Nu Skin Enterprises (NUS) 1 Nov 232023 Q3 Earnings call transcript

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Nu Skin Enterprises Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Mr. of President Vice Pond, Investor Relations. Scott ahead. go Please

complete filings to be on comparable Thanks, our those the or in me with for James statements any call CFO. may turn comments results involve of refer Today assist statements. uncertainties, anticipated. discussion investor some and website may We Olivia, good call, afternoon, certain non-GAAP Thomas, be discussed differ numbers will these risks. Also for that, to to release I'll call, and today's period-to-period of during in a actual statements. financial and risks the On more that that a numbers financial are These discussed earnings our non-GAAP reconciliation with today's comparing numbers over the differ required and include forward-looking Ryan. call SEC And our CEO; consistent these from everyone. manner. made and Ryan results believe and in numbers. President Napierski, from materially refer obtained Please Please

joining consumers Hello, and our to today. transformation Scott. business the enterprise navigate for headwinds we times us company globe, Thanks everyone. important our These are continue environmental macro amidst around for our the Thanks, impacting very as accordingly. pivot

improving quarter economy broader this million across non-GAAP per non-GAAP of leading our strategic when China on Skin of grow our guide. a quarter, more half and trends. In to We Core Americas, slowdown the cautious $X.XX a was our incomes write-down. Xrd in Nu projected the reversed had earnings led The performance progress Mainland prolonged excluding share the to end China. in price-sensitive on the with earnings evident year half our consumer in low second In constrained sales pressures per QX of into for based markets the strategic factor below inflation a of expectation the $XXX even trends to quarter. This share with last significant early third and of the QX. first the revenue was to Our our notable escalating business. mixed key initiatives to But overshadowed in by half was primary past during has those underperformance consumer. and spending early led inventory and Particularly

However, growth ageLOC Taiwan challenges, of Japan, other and these gains partially all notable our in experienced regions and Hong iO. offset Kong, Europe with the regions introduction WellSpa

that call growth generated and our Rhyz Asia in segment above We just expectations, which discuss a Korea I'll out Southeast also performed Pacific important moment. South It's our in well to sequential segments. more

continue our to due strategic generated investments primarily macro strategic our some factors our personalization, Nu our past expected, Consequently, in discussed. quarters has While key ecosystem. the that, we'll imperatives digital been associated to tactics I improvement over slower have transformation X across than sync Core Skin dynamics refining areas business social with market the lift just and of our positive maximize commerce EmpowerMe with and pace initiatives

an lean which have our million To the Mainland as on into device beauty than device our through and logged quarter. system, date, connected in data personalization, journey. system, with ageLOC meaningful revenue many increasingly the connected the unique ageLOC XX% further treatments journey contributing XXX device management million we role personalized X During wellness TRMe and road China markets. We will of our and of aligns device weight currently second iO XX% iO remain introduction strategy of our our advance map the our rollouts of to of near-term we our Korea by and This we continued more XX% target third connected long-term insights, collected our EmpowerMe with systems focused personalization WellSpa quarter, of goal and enhancing play with into XXXX. over

continue we business builders, most which new better model outcomes notably to of are America. powered and business affiliate yielding multiple trials parts Latin in support to modifications in Japan make Next, markets recent our across to some promising

to as into seeks further of this today's We ways economy. will working the new lean an continue portion increasing journey and more in affiliate gig flexible more of workforce

As XXXX. eligibility beginning markets continuing a to affiliate reminder, by adjustments the and for in our affiliate numbers QX through some made were impacted in requirements rewards

our apps digital and affiliates. strengthen our continuously features to with enhancing Vera ecosystem, For of Stella connections the our and we customers are capabilities and

encouraged for of generated Following new revenue was app-based by of the recent tests promotions features that promotional very global XXXX. potential we coordinated and the were Europe, in Vera in

user active which slower target to to of of our XX%, is ratio tracking customers monthly adoption monthly Vera, due behind Asia. XX% in active increased mostly Our for

For on monthly XX% Stella, than app. our doubled annual have average with paid users affiliates the target active year monthly more we of of this

improved apps in We resulting will value. engagement deeper affiliates to be these focusing with conversion, on upon and and our through XXXX connections lifetime expand customers driving

