NUS - Earnings call transcript Q1 2020 | Nu Skin Enterprises, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q1 2020 Nu Skin Enterprises Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]

to Pond, conference Relations. Vice like speaker to now Scott today President would hand over the your I of Investor you. Thank Please, go ahead, sir.

Scott Pond

with Scientific Mark Lawrence, good on Financial Officer; Chief and everyone. Joe Chief Officer; me Chang, Dr. call Chief Executive President; Christy, Wood, are Napierski, Thanks, Ryan and Ritch Officer. afternoon, the Today

anticipated. actual complete forward-looking Please filings those involve risks statements On comments be will These earnings from today's today's to for these materially made uncertainties refer statements. results and release call discussed SEC differ or that discussion include some our risks. may and and of a

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

I'll Ritch. turn to the over And with that, time

Ritch Wood

Thank join into what you you, global about in Scott, and mentioned then, pandemic? some early coronavirus we predicting impact a on February, Since us outbreak the our regional of Last with time business. our spoke results the we as Thank grown time taking for of today. difficulty began good has afternoon, everyone. to a

workers at the of world. efforts the On out behalf responders team healthcare And for around grateful of workers, the hearts Nu essential go our and impacted. Skin, are entire to all we first those

support efforts. For sales and and world, leaders working donations including the our safety of COVID-XX protect we part, communities are employees, relief our diligently to our to health around the significant

this on to a is to remotely. empowering not flexible immune business of magnitude, are we fortunate built Skin have While people work model, to a Nu disruption

our For than XX% processed of online. revenue globally example, already is more

China. government when meetings learned year Mainland gatherings in of significantly XXXX restricted also valuable lessons and for in much actions the We

and that reality. the is This our to demonstrated operate including experience today's representatives fact $X.XX, business with we of quarter currency revenue foreign our per results X% prepare sales above produced $XXX in share This guidance, has earnings million helped a headwind. first by and of

remain Our their providing focused on sales customers. top-notch dedicated and to service and their resilient businesses leaders building

steady the nature which sequential numbers and of basis, the nature on sequential quarter a a where our the notable, given sequential held cyclical is customer Our typically shows decline. first business,

year-over-year, our down primarily decline due the XXXX. While during leader numbers sales to were

than We pleased better seasonal decline the was are in the typical. first that quarter slightly

remainder giving our activity supplements We for optimism also the strong year. experienced seen us demand have stronger-than-anticipated of and first the nutrition for this quarter customer in

down expected, Mainland China As was our business for the quarter.

a have And customer in training of we XXXX, deep digital improve sentiment and sales We understanding provide to network. implemented tools Chinese to and market. creative the strategies assist the developing throughout

of products the the improvements the our On knowledge, the our pandemic-related the seeing balance strength second of in of expect easing and power China, to the year. the restrictions of continue signs we in this quarter throughout of are institutional and gradual

stepped leaders of to challenge. the markets, we're the way other proud have sales In our up

EMEA markets the sales anticipated activity. Sequentially we business leader our guidance. with more While gave than stable previous and and COVID-XX global customer the in impact held had improving from Americas the time the

markets product half XXXX, quarter. fourth the slated growth launches of we return these strong with for to Additionally, the back expect also by to

certain largely given well packaging performed due pandemic-related disruptions supply segment and caused by manufacturing materials from The modestly, the ingredients circumstances. shutdowns. third-party on Our chain segment suppliers to declined

stable chain investment to Nu Skin strategic time be product are businesses disrupted. significantly enabled supply these in has being when a at others our Our

add in and our to in growth capacity, During equipment the quarter, later capabilities opportunities we and invested year. will additional this manufacturing which

our return value dividend business the for of enabled by increasing strength generated and our repurchasing straight us our cash balance QX sheet XXth in shares. our solid the year to and Finally, shareholders operations from to

While a COVID-XX safety. and have while impact, financial or duration severity a prioritizing we position of and this global no and sales the their one benefits strong our health of be employees customers, business leaders can certain model that

Overall, QX half and confident to generate future in are we in through and on believe our year. we executing our feel are this the trends April, the seeing continue on which based plans, business of the we growth about second will of

great well continue We initiatives leader our as and customer see will invest manufacturing as and sales a to capabilities future strategic in ahead.

turn around global to over Ryan the our more plans. provide business call our to now will detail I launch Ryan? and product

