Nu Skin Enterprises (NUS) 13 Feb 192018 Q4 Earnings call transcript

Company Profile

Participants

Scott Pond	VP, IR
Ritch Wood	CEO
Ryan Napierski	President
Mark Lawrence	EVP & CFO
Dr. Joe Chang	Chief Scientific Officer
Faiza Alwy	Deutsche Bank
Olivia Tong	Bank of America Merrill Lynch
Tim Ramey	Pivotal Research Group
Linda Bolton-Weiser	D.A. Davidson
Stephanie Wissink	Jefferies
Ashley Helgans	Jefferies
Doug Lane	Lane Research
Beth Kite	Citi
Mark Astrachan	Stifel

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to the Nu Skin Enterprises Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today’s conference, Mr. of President Vice Pond, Investor Relations. Scott may you begin. Sir,

Scott Pond

for Thank and everyone you, thanks joining us. Ashley,

made our to materially risks discussed from Dr. with call uncertainties, that Executive or statements. Mark Officer; be more for Officer. Investor SEC Napierski, of the today's during today to We actual be comments Please a call, and assist turn statement. anticipated. a consistent Officer; financial involve And President; Chief manner. some will page Ritch. and obtained ir.nuskin.com On complete Financial discussed today’s discussion Chief reconciliation call, On Lawrence, may required statements in forward-looking financial time our me comparing of our believe refer Ryan Chief these are earnings these those in Chang, Scientific numbers non-GAAP release risks. Joe numbers Ritch results filings comparable any include Please numbers. These the and may for differ I'd in the refer results Also non-GAAP to at period-to-period now Wood, that financial in from differ certain numbers

Ritch Wood

joining Good call this you afternoon for us today. everyone thank and on

and learned given a completed in lot. pause definitely started Year we it nearly New two has past the XXXX As consider what XXXX, the becoming me I've CEO. of to opportunity learned the this and I've years since

has and management the force, people fortunate strong lucky to world to which global of are and team work we’re believe most best some I’m with First, have offer. talented very global we a to this motivated and our sales capable

believe our this me I vision and more is the pathway confident we our deliver in successful regard, in to could now. capabilities years and their the mission customer improve on grow lives ago, customer, am of our on I is base can potential be focus and how growing much working. relentless world. to around our unleash to business Two we truly Today, Our clear

particularly change we here will the I generated quarter with and currency to year great encouraged we growth. revenue as the forward a fourth year look was close wherein solid constant X% world We I XXXX. in a

revenue reported of was a included reported promising our of and a the XX% revenue very we These as results a impact negative X%. LumiSpa year are product currency prior $XXX growth which X%, included quarter Our million which growth. from in introduction

in throughout was annual in Japan. growth For with by except growth X.XX for especially anXX% year region actually in XXXX, revenue billion Japan, also improvement And our a the customer year. base, and with to this pleased in I which growth was force strategy the every year. modest that result improvement XX% we our happen showed the of is driven quarter few minutes. growth a and will steady sales our direct this our throughout we and Ryan reported the speak in This

Our significantly company customer our innovation, and XXXX, organization. operating the $X.XX power this including were vision charge. our transformation accounting to a chain, accelerate increase of our centric beginning as our open of of of This impact share earnings of purchase a and allows to grow includes the our advance platform we ability our believe three restructuring impairment our of strategic decision transform When reported enterprises accelerate our will We technology to fourth $X.XX. The products to per At quarter earnings execution acquire margin of a to at loss strategic share per organization the to and reach the previously capabilities secure when market. we $X.XX charge, was the potential. bring one-time our to made to the our $X.XX and $X.XX. decision restructuring charges technology manufacturing announced a supply strong excluding us the

million $XX Skin of these revenue the for reported forward. entities margin. improvements companies gross manufacturing our we has are partner to from Each and our beginning and XXXX, each growth going strong to partners in potential to continue benefits great showed Nu grow deep see we revenue profit quarter, and in of anticipated the During year-over-year

about have agriculture. We spoken investment indoor or our CEA to often also referred in technology controlled in the past as environment growing

Our CEA product full with ingredients, enhance vision is our in our competitive and our our ability clean, development, provide provide to with give a customers transparency, advantage to sustainable customers innovation. sourcing

look vision, facilities and XXXX technologies our his We further anticipate our an Investor on We will our X% for on surrounding our to also held at of more earnings at we Mark now corporate more in $X.XX in advancements We tour $X.XX. to of It in of significant the including and continue discuss to this this Company on it guidance Investor to our XX. forward X% those and in currency vision Ryan forward look that interested neutral make another will update commentary. for I'll capabilities insight to call at plans our provide excited will year be share of projected and webcast. empower sharing you to business. per great Day. the many with time. to I’m at to headquarters revenue Utah growth be share information over our a global that February here turn Day seeing

Ryan Napierski

Thanks, afternoon Ritch, everyone. good

strong and pillars one. each strategy in in what and results make with progress on we XXXX We’re as of in terms growth focused our remain steady excited three drove

From effectively promote perspective, to media ways in leverage engaging retain to leaders customers a social and various our more which social of sharing regarding sales continue are platforms, we our through company social and the we employing use business. First, empowers more attract, also acquire to media technology.

