Nu Skin Enterprises, Inc. (NUS) Q1 2012 Earnings Report, Transcript and Summary

Good day ladies and gentlemen and welcome to the First Quarter 2012 Nu Skin Earnings Conference Call. My name is Lisa and I will be your operator for today. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for, Mr. Scott Pond, Director of Investor Relations. Please proceed.

Thanks Lisa. We appreciate everyone joining us today. With us in the room today are Truman Hunt, President and Chief Executive Officer; Ritch Wood, Chief Financial Officer, Dan Chard, President of Global Sales & Operations, and Joe Chang, Chief Scientific Officer. Just a reminder during this call, comments may be made that include forward-looking statements. These statements involve risks and uncertainties and actual results may differ materially from those discussed or anticipated. We encourage you to refer to today's earnings release and our SEC filings for a complete discussion of these risks. Also during this call, certain financial numbers may be discussed that differ from comparable numbers contained in our financial statements. We believe that these non-GAAP financial numbers assist management and investors in evaluating and comparing period to period results in a more meaningful and consistent manner. I will now turn the time over to Truman.

Thanks, Scott and good afternoon everyone. We appreciate you joining us on our call today. As you saw from our announcement this morning, we're off to a great start in 2012, posting another record quarter and exceeding guidance for both revenue and earnings. We generated revenue of $462 million for the quarter, which is a healthy 17% increase, and we also saw significant earnings per share improvement of 32%, when excluding charges related to last year's Japan custom's ruling. So given these solid results and our outlook for the remainder of the year, we're increasing our 2012 guidance which Ritch will touch on in a few minutes. We're really pleased with our first quarter. Continued growth is a result of the phenomenal job that our sales leaders are doing in ageLOC product launches. You know that we've always felt that our scientific focus on the genetic sources of aging, which are addressed in our ageLOC product platform, gives us a very compelling product advantage. But these product innovations are really of limited value without a highly capable and motivated group of sales leaders to promote them. As indicated in our release, we're seeing very solid growth in active distributors, and in our executive distributor ranks, which is a reflection of the success of our sales leaders' efforts. We're working hard to be better aligned with our sales leaders, and that effort is paying off as we see increasingly large impacts from our product launches. You'll remember that we had a very strong fourth quarter of last year when we introduced new ageLOC products at our global convention. Now these products are rolling out regionally, and we're duplicating that strong response with our local and our regional launches. Historically, those local launches were sometimes as far out as 2-4 years from the product introduction in the United States, but our new approach has these products rolling out in close proximity to the U.S. launch and this is enabling us to capture a lot of energy that previously would have dissipated with time. So we remain optimistic about the remainder of the year, as we have significant product live launches in many of our markets yet to come. In January, we launched a new ageLOC Galvanic Body Spa in the U.S. and Europe and we also introduced our first global age-lock supplement called R2. This is the product that helps provide sustained energy levels and also promotes cellular cleansing. Japan and Korea were the first markets to get the R2 product and we'll continue to global roll out of ageLOC products in the second quarter when we launch R2 as well as the Body Galvanic Spa in greater China, and R2 in south Asia pacific. So with the significant launches that we're having in both of our product categories it's nice to see double digit increases in both skin care and nutrition as well. So let's spend a minute just looking at our regions individually. We're very encouraged by the positive trends that we've seen in the Americas. New product launches have been extremely well received by our distributors here, and frankly our regional management team is doing a great job to drive distributor productivity. So based on what we've seen here in our home market, we believe that the Americas will have a very solid year. Taking a very quick look at North Asia. As our release indicated Japan was down about 5% for the quarter, which was a slight improvement over the prior quarter and in line with our expectation. We're now starting to lag out [ph] the impact of last year's natural disaster from Japan and do expect to see a modest spend improvement throughout 2012 and the fourth quarter, we look to be flat to slightly up in Japan. And at the same time, South Korea posted another solid quarter in the space of increasingly tough comps. That market has really been and all-star market for us in the past several years till now. We also continue to grow at a very strong pace in our emerging markets. Mainland China, in particular, has posted gains of more than 57% in Q1 and we project a very strong Q2 as we begin to take orders for ageLOC R2 and Body Galvanic Spa next week in a stance of a large greater China regional distributor convention will be held in June. We also continue to see very strong growth in South Asia. The region posted a 54% year-over-year increase in Q1 with growth coming from virtually every market in the region. Now Q1 revenue includes about $15 million of products that were moved in Q1 from the fourth quarter convention orders. But even without this boost due to our revenue in Q1, South Asia is doing extremely well as you can see when we break at [ph] distributor account growing at 23% in the quarter. So we expect South Asia to continue to post very impressive results. I also want to point out that we continue to make great strides in terms of overall profitability. Our operating margin's moving towards our 16% target. This was the target that we set our sights on about 18 months ago when we announced our intent to push to $4 of earnings per share, and we continue to track ahead of schedule in achieving that target. So with that, let me turn the time over to Ritch.

