Good day, and thank you for standing by. Welcome to the Q2 2025 Nu Skin Enterprises Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, B.G. Hunt, Vice President of Treasury and Investor Relations. Please go ahead.

Thanks, James, and good afternoon, everyone. I'm joined by Ryan Napierski, President and CEO; and James D. Thomas, CFO. We are excited to share Nu Skin's results from Q2 of 2025. Before I turn the time over to Ryan, let me point out that on today's call, comments will be made that include forward-looking statements. These statements involve important risks and uncertainties, and actual results may differ materially from those discussed or anticipated. Please refer to today's earnings release and our SEC filings for a complete discussion on these risks. Also during the call, certain financial numbers may be discussed that differ from comparable numbers obtained in our financial statements. We believe these non-GAAP numbers assist in comparing period-to-period results in a more consistent manner. Please refer to our investor website, ir.nuskin.com for any required reconciliation of these non-GAAP numbers. And with that, I'd like to now turn the call over to Ryan.

Thanks, B.G. Thanks, everyone, for joining the call. We spent some time this past quarter with our amazing and talented top leaders in our annual Team Elite incentive trip in Greece, where we aligned around our vision, strategy and plans for our next big opportunities, which I'll get to in just a moment. But before I get to the strategy, I'll begin with an overview of our Q2 performance, then provide an update on our key strategic priorities for the remainder of 2025 as we continue pursuing our mission of being a global force for good by empowering people to look, feel and live better lives. I'm pleased to report that we delivered revenue at the high end of our guidance range and significantly exceeded our earnings per share forecast for the second quarter. We achieved revenue of $386.1 million. More notably, we delivered earnings per share of $0.43, well above our guidance range of $0.20 to $0.30. This strong earnings performance reflects our disciplined approach to cost management and operational efficiency improvements that we've been implementing across the organization. As we review our reporting segments, we're seeing encouraging signs in several parts of the business as we navigate the macro environmental uncertainties impacting consumers around the world. We continue to drive strong year-over-year growth in Latin America as our developing market strategy takes hold in the region. This was offset by declines in North America, which has faced increasing macro pressures on the business. Japan reported growth in the quarter and continues to benefit from a strong subscription- based wellness business. While revenue in South Korea and China was down due to persistent economic challenges, we're seeing signs of sequential improvement. We experienced growth in the Pacific, while the rest of Southeast Asia remained sluggish. Europe and Africa also…

Thank you, Ryan. Good afternoon, and thank you for joining us today for our Q2 earnings call. I'm pleased to provide an overview of our performance for the second quarter of the year, including key highlights, challenges and our outlook for the rest of 2025. As always, I'll walk through the financial results, touch on some key business dynamics, discuss our outlook for Q3 and the rest of the year as well as provide an update on how we're navigating the current macroeconomic environment. Turning to our financial results for the quarter. I'm pleased to report solid performance in several key areas. For the second quarter, we delivered revenue near the top end of the range at $386 million, with neutral foreign currency impact. Earnings per share came in at $0.43. This surpassed our guidance by $0.13 and demonstrated significant improvement over the prior year $0.21 adjusted earnings per share due to our cost efficiency efforts deployed over the [ last 2 years ]. Our Q2 gross margin was 68.8% compared to 70% in the prior year, primarily due to the revenue mix between Rhyz entities and the Nu Skin core following the sale of Mavely. Within our core Nu Skin business, gross margin was 77.5%, up 140 basis points from the prior year, resulting in 4 quarters of sequential adjusted gross margin improvement. We're continuing to see the benefits of our portfolio optimization and operational refinement efforts. Selling expense as a percentage of revenue was 33.2% for the quarter, a decline from the prior year, primarily reflecting the impact of the Mavely sale on the overall revenue mix between our core Nu Skin business and Rhyz. Within the core Nu Skin segment, selling expense was 40%, down from 42.2% in the prior year. The decline was largely driven by…

[Operator Instructions] Our first question comes from the line of Dave Storms from Stonegate.

Just want to start at the top here maybe with -- maybe just some thoughts around the puts and takes on your guidance. Great to see you guys narrow that range. But are there any initiatives or geographies that can maybe have an outsized impact that will put you on the higher end or lower end of that guidance?

Dave, yes, just -- maybe I'll share my thoughts and then obviously, James, can dive into it a little bit better. But I think as I mentioned through first half performance, we continue to see Latin America overperforming expectations, a little bit offset through North America, which is a key market, and we're working to improve there. Again, puts and takes, as you said, it's Korea and China. Korea, we're seeing improving trends there. China is always a big question mark, especially with the macro uncertainty there economically and just geopolitically. So those are probably for me the ones that are like top of mind would be those North America, China, Korea, whereas Europe, Southeast Asia and Japan and LatAm, I think are going to are going to do better. But James, any additional color from you?

No. As we look across the landscape across the first 2 quarters of the year, there was a lot of shifts between geographies and the performance between the outcomes of our reported numbers through Q2. When we looked in the back half and we're forecasting out forward and Ryan touched on the ones where we see -- we've rolled through that overperformance and then also adjusted those other markets that have underperformed through the first half and looked at the energy maps and the programs that we have running in each of those regions. He touched on the highlights for us. Latin America continues to perform well. Japan continues to hold steady. And the other markets and regions, we're looking forward to our Q4 launch of our Prysm iO as well as getting ready and staging for the opening of India.

That's great color. I appreciate that. And then maybe just double-clicking on the strength seen in Latin America there. Are you able to highlight what's really working there? And how much runway is left? Does Prysm iO turn into -- is that pouring gas on the fire for Latin America? Or just kind of how you see that playing out in the near term?