Skin and South popular Balance Plus. XXX quarter a new we successfully in in a For the social Nu the system, platform the in example, our reintroduced Korea, China out WeChat in similar to utilize fourth Mainland pre-biotic platform way using KakaoTalk launch we product

service digitally to making are accelerating to significant enabled our migration leadership key the ability in capacity globe. expands As better we Ritch the to organization, the scale our our progress our changes, needs to our obsessed, of direction some around of team, customers our noted, under and which cloud, customers more the technology new flexibility becoming

On than with revenue the and acquisition strong to continues of for fourth accounting $XXX quarter more XX% enabling and LumiSpa front million for Skin demand globally, perform well ageLOC year. drive product Nu customer the

reformulated eyes. During which more the provides of attachment, introducing the is fourth treatment quarter, we focused used a a also markets. in new benefits with to LumiSpa by for few franchise Accent delicate around the serum began extend Accent LumiSpa LumiSpa skin a the idealized when our

key us remain for We a in to expect growth brand LumiSpa XXXX.

products focuses the greater leaders sales compensation weekly for also rollout rewards enhancement to basis. a the entrepreneurial world. flexibility It and Finally, provides This on regarding a appeal to accelerating empowering programs, sharing around demographic. we continue on daily, to rewards broader monthly velocity increased our and

all the on During amongst implemented this of model. drive XX% are acquisition pace increased evidenced which growth Velocity it fourth in force a and velocity past behaviors to continues sales we have our quarter, was operates in by customer including year. customer under XXXX business South to exception our with key fully launched growth the mid different markets as by Korea China mainland

for In of has trade been economy segments. currency while as China the regulatory scrutiny growth market, and strategies for In XX% X% in fourth of concern up we on of impact solid of the X% the continue as to constant revenue media quarter. results around China, some in XX% in about year our fourth drove anticipate XX% our and there the the negotiations collectively, growth grew we continued in Korea, Taiwan, by Mainland X% quarter. South each and Kong improve reflecting the in well So, constant growth decline In year-over-year positive in business And X% nutrition and and constant growth Hong LumiSpa interest from quarterly XXXX social to growth in the sharing. currency XXXX. we and posted XXXX a currency, increased

in These enhancement During Pacific, with currency we when Pacific with currency Asia, coupled that velocity grew XX% the quarter. for the Nu Skin In in both we and quarter. XX% the X% year of improved XX% lost driven quarter, America and America. customers Argentina strong hyperinflationary compensation growth constant In continue were growth market. to growth environment well the revenue. by results in Latin of and the for in and we for the our XXX which the restage and system constant XXXX the temper the perform Despite which Southeast

improvement currency prior continued improvement focus year in And of throughout reflecting trend the in markets. decreased grew continue key we the in anticipate results region to social sharing on for focus of revenue which years. our and the EMEA, and the quarter, Japan, We the from constant a currency which for leaders improvements produced year, X% constant as strong on sales growth XX% revenue customers. In strategy, our is XX% and of several both XX%

to focus XXXX attract we we our teams. ourselves providing platforms, on growth and and to As strategy, towards programs customers leaders the and empower sales retain build stronger look to continue will products

help strength business the that, throughout that focus to annual organization degree believe Our alignment reflect quarterly turn and creating to I'll our over and continue Mark. alignment, execution the it are and With of of grow us we results the we in the will XXXX.

Mark Lawrence

provide XXXX now I results Thank first and year quarter detail and fourth give Ryan. some you, our regarding will quarter guidance. full

financial Investor our website. be section our of information can found on Additional

which or currency on X% basis, to quarter revenue million $XXX.X prior fourth year, million Our compared constant include a $XXX to million the improved introduction. LumiSpa X% to a $XXX.X

revenue was reported currency X% fluctuations. foreign negatively Our impacted by

an $X.XX our revenue marking our For the revenue was full over billion, increase highest history. the the year XX% year, second in year prior

recent our currency X% less full-year, core For XXXX acquisitions by revenue the Skin X%. business impacted our XX% grew fluctuations. contributed while Nu was foreign than