Ryan Napierski

place our a to leaders responded crisis call, community. the serve last everyone. proud our of afternoon, employees and I'm Skin different needs Thanks, The is Good earnings around so world in this and but family broader the our Rich. Nu the have since how certainly of world

While is vision, is and long-term mission commitment this global business impacted pandemic our what hasn't future. and everywhere, our changed to our optimism the the about strategy

with the customers which their products and building with actively are looking built need digitally uncertainty they We've to around business Skin, resilient socially world businesses. committed Nu to We're at their historically people in income. performed leaders well their economic empowering tools of to innovative enabled and for a has while ways supplement our serve times

area of it's led learned heavily. experiences to we for done XXXX feel sales proving educate already We as our markets face-to-face an many train in many transformation limit beneficial, that in digital-first business that invest technologies a interactions. and what implementation empower are What where the remotely. from years. leaders years Our conducting current continued began tools and particularly to better to few fortunate the It's our they've we've is force. to And our accustomed of ago circumstances

training geographies, to teams. education, month. broadcast with each and promote online Asia of China, to of thousands instance and views For now through train tens our the Southeast is leaders and operating seminars leadership, Americas, our virtual customers in In products their conduct fully other

As look to I want QX our specific we to few a out markets. globally, results call

environment over beginning is as it return people to previous and year, to We're down performed business in slightly see China anticipated. was normalize back than China up business Mainland, our work. better While the to opens encouraged

adapting how conduct where business been to digitally past are our new restricted. -- meetings the leaning Over and to in-person year, leaders a learning reality have

invest to more new migration product quarter. tools training released to implemented online the continue with We've platform also in enable and first promotions. a We expos in digital digital this

With outbreak. in-person these COVID additional digital the capabilities, are we our meetings. performed of general, markets following with reliance In expectations in reducing our line on the rest largely

harder As than markets by Rich COVID-XX. mentioned, were Americas and hit our expected EMEA

However, trends we're of from social levels activities. increasing seeing sharing benefiting improving

the QX, in to While performed Korea quarter. line anticipate South effects we potentially second COVID-XX with our expectations more in impactful of mostly the in be

in improvements Indonesia, in Vietnam. and with with Southeast line Malaysia expectations Asia performed

this reflected the relatively from second first COVID-XX our significant While will quarter, which is well region the performed our guidance. quarter, in in we impact anticipate closures

We stabilizing as in And remained Kong line in in we're longer. with optimistic factors in throughout optimistic place these a revenue in remain they will remain see markets bit in stabilizes. despite the we the improve with Japan, return improve continue business flat that government-mandated world that virus Hong and relatively fourth to the to will our expected considered, restrictions And to growth quarter forecast. and All year are line performed while Taiwan, that expectations.

our in as our our environment. long-term operate focused on strategy priorities for we we executing business evolving Regarding XXXX, and this remain plans

touch experiences From perspective, our Let across a we're technology our customer digital of me on call. enhancing provide all points. some updates focused since last

more mentioned our imperative than build transformation. Rich coming that the made As business global of online we through digital to with progress transactions now XX% our we've revenue continue it's on with

with VERA, which tool to called plan digital provide a upcoming our to in learning machine leverages recommendations previews new together launch QX. we product product Next, and intelligence artificial personalized

Speaking product broadcast to around innovations, pandemic precluded we and our of our products, new launch from while Team holding Trip, our align our the Elite a held global introduce plan. us global instead annual leadership

to will youthful share details latest microcurrent including promotes We customers that Systems our on-the-go ageLOC looking with our system which Device proprietary Boost, Beauty skin. product number brand. upcoming at-home an This introductions the be provides treatment device one addition of

the skin new everyday adapt and like with bioadaptive ingredients rays We innovative stresses under to made clean brand. environmental Nutricentials blue skincare will also pollution. line worry-free help These announced and products light the UV

proven in These preview of similar will half the market a throughout launches with two first LumiSpa introduce XXXX. our was local launch follow and global process how QX products to

our products. supplemental around others. from We new with growth incentives new spur to interest digital we've see as believe introduced using social home media that our can the leadership to for with do programs, we they people in of Finally that increased tools are opportunity empowering as looking opportunities income the connect we'll launch towards and build our world

finding and our have customers. sales continue increased also opportunity We launches to some But new will and our our business. in help product may believe force selling if economic difficulty products issues this worsen, interest new

will So move that previews we are landscape the in continue as to and strategy evolves. product forward broader we improve XXXX confident remain long-term business summary, and optimistic towards as our in our our

