Q1 2025 Overview Important Information Regarding Forward-Looking Statements: This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that represent the company's current expectations and beliefs. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws and include, but are not limited ...

Revenue Performance - Revenue for Q1 2025 decreased by 12.7% to $364.5 million, down from $417.3 million in Q1 2024, with a 3.0% negative impact from foreign-currency fluctuations[74] - Total revenue for Q1 2025 decreased by 12.7% to $364.5 million, down from $417.3 million in Q1 2024[102] - Revenue from the Americas segment decreased by 8.0% to $69.1 million, while the Mainland China segment saw a decline of 21.8% to $47.8 million[79] - The total revenue decline of 12.7% was attributed to macroeconomic challenges affecting consumer spending and customer acquisition[75] Customer Metrics - The number of Customers, Paid Affiliates, and Sales Leaders declined by 11%, 15%, and 20% year-over-year, respectively[74] - Total customers decreased by 11% year-over-year to 776,712, with significant declines in Mainland China (25%) and South Korea (28%) markets[84] - Paid affiliates decreased by 15% year-over-year to 131,518, with the largest drop in Southeast Asia/Pacific (25%) and South Korea (20%) markets[84] - Sales leaders decreased by 20% year-over-year to 31,036, with a notable decline in Mainland China (35%) and Southeast Asia/Pacific (18%) markets[84] Earnings and Profitability - Earnings per share for Q1 2025 increased to $2.14, compared to $(0.01) in the prior-year period, primarily due to a pre-tax gain of approximately $176.2 million from the sale of the Mavely business[76] - Net income for Q1 2025 was $107.5 million, a significant increase from a net loss of $(0.5) million in Q1 2024[113] - Gross profit margin decreased to 67.8% in Q1 2025 from 70.5% in Q1 2024, impacted by lower margins in owned manufacturing entities[103] - Selling expenses as a percentage of revenue decreased to 32.5% in Q1 2025 from 36.8% in Q1 2024, reflecting cost-saving measures[105] - General and administrative expenses decreased to $113.2 million in Q1 2025 from $124.6 million in Q1 2024, primarily due to reduced labor and promotional expenses[106] Capital and Cash Management - As of March 31, 2025, working capital increased to $264.6 million from $242.0 million as of December 31, 2024, primarily due to proceeds from the sale of Mavely[115] - The company had $213.6 million in cash and cash equivalents as of March 31, 2025, up from $198.0 million at the end of 2024[121] - The company repurchased 0.6 million shares of Class A common stock for $5.0 million in Q1 2025, with $157.4 million remaining available for repurchases[119] - The company maintains a consolidated leverage ratio not exceeding 2.75 to 1.00 and was in compliance with all debt covenants as of March 31, 2025[117] Future Outlook and Strategic Initiatives - The company anticipates nominal revenue from its India market pre-opening in Q4 2025, with a formal launch planned for mid-2026[75] - The company is focusing on business model optimization and the rollout of enhancements to its sales performance plan in 2025[75] - The company is preparing for the launch of its next connected device, the Prysm iO, as part of its long-term vision[75] Tax and Financial Gains - The effective tax rate for Q1 2025 was 20.1%, benefiting from the Mavely sale, compared to 148.4% in the prior-year period[112] - The company recorded a pre-tax gain of $176.2 million from the sale of the Mavely entity for $230 million in January 2025[110] Cash Flow and Dividends - In Q1 2025, the company generated $0.4 million in cash from operations, a decrease from $3.3 million in the same period last year[114] - A quarterly cash dividend of $0.06 per share was declared in February 2025, totaling $3.0 million paid on March 5, 2025[120] Currency and Repatriation - The company has $30.9 million in cash denominated in Chinese RMB, with restrictions on repatriation until necessary financial statements are filed[122] - The company plans to repatriate undistributed earnings from non-U.S. operations as necessary, considering cash needs for dividends, stock repurchases, and capital investments[122]

Financial Data and Key Metrics Changes - The company reported Q1 revenue at $364.5 million, achieving the high end of its guidance range, despite a 3% negative foreign currency impact of $12.3 million [20] - GAAP earnings per share were $2.14, while adjusted earnings per share were $0.23, surpassing guidance and showing significant improvement over the prior year [20] - Q1 gross margin was 67.8%, down from 70.5% in the prior year, primarily due to revenue mix changes [20] - Selling expense as a percentage of revenue was 32.5%, a decline from the prior year, reflecting the overall revenue mix [21] - General and administrative expenses improved to 28.9% from 29.9%, indicating cost reduction efforts [22] Business Line Data and Key Metrics Changes - The core Nu Skin business gross margin was 76.7%, slightly down from the prior year but showing sequential improvement [20] - The RISE segments experienced 10% year-over-year growth in manufacturing, indicating strong performance in this area [7] - Latin America saw