impairments or impact impairments, related infrastructure, excluding share $X.XX share, $XX share QX Please expenses. tax accounting $X.XX of charge. technology or or reported tax a XXXX. in reform quarterly $X.XX, $X.XX when other earnings This purchase non-cash in $X.XX were per to earnings the charges per excluding incurred non-cash that related when earnings per and This the the includes $X.XX reported million compares restructuring fourth in when impact XXXX. in the reform with quarter. primarily for the when the note $X.XX compares information of severance negative were charges excluding XXXX excluding of $X.XX or $X.XX $X.XX and to Reported Our

business impairment departments took million our with associated charge a required quarter, as assets investment business XX.X%, the During was other we we Skin support in this anticipate program took quarter expense transition, to XX.X%. charge with to of was revenue The cloud of decrease the and savings improved compared IT XX percent and our to to of year plan for transition this compared quarter. our associated quarter revenue points down the $XX.X a XX.X%, with We executed Gross America's the cloud restructuring as to infrastructure XX.X% of the cost restructuring execute in prior changes significant non-cash to year a to world's margin for technology becoming we XX.X% Additionally, to our a our to to $XX.X Selling within million associated margin leading entities. gross due Because in our basis our talent don't prior transition vision non-commissionable breaking largely manufacturing corporate a platform. to we Nu was the to and secure result offices. XXXX. the of

in charge, XX.X%. or prior Nu was for to compared XX.X% margin XX.X%, General X.X% in a prior or Skin XX.X% when administrative of operating and was restructuring quarter as revenue, the Reported XX.X% to expense Our percent year. expenses the excluding selling year. the the compared

The reflects to the the increased expense, prior U.S. million million other dollar. year. a was $X.X in $X.X strengthening expense expense expense The due to the line of primarily compared income a

repurchase stock. we $XX.X quarter, million and of the million our paid During in $XX.X dividends

the compared separate a XXX% XXXX. reform The for when to consecutive when in release, to or impact in excluding the annually. XX.X%, tax increased rate the charge, dividend indicated or quarter XX.X%, XX.X% As our $X.XX excluding XXth the for also tax we year of was restructuring

currency to to and headwind. of for with to the $X.XX X% constant $X.XX Our to earnings X% approximate is quarter currency QX or to X% growth reflecting XX%. tax We million, share of X% project to revenue XX% zero per QX first an in $XXX guidance rate X% $XXX million

tax X% growth are X% X% with per of XXXX, XX% or revenue to share resumes and X% range approximate in to projected the our headwinds. to For we $X.XX projected This earnings or at X% guidance $X.XX to XXXX of projecting billion constant to X% currency. in to XX%. currently a $X.XX $X.XX billion rate

additional We at our XXth details will event corporate Investor on upcoming our provide headquarters. at Day February

call that, to If you attend up team. would please for Investor now person, the With open Relations to reach questions. like I in out will our

Operator

Thank you. [Operator Instructions] from Deutsche comes line the Bank. Alwy first question And our Faiza of from

now Your line open. is

Faiza Alwy

question first Faiza And you. Instructions] Deutsche [Operator Thank Bank. Alwy comes from line the of from our

line Your is open. now

Faiza Alwy

a have questions. I So few

fiscal The first on one currency, 'XX. currency local the constant for is growth just

by it else it mindful start from disaggregate If particular phasing, rest maybe could maybe any in the of be just how we you that the XQ then and you're that but think about be regions anything and are the region, for a us how quarterly basis? seems So should better, I'll expecting there or off? launch with events should to that. we like China

Ritch Wood

Thanks, Faiza.

forward by that. and just by by region, lay where me to to Appreciate look Let detail. our Analyst Day, quickly detail we question. Investor more speak will growth, out your We give more quarter

single-digit on for lay I think year in rest I high of and today, mind most details people's at the What on expect China question big think we China, is constant a again, China. the the basis out growth we then, Investor think we'll currency do the Day. next for project purposes I

Faiza Alwy

And margins you if declined I next little as made could 'XX? your year, acquisitions. had sort But know what some is then talk just, this are had what a gross for next -- embedding the we about some for thinking Mark, you -- gross of year for how bit year? margins -- you about maybe you're

Mark Lawrence

Yes, Thanks, great Faiza. question.