Thank you, Truman. And thanks to each of you for joining us on the call today. We started this year off with a very strong first quarter and that's prompting us to increase our annual guidance with this morning's earning release. So let me touch on that first of all. We're increasing our anticipated local currency revenue for 2012 by 3%. But we're also increasing the expectation for negative currency impact by 1%. So net, we're increasing our revenue guidance over the top end of our prior guidance by $35 million for the year, or approximately 2%. In addition, we now expect earnings per share to be in the $2.92 to $3 per share range. That's an increase of $0.06 over the top end of our previous guidance. The guidance reflects an anticipated benefit from our new product launches in greater China and Southeast Asia during the second quarter of approximately $55 million to $60 million. And that's up about $20 million to $25 million off where our previous guidance was. The company's operating margin for the first quarter was 15.5%, representing a 90 basis point improvement over the prior year. The improvements came from efficiencies within both the cost of sales line as well as our general and administrative expense line on the income statement, offset by an increase in our distributor incentives and these results put us well on track to achieve our stated annual profitability objectives. Our gross margin for the quarter at 83.6% consistent sequentially and an 80 basis point improvement over the prior year. Selling expenses for the quarter were 43.8%, compared against 42.7% in the prior year. This increase is a result of our sales leaders achieving or reaching a higher level of achievement on our core compensation plan as well as a higher number of distributors qualifying for sales incentive trips than in previous years. The higher achievement in generating accelerated revenue growth, it is generating accelerated revenue growth. And a positive signal for the future expansion of our business. And during the second quarter specifically, we anticipate that our selling expenses will remain high due to the scheduled product launch and so we're modeling these expenses to be approximately 44% in the quarter. Our G&A expenses, which were more fixed in nature, improved 130 basis points over the prior year, coming in at 24.3% of sales. Our tax rate was 36.5% compared to 37.5% in 2011. And we expect this rate to track in the 35.5% to 36.5% range for the balance of 2012. During the quarter, we paid $12.5 million of dividends. We repurchased $5.4 million of our outstanding shares. For the 2nd quarter of 2012 we are projecting year-over-year revenue to increase approximately 20% in local currency with an anticipated negative impact from currency fluctuations of approximately 3%. This modeling puts our revenue guidance of $490 million to $500 million with earnings per share in the $0.79 to $0.83 range. With that we will now open the call up for questions.

[Operator Instructions] Your first question comes from the line of Tim Ramey with D.A. Davidson.

Ritch, the obvious follow on to your last statement is then if we model 17% revenue growth for the 2Q, we have to model -1% revenue growth for the 3Q and 4Q or second half combined to get to your overall guidance unless I did my math incorrectly. I know you are conservative. We love and respect that about you, but tell me why we would believe that revenues are going to be down in the second half.

Generally I am looking at fairly solid growth in the third quarter. There is a negative currency impact. I am looking at 4% currency headwind in Q3; so somewhere around 9% revenue growth in local currency in the third quarter with us obviously -- we're comparing against the $100 million [Audio Gap] so I actually have our revenue down a little bit in the fourth quarter. That assumes a 2% headwind for currency in the fourth quarter as well. But it's primarily just comparing against the substantial product launch in the prior year.

No, I know that that product launch was orders of magnitude bigger than any that you'd ever done before, but I think you were pretty happy with the methodology that you used on that product launch. You will have a convention. You will have a new product launch this fall again as well, I assume. How should we think about that? Are you planning on doing it in some way that might be different and thus would take revenues out of the fourth quarter?

Tim, it's Truman. You'll recall that we do our global convention every other year and so this is a non-global convention year, and the fourth quarter events will be smaller in nature with most of the major product introductions having occurred in the first, second...

Your next question comes from the line of Bill Schmitz with Deutsche Bank.

Could you just talk briefly about the couple of the board departs recently and any plans you have for replacing those board members? Just give it some context in what they've...

