NUS - Earnings call transcript Q2 2024 | Nu Skin Enterprises, Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Nu Skin Enterprises Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Scott Pond, VP of Investor Relations. Please go ahead.

Scott Pond

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

Ryan Napierski

update Thanks, towards and and core by Scott. performance traditional and Nu continue summary as joining our everyone. progress enterprise direct-selling our a model for QX we expansive our lifestyle beauty, providing company, our vision, transformation more call on today. ecosystem. plan to ongoing strategy a Skin Thanks I'll evolve wellness Rhyz of from integrated start share a including business Hello, then

trends leaders. in globally, translated Pacific. challenging South to macroeconomic China parts Most into challenges, our notably, improving to of gains while of near for trends the end to improving in Korea brand quarter part paid the Skin pressures due of in continued The challenging Nu midpoint business in affiliates with slightly earnings first revenue sales the sequential similar progress we X%. Asia range, costs FX share the of U.S., these for to reflecting the which Non-GAAP market. business including remains large per top and transformation by and environment our Despite plan managing were and the macro markets, on of out encouraged operating efficiencies. Overall, remained driving industry due direct-selling our new a core over guidance above the factors headwind despite our played stronger-than-anticipated were the we experienced second itself. Southeast several year-over-year

transformation Our for continued affiliate to well with Rhyz Rhyz quarter perform million, XX% Wasatch platform accounting and mix XX% plays revenue expect to a speak revenue Mavely by over our by at our a Rhyz and enterprise from our we role second a continue to up at moment, I'll Rhyz business. in $XX XXXX. that of manufacturing faster our led XX% XX% reaching in Growth business revenue overall to critical of grow was to to nearly total. pace,

and WellSpa behaviors, quarter. delivering of treatments -- were million than are business, core devices to points to in devices consumers. Nu drive system, million these our devices revenue the the has our into products, including deeper Skin growth beauty ageLOC RenuSpa wellness dive management iO, resulted along main in of new our In the wellness Adding $XX with new of both Rhyz drivers iO iO Let's Nu over cadre businesses. consumers' core and device weight and Skin Skin better this than Nu our TRMe beauty more purchasing the Euromonitor XX being habits produced iO which to our company our have that as past wellness and and systems To us over that named date, understand data world's year. unique X device connected for XXX #X greater Xx by helping million nonconnected new

consumer was markets energy largest we majority the in together our Nevertheless, to alignment person, in It larger goods. event sequential our including we double-digit in Americas in of X and over of leaders particularly customer in-person China, several for reminder our gains live with of in our sales growth Western encouraged along in with of leaders along an of spending were impact macro our the regions, and for drive feel a and markets the able event key the initiatives. segments, Mainland KPIs, in gains for markets getting X quarter, the our to challenging X first the customer September. continue we affecting held During acquisition just were slated environment and our even Pacific. We Eastern and key of South Korea years Southeast power as the in great we shared Asia with premium

serve we next First, launched are support over seeking approach customers cognitive cognitive previewed for stress several a built will MYNDXXX, management, major quarters. market. globe $X performance health cognitive supporting that and be billion global product MYNDXXX our the growing rapidly in the next holistic division, around to is health to sleep this who

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

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

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

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

next Shifting to Rhyz.

Mavely lifestyle in brands of instance brands more its that ranging will recently, the army rapidly simple, to beauty, technologies, Every in Rhyz easy. And previously, Rhyz at invest businesses Nu to long-term leveraging critical our influencer to and share brands a ecosystems. is social strategy. One business manufacturing and long-term Rhyz becoming platform, scale to and to beauty, roles our platform mentioned value made app X,XXX influencers our is wellness Rhyz than that that lifestyle easily to Mavely of businesses curates AI, accelerated everyday platform towards play working Leveraging access holds an in leading investment implement States. in as Skin critical XX,XXX United machine via enables more for and affiliate connects share brand wellness to we and up and of vision ecosystem learning their brands affiliates brands. access within in, a fast I brands promote perform the businesses over more and from pace As and continues other synergistic build Skin/Mavely media. is develop social Mavely these and to our integrated affiliates several our gaining technology via affiliates media to to everyday other share enable while hundreds share. Nu leveraging to we're the brands next-generation Mavely,

player and approach marketing anticipate that Mavely shaping the virtually as affiliate other become We outpace promotion marketing BeautyBio of integrated to to affiliates. Mavely a Additionally, believe Rhyz this in of brands industry. our continue all promotion, will will to rapidly via advertising affiliate forms other that more such we meaningful Mavely and enables

