Nu Skin Enterprises (NUS) 7 Nov 242024 Q3 Earnings call transcript

Thank you for standing by. My name is Prilla, and I will be your conference operator today. At this time, I would like to welcome everyone to the Nu Skin Enterprises Q3 2024 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Scott Pond, Vice President of Investor Relations.

You may begin.

afternoon, good and Prilla, everyone. Thanks, call Today President are Napierski, me CEO; on and the and James Ryan with Thomas, CFO. On that include will be comments today's forward-looking call, statements. made materially and statements results These and discussed uncertainties, risks may anticipated. involve differ from those or actual release today's a risks. our SEC Please complete earnings filings of discussion refer and to these for

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

with And like call the now turn over that, Ryan. I'd to to

as ecosystem, reenergize towards selling to strategies sharing operating our lifestyle an I'll for and Thanks, expansive Scott. providing growth our Thanks performance, longer-term update more Hello, businesses. near-term direct on start a call. everyone. we our priorities traditional Nu to business on core followed thoughts including our on by Rhyz continue improve a our joining wellness QX, by Skin performance beauty, summary to evolve integrated

third our The business, growth markets Nu in Mavely, results segments. Rhyz offset guidance impressive from with growth from Latin a We platform. in partially and our performance ongoing our core by strong Skin as America as headwinds well continued delivered quarter range, reflecting of affiliate Asia our in were in line handful marketing Southeast

and in opportunities markets, macroeconomic potential with of several China I market of the larger factors evaluating recently spending. market in including consumer where team Korea impacting was despite pressures face our near-term the this our continue to the continue headwinds. future are and South believe We China, long-term ongoing to in in

and ways to introducing the marketing, direct which discovery the pressures industry both social innovative address influencer a their products the even for changing are more model business performance and links, and month just discuss easier many Nu sales U.S., media-driven will we ongoing this landscape product plan to a commercial are affiliates of make companies to growing towards I affiliate are evolving more and exploring media In faces new Skin where social moment. selling in share it via

Mavely exceeded closed by Rhyz Mavely affiliate up marketing is connect with more tremendous XXX,XXX year-over-year, X most media than economy Our platforms. invested that everyday X,XXX retailers more and forward. influencers years their of continues We've potential across record XX% another forecast than over looking past see brands and to in expand quarter Mavely. platform the social segments creator enables as the via approximately development consumers to led and our

to wellness continues brands of servicing also CPG, direct-to-consumer array retail. and a beauty Manufacturing leading and broad traditional across well, perform

market the and drive efforts margins even persist XXXX. uncertainties cash As into efficiencies broader a flow under accelerating term, and will cost in we be to our the where we navigate near scenario improve headwinds topline

end, that X the our near-term To priorities on focused areas. following are

of XX% reducing First, with approximately this on we to raw basis suboptimized of of point Coupled than efforts to accelerating are Skin XXXX, product XXXX. by on pleased product XXX end. earlier margin low-performing globally. business another to optimization our we began manufacturing our consolidation the that doing will SKUs year's In XXX made of Nu portfolio material work anticipate we've to with the our end core date the we been XX% lead by costs, be year lowering XX% SKUs, anticipate gross more improvement progress will portfolio which side, and reducing and

next referrals performance do selling enhanced The in both Korea new sales an both North geographic product the by others in this improve mix. channel for promoting the Second, places direct other in who expense has we to XX% initiatives selling to expense affiliate several of activation in historic on and consumer our and force markets growth the risen quarter over mentioned and in large These towards XXXX. target year's same. by focus building. leadership-driven sales in plan of scaling part will with sales follow America It while the South the to help and selling and due by with introducing core We'll this I in past quarters year. best model marketing market end team our work as earlier the optimizing start business core power sustainable combines healthy shifts

we strive XXXX. extend and savings all earlier third, simplified our have balanced $XX across initiated We $XX to both we year in efforts the segments we'll top this G&A improving beyond annual our developing as the And year. markets bottom process optimization across profitability anticipate over operational business market. we as improvements towards million million this Argentina and annualized in focused in line and in coming experienced work profitability markets We market ensure as underperforming significant all to in