Yes, we have had most of the member of our board have been really long-term board members. We announced last fall that Blake Roney would be leaving to serve a volunteer church assignment for 3 years. So that frankly gave us the opportunity to just take a look at our board and decide what the ideal size would be and trim the size a little bit and kind of match inside participation with an appropriate level of independent board member participation. And I would really read much into it. It was all mostly participated by Blake's leave of absence here for a few years.

Okay. Got it. That's what thought. And then I know you talked a little bit about M&A and some plans for Latin America. Is there any sense for the timing if you guys do end up doing something down there?

Well, Bill, as you know Latin America is a very important market for direct selling, generally. It happens to be the region of the world that's growing the fastest for our industry. And we are enjoying decent growth rates in the few countries in which we operate in Central and South America right now, but the market has a lot more potential and we're actively engaged in considering how we can go from our current business model to really making Latin America relevant to us. If we're going to reach our potential by the year 2020, which, as you know, we've put a $5 million target out there by that point in time, we have to have substantial contribution from Latin America and we're in the process of figuring that out.

The next question comes from the line of Olivia Tong with Merrill Lynch.

I wanted to go a little bit deeper into the North Asia results. First, just thoughts about Japan now that the comps get quite a bit easier with the lapping of the disaster impact. And then on Korea, you mentioned tough comps, but the comps have been quite difficult for some time so maybe if you give a little bit more thoughts about what you're thinking towards the rest of the year, both Q2 and going forward? And then the executive distributor account had -- that's the only area in which it -- North Asia, Asia is the only region where you saw a decline in executive distributor accounts. So could you give a little bit more color on what happened there?

Yes. No, for Japan, Olivia, we're modeling Q2 about where Q1 was or a slight trend improvement over Q1 with about a 3% decline for the year, which means that you'll see an improvement in the second half as the comps do get a little bit easier and we're also launching a body galvanic store in Q4 in Japan, which will be a nice launch. And as I indicated in my remarks, should get us slightly up by the end of the year. So it's -- I would say it's slow trend improvement in Japan, but we are seeing signs of hope. Now, the negative number that you see in North Asia there in the quarterly release is about 3% down in the executive count is entirely Japan-related. In Korea, as you know, Korea has just been an absolute all-start market for us for 12, 13 years and the market is getting to the size to where it's difficult to maintain the growth rates that we've enjoyed over that period of time. But the market is also going to take kind of breaths -- deep breaths from time to time in between product launches and major opportunity, renewal launches and stages. So we have no reason to believe that Korea won't continue to be a solid market, but there will be quarters from time to time where the market's going to take a deep breath.

Got it. And then, secondly, on the convention. Are there -- you've got the greater China and Southeast Asia conventions in Q2. Is there anything in Q3 or Q4 from a regional basis that we should be aware of?

No. Actually, the convention for Southeast Asia will actually be in Q3, although they're having some different events in Q2 where the product launch is happening. So we get some of the product launch revenue will be pushed back into Q2 based on some of the seminars, the big success events they're holding there and then the convention actually in Q3. So Q3 won't -- we don't really have any big events planned Q3. We do have the U.S. Regional event in Q4 along with some other smaller product launches that will happen around the world, but, yes, it should be business fairly normal in Q3 and 4.

Your next question comes from the line of Scott Van Winkle with Canaccord.

Ritch, I was trying to break down the $55 million to $60 million of sales you're going to see in Q2 around the launches in Southeast Asia and China. Should we assume that 80% of that or so is coming from China? And will that all fall in Hong Kong when you actually report region -- sales by market?

Yes. Pretty close estimation there, Bill. I'm guessing at this point in time because there's 2 things I guess at. Number one is how much the gross number will be and number two, how much the net number will be once you factor in returns, cannibalization and actually what ships in Q2 and if there's any that pushes into Q3. So, what I've got in the modeling is basically $40 million of net product increase, which the majority of that will be built -- shipped in Hong Kong. So, most of those sales will be reported there. And then another $15 million to $20 million coming out of Southeast Asia. Again, those are kind of net numbers so I would assume the gross number is higher than that. And then we'll just have to see. We'll start to get a really good idea on the greater China number. They have the first week in May where those pre-orders are actually placed, and then they will be picked in June. We will get a pretty good sense after the first week of May of what those numbers are looking like. Later in May we have an event in Southeast Asia and then one more event in June. So that's kind of how the product rollouts will come throughout the rest of the quarter.

