Nu Skin Enterprises, Inc. (NUS) Q2 2022 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the Nu Skin Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to hand the conference over to Scott Pond.

Thanks, Cory, and good afternoon, everyone. Today on the call with me are Ryan Napierski, President and CEO; and Mark Lawrence, CFO. On today's call, comments will be made that includes some 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 and our SEC filings for a complete discussion of 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 financial numbers assist in comparing period-to-period results in a more consistent manner. Please refer to our investor website for any required reconciliation of non-GAAP numbers. And with that, I'll turn the call over to Ryan.

Hey, thanks Scott. Good afternoon, everybody, and thanks for joining us on today's call. As we've discussed with you over the past few quarters, we are actively engaged in Nu Vision 2025 and our multi-year transformation to becoming the world's leading integrated beauty and wellness company that's powered by our dynamic affiliate opportunity platform. We're making progress on our vision despite ongoing macro challenges that are causing near-term disruptions in several regions, including the extended lockdowns in Mainland China, ongoing distractions in EMEA and the economic uncertainties, particularly in emerging markets like Latin America. While second quarter revenue was lower than planned due to these headwinds, we delivered non-GAAP EPS within our previous guidance range, reflecting the agility of our model and the entire team to adapt quickly to environmental challenges. In addition, we delivered our ninth consecutive quarter of growth in the US, driven by our recent product launches and broader adoption of social commerce, which bodes well for our future growth aspirations in this market and our other regions. We've also established some momentum in both Southeast Asia and Taiwan through our new ageLOC Meta and Beauty Focus Collagen+ product launches, and we're gaining some traction with our social commerce model in these markets as well. Over the past several months, we've continued to advance our three strategic imperatives that underpin Nu Vision 2025, including Empower Me personalized beauty and wellness, affiliate powered social commerce and our digital-first ecosystem. These strategies support Nu Skin's transition from being identified largely by our traditional direct selling channel to being a leader in integrated beauty and wellness. We remain confident in our direction, along with our ability to accelerate future growth and drive significant value for shareholders. Let me quickly update you on each of the three strategic imperatives. First, we're thrilled to be approaching the introduction of Empower Me personalized beauty and wellness with our first IoT device system, LumiSpa iO. It will be introduced beginning in the third quarter with global availability later this year. Connected input output devices are central to this strategy, as we transition to a more holistic approach of providing integrated beauty and wellness solutions. By offering deeper insights into every customer's unique beauty and wellness journey, we will empower them to better understand their personal needs, which will lead to higher levels of customer engagement and improve lifetime value. This is a significant step forward as we connect with our customers in a more personal and integrated manner. We plan to follow it up with additional connected devices in 2023 and beyond. Second, we continue to build momentum in our affiliate powered social commerce strategy led by the US with encouraging signs in Taiwan and parts of Southeast Asia. Nano influencers in these markets are embracing social media and leveraging their personal brands to reach more customers in an authentic and scalable manner. While EMEA was an early adopter of social commerce, we are looking to rebuild momentum that has been lost due to ongoing distractions caused by geopolitical factors. We're also accelerating the early earning potential of social commerce for affiliates with a new global one price model. We believe this model, which we are introducing with LumiSpa iO and other select products will promote affiliate productivity and retention. And third, we continue to advance our digital first ecosystem by expanding the reach of our recently introduced Vera and Stella apps. We continue to add new features and languages to our Vera consumer app that enable our empowered me personalization strategy and fostered deeper relationships with our customers. We expect accelerated adoption of Vera with the upcoming launch of LumiSpa iO as customers connect to their devices via this app. The Stella app makes it easier for our brand affiliates to manage their businesses from their mobile devices and facilitates the cultivation of customer relationships through unique features like Connect, our CRM campaign tool. We will further drive Stella adoption in the second half as we enhance its feature set through the consolidation of other legacy tools. In China, we continue to invest in our digital ecosystem with the introduction of our new myShop storefront in Q3. This is an individual version of the Vshop [ph] social commerce corporate store front we rolled out last year, which drove new customer acquisition in this past quarter. These three strategic imperatives are foundational to New Vision 2025 and the transformation of our company over the next few years. Next, let me share with you some additional insights on market performance over the quarter. We had the opportunity to meet with many of our top global leaders in London last May for the first time since COVID, spending time together, aligning around New Vision 2025 and our second half goals. While we are heavily investing in our digitally enabled future, these face-to-face opportunities are critical to engaging, motivating and training our teams. Also with growing global complexities, we continue to seek additional opportunities to balance our market portfolio and provide greater stability to our geographically diverse business which will help to improve stability of our business moving forward. Mainland China continues to be very challenged, reflecting the extended impact of COVID-related factors on our selling and promotional activities. The extended lockdowns halted business momentum for several quarters now, which significantly impacted our affiliate and sales leader numbers. For the quarter, revenue was down 42% in local currency, and we anticipate ongoing uncertainty in the region through the remainder of the year. Nevertheless, we continue to invest in this market and look forward to the introduction of LumiSpa iO and myShop, both effective tools to stimulate new activity in the market as we lead further into our digital first strategy there. Hong Kong and Taiwan grew 6% in constant currency, reflecting continued strength in Taiwan as our product launches and social commerce model gather momentum. The Americas continue to be led by the US where we delivered our ninth consecutive quarter of growth with year-over-year revenue up 6%, atop strong double-digit growth in 2020 and 2021. We've established an effective cadence for new product launches in this market and our affiliates continue to become more immersed in social commerce as we go. However, in Latin America, macro conditions remain challenging. We continue to believe our pathway to return to growth is tactically aligned with our approach in the US market, including leveraging our Collagen+ learnings, along with the training and support to expand social commerce, adapted for local market economic conditions there. The ongoing conflict in Russia and Ukraine continues to cause distraction and uncertainty across EMEA region, resulting in segment revenue down 31% in constant currency. We look forward to the upcoming product introductions in this region, but remain cautious in the near-term, given the macro environment. Japan continues to perform in line with expectations, down around 3% in local currency. However, South Korea was down 12% in local currency due in part to lower performance in their quarterly promotions cadence. Both markets were significantly affected by unfavorable foreign currency pressures leading to double-digit impact. Nevertheless, we're optimistic in our waiting of LumiSpa iO that comes in the second half. In Southeast Asia Pacific, momentum from ageLOC Meta helped drive a 16% increase in constant currency revenue. We are seeing positive trends in Indonesia and Singapore, in particular and are encouraged by the energy of our teams in these high potential markets. So, overall, with the global macro environment worsening in the past few months, we expect to face continued headwinds in several regions over the near-term and have adjusted our 2022 outlook accordingly. This is reflected in our revised guidance that Mark will cover in just a moment. To help mitigate the impact of these macro factors, we are taking several actions to proactively align all capabilities and resources to enable Nu Vision 2025 and to continue transforming our organization to optimize future growth and profitability as well as maximize shareholder value. These actions will result in a restructuring event in the second half and an estimated $100 million in cost savings in the coming year. Looking towards the balance of the year, we are acutely focused on furthering Nu Vision 2025 with the introduction of Empower Me personalized beauty and wellness, beginning with LumiSpa iO and we're optimistic that momentum will begin to build sequentially throughout the remainder of this year. We continue to gain solid traction with our newest product innovations and favorable social commerce adoption across several markets, reflecting the potential of our model and the direction of our vision. Nu Skin is well positioned to capitalize on the tremendous opportunities in beauty and wellness space as we execute Nu Vision 2025 by leveraging our global brand, scalable platform, and our strong balance sheet. And with that, let me turn the time over to Mark to talk through our financials in more detail. Mark?