Our end the experienced and we of year. team business our help that towards innovation confidence strategy business this give can growth drive and expand return us us to global to

to And with the I'll turn that, over Mark. call

Mark Lawrence

will results for I and through quarter Ryan. the full walk Thanks, our and financial guidance. XXXX year provide QX

and the Investors find website. can of additional our in Section information As tables reminder on supplemental a slides release financial you on and our our

foreign negatively or $XX top million came our revenue approximately of X% $X.XX. fluctuations. Earnings currency quarter $XXX unfavorable guidance million was per share range. First earnings in end per the revenue above were was share by and QX and impacted

fixed Gross The and impact. segment of revenue, margin a revenue, from to the for prior in overhead larger our year FX the quarter difference quarter. making up compared comes XX.X% on XX.X% manufacturing percentage negative lower was cost

expense prior XX.X% revenue in compared year. was at Nu the XX.X% flat the as Selling of was The Selling for the was Nu a in Skin XX%. XX% expense year. to margin XX.X% business gross to prior Skin compared percent

our prior quarter. expenses reduction efforts administrative and actively Our versus a manage in the in $X expenses resulted to general million year

base. and incurred expenses leaders, sales in prior additional our of As largely XX.X% offset the costs sales and meetings, trips our by was compared revenue employees some To security, the to and protective were ensure year revenue, additional it a due tools. related percent and lower to These expense cancellation of SG&A cleaning we management XX.X% the proactive safety to workplace equipment, efforts. modifications online of

attributable reflects losses. million year. $X.X compared the to line The higher a expense foreign expense, income million other $X.X largely in The increase currency is to prior

dividends stock repurchased our in authorization. million $XX.X $XXX and paid we $XX.X quarter, with under of million million the remaining During

for rate quarter tax the XX.X%. was Our

$XXX operations, our cash quarter on revolver. balance we cash $XX generated in the increased have the During our sheet million from on and million available position

million We also it $XX the in our and continue to quarter. inventory by actively further manage reduced

and are and plans strategic navigate return successfully financial position liquidity Our strong. confident is to to ability pursue the value And in maintain shareholders. our crisis, our to flexibility we adequate current our

the of outbreak our Rich noted, anticipate impacted due results to ongoing we be coronavirus. As will the

of more We effects continue dollar, adjustment of impact than are with Due the higher than earnings FX, to $X.XX. our in $X.XX X% end share per XXXX guidance. making to range, annual larger we also FX estimated billion see slight estimated the impact revenue strengthening a billion we that $X.XX annual original projected revenue to originally $X.XX U.S. of is of with now a our and to high our to had

a a assumes XX% and X% impact foreign guidance negative Our currency of of tax to X% to XX%. rate approximately

Our guidance of to X% foreign with This is a X% XX%. negative of rate share of $X.XX. $XXX $X.XX earnings $XXX million quarter second to million currency XX% assumes revenue impact tax per and a to to

turn call the we Q&A. for will that, now With back the to operator

Ritch Wood

there? you are Christie,

Operator

Wissink Our with Instructions] Stephanie first from [Operator question Yes. Jefferies. comes

Stephanie Wissink

Thank first Can you. just us in things. wanted far some to field? couple with the product with insight everyone. to track just of Hi. your to so launch through we partners should launch prior just to a But the quarter. on What's launches your you've think And in done? respect that you to give maybe afternoon that unpack Good that everything fourth been launch? relative how communicated I

Ryan Napierski

That's great. Yes.

couple yes, Nutricentials will -- and place preview foremost, our take for everything and quarter. a the the launches most that follow-up global U.S. fourth ageLOC will on fourth lead so First And first launches be our are of then the in ageLOC staggered the The so our happen for is Boost product track Boost that for for the will with XXXX. half Nutricentials. markets. markets including launches quarter in of the of There will

utilizing It's similar how LumiSpa, launch instance, of for we global how As $XXX launched are to far around those, a million think was as which you process. kind very we launch. about our

a of looking business kind the we a course, direction but towards Of is bit that are in as different well. state, of

So, both follow we global will at that launch products and that process will point.

