如新 (NUS) 2016 Q4 法說會逐字稿

Good day, ladies and gentlemen. Thank you for your patience. You've joined the Nu Skin Enterprises' Q4 2016 earnings conference call.

(Operator Instructions)

As a reminder, this conference may be recorded. I would now like to turn the call over to your host, the head of Investor Relations, Mr. Scott Pond. Sir, you may begin

Good afternoon, and thanks everyone for joining us. Today, on the call with me are, Truman Hunt, President and Chief Executive Officer, Ritch Wood, Chief Financial Officer, Ryan Napierski President of Global Sales and Operations, and Joe Chang, Chief Scientific Officer.

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

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

I'll now turn it over to Truman.

Thank you, Scott. Good afternoon, everyone. We appreciate you joining us.

As our release indicates, we posted quarterly revenue of $531 million compared to $572 million in the prior-year quarter. Currency was 1% negative to the year-over-year revenue comp and more importantly, the fourth quarter of 2015 included $50 million a limited time offer volume against no significant product launches or LTL volume in the fourth quarter of 2016. So apples to apples revenue was in up slightly in Q4, although still a bit softer than what we had hoped.

Revenue was also negatively impacted by a promotion in China of ageLOC Me cartridges, that generated more demand and had supply. So we ended up deferring about $7 million of revenue in the first quarter, primarily because of this issue. Our earnings per share were $0.69, and included a tax charge of $0.10, which came up in December, and which Ritch will speak to in a moment. This compares to $0.62 in the prior-year quarter.

For the year, constant currency revenue was essentially flat with the prior year, continuing the trend improvement that we've seen over the course of the last couple of years. We had hoped to do a little bit better, but we feel good about the continued trend improvement. And our earnings per share for the year or $2.55 compared to $2.25 in the prior-year. So while Q4 ended up a bit soft in the few markets, there are still good things happening throughout the business.

We have many reasons to be optimistic that 2017 will see continued improvement with the return to revenue growth and with accelerating improvement in earnings growth given revenue improvement, as well as the impact of the substantial share repurchase completed in the fourth quarter. We really see no reason to come off our forecast for growth that we've presented at our investor day in December.

As previously announced, at our investor day, our management transition is continuing to take shape. In the coming few weeks, we anticipate naming a new CFO and at that time I will assume the position of Vice Chairman of the Board of Directors, Ritch will assume the position of Chief Executive Officer, and Ryan Napierski will assume the office of President. I've work closely with both Ritch and Ryan for many years, and I'm confident that under their guidance Nu Skin will thrive. So given this management transition, I'm going to have Ritch and Ryan cover more detail on this financial results for the quarter as well as on our plans for 2017. So with that, I'll pass the baton to Rich and Ryan

Thank you, Truman and good afternoon everybody. I'm really excited for 2017. But let me first start by just talking quickly about the financial details from the fourth quarter. As Truman mentioned, our revenue comparison against the prior-year quarter were impacted by about $50 million of limited time offer product sales in the fourth quarter of 2015 compared to virtually no product launch sales in the current year. So these products sales came from the Americas, South Korea, and Japan in the prior year. The year-over-year comparisons are skewed a bit by these sales.

The operating margin for the fourth quarter improved to 11.4% compared to 10.8% in the same prior-year period. Gross margin was 79.6% versus 78.8% in the fourth quarter of 2015. Selling expenses for the fourth quarter were 42.0% compared to 41.5% in the prior year. General and administrative expenses were 26.2% of revenue in the quarter compared to 26.5% in the prior-year period. We incurred a gain of $1.4 million in the other income expense line item of the income statement that compares against a loss of $3.3 million in the prior-year. This gain is due, primarily, to foreign currency translation from our yen denominated debt, offset by interest expense.

Our income tax rate for the fourth quarter was 38.5% compared to 38.7% in the prior-year period. Our rate in the fourth quarter of 2016 was impacted by the enactment of a new tax regulation, 987, in December. This new regulation required us to revalue the foreign currency impact on certain deferred tax assets and liabilities on the balance sheet and negatively impacted our earnings for this one time adjustment by approximately $0.10 per share.

Our tax rate benefited during the quarter from permanently reinvested earnings in China and some other smaller benefits. During the quarter, we paid $18.9 million of dividends and repurchased $205 million of our stock leaving $200 million remaining in our share repurchase authorization. We repurchased approximately 3.3 million shares during the quarter, which will be nicely accretive to shareholders in the future. Also today, we announced that we will increase the dividend for the 16th consecutive year and this will be reflected in the next dividend payment.