at terms these believe and we vision business term, matter next enhance believe events including: We've new the introduced our becoming the business and near-term of beauty, we West one, our focused world's this our vision. remain over the towards to operational long-term simplify X launches East initiatives leading most building few global Together, our our market this live returning MYNDXXX quarters. lead growth Longer of that profitability. introduction to out us quarter optimization continuing things initiatives we on wellness and will of in ensuring several operational ecosystem. ability enterprise focus the on past lifestyle that will while with

globally year. to per be consumer XX% growing is and Health Cognitive rapidly $X billion reported a at growing category

the it of customers attract category new believe Nu future. to Skin consumer behavior, to overall a we this in will new burgeoning is segment While

innovations demonstrate our addition, along also that our in efficacy. are Second, we and pipeline remains with product supplement nutrition technologies business, help robust, their exploring in new

We anticipate lines, we'll and to market you the discuss some portfolio. late including our nutrition highest upcoming of others innovations quarters. and the also in more customer some these rates Our gX with retention new hold and XXXX, LifePak, in in product acquisition Pharmanex, hit of

At broaden via wherever exploration Nu us. to in with as building very are Live, but see accessibility we marketplaces and efforts, customers exploration into our find beginning customers strive introduced as we our access seek integrated promising engine We're products to Skin's early to the our also force brand third-party indicators of sales advertisements. search

is order of For ads instance, believe purchasing integrated are potential via approximately back way who an We online their XX% invigorating to through those to customer and advertisement. place through Skin activation there found in Nu retention untapped customers building. brand an

month. affiliates beta in initially version Fourth, Mavely we U.S. our later -- a this be our to of will U.S. releasing brand

are ease the that to combination and enhance platform. lifestyle well the and engage as Mavely and sharing brands Nu Skin products believe app Mavely influencers, than socially. wellness additional Skin will Our we customers of will authentic as further more Nu their of with micro The on beauty, improve affiliates their ability X,XXX

continue anticipated a economies we Skin billion to population in holds future in into to beauty India entrepreneurial market complex significant lastly, the second conscious and world's world. And explore highly potential India, largest late of the is Nu X.X to population the wellness introduce as expansion strive XXXX. person market this but fastest-growing and one we

our operating challenging of environment, summary, despite areas in in the we making vision. So several progress are

resources pushing we up initiatives. to as flow term, to well immediate support cash additional our efficiencies, are operational the and help will as which key drive to free profitability growth harder Over improve

model our evolve ecosystem. leading growth. to wellness as executing to lifestyle continue We vision beauty, and long-term also overall as healthy remain world's of regenerate on We well becoming and integrated efforts business branding focused sustainable our the

time we'll the detail, turn I'll over to QX and that, it questions. with then open for up cover in James? more So to guidance, with James along

you afternoon, to update results and and Good quarter. then speak for to QX XXXX joining and provide third a I'll financial for us discuss guidance. Skin's thank Nu brief the

our while uncertainties optimize across operational company-wide commitment the efficiency through reflects weak and performance in sentiment efforts environmental our direct navigating sales Our consumer P&L the to the industry. expenses to macro

markets, Before we and details, with XX% product business. products QX see XXXX plan beginning as pivot In reduce dive and our SKUs more our developing mix. that are this improvements pleased effort portfolio our higher-margin I'm margin focus we simplify by track in a accelerating to toward to to are to on profitable core our we're on within positive we share into in

in still lower-tier transition markets, and to have we're price business the streamline early with stages improve strategic attractive margin target structure in our implemented enhance to the targets, opportunity of operating returns. bottom more overhead steps a While we this our commission line and reduce

are we're In of our addition on track XXXX efficiency to well announced to our end the savings targets and previously initiatives reach of to million. $XX $XX upper changes, these million G&A cost progressing with

or range negative $XX.X within and year posted third Now of foreign quarter revenue impact We Revenue of currency $XXX.X X.X% quarter prior million. on the $XXX.X our for to a was included guidance prior million, which million. landed results.