Stephanie Wissink

the the to number experience the I in volume that approach a would limit great. launch again way? Okay. That's recall similar similar in of I And process, should Mark, units think it think you'll LumiSpa or you if we

Mark Lawrence

Yes.

I sure we the LumiSpa, that to that to up world we a stacked inventory launched think have careful and great were around ability it wasn't very the our When same the that process that's so distributors product initial that shortly memory. product. following at make ageLOC after We'll could quickly, sell-through be available quarters launch. that -- follow they the the with generally Boost that in

Stephanie Wissink

Okay. bit conditions. And on to widen on the the digitization just net changing just out what are like learnings your conferences. large-scale experiences Great. learning And then extrapolate experiences question the particularly the another Can about you your participation? a of that some little you're able of your you

and opportunities conference to year event implied How and rethink then the of years maybe reimagine of in structure? or forward should we balance that terms really think into about the the

Ritch Wood

for has we allowed This were last meetings I think started it Steph. in-person really a us learning to Yes. not in And good as really year China. have been

putting we as year. sales allow help trainings So, rolled leaders of been into tools our beginning we in That's digital the began do to carry helpful business. place their this and on to

communication communicate add Ryan in would our to regularly we little frequently world. have as I technology you well. much to bit structure force today We've or adjust sales very need continues better motivate going employed forward depending as than has sales And transpire. we've salesforce and that? responded the event how and how would leaders say our incentivize the will we with Clearly, around what past more to on our had probably a But and to this

Ryan Napierski

Yes. our live that events all No, think to I that expand hold. of we

the do market do events You'll global years every on other recall that year a the level. then we we off live event. individual live at And market

broadcast. been first digitally meetings all So they're and digital those rechanneled so of have

down been many digital-based operating that to So, have on communication. been really so doubled have wise we've Rich's on and front. trip point, we're Incentive how postponed really that's

Stephanie Wissink

about if a seeing what Wellness versus last division. and then bit environment you're two? customers share right a quarter-to-date division major And talk maybe about great. some the bit little maybe your the also you're just two the Okay, now? brand acquisition throughout saw in of new patterns the that And seeing quarter you little Nutrition the Beauty that talk to some customer in you platform divisions separating the the Maybe could if the we're about

Ryan Napierski

Yes, with minute Yes continue but the putting sales Care shaping more product really TRXX that predominantly our minor last in to that perform in our might debated Nutritional historic everything a done thought script I in today related has actually throw body I the recently line pattern we've Personal off. well. the system actually seen divisions and Nutrition uptick generally

And so the there. that's of kind shift

on our we're movements some higher in sharing as seeing well We're products also doing in kind that well sunless seeing volume tanners social of that is LumiSpa front.

that's -- brief So but product of overview. kind a

management the been on manage ensuring we're really very customer last business. improving acquisition very we very platform relationship across we've improving three As focused our to digital a our greater to focused our to efforts customer-obsessed that related approach taking for capability, product how our We've been our experiences promotion nuskin.com as on far focused focused goes, on China years providing on and value and customers. very

the in do you the around continue efforts those China to saw customer well as very generally. world. continues And numbers

forward. And remain of so will a ours that focus moving

Stephanie Wissink

for Thanks guys great. Okay, the Appreciate it. color.

Ritch Wood

Steph. Thanks

Operator

Deutsche question next Your line of the Alwy Faiza from is with Bank.

Faiza Alwy

hi. Yes

So, think markets I across you look talked as wanted month I in a of the And seeing a you're just China. April? the had we rest ahead regionally to little what what of of the think I So, previously bit the when about were year? different XX% to you anticipating talk XX% embedding in sort to you're decline

China? So, maybe Because if that seems come China a than how bit expectations. curious I'm are better earlier little back about thinking you like your it has or

and takes year? of some are to the of the look region some you -- rest as the what just puts So out by

Ritch Wood

first really specifically. Thank Faiza high quarter a acquisition from Ryan level for that question. in we mentioned good the you as just customer saw

new in rare. uptick actual QX the number business is versus an coming into which in QX the So of customers

strength a that we is which then April Usually, into bit that very and continue see decline us. encouraging little we've to seen

our modeling adjusted haven't China. for annual We

to the at leaders we product although throughout anticipate as by strong continue the launch of leaders grow half would fourth strong say year, in the the the look region We year. here sales ready launch first for sales XX% new second And We'll go starting with a down this towards think to that base the that's product of in build. count and as the fairly I see strengthens XX% year driven consistent year, customer the strong with to half we'd the quarter of year fairly it region. throughout I a a to which the end to customer in

Faiza Alwy

much. you, so Thank Okay.

