NU SKIN ENTERPRISES, INC. Q3 FY2024 earnings call

Near-Term Priorities - Product portfolio optimization: Accelerating efforts, reduced over 20% of sub-optimized SKUs in 2024, anticipate reducing another 30% in 2025 for over 50% consolidation by year-end, aiming for 150-200 basis point gross margin improvement for core business by end of 2025. - Selling expense optimization: Introducing new sales performance plan combining affiliate marketing and leadership-driven model, starting in North America and South Korea, aiming for 40% selling expense target by end of 2025. - Operational optimization in underperforming markets: Extended efforts, initiated in Argentina earlier this year with significant top and bottom line improvements, anticipate improving annual profitability beyond $20 million across developing markets, working towards $50 million in annualized G&A savings. ### Longer-Term Strategies - Enterprise vision: Building world's leading beauty, wellness and lifestyle ecosystem. Introduced Mind 360 at events, global launches ongoing. Cognitive health is a growing category. - Product pipeline: Robust, exploring innovations in nutrition supplement business, some new innovations expected in late 2025. - Integrated brand building: Exploring efforts to broaden accessibility via third-party marketplaces and search engine ads, seeing promising indicators with 80% of online ad purchasers returning to place orders. - Mavely: Releasing beta version initially to U.S. brand affiliates later this month. - India expansion: Exploring future market expansion, anticipating introduction in late 2025.

Third quarter revenue was $430.1 million, within guidance range. Core Nu Skin business faced headwinds from markets like China and South Korea due to macroeconomic factors. Rhyz segments exceeded forecast, up over 20% year-over-year led by Mavely. Nu Skin core business gross margin was 76.5%, down 30 basis points due to geographic revenue shift from Mainland China and South Korea. Selling expense as a percentage of revenue was 39%, higher than prior year. General and administrative expenses declined year-over-year due to cost efficiency program.

2024 - Revenue expected in the $1.70 billion to $1.73 billion range. - Earnings per share negative $2.32 to negative $2.22 or adjusted earnings $0.65 to $0.75. - Assumes increased foreign currency headwind of approximately 3% to 4%. ### Q4 - Revenue projected $410 million to $445 million, assuming foreign currency headwind of approximately 1% to 2%. - Reported earnings per share negative $0.09 to $0.01 or adjusted earnings $0.19 to $0.29, excluding planned cash restructuring charge $15 million to $20 million.

- Macro factors: Ongoing headwinds in core Nu Skin business due to macroeconomic factors impacting consumer spending in larger markets like South Korea and China. - Foreign currency: Negative foreign currency impact of 3.4% or $16.7 million in Q3. - Economic uncertainty: Uncertainties in economic recovery affecting consumer sentiment and spending patterns.

Q: How to think about the timeline for stabilizing the core Nu Skin business?

A: Near term focused on cost optimization, mid-to-long term on innovations like new sales performance plan and integrated brand building. Future transparency depends on political landscapes and economy, with initiatives coming in next quarters.

Q: Provide context on Rhyz segments, especially non-manufacturing like Mavely and BeautyBio?

A: Rhyz is a bright spot, Mavely plays in creator economy, manufacturing is strategic for observing trends. Rhyz expected to mix up to 20%-25% of sales by 2025, with investments in Mavely and other brands.

Q: Update on affordable luxury, nutrition, and China?

A: Affordable luxury focus on masstige pricing, nutrition supplement business has higher customer acquisition and retention, China has government stimulus but consumer sentiment shift too early to tell, but optimistic on long-term potential despite near-term headwinds