XX,XXX Given business X for personalization [indiscernible], than XX% strategy. for broader our the it of into into and technology digital Skin. Elevate growing for core including transformation. than more more but platform, we and recent XXX and than strategy of marketing Clean and anticipate our important our Nu most the holds than, enterprise of synergistic rise us which Beauty not accounts next our advances deeper business, its affiliate evolving a to of acquisition, brands businesses. facilitate of a that Vera retail more these XX% which BeautyBio, enterprise beauty only retailers to these to ecosystem all dynamic significant it growth affiliates channels. manufacturing dive wellness XX% leading Moreover, ecosystem several and serves the and to revenue lean years. our consumer And quarter, over strategy. manufacturing, enterprise the segments DNA, Rhyz, into robustness brands business to potential enhance like of broader underscoring consists DNA retail of broader year-over-year future omnichannel a nearly which further expand and segment delivered we in our [indiscernible] our app. [indiscernible] power now to robustness Rhyz it's currently Rhyz continues This our as which and businesses, customers, XXX technology recommendation, more XX% connects companies and including helps

While you we have our not yet talked sharing excited in-depthly Rhyz next about personally our very with I'm year. enterprise about vision strategy, broader early

on coming core areas enables business. A in Nu greatest three, XXXX Number Mental will holistic place in efficiently Nu the Core one operate it strategic brands; globe. as the increasing the The time, execution our made include, that have Wellness headwinds markets. This focus in have business execute share of same which continued business retooling simplify global a To efficiency upholding product the portfolio, to delivering navigate the excellence strategy on plans and advantage to including we our up, years. our exceedingly of of wrapping share number business globe to priority focusing that investments two, Skin remain as that end, Hero organization result us paramount uncertainties accelerate reevaluating where our as strategically an I'd managing we while year. balance work global approach process swiftly. At in like flows, global on the This remapping our review, effectiveness with as well of is way category, and effectively work the we and as this strategic our operational entirely we will more will overall the introduction we the our and in insights retooling Before how in and the one, a an our is visibility the ambitious per earnings can growth incorporate around term long-term we business macro to drivers, including striking around footprint under and new Therefore, are competitive global the commitment the control. improving environmental we where executing and improve to for near core Skin enhanced between operate dynamic margins to conditions over premise work and will shareholders. enterprise, value constrained in cash realignment team; to some few our several one number of evolve our past the strictly value

we XX% of to example, integrated relative product our XX reevaluating the nonstrategic our XX% portfolio to thoroughly and to eliminating For SKUs next months. are Beauty and over anticipate strategy Wellness XX

to go-to-market our navigate that XX-year maintain additional We to between note will organization execution. repeatedly challenges strong resilient investors. I'm regions health ability with great that to invest we're Global for the that in to be are over continue global value, also optimize this generating growth Growth disruptive further to also our these discover returning Tang opportunities value we'll shareholders. our greater including Connie new compelling global sheet confronted with nearly we our and history, strategic a financial her down We able to numerous has create dividend to business sales as and to healthy times, and Officer to to amidst our uncertainties from to force. alignment have past we businesses our realigning in like exploring a has partner functions due family opportunities, long-term enhance model demonstrated been confident prudence step a our the strategic to business decided operations to have needed and X approach and order But and one role Connie years. Throughout adhering our balance ensure while market. I'd matters. change, global

the guidance year for you Q&A. on James So including turn detail, with let financials to our that, take James? end to time more QX in to our and me then and over through of

then Thank XXXX a all full financial brief joining provide you, you give guidance. of update QX I'll Ryan, QX to year today. projections review thanks for and and and

details, Relations additional our website. please Investor For visit

for foreign when quarter quarter, $XXX.X earnings revenue Reported $X.X X.X% For of currency we million. the million negative a $X.XX per excluding $X.XX impact inventory or share negative third posted was the with charge. or write-off of

review portfolio, accelerate the aligning we've inventory decision with wellness beauty our write-off. and Given state million our of product Ryan further the by product portfolio made optimization resulting a in product strategic EmpowerMe narrow and to decision in rebalance the with $XX.X integrated and mentioned, strategy. line our helps This business the offerings our

our landscape. to product ability benefits across the customer responses be to enabling invest to expect support optimization business competitive of to cash with in portfolio X market years our with X inventory next as the enterprise areas the to free shifts lower over the from as levels and demand, well to up in the We faster the growth realized preferences

was XX.X% XX% to compared or or inventory charge. of the core QX gross XX.X% or charges business for margin Skin excluding inventory XX.X%, XX.X% XX.X% Nu XXXX. excluding in write-off margin the Gross Our when was the excluding restructuring

was a has expenses Selling reported impact this With segment, part XX% while below for positively sales. is year expense segment, selling consolidated on the our XX.X%, in lower growth margin which negative percentage affecting our overall of of a in the as selling points XX% growth period. our our revenue to prior Rhyz XXX gross the group. due expense represented Rhyz The large Manufacturing total basis of

