. And so having those optionalities or the optionality of additional products.

Ryan Napierski: That's really not how the affiliate world works any longer. It's more of identifying products that relate to you and relate to your target customer as a social influencer and micro influencer. And so having those optionalities or the optionality of additional products to select from, you know, it then enables them to build their business their way so to speak. So we are mindful of the balance and the back to the basics. Again, I go back to basics simply means sharing products you love with people and getting them to do the same.

Speaker Change: to select from, you know, then enables them to build their business their way, so to speak. So, we are mindful of the balance and the back to the basics. Again, I go back to basic simply means sharing products you love with people and getting them to do the same. That is the basics, regardless of the product we put in front of them. We're targeting products that enable them to reach broader demographics and broader target markets.

Ryan Napierski: That is the basics regardless of the product we put in front of them. We're targeting products that enable them to reach broader demographics and broader target markets. If that makes sense. I got it. No, that's that's good detail. And then just mechanically, if a sales leader uses the Maverley app, shares a product and generates the sale, how is that booked? Is that booked as core new skin sale? Is that booked as Ry sale?

Chase Bender: Got it. No, that's good detail.

Speaker Change: If that makes sense.

Speaker Change: Got it. No, that's good detail. And then just mechanically, if a sales leader uses the Naval Naval App, shares a product in generates the sale, how is that book? Is that book does corn, new skin sale? Is that book does, why sale?

Chase Bender: And then just mechanically, if a sales leader uses the Naverly app, shares a product, and generates a sale, how is that booked? Is that booked as a core NU Skin sale? Is that booked as a ride sale?

Ryan Napierski: We're still working through the mechanics of how that will come through, but a cell that runs through the Mavely app. We will be recording revenue in Mavely, but it will all go to the same parent company, NU Skin.

Speaker Change: We're still working through the mechanics of how that will come through, but a cell that runs through the Mavely app, we will be recording revenue in Mavely, but it'll all come through the same parent company in NU Skin.

Ryan Napierski: Yeah, it's a change. Go ahead. Yeah, so I mean, we're still working through the mechanics of how that will come through, but a sell that runs through the Maverley app that we will be recording revenue in Maverley. But it'll all come through the same parent company in NU Skin. Okay, got it.

Chase Bender: Okay, got it. And then I wanted to ask about the revised operating model and LATAM and those Southeast Asian markets. Could you just expand on that? You know, what the key changes are in your mind and frame how quickly you think you could see positive activity and productivity changes and then ultimately translate that into a timeline for those changes to hit the P&L?

Speaker Change: Okay, okay, got it.

Speaker Change: And then I wanted to ask about the revised operating model and LATAM and those Southeast Asian markets. Could you just expand on that, you know, what the key changes are in your mind and

Ryan Napierski: And then I wanted to ask about the revised operating model in Latin and in those Southeast Asian markets. Could you just expand on that? You know, what the key changes are in your mind and frame how quickly you think you could see positive activity and productivity changes and then ultimately, translating that into a timeline for those changes to hit the P&L. Yeah, yeah, absolutely. So really from as we look at what we call developing markets or these markets where NU Skin has a presence, you know, we have well over half our markets that sit in that Latin, Southeast Asia, East Europe, even parts of China, frankly, that are just different than the major urban cities.

Speaker Change: frame how quickly you think.

Speaker Change: You could see positive activity and productivity changes, and then ultimately translating that into a timeline for those changes to hit the P&L.

Ryan Napierski: Yeah, yeah, absolutely. So really, as we look out at these, what we call developing markets are these markets where NU Skin has a presence. You know, we have well over half our markets that sit in LATAM, Southeast Asia, East Europe, even parts of China, frankly, that are just different than the major urban cities. And as we look at that and the opportunities there, certainly, there are three key components of our operation there that we are reconsidering or evaluating.

Speaker Change: Yeah, absolutely. So really from, as we look at at these, what we call developing markets are these markets where new skin presence has a presence.

Speaker Change: You know, we have well over half our markets that sit in that lab town, Southeast Asia, East Europe, even parts of China, frankly, that are just different than the major urban cities.

Ryan Napierski: The first is the product portfolio and ensuring that we have the right products at the right prices. The second one is the business model to enable the right behaviors for selling those products. And then the third one is the operational infrastructure, which in various geographies is a little bit different. For instance, in Latin America, quotas or installment payments are the predominant form of payment versus, say, credit cards or the like elsewhere.

Speaker Change: And as we look at that and the opportunities there.

Speaker Change: Certainly, there are three key components of...

Ryan Napierski: And as we look at that and the opportunities there, certainly, there's three key components of our operation there that we are reconsidering or evaluating. The first is the product portfolio and ensuring that we have the right products, the right prices. Second one then is the business model to enable the right behaviors for selling those products. And then the third one is the operational infrastructure that in various geographies is a little bit different.

Speaker Change: of our operation there that we are reconsidering or evaluating. The first is the product portfolio and ensuring that we have the right products at the right prices.

Speaker Change: Second one, then, is the business model to enable the right behaviors.

Speaker Change: for selling those products, and then the third one is the operational infrastructure that in various geographies is a little bit different, for instance, in Latin America.

Speaker Change: Quotas or installment payments are the predominant.

Ryan Napierski: For instance, in Latin America, quotas or installment payments are the predominant form of payment versus, say, credit cards or or the like elsewhere. So as we're looking at these developing markets and we've already begun work in Latin America in Argentina, for instance, where we've reduced the product portfolio of the existing and are evaluating, you know, local manufacturing opportunities for new products to get price points at the right place for the demographic, the target demographic that we're going after, evaluating the business model.

Speaker Change: form of payment versus, say, credit cards or the like elsewhere. So, as we're looking at these developing markets, and we've already begun work in Latin America, in Argentina, for instance,

Chase Bender: So as we're looking at these developing markets, and we've already begun work in Latin America, in Argentina, for instance, where we've reduced the product portfolio of the existing and are evaluating local manufacturing opportunities for new products to get price points at the right places for the demographic, the target demographic that we're going after. Evaluating the business model, we're already in a test model down in Latin America on a revision to the business model or the compensation system that rewards it for that, and then scaling the operation.

Speaker Change: where we've reduced the product portfolio of the existing and evaluating local manufacturing opportunities for new products to get price points at the right place for the demographic, the target demographic that we're going after. Evaluating the business model, we're already in a test model down in Latin America on a revision to the business model or the compensation system that rewards for that and then scaling the operation. So we've already begun those tests in Latin. We will continue to expand those tests throughout the end of this year and and evaluating, you know, a couple of markets in Southeast Asia like the Philippines, in Thailand, Vietnam, these...

Chase Bender: So we've already begun those tests in LATAM. We will continue to expand those tests throughout the end of this year and evaluate a couple of markets in Southeast Asia, like the Philippines and Thailand, Vietnam, these parts of the world where the socioeconomic status is just different and much different than the more developed markets we operate on. So as far as how we see it in the P&L, we haven't really worked on that through the remainder of this year. I think we're very much in a continued testing and refining process. And then we'll be talking with you more in our 2025 guide, probably in further detail about that.

Ryan Napierski: We're already in a test model down in Latin America on a revision to the business model or the compensation system that rewards for that and then scaling the operation. So we've already begun those tests in Latin. We will continue to expand those tests throughout the end of this year and evaluating, you know, a couple of markets in Southeast Asia, like the Philippines and Thailand, Vietnam, these parts of the world where they're just the socio-economic, you know, status is just different and much different than the more developed markets we operate on.

Speaker Change: these parts of the world where they just did this socio-economic

Speaker Change: you know, status is just different and much different than the more developed markets we operate on. So, as far as how we see it in the P&L, we haven't really worked that through the remainder of this year. I think we're very much in a continued testing and refining process, and then we'll be talking with you more in our 2025 guide, you know, in probably further detail about that.

Ryan Napierski: So as far as how we see it in the P&L, we haven't really worked that through the remainder of this year. I think we're very much in a continued testing and refining process and then we'll be talking with you more in our 2025 guide, you know, in probably further detail about that. I got it. That's helpful.

Chase Bender: Got it. That's helpful. And I'm sorry, I don't mean to hog the entire call here. So, so apologies, but just one more, if I may.

Speaker Change: Got it. That's helpful. And I'm sorry, I don't mean to hog the entire call here, so apologies, but just one more if I may.

Chase Bender: I wanted to ask about the updated 2024 guidance. It looks like the implied second half net sales guidance went from down about 4.3% at the midpoint to down about seven and a half. But the implied second half EPS guide went from down $0.91 to $0.55, if my math is right. And so, James, I was hoping maybe you could spend a little time framing the difference there just in context of the expense management efforts you're calling out. Are you investing more? If so, where are those dollars going? Just some additional color on that side, unpacking the change and any investment posturing would be helpful. Thanks.

James Thomas: And I'm sorry, I don't mean to hog the entire call here, so apologies, but just one more if I may. I wanted to ask about the updated 2024 guidance. It looks like the implied second half net sales guidance went from down about 4.3% at the midpoint to down about seven and a half. But the implied second half EPS guide went from down 91 cents to 55 cents, if my math is right.

Speaker Change: I wanted to ask about the updated 2024 guidance. It looks like the implied second half net sales guidance went from down about 4.3% at the midpoint to down about seven and a half.

Speaker Change: But the implied second half EPS guide went from down 91 cents.

Speaker Change: To 55 cents if my math is right and so James I was hoping maybe you could spend a little time framing

James Thomas: the difference there just in context of

James Thomas: And so James, I was hoping maybe you could spend a little time framing the difference there, just in context of the expense management efforts you're calling out, are you investing more if so, where are those dollars going? Just some additional color on that side unpacking of change and any investment posturing would be helpful. Thanks.

Speaker Change: the expense management efforts you're calling out. Are you investing more? If so, where are those dollars going? Just some additional color on that side, unpacking your change and any investment posturing would be helpful. Thanks.

James Thomas: Absolutely, and that's a great question. It's something that we've looked at in terms of how we saw the first half come through as we performed the guidance towards the midpoint of our revenue guidance. You know, you're right on top line. We have narrowed that range to where we perform under the high guiding Q1 and Q2. And then the big discussion point that we didn't anticipate when we gave guidance was a foreign currency headwind of 4% plus that we've built into our models. And so when you run that foreign currency through on the top line, we've brought down the top for that rationale. We've been able to hold the bottom with what we see coming through in Q3 and Q4.

James Thomas: Absolutely, and that's a great question.