Operator

Your Lane next line of question comes with Lane from Research. Doug the

Doug Lane

Yes, afternoon has weeks. your to eight last changed over in four hi, thinking interested everybody. these good I'm how

You've the and Beauty got lines some Device two been the product you've teasing time. for

following environment So attractive quite be like But a that heading we're with item nutritional high in understand it seems as the supplement I not into item. ticket as through beauty may a that.

can quickly products? new on focusing nutrition pivot this to on how you for focus beauty from So,

Ritch Wood

and in have the we products lines. together. that good attack idea harmonizes the beauty good really the actually outside Well, wellness from both health inside And really and you and

want really good we new around advantage have which this we play that, which again, of with Personal that that have strong. we device really, well. take Together our think a Nutricentials with momentum line to Care line why we We is is of will think

the behind nutritional focus put product We lines. continue to

initiatives this year have and actually there. So, strong year nutrition will focus some we on be the big line next we launch don't our good have a

product our seen year we've Ryan Personal But in selling. area. this that mentioned as uptick anticipate some strong. product nutritional sales momentum Care been to focus TRXX in supplements naturally launches we've that we're will to and our big other continue the with be the interest on gaining in We So

Ryan Napierski

the asked would capability terms we have we -- add, you supplying have this Doug, very been manufacturing just quickly about or Ritch to previously products. when about pivot demand of pivoting. maybe across that mentioned -- now able And this with in I of increased thing talked the is portfolio One

a course been about. the something think that's highlight over period this strength to were just that eight-week four Sot you asking has I that real to of

Doug Lane

you. Thank Okay.

Operator

Tong comes next Olivia America. with Bank from Your question of

Olivia Tong

hoping Good a bit more Thanks. Great. afternoon. detail I was give could you the little on guidance.

it's bit little that a companies it. have somebody efficiently different First, since of their lot kept that a to guide you pulled see

a talk just So few there. about you bit your talk topics. of And in there, underlying terms little can decision-making about what then a

wave you're what in environment portfolio? the in typically during recessionary with happened Whether of potential Thank periods in terms the assuming various what's And broadly, just First, you. then lockdowns assuming macro various lift winter? when second across of anything regions? you're your terms

Ritch Wood

ups those these hit of good product I've because of really able of All Mark been and can you, them the for during a on we've strong I this. either number to CEO periods hope add we've interesting times It's been as lean been on questions. to economic slowdown and where here generally, Thank an all launches generally Olivia. can there's downs. I or time. And and CFO in had

internally. of the that work have year back we some economic headwinds half guidance? a did look I the year, believe our gives What So, very was provide as into from continue which consistent our we've We specifically, very confidence year into an why us the modeling which that in very, we held the standpoint. this good product find to to of gives us ability launch we has discussion believe we've that This And at we strong it? through come have had as confidence. this a in I built

to business be and give to And cash to continue gives did given in, was continue that tighten the and April guidance. a go out able well is come coming is like confidence larger then some a our see flow obviously shareholders can to We here. which confidence obviously have little we just feel us level in range. that we solid, that give performing to we of strong bit that We up

into second As -- this start came we into quarter. we the as

quarter and But a overall, the feel. that product that which see the give also guidance important of we strength is well launch see we we trending we business the in fourth

we the do But to That's been anticipate know. it's world is a hard past. same So, do know second what as the in the that, be wave? we won't probably

So we to to our on in have efforts. lean digital continue

obsessed the get be do providing very make easy and customer-focused tools find which for of everything our able sure can in. to to situation Have we're we sales that regardless in make leaders and products to it to customers our we ourselves exterior

hopefully towards work the along be come shocks and able that, to So, the path. absorb of that we'll some

Mark Lawrence

year performed only in rest Olivia would line Rich be the of I exception the continued did forecast models our that as strengthening would with in how right with with thing, the add QX right the one in as the performance just mentioned dollar. The for line is of modeled and QX U.S. only had of came we our

X% end adjustment continue of We that put rest and headwind pressure our slightly since see the on we'll a high see for increase headwind that slight the more than there in of made year. we the FX the to guidance, throughout annual really FX