Our guidance for the first quarter includes revenue of $480 million to $500 million with earnings per share of $0.47 to $0.51. The revenue is expected to be negatively impacted 1% to 2% by foreign currency. So with this guidance, we anticipate revenue growth in the constant currency basis of somewhere between 3% and 8% for the first quarter. And we hold our 2017 annual guidance consistent with that provided at the investor day, as a reminder that's revenue of $2.26 to $2.3 billion and earnings per share of $3.10 or $3.25.

Now, let me talk about our plans in 2017, I really feel like we have the right products and the right opportunity to be successful. I'm excited to work with Ryan and the rest of our management team to execute the priorities that we set forth for this year. We're confident we can deliver our strategic initiatives, and we will generate growth in the business.

We highlighted five strategic initiatives during our investor day. First, we are working to maximize market penetration of Youth and Me. We're at a critical point in the business cycle with these products and our success will be measured by our ability to acquire new customers. We continue to received positive customer feedback on these products. We will continue to focus on positioning and supporting both of these products during 2017, thinking to lower barriers to trial and maximize the lifetime value of our customers.

Second, we're looking forward to launching LUMISPA in the fall. We've had tremendous success in the past with in-home skin treatment devices. Galvanic Spa for example, remains our top selling product. The device platform is expanding as ageLOC Me becomes fully available here the first quarter. Our plan is to introduce LumiSpa in the fall, which will be adding a cleansing and treatment system to our unique device platform. I believe that this product will get a very nice response from customers and sales leaders as we preview it globally in the fourth quarter.

Third, we are expanding our social selling platforms and beginning to deploy our social selling tools. Much of our growth in EMEA, during the year, especially in the fourth quarter, was driven by social selling. We are broadening our social selling support and training and, as discussed previously, will begin to pilot our customized technology platform with the intention of empowering our sales leaders to more effectively introduce customers to our products and business.

Fourth, in October of this year we will be hosting a globally broadcast convention entitled New Skin Live. This will originate from Salt Lake City, Utah. This will be an exciting event that will empower our leaders to achieve success, which can then be recognized on this global stage. This event will mark the global preview and introduction of LumiSpa together with the new brand refresh that will impact the way we look and feel. We believe New Skin Live will act as an additional catalyst for energy and growth in our business and we invite you all to participate in this global event.

And finally, our fifth priority is the sustained growth in China. I'll turn the time over to Ryan for a few minutes to address and provide color on this market as well as a few additional items.

Thanks, Ritch. Good afternoon, everybody. We believe the main land China continues to hold tremendous potential for our business, direct selling is thriving there and will likely surpass the US as the world's largest direct selling market this year. We are encouraged by main land China's return to local currency growth for approximately 15% in 2016, which positions us well going into 2017.

Last week, I had the opportunity to be in China with our management team and several of our top sales leaders. I came away from these meetings with continued optimism for the future. They're energized about the future and focused on the full launch of ageLOC Me coming up in March. We believe that this product and the upcoming launch of LumiSpa will be important growth drivers for our business in the coming year.

As Ritch stated, in this phase of our product launch cycle, we remain focused on building our loyal consumer base. In the fourth quarter, we generated about $100 million in sales from ageLOC Me and Youth together. While we began the market rollout of ageLOC Me only a year ago, we are already seeing higher rates of retention and improvements in lifetime value of customers purchasing this product.

We believe these early indicators bode well for the both customers and sales leader growth as we continue to optimize the positioning of this revolutionary product. ageLOC Me is still in the early stages of introduction in China and in South Asia and our plan is to make the product fully available in these markets by the end of this first quarter. Overall we believe both ageLOC Me and Youth have tremendous potential.

I'd also like to briefly talk about the status of our sales leaders in the fourth quarter. Sales leader growth is primarily influenced by our annual business cycle as well as our product launch process. The decline in sales leaders was primarily due to timing and comparisons in our product launch process.

In the Americas, Southeast Asia as well as North Asia, we were up against strong comparisons for the prior-year due to LTOs. In China, we deferred the launch of ageLOC Me and Q1, in order to bolster our business based for 2017, sales leader growth in EMEA was positive. For 2017 we anticipate improvements as we continue to drive ageLOC Me and Youth as we prepare for our next product launch cycle with LumiSpa.