'XX of mentioned, we're acquired roughly we'll a at line our break full margins of 'XX out margin projecting gross have year our we companies. the you full highest Ritch walk for impact in Investor As But Day. gross at level, as with

XX% to that is that. XX% in where should model you range So

Faiza Alwy

is, And me then quarter? was the the what sorry for in last one inventory from just write-off

Mark Lawrence

made So organization. chain due that our we the inventory were to changes items write-off was supply largely impaired in that our structural

Operator

Thank next Lynch. question America with our you. of of the Bank from Tong Merrill And comes line Olivia

open. line Your is now

Olivia Tong

obviously you the restructuring I guess, quarter program. in announced

obviously you're expectation in coming You've get savings that, hoping love behind lot that more of it kind with efficiency efficiency XXXX bit of out it's what tackle that of then So additional expect better a a what to out allows what get that? of savings program So you? I'd that some a to mentioned understanding that? of But obviously with think capacity that? not you And little an expectation. an there's also like sounds would now of that of color you an

Ritch Wood

to quickly just we achieve be support in to customers so Good as can update you and We a and allow to be guys Yes. then believe of specifically I'll flexible we some old give our able the our just vision, before move to making technology never the quick able and and to we to have thoughts a way in and vision Thank of you, to forth. speak be other customer-centric, Olivia. from hear far. that didn't a to around terms our it order us have very in have so to relates the and margins really changes

about in this moving Ryan, which we'll to? and XXXX. way, start benefits quickly along you to excited really it's change, want under see we're So do is well

Ryan Napierski

simply to point in well, we're really I -- would order service scale, need that we business. that and and the moving flexibility add to cloud, we Yes, in capacity to to will the seeking

exercise. And move effectiveness, infrastructure reduction and create cost this so, efficiencies a more I to a versus not your a mean, is point to effective technology around really

what it. we out really of that's So seek gain to

Mark Lawrence

a is not expense Yes. projecting huge And the is, capitalized a I expense. savings would into next from are on-premise cloud reason thing cost a shift really the it's add more only why OpEx year to we

offset taking cloud capital off the we the the incur as So loss. move were that depreciation from will to OpEx that books the will taken we that we

Olivia Tong

recently. huge if yet And couple cash from to But that operations if of great? in if flow move or I terms a returning just cash you've dollars. the have acquisitions you shareholders, would then not But could not over of to done this cash obviously, year-end. just flow. sure I'm then, cash they're you fiscal just free And be flow numbers given quarter, provide could

been can authorization inching more a at your of still pace priorities your of earnings this than repurchase on is growth you the and because as well. lot obviously a has So up talk recently there kind raise dividend about slower room

So great? would a that just bit priorities into your be color of little

Mark Lawrence

Sure.

So from one. million. I'll $XX in about tackle was quarter Cash the operations first the

uses as cash on far first we're of As and really such, focused grow priority cash our our use business. which of priorities, to the is

this XXth And then dividend to the we'll pay our consecutive the in It one year paying we second with dividend, repayment our we'll and similar dividends. be is, healthy a how what to to did year. share share was years. line roughly balance for believe last buyback done we third, the but raised continue debt and modest The we we've expect buybacks increase, we're two just

Ritch Wood

Olivia, really our more from or past. the we grow think an I see so overall seen to opportunities standpoint, invest and than business, in we've maybe

is we part For as And think to opens go moving get one and committed area cloud a up share need. reason, really to the going results to both opportunities lot we'll conservative our buyback well for dividend but with we very look we we've as of technology that think that I think the there's just we're opportunity of I because been in. to our to think all it us, expand,

be hamper ability in to do and obviously any able sort of business. things available the grow cash our some way leaving to So to those not

Ryan Napierski

building really in next that that in spend earnest year. only up XXXX. add will the talked and And will We've capital process is about in facility the our start China thing I go would manufacturing

Olivia Tong

are are skin hear little initiatives in focusing new And also little like the we just we'll you at of about the imagine into of lastly could overview I if nutrition? care And in terms us initiatives XXXX, then lot a growing? focus if the how bit pipeline, a more that terms of more on Analyst product new price approachable an of of you Day. our the just going product on, guess, bit of -- But give indoor versus a points? in some on give I for have to then could much you the flavor more

Ryan Napierski

Analyst But -- laying brands the Olivia, building are -- we be will us Day on have those points you'll full of on we see coming more or I Investor around up. just that at will Yes, effectively. we think couple as what said, Day you plan the product, focusing out generally much speaking, a

continues I franchise previously, As well. mentioned LumiSpas in to do

You'll in see invest that power house those us brands really for continuing are us. to brands

noted We you will continue as lower products price point -- as there. to explore you're

Social certain portfolio socially to that we products and that on of sharing and price all entire the focused is are proficient well. points remain our way. But critical required move also ensuring

to On I skin well continues our very the -- the care balanced bit heavily China, skew news, mentioned TRXX in there nutrition local be including one versus initiatives, important us. to XXXX side, -- the on very, to both continues personal care side, is many line a but heavier although on the the are

of types product related nutrition year those markets. of So throughout throughout initiatives our are many sprinkled the