significant growth with a 144% year-on-year increase, driven by a focused developing market strategy [11] Market Data and Key Metrics Changes - Improving trends were noted in South Korea and China, while Europe and Africa showed better results due to an enhanced sales performance plan [6] - Southeast Asia Pacific markets experienced growth, although Indonesia faced additional headwinds [7] - Japan's performance remained stable on a local currency basis, contributing to a consistent consumer base [7] Company Strategy and Development Direction - The company outlined three strategic priorities for 2025: strengthening the core Nu Skin business, accelerating innovation with the IO intelligent beauty and wellness platform, and improving operational performance [8][9] - A major milestone was achieved with over $20 billion in sales compensation paid to the sales force, emphasizing the commitment to rewarding brand affiliates [10] - The company plans to enter the Indian market in mid-2026, leveraging a localized product suite and compensation plan [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's future despite macroeconomic pressures, highlighting strong partnerships with sales leaders [5] - The company is implementing proactive supply chain strategies to mitigate risks from global uncertainties, including tariffs [25] - Current projections suggest that tariffs are unlikely to materially impact costs in the near term, but consumer sentiment will be closely monitored [25] Other Important Information - The company reduced outstanding debt by $155 million, achieving the lowest debt level in over ten years [24] - Approximately $8 million was returned to shareholders through dividends and share repurchases [24] - The launch of the Prism IO intelligent wellness platform is anticipated to enhance customer relationships and drive revenue growth [13][17] Q&A Session Summary Question: What are the expectations for revenue in Q2? - The company projects second quarter revenue between $355 million and $390 million, factoring in an expected foreign currency headwind of 2% to 3% [26] Question: How is the company addressing macroeconomic pressures? - The company is implementing proactive supply chain strategies and closely monitoring potential effects on consumer sentiment and demand [25]

Financial Data and Key Metrics Changes - The company reported Q1 revenue of $364.5 million, achieving the high end of its guidance range, despite a 3% negative foreign currency impact of $12.3 million [17] - GAAP earnings per share (EPS) was $2.14, while adjusted EPS was $0.23, surpassing guidance and showing significant improvement over the prior year [17] - Q1 gross margin was 67.8%, down from 70.5% in the prior year, primarily due to revenue mix changes [17] - Selling expenses as a percentage of revenue decreased to 32.5%, reflecting a decline from the prior year [18] - General and administrative expenses improved to 28.9% of revenue, down from 29.9% [19] - The company reduced outstanding debt by $155 million, bringing total debt to $239 million, the lowest level in over ten years [21] Business Line Data and Key Metrics Changes - Significant growth was noted in Latin America, with a year-on-year growth of 144%, driven by a developing market strategy [5][9] - The core Nu Skin business gross margin was 76.7%, slightly down from the prior year but showing sequential improvement [17] - The RISE segments experienced 10% year-over-year growth in manufacturing [6] Market Data and Key Metrics Changes - Improving trends in key performance indicators (KPIs) were observed in South Korea and China, while Europe and Africa showed better results due to an enhanced sales performance plan [6] - Southeast Asia Pacific markets showed growth, although Indonesia faced additional headwinds [6] Company Strategy and Development Direction - The company outlined three strategic priorities for 2025: strengthening the core Nu Skin business, accelerating innovation related to the IO intelligent beauty and wellness platform, and improving operational performance and efficiency [7] - A major milestone was achieved with over $20 billion in sales compensation paid to the sales force, emphasizing the commitment to enhancing the sales compensation plan [8] - The company plans to enter the Indian market in Q4 2025, targeting a population of 1.4 billion with locally manufactured products [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's future despite near-term macroeconomic pressures, highlighting strong partnerships with sales leaders [4] - The company is implementing proactive supply chain strategies to mitigate risks from global uncertainties, including tariffs [22] - Guidance for Q2 revenue is projected between $355 million and $390 million, with anticipated foreign currency headwinds of 2% to 3% [23] Other Important Information - The introduction of Prism IO, an intelligent wellness platform, is expected to enhance customer relationships and product recommendations [11] - The company has amassed a significant antioxidant database, which will support the development of customized nutrition solutions [12][14] Q&A Session Summary - No specific questions and answers were provided in the content, thus this section is not applicable.