And do you assume any -- take greater China for example, do you assume that any of that $40 million net in Q2 is pulled forward out of a Q3 period? Or is it just kind of incremental to that quarter?

That is another great question and I think we are gaining more and more experience. By the way, we do this with our sales teams and they do a lot of analysis on how this is working. We watched that very closely from Q4 to Q1 and we just did not see a lot of slowdown in the business in Q1, so it did not seem to be a huge factor that we pulled sales out of Q1 into Q4 when we had that big product launch. So I do not anticipate that it will pull a lot of sales out of Q3 necessarily into Q2. The key for us, and we continue to talk about this and manage it, is what happens to our executive growth and our sales force growth. If we get real growth in those numbers, those executives continue to qualify and grow the business so the business should continue to trend really strong.

Great. And the commentary on the higher selling expenses, staying high in Q2 with the big launch, we didn't see -- well, we saw some growth in selling expense in Q4 both sequentially and year-over-year, but not to the same magnitude. Is this something that's built upon itself? Or is it different than what we saw in Q4 when you had $100 million of pre-orders around a new product?

Yes. I think it will be fairly similar to Q4. We are just running a little bit higher already with the base, so then when we add that on top, that's why I'm estimating it to be a little bit higher.

Your next question comes from the line of Mark Astrachan with Stifel Nicolaus.

Question on distributor growth. There is a slight deceleration, I guess, in the quarter versus what was in the fourth quarter. If you could give some sort of thoughts on that on a go-forward basis, sort of like how many folks came into the business in the fourth quarter that tried and have since left? Like is there anything unusual in turn rates, and sort of your thoughts relating to your guidance, how you think about distributor growth going forward, including on the executive distributor front?

Yes. The dynamic that's in play there, Mark, is that we almost always see a pickup in distributor growth in connection with our major conventions, and so it is not surprising that there was acceleration in distributor growth in Q4. And Q3 has had more and more distributors try to qualify for different PIN levels in connection with our global convention in October of last year. So the fact that there was a deceleration sequentially is really not at all surprising. In fact, an 8% growth in active and an 11% growth in executives is really a healthy number for Q1 and a number we're very pleased with.

And I would just comment too, to add to that, Mark, that ideally as the product begins to roll out, you really see the sponsoring pick up. A lot of times you'll see the executive growth strong prior to product launch and then following that on, strong sponsoring which is exactly what we saw in Q1. We saw really nice uptick in our active numbers. So yes, the business is trending the way we would have hoped it's doing, and an 11% growth in the executive base is really an indication of what's happening with the core business. And that should point to a very strong core business growth as we go throughout the year as long as we can hold onto that number and continue to drive from there.

Great. And then in terms of inventories out there amongst the distributors, I know you've talked historically about return rates as a good proxy for what's there or how the product has been sold through. What's sort of the update there as we've been now 4, 4-ish months into that launch in some markets?

Yes, that's something that we obviously asked ourselves with the size of the fourth quarter convention launch, and we've been very pleasantly surprised at return rates really haven't bumped up at all and have stayed in line with historical measures and even lower than what we would have anticipated, so we're encouraged by that.

So we're talking low end of 3% to 5%?

Yes.

Okay. And then in terms of just think about gross margins down slightly sequentially. I guess have been going up a bit going forward, or have been going up a bit over the last couple years. Anything sort of change there?

No, I think we'll see a hold right in this range right now. I have softened it up just a little bit in the back half of the year because we're anticipating a little bit of currency headwind, but should be strong here in the second quarter with the launch of the new product. The new product has margins that are very similar and so we saw strength in the fourth quarter and we anticipate holding that as we go forward. So 83.5% to 84% would be the range we believe will hold in for the rest of the year.

Great. And just lastly, housekeeping, could you give us a bit of color on sales by segment including like R2, Vitality, Transformation, etc.?

You bet. One of the real great signs we saw in the business is that LifePak continued to be very strong. So LifePak was actually up 8% year-over-year in the first quarter at about $66 million. The facial spa continues to sell really strong holding steady basically at about $60 million for the quarter. R2 about $47 million, which included a push over for sales in the fourth quarter that were shipped in the first quarter. So the base would have been about $30 million of R2 in the first quarter. The Transformation at about 35 million, the Body Galvanic Spa at about $14 million, Vitality$12 million. So total ageLOC sales somewhere around $168 million for the quarter.

Your next question comes from the line of Rommel Dionisio with Wedbush Securities.