Ritch Wood

customers really the weeks. couple we more that did, here clean, with live to opportunity sharing philosophy, really of plans important demand solid ingredient be effort. today. product hard forward. focused initiative ago, different to Good to that in as transparency, is believe and indoor a able And brands that in we LTO world two going They look not really a three or an pipeline say, to years with these of build they we relates we It's demand really, forward growing, it an Yes. guarantee pure to customer to big the it's in that but

down going to going be So that customers. very, we path a believe to motivational our very is we're

have think But and it progress point We'll we and vision customer I two fits demographic it this the exciting our going actually right in weeks. good in they're see that forth. talk again we've later love believe products some the so we made start will and for to the company. to front into progress about and where to that year

Operator

Thank you.

of next Ramey Tim Our Pivotal Group. Research from question line with comes the

is open. Your now line

Tim Ramey

not you have way, new coming think in of in emphasized might percentage up at, the from of products the where you on time. go? I'm we're over say -- sure Do we have where Ritch, this exactly anything you expressed there of revenues your we metrics specific it but certainly to terms progress idea of ramping

Ritch Wood

much building something That's and that our our a have but brand. more with really great be question, and watched time, we're we Tim, changing over philosophy strong agile to products

So has products focus want going our That's nutrition a LifePak is example, them updated those two not for way want many is years. we continue not that We been take to strong number supplement product for really forward. to to probably that the update regularly. and

and into technology going product. there's So consistent innovation our new

You'll packaging this at see and out end it that's new refreshed last of rolling year. in year into the our

new big and it new it's look So our to going will again, fresh, of will try comparison strategy, our think it's customers. and new from that we exciting look a did product good different that's probably to to come the actually look than I going different the so path, But a say, to not what in the products. revenue percentage

Tim Ramey

somewhat CapEx I'm Do I you intensive if that sorry. And the forecast for then side. IT gave the a I'm it. also cloud you just on yet you have to moving missed XXXX? So less guessing CapEx makes it, for

Mark Lawrence

range we give our No, depending to give $XX be you to to $XXX million now. on the in million It's it it, out factory didn't I'll going in but build somewhere China.

Tim Ramey

that China? it will most And be Okay. of

Mark Lawrence

to No, range factory would about million million somewhere in $XX China. the in be the $XX

Tim Ramey

been expect a where we you positive a that one should but way. at the just bent to think South like there we curve level or Korea looks and regions, And I Okay. a slog in it least stick on to know in wanted there, could you've high kind market the Is has growth of then 'XX? slightly

Ritch Wood

we what end saw the year. toward very we're encouraged Well, with the very, of

product. successful that XXX-based do product to traction compensation initiatives the at growth, customer Nu get with we we've product, China, and the really where positive, quarter we really fourth that where in acquisition going customer Skin changes that encouraged call saw a we So new our we around forward our Again, of the We system increase. how brought did. which restaged able we seen are great products were forward, two strategy look Velocity to there same were we we time, primary

that And forecasting encouraged But so in guidance, Korea been we're our for quite we I'd year, market. around, growth It's end this low say on our and single-digit probably with looks but that this business do show turn in year. growth is just quite like in conservative we've encouraged anticipate what but results what in year. as saw of we the we continues the to this

Operator

you. Thank

line Bolton of next the Davidson. DA Our comes question from Weiser with Linda

Your line now open. is

Linda Bolton Weiser

I there in change that are in was many in down, leaders, at of but sales that's regions year-over-year been wondering, looking the markets. your trend many are just these

it's been the about that's of that if X%. decline increases Americas/Pacific have So leaders been just in that don't know, know that, don't up. yes, has you I about would being one down the out -- Can just versus really I like talk I the think kind why previous become guess just quarters? can a And you I stood was that the sales trend talk because only

Ritch Wood

Yes.

impacted hyper The has Latin to level which Americas in detail market, Argentina, our I that me Ryan, extent. inflationary the in just Ryan growing add impacted Let really to some America the Mark and maybe, mentioned, slowed can environment speak call and fastest or it. some is think as that down business high was then mentioned

the the throughout what end nicely. What the about place develop just and sales and projected. year, the of leader incentives to to down that continue quarter, some it improve generally So launch we which we a reflected these to first China, leader number a of numbers, in that's come sales the we're then year and our that LumiSpa other year way where strong ago steady, one the had in drove the continue response some in numbers, with is were that encouraged in to jump really is

year. not that? year-over-year feel I the to number So because of launched comp in Ryan the about our quite sales telling last good direction is perspective LumiSpa leader you add my as of and Would

Ryan Napierski

that customers would relationship the growth. on really has acquisition on and add I growth. acquisition evolved of relationships, somewhat. only between race -- about kind so we we're customer The the The our really customer sales the excited the as customer -- leaders focus

So and of the -- the to quarter hard compare that. it QX is activity impact

Linda Bolton Weiser

Okay.

if were -- Americas/Pacific the U.S. just just at say, the down the U.S.? look you been at have like were or So just you to up if leaders and sales look in to with