James Thomas: Absolutely. And that's a great question. It's something that we've looked at in terms of how we saw the first half come through as we performed a guidance towards the midpoint of our revenue guidance. You know, you're right on top line that we have narrowed that range for where we performed under the high guiding Q1 and Q2. And then the big discussion point that we didn't anticipate when we gave guidance was a foreign currency headwind.

Speaker Change: You know, you're right on top line that we've seen.

Speaker Change: We have narrowed that range for where we performed under the high-guiding Q1 and Q2. And then the big discussion point that we didn't anticipate when we gave guidance was a foreign currency headwind.

Speaker Change: of 4% plus that we've built through our models. And so when you run that.

Speaker Change: Foreign Currency through on top line. We've brought down the top for that.

James Thomas: Of 4% plus that we've built through our models. And so when you run that foreign currency through on top line, we brought down the top for that that rationale, we've been able to hold the bottom with what we see coming through and Q3 and Q4. The pressure comes on gross margin when you see if you see how we performed in the quarter compared to the prior year when you roll effects through on gross margin.

James Thomas: The pressure comes on gross margin when you see how we performed in the quarter compared to the prior year, when you roll FX through on gross margin, and then even some geographic shifts that we've noticed within the NU Skin segments of where we performed compared to our expectations. We're getting more revenue from some of our less profitable regions, and less revenue from some of our more profitable regions. So it created a little bit of mix shift and pressure on gross margin, as well as just a slight uptick in selling expenses as we invested in areas to go after performance within the plan.

Speaker Change: That ration now, we've been able to hold the bottom with what we see coming through in Q3 and Q4. The pressure comes on gross margin when you see if you see how we performed in the quarter compared to the prior year when you roll FX through on gross margin and then even some geographic shift.

Speaker Change: that we've noticed within the NU Skin segments of where we performed to our expectations.

James Thomas: And then even some geographic shift that we've noticed within the new skin segments of where we performed to our expectations, we're getting more revenue from some of our less profitable regions, less revenue from some of our more profitable regions. So it created a little bit of mixed shift and pressure in gross margin as well as just a slide up tick and selling expense as we've invested in areas to go after performance within the plan.

Speaker Change: We're getting more revenue from some of our less profitable regions.

Speaker Change: less revenue from some of our more profitable regions. So it created a little bit of mix shift in pressure and gross margin, as well as just a slight uptick in selling expense.

James Thomas: In G&A, we continue to be hyper-focused. We continue to go in and drive those cost efficiency savings that we set out to do, looking to be on pace with the original savings goal that we set out of $65 million coming out of G&A in 2024 compared to our prior year. So that's a little bit of a bit of color on why there's pressure. And then with that pressure on profitability comes an impact on our tax rate.

Speaker Change: as we've invested in areas to go after performance within the plan.

Speaker Change: GNA, we continue to be hyper-focused, we continue to go in and drive those cost efficiency savings that we set out to do, looking to be on pace with the original savings goal that we set out of $65 million.

James Thomas: GNA, we continue to be hyper focused, we continue to go in and drive those cost efficiency savings that we set out to do looking to be on pace with the original savings goal that we set out of $65 million coming out of GNA in 2024 compared to our prior year. So that's a little bit of a bit of a color of why there's pressure. And then with that pressure on profitability comes an impact to our tax rate.

Speaker Change: coming out of GNA in 2024 compared to our prior year. So that's a little bit of a bit of color of why there's pressure. And then with that pressure on profitability comes an impact to our tax rate. If you notice the higher tax rate that we have.

James Thomas: If you notice the higher tax rate that we have modeled out, or we gave in our script there, we are seeing pressure on our tax rate due to the profitability by geographic segment around. So just flexing that through, trying to give clarity on where we think we'll land from an earnings perspective.

Speaker Change: Modeled Out, or we gave in our script there. We are seeing pressure on our tax weight due to the profitability by geographic segment around the world. So just watching that through trying to get a clarity on where we think we'll land from an earnings perspective.

James Thomas: If you notice the higher tax rate that we have modeled out or we gave in our script there, we are seeing pressure on our tax rate due to the profitability by geographic segment around the world. So just watching that through trying to give clarity on where we think we'll land from an earnings perspective. Got it. That's really helpful color. I appreciate it. I'll pass it on from here. Thank you.

Speaker Change: Got it. That's a really helpful caller. I appreciate it. I'll pass it on from here.

Operator: Thank you. As a reminder, to ask a question at this time, please press star 11 on your touch-tone telephone. Our next question comes from the line of Sydney Wagner with Jeffries LLC. Your line is now open.

Speaker Change: Thank you. As a reminder, to ask a question at this time, please press star 11 on your touch-tone telephone.

Operator: As a reminder to ask a question at this time, please press star 11 or you touched on telephone.

Speaker Change: Our next question comes from the line of Sydney Wagner, with Jeffrey's LLC, your line is open.

Sydney Wagner: Hi, this is Sinyon on behalf of Ashley Helgens. Thanks for taking our question. Just three from us. So any update that you can give on some of the affordable luxury launches you discussed last quarter and how those have been received by the market? And then the second one was last quarter, you mentioned while you did see some pressure from the consumer side, demand for higher priced items was still resilient. Just curious if that was a trend you still saw play out this quarter and then just any additional color you can give on China and what you're seeing there. Thank you. Yeah, sure. No, Sydney, it's great.

Speaker Change: to

Sydney Weg: Our next question comes from the line of Sydney Weg, with Jeffries L.O.C., you're on its open.

Sydney Wagner: Hi, this is Sydney on for Ashley Helgens. Thanks for taking our question. Just three from us. So any update that you can give on some of the affordable luxury launches you discussed last quarter and how those have been received by the market?

Sydney Weg: Hi, this is Sinyon for Ashley Helgins. Thanks for taking our question. Just three from us.

Ryan Napierski: So any update that you can give on some of the affordable luxury launches you discussed last quarter and how those have been received by the market. And then second one was last quarter you mentioned while you did see some pressure from the consumer side demand for higher price items was still resilient. Just curious if that was a, you know, a trend you still saw play out this quarter. And then just any additional color you can give on China and what you're seeing there.

Speaker Change: and then second one was, last quarter you mentioned while you did see some pressure from the consumer side.

Speaker Change: Demand for higher priced items was still resilient, just curious if that was a, you know, a try and you still saw play out this quarter and then just any additional color you can give on China and what you're seeing there. Thank you.

Ryan Napierski: Yeah, sure. No, Sydney, it's great.

Ryan Napierski: Thanks for joining the call. Yeah, so affordable luxury, as we mentioned, we're doing quite a bit of research and development on that right now, with more products to come. One product that we put out in the last quarter was a product called Peptide Pout, which is a lip application that literally does that, pouts the lips. James might be wearing it right now, I can't tell.

Sydney Wagner: Yeah, sure. No, Sydney, it's great. Thanks for joining the call. Yeah, so affordable luxury, as we mentioned, we're doing, you know, quite a bit of research and development on that right now, with more products to come. One product that we put out in the last quarter,

Ryan Napierski: But the Peptide Pout was a great social seller. In fact, it sold out very quickly, sold out of stock, and will be a very good promotional product around the world. So that was one that we brought to market very, very quickly, and we have several more that are planned just like that over the coming quarters. They're interesting because these types of affordable luxury products are a bit more promotional in nature, meaning that they kind of run in really quick turns, and they're sold almost like in a sellout fashion.

Ryan Napierski: Thank you. Yes, sure. No, Sydney, it's great. Thanks for joining the call. Yeah. So affordable luxury as we mentioned, we're doing quite a bit of research and development on that right now with more products to come. What one product that we put out in the last quarter was a product called peptide pout, which is a lip application that literally does that. Pouts the lips. James might be wearing it right now. I can't tell, but the peptide pout and it was a great social seller.

Ryan Napierski: In fact, sold out very quickly, sold out a stock and will be a very good promotional product around the world. So that was one that we brought to market very, very quickly. And we have several more that are planned just like that over the coming quarters. They generally they they're interesting because they these types of affordable luxury products are are a bit more promotional in nature, meaning that they kind of run in really quick turns, you know, and they're sold almost like in a sell out fashion.

Sydney Wagner: was a product called Peptide Pout.

Ryan Napierski: You can almost imagine some of these influencer brands that hit and they'll sell a full you know, a full production, you know, run through and then they reload. So we're seeing similar dynamics to that with with peptide pout as we've put it out there and then with the others, we're kind of forecasting similar models.

Speaker Change: which is a lip application that literally does that, pouts.

Speaker Change: James might be wearing it right now, I can't tell.

James Thomas: The peptide pad, and it was a great social cell, in fact sold out very quickly, sold out a stock.

Sydney Wagner: and will be a very good promotional product around the world. So that was one that we brought to market very, very quickly, and we have several more that are planned just like that over the coming quarters.

Sydney Wagner: They generally, they, they're interesting because they, these types of affordable luxury products are a bit more promotional in nature, meaning that they kind of run in really quick.

Sydney Wagner: turns, you know, and they're sold almost like in a sellout fashion. You can almost imagine some of these influencer brands that hit and they'll sell a full, you know, a full production, you know, run through and then they reload. So we're seeing similar dynamics to that with with Peptide Pout as we've put it out there and then and then with the others we're kind of forecasting similar models. So you'll be seeing a few of those but that's just one example.

Ryan Napierski: You can almost imagine some of these influencer brands that hit, and they'll sell a full production run through, and then they reload. So we're seeing similar dynamics to that with Peptide Pout, as we've put it out there, and then with the others, we're kind of forecasting similar models. So you'll be seeing a few of those, but that's just one example of one that's moved forward.

Ryan Napierski: You were asking about the kind of higher-priced product resiliency. I mean, generally, we've noticed that our devices hold up reasonably well in this kind of hyperinflationary market, while some of our other higher-end consumables tend to struggle a little bit more. So I would say that it's a little bit more mixed from a consumer behavior standpoint around high-priced items, but our devices continue to perform well, but we see some challenges in some of the other items. So I think it's just what's maybe a more durable good that tends to do a little bit better, at least we're observing that.

Sydney Wagner: of one that's moved forward. You were asking about kind of higher priced.

Ryan Napierski: So you'll be seeing a few of those, but that's just one example of one that's moved forward. You were asking about kind of higher priced product resiliency. I mean, I think generally are we've we've noticed that our devices hold up reasonably well in this kind of in hyperinflationary market while some of our other, you know, higher higher and consumables tend to struggle a little bit more. So I would say that it's a little bit more mixed from a consumer behavior standpoint around high priced items.

Sydney Wagner: Product resiliency, I mean, I think generally...