I wonder if you could -- now that the new product have been launched, just discuss to what extent you might have seen some cannibalization from existing products, specifically especially the ageLOC Transformation from the Body Galvanic. I realize one's for the face and one's for the body, but did you see any sort of deterioration in the quarter as the quarter progressed as new -- as the distributors were focused on the new product launch?

We're always going to see that some extent. Wherever we shine the spotlight, that's where distributors and consumers are really going to be focused and so as we shine the spotlight on Body Galvanic and on R2 as they launch, there will be almost inevitably some cannibalization but we're getting better at minimizing the degree of cannibalization. As Ritch indicated just now with the product to product sales results of LifePak up 8% year-over-year is really encouraging sign because LifePak really isn't the focus of our marketing promotion attention right now. You want to add to that Ritch?

No, I think that's exactly right. What's always interesting to us is where the base is, so we try and build up as many subscription orders and so forth to get that base up. What generally fluctuates a little bit is the number of new people who are coming in on that product. That seems to be, as we shined a spotlight from product to product, the base seems to stay the same but the new people coming into the business singing up using that product will fluctuate a little bit. So we're actually extremely encouraged. To generate $168 million in the quarter of ageLOC products, puts us on track for over $700 million or so this year. And ageLOC product sales, a brand that we basically launched about 4 years ago or 3 years ago, we are very encourage with the way the business, not only trending, but the limited amount of cannibalization we've seen as we've launched each of these products.

Your next question comes from the line Anand Vankawala with Avondale Partners.

Just a couple of questions. Just first, relating to the launches that are expected in Q2. What are the incremental G&A expenses that we should build into our model for the second quarter?

Yes, there's probably about $3 million of net cost related to these conventions that we're holding.

And then also just talking about Q4. I know that we're going to have the difficult comp, but I mean, what are some things that you could possibly do to offset this? I know that we have -- that you have some launches scheduled for fiscal '13 in the first quarter. Is it possible for you -- are you still considering plans to pull some of those forward into the fourth quarter? And also any plans to add the ageLOC brand to other products and re-launch those possibly in the fourth quarter?

Yes, all of those things are in play. As we indicated a little earlier in our remarks, we'll see the Body Galvanic Spa of the launch in Korea in Q4. And the U.S. is also going to have a nice launch as we apply ageLOC Technology to a very popular product here, our Tru Face Essence Ultra product, which will launch in the fourth quarter. And so we are applying ageLOC Science to other key products and we are managing product launches to -- we're not giving up the fourth quarter and just concluding that we're going to be down. We are going to try to maximize sales in the quarter. It's just that offsetting that $100 million pop last year is a pretty tall order.

Your next question comes from the line of Carson Yost with Yost Capital Management.

I just had a follow up with a question on the board member someone asked earlier. Just any questions regarding fall out related to the books published by the board members' husbands. What have you all done to kind of try to stem the damage if any? And is it anything that we should worry about?

Yes, that is not our favorite topic around here right now because it's something we'd obviously rather not have to deal with. To us, to be honest in my opinion, it's pretty much garden variety extortion from my perspective. And our board member, Sandie Tillotson, is doing her best to deal with her ex-husband and husband and fighting that battle as effectively as she can. But when people show up with their hand out saying, "Pay me or else," it's pretty distasteful.

So the company neither paid off either of the 2 husbands? Because I saw that the second one had removed his book from his website a couple of days after it showed up.

No, the company hasn't participated in any settlements with those people.

Your next question comes from the line of John Faucher with JPMorgan.

I was wondering if you take a look at the subscription volume, can you sort of update us in terms of where we stand on that? And can you also talk about as you launch more new products, does that create a situation where the subscription percentage goes down and then begins to move back up again because of the whole pre-launch stuff? So can you just give us an update in terms of where we stand there?

Yes, that's exactly how it works. When the pre-launch happens, none of that volume comes in on subscriptions so it pushes the rate down just a little bit. It was right around 56% in the in first quarter. So holding very solid. Then it's always fun to see the new orders come in on subscription. We're processing a half million orders a month now on subscription and continuing to grow that base as we go forward, but you are exactly right, it drops down generally when we have a big pre-launch and then it picks up as the customers come on to that new product.

Got it. And then a sort of a follow up on the China business, which is obviously doing well, but one of the things that we struggle with is trying to figure out sort of what's like-for-like growth versus new territory growth, sort of geographic expansion. Any sort of updated thoughts in terms of how your like-for-like business is doing in China as opposed to, let's say, sort of picking up new distributors or picking up new geographies?