Ritch Wood

quick. up pull real that gonna I'm

down I bit U.S., customers think the were down were little sales leaders a the down in yes, about X%. XX%,

the our slightly compensation in I and to think move are part is requirements of down So that -- to There also Velocity. with change lower the new plan.

very more showed than strong, number little of have. we it's U.S. business So that but bit Overall, we've of other the seen markets. in some our sales some consolidation, say generally the leaders I would a

Linda Bolton Weiser

pattern Okay. something XXXX? about recent And for every new launch about two a of then can that think you've possibly kind major years shown in of a Is having years. we

Ritch Wood

personal done and care. relaunch. launch we a brand it definitely we're that the in that nutrition the product product of probably I I major bit focus past, will given take will side, innovation investment, new key a our don't doing -- we've key -- has product been swing be very little the a It think LTOs will the put to there be and be with more won't significant over as but same

Ryan Napierski

XXXX couple going an Ritch brands -- as you just see will to multiple really across beyond. times, and a Yes, mentioned enhanced see you're Linda, you're innovation of in focus on

we'll will of would be more be product more I time. much initiative think initiatives, less single brand so, or and through that for this the sustainable over we probably about which looking key And lot multiple driving explaining one-off will brands results be a the multiple drive and powerful strategy

Operator

Thank line you. comes And of the next with from our Wissink question Stephanie Jefferies.

Your line is now open.

Ashley Helgans

this Hi, for Thanks for taking Steph our question. on Helgans Wissink. Ashley is

about should constant X%, between to X% at expectations level? currency leverage the we Regarding how cost sales think revenue the

Ritch Wood

X% We like when growth confident to X% we growth, could similar. at be that it X% started by all back of first as encouraged rate. and XXXX to we was really what to X% felt We're we guided looking of

XXXX so same rate. do Mark high on And you growth be from that? maybe comment We would we'll with a we're to what believe, expand level, that starting our able margins

Mark Lawrence

what for point think improvement this our year operating I basis we're is in margin. roughly in modeling Yes, XX

Operator

question next the with Lane Thank line Doug Research. of you. Lane And our comes from

You proceed. may

Doug Lane

China large I a very that talked growth certainly and of comparison. organic operations guess comparison the X% we've impressive they top were on on growth and X% in about pretty the

the perform well. So business to continues

operating In fact, ahead we giving looking income non-operating was we in but for, of where items. these the back it keep were

so what this the quarter exactly XXXX? that And impacted that about the currencies from should modeling think going and just into income a we how where standpoint, other

Mark Lawrence

a continue most We nearly then currency it's really to be we're also currency becoming for is and us. was RMB longer mark-to-market question. from an great Argentina fluctuations assets of inflationary. our many face nearly in the to where for being important large our them the in for are of highly highly a pressure The Chinese being markets our from subject us, of market Those but were inflationary very and we are subject in no us all Southeast swingers -- we Asia ever would to have really It's to biggest we there. market Intel coming swingers big with XX all of and overseas. profit

are markets we of currency to those in subject so swings well. as all And

currency our guided for X% to the year, we X% headwind. guidance at look you If

year, an So a the of particularly this currency from we're this is to uphill be where a going facing in to year, first battle perspective. going be half

Doug Lane

could can forecast we negative as go other assume income there negative would on well? a Basically your when have be impact together? line, to So top number you currency

Mark Lawrence

a We've do. job mitigate fairly what they to good is of think risk. -- done Yes, I trying a that

If you large remember happened charges. or we QX and have what in QX, rather

done to operate to comparison a We've think of that it was going best movement balances I a the As and to try the impact in they to business. FX that $X.XX relatively in around which large still We is our quarter, the our amount exposure China, have mitigate manage current an still be on cash quarter. about intercompany in world. need considering difficult to the

Doug Lane

make sense. That's

yet marked the quarter the in that for X% So year?

Mark Lawrence

is quarter X% the year X%. to the the for to X%, for impact impact The X% is

Doug Lane

per No, the income I line? the of translation foreign in the I'm share -- if impact earnings other mean, losses asking currency

Mark Lawrence

next For year? XXXX or

Doug Lane

XXXX? For

Mark Lawrence

in XXXX, QX $X.XX in QX. we the $X.XX disclosed and

Doug Lane

say you was QX? it did And in what

Mark Lawrence

roughly Yes. Right I'd $X.XX. it's just now say

Doug Lane

Okay, all -- hopefully to right. And smaller all there be we than year, is but a back that will that going somewhat this number won't be so that? get

Mark Lawrence

that hopefully that goal of is mitigated The we much risk.