Olivia Tong

I That's guess helpful. things. you. Thank two

terms the in run just First, of that lot campaigns there's way guys typically have a you of events.

promotional You and things talked trips the about as that. like trips,

about are leaders? in thinking leader you any you how how Going of been there terms incentivize Has forward, change commissions?

the March a Chinese month Year grace little as a And by question anyway. the a sales better bit similar we a than China uses quarter previous then analyst, And and New had anticipated. around force were usually to large numbers your but on

COVID-XX-related some downturn? in actually help played your performance from China that any way Or of other did So factors there were in into shield QX? that you the

Ryan Napierski

Yeah. No, both great questions.

to providing incentivizing Yeah, time you're actually exploring quite those been is part and So, experienced in key for has absolutely commissions. right. first been on economy alternative a business the some focus. the through experiences. sales key on mediums focused of incentives motivate our leader trips our force certainly We've A

But As in really at you motivating EMEA incentivizing. smaller our doing We're we and know, opportunities of types alternative that continue are explore explore time. region struggling to do the some tourist for things this providing still trips industry that is experiences.

that, combining at some well looking with as as we're experiences events. So

So to There we'll Mark been of change continue explore at there. the level. a really as we're reported; commissions same paying leader hasn't terms really out in

is that We are on focused really every commissioning. maximized in the dollar's ensuring value

So, to the no changes overall payout levels.

As far we as some I down. China seasonal perspective New slowness a Year traditionally think goes we that's and from the effect. part probably -- see the was slow certainly I that, because whether our shielded or that had and not And business over in like. maybe QX do Chinese the general of mean, saw what

again bigger the think or issue digital benefit for these is leaning in platforms. the really bigger I on us

build in-person educating. are leaders used motivating, normal new they're getting relied are to Our adjusting heavily training, where as of upon to how meetings more digital not really to the first. for And

to would we be And me saw. benefit that so maybe that's that the bigger

Olivia Tong

Got it. you so much. Thank

Ryan Napierski

Thank you, Olivia.

Operator

next with Mark question the line Astrachan is You Stifel. from

Mark Astrachan

and Thanks, everyone. afternoon, Yeah.

Ritch Wood

Mark. Hi,

Mark Astrachan

And on we home better. terms what continue correlated leaders May? One, guess trends guess as in growth? or a few of progression at point and in have are related stayed China into quarter but related should be April? what -- think the to not how this did about at the of benefit and economy maybe has questions. I But through the you be shut any really customers last April declines should through and and see the And China attention I reopened we question, building then to drive paying economy to people I you gradually guess, sales just the progressed on be sales focused as trends into talk has

Ritch Wood

Thanks Yeah. Mark.

The last number customer not really it throughout see important. to hit first in able numbers. impact. relates training we the our the did strong which intake, of sales As year the we But meetings being quarter of really have training is specifically, to impact and our lack China leader felt

of primary that really leader we're So from build customer. the ago. product substantially we -- is come sales to that were focus a we end down always where a starts year this our into as It year, as with launches back. number And this

And It proceed number leaders for coming become always through who the channel of to increasing choose them, the starts then in. those customers start having by to sales to.

that applies basically to world. I and -- of the the rest think So

customer sales We coming, leader numbers later which then we probably into numbers we coming to growth start the leader that believe to start the translate QX, into needs real see strong in when to launch. product numbers sales really hit will see

the launch from to We to sales the in successful to motivate and build. in doubt have then, continue That's no our We've force build real order numbers of seeing So, we're that where to a that develop. first incent to see product is. strong to those customer later on year. the got signs focus like And numbers. got we've

Mark Astrachan

far in any progression quarter? as So April what versus and change China, you there trends was saw through in May the of early as

Ritch Wood

came through fairly a in changed. steady, as first I to I well. and strong China saw saw We continued trends say the see just the we they anything Well lean a was with selling. significant the We saw continue we we saw Particularly into on didn't Americas uptick. social April uptick as market, as nice would in EMEA quarter. the strength, U.S.