No, the growth that we are seeing in China, John, really is coming from the centers around Beijing, Shanghai and Guangzhou. And the growth that we are seeing really isn't related to -- much at all to the expansion of new cities. This is just core growth in our 3 core areas, and it is obviously very encouraging because it is much less related to geographic expansion than it is to just core growth in the business.

[Operator instructions] Your next question is a follow up from the line of Bill Schmitz with Deutsche Bank.

Just a couple follow ups if you don't mind? What -- how should we model the margin impact of the currency? I know we've kind of talked about it before, but is there any sort of delta? If it is going to be sort of like 3% you said in the third quarter, I mean, what kind of profit hit would you have on that?

Yes. So 3%, somewhere around $15 million or so would be the head wind and it is probably around $0.02 EPS. It shouldn't have a huge impact on the overall margin, but there will be a little impact on EPS for the 3rd quarter.

Got you. So it is pretty linear. So if it is 3% at the top line, it is 3% to the operating line as well?

That's right. Yes.

Okay. And then is there like -- if ageLOC sort of goes as planned this year, is there a chance that it becomes a billion-dollar brand this year?

Oh yes. It is already a billion-dollar brand.

I thought you said $168 million in sales this quarter?

Just for the year itself.

I think, Bill, the big think that pushes that up is what happens here in the 2nd quarter with these product launches. We will get a pretty good idea even in the next few weeks of how that is going, and there is probably opportunity that we overshoot the numbers we put out there as we regularly try and do. Again, I just remind that the areas of conservatism, what we try to bake in are emerging markets and product launches because those are a little bit more difficult to project. The rest of the business I can stick my finger on pretty good. So, we try and always stay behind the curve as it relates to what those product launches look like. Obviously our General Managers are much more aggressive at what they believe this will turn out to be than what I put into these numbers.

And to that point, Bill, let me just highlight one thing and that is that our annual sales incentive trip that we do with our top sales leaders happens to be in the second week of May this year. The week following the order-taking in connection with the greater China launch, we're going to want to talk to our sales leaders at this trip about the result of the order-taking process. So there's a high likelihood we'll update the industry [ph] on orders for the Greater China Convention just prior to our annual sales incentive trip.

Your next question is a follow up from the line of Olivia Tong with Merrill Lynch.

Just on the other income line, do you have any sense for where that's trending so far. And I realize that we're only part way through the quarter, but any sense on that?

Yes, Olivia. I'm just going to jump back in time to Q3 of 2011. You'll notice we took a hit back then about $6.5 million or so for FX or currency shift. Basically we said that a lot of those were non-cash translation losses that we took. We brought much of that cash back in, in the first quarter as the rates had moved into our favor. Basically on a go-forward basis, the thing that will cause that number to shift on the other income expense line is the fluctuations during the quarter and where it happens to land at the end of the quarter, so it's a little bit difficult to forecast at this point in time because we kind of have to see where it's going to land at the end of the quarter. But generally speaking, I've probably built a little conservatism into what I think is happening with exchange rates, primarily because the yen moved to 84 during -- a couple of months ago. So, I built a little conservatism in, I believe, in the latter half of the year with the yen being in the 83 range into the numbers, and today as you know, it's about 80 1/2 or so. So, that's where I'm trying to forecast out what's going on but I can’t really give too much of an update on the other income line until we get closer to the end of the quarter.

Let me just conclude our call here by, again, thanking you for joining us. And I wanted to just highlight that our numbers obviously give us a difficult comp in the second half of this year, but overall with the success that we're having from our product [ph] launches in the first half, 2012 is going to be another record year. We're seeing phenomenal distributor enthusiasm around the world and are aligning our sales leaders to give and sustain long-term growth. So looking beyond 20012, the refinements that we've made to our launch process of the past couple of years, really bode well for the future as we expect our 2013 global introduction of an ageLOC-based weight management system to be our largest global launch ever by quite a wide margin and then that will obviously bode well for 2014 as we roll out the weight management system globally. So this product development and launch process is really enabling us to sustain and propel long-term growth we feel for many years to come. So overall, it's a great time for Nu Skin Enterprises and we're delighted with our results. We're optimistic about the future and couple these things with a growing a talented distributor force and a fully committed corporate team that's focused on achieving our core dollar earnings per share target, we continue to have a very bright future. So thank you all for joining us today and we hope you have a great day.

Thank you very much. This concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.