Speaker Change: We've noticed that our devices hold up reasonably well in this kind of hyper-inflationary market, while some of our other higher-end consumables tend to struggle a little bit more. So I would say that it's a little bit more mixed.

Ryan Napierski: You know, but our our devices continue to perform well, but we see some some challenges in some of the other items. So I think it's just what's maybe a more durable good that tends to do a little bit better, at least we're observing that. And then the third question around China, China just continues to be a very interesting macroeconomic market. It seems every time I drive home, I'm listening to CNBC or the Bloomberg report it, it's reading of something a little different.

Sydney Wagner: from a consumer behavior standpoint around high-priced items, you know, but our devices continue to perform well, but we see some challenges in some of the other items. So I think it's just what's maybe a more durable good that tends to do a little bit better, at least we're observing that.

Ryan Napierski: And then your third question about China. China just continues to be a very interesting macroeconomic market. It seems every time I drive home, I'm listening to CNBC or the Bloomberg Report; it's reading about something a little different. I was over there just about a month ago, meeting with many of our employees and our team, over 800, in fact, and really interesting. There's still a lot of ambition in the market, but you know that the economy is obviously struggling over there.

Sydney Wagner: And then your third question around China, China just continues to be a very...

Sydney Wagner: interesting macroeconomic market. It seems every time I drive home, I'm listening to CNBC or the Bloomberg Report, it's reading of something a little different.

Sydney Wagner: I was over there just about a month ago, meeting with many of our employees in our team, over 800 in fact.

Ryan Napierski: I was over there just about a month ago, meeting with many of our employees and our team over 800, in fact, and really interesting. There's still a lot of a lot of ambition in the market, you know, that the economy is obviously struggling over there. And so I think there's there's near term, you know, call it hesitancy. It built into the market. And that's why we're being very conservative on our our go forward looks.

Sydney Wagner: really interesting. There's still a lot of ambition in the market. You know, the economy is obviously struggling over there, and so I think there's near term.

Ryan Napierski: And so I think there's near-term, you know, call it hesitancy, it's built into the market and that's why we're being very conservative on our go forward looks. But I continue to believe heavily in the potential of China. It's still the world's second largest market, and it still has very strong consumer demand. There are a lot of local brands; Chinese brands in the beauty space, in particular, are growing at pretty aggressive, you know, paces, and that's very different than it was five to seven years ago, especially, you know, via Douyin or TikTok over there.

Sydney Wagner: you know, call it hesitancy. It built into the market and that's why we're being very conservative on our go-forward looks.

Sydney Wagner: But I continue to believe heavily in the potential of China. You know, it's still the world's second largest market. It still has a very strong...

Ryan Napierski: But I continue to believe heavily in the potential of China, you know, it's it's still the world's second largest market. It still has a very strong consumer demand. There are a lot of local brands Chinese brands in the beauty space in particular are growing. It's pretty aggressive, you know, paces. And that's very different than it was five to seven years ago, especially, you know, via doyen or TikTok over there. So a lot of social brands that are of China origin are really starting to take market share over there. But as a premium device and a premium brand market, we see, you know, we see a long term potential there.

Sydney Wagner: Consumer Demand. There are a lot of local brands, Chinese brands in the beauty space, in particular, are growing at pretty aggressive, you know, paces, and that's very different than it was five to seven years ago, especially, you know, via Doyen or TikTok over there. So a lot of social brands that are of China origin are really starting to take market share over there. Bye.

Ryan Napierski: So a lot of social brands that are of Chinese origin are really starting to take market share over there. But as a premium device and a premium brand market, we see, you know, we see a long-term potential there. I just think it's going to take more time for the market to get back on its feet.

Speaker Change: As a premium device and a premium brand market, we see a long-term potential there. I just think it's going to take more time for the market to get back on its feet.

Ryan Napierski: Thank you. Thanks, Sydney. I think that's all of the questions we had for the call today. I appreciate all of you dialing in. We acknowledge you're kind of juggling between other calls across the board, so we appreciate the time you're able to give us. We look forward to giving you more updates in the quarters to come as we continue to evolve our business towards our vision of becoming the world's leading beauty, wellness, and lifestyle ecosystems. With that, we'll speak with you next quarter. Thanks a lot. This concludes today's conference call. Thank you for your participation. You may now disconnect. Thank you for watching. [music]

Operator: I just think it's going to take more time for the market to get back on its feet. Thank you. Thanks, Sydney. I think that's all of the questions we had for the call today. I appreciate all of you styling in. We acknowledge you're kind of juggling between other calls across the board. So we appreciate the time you're able to give us.

Speaker Change: Thank you.

Sydney Wagner: Thanks, Sydney.

Speaker Change: I think that's all of the questions we had for the call today. I appreciate all of you dialing in. We acknowledge you're kind of juggling between other calls.

Speaker Change: Acroft of the board, so we appreciate the time you're able to give us. We look forward to giving you more updates in the quarters to come, as we continue to evolve our business towards our vision of becoming the world's leading beauty wellness and lifestyle ecosystems. With that, we'll speak with you next quarter. Thanks a lot.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect. Go to https://www.youtube.com or the link in the description box below. [Music] Thanks for watching. Please subscribe, like, comment, and share this video with your friends. [music] Thanks for watching! Good day, and thank you for standing by. Welcome to the NU Skin Enterprises second quarter 2024 earnings conference call.

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

Scott Pond: 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 to press star 1-1 on your telephone. You will then hear an automated message advising you that your hand is free. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Scott Pond, VP of Investor Relations. Please go ahead.

Scott Pond: 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 these non-GAAP numbers. And with that, I'd like to turn the call over to Ryan. Thanks, Scott.

Ryan Napierski: Thanks, Scott. Hello, everyone.

Ryan Napierski: Non-GAAP earnings per share were near the top end of the range, reflecting continued progress to plan for our business transformation while managing costs and driving efficiencies. However, overall, the operating environment remains challenging for our core NU Skin business due in large part to macroeconomic factors and pressures on the direct selling industry itself. Despite these challenges, we were encouraged by sequential gains in several of our markets, including the U.S., South Korea, and parts of Southeast Asia Pacific. Most notably, we experienced year-over-year improving trends in paid brand affiliates globally, which translated into improving new sales leaders. China remained challenging due to macro trends in the market.

Ryan Napierski: Our RISE business continued to perform well, with revenue up 32% to nearly $68 million, accounting for over 15% of our second quarter total. Growth that Rides was led by our Maverly Affiliate Platform and our Wasatch Manufacturing Business. RISE plays a critical role in our enterprise transformation that I'll speak to in a moment. And we expect revenue from RISE to continue to grow at a faster pace, reaching 20-25% of our overall revenue mix by 2025. Let's dive deeper into both our NU Skin core and R.I.S.E.

Ryan Napierski: businesses. In our core NU Skin business, new products, including Agelok WellSpa I.O. and RenewSpa I.O., along with our TRME weight management system, were the main growth drivers delivering over $60 million of revenue in the quarter. Adding these new wellness products, the new wellness I.O. adding devices to our cadre of beauty devices has resulted in NU Skin being named the world's number one company for beauty and wellness device systems by Euromonitor this past year. To date, our I.O.

Ryan Napierski: We just held our first in-person live event for our Western markets in over five years, with an even larger event slated for our Eastern markets in September. It was a great reminder of the power of getting together in person, and we were able to drive energy and alignment among our leaders as we shared three key initiatives. First, we previewed our next major product division, MIND360, a holistic approach to supporting cognitive health that will be launched around the globe over the next several quarters. Mind360 is built to serve customers who are seeking support for stress management, cognitive performance, and sleep in this rapidly growing $9 billion global cognitive health market.

Ryan Napierski: Maverly is rapidly becoming a leading affiliate brand platform, leveraging technology that enables brands to access their army of everyday influencers to share their brands via social media. Leveraging machine learning and working to implement next-generation AI, Mavely curates brands for its affiliates to share via social media, simple, fast, and easy. And we're leveraging the Maybelline platform to develop a NU Skin Maybelline app instance that will enable our affiliates to share NU Skin brands more easily while gaining access to hundreds of other brands to promote and share. Additionally, Maybelline enables the promotion of other R.I.S.E. brands such as Beauty Bio to Maybelline affiliates.

Ryan Napierski: We continue to invest in RISE as a critical innovation accelerator for our overall enterprise transformation strategy. Leveraging the expertise of companies within RISE has been instrumental in accelerating our innovation agenda for product and device research and development, sustainability, and supply chain capabilities. We'll continue to expand on this and share progress with you in the coming quarters. So, in summary, our enterprise transformation remains on track with second-quarter results in line with guidance and at the halfway point of 2024.

Ryan Napierski: We've continued to demonstrate our ability to adapt to challenges and deliver within expectations. We're focused on accelerating innovation across our NU Skin core business with our Mind360 product division, an enhanced business model for developing and emerging markets, and integrated brand-building efforts. We're also investing in key enterprise growth initiatives, including Maverly and several other businesses in RISE, which continue to deliver strong growth. We have a long runway into the future and provide us with synergistic tools and capabilities that we can leverage across the enterprise.

James Thomas: Thank you for joining us today. I'll provide a brief Q2 update and then speak to Q3 and 2024 guidance. For additional details, please visit our Investor Relations website. For the second quarter, we posted revenue of $439.9. $1 million, which was at the midpoint of our previous guidance range and included a slightly larger than expected negative foreign currency headwind of 4.2% or $21 million. Reported earnings were negative $2.38 or $0.21 excluding restructuring and impairment charges.

James Thomas: Selling expense as a percentage of revenue was 37.7% compared to 37% in the prior year quarter. For the NU Skin core business, selling expense was 42.2% compared to 40.2% in the prior year period. Our core NU Skin selling expense typically ranges between 40% to 42% with a slight increase mainly attributed to enhancements made to the compensation plan targeting customer and affiliate acquisition. General and administrative expense declined nearly $20 million due to the continued execution of our cost efficiency program, related restructuring activities in the quarter, and bringing overall operating costs more in line with current revenue levels.

James Thomas: Our tax rate for the quarter was 10.2%, or 41.4% excluding restructuring charges, compared to 27.5%. For both the third quarter and the year, we anticipate an adjusted tax rate of 36% to 42%. This annual rate reflects an anticipated higher global effective tax rate primarily due to the expected geographical mix of our earnings.