Financial Performance - Q1 2025 revenue was $364.5 million, a decrease of 12.7% year-over-year, with a foreign exchange impact of $(12.3) million or (3.0)%[3] - Total revenue for Q1 2025 was $364.49 million, a decrease of 12.6% compared to $417.31 million in Q1 2024[20] - For Q2 2025, revenue is projected to be between $355 million and $390 million, reflecting a decline of 19% to 11% year-over-year[6] - Full-year 2025 revenue guidance is set at $1.48 to $1.62 billion, representing a decrease of 15% to 6% compared to 2024[6] - The overall Revenue Growth Rate for 2024 is expected to decline between (19)% and (11)%[36] - Adjusted 2024 Revenue is projected at $427,074,000, reflecting a revenue growth rate of (17)% to (9)% excluding Mavely[36] - Forecasted 2025 Revenue ranges from $1,480,000,000 to $1,620,000,000, indicating a potential recovery in growth rates[36] - The company anticipates a significant improvement in revenue performance in 2025 compared to 2024[36] Customer Metrics - Total customers decreased by 11% to 776,712, while paid affiliates and sales leaders decreased by 15% and 20%, respectively[3] - Total customers decreased by 11% year-over-year to 776,712, with significant declines in Southeast Asia/Pacific (20%) and Mainland China (25%)[18] - Total paid affiliates decreased by 15% to 131,518, with the largest drop in Southeast Asia/Pacific (25%) and Mainland China (19%)[18] - Total sales leaders decreased by 20% to 31,036, with the most significant decline in Mainland China (35%) and South Korea (31%)[18] Earnings and Profitability - Earnings per share (EPS) for Q1 2025 was $2.14, or $0.23 excluding the gain from the Mavely sale and other charges, compared to $(0.01) or $0.09 in the prior year[4] - Net income for Q1 2025 was $107.52 million, compared to a net loss of $0.53 million in Q1 2024[20] - Operating loss for Q1 2025 was $9.90 million, while adjusted operating income was $23.18 million, reflecting a margin of 6.4% excluding certain charges[27] - The diluted earnings per share for Q1 2025 was $2.14, compared to a loss of $0.01 per share in Q1 2024[20] Expenses and Debt Management - Gross margin for Q1 2025 was 67.8%, down from 70.5% in the prior year, with selling expenses reduced to 32.5% from 36.8%[4] - General and administrative expenses were $113.20 million, representing 31.1% of revenue, an increase from 29.9% in Q1 2024[25] - The company reduced outstanding debt by $155 million, achieving its lowest debt level in over 10 years[7] Strategic Initiatives - The company plans to launch the Prysm iO intelligent wellness device in the second half of 2025, aimed at enhancing customer satisfaction and loyalty[3] - The company is preparing for market expansion into India, with a pre-opening planned for Q4 2025 and a formal launch in mid-2026[3] - Dividend payments totaled $3.0 million, with an additional $5.0 million allocated for stock repurchases, leaving $157.4 million remaining in authorization[5] Market Outlook and Strategy - The financial outlook suggests a strategic focus on enhancing revenue streams while managing the impact of Mavely[36] - The company is actively monitoring market conditions to adjust forecasts and strategies accordingly[36] - Future growth strategies may include new product developments and market expansions to drive revenue recovery[36]

Industry Overview - The beauty and cosmetics industry has evolved from natural ingredients to advanced, science-backed formulations, becoming a multi-billion-dollar powerhouse that shapes self-expression and personal identity [1] - There is a significant shift towards skincare over traditional makeup, with consumers prioritizing healthy skin and demanding products with natural ingredients and clean formulations [2] Sustainability Trends - Sustainability is a defining factor in modern cosmetics, with consumers favoring brands that prioritize transparency and ethical sourcing [3] - Companies like e.l.f. Beauty, Inc. have successfully