Operator

from of Beth with you. question And line Citi. Thank next the our comes Kite

line open. Your is now

Beth Kite

selling and social markets idea in was about thinking heard biennial that back to I the 'XX. some going new going of in 'XX, were tested that convention about the lot to we across be October at products just of a

for initiatives now us the which of a So that you Can that that that this sort products give some we XXXX? past have selling maybe have that. What year context learned how And you of social inform of outside successes? around full some year? were you might from

Ryan Napierski

question Yes, absolutely, quite you frequently. Beth. ask this And do

has we of market, attracting say new is customers couldn't as we seeing at a in have good rolled we of become did out been effectively. So XX at are script. as those in demographic times. just various about. we the us one. those I'd various been have but or several -- that it great us, been that test mentioned a most think of out rolling really terms introduced XX to product those talk were XXXX launched, attract just end those little learning and markets really you learn. we're by work live varying one historically It's results concepts year I for then a Many something the And like of for should We notably many of really Powerlips concepts franchise as

work that others driven are I need a and margins further. continue order markets concept So in a to have those around very that that. out We've concepts that's interest continues been into seems to decent well. well. to great out to really right We be get and dial that's to it great be promise guess that on favorable, the gone good were Dr. continues and had one as and There Dana to in see do in many product rolled world we

with product explore continue we'll before. to experiment new So we concepts, like and did

that we socially And products quite price be is last ability of for throughout our like role. the higher us are shareable think a or that bigger the maybe roll is the learning we found every of historically I the half one that product. a maybe has to course and LumiSpa, socially by actually year haven't seen many our socially products of points that as particularly be by

goal And better -- leveraging these our ensure tests of the really entire so to portfolio from to shareable that socially has are and portfolio. learnings the our many that products entire is these

Beth Kite

seeing that so I'm thinking if be product fourth sound like only were test sort ask like that you about of we Because quarter phase, raw will? in the would you that one

Ryan Napierski

Yes, we packaging general very in well. concepts -- there consumer all of margins need is that best to very We we that of to in effectively. it. good. that raw product yes, we on scale argue tested one exactly, to response work is to the I is I'd And continue can terms make mean and just fact, But to work ensure just of certain, need concept that the

Beth Kite

think in we to access the and Are debut to to quarter of markets now the market are also, LumiSpa. in which roll-out then one that keep the first 'XX. in quarter? second mind? us between of Accent more idea the tell ageLOC for any sort pivot in And going could fourth I there you of it's of Are terms So nuances broadly

Ritch Wood

easy we did the and to markets like quick three fourth be in. will get it quarter, that are it because Yes, there only

Beth Kite

Okay.

Ritch Wood

Asia. China difference will or markets half a the big Southeast Kong, Taiwan Hong that in with one XXXX being primarily and first think April. is It two launch, I be

QX markets the the Accent China launch will start So be of to of will rest the most QX. in

Beth Kite

the One or TRXX in do the sales? earnings concept was shaped on know you two second call, sales. quarter had roughly one, TRXX questions I year Can to where let us there potential other million year $XXX may, the the for that if back full out for

Ritch Wood

Yes. $XXX million It year, the over about million was $XXX so. well for or

Mark Lawrence

million. $XXX

Ritch Wood

million. $XXX

Beth Kite

the be CFO. To from Great. exact

Now, Mark, rate. quick question actually tax on

a we we've higher last likely than years, of of forward this couple harkens at tax you to If kind had is rate like what 'XX least sort the back years to in rate, and at of looking least the there into what's the four ago, low-XXs? mid-XXs three maybe the are of to Is an work more there the opportunity comfortably tax opportunity?

Mark Lawrence

is a There I opportunity, it'll but little bit longer term. an be think

guide or more more quarter profit be given So quarter. for be higher generated that, example, the tax be by world. it that be tax will the A, to If China rate in that Korea, indicating rate and region, driven tax the around will will generated fluctuation will variable, we really our did is profits XX% higher so XX% where the in in

those and range. the on that XX to to careful been adjusting try markets in We end be lower structure to or potentially things. unravel that XX-year range, bring as have are of working the against structure down up need very operating tax we're you below our set actively tax you us and But that nearly to

Ritch Wood

profit. that lower to line is drive U.S. getting bottom the But

our our on particularly And profitability, finding increase to in the ways -- are opportunities and U.S. profit, so we definitely our market. yes, grow business, continue we focused to to

Beth Kite

I if one, final one modeling. on may, And

quarter add the that I around. you still convention for your to of every G&A the have in for magnitude fourth event? think the that roughly the incremental be It that for thinking assume the year. bright again, to, is sort moved event. fourth this Are about year year kind of million Is quarter for of global And used full had you in to fourth $XX year? could your that about spend to Just the so, G&A of quarter for the if big G&A know going other I kind