James Thomas: We are projecting third-quarter revenue of $430 million to $465 million, assuming a foreign currency headwind of approximately 4% to 3%, with reported earnings per share of $0.08 to $0.18 or adjusted earnings of $0.15 to $0.25. Looking ahead, we are confident in our ability to navigate the challenges and opportunities that lie before us. Our solid balance sheet and strong cash flow position us well to invest in growth initiatives while returning value to our shareholders. We will continue to execute our enterprise vision and strategy with discipline and focus, ensuring that we remain well-positioned for success. And with that, Operator, we'll now open up the call for questions.

Speaker Change: [inaudible]

Chase Bender: Great, thanks. Afternoon, guys.

Chase Bender: I wanted to first ask if you could give a little bit more detail about this NU Skin neighborly app and explain how it'll work specifically from the perspective of a sales leader. Once I have it in hand, how do I operate it? What does it mean, and how do I interact with it? But then, at a higher level, obviously, you are launching products like Mind360. You have more affordable luxury. You have this new app coming online.

Chase Bender: It seems like there's a lot coming at sales leaders, really, one at a time; they need to get back to basic blocking and tackling. So, just generally, how do you think about balancing all of these launches with competing attention versus stabilizing the core?

Ryan Napierski: Yeah, Chase, good questions. We'll kind of walk through a couple of those things quickly. Yeah, so the Maverly app, if you go to the app store today, you can download the Maverly app and walk through how it works in terms of curating brands as an individual, everyday affiliate stands up. So as we're looking towards NU Skin, the NU Skin Maverly instance of that, NU Skin affiliates, as we build this out and put it into the market, they'll be able to download the app and go through a very similar experience, curating the brands that work for them.

Ryan Napierski: Then they'll be able to, you know, it's a simple post and share technology that works with links, and it's pretty smooth, pretty easy to share. So that's kind of how you basically share those brands and then get access to other beauty, wellness, and lifestyle brands on the Maverly app. So pretty straightforward that way.

Chase Bender: Got it. No, that's good detail.

Ryan Napierski: As far as the focus of the field, and we totally agree with you, that's a lot of our discussion in house: how do we ensure that we continue to innovate while enabling our sales force to focus on those back-to-basics principles? In fact, a big part of our live event theme and discussions were around getting back to basics, which is really sharing products you love with people and getting them to do the same. That's really the basic fundamental.

Chase Bender: And then just mechanically, if a sales leader uses the Maverly app, shares a product, and generates a sale, how is that booked? Is that booked as a core NU Skin sale? Is that booked as a ride sale?

Ryan Napierski: We're still working through the mechanics of how that will come through, but a cell that runs through the Mavely app will record revenue in Mavely, but it will all come through the same parent company, NU Skin.

Ryan Napierski: And you can even see that with some of our new product launches in the last five or six years. The world has kind of changed quite a bit, where historically, we would launch a new product, and nearly the entire sales force would focus on that one new product. That's really not how the affiliate world works anymore.

Chase Bender: Okay. Got it. And then I wanted to ask about the revised operating model in LATAM and those Southeast Asian markets. Could you just expand on that? You know, what the key changes are in your mind and frame how quickly you think you could see positive activity and productivity changes and then ultimately translate that into a timeline for those changes to hit the P&L?

Chase Bender: So as we're looking at these developing markets, and we've already begun work in Latin America, in Argentina, for instance, where we've reduced the product portfolio of the existing and are evaluating local manufacturing opportunities for new products to get price points at the right places for the demographic, the target demographic that we're going after. Evaluating the business model. We're already in a test model down in Latin America on a revision to the business model or the compensation system that rewards for that, and then scaling the operation.

Chase Bender: So we've already begun those tests in LATAM. We will continue to expand those tests throughout the end of this year and evaluate a couple of markets in Southeast Asia like the Philippines and Thailand, Vietnam, these parts of the world where the socioeconomic status is just different and much different than the more developed markets we operate on. So as far as how we see it in the P&L, we haven't really worked on that through the remainder of this year. I think we're very much in a continued testing and refining process. And then we'll be talking with you more in our 2025 guide in probably further detail about that.

Chase Bender: Got it. That's helpful. And I'm sorry; I don't mean to hog the entire call here, so apologies, but just one more, if I may.

Chase Bender: I wanted to ask about the updated 2024 guidance. It looks like the implied second half net sales guidance went from down about 4.3% at the midpoint to down about 7.5%. But the implied second half EPS guidance went from down $0.91 to $0.55, if my math is right.

Chase Bender: And so James, I was hoping maybe you could spend a little time framing the difference there, just in context of the expense management efforts you're calling out. Are you investing more? If so, where are those dollars going? Just some additional color on that side, unpacking your change and any investment posturing would be helpful. Thanks.

Operator: We look forward to giving you more updates in the quarters to come as we continue to evolve our business towards our vision of becoming the world's leading beauty, wellness and lifestyle ecosystem. So with that, we'll speak with you next quarter. Thanks a lot. This was today's conference call. Thank you for your participation. You may now disconnect. .

Speaker Change: Thanks for watching!

Speaker Change: ? ? ? ? ? ? ? ? ?

James Thomas: If you notice the higher tax rate that we have modeled out or we gave in our script there, we are seeing pressure on our tax rate due to the profitability by geographic segment around. So just flushing that through, trying to give clarity on where we think we'll land from an earnings perspective.

Speaker Change: Good day, and thank you for standing by.

Speaker Change: Welcome to the new Skin Enterprises, second quarter 2024 earnings conference call.

Operator: Douglas Lane, Ryan Napierski, Linda Bolton, Chau, Douglas Lane, Ryan Napierski, Linda Bolton, Chau, Douglas Lane, Ryan Napierski, Linda Bolton, Chau, Douglas Lane, Douglas Lane, Ryan Napierski, Linda Bolton, Chau, Douglas Lane, Ryan Napierski, Linda Bolton, Chau, Douglas Lane, Ryan Napierski, Linda Bolton, John Napierski, Linda Bolton, Chau, Douglas Lane, Ryan Napierski,[inaudible] Good day, and thank you for standing by.

Scott Pond: Welcome to the new Skin Enterprises 2nd quarter 2024 earnings conference call. At the time all participants are in the list Nully mode. After the speaker's presentation there will be a question to answer session. To ask a question during a session you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is phrased. To withdraw your question please press star 1-1 again. Please be advised that today's conference has been recorded.

Speaker Change: 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, Scott Pond, VP of Investor Relations. Please go ahead.

Sydney Wagner: Hi, this is Sinyon on behalf of Ashley Helgens. Thanks for taking our question. Just three from us. So any update that you can give on some of the affordable luxury launches you discussed last quarter and how those have been received by the market? And then the second one was, last quarter you mentioned that while you did see some pressure from the consumer side, demand for higher priced items was still resilient. I was just curious if that was a trend you still saw play out this quarter.

Sydney Wagner: And then just any additional color you can give on China and what you're seeing there. Thank you. Yeah, sure. No, Sydney, it's great.

Scott Pond: I would now like to hand a conference over to your speaker Scott Pond, VP of Investor Relations. Please go ahead. Thanks Shannon 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 includes 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 FCC filings for a complete discussion of these risks.

Ryan Napierski: Thanks, Shannon and good afternoon, everyone. Today, on the call with me, I'm Ryan Napierski, President and CEO and James Thomas CFO. On today's call, comments will be made that includes forward-looking statements.

Speaker Change: These statements involve risks and uncertainties and actual results may differ materially from most discussed or anticipated. Please refer to today's earnings release and our SEC filings for complete discussion of these risks.

Speaker Change: Also during the call, certain financial numbers may be discussed that differ from comparable numbers obtained in our financial statements.

Scott Pond: Also during the call certain financial numbers may be discussed that differ from comparable numbers obtained in our financial statements. We believe these non-gap numbers assist in comparing period to period results in a more consistent manner. Please refer to our investor website for any required reconciliation of these non-gap numbers.

Speaker Change: We believe these non-GAAP numbers assist in comparing period-to-period results in a more consistent manner.

Speaker Change: Please refer to our investor website for any required reconciliation of these non-GAAP numbers. And with that, I'd like to turn the call over to Ryan.

Ryan Napierski: Yeah, sure. No, Sydney, it's great.

Ryan Napierski: James might be wearing it right now; I can't tell, but the Peptide Pout was a great social seller. In fact, it sold out very quickly, sold out of stock, and will be a very good promotional product around the world. So that was one that we brought to market very, very quickly, and we have several more that are planned just like that over the coming quarters. They're interesting because these types of affordable luxury products are a bit more promotional in nature, meaning that they kind of run in really quick turns, and they're sold almost like in a sellout fashion.

Ryan Napierski: You were asking about the kind of higher priced product resiliency. I mean, generally, we've noticed that our devices hold up reasonably well in this kind of hyperinflationary market, while some of our other higher end consumables tend to struggle a little bit more. So I would say that it's a little bit more mixed from a consumer behavior standpoint around high-priced items, but our devices continue to perform well, but we see some challenges in some of the other items. So I think it's just what's maybe a more durable good that tends to do a little bit better, at least we're observing that.

Ryan Napierski: Thanks, Scott. Hello, everyone. Thanks for joining our call today.

Ryan Napierski: And then your third question about China. China just continues to be a very interesting macroeconomic market. It seems every time I drive home, I'm listening to CNBC or the Bloomberg Report; it's reading about something a little different. I was over there just about a month ago, meeting with many of our employees in our team, over 800, in fact, and really interesting. There's still a lot of ambition in the market, but you know that the economy is obviously struggling over there.

Ryan Napierski: And so I think there's near-term, you know, call it hesitancy, it's built into the market and that's why we're being very conservative on our go-forward looks. But I continue to believe heavily in the potential of China. It's still the world's second largest market, and it still has very strong consumer demand. There are a lot of local brands; Chinese brands in the beauty space, in particular, are growing at pretty aggressive, you know, paces, and that's very different than it was five to seven years ago, especially, you know, via Douyin or TikTok over there.

Ryan Napierski: And with that I'd like to turn the call over to Ryan. Thanks Scott. Hello everyone. Thanks for joining our call today.

Ryan Napierski: I'll start by providing a performance summary of Q2.

Ryan Napierski: and then share progress update on our ongoing enterprise transformation vision strategy and plan as we continue to evolve our core new skin business from a traditional direct selling model towards more expansive integrated beauty wellness and lifestyle company, including our rise ecosystem.

Ryan Napierski: I'll start by providing a performance summary of Q2 and then share progress update on our ongoing enterprise transformation vision strategy and plan as we continue to evolve our core new skin business from a traditional direct selling model towards more expansive, integrated beauty wellness and lifestyle company, including our rise ecosystem. The second quarter played out similar to the first with revenue slightly above the midpoint of our guidance despite a stronger than anticipated effect headwind of over 4%.