blended affordability with cruelty-free and vegan formulations, positioning themselves for long-term success as regulatory bodies push for clearer labeling [3] Technological Advancements - Technology is revolutionizing the beauty industry through AI-powered diagnostics, AR-driven virtual try-ons, and biotech formulations, making beauty more personalized and effective [4] - The rise of dermocosmetics, where beauty meets pharmaceutical-grade skincare, has led to the success of brands backed by dermatological research [4] Market Growth Projections - The global cosmetics market is expected to witness a CAGR of approximately 6.1% from 2024 to 2030, with companies focusing on innovation, sustainability, and digital engagement poised for success [5] Company Highlights: Nu Skin Enterprises, Inc. - Nu Skin is at the forefront of innovation, leveraging advanced technology and scientific breakthroughs to redefine beauty, with a focus on premium skincare innovations [6] - The company has developed a database of over 25 million connected treatments and is preparing to launch Prysm iO, a device for measuring micronutrient absorption in the skin [7] - Nu Skin's integration of AI-driven data analysis with skincare offerings enhances customer experiences and market penetration [8] Company Highlights: Ulta Beauty, Inc. - Ulta Beauty strengthens its position through innovation, exclusive brand partnerships, and advanced digital engagement, introducing new brands and collaborations [9] - The company boasts a loyalty program with 44.4 million active members, driving customer engagement and retention [10] - Ulta's digital and omnichannel strategy includes features like the GLAMlab 2.0 virtual try-on tool, enhancing the shopping experience [10][11] Company Highlights: Sally Beauty Holdings, Inc. - Sally Beauty focuses on product innovation, omnichannel expansion, and customer engagement, with a recent store refresh receiving positive customer feedback [12] - The company is experiencing significant e-commerce growth through partnerships with DoorDash and Instacart, supported by proprietary hair color and care products [12] - Sally Beauty is expanding its distribution of premium haircare brands and introducing new products in collaboration with Sauce Beauty [13][14]

Group 1 - Nu Skin Enterprises (NUS) is currently outperforming its Consumer Staples peers with a year-to-date return of 11%, compared to the sector average of 4.9% [4] - The Zacks Rank for Nu Skin Enterprises is 1 (Strong Buy), indicating a strong potential for outperformance in the market [3] - The Zacks Consensus Estimate for NUS's full-year earnings has increased by 7.1% over the past quarter, reflecting improved analyst sentiment [4] Group 2 - Nu Skin Enterprises is part of the Cosmetics industry, which has seen an average loss of 8.8% year-to-date, further highlighting NUS's strong performance in this context [6] - The Consumer Staples group, which includes 180 companies, is currently ranked 10 within the Zacks Sector Rank [2] - Primo Brands (PRMB), another stock in the Consumer Staples sector, has also outperformed with a return of 13.1% year-to-date [5]

Revenue Performance - In 2024, the company generated revenue of $1.7 billion, with 30% coming from the United States and 70% from international markets[13][15]. - Total revenue for Nu Skin in 2024 was $1,445.5 million, a decrease of 17.5% from $1,752.5 million in 2023[63]. - Revenue from the Americas segment was $322.5 million in 2024, representing a 19% decline from $398.2 million in 2023[63]. - Revenue from Southeast Asia/Pacific was $244.8 million in 2024, down 8.4% from $267.2 million in 2023[63]. - Revenue from Mainland China decreased to $235.2 million in 2024, a 21.1% drop from $298.1 million in 2023[63]. - The Rhyz business segment generated $286.6 million in total revenue in 2024, up 32.3% from $216.6 million in 2023[63]. - Manufacturing revenue increased to $201.4 million in 2024, a 11.0% increase