Rhyz more benefits our Mavely, trends provides and product and manufacturing the us move also to In us to brands partnered more owned wellness. speed market and discover vertical enables innovation to consumers integration beauty pace as and meeting and brand quickly to awareness in consumer engagement, shop. across they to to drive keep accelerate we and optionality where addition with

capabilities. continue Rhyz strategy. Leveraging has our expertise innovation for our innovation on been the to this and companies in and We'll coming continue expand share sustainability, supply to within and research Rhyz a as We accelerator and instrumental in in you quarters. invest enterprise of progress agenda product overall transformation development, in device the with critical accelerating chain

model product with growth. to So strong enterprise point and challenges adapt the within initiatives, guidance We're summary, enhanced continued with focused several enterprise and markets, We're key business deliver our growth other line to across We've to XXXX. transformation demonstrate core and on accelerating our in deliver quarter in results business emerging and track with in developing Skin innovation businesses second ability our brand on at our halfway of expectations. investing and also Mavely efforts. Nu to MYNDXXX including building for integrated continue division, in an which Rhyz, remains

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

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

James Thomas

you, all you update and provide Thanks I'll then a Thank brief today. QX Ryan. QX for to XXXX speak joining and guidance. to of

Relations our For Investor please website. visit details, additional

of Reported posted the excluding currency range X.X% larger-than-expected million. midpoint charges. previous foreign restructuring $XX earnings For the at $XXX.X guidance of headwind negative $X.XX or impairment we quarter, was slightly million, or negative second revenue of $X.XX were our and which a and included

Our the compared prior was in margin XX% quarter. XX.X% year to gross

in expense Skin in attributed accelerating carries core improvements gross our XX% see margin. prior and SKU was volume. margin compared margin Our margin XX.X% XXXX. Selling project which to XX.X% We're a continues the largely by overall the and in decline XX.X% XX% can Nu margin of by the the lower gross as Gross in on impacted costs This percentage geographic business in core quarter. year rationalization approximate to an in year with of our count overall to quarter. the was end gross fixed shift revenue our prior SKU growth reduction overhead for revenue to lower to compared of in expect be sequential Rhyz a business, the be

business, core XX.X% Skin Nu the XX.X% in was period. selling year the For compared prior expense to

costs expense XX% made typically customer acquisition. General and core and attributed declined expense with ranges current targeting related $XX slight to to affiliate million compensation increase due revenue the and XX% our levels. program, between a Our administrative Skin with restructuring plan the Nu line operating quarter mainly the cost nearly to overall of enhancements selling in more efficiency execution bringing in to activities continued

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

Over the direct-selling of reporting factors of Nu These faced capital and the noncash our across overall the to million, goodwill Skin units. to industry contributed Skin a which several impairment intangibles cost business mainly a past market in challenges global core valuation, economic due have rising downturns, resulted $XXX and years, has pressures. Nu depressed

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

negative prior charges Our was margin excluding million compared restructuring the X.X% in quarter expense Interest to $X.X for for to the operating year. and $X.X the in quarter. quarter the impairment or XX.X% compared million was year X.X% prior

The $X.X in year million $XX.X compared million quarter. paid make $XX $XX.X to $XXX.X other income debt authorization. million, during expense and of our line quarter, strides which second optimization million and also of flows cash our in management down dividends, million to repurchase paid We any have generated quarter. on $X.X million which income current continue income million free from helped the did quarter. In We $X not our cash outstanding plan, in healthy of in flow inventory remaining operations the the of stock the portfolio we prior reflects generate of

Our tax rate was to quarter charges or compared XX.X%. XX.X% restructuring XX.X% excluding the for

rate, to both the an and to with guide, negative the $X.XX reflects the of rate adjusted prior due attention the an $X.XX. to anticipate quarter our the and to Based are state expected earnings guidance. adjusted guidance. of of primarily $X.XX anticipated our earnings midpoint mix negative business, share to billion we expect higher of tax first For revenue $X.XX we annual pressure This XX%. half current at third XXXX in of XXXX billion global year, XX% on tax per tightening of our increased or the effective $X.XX our annual performance We earnings. Shifting range now the geographical in $X.XX now to rate FX

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

to third approximately headwind of We of to revenue $X.XX million adjusted currency earnings earnings X% $X.XX to $X.XX. share reported or projecting $X.XX million, to with assuming of foreign $XXX are quarter of per a X% $XXX

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

Our solid to and in strong us to growth balance flow sheet position while initiatives returning invest well our cash shareholders. value

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

Operator

line from first Our Bender of Chase Instructions] question with comes Citi. the [Operator