strong. So those were trends

EMEA It's Southeast started little the China kind there. because see global U.S. shutdowns into and and the being COVID-XX, more business were as we'll and -- and then into interesting more rolled of bit by think shutdowns. significant it's Japan possibly I Asia through And we in with the came April those impacted a Korea

in And Southeast fairly you see to those trend work. people of shutdowns We of then, X.X As to now shutdown getting are about the everybody two markets similar and a of back is start coming it. out months following Japan. Asia

continue thing think continue key year. lean to that for in the people what home they're we the whether out And it doing balance to is more. the So they're what get confidence of us, tools. And able into That's whether to we to or allow give digital continue our like April. business, the I us from numbers that throughout saw to gave do

Mark Astrachan

from what so lastly, does percentage then, accrued just about different term? that? Great, potentially change point? of sheet does longer terms Meaning So, that that about Ryan payouts talking a expenses, on, how maybe Okay. cash for go balance sales? does potential in a outflow Mark from the is revenue was the of as to subscription to or of payout timing of thinking more at And or what payout ability a any affect

Ritch Wood

Subscription around that of for be different, December. there. have of in the terms sheet out we'll total sales. Thanks one real XX% there's the too. to little thing a was that strong And continues ordinary of sometimes question a Yeah. The nothing balance

So real payment ordinary. there's quarter. operations a from million the allowed in first quarter It number regular our QX, sometimes dip the the and quarter, real QX a which causes happens strong first December high because to to cash was our more in from look was strong out cash not in like that a operations commission of or $XX with

Mark Lawrence

over Yeah. concerns way, But nothing quarters. down, with that any either accrued or fluctuated last they haven't our the in there's several significantly expenses up

Mark Astrachan

you. Thank okay. it, Got

Ritch Wood

Mark. you, Thank

Operator

comes question Wendy next from Nicholson with Our Citi.

Wendy Nicholson

continue is to the the increased that, cutting? questions do to of owing expenses terms in expenses offset cleaning couple much to please. things G&A from have If facilities. and flexibility do your more you you A higher sort that in COVID-XX cut in of like you first How of flexibility structurally have cost cut? are How $X spending. Hi. My much million to there

Mark Lawrence

security, our thing and quarter-over-quarter nice that Yes. trips also facilities, million mentioned we from and a expenses Wendy did because spend reduction cost increased and that's question. is as increased for $XX G&A that year-over-year million great plants covering and in our success that canceled manufacturing cleaning sustainable include such. is The $X travel

that's continue it years think the be -- I where a believe our our lot an of we're seriously. benefits And a spend. overhead company is this at seeing of there's area now. And to well as can How to continue we're reduce we're process several commitment and careful a to to manage see we I ago. started looking and very starting with we expenses

Ritch Wood

it add lot learn learned companies with lot. consistent to just being by a be But I'd it's you Wendy, we've a that -- may forced other And follow.

centers believe to we've travel learned call For be increase sustainable some well longer-term new of going can working the efficiencies operate example, now that from operate remotely less of it things a some we as individuals those see. and homes, way can that as their forward we

Wendy Nicholson

it. Terrific. Got

will top-line year year practice fourth come to the launch? your get most how the you -- that embedding in On in in those much trying forecast, if of, a full can XXXX, But and the of but as fourth you How don't quarter good clarify I'm of launches hit start get I for how magnitude just get, can forecast sort full are? quarter granular. order for it know to to it I for know to in the off number. an meaningful to you're is from clarify those you important order

into you a know you is while scenario where and whole push might a challenging for really thing to say for us there And what this better economic the remains pressured you're if environment of XXXX? what? some wouldn't go matter going distributors the upsetting there the no that ahead worth be Or that is just of in risk fourth to that quarter your

Mark Lawrence

a great That's question. Yes.

quarter. So with fourth I'll the start

Boost guidance of launched. we're of quarter. So proxy were ageLOC out And understand thinking LumiSpa proxy we we'll some from how by leaders give than starting we be how numbers. give of we would lower you we sales our launched when the best The a to are base But don't LumiSpa. launch

But some a LumiSpa. that generated couch preview million to the have to incremental So with net we of introduction we effect. and $XXX

would that we're we so model range leaders. base understanding lower from a that from little again something starting bit sales And within

Ritch Wood

to product fourth just The we is in something thing slated for quarter to that. of also. let add me well generally, launch the there one start think, build I advance awards