Thank you, Ryan, and thanks to all of you for joining today. I'll provide a brief Q2 financial review, and then give initial Q3 projections, and update full year 2022 guidance. For additional details, please visit our Investor Relations website. For the second quarter, we posted revenue of $560.6 million, with a negative foreign currency impact of 5% or $34.6 million. The US dollar continues to strengthen at a pace well above expectations, which negatively impacted Q2 and will impact the balance of the year. Reported earnings per share for the quarter was $0.67 or $0.77 when excluding an additional charge in other income expense associated with our Q4 2021 exit from Grow Tech. Our gross margin was 73.6%, a sequential improvement over the prior quarter. Gross margin was negatively impacted by foreign currency exchange rates and increased promotions, particularly of LumiSpa devices in preparation for the launch of LumiSpa IO beginning in the third quarter. Gross margin for the core Nu Skin business was 77% compared to 78.3% in the prior year quarter. We anticipate second half 2022 gross margin stabilization, with new product introductions that have healthy margins, along with ongoing global price increases to offset continued supply constraints and inflationary pressure. Selling expense as a percent of revenue was 39.1%, 80 basis points below the prior year period. For the core Nu Skin business, selling expense was 42% compared to 42.8%. General and administrative expenses declined $25 million year-over-year as we remain focused on cost control. As a percent of revenue, G&A was 25.3% compared to 23.6% in the prior year. Operating margin for the quarter was 9.2% compared to 12.1% in the prior year period, driven by the lower revenue level this year. We anticipate sequential operating margin gains in the second half of 2022 as we work towards our midterm stated goal of 13% operating margin. The other income and expense line reflects an $8.6 million expense or an adjusted $2.9 million expense compared to a $4 million expense in the prior year. The adjustment in this line item is a $5.7 million unrealized investment loss related to our Q4 2021 exit from the Grow Tech segment. Cash from operations for the second quarter was $46.5 million compared to $20.7 million in the prior year. We are pleased with a $27 million reduction in inventory during the quarter, and we remain committed to strategically invest in inventory to support our supply chain and plan to further reduce inventory levels as global supply chain constraints ease. We paid $19.4 million in dividends and repurchased $10 million of our stock with $225.4 million remaining on the current authorization. Our balance sheet remains strong. We are largely cash debt neutral with $382 million of cash and current investments and anticipate this growing in the second half of this year. To further strengthen our financial position and increased flexibility, we recently closed a $900 million debt facility, which ensures we have the necessary resources to accomplish new Vision 2025. Our tax rate for the quarter was 20.2% compared to 27.1% in the prior year period. The decrease in effective tax rate for the second quarter primarily reflects the strong growth in the US market, which enabled us to utilize additional foreign tax credits to offset US income taxes. Our Rhyz segment, which includes our manufacturing partners, declined 20% in the quarter. Remember that revenue reflected in this segment only represents sales to third-party customers. The demand for external customer products was soft in the quarter as many of our large customers were long on inventory and impacted by continued supply chain constraints. Our manufacturing entities continue to significantly benefit our core Nu Skin business by helping firm up our supply chain, increase our speed-to-market for new products and generating US profit that lowers our overall tax rate. We also continue to carefully seek investment opportunities in this segment to further enhance our capabilities. Lastly, as Ryan mentioned, we anticipate a second half restructuring and impairment charge of approximately $35 million to $45 million associated with the strategic reallocation of our capabilities and resources in support of Nu Vision 2025. We believe these actions will benefit the balance of 2022 and provide approximately $100 million of cost savings in 2023. Shifting focus now to guidance. Given the continued economic uncertainty, prolonged COVID related factors, foreign exchange pressure and geopolitical conflicts; we are adjusting our annual guidance. We now expect 2022 revenue of $2.33 billion to $2.41 billion. We anticipate earnings per share of $2.46 and to $2.76 or $3.30 to $3.60, excluding Q2 charges associated with our Q4 2021 exit from Grow Tech and the second half restructuring and impairment charges. This guidance assumes a negative foreign currency impact of approximately 5% and an adjusted tax rate of 18% to 24%. We are projecting third quarter revenue of $550 million to $590 million, assuming a foreign currency headwind of approximately 6%. Q3 earnings per share guidance is $0.04 to $0.22 or $0.70 to $0.85 when excluding the third quarter restructuring charge of approximately $30 million of the $35 million to $45 million second half estimate. In summary, while the near-term environment remains challenging, we continue to execute on the strategic priorities that underpin Nu Vision 2025, ensuring that all our resources are aligned to drive the transformation of our business to our vision of becoming the world's leading integrated beauty and wellness company powered by our dynamic affiliate opportunity platform. And with that, operator, we will now open up the call for your questions.