For a top priority. compared Skin million XX.X%. General the administrative Nu $X expense business, expense year-over-year was as declined to XX.X% remains selling expenses prudent core and management

million strong was charges operations X.X%, year. The As million and expense. the was authorization. percentage iO. TRMe our greater inventory repurchased the third income X.X% with in million mainly $XX.X an compared and year $XX G&A million X.X% revenue, on prior remaining or of from WellSpa was the write-off negative stock We generated driven charges of in $XX the conversion XX.X% million expense compared Other This the line a for previews inventory prior in period. $X.X for margin restructuring negative We the to by reflected by in the prior X.X% market compared year. current XX.X% $XX.X of or quarter led Operating to to cash excluding $XXX.X dividends paid million of excluding quarter

XX%, prior Our restructuring the X.X% year quarter for compared tax excluding charges in XX.X% negative period. the to or excluding rate or was XX.X% inventory write-offs

result of tax in was rate a inventory reduced write-offs. U.S. by impacted the negatively the earnings the Our as

our tax of to guidance. rate QX rate tax a and of with or now adjusted to XX% to pressure anticipating adjusted XX% QX additional XXXX XX%. Shifting expect We are restructuring an XX% focus annual

charge negative now Given We X%. This $X.XX $XX X% QX the $X.XX to an of $X.XX the economic business of excludes billion. We inventory anticipate per earnings share currency and and $X.XX million. to we $XX includes or $X.XX restructuring are to the our revenue annual to write-off of guidance billion a XXXX which charges recent trends, conditions restructuring approximately negative guidance, for which assumes anticipated expect aforementioned of to foreign million $X.XX impact XXXX. adjusting

key $XXX foreign $X.XX Skin assuming the our operational to our and our financial remain reported expenses further with dedication And in $XXX our projecting initiatives Nu that, increased headwind questions. efficiencies million, of per in closing, forward to we a strength. negative invest earnings while $X.XX charge. In approximately We quarter to by cash of million This now decline for streamlining X% flow prioritizing open call avenues when our to up growth. leveraging in for challenges, $X.XX currency share steadfast our of pursuing maximizing or excluding while to revenue business from driving are continues with also fourth $X.XX quarter involves macro in the Rhyz order future we'll fourth operator, ecosystem actively

question Tristen we have showing Chau Stifel. with I'm Instructions] [Operator a And from

commentary, Chinese go-to-market China I how you're product about launches after weakness the how other if have changes I wondering impact, two little thinking then your bit a longer? on of follow-up a consumer weakening was questions continues for and the And the new Just that.

there. the our do towards products seen great products We, there. product over masstige research consumer. But mass more in Tristen, a around coming and months, times lower-priced the is consumer of a China a consumer, more cost-conscious couple pointing of course in Yes, general out. very portfolio, we're and fortunately, do implications we we the or have premium been place, all play same we've while for the and Certainly, have last now value-driven I James I affordable more consumption in over Yes, of reading question. couple know notable research

our So price-sensitive lean I versus Even opportunities system more Centrals moving along, trends like Nutra us is TRMe as line. further we for Line. see our these would a see product TRXX to into lines

expand from as well Tencent we so us. our side, you'll in partnership, will likely the our leveraging to there near capabilities a go-to-market of we'll to our more e-commerce that go-to-market see, And see midterm. From continue over

probably So things. the biggest those two are

compared Got on then say are it. responding just historical it consumers levels. to promotions to And that seems China, more

so And thinking have in how how does the about that to you region? change you're compete

absolutely. Yes,

now goes I right to and price think, price competitiveness again, the for back value consumer. the all it the way

as critical about to But Our strategy. November a business, and in promotions be to when we because them are have we very do sensitive they very, traditional we tend such. how cycles disrupt apply continue major promotion events to like product that will equity like brand that things we and certainly XX our is part so manage through And be of process. think

proposition us, I value to think marking going per is be for on certain important. brand lean very we the

of more So research sort that have position those the that higher than price-conscious level can on more be maybe more that thing. are brand, premium science, development, of a aggressive and we

where rates any Got changes of it. one, you And last seen growth parts then the beauty in in the market, have compete? the you

Yes.