So they'll the to as to force qualify in with working participate Ryan to mentioned done be prelaunch trainings. start activities. We're already we've sales able

that so it that And would the keep there's launch lot momentum to for in be keep build order going. a to we us of And momentum towards. critical frankly,

a in go the of was products launches sales I really force it and kept difficult XXXX the ageLOC environment. XXXX And moving really engaged to launched forward. when back in some strength that we those

those So on dates. hold yes we'll to

through is see way real pushing back of a times. work And it would we our plans delaying. no say or to I tough have opportunity We that economic

Wendy Nicholson

in then because It see many Terrific. quarter that buyback And that great have right you my the do to to not very was stock companies the last question. now. flexibility

totality in the for So of that. year buyback much to the you full for terms on the But good how Thanks. year? do quantify expecting guidance for you're the for maybe can earnings front in you more

Ritch Wood

forecast our any Wendy. you, we Typically, the repurchases don't of into Thank numbers. planned Yes.

purchases first operations numbers, haven't to additional our continue priority from around those see being business. cash we anything built the into driving So of but

And opportunity to dividend. later Second, we're our for to sure market debt was felt for shareholder Thank and for question. to value. a down hopeful making on. our value great be good use and drive generate shareholder thirdly, like us the you cash opportunities then in that just we looking paying it our some And

Wendy Nicholson

Thanks color. all the Great. for

Ritch Wood

bet. You

Operator

D.A. next Your with from question comes Davidson. Linda Bolton-Weiser

Linda Bolton-Weiser

if about of more Hi. China last in believe of could if felt there of coverage has there -- discussion media difficulties -- the you talk tone direct for the of some year that having you the when talk you like impacting -- or cleared bit sense I I your is that wondering about was in industry was demand Could articles sort China about was you a media what that away little were products. the selling now? and was

clarify, the what Thanks. government? of COVID, is meetings? just meetings the apart still with can constrained is also from you then situation COVID impacts? Or size by situation And there from Are apart what exactly the

Ryan Napierski

China. No, Sure. questions on great Yeah.

environment year fall stabilizing coverage I government selling. in the efforts. the to the foremost and last industry actions mean outcomes pursue to first issued according of around the So The on continue and their is yes. their media direct

have we at time. point So not any seen of this a of resurgence that in

and to meetings meetings small meeting are to last or approved certainly much. from relatively being year, or to the There small leery restrictions government -- be COVID open up Regarding too continues hesitant specific somewhat meetings, in China.

Our we're really decrease past. the to digital-first basis this continue to in-person view we the meetings, were as not continuously for as a go company in approach on is into so forward reliant we as need a lean that that

COVID on so the China And that. continues. general because We in that and that just meetings apprehension over we anticipate rely of that large shouldn't effort

on so in we'll continue And to digital. lean

Linda Bolton-Weiser

that a would you XX% Is talking you think to on what the when about outlook kind I of had call that And range. the the about that Thanks. say? margin you gross last talked still for XX% were this year in

Mark Lawrence

Yes.

in range. inside QX and -- that a range. what to I we're that from for it rest the of be of in And seeing played we model think year, QX the expect still

Linda Bolton-Weiser

more what input of something finally, And Okay. or just Thanks. I give manufacturing been or Can you related resolved? operations. then think on was that some to little and has certain supplies mentioned you your had color shortage that a

Ritch Wood

Yeah. Thank you.

coming customers really the manufacturers well an through not work to permit Our of quarter. a there, shipped to That some have came during actually their which them some is get disruptions trying from to performed back. a item out orders able being or to ingredient here of get didn't that packaging number

anticipate stabilized was But It impacts primary came out it there In fact China. products, things in really say And sort improve comes as the that there's back. packaging in we that things there. seems chain wouldn't in particularly April, of the saw impact would or like forward. I are have really of Obviously, and that that improve seeing going QX. we supply QX

Linda Bolton-Weiser

very you much. Okay. Thank

Ritch Wood

And call questions. the really you of in you. sense joining really like And can we that us Thank do of all it plans We the year today. growth optimistic you place. on our this are about appreciate we returning have as on to all based looks that's

we're to pulling one us of everyone next a are lessons a hopeful to to again thoughtful, while effort more learning in united gratifying bit better, uncertainty, make forward world that a healthy our Stay more help a a now another. grateful. on faces the So, look it we each people see the you together little we little of will little is great And deal and connecting call. fair and with so many

Operator

and gentlemen, thank for Ladies you participating.

You disconnect. may now

Nu Skin Enterprises (NUS) 6 May 202020 Q1 Earnings call transcript