Thank you. At this time we will conduct a question-and-answer session. [Operator Instructions] All right. First up, we have Stephanie Wissink with Jefferies.

Thank you. Good afternoon, everyone. Ryan, I'm wondering if you can start by just taking us around your key markets and helping us think through when Lumi iO will be launched and when some of the digital tools will be launched. I think it would just help us understand the back half acceleration you're anticipating just to think through when some of those key initiatives will be implemented.

Yes. Hi Steph. Yes, so just at a high level, we have the LumiSpa IO introductions and launches, so limited introductions to the sales force, followed by launches to the consumer base that are spread relatively evenly between Q3 and Q4. Each market is on a slightly different cadence, but the goal is to have it in all markets over the course of the two quarters. I think probably the best way to just to look at it would be a more even distribution between Q3 and Q4 for those products. The digital tools, specifically Vera and Stella, they hit the app stores really in the first part of Q2 and the last day of Q1. Those have really been in a beta form and those will continue to roll out in English, but they'll continue to roll out really into Q3 and Q4 as we add those features. They're going to be really, the adoption of those tools, are going to be highly associated with LumiSpa IO, because the device connects to the Vera app. So, they kind of work in tandem with one another. But they're not -- those apps are not specifically intended to be revenue-driving mechanisms as much as facilitating the standard business. So we're not really associating revenue specifically with the apps.