Ryan Napierski: Thanks, Sydney. I think that's all of the questions we had for the call today. I appreciate all of you dialing in. We acknowledge you're kind of juggling between other calls across the board, so we appreciate the time you're able to give us. We look forward to giving you more updates in the quarters to come as we continue to evolve our business towards our vision of becoming the world's leading beauty, wellness, and lifestyle ecosystems. With that, we'll speak with you next quarter. Thanks a lot.

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

Speaker Change: The second quarter played out similar to the first with revenue slightly above the midpoint of our guidance despite a stronger than an anticipated FX headwind over 4%.

Speaker Change: non-GAAP earnings per share were near the top end of the range reflecting continued progress to plan for our business transformation while managing costs and driving efficiencies.

Ryan Napierski: Non-gap earnings per share were near the top end of the range, reflecting continued progress to plan for our business transformation while managing costs and driving efficiencies. Overall the operating environment remains challenging for our core new skin business due in large part to macroeconomic factors and pressures on the direct selling industry itself. Despite these challenges we were encouraged by sequential gains in several of our markets including the US, South Korea and parts of Southeast Asia Pacific.

Speaker Change: Overall, the operating environment remains challenging for our core NU Skin business due in large part to macroeconomic factors and pressures on the direct selling industry itself.

Speaker Change: These challenges we were encouraged by sequential gains and several of our markets, including the U.S., South Korea and parts of South East Asia Pacific.

Speaker Change: Most notably, we experienced year-over-year improving trends in paid brand affiliates globally, which translated into improving new sales leaders.

Ryan Napierski: Most notably we experienced year over year improving trends and paid brand affiliates globally which translated into improving new sales leaders. China remained challenging due to macro trends in the market. Our rise business continued to perform well with revenue up 32% to nearly 68 million accounting for over 15% of our second quarter total. Growth at rise was led by our Mavily Affiliate Platform and our Wasatch Manufacturing Business. Rides plays a critical role in our enterprise transformation that I'll speak to in a moment and we expect revenue from rise to continue to grow at a faster pace reaching 20 to 25% of overall revenue mixed by 2025.

Speaker Change: China remains challenging due to macro trends in the market.

Speaker Change: Our R.I.S.E. business continued to perform well with revenue up 32% to nearly $68 million, accounting for over 15% of our second quarter total.

Speaker Change: Growth that Rides was led by our Maverly affiliate platform and our Wasatch manufacturing business.

Speaker Change: RYSE plays a critical role in our enterprise transformation that I'll speak to in a moment. And we expect revenue from RYSE to continue to grow at a faster pace, reaching 20 to 25 percent of overall revenue mixed by 2025.

Speaker Change: Let's dive deeper into both our NuSkin core and RISE businesses.

Speaker Change: In our core new skin business, new products including H. Lockwell Spa I.O. and Renew Spa I.O. along with our TR-Me weight management system, where the main growth drivers delivering over $60 million of revenue in the quarter.

Ryan Napierski: Let's dive deeper into both our NU Skin Core and RISE businesses. In our core NU Skin business, new products including age lock, well spa IO, and renew spa IO, along with our TRME Weight Management System, where the main growth drivers delivering over $60 million of revenue in the quarter. Adding these new wellness, the new wellness IO devices to our cadre of beauty devices has resulted in NU Skin being named as the world's number one company for beauty and wellness device systems by your own monitor this past year.

Speaker Change: Adding the new Wellness IO devices to our cadre of beauty devices has resulted in NuSkin being named as the world's number one company for beauty and wellness device systems by Euromonitor this past year.

Speaker Change: To date, our I.O. devices have produced more than 20 million connected treatments and over 100 million data points that are helping us to better understand our consumers' unique habits and behaviors, which drive two to three times greater purchasing than that of non-connected device consumers.

Ryan Napierski: To date, our IO devices have produced more than 20 million connected treatments, and over 100 million data points that are helping us to better understand our consumers' unique habits and behaviors, which drive two to three times greater purchasing than that of non-connected device consumers. During the quarter, we continue to fill the impact of the challenging macro-environment, affecting consumer spending, and customer acquisition in the majority of our regions, particularly for premium goods.

Speaker Change: Nevertheless, we were encouraged with sequential gains in several of our KPIs, including double-digit customer growth in our two largest segments, the Americas and mainland China, along with gains in sales leaders in the key markets of South Korea and Southeast Asia Pacific.

Ryan Napierski: Nevertheless, we were encouraged with sequential gains in several of our KPIs, including double-digit customer growth in our two largest segments, the Americas and mainland China, along with gains in sales leaders in the key markets of South Korea and Southeast Asia Pacific. We just held our first in-person live event for our Western markets in over five years within the even larger event slated for our Eastern markets in September. It was a great reminder of the power of getting together in person, and we were able to drive energy and alignment along our leaders as we shared three key initiatives.

Speaker Change: We just held our first in-person live event for our Western markets in over five years with an even larger event slated for our Eastern markets in September .

Speaker Change: It was a great reminder of the power of getting together in person, and we were able to drive energy and alignment among our leaders as we shared three key initiatives.

Speaker Change: First, we previewed our next major product division, MIND360, a holistic approach to supporting cognitive health that will be launched around the globe over the next several quarters.

Ryan Napierski: First, we previewed our next major product division, Mind 360, a holistic approach to supporting cognitive health that will be launched around the globe over the next several quarters. Mind 360 is built to serve customers who are seeking support for stress management, cognitive performance and sleep in this rapidly growing $9 billion global cognitive health market. Second, we discussed plans to enhance our overall brand awareness, announcing our integrated brand building plans as we strive to build greater presence wherever our customers seek to find us, including enhanced digital marketing, and third-party marketplaces like Amazon.

Speaker Change: Mind360 is built to serve customers who are seeking support for stress management, cognitive performance and sleep in this rapidly growing $9 billion global cognitive health market.

Speaker Change: Second, we discussed plans to enhance our overall brand awareness, announcing our integrated brand building plans as we strive to build greater presence wherever our customers seek to find this, including enhanced digital marketing and third party marketplaces like Amazon.

Ryan Napierski: Improving overall brand awareness will lead to greater engagement and conversion for our customers and affiliates as we build synergistic value in the marketplace. And third, we announced our increasing efforts and focused to further penetrate developing and emerging markets around the globe, beginning with the revised operating models in Latin America and some Southeast Asia markets beginning the second half of this year. Developing markets represent more than half of the markets in which new skin currently operates and are significantly underrepresented in revenue and operating performance.

Speaker Change: In proving overall brand of awareness, we'll lead to greater engagement and conversion for our customers and affiliates as we build synergistic value in the marketplace.

Speaker Change: And third, we announced our increasing efforts and focus to further penetrate developing and emerging markets around the globe, beginning with revised operating models in Latin America and some Southeast Asia markets beginning the second half of this year.

Ryan Napierski: Our revised operating plan will include a more localized product portfolio and business model that will enable us to reach a broader demographic than historically feasible through our current business model in these markets, as well as streamlined operations. We will leverage these learnings as we prepare for our previously announced exploration of the India market. Our team is very focused on building successful developing and emerging market business models that will take new skin's mission of being a global force for good by empowering people to improve lives to new markets around the world.

Speaker Change: Developing markets represent more than half of the markets in which NU Skin currently operates and are significantly underrepresented in revenue and operating performance.

Speaker Change: Our revised operating plan will include a more localized product portfolio and business model that will enable us to reach a broader demographic than historically feasible through our current business model in these markets, as well as streamlined operations.

Speaker Change: We will leverage these learnings as we prepare for our previously announced exploration of the India market.

Speaker Change: Our team is very focused on building successful developing and emerging market business models that will take NU Skin's mission of being a global force for good by empowering people to improve lives to new markets around the world.

Speaker Change: ShiftingX to rise, as I mentioned previously, rise continues to perform at an accelerated pace, as we invest in, build and scale these business towards long-term integrated beauty, wellness and lifestyle ecosystems.

Ryan Napierski: Shifting extra rise, as I mentioned previously, rise continues to perform at an accelerated pace as we invest in, build and scale these business tools towards long-term integrated beauty, wellness and lifestyle ecosystems. Rides is made up of several businesses ranging from technologies, manufacturing, and more recently brands. Every investment in rides holds synergistic value to the other businesses in our ecosystem and play critical roles in our long-term vision and strategy. One critical business within rides is Mavily, our everyday influencer platform that connects more than 70,000 affiliates to over 1200 beauty, wellness and lifestyle brands in the United States.

Speaker Change: Rides has made up of several businesses ranging from technologies, manufacturing and more recently brand. Every investment in Rides holds synergistic value to the other businesses in our ecosystem and play critical roles in our long-term vision and strategy.

Speaker Change: One critical business within Ryze is mainly our everyday influencer platform that connects more than 70,000 affiliates to over 1,200 beauty wellness and lifestyle brands in the United States.

Speaker Change: Maverly is rapidly becoming a leading affiliate brand platform leveraging technology that enables brands to access our army of everyday influencers to share their brands via social media.

Ryan Napierski: Mavily is rapidly becoming a leading affiliate brand platform, leveraging technology that enables brands to access our army of everyday influencers to share their brands via social media. Leveraging machine learning and working to implement next generation AI, Mavily curates brands for its affiliates to share by a social media simple fast and easy. And we're leveraging the Mavily platform to develop a new skin Mavily app instance that will enable our affiliates to share new skin brands more easily while gaining access to hundreds of other brands to promote and share.

Speaker Change: Leveraging machine learning and working to implement next-generation AI, mainly cure experience for its affiliates to share by a social media simple fast and easy.

Speaker Change: Additionally, Mavily enables the promotion of other rise brands such as Beauty Bio to Mavily affiliates.

Ryan Napierski: Additionally, Mavily enables the promotion of other rides brands such as beauty bio to Mavily affiliates. We anticipate that affiliate marketing will continue to outpace virtually all other forms of advertising and promotion and we believe that our approach to integrated affiliate marketing via Mavily will become a more meaningful player in this rapidly shaping industry. In addition to Mavily, the benefits to vertical integration across manufacturing and our own and partnered brands enables us to accelerate product innovation and speed the market as we move more quickly to keep pace with consumer trends in beauty and wellness.

Speaker Change: In addition to mainly the benefits to vertical integration across manufacturing and our own and partnered brands enabled us to accelerate product innovation and speed to market as we move more quickly to keep pace with consumer trends in beauty and wellness.