I also want to quickly comment on the impact of social media on our business. It really is impressive to see how impactful social selling can be in our model. The early social selling success that started in the UK about two years ago is now beginning to blossom in the other markets. We are seeing pockets of social media savvy-sales leaders successfully leveraging many of our long time highly demonstrable products within their own social networks, sharing their enthusiasm for everything from our AP 24 whitening toothpaste to our contouring lip gloss. We believe the social selling would be a key accelerator to our business in the coming years.

I joined Truman and Ritch in expressing my confidence in the future of this great company. We have the strategy in place, and I believe that we are poised to catch a new gear as we look to a new growth in 2017 and an even brighter future. We will now open up the call for questions.

Thank you, sir.

(Operator Instructions)

Frank Camma, Sidoti. You're line is open.

Good afternoon, guys.

Hello, Frank.

Question on the sales leader growth, particularly in China, when you have the deferred revenue from the ageLOC Me cartridges, does that count in their sales? How do you pick that up since you didn't have the ability to [ship] that. I'm just -- how does that affect your accounts at all at the end of the quarter?

Yes actually count the volume Frank, and so they get commissioned on that, the product is treated as the backorder that's that shipped out on those were shipped out in January.

Okay, so that would not negatively affected your accounts or anything. Just trying to figure that out. And the other thing you seeing any difference in sort of like, obviously, looks like you're having better than expected response in China, since you're short on supply, but what are seeing in more developed markets like the US where there is perhaps more competition for something like that

Frank, this is Ryan. Regarding the ageLOC Me and developed -- other developed markets in the US, Korea, et cetera. As we announced at our investor day, we continue to work on the pricing offer of ageLOC Me. We are seeing improvement there, in the market and increased customer adoption, we will continue to drive it as we move forward.

Can you talk a little bit more, like last time, you talked about the really strong re-order rates. I was wondering if you give us a little color on that. Like what you're seeing now that you have some experience with that.

Yes, Frank, we continue to see really positive indicators with that. When we stocked out, obviously, of the cartridges in December in China, part of that was because we then took the cartridges off and they are not available until March, we actually launch, so there was a push right up until that point in time in China, and then there's been no cartridge sales, obviously, in January and February.

But the rest of the market continues to show good signs and the more units that are placed out there, the more customers we find coming on and being loyal consumers on that product. So yes, we continue to be very encouraged about the retention and repeat purchasing of those who are buying the devices.

Okay, my final question is housekeeping on the $0.10 that you called out. So it's basically a 39% effective rate, which obviously was higher than your normal. So even using 35% had you get the $0.10 -- I mean 35% is about what you are expecting is that correct? I'm just trying to --.

Yes, that's right. We have some benefits Frank, that came through for a couple of items, one was some revenue that was permanently -- or some earnings that was permanently reinvested in China with a couple other minor things, so our rate without the $0.10 would have been around 29.5%.

Okay, thank you.

You bet.

Tim Ramey, Pivotal Research. You're question, please.

Thank you so much. On the first-quarter guidance, it seems like revenue guidance is sort of as expected but to get to the EPS number you're talking about -- margins would have to be somewhat compressed, or we don't know what the tax rate is that you are expecting for 2017. Maybe you could address those two things first, the tax rate and is there a margin impact from higher selling expense or something like that in the first quarter?

Yes, good question. Thanks for that, Tim. The tax rate is expected to be where historically has been around 35% to 35.5%. The difference, really, is just a lower revenue number with essentially a mostly fixed overhead number, so it brings our operating margin closer to the 9% for first quarter and then as we see the revenue increased throughout the year, the margins will improve and stay in line with what we guided to at our investor day, so it really is just a function of the revenue being lower in the first quarter.

Is that primarily -- we're going to see that at the G&A line? Is that we should expect to see that?

That's right. The G&A will be higher, that's right.

Okay. All right, and just one off the wall, you closed your SEC investigation when you filed the 3Q 10-Q but this probes reporter seems to indicate they're isn't -- still an ongoing SEC investigation. Can you speak to that are you aware of anything that we should know about in terms of ongoing activity or is that actually closed?

We are not aware Tim, of what the probes reporter is reporting and have nothing to update the market on at all with respect to SEC investigations.

So it's fair to say that whatever was there is closed?

Yes.

Okay. And then, just one more on cash availability. You had fairly meaningful current maturities, but if you're looking at the cash balance, what would you kind of estimate the availability that it could be used for share repurchase? I mean, is there an extra $100 million in that number right now or how should we think about the needs of the cash account?