negative of share or $X.XX, our $X.XX year per previous quarter. landed compares guidance earnings prior an also range. to within $X.XX quarter the inventory in Third write-off excluding This

Our inventory gross to XX.X% prior or in XX.X%, XX.X% an margin write-off excluding compared was year quarter. the

sales XX.X% write-off, South for shift prior reduction which XX.X% or the XX.X% core Skin revenue excluding China expense a the the was revenue was convention due to Korea. Mainland to core Selling was Nu Skin XX.X% year XX.X%, in from XX% period. as compared year a to points COVID Selling compared business basis elevated business compared the of quarter. in-person was first in to to margin for Gross prior and XX Nu the expense inventory XX.X%, since of our due percentage geographic

more million declined cost levels. expenses bring expenses efficiency year-over-year current due of in program, administrative continuation the $XX line with helping and our revenue approximately General to

the XX.X% of was XXXX. for quarter percent revenue, QX a to XX.X% of As G&A compared in

quarter X.X%, million for negative the was Our X.X% prior to an to for or expense Interest compared $X.X inventory quarter year. was the excluding operating write-off. margin in the $X.X X.X% million compared

solid $XX.X to in flow our cash utilization contributed a which strategically progress a operating reducing cash made healthy product this quarter. inventories perspective, From we portfolio, in across million

by We current under outstanding $X our this and paid quarter reduced we remaining dividends. did million $XXX.X $XX in have million repurchase debt not stock and our authorization. any million Additionally,

inventory for rate excluding negative compared XX.X% tax quarter the Our or to XX.X%, was X.X% the write-off.

now guidance. to Shifting attention

the of $X.XX. XXXX earnings months negative are We the in billion of XXXX revenue billion and results $X.XX or to to range. business, $X.XX of of share negative state anticipate current of earnings per the the $X.XX expecting we to adjusted first Given the $X.XX X $X.XX

currency foreign to increased assumes Our of an headwind guidance approximately X%. now X%

to projecting million, X%, X% fourth We of negative with $X.XX $XXX per million of headwind of earnings assuming share quarter adjusted reported are currency $XXX a to foreign or revised to $X.XX approximately to $X.XX line to $X.XX, million with be current in cash charge align our of more on earnings excluding $XX the of to to restructuring $XX revenue. million planned outlook operating a costs revenue

which by discussed, in committed margins acutely margin improved enterprise contribution vision margin, improving gross align the to we our our operating long shareholder to driving to on focused beauty, see, via will leading these and key are that as can operating work to on optimizing key operations focus XXXX world's resources we our the initiatives, you wellness drive Ryan in mid- improving long-term the remain becoming overall which our lifestyle We As of return initiatives and strategically transformation term. margin through ecosystem.

And we'll questions. the now for with call open that, operator,

Bender [Operator Chasen Citigroup. of Instructions] first Your question comes the line from with

high I business? a the core underway? that start e-com Or operating really wanted together those given direct putting underway that introductions, 'XX still based we of about be 'XX And new a product initiatives in Nu point? some how could that the in for context it there's how selling projects be for level. environment, initiatives Skin I to macro this been is whether stabilizing to Is thinking all like what leveraging I long a guess business, mean, line challenging you the models, core the build lot new clearly, should happen is marketplaces. very traction, of that something time story to that takes stabilize at have more it on of

comment looking a Chasen, good Yes, context as we're the at I'll that's how business. maybe James his and question. well, can add

decline sectors. a product split our it is of been most now profitability got as, I And getting great. ensuring is selling frankly, the expense developing the is prolonged optimization, we've kind the focused of hasn't even which as as therefore, markets of portfolio, across I focus that in business and across right our term, we then state way the simplified near as mentioned, and obviously primary right now kind as we are where operationally can So

and brand really that integrated term. activation, both us take channel initiatives cost towards directed very initiatives social focused like, building, so do effective new mentioned, new on long order invest So think these are And I it less towards money wasteful mid- but for those that then to or plan directed to in performance the also eliminating and that in more transformational. sharing like sales like new are the and I