Speaker Change: RISE also provides this optionality to drive brand awareness and engagement, meeting more consumers where they discover and shop. We continue to invest in RISE as a critical innovation accelerator for our overall enterprise transformation strategy.

Ryan Napierski: Rides also provides this optionality to drive brand awareness and engagement, meeting more consumers where they discover and we continue to invest in rides as a critical innovation accelerator for our overall enterprise transformation strategy. Leveraging the expertise of companies within rides has been instrumental in accelerating our innovation agenda in product and device research and development, sustainability and supply chain capabilities. We'll continue to expand on this and share progress with you in the coming quarters.

Speaker Change: So in summary, our enterprise transformation remains on track with second quarter results in line with guidance and at the halfway point of 2024. We've continued to demonstrate our ability to adapt to challenges and deliver within expectations.

Ryan Napierski: So in summary, our enterprise transformation remains on track with second quarter results in line with guidance and at the halfway point of 2024. We've continued to demonstrate our ability to adapt to challenges and deliver within expectations. We're focused on accelerating innovation across our new skin core business with our mine 360 product division and enhanced business model for developing and emerging markets and integrated brand building efforts. We're also investing in key enterprise growth initiatives including Mavily and several other businesses in rides which continue to deliver strong growth.

Speaker Change: We're focused on accelerating innovation across our new skin core business with our mind 360 product division and enhanced business model for developing and emerging markets and integrated brand-building efforts.

Ryan Napierski: We have a long runway into the future and provide us with synergistic tools and capabilities that we can leverage across the enterprise. Operationally, we continue to focus on managing costs and driving efficiencies throughout our ongoing transformation. Despite the persistence of macroeconomic headwinds, we remain focused on executing our long-term vision of becoming the world's leading integrated beauty wellness and lifestyle ecosystem.

Speaker Change: Operationally, we continue to focus on managing costs and driving efficiency throughout our ongoing transformation. Despite the persistence of macroeconomic headwinds, we remain focused on executing our long-term vision of becoming the world's leading integrated beauty wellness and lifestyle ecosystem.

Speaker Change: So, with that, I'll turn the time over to James to cover second quarter results in more detail along with our guidance. And then we'll open it up for questions.

James Thomas: So with that, I'll turn the time over to James to cover second quarter results in more detail along with our guidance, and then we'll open it up for questions. Thank you, Ryan. Thanks all of you for joining today.

James Thomas: I'll provide a brief Q2 update and then speak to Q3 and 2024 guidance. For additional details, please visit our investor relations website. For the second quarter, we posted a revenue of $439.1 million, which was at the midpoint of our previous guidance range and included a slightly larger than expected negative foreign currency headwind of 4.2% or $21 million. Reported earnings were negative $2.38 or 21 cents, excluding restructuring and impairment charges. Our gross margin was 70%, compared to 72.9% in the prior year quarter.

James Thomas: $1 million, which was at the midpoint of our previous guidance range and included a slightly larger than expected negative foreign currency headwind of 4.2% or $21 million.

Speaker Change: Reported earnings were negative $2.38 or $0.21 excluding restructuring and impairment charges.

Speaker Change: Our gross margin was 70% compared to 72.9% in the prior year quarter. Our overall gross margin continues to be impacted by growth in our RISE business, which carries a lower gross margin.

James Thomas: Our overall gross margin continues to be impacted by growth in our right business, which carries a lower gross margin. Gross margin for the new scheme core business was 76.1% compared to 77.2% in the prior year quarter. This decline in margin can largely be attributed to the geographic shift of revenue in the core and fixed overhead cost on lower volume. We're accelerating our skew rationalization project and expect to see sequential improvements in gross margin with an approximate 20% reduction in our overall skew count by the end of 2020.

Speaker Change: Gross margin for the NU Skin core business was 76.1% compared to 77.2% in the prior year quarter. This decline in margin can largely be attributed to the geographic shift of revenue in the core and fixed overhead costs on lower volume.

Speaker Change: We are accelerating our SKU rationalization project and expect to see sequential improvements in gross margin with an approximate 20% reduction in our overall SKU count by the end of 2024.

Speaker Change: Selling Accents

Speaker Change: as a percentage of revenue was 37.7% compared to 37% in the prior year quarter. For the NU Skin core business, selling expense was 42.2% compared to 40.2% in the prior year period.

James Thomas: Selling expense as a percentage of revenue was 37.7%, compared to 37% in the prior year quarter. For the new skin core business, selling expense was 42.2%, compared to 40.2% in the prior year period. Our core new skin selling expense typically ranges between 40% to 42%, with a slight increase mainly attributed to enhancements made to the compensation plan targeting customer and affiliate acquisition. General and administrative expense declined nearly $20 million due to the continued execution of our cost efficiency program related restructuring activities in the quarter and bringing overall operating costs more in line with current revenue levels.

Speaker Change: Our core NU Skin selling expense typically ranges between 40% to 42%, with a slight increase mainly attributed to enhancements made to the compensation plan targeting customer and affiliate acquisition.

Speaker Change: General and administrative expense declined nearly 20 million dollars due to the continued execution of our cost efficiency program, related restructuring activities in the quarter, and bringing overall operating costs more in line with current revenue levels.

Speaker Change: As a percent of revenue, G&A for the quarter was 26.9%, compared to 27.4% in Q2 2023.

James Thomas: As a percent of revenue, GNA for the quarter was 26.9%, compared to 27.4% in Q2, 2022, 2023. Over the past several years, our core new skin business has faced challenges due to global economic downturns, the rising cost of capital and overall direct selling industry pressures. These factors have contributed to depressed market valuation, which resulted in a non-cash goodwill and intangibles impairment of $141 million, mainly across the new skin reporting units. Additionally, in the second quarter, we incurred $8.4 million in restructuring charges and plan to extend our restructuring program as we continue to evolve our operating footprint as we transform our business.

Speaker Change: Over the past several years, our core new skin business has faced challenges due to global economic downturns, the rising cost of capital and overall of direct selling industry pressures.

Speaker Change: These factors have contributed to a depressed market valuation, which resulted in a non-cash goodwill and intangibles impairment of $141 million, mainly across the NU Skin reporting units.

Speaker Change: Additionally, in the second quarter, we incurred $8.4 million in restructuring charges and plan to extend our restructuring program as we continue to evolve our operating footprint as we transform our business.

Speaker Change: Our operating margin for the quarter was negative 28.6%, or 5.4% excluding restructuring and impairment charges, compared to 8.5% in the prior year quarter.

Speaker Change: Interest expense was $6.7 million for the quarter, compared to $5.8 million in the prior year. The other income expense line reflects $0.6 million of income, compared to $0.4 million of income.

Speaker Change: in the prior year quarter.

James Thomas: In the second quarter, we continue to make strides in our inventory management and portfolio optimization plan, which helps generate healthy cash flows from operations of $51.2 million, which also generated free cash flow of $43.1 million in the quarter. We paid $3 million in dividends, paid down 25 million of our outstanding debt during the quarter, we did not repurchase any stock and have $162.4 million remaining on our current authorization. Our tax rate for the quarter was 10.2%, or 41.4% excluding restructuring charges compared to 27.5%.

Speaker Change: We paid $3 million in dividends, paid down $25 million of our outstanding debt during the quarter. We did not repurchase any stock and have $162.4 million remaining on our current authorization.

Speaker Change: Our tax rate for the quarter was 10.2% or 41.4% excluding restructuring charges compared to 27.5%.

James Thomas: For both the third quarter and the year, we anticipate an adjusted tax rate of 36% to 42%. This annual rate reflects an anticipated higher global effective tax rate primarily due to the expected geographical mix of our earnings.

Speaker Change: Shifting attention now to guidance, based on our first half performance in 2024 at the midpoint of our prior guide, increased FX pressure, and the current state of the business, we are tightening our annual guidance.

James Thomas: Shifting attention now to guidance based on our first half performance in 2024 at the midpoint of our prior guide increased FX pressure in the current state of the business. We are tightening our annual guidance. We now expect 2024 revenue in the 1.73 to 1.81 billion dollar range with earnings per share of negative $2.1 to negative $1.81 or adjusted earnings of 75 cents to 95 cents. Our guidance now assumes increased foreign currency headwind of approximately negative 4% to negative 3%.

Speaker Change: We now expect 2024 revenue in the $1.73 to $1.81 billion range, with earnings per share of negative $2.01 to negative $1.81, or adjusted earnings of $0.75 to $0.95.

Speaker Change: Our guidance now assumes increased foreign currency headwind of approximately $4 billion.

Speaker Change: negative 4% to negative 3%.

Speaker Change: We are projecting third quarter revenue of $430 million to $465 million, assuming a foreign currency headwind of approximately 4% to 3%. With reported earnings per share of...

James Thomas: We are projecting third quarter revenue of $430 million to $465 million, assuming a foreign currency headwind of approximately 4% to 3%. With reported earnings per share of 8 cents to 18 cents or adjusted earnings of 15 cents to 25 cents. Looking ahead, we are confident in our ability to navigate the challenges and opportunities that lie before us. Our solid balance sheet and strong cash will position us well to invest in growth initiatives while returning value to our shareholders.

Speaker Change: $0.08 to $0.18 or adjusted earnings of $0.15 to $0.25.

Speaker Change: Looking ahead, we are confident in our ability to navigate the challenges and opportunities that lie before us.

Operator: We will continue to execute our enterprise vision and strategy with discipline and focus ensuring that we remain well positioned for success. And with that operator, we will now open up the call for questions. Thank you.

Speaker Change: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.

Speaker Change: To withdraw your question, please press star 11 again.

Operator: As a reminder to ask a question, please press Star 1 on your telephone and wait for your name to be announced. To withdraw your question, please press Star 1 on again.

Speaker Change: Our first question comes from the line of Chase Bender with Citi. Your line is now open.

Chasen Bender: Our first question comes from the line of Chase Bender. What city your line is now open? Great. Thanks. Afternoon, guys.

Chase Bender: Great, thanks.

Chase Bender: Afternoon, guys. I wanted to first ask...

Speaker Change: Uh, if you could give a little bit more detail about this new skin, Napoli app.

Ryan Napierski: I wanted to first ask if you could give a little bit more detail about this new skin neighborly app and explain how it will work, specifically from the perspective of a sales leader. Once I have it in hand, how do I operate it? What does it mean? And how do I interface with it? But then at a higher level, obviously you are launching products like mine 360. You have more affordable luxury.

Speaker Change: and explained how it'll work.