So yes, that's great question. a

on wellness. like reading site. categories That would more recent most yet research I'm us seen of we're the haven't direct research, quarter, beauty anecdotally, terms when within what speaking like Monitor at point in look from I Euro So the any Xrd we and

is take seeing, companies. But device I to term, wellness customer Gambles, believe more consumer WellSpa beauty market and with be to deep winning are time the market think playing approach device the we From going those people device of under to now well. long personalization in while long that that's plan I we of is a those tail long a connection that the to We going in that the believe term. still and insights-driven little research. mid Procter though, strategy the are Obviously, iO. still, to & bit mass a types needing What goods, pressure. luxury necessities the like more we sorts

we're systems, devices for important. consumer We'll making invest the room well. the continue on more to as are are think we and continuing to So in we but the device invest our portfolio in premium, value more and

And our from Doug of next coming question with Research. [indiscernible] line the Lane

to for change China any you been business on X on impact for term. Has outlook give everybody. Good years. can there X difficulties years? market the to sound longer-term you maybe last and despite in continue here, X us to step or But back Ryan, there staying the cautious tone that a your near afternoon, the your X

the time by again. and This spending us. is, connect you Yes, China it's, I you the way, to Doug, call we of with really appreciate Yes, great have Again, interesting. lot on some a is time. spent

have decrease at severe consumption the In immediately at over business obviously having a fact, struggles of consumption cities party of we the we economies middle cities class. where still the more the specifically were portion last GDP level. enormous and Skin with macro second don't our China. Nu on push very the operate, third-tier this about [indiscernible] It's and really outside past China interesting had and talking that really economic with and our they an years. few continues. in again first-tier of setbacks in those that's They're the even because But team today, the night. in still happening They're it's opportunity small business some

So near pressure. goods. potential to continue in middle to we class. and big term will that believe there's term, We we middle And cities. there's a third-tier there's second know expansion know But consume class that long mid-

we're, in and be a company, no recovery write this it's think consumers, off engagements to we're of kind more period reach more that's and And just China. we our the we means why investing economic by is We in how channel. we, be going need do then for And smarter a so time. because dominant to Tencent an as those

to substantial a in retooling China? any it changes the years, all operating Has model over of have last been you've is Skin how the for at much pretty several on Or years? going the Nu same been change last With go still you there been there market. the real of couple

Yes. appreciate really the -- would, asking it market. question, it's lockdowns, around retooled of with I especially question. the is most way a where business. were interrupted, has period continuously that going certainly where yes, in the that disrupted during market. no, And you COVID But We, been kind historically to that have is I great transformation go-to we and this business our China, we

that's return There some are about with of kind group recall meetings stopped. conversations meetings. of a But clearly signaling the COVID, lot our large there all historically path. of You'll that, were were that to growth companies

to purposes although always growth the training value not the force a in investing got training strategy. future. play continue our in path, a meetings mass believe education. But digital-first return We that's believe of customer, be through for and to That and we that in started that's reaching for sales terms we to

dynamics less China approach our And so where go-to-market trying less say been I markets than hoped. progressive than of would had we've prolonged has in in other strategy just that's more business there restarted of has probably been a the we the that or been China macro because progressive evolving with is in, in to get and certain new

your impact inflation inflationary all that's your very about that's No, XXXX? helpful. for about, the here, shifting how the of specifically XXXX this just James. I inflation the front, know to gears talking of give Can just you're us Can talk wave we've not you gone over And Yes. through sense huge place. you on sort going is environment just outlook yet. But impacted on everybody

inflationary our also you that what at good our consumers, pressures X mentioned. been some it's through been of and prices to Doug, pricing. We've evaluating channels to how Ryan throughout passed like we've it, looked to those to chain again, and how and is doing monitoring the supply the costs. but it's it on something We to last Yes, this speak years. from We, impacts

margins trying the we're So operating go sure cognizant and we're make be protecting to that forward. to our

And out we're so in we we QX an margin end look and at where project we operating QX. consistent year as with of looking very landed

through can to evaluating, we've line, also growth still what's see within think it channel, those XXXX, top to monitoring we what looking going investment arm As to what's and our we to different type Rhyz businesses our our in acquired. that happen to at going pertains happen to addition we're of

Thanks, Doug.

Okay. Well, are know been this call, from stacked of abbreviated fairly you other readouts other a I companies. up has some with

I thank it for to keep you call. just the wanted we'll short. joining But So all

good want world's to As near-term greatest macros. continuously evolving our challenges very you we greater and firmly many to opportunities position our is the committed know better. experiencing to this, being mission to people our improve people of companies given to business reflect and through for products our lives live believe ahead. We by team look, and right help in are on of a now it the opportunity empowering our that for force fill doing I global

it's for. strategic to continue focused this, give be positioning looking plans, our will very on world refining to go-to-market much We really and the what

We So in forward is to and strategy enterprise quarterly our continue the We'll you come. sharing do we look updating very that more to important. touching know basis continuously. about months to

you thank So all.

gentlemen, today. our participation. Thank for and conference does Ladies you for your that conclude

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