Chasen Bender

could little first do have it? this interface will I I in a sales do like Nu it bit if wanted What more and work launching how how operate from you give then Once it explain does you to at And I of higher level, I a hand, obviously, how Skin/Mavely the about ask with mean? Great. perspective detail leader. it a app are MYNDXXX. specifically it? But products

affordable luxury. more have You

You have online. like to to really, a leaders, this coming back new It app at a basic lot tackling. get and sales coming blocking there's need seems time. one They at

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

Ryan Napierski

quickly. Yes. good questions. of Chase, We'll couple walk things Yes, through those a of kind

you a and brands as terms day go affiliate app, if an every up. signs today, it can individual So through curating the walk to works how download store in the app app Mavely of Mavely you

Skin, with the that, curating go through easy brands a it's it's instance pretty them. we're looking a it works -- app be for and Nu as be Then So share. they'll links towards into market, and experience, Skin and as they'll similar pretty Nu build smooth, able the to share technology post simple this work to affiliates the put download able -- and that we Nu the Skin/Mavely very to that of that out

on get the brands that's to so wellness, way -- pretty beauty, simpler brands way. of it's and how app, a lifestyle So then that basically Mavely to share other kind straightforward those access

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

were fundamentals. you big In products That's the is people around discussions to really live fact, part getting love basics, theme our of with them to really basic and and same. which a back events the sharing do

So as to additional them share luxury, and into affordable do we get them love people whether are whether they these the market, is look the it same. for to it's MYNDXXX, to new with products products that

people affiliate not Typically, relate as products world, to focus about for on. it's orient new them the to especially that marketing they to in much So they and -- products adding orient in most.

the kind with that some thing. And our of launches a your years. new So social you really can nearly product would world the see and to influencer, on new the a even has moving last X influencer. they're relate longer. product. products -- how to new force micro customer the all same any changed not entire identifying more of target product That's that not the It's of historically, that as bit you quite in focus It's relate we sales affiliate and X or a world where, would launch a one works

business to optionalities those from, having build so the them select And their to enables speak. then additional of way or their products it optionality to so

the is Regardless mindful product Again, -- So That that basics we and target put products front reach back you them the products the simply go balance broader and we're the to in demographics enable basics. do of people means same. if I to targeting them them, and to sense. the are makes that of markets, broader of love back basics. the with sharing getting to we

Chasen Bender

then shares as leader a that And is that the a just Is detail. as good sales that's how Is No, the generates that sale? it. core sale, Mavely Rhyz uses Skin booked? app, Got sale? Nu mechanically, booked booked and if product

Ryan Napierski

ahead. go James, Yes,

James Thomas

Yes.

will recording a of come parent will through. I and the working will -- Mavely we're But mechanics in the that still in runs mean be Skin. app to sell that Mavely revenue all it So but through we come that the how Nu same company through

Chasen Bender

Okay.

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

Ryan Napierski

Yes. Yes, absolutely.

at So markets, developing look has as Skin out really present Nu -- we markets a -- what where these, from we these call, presence. are

our our there frankly, key that of over there are East components sit we have that of China, evaluating. And Southeast as We parts that reconsidering major operation are there, are Europe, half in and markets different Asia, well cities. at opportunities that certainly, of the than look we LatAm, even or just the X that urban

prices. have right product we The portfolio the that ensuring at the first right is products the and

to selling geographies model the operational one for Second is third that one is And in products. is infrastructure the business different. then the behaviors bit little a enable then right those the various

form For the instance, payment installment America, credit or in versus, cards or say, the predominant quotas payments are Latin elsewhere. of like

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

So tests LatAm. begun we've in those already

the operate of Thailand, world, like We parts and more developed socioeconomic the in of this will just status the we the in those these Asia, the couple than evaluating -- is of year different to on. a just markets much end Vietnam, where expand continue Southeast tests throughout different markets that Philippines,

it really this that the worked haven't as we we see year. far P&L, in as through how remainder So of the

a that. we'll you refining then very probably continued And detail talking testing we're process. about be our XXXX think much guide and in more in and I further with

Chasen Bender

entire about mean so Got helpful. apologies. updated from And if to second implied I is But the I guide second down just down math went at looks I guidance. like net It implied one to the ask down wanted if X.X% to the went half EPS don't right. But midpoint may. $X.XX half guidance here, the it. That's from about $X.XX XXXX sales hog call the X.X%. I'm to sorry, more my about

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

James Thomas

great through that's at that performed midpoint of as our the we guidance come in the question. to a looked It's revenue guidance. first And Absolutely. we've towards half of how something terms saw we

right top You're on line.