Yes, I think generally, we try to keep around a minimum balance, I would say around $250 million. It's impacted somewhat by the timing of being able to bring cash back from offshore, but we have a line of credit that we can use as a buffer since, in fact, we felt like we wanted to use additional cash for share repurchase. I would say a minimum balance would be around $250 million Okay, thanks so much. Thanks, Tim

Bill Schmitz, Deutsche Bank Your line is open.

Hello, guys. Good afternoon.

Hello, Bill

Can you just talk about the North Asia business because there's a lot expectations and I was wondering if it came in a lot below your expectations too. I know there was, obviously, some [small tipping] in base period and then, I guess more important, it seems like the last couple weeks of December, it's been much worse than expectations in the last two or three years. It something going on with the business in that respect and how would you explain that proceeds softness, relative to kind of you had at the end of last day?

Let me take the latter part of that question first, and then Ryan, if you wouldn't mind comment on North Asia specifically. The way the fourth quarter played out, you know, October was a little bit soft and November was really solid, and we just felt like going in December we had the firepower we needed to get to what we guided to.

As our promotions kicked in, in the month, particularly in Korea and Japan, which is North Asia as well as in the Americas, we just got lesser pop out of those than what we had anticipated.

Is there something to that, seasonally? And as much as we've seen the last couple of years, I don't really think that, Ritch, do you? Think so?

I haven't -- it certainly isn't a consistent pattern. It was really, like you said, associate with those couple of markets.

Ryan, you want to comment on North Asia?

Yes, you bet. Hello, Bill. Regarding North Asia, as you will recall in Q3, we had a significant [LTO] in the market with our Youth product there, which drove sales leader creation quite well in that market.

Moving into Q4, the key is that to get those leaders to stick and that's really where we saw some softening there, for us Japan continues to be a challenging market, we are not seeing -- we are not seeing the results of that market that we hoped, but I think the impact that you're talking about is mainly more related to Korea in retaining sales leaders, post product launch in Q3.

Okay, that's super helpful. And then, on the social selling front, is the business pivoting much more to personal care products so is that by design with the social selling where the average selling price is lower but the velocity is higher or do you think that's just discrete to the UK market, you know, vary market by market as you rollout more of the digitally enabled social selling stuff?

I want to comment on this one real quickly, Bill, because I really enthusiastic about what we are seeing in social media environments around the world. It does SKU right now, a little bit, to the personal-care category, although that's not entirely the case because Tea Green or dietary supplement happens to be a big social media seller in the UK, but we really like what's happening and even in the US, we are seeing pockets of social selling erupting in ways that are really impressive.

Today or at least so far, in most of the other markets its a little bit off the radar screen because it hasn't been big enough to impact our overall results in some of our larger markets, but it's going to be. And I think, in the course of 2017, you're going to see social media driven results coming out of several markets, the US being one, I think Latin America's going to see it, and I think Southeast Asia markets are going to see as well. Ryan, what you have to say a social media?

Yes, totally agree. I think the one thing to keep in mind will social media is the high demonstrability of these products Bill. A lot of these products are very much what you can see or what we call selfi worthy products so that tends to skew towards the beauty and personal care space more than nutrition.

However, we are seeing products like our Tea Green product that are catching a gear as well, so the interesting thing with social, is that the purchase, the average purchase price per customer is lower and so to Truman's point throughout the year in 2017, as it continues to build at improving our customer base, average spend per customer will be something that we really focus on so ensuring that we're building lifetime value with these customers as that grows.

Okay, that's great. And let me sneak in one more. Do you think you bottomed in terms of sales leaders in China?

I'll address that, as well. I think our sales leader activity, again, having just spent the week with a few of our, really, our top leaders over there, the optimism in the market is very strong. China is such a big business and it's such a unique business, requires a lot of training and over communication in that market.

We're seeing that the sales leaders, our top sales leaders, really in a much more favorable position to move. So I don't know that one would ever say bottoming out as you can predict that, but I think we're in a good position, and I think we have a solid base to build from there, really move into Q1 as we look at this ageLOC Me launch.

Okay, great thank you guys.

Olivia Tong, Bank of America.

Thanks. First, just want to clarify, for the $7 million of sales that shipped in Q1, you booked the selling expense in Q4 but the revenue will be booked Q1 correct?

No, that's not quite right. When you defer the revenue you also defer the expense.

Okay, so the expense will match up with the revenue in Q1.

That's correct.

Okay, got it. Thank you for that clarification. And then, I know you have the LPO benefiting the comp period, in terms of sales, but relative to your expectations, where was the $20 million to $30 million short fall relative to your expectations and analyst day?