Speaker Change: specifically from the perspective of a sales leader. Once I have it in hand, how do I operate it? What does it mean? And how do I, how do I interface with it? But then at a higher level,

Speaker Change: Obviously, you are launching products like mine 360, you have more affordable luxury, you have this new app coming online.

Speaker Change: It seems like there's a lot coming at sales leaders, really one at a time, they need to get back to basic blocking and tackling.

Ryan Napierski: You have this new app coming online. It seems like there's a lot coming at sales leaders. Really one at a time they need to get back to basic blocking and tackling. So just generally, how do you think about balancing all of these launches with competing attention versus stable as a stabilizing the core of the business?

Speaker Change: So, just generally, how do you think about balancing all of these launches with competing attention versus stabilizing the core of the business?

Speaker Change: Yeah, Chase, good questions. We'll kind of walk through a couple of those things quickly.

Ryan Napierski: Yeah, Chase, good questions. We'll kind of walk through a couple of those those things quickly. Yeah. So the the Mavily app, if you know, if you go to the app store today, you can download a Mavily app and and walk through, you know, how it works in terms of curating brands as an individual, you know, everyday affiliate stands up. So as we're looking towards NU Skin, the NU Skin Mavily instance of that, NU Skin affiliates as we build this out and and and put it into the market, they'll be able to do that.

Speaker Change: The Maybelline app, if you go to the app store today, you can download a Maybelline app and walk through how it works in terms of curating brands as an individual, everyday affiliate stands up.

Ryan Napierski: They'll download the app and go through a very similar experience curating the brands that that work for them. Then they'll be able to, you know, it's a simple, you know, post and share technology that, you know, works with links that and it's pretty smooth, pretty easy to to share. So that's kind of how it's a simpler way to basically share those brands and then get access to other beauty wellness lifestyle brands on the Mavily app. So pretty straightforward that way.

Speaker Change: So as we're looking towards NU Skin, the NU Skin Maverly instance of that, NU Skin affiliates, as we build this out and put it into the market, they'll be able to download the app.

Speaker Change: and go through a very similar experience, curating the brands that work for them, then they'll be able to, you know, it's a simple...

Speaker Change: you know, post and share technology that, you know, works with links and it's pretty smooth, pretty easy to share. So that's kind of how, it's a simpler way to basically share those brands and then get access to other Beauty Wellness Lifestyle brands on the Maybelline app, so pretty straightforward that way. As far as the focus of the field, and we, you know, totally agree with you, that's a lot of our discussion in-house, is how do we ensure that we continue to innovate.

Ryan Napierski: As far as the focus of the field, and we, you know, totally agree with you, that's a lot of our discussion in houses. How do we how do we ensure that we continue to innovate while enabling our our sales force to, you know, focus on those back to the basics principles. In fact, a big part of our live event theme and discussions were around back to basics, which is really sharing products you love with people and getting them to do this.

Speaker Change: while enabling our sales force to focus on those back-to-the-basics principles. In fact,

Speaker Change: A big part of our live event theme and discussions were around back to basics, which is really sharing products you love with people and getting them to do the same. That's really the basic fundamental. So as we look to new products into the market,

Speaker Change: whether it is, you know, affordable luxury, whether it's Mind360, these are additional products for them to share with people that they love and get them to do the same. So it's not as much about, you know, adding new products in for them to focus on. Typically people orient, especially in the affiliate marketing world, they orient to products that they relate to most.

Ryan Napierski: Same that's really the basic fundamental. So as we look to new products into the market, whether it is, you know, affordable luxury, whether it's mind 360. These are additional products for them to share with that with people that they love and get them to do the same. So it's not as much about, you know, adding new products in for them to focus on typically people orient, especially in the affiliate marketing world, they orient the products that they relate to most.

Speaker Change: So they're not all moving the same thing. And you can even see that with some of our new product launches in the last five or six years.

Ryan Napierski: So they're not all moving the same thing and you can even see that with some of our new product launches in the last five or six years. It's the world has kind of changed quite a bit where historically we would launch a new product and nearly the entire sales force would focus on that one new product. That's really not how the affiliate world works any longer. It's more of identifying products that relate to you and relate to your target customer as a social influencer and micro influencer. And so having those optionalities are the optionality of additional products to select from, you know, then enables them to build their business their way, so to speak.

Speaker Change: So the world has kind of changed quite a bit where historically we would launch a new product and Nearly the entire sales force would focus on that one new product. That's really not how the affiliate world

Speaker Change: works any longer. It's more of identifying products that relate to you and relate to your target customer as a social influencer and micro-influencer. And so having those optionalities or the optionality of additional products.

Speaker Change: to select from, you know, it then enables them to build their business their way, so to speak. So, we are mindful of the balance and the back to the basics. Again, I go back to basics simply means sharing products you love with people and getting them to do the same. That is the basics, regardless of the product we put in front of them. We're targeting products that enable them to reach broader demographics and broader target markets.

Ryan Napierski: So we are mindful of the balance and the back to the basics. Again, I go back to basics simply means sharing products you love with people and getting them to do the same. That is the basics regardless of the product we put in front of them. We're targeting products that enable them to reach broader demographics and broader target markets. Yes. Got it. No, that's that's good detail.

Speaker Change: The Atomic Sense.

Speaker Change: Got it. No, that's good detail. And then just mechanically, if a sales leader uses the Maverly app, shares a product and generates a sale, how is that booked? Is that booked as core NU Skin sale? Is that booked as ride sale?

Ryan Napierski: And then just mechanically, if a sales leader uses the neighbor neighborly app, shares a product and generates the sale, how is that book? Is that book does core new skin sale? Is that book does ride sale? Yeah, it's a change go ahead. Yeah. So, I mean, we're still working through the mechanics of how that will come through, but a cell that runs through the mavely app that we will be recording revenue in mavely. But it'll all come through the same parent company in NU Skin. Okay, okay. Got it.

James Thomas: Yeah, James, go ahead. Yeah, so I mean, we're still working through the mechanics of how that will come through, but a cell that runs through the Mavely app, that we will be recording revenue in Mavely, but it'll all come to the same parent company in NU Skin.

Speaker Change: Okay, okay, got it.

Speaker Change: And then, I wanted to ask about the revised operating model in LATAM and those Southeast Asian markets. Could you just expand on that? You know, what the key changes are in your mind, and...

Ryan Napierski: And then I wanted to ask about the revised operating model in Latin and in the Southeast Asian markets. Could you just expand on that? You know, what the key changes are in your mind and frame how quickly you think you could see positive activity and productivity changes, and then ultimately translating that into a timeline for those changes to hit the P&L? Yeah, yeah, absolutely.

Speaker Change: frame how quickly you think you could see positive activity and productivity changes, and then ultimately translating that into a timeline for those changes to hit the P&L.

Speaker Change: Yeah, yeah, absolutely. So really from, as we look out at these, what we call developing markets are these markets where NU Skin has a presence.

Ryan Napierski: So, so really from as we look out at these, what we call developing markets or these markets where NU Skin has a presence, you know, we have well over half our markets that sit in that Latin, Southeast Asia, East Europe, even parts of China, frankly, that are just different than the major urban cities. And as we look at that and the opportunities there, certainly there are three key components of our operation there that we are reconsidering or evaluating.

Speaker Change: You know, we have well over half our markets that sit in that LATAM, Southeast Asia, East Europe , even parts of China, frankly, that are just different than the major urban cities.

Speaker Change: and as we look at that and the opportunities there.

Speaker Change: Certainly, there are three key components of...

Ryan Napierski: The first is the product portfolio and ensuring that we have the right products, the right prices. Second one then is the business model to enable the right behaviors for selling those products. And then the third one is the operational infrastructure that in various geographies is a little bit different. For instance, in Latin America, quotas or installment payments are the predominant form of payment versus, say, credit cards or the like elsewhere. So as we're looking at these developing markets and we've already begun work in Latin America in Argentina, for instance, where we've reduced the product portfolio of the existing and are evaluating, you know, local manufacturing opportunities for new products to get price points at the right place for the demographic, the target demographic that we're going after.

Speaker Change: of our operation there that we are reconsidering or evaluating. The first is the product portfolio and ensuring that we have the right products at the right prices.

Speaker Change: Second one then is the business model to enable the right behaviors.

Speaker Change: for selling those products. And then the third one is the operational infrastructure that in various geographies is a little bit different. For instance, in Latin America.

Speaker Change: Quotas or installment payments are the predominant.

Speaker Change: where we've reduced the product portfolio of the existing and are evaluating local manufacturing opportunities for new products to get price points at the right place for the demographic, the target demographic that we're going after, evaluating the business model. We're already in a test model down in Latin America on a revision to the business model or the compensation system that rewards for that, and then scaling the operation. So we've already begun those tests in LATAM. We will continue to expand those tests throughout the end of this year and evaluating a couple of markets in Southeast Asia like the Philippines and Thailand, Vietnam.

Ryan Napierski: Evaluating the business model, we're already in a test model down in Latin America on a revision to the business model or the compensation system that rewards for that and then scaling the operation. So we've already begun those tests in Latin. We will continue to expand those tests throughout the end of this year and evaluating a couple of markets in Southeast Asia like the Philippines and Thailand, Vietnam, these parts of the world where the socio-economic status is just different and much different than the more developed markets we operate on.

Speaker Change: these parts of the world where they just did this socio-economic

Speaker Change: you know, status is just different and much different than the more developed markets we operate on. So, as far as how we see it in the P&L, we haven't really worked that through the remainder of this year. I think we're very much in a continued testing and refining process and then we'll be talking with you more in our 2025 guide, you know, in probably further detail about that.

Ryan Napierski: I got it. That's helpful.

Speaker Change: Got it. That's helpful. And I'm sorry. I don't mean to hog the entire call here. So apologies, but just one more if I may.

Speaker Change: I wanted to ask about the updated 2024 guidance. It looks like the implied second half net sales guidance went from down about 4.3 percent at the midpoint to down about 7.5.

Speaker Change: But the implied second half EPS guide went from down 91 cents

Speaker Change: To 55 cents if my math is right. And so, James, I was hoping maybe you could spend a little time framing

James Thomas: the difference there, just in context of

James Thomas: And so James, I was hoping maybe you could spend a little time framing the difference there just in context of the expense management efforts you're calling out. Are you investing more if so, where are those dollars going? Just some additional color on that side unpacking your change in any investment posturing would be helpful. Thanks.

James Thomas: the expense management efforts you're calling out. Are you investing more? If so, where are those dollars going? Just some additional color on that side, unpacking your change and any investment posturing would be helpful. Thanks.