from $181.4 million in 2023[63]. Product Categories - Revenue from beauty products was $681.8 million (39.4% of total revenue), while wellness products generated $757.2 million (43.7% of total revenue) in 2024[24]. - The ageLOC beauty products accounted for 43% of the beauty product category revenue and 17% of total revenue in 2024[24]. - The ageLOC TRMe personalized weight wellness line became the top-selling brand in 2024, with ageLOC wellness products making up 20% of total revenue[19][25]. Customer and Affiliate Metrics - Total Customers decreased from 1,147,124 in 2022 to 831,972 in 2024, representing a decline of approximately 27.5%[45]. - Total Paid Affiliates decreased from 236,956 in 2022 to 144,874 in 2024, a decline of about 38.8%[45]. - Total Sales Leaders decreased from 48,737 in 2022 to 36,912 in 2024, reflecting a decrease of approximately 24.3%[45]. Digital Transformation and Innovation - The company is undergoing a significant digital transformation, which will require substantial expenditures over the next several years[35]. - The company is developing new digital tools and enhanced e-commerce functionality to support its sales force and improve consumer engagement[34]. - The company launched ageLOC WellSpa iO and Nu Skin RenuSpa iO connected devices, which gather consumer behavior data for personalized experiences[18]. Regulatory Environment - Regulatory scrutiny in Mainland China has increased since 2019, impacting business operations and revenue potential[66]. - Direct selling regulations in Mainland China limit compensation to a maximum of 30% of revenue generated by sales[68]. - The FDA's implementation of the Modernization of Cosmetics Regulation Act of 2022 may impose additional compliance burdens on cosmetic manufacturers[73]. - The regulatory environment for dietary supplements is becoming increasingly complex, with stricter regulations anticipated in the future[88]. Supply Chain and Manufacturing Risks - The company experienced production difficulties and quality control problems that could lead to stock outages or shortages in the market[206]. - The company faces risks related to supply chain disruptions, including potential loss of suppliers and difficulties in sourcing alternative materials, which could harm revenue[208]. - The COVID-19 pandemic has caused significant disruptions in global transportation channels, resulting in delays, quantity limits, and price increases[210]. Sales Force and Compensation - The company’s global sales compensation plan is considered one of the most generous in the direct selling industry, providing competitive advantages[50]. - The company’s sales force is primarily composed of independent contractors who are required to adhere to ethical standards and consumer protection policies[38]. - The company’s sales leaders in Mainland China are compensated under a separate model, which is competitive but distinct from the global compensation plan[181]. Challenges and Competition - The company faces significant risks associated with direct selling, including regulatory scrutiny and potential legal actions that could impact revenue and profitability[143]. - The company is challenged by shifting consumer preferences and increased competition from affiliate marketing and gig economy businesses[160]. - The company faces intense competition, with competitors having greater name recognition and financial resources, which may hinder market share[167]. Employee and Human Capital Management - The company had approximately 3,100 full- and part-time employees worldwide as of December 31, 2024, excluding about 8,200 sales employees in Mainland China[109]. - The company’s human capital management strategy includes hiring, engagement, development, and retention initiatives to address competition for qualified employees[110]. - The company’s employee wellness program, "The Best You," aims to enhance physical, emotional, intellectual, and financial wellness[117].