XXXX, what's and and which I with in like, to beauty landscapes out be leveling think to hard into off to political is seems premium wellness. read with happen, trying down, So we know when the look going the more to but here to going U.S. and believe we help calming inflation

As still a think XXXX, I that. few we're away we later look into quarters from

to rough. we're and -- we of 'XX, part near it's transparent. the transparent be I think look model, hey, So think we're now as I into when term not -- that think to the be side. is at it's going not it's It's early on saying, future as moving going for But I still us,

that talking election a more quarter few of half, transparency and out the kind U.S. Towards in the here late in. XXXX. a will think initiatives that the we economy quite We'll come be we'll we'll have next how post in of see where we will plays second that about have go, little

For into mid- these little long-term that lean now, innovations while a though, to optimization we very focused focused. it's cost near then us term more are

add you thoughts? other any would James,

we Yes. our softness cautious that QX, half we finished 'XX, into in underneath looking the is we're forecasting this opportunities an maximizing profitability Chasen, the I'd of showing going and P&L we're being the operating profit about guidance the make at in year, through of what saw and after going doing back we're to working we're give where But We'll where with say, end what really meantime, with all really -- forecast. And from we're we're that year. we're perspective to sure of 'XX. how those the forward. forecast QX trying

appreciate I then color. that switching And it. gears. Got just

Rhyz hand, a just to spot. other bright the continues On be absolutely

the the a Mavely additional particularly like contributing? how provide I But BeautyBio and context, could So was various side. Mavely. hoping just little know are mentioned you I on non-manufacturing you pieces

sales picture, get bigger of the about mixing And much seems XX% I by side. sooner up you've decay the know direct 'XX. given Rhyz in could selling you It talked there to XX%, like

comp? the what So to about and in organic on provide particularly was perspective a manufacturing maybe manufacturing how rate slow the quarter some other, think just context growth did pretty growth both that on across this difficult meaningfully

down, is and invest Yes. as said, platform. Rhyz to well, I for kind is allocate steady that resources there. I doing that Mavely, that if why investment Yes. an really No, you very is break I of you think manufacturing to is as strategic. manufacturing? we we we it hold mean much lot it in in mean of continue ask do us business platform a look that people

and trends us is channels multiple frankly. what mean have DTC, I observe It's of we honest. market to customers from able retail, and be traditional CPG, winning, into channels -- how be service across interesting we e-commerce. really for I'll innovation hundreds going see be other to able to are

It it's is insightful us, beauty in operational and and just an play. wellness helpful for more vertical really than space. the So

to yes, continues been continues to to it to continue it's been to I interesting investment. go a Mavely fuel invest really that need We But has mentioned be growth. only -- deals X years. to well. interest in The sector there. a creator there's right with economy. lot recent business sweet plays spot that continues of the in And of the It perform well.

make we'll opportunity sure growth for invest it We has continue to on there. want continued best So Mavely. to the

mentioned, brands, do the We likes of have as BeautyBio. you

see I investments how other of think in now. as world the transitioning few a is go. And brands mean, we'll have We well. omnichannel I those

Ulta how to business watch and their from mortar as thing with goes lot a and Sephora, we're play If And think of and cetera. bricks others, in the et businesses better. you we we I and mix shifting There's experiencing them understand like online. companies -- learning these same

to figure think effective best that out from I to customer great amazing an how we to there, in most BeautyBio traction has way. want brand market and it the is bring great a standpoint,

some private little but I model, businesses, of very are of extremely equity do some time work to anticipate moderate, where that and be a a type be in much think, brands some a other So there's as way, that lot don't don't the will quartile any around a we of look over and then those say there will well of I bit want well. will --

commitment I think way. our apply those then learnings core business. the them is to And this across learn again, omnichannel take and

ad originated core came of ROAS, brands. return insights building, running that integrated building our the these of we're on least the of brand models For right integrated some the or our on instance, a now from the at spend other brand lot

so And brands, through got of learnings now, ecosystem come X manufacturing. years, the this having affiliates, years, you brands. when a And the look out got X X we from got we years we we see of that lot this the