Yes. Latin America has been an interesting journey for us. Obviously, at the macro level, it's always been a region that has enormous potential in direct selling. But for us, has maybe been underrepresented. What we're pleased with there, we took a different approach there about 2 years ago, aligning with our leaders there around how we would simplify the model to really get a focus that would enable us to scale more profitably. And what we ended up finding out is the more we focused and simplified the model from an operational efficiency perspective, the better the sales force aligned and focused. And so to true extent, less was more and from there, that was borne into kind of a 3-pronged strategy from the product side, the business model side and then the operational side. So at the product level, really retuning the portfolio to hit at the right price points with a good retail profit from a sales leader perspective. So working through margins there, and that was important. On the business model side, as I mentioned, it's critical in those markets that there's a healthy and reliable retail profit that's made to the seller in addition to the incentives that we align around growing the channel. And so striking the right balance between that selling and referring together with our new sales performance plan is working really well. And then that last prong of scalable infrastructure there. So really focusing much more on the technical and technology-based support rather than hard cost infrastructure has proven to be helpful there, being able to get to the needs of the consumers and affiliates down there. So I think those are really the elements of when we talk about the developing market strategy, even in India, same 3 types of elements will be focused on the portfolio, the business model and the flexible digital-first infrastructure. Prysm, I think, will be an additional help there. Latin America historically has been a beauty origin market. The majority of our business down there is that, but we have some good nutritional products like our Collagen line down there that kind of spans the two. Our sales leaders are really excited about Prysm and think there's a great opportunity moving forward with this expanded LifePak line, which is our premium nutritional supplement that works really hand-in-hand with Prysm. And we have a new formula called LifePak Elements that we'll be introducing down there next year that we anticipate will further strengthen the offering down there.

That's great. I really appreciate that. Turning to -- at the consolidated level, the cost optimization that you've been kind of driving here, it seems to really be making some strong progress. When you're thinking about it going forward, how many levers do you still see to pull there? Is there any low-hanging fruit that could continue to drive margin improvement year-over-year like we saw this quarter?

Yes, I'll take that question, Dave. For us, we talked about earlier about 4 consecutive quarters of sequential growth in gross margin. That is the result of cumulative efforts across the [ last 2 years ] mainly and working through the inventory and the turns to get that flow through our cost of sales, so the lower overhead will roll through. We still believe that there's still opportunity there as we've lowered our inventory levels and manage that to be really in line with our overall revenue. Selling expense, we continue to optimize for us. That's something that helps the field and generates the top line. And so we're really focused on spending efficiently where we can to make sure that we're optimizing performance. And then G&A, we're going to continue to focus on our operational footprint, like the developing market strategy that Ryan talked about in Latin America. We're looking across the scope of all of our markets and continue to look and find opportunities where we can use technology in place of physical presence or labor and continue to find opportunities where we can deliver more dollars to the bottom line. So we're going to continue our efforts, and we feel confident in our ability to navigate our forward.

That's great. I really appreciate that commentary. Maybe just one more for me. You ended the quarter with a strong balance sheet, and you mentioned that it gives you a lot of flexibility. Just if you could help us maybe prioritize what your capital allocation priorities are going to be in the back half of the year given that flexibility?

Yes. And maybe I could -- I'll have James kind of go into the detail on capital allocation. But I mean, obviously, for us, investing in growth of the business is critical and kind of doubling down on our 2 growth opportunities, Dave, for us that are always front and center. First, from an innovation standpoint, Prysm iO, as we're building upon the extensive database that we've created over the last 20 years to now take that forward in a new device that is -- really literally can fit in anyone's pocket anywhere. This device, coupled with our database, extensive database and then the app, the intelligent wellness app coming along is a major -- for us, it's a major focus and source of investment as we lead out into this new world. And then, of course, leaning into developing markets. Again, we have a scalable model. We're taking a very different approach, digital first there. So we're not talking about massive fixed cost infrastructure investments, rather, we're really building it out to be scalable. And so as we go into India, that's a priority and making certain that we're really allocating our investment into growth first. But James, maybe you can talk more about capital allocation.

Yes. Our capital allocation strategy has been consistent. We fund the business. We look for opportunities where we can find the growth, like Ryan mentioned, right now, Prysm iO, India and then other several initiatives inside the business, we're heavily funding. The second one is making sure that we're able to service our debt, that we can manage our obligations going forward with where we're in a really healthy position. And the third is to continue to pay a strong dividend, return value to shareholders through both our dividend and then when opportunity permits to be able to be in the market to repurchase shares. And so that's really what we have and we're looking forward. And we also look for other opportunities where we can take advantage of potential opportunity that may arise to go after growth.

I am showing no further questions at this time. I would like to turn it back to Ryan Napierski for closing remarks.

Well, we really appreciate everyone joining the call. If you have additional questions, please reach out to B.G., James, myself to answer those. We're very, very excited about the future as it's unfolding. We were pleased with our first half results and are now very focused on second half in preparations for 2026. We're going to be driving these 3 priorities across the business of accelerating innovation with Prysm iO and our intelligent wellness platform, strengthening our core business with developing and emerging markets beginning with India and then driving operational performance and efficiency, all with an end game of strengthening shareholder value as we provide greater opportunities for our empowered sales force, affiliates and powerful leaders around the world, where we provide them opportunities to grow and empowerment initiatives is where we find success in our business. So that's what we're acutely focused on. We'll look forward to updating you in coming quarters. And so please join the calls and reach out with any questions. Thank you.

Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.