Core Insights - Nu Skin Enterprises, Inc. (NUS) reported fourth-quarter 2024 results with earnings surpassing estimates, while net sales declined year over year [1][2] - The company anticipates improving trends in several markets for 2025 but expects economic challenges in Greater China and South Korea [1] Financial Performance - Adjusted earnings for Q4 were 38 cents per share, up from 37 cents in the previous year, beating the Zacks Consensus Estimate of 22 cents [2] - Quarterly revenues were $445.6 million, down 8.8% year over year, with a negative impact of 4.1% from foreign currency fluctuations; on a constant-currency basis, revenues fell 4.7% [3] - Adjusted gross profit decreased 9.8% to $317.9 million, with an adjusted gross margin of 71.4%, down 70 basis points from the prior year [5] - Selling expenses declined 8.8% to $165.4 million, remaining flat as a percentage of revenues at 37.1% [6] - General and administrative expenses fell 16.6% to $120.9 million, with a percentage of revenues at 27.1%, down 260 basis points [7] - Adjusted operating income increased 10.1% year over year to $34.5 million, with an adjusted operating margin of 7.7%, up 130 basis points [7] Regional Performance - Revenue declines were noted across various regions: Americas (-12.7%), Southeast Asia/Pacific (-2.9%), Mainland China (-21.1%), Japan (-6.8%), South Korea (-30.9%), Europe and Africa (-11%), and Hong Kong/Taiwan (-21%); however, other revenues surged 66.8% year over year [8] Financial Health - At the end of the quarter, the company had cash and cash equivalents of $186.9 million, long-term debt of $363.6 million, and total stockholders' equity of $651.5 million [9] - The company declared a cash dividend of 6 cents per share, payable on March 5, 2025 [10] Future Outlook - For 2025, Nu Skin anticipates revenues between $1.48 billion and $1.62 billion, indicating a decline of 15-6% from the previous year [12] - EPS for 2025 is projected to be between $3.45 and $3.85, or 90 cents to $1.30 when excluding gains from the Mavely transaction [13] - For Q1 2025, revenues are expected to be between $345 million and $365 million, representing a decline of 17% to 13% [13]

Financial Data and Key Metrics Changes - Fourth quarter revenue reached $445.6 million, exceeding previous guidance despite a 4% negative foreign currency impact of $20.1 million [33] - Adjusted earnings per share for Q4 was $0.38, surpassing guidance and slightly ahead of the prior year's $0.37 [34] - Full year revenue totaled $1.73 billion, within original guidance despite an unexpected foreign exchange headwind of approximately $60 million [34] - Adjusted gross margin for Q4 was 71.4%, down from 72.1% in the prior year, while the core Nu Skin business adjusted gross margin was 76.6%, down from 77.4% [34] Business Line Data and Key Metrics Changes - The launch of the AgeLock TrueFase peptide retinol complex contributed to Q4 results, with the new TrueFace product showing strong market acceptance [12][13] - The RISE segment achieved 28% year-on-year growth in Q4, indicating strong performance in this area [13] - A $38.8 million write-down was recorded this quarter as part of a strategy to streamline the product portfolio [35] Market Data and Key Metrics Changes - Growth was noted in Latin America and parts of Southeast Asia, while persistent headwinds remained in China and South Korea [11] - The Americas segment showed constant currency growth, with particular strength in Latin America [11] - The company anticipates revenue declines of 3% to 11% for 2025, excluding the impact of the Mable business from the prior year [44] Company Strategy and Development Direction - The company aims to strengthen its core Nu Skin business, accelerate innovation in its intelligent beauty and wellness platform, and improve operational performance and efficiency [15] - A new business model is being rolled out to enhance the entrepreneurial model for affiliates, focusing on social-first selling [18] - The company plans to refine its product portfolio to meet emerging consumer needs and increase focus on developing markets [19] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing economic challenges in South Korea and China, with consumer spending dropping and savings rates increasing [51] - The company is optimistic about growth opportunities in Latin America, Southeast Asia, and Japan for 2025 [60][61] - The management expressed confidence in achieving meaningful earnings growth despite top-line pressures in certain markets [46] Other Important Information - The strategic transaction involving the sale of the Mable business for $250 million was highlighted, which generated a five times return on investment [14] - The company has made significant progress in strengthening its balance sheet, reducing debt by $110 million funded through cash from operations [41] - The restructuring plan is now materially complete, positioning the company for a more sustainable future [39] Q&A Session Summary Question: Economic challenges in South Korea and China - Management acknowledged ongoing economic challenges in these regions, with consumer spending dropping and local brands gaining priority [50][52] Question: Markets expected to return to growth in 2025 - Management highlighted Latin America, Southeast Asia, and Japan as key markets with potential for growth in 2025 [60][61] Question: Performance on Amazon - Management discussed the importance of maintaining brand image on Amazon and noted that the strategy has been beneficial in minimizing discount reselling [66][70]