QX. And We we've that then have high QX in the big for we a through built range performed headwind X% that of narrowed the models. we and when didn't our under we gave guidance discussion currency that anticipate where guide was plus point foreign

And expectations, within less segments of Skin rationale. we compared on performed you the from QX. The you in less from gross regions. that down where geographic some you the margin to how gross some some you so on been revenue year, more of We've through top noticed with prior And getting we've bottom the what even when see we're QX more we've the for FX when regions, that of -- currency margin. our line, hold to and shift Nu quarter in profitable then if our revenue that brought pressure we profitable see our roll through we performed through on foreign comes see when coming run top able the to

gross focused. as as areas slight shift plan. G&A, created a hyper it margin go little bit just expense we to mix be the selling within in of well uptick continue in we've invested performance and as in pressure a So after to

our out do, pace the compared original we to prior year. of out G&A We continue with set to coming those be looking on million of drive efficiency to out savings cost that savings go in in XXXX and goal to we $XX that set

there's that's tax a profitability an on of a little to comes that with why pressure. And bit then color So our pressure rate. impact of

you are that pressure geographic gave we tax around segment there, If on rate we in the profitability higher due noticed script the modeled tax the seeing rate by world. our or have to we out our

that we'll we trying think flexing earnings land just clarity from perspective. So where through get an to on

Operator

question of LLC. next the Jefferies Our Wagner line Instructions] from Sydney [Operator with comes

Sydney Wagner

This on Ashley is us. Sydney for from Three Helgans.

luxury those demand any that items see on one mentioned, how then So last was, the discussed launches still resilient. while second by for some last And the quarter, you did you give update quarter can some you been affordable was the side, received higher-priced of have and market? pressure from consumer you

that on if any Just you saw what additional curious seeing still you color you're this was just a out China trend And play can there? and quarter. then give

Ryan Napierski

Yes. Sydney, Sure. great. the Yes. call. it's joining No, for Thanks

called the we're we doing sold of pouts product a application might very bit James be very affordable was literally was great now. which the So that be social promotional the to will lip last I in a it it product mentioned, quite is around of wearing tell. research and out luxury, products and Peptide as right the now come. One sell, a a product out does can't we that fact, a that stock on Pout quickly, Pout, more put good sold right with that, lips. But out and world. development Peptide quarter in

sellout a affordable types nature, promotional kind quick a products almost of more quickly. more -- fashion. they So they're that little that really quarters. They the like sold and are we that in very, over they generally one that they're was like because planned of meaning market several we these -- very turns that luxury And run brought have just in bit are to in coming interesting

sell of through, full and hit they You and imagine that reload. some can brands a then run almost they'll these production influencer

with Peptide of similar that with We're and then the forecasting Pout others. So models. there put to seeing we're as dynamics we similar kind out it

just one moved that's example seeing but that's be you'll forward. of of those, a So one few

noticed kind hyperinflationary consumables our resiliency. I were struggle kind I while -- market, think, higher-priced more. that higher-end other this to reasonably up asking well product we've mean our of our hold of about tend a generally, bit in devices little You of some

I a in standpoint items. but well, from it's little a continue But would devices around see consumer we of So say mixed challenges some the other bit perform some high-priced items. that behavior our more to

or So listening and a reading I Bloomberg it. think -- near and still do something are It China, believe pretty a growing the market, there. ago meeting your it's time CNBC over bit there's It's was I'm TikTok the in to home, why that lot market. there, we're of report I there little call I X observing continues then At than a third macroeconomic consumer beauty every of strong little the we're via to maybe team, tends over interesting drive potential that. And question in very China and in demand. at just to a good world's with go-forward Douyin it very a struggling of particular, so pace, what's the a market. aggressive to a brands, conservative I employees better. Chinese lot There's different X month our to least in just about are local was around years ago, or It term, durable has that's There XXX brands that's think really fact many especially more be the is still obviously very It's on in to I a space, us economy second ambition over built largest continue just still our the interesting. over our seems it, and different. and heavily The market. very hesitancy looks. But into of China. being

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

other the the we time had of giving the leading of We to for wellness juggling becoming in. us. so the all continue you're all we and business Appreciate that's board, questions think dialing towards our call forward ecosystem. the as I you across kind to you're appreciate beauty, between in We the of come look give you acknowledge today. of our we lifestyle updates to quarters able to calls world's more vision evolve

you with we'll Thanks So next with quarter. that, lot. a speak

Operator

This for participation. concludes Thank your conference you call. today's

may now disconnect. You

Nu Skin Enterprises (NUS) 8 Aug 242024 Q2 Earnings call transcript