Speaker Change: You know, you're right on top line.

James Thomas: We have narrowed that range for where we performed under the high-guiding Q1 and Q2. And then the big discussion point that we didn't anticipate when we gave guidance was

James Thomas: a foreign currency headwind.

James Thomas: Of 4% plus that we've built through our models. And so when you run that foreign currency through on top line, we brought down the top for that that rationale we've been able to hold the bottom with what we see coming through and Q3 and Q4. The pressure comes on gross margin when you see if you see how we performed in the quarter compared to the prior year when you roll effects through on gross margin.

James Thomas: of...

James Thomas: 4% plus that we've built through our models. And so when you run that...

Speaker Change: foreign currency through on top line. We've brought down the top for that.

Speaker Change: That rationale, we've been able to hold the bottom with what we see coming through in Q3 and Q4.

Speaker Change: The pressure comes on gross margin when you see, if you see how we performed in the quarter compared to the prior year, when you roll FX through on gross margin. And then even some geographic shift that we've noticed within the NU Skin segments of where we performed to our expectations.

James Thomas: And then even some geographic shift that we've noticed within the new skin segments of where we performed to our expectations. We're getting more revenue from some of our less profitable regions less revenue from some of our more profitable regions. So it created a little bit of mixed shift and pressure and gross margin as well as just a slide up tick and selling expense as we've invested in areas to go after performance within the plan.

Speaker Change: We're getting more revenue from some of our less profitable regions.

Speaker Change: less revenue from some of our more profitable regions. So it created a little bit of mix shift in pressure and gross margin, as well as just a slight uptick in selling expense.

Speaker Change: as we've invested in areas to go after.

Speaker Change: performance within the plan.

James Thomas: G&A we continue to be hyper focused. We continue to go in and drive those cost efficiency savings that we set out to do looking to be on pace with the original savings goal that we set out of $65 million coming out of G&A in 2024 compared to our prior year. So that's a little bit of a bit of a color of why there's pressure and then with that pressure on profitability comes an impact to our tax rate.

Speaker Change: coming out of GNA in 2024 compared to our prior year. So that's a little bit of a bit color of why there's pressure. And then with that pressure on profitability comes an impact to our tax rate. If you notice the higher tax rate that we have

Speaker Change: Modeled Outer, we gave in our script there. We are seeing pressure on our tax weight due to the profitability by geographic segment around the world. So just watching that through trying to get clarity on where we think we'll land from an earnings perspective.

James Thomas: If you notice the higher tax rate that we have modeled out or we gave in our script there, we are seeing pressure on our tax rate due to the profitability by geographic segment around the world. So just watching that through trying to get clarity on where we think we'll land from an earnings perspective.

Speaker Change: Got it. That's a really helpful caller. I appreciate it. I'll pass it on from here.

James Thomas: Got it. That's really helpful color. I appreciate it. I'll pass it on from here.

Speaker Change: Thank you. As a reminder, to ask a question at this time, please press star 1-1 on your touchtone telephone.

Operator: Thank you. As a reminder to ask a question at this time, please press star 11 or you touched on telephone.

Speaker Change: Our next question comes from the line of Sydney Wagner with Jeffries LLC. Your line is now open.

Sydney Weg: Our next question comes from the line of Sydney Weg, with Jeffrey's LLC. You're on his open. Hi, this is Sinyon for Ashley Helgins. Thanks for taking our question.

Sinyon: Hi, this is Sinyon for Ashley Helgens. Thanks for taking our question. Just three from us. So, any update that you can give on some of the affordable luxury launches you discussed last quarter and how those have been received by the market?

Sydney Weg: Just three from us. So any update that you can give on some of the affordable luxury launches, you discussed last quarter, and how those have been received by the market. And then second one was last quarter, you mentioned while you did see, you know, some some pressure from the consumer side demand for higher priced items. It was still resilient, just curious if that was, you know, trying to still saw play out this quarter. And then just any additional color you can give on China and what you're seeing there. Thank you.

Speaker Change: And then second one was, last quarter you mentioned, while you did see, you know, some pressure from the consumer side, demand for higher priced items was still resilient. Just curious if that was a...

Speaker Change: you know, a trend you still saw play out this quarter, and then just any additional color you can give on China and what you're seeing there. Thank you.

Speaker Change: Yeah, sure. No, Sydney, it's great. Thanks for joining the call. Yeah, so affordable luxury, as we mentioned, we're doing, you know, quite a bit of research and development on that right now, with more products to come. One product that we put out in the last quarter was a product called Peptide Pout.

Ryan Napierski: Yeah, sure. No, Sydney. It's great. Thanks for joining the call. Yeah. So affordable luxury. As we mentioned, we're we're doing a, you know, quite a bit of research and development on that right now with more products to come. What one product that we put out in the last quarter was a product called peptide pout, which is a lip application that literally does that helps the lips. James might be wearing it right now.

Ryan Napierski: I can't tell, but the peptide pout and it is it was a great social seller. In fact, sold out very quickly, sold out a stock and will be a very good promotional product around the world. So that was one that we brought to market very, very quickly. And we have several more that are planned, just like that over the coming quarters. They generally, they, they're interesting because they, these types of affordable luxury products are a bit more promotional in nature, meaning that they kind of run in really quick turns, you know, and they're sold almost like it in a sell out fashion.

Speaker Change: which is a lip application that literally does that, pouts.

Speaker Change: James might be wearing it right now, I can't tell.

Speaker Change: The Peptide Pound, and it was a great social seller, in fact, sold out very quickly, sold out of stock.

Ryan Napierski: You can almost imagine some of these influencer brands that hit and they'll sell a full, you know, a full production run through and then they reload. So we're seeing similar dynamics to that with with peptide pout as we've put it out there and then with the others were kind of forecasting similar models. So you'll be seeing a few of those, but that's just one example of one that's moved forward.

Speaker Change: and will be a very good promotional product around the world. So that was one that we brought to market very, very quickly. And we have several more that are planned just like that over the coming quarters.

Speaker Change: They generally, they, they're interesting because they, these types of affordable luxury products are a bit more promotional in nature, meaning that they kind of run in really quick.

Speaker Change: turns, you know, and they're sold almost like in a sellout fashion. You can almost imagine some of these influencer brands that hit and they'll sell a full, you know, a full production, you know, run through and then they reload. So we're seeing similar dynamics to that with with Peptide Pout as we've put it out there. And then and then with the others, we're kind of forecasting similar models. So you'll be seeing a few of those, but that's just one example.

Speaker Change: of one that's moved forward. You were asking about kind of higher priced.

Speaker Change: product resiliency. I mean, I think generally

Ryan Napierski: You're asking about kind of higher priced product resiliency. I mean, I think generally are we've, we've noticed that our devices hold up reasonably well in this kind of in hyperinflation area market while some of our other, you know, higher higher and consumables tend to struggle a little bit more. So I would say that it's a little bit more mixed from a consumer behavior standpoint around high priced items, you know, but our, our devices continue to perform well, but we see some, some challenges and some of the other items. So I think it's just what's maybe a more durable good that tends to do a little bit better, at least we're observing that.

Speaker Change: from a consumer behavior standpoint around high-priced items. But our devices continue to perform well, but we see some challenges in some of the other items. So I think it's just what's.

Speaker Change: Maybe a more durable good that tends to do a little bit better, at least we're observing that.

Speaker Change: And then your third question around China, China just continues to be a very

Speaker Change: Interesting macroeconomic market. It seems every time I drive home I'm listening to CNBC or the Bloomberg Report, it's reading of something a little different.

Ryan Napierski: And then your third question around China, China just continues to be a very interesting macro economic market. It seems every time I drive home, I'm listening to CNBC or the Bloomberg reported it's reading of something a little different. I was over there just about a month ago, meeting with many of our employees and our team, over 800, in fact, and really interesting. There's still a lot of a lot of ambition in the market, you know, that the economy is obviously struggling over there.

Speaker Change: I was over there just about a month ago meeting with many of our employees and our team, over 800 in fact.

Speaker Change: Really interesting. There's still a lot of a lot of ambition in the market, you know that the economy is obviously struggling Over there, and so I think there's there's near-term

Speaker Change: You know call it hesitancy it built into the market and that's why we're being very conservative on our go-forward looks

Ryan Napierski: And so I think there's near term, you know, call it hesitancy built into the market. And that's why we're being very conservative on our our go forward looks. But I continue to believe heavily in the potential of China, you know, it's still the world's second largest market. It still has a very strong consumer demand. There are a lot of local brands Chinese brands in the beauty space in particular are growing. It pretty aggressive, you know, paces and that's very different than it was five to seven years ago, especially, you know, by a dough in or tick tock over there.

Speaker Change: But I continue to believe heavily in the potential of China. You know, it's still the world's second largest market. It still has a very strong...

Speaker Change: Consumer Demand. There are a lot of local brands. Chinese brands in the beauty space in particular are growing at pretty aggressive, you know, paces, and that's very different than it was five to seven years ago, especially, you know, via Douyin or TikTok over there. So a lot of social brands that are of China origin are really starting to take market share over there. But

Ryan Napierski: So a lot of social brands that are China origin are really starting to take market share over there. But as a premium device and a premium brand market, we see, you know, we see a long term potential there. I just think it's going to take more time for for the market to get back on its feet.

Speaker Change: As a premium device in a premium brand market, we see a long-term potential there. I just think it's going to take more time for the market to get back on its feet.

Speaker Change: Thank you.

Sydney Wagner: Thanks, Sydney.

Speaker Change: I think that's all of the questions we had for the call today. I appreciate all of you dialing in. We acknowledge you're kind of juggling between other calls.

Operator: Thanks, Sydney. I think that's all of the questions we had for the call today. I appreciate all of you styling in. We acknowledge you're kind of juggling between other calls across the board. So we appreciate the time you're able to give us.

Speaker Change: across the board. So we appreciate the time you're able to give us. We look forward to giving you more updates in the quarters to come as we continue to evolve our business towards our vision of becoming the world's leading beauty, wellness, and lifestyle ecosystems. With that,

Operator: We look forward to giving you more updates in the quarters to come as we continue to evolve our business towards our vision of becoming the world's leading beauty wellness and lifestyle ecosystems. With that, we'll speak with you next quarter. Thanks a lot. This concludes today's conference call. Thank you for your participation. You may now disconnect.

Speaker Change: speak with you next quarter. Thanks a lot.

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

Speaker Change: www.NUSkinEnterprises.com

Q2 2024 Nu Skin Enterprises Inc Earnings Call

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