Mark Lawrence

event We're in less stages million $XX in planning that for the range. that's the roughly in line. or of budget, But that's planning now. more the we're Yes, that obviously

Operator

Thank question Mark our line you. with of Astrachan And from comes next the Stifel.

now Your line open. is

Mark Astrachan

ask But I currency just apologies neutral try the parts this bit of so to and to Wanted and sales And of And then what like I was leaders were was the earlier. not kind growth of sales X% of with of try to so reconcile just touched quite kind a leaders if sales on to sense a going there just wanted moving the a on tuned what then China, customers. growth, on was a but tougher bit variability were in late, comparison, drove in down. and up that there the obviously stronger get customers there? get the I

helpful? maybe get how with just single-digit about can reconcile puts takes to 'XX kind and that growth be high you talk would in that you and if So of

Ritch Wood

and is be we continues to able opportunity we China were a see what happy to great really grow. be to

of $XXX China. quarter So million $XX million of in in fourth the of of our was that LTO XXXX,

the throughout our base the a fell results the But been So driving anticipated, year. that quarter both team it good was leader as look customer number in push and that consistent strong a end big we're year against. his China. had fell with Ryan and the and of QX and is down, we in has customers progressed. was big the projected then good sales down Where comparing We really solid number then really XXXX. And seen our We've of at XXXX. as sales in leaders right focus

three number as and customer way retention say six the the show, move good increased of or a customers on to is particularly had beginning that gives next a the of the really we've base over and into year. fourth our it's encouraged number in last quarter us So we months with

Our to grow. grow to and base our the will our our ability the and to that leaders sales need business customer success grow be fact by there driven has

the trend us we've overall, direction about and good additional confidence it think that's the seen what to gives market, good growth year guiding we here I that we XXXX. enter feel feel throughout as the yes, about we So,

Mark Astrachan

just Mark, cash to switching then, flow. And

moving XXXX. It the of reverse cash in How or was on in working if that that'd there? some any be should seems sounds pretty and 'XX for big think a give about that of million you Does $XXX parts number for expectations sort ops headwind. can color capital from roughly helpful? So we like

Mark Lawrence

say will weeks. at I that a of of Day/Investor QX LTO Day two that was 'XX, in that large Analyst Yes, in into early we'll with created lot of I payable. an think that's detail This our a something commissions QX 'XX. go in around

in cash a give So 'XX. the at a operations 'XX. or 'XX itself because down brought you up Day. of have detail lot in we not We'll the large from should that didn't be in reflect more Analyst artificially same That QX LTO

Mark Astrachan

we it I the to was revenue Any a that? view Why the guess, is in wait just standpoint, customer about try quarter was I what to hear on I more productivity to was want mix out, think down specifically standpoint? per China. be a back productivity. lot so from How the on might there helpful? that. QX We'll from in QX? figure to question to want I mean going versus it go and

Ryan Napierski

growth I to really, Yes, function think right the denominator that's of the more revenue. of a

are the size mentioned So customer back the were if basket to the repeat around retention way, initiatives, Ritch look by we the some at going we purchase these which the repeat typically, order first point than of the purchases really smaller able it, generally to typically. increase activity, month

divided So customer. perceiving you'd dialed but that looking what that's in as we really by I'm be specifically on revenue China way, that haven't

Mark Astrachan

go will that correctly? on what be back not leaders the the So as focus I customers. sales before Is forward, the heard moving we

Ryan Napierski

the business, I that maybe we our stated to strategy, sales leaders No, will while anticipate correlate I better think to customers. drive think customer -- better would continue be acquisition we

quarter. generated QX quarter QX I increased the think comp in leader year-over-year really sales of volume on amount the significant the our also LumiSpa went introduction. of from revenue that XXXX issue that was and the There that a in the amount in based

interesting a are resetting two we're and it's QX, us those activity that that for But then from anticipate to So our months indicating customer five four, really quite initiatives at numbers and it or new the well QX as retention frankly again, benefit call customer looking last, the are that we'll proving to these of that growing some at XXXX, China correlated. least good where of over generally. in out

Ritch Wood

that they drive I have made think, have going to important denominator specifically grow. on in particularly both. months But to note to we efforts focus into grow a recent both year. China, we're in what's this how But see shifting comes to little We'll if we it's really some it and this Mark, that's year, the that bit.

We leader to and customer we have have have growth. sales growth have to

Ritch Wood

Thank you, Mark.

We who attention the very in I make of call and to Okay, year any questions think and to forward forward will questions. Investor appreciate weeks. all your you on at two great the here Day of look that's able you much. appreciate sure be the a and end this seeing Thank look to it our

Operator

Everyone, Ladies may and This gentlemen, in thank you does for and all have a you program, disconnect. today's wonderful conference. participating today's day. conclude

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