All of these have learnings there. of a path

kind of we're that's So it. how seeing

but I'll is smaller we've Rhyz lot then up. the think come them continue I mostly investments inorganic. imagine I to and thing Rhyz organic we of be obviously being will would across has next case, launched do have I a brands the from all through originated inside last see made organically the of beginning capabilities over that that future think the And where we that scale versus say years, that state we brands actually few insights that ecosystem that there could is to have.

my wanted last it. then I to for Got profitability. about ask And one, just

additional year. remainder the to year have initiatives reduce of costs next You've take this obviously expanded to and and been out the costs now of on a some journey through

maybe managing you've been just But year-over-year yet core still it's and SKU rationalization, taking doing look and on selling you margin, but show out unpack mix, a as more of that efficiently P&L. I And direct just yet. that coming for XX the us together down we're know up it the at detail and like costs in gross P&L greater promos seems the we're why not not the how all seeing mentioned in some just basis. I in that's bps seeing

has some to and so will hard look for at helpful. I will a instance, the way has probably impacted being is it reset been views look Yes. we it's one James maybe it much businesses optimism gross be has I think so with tag I'll be my geographic for The very this in pragmatic James' really when -- line on good top for And and higher-margin of then to China, been counter it's us globally. difficult as that business the what down, I effects. at some margins our mix really team

in don't do this really really next about sort of XX%, hit the cleanup of really more we start a but erodive suboptimized year, affect XX% significantly SKUs we've do revenue. that lot revenue. Like been SKUs additional we're year than out our into XXXX the to scaled more of getting the this we and has I work What of started of get kind any said, talking periphery margin around they have of really in products A SKUs. little

of behavior I margin And that side a to so out. impactful customer think needs there's play the that shift model it's the happen, will more of but also

more that margin up we're business stated our lasering in after we optimistic if And it. on it so to we're XXX And why I so that what and can fringes we're of part is I I'm And the is and that of on for that on. opportunity remarks the basis do. opening cleaning focused meaty is core this in components go exists think prudent points vigilant my XXX really to

are your... what But James,

mean one question. that Yes. grapple It's with. we a I it's great

other we're making to in the the to to now tend years our optimization. the the the trying on one X then the overshadow Korea, from seen XX%, that market, that and gross as to at quarter business XX% we've of that moved declines at Over get I current South in last away X touched improvement, years, worked the that, shift the on portfolio from, they majority has China of margin last in addition through it. mean point, that some wins of with Ryan we've the of market

really upside lot markets improvement mix. market America, where And signs our see we're count Asia, a margin where starting in strategy a developing focused of to is profile the large good where Latin developing through SKU through of we're the to reduced part we've that of also overall that Southeast in higher

that, continue So to and as believe see start improvements. we we'll those scale move to to I

We have from showed QX, from steady held a basis improvement XX sequentially QX, QX. we to QX

wins small XX% want move to our getting really take targeting we margin that to and 'XX and launches to with launches as forward are 'XX. And we that to product that starting that different move profile future through with target us we we're product to back XX% So mix.