I think, first of all, the $7 million in China didn't help so that leaves us maybe $10 million to $12 million short of where we talked about at the analyst day. It goes back to, I think, Truman's comments that the promotional activity that we had anticipated to drive some additional revenue in the US, Japan, and Korea primarily, just didn't catch the gear we thought it would each one to $3 million to $4 million range and that made up the difference in the shortfall, that we sustained in the quarter.

Great, got it. And then, I know every other year you have a global convention, it seems like it's -- more is happening within market, so when you think about this year, would you expect the same kind of big pickup versus years past or is it, do you think it's more -- its less of a hockey stick in Q4 relative to years past?

I'll stay with the forecasting exactly, Ritch can answer that one, but regarding the Live Event coming in October, as you mentioned, we do this every two years. We are really taking a unique approach to this event, which I'm personally excited about.

As we mentioned, this would be a globally broadcast event and so we are pushing for high attendance here but we're really pushing the reach of this event and we're looking at various promotional activities that will be tied into that and our LUMISPA as well, which I think will enable us with our Live Event to actually be more accretive in terms of building value for sales leaders and for our customers then previous conventions have been alone as far as Q4.

Yes, and as far as the guidance goes, Q4 should be a good quarter because of the launch of LUMISPA. So the real measure of whether we are getting traction with the Live Event, will definitely be -- do we see an increase both coming into and coming out of this event in our sales leaders and our customer base? That will be the real measurement that will be meaningful.

In terms of revenue, we will have about 0.5 million LUMISPA units that will be produced and available for sale in the fourth quarter. Those will be allocated around the world, price on that product is somewhere around $125, so generally speaking, there would be $60 million, $70 million of volume from the device itself, that we would anticipate. The better of a job we do at bringing in new customers, the more that revenue can be incremental to our base business is so that will be the focus in Q4.

Got it. And then, just lastly, can give a bit color is what drove the gross margin expansion this quarter?

We've had some improving benefit throughout the year, last year as we continue to -- we sort of worked our way through old inventory that needed to be cleared out, that really was towards the end of 2015. Then, we are just able to improve as we went throughout the year and hopefully we can hold in that range.

When revenue comes down a little bit we do have some amortization that flows through cost of sales, some sort of fixed costs are not real big. But a little bit of a lower revenue number can put a little pressure on that gross margin but generally, for this year, we would anticipate it being fairly similar to 2016 in total so in the 79% to 80% range and bearing a little bit by the revenue number in each quarter.

Got it. Thank you.

Beth Kite, Citi. Your question, please.

Terrific, thank you. Hello Ritch, Ryan, and Truman. I have a couple questions to start off on the first quarter, namely in China. How that's impacting the $482 million to the $500 million guide for the top line. It felt a little light to me when I first looked at it and I'm wondering if that's in part related to now Me being a March event, I think on the last call it was a January event.

ICR, you talked about maybe being a February event, so can you talk to us if that, in fact, driving for the full quarter number to feel a little lighter, and related, when you spoke of the range for local currency sales growth at 3% to 8%. What would happen for you to get 3%, what would happen for you to be at 8%? If we may start there, that would be great. Thanks.

Yes, great question. So the event, the actual launch in China, the product will essentially be made available. Where we get the pops in revenue is generally from an [LPO]. So since this is launching right at the end of March, we don't have built into our numbers a big spike from the actual launch of ageLOC Me.

It is a little bit later than we had initially hoped because it's taken effects time to build up the cartridges and be ready the actual launch so we pushed that back to the latter part of March. Generally, the numbers are coming in mostly where we would have anticipated, though, and so not a big swing. Again, we don't have any real product LPOs in the quarter to drive spikes, which is a pretty apples to apples comparison with what was the prior year, we were at [7] -- $470 million in the prior year and then we do anticipated a 1% to 2% currency impact in this first quarter.

Okay, and related to the cartridges, is there any risk that supply won't be available to go in March or have you kind of resolved maybe what you have driven the out of stock in December?

Yes, we should be in good shape to be well supplied, that's why we pushed it back, actually, to the end of March so that we could be well supplied and ready to go and should be able to keep up with demand now.

Okay, terrific. By chance, do you have a data point similar to what was offered on the investor day, for the number of buyers of the cartridges set? I think investor day offered roughly 100,000 sets were being sold in the month of October.