And your Jefferies. of next question Helgans comes from Ashley the line with

last actually an asked quarter, we I wanted So but just -- update to we this get here. about

but some still And kind Maybe affordable then just expanding it's any versus now And legacy the nutrition your you about there? those and and You business. the days stimulus can the the talked market? side, customer base luxury launches, additional update know on early I about color into is were any the quarter, that how government on talk base. expectations China putting of last curious nutrition any on last, customer side then

really meaty Yes. topics, all No, Ashley.

on connect So I'll those.

market, want lot our that the to luxury, of right. but focusing a products they're to priced make from we affordable more luxury, attention we're of affordable a sure on bringing regarding are view So point we

in MYNDXXX would I of the fit that just what example, masstige products as for now, premium. So those pricing, we're not prestige, maybe most really but introduce line define slight starting to

coming And that's we're out line doing so work new, there. that

to be Pout. I Brow topical some have Lash really of or been We've been hyperinflation way. through, luxury that was like that the that that orient focus I was Peptide a products that We in think And -- affordable serums had that area. types prestige to to and inflation other selling has definitely and others, the have treatments rolling as think built of social ours Masstige --

stabilizing much see better not to better, and perform -- product around but premium, categories our inflation will with prestige into hopeful that we'll as the hopefully move globe quite prestige XXXX. we tempering to start I'm

but focus products certain broader of ones So we as in on brands potential we're making luxury, market, that stabilizes. also in also put the kind economy but the continue investing making the new certain the to that have affordable that by

the pretty applies Chasen's and weighted question historically relatively interested On Skin supplement care our business it wellness Nu get or evenly maybe Skin, side, to nutritional XXXX. outlook business. been this where evenly and weighted for I nutrition business -- very is Nu our between has a personal

Over the course of the last X the kind or X around is years, commerce come thriving. the of where vast majority personal social of our is innovation has which side, care

And of in logic so there's doing a and lot sense that.

But as just almost And nutritional XX-day business in or the supplements. of retention generally you we be might at higher categories, and to categories models. supplements segment, acquisition look market that performance, product design the the look portfolio nature for customer holds nutrition partially and we every nutrition, due across on

side. than We personal the care with nutrition lot so have subscription-based of more a in revenue

value longer so the just lifetime see customer And tail nutrition we through side.

will on basis there. to an we So including go -- and I we've we've see into I acquisition kind from that a leadership really of even XXXX, to back that customer think our acquisition for think split. business, which improvements nutrition innovation more as up a affiliates innovation and bolster And our should more shifted retention,

important move an think we be bit and strategically, it's the we'll us balance to better, that's portfolio little for doing. a what So

remember, so color you trying Yes. China, on color, I'm China. I wrote to I stopped. -- -- on question said last was I wrote Your but on

primarily of interesting. by to sure that's se. consumer play drive And there money placed market into is as Obviously, that the into term. economy probably longer It's spending said, to China a So not you there's out going government. lot going the directly in local per how don't I'm the being sectors

We're we're there consumer to rates the opposed on and shifts as in see right China seeing the in focusing really to now. that savings hoping spending

little economy that investing I a weeks couple meeting too up government leaders. the there's because to is frankly, lot a interesting tell. some economy. of was the still of the optimism top at and team because it some is was And market of going ago, And local look early So to with there's management level our our energy. a the in there

sentiment a hope particularly in be is and lot will XXXX. to baking that so my on spent into area, China in consumer and premium and the beauty spent people think peers that in based And But start I the follow will some the savings suit like. aren't other

us, that right with some I if least overall the the being drive will not stimulus hope prestige we're for think confidence and will back fairly premium. And cautious area, now of consumer purchasing at in sentiment improve up,

I'll on it to else. someone pass

sweet it actually keeping I think fairly we're and short today.

Skin. just up you and wanted Nu So our I to story to observe continuing monitor wrap call being here maybe on for at the by thanking all transformational for and

think of I over have headwinds the absolutely that here been the last couple years.

based which to for better live and today. lot for lives. As in look, we need is feel look a provide, we is in of people that out see Nu world what to Skin the that's on something future, to the we continue And opportunity opportunities

the Rhyz we new to and product focusing brand get happen. there How throughout and we opportunities is how integrated get building, terms new our that ecosystem broader a in lot area market that exploring where we're of offerings make to

in tuning and look forward updating we good go. you as appreciate to Have we you So day. quarter-by-quarter a

Thank you. participating. all today's call. Thank And for you conference this concludes

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