Yes, that continue to increase in November and then jumped up big in December because of the promotion that was done in China. And then, obviously, we're not selling those cartridges in January here, so we continue to see good adoption, the base continues to build as we go forward. I think we've now sold about 300,000 total units, and we are encouraged with what we're seeing.

Okay, great and then, if we could move to LUMISPA. I feel like were going to be backend loaded gear again, what that launch. Is there any chance that some of the product might go out in the third quarter? I know you previously said [2H] and it sound like today it's more 4Q but my -- anything occur with LUMISPA in the third quarter?

Yes, right now our plan is to really combine this with our global Nu Skin Live Event and build energy around that. So our plan, at this point in time, is to have it all in the fourth quarter.

Okay, and last one. Do you have a cash flow from operations guidance point for 2017?

I do. I think this year we came in right around $275 million and it should be very similar next year.

Wonderful. Thank you, all so much.

(Operator Instructions)

Mark Astrachan, Stifel. Your line is open.

Thanks, and good afternoon, everyone. Curious about the change in definition of active to customers. Any reason and any change to what encompasses it from the definitional standpoint?

Yes, I'll speak to that. We have felt for some time that it would be beneficial within the investor community particularly, to use terms that were more customary. So, actually, within industry Association circles we've been talking about trying to normalized our use of how we refer to sales leaders and customers as well. So there's no change in how we're calculating these two categories, we're is trying to use terms that the market is more familiar with and I think when you see other direct selling companies talking about their sales force and their customer bases, hopefully you'll see them using similar terms as well.

Got it. Okay. And then, switching to China. Greater China, customers, executives -- both sequentially, you're in your worse -- customers not [building on] a sequential basis but the greater revenue or Greater China revenue also down.

So I guess I'm curious what that implies from a product standpoint or whether it applies anything about promotional activity or just was sort of what clarity you can give around what's going on in that market and what could potentially be driving those two metrics moving in unison?

Yes, good question regarding China, and I think I caught the full thing so if not, let me know. You're asking about China sales leader and customer growth in Q4 and how we are reading the trends there.

And relating to the revenue. So, in other words, activity fees being weaker.

Yes, so generally speaking, as we look at the trends, as you will recall Q2, we had a strong LPO. And carried a lot of those sales leaders through to Q3. In Q4, as we pushed back the launch of ageLOC Me, that had an obvious impact on our sales leaders, at that point in time.

So for us, the focus in China is to ensure that our sales leader growth, our customer growth, and our revenue growth, it generally moves a more consistent manner and that's really where we've been focused because we acknowledge that there is some variance in there that tends to be less predictable than the way we want it. So as we look to Q4 and we see the activity around sales leaders and active versus revenue, for us it's how what levers we pull to drive our business in various ways. Ritch, I don't know, do you want to add anything?

I think we are actually disappointed that the sales leader number came down. We are actually encouraged that the active number -- the customer number, has really helped steady.

So I think part of that is ageLOC Me and the retention that we're seeing there so that's an encouraging sign. But clearly as we go into this next year, as Ryan mentioned, the focus will be on driving both. Sales leaders often lead out and then bring in customers to support and allow them to stay in the business. So yes, it will be a real attack this year on driving both of those.

Great. Thank you

Thank you. I think that our list of questions has expired. I'm going to take just a second, and as much as this is my final earnings call as CEO, share a quick thought. 20 years ago, I joined the Company as a bit of a skeptic. The founders had asked me to take the Company public, and I thought at that time, I would get the project done and on the move on because I didn't really see myself spending my career in direct selling venture.

But what I found here was not what I expected. This is an amazing company and a terrific business. And like all businesses we have our ups and downs but we have survived and thrived through all of the challenges. And will continue to do so.

That's going to happen because of two things. First, the world needs what we offer, both in terms of our high-quality anti-aging products, as well as the opportunity we provide to enable people to try to their hand at an entrepreneurial endeavor. The marketplace trends for these two factors are not waning. The world is aging and the seemingly endless need for opportunity in the world where opportunity often exists only for the privileged.

For the people seeking a better way, in my opinion, there is no other business platform that is as low risk and potentially as high reward as direct selling. And secondly, Nu Skin has built on its foundation of solid values and principles that were a reflection of our founders original but that are now embraced by hundred of thousands of remarkable people, who want their lives to stand for more than the size of their bank account.

That's why it's a privilege to be associated with such a fine enterprise and it's why I believe Nu Skin Enterprises will continue to flourish, thank you

Thank you, ladies and gentlemen. That does conclude your program. Thank you for your participation, and have a wonderful day. You may disconnect at this time.