Okay. That's helpful. And then related to the product innovation pipeline, the idea of integrated beauty and wellness is something that you're uniquely positioned to address. So I want to just give you a chance to also to talk about what you're learning about Collagen+, what you've been seeing so far in your customer feedback, your affiliate feedback on this idea of integration? And how do you amplify that as you go into the back half and into 2023?

No. Yes, great question. And I'm glad you really focus in on the integrated -- the word integration. For us, integration really intimates a couple of different considerations. The first is the inside-out approach of the product portfolio that we have. As you know, we're pretty well split between personal care and wellness products. And so to your point, around Collagen+, integrated with LumiSpa IO or LumiSpa, that we have clinical studies on that is a great example of how we look at input/output. The other dimension is the input/output devices themselves and device systems specifically. So the devices plus the product lines that work in conjunction with those devices. And so yes, Collagen+ for us is definitely one of these great integrated products as it plays really well with LumiSpa. It is an ingestible beauty, so to speak, which is a very strong growing category in Beauty as we know. And so we see that being very beneficial. The other good thing with Collagen+ related to social commerce, their social selling is that it's a great subscription product. So in many of our markets, the US, EMEA, Latin America, these markets in particular, have really leveraged that as a subscription product, which creates a greater retained lifetime value of the customers on it.

The only thing I would add to that, Steph, is the Collagen+ is the top five product for us in this quarter, which really shows the ability of new products to gain traction as we roll it out around the world. I think this integrated beauty and wellness theme is starting to resonate well around the world.

That's fantastic. My last one, Mark, is for you. I know cost restructuring programs are never easy to undertake and they can be emotional and culturally impacting. So, I wanted to just give you a chance to talk about the scope of this program, how you plan to implement it, it sounds like it's going to be a bit more Q3 weighted maybe give us some sense of timing. And as you look out into '23, $100 million of savings, is that net savings should we assume that drops through to the bottom line, or is there some level of reinvestment? Thank you.

Yes. Steph, maybe I'll comment first, and Mark can really fill in all the details on that. You're absolutely right. Every time a business has to look at a restructure, we take it extremely seriously and we have a global team that's really critical to the transition. As we talked about in the call, this is really all around looking at how we're allocating resources across legacy programs, legacy capabilities, legacy technologies, legacy assets and what is truly needed for us to move more quickly as we shed some of those legacy elements that can hold us back. And so we felt like this is the right time to do it. And so, we've structured it that way, and we'll be executing according to that plan. But it really is all around, how do we align these resources to move more quickly into the future by letting go of some things that have held us back. But Mark, maybe you can give a little more detail.

Ryan, hit on the key points. We went through it nearly every line item in our P&L. We looked at our assets around the world, look at our different geographic balance of our business as it shifted pretty dramatically over the last few years and then really work to realign the allocation of resources to where our business is really thriving and where is thriving and ensure that we're putting resources towards the future towards New Vision 2025. We are not backing off our stated investment of $500 million in technology. We believe that's key to our future. So, there will be some reallocation of resources, but I still believe that, that $100 million is real, and we can deliver that to the bottom-line next year, even with those future investments in technology that we've already slated a spot for. And then the timing stuff, we're going to try to get most of that done in Q3. We stated about $30 million of the $35 million to $45 million range, that will largely be dependent on, how we work with governments around the world and make sure we're proper and taking care of employees in the proper way and doing things according to the law. That will largely be what depends on whether it's a Q3 or a Q4 action.

Always very helpful.

Thanks, Steph.

Thanks Steph. Next up, we're going to have Chad Wendor [ph] with Citi. Hold on one second and Chad you are up. Q –Unidentified Analyst: Great. Thank you, operator. Good afternoon, everyone and thanks for the question. I guess where I just want to start, can you talk a little bit more about the one price incentive structure, specifically which market it's going into and how it's going to impact the sales leaders relative to the marketing plan that's already there?

Yes, hey Chad. Yeah, thanks for the question. We anticipated there would be one. So, thanks for asking, gives us a chance to explain it a little bit more. You may be or may not be familiar with our model, our traditional business model where whereby we sell products traditionally at a wholesale product to our affiliates who then mark them up and sell them at retail. And this has been how the company's price products, mostly speaking, since the beginning of the company. Over the course of time as social commerce continues to evolve, we found that the retail margin is such a critical part of that -- and a part of the social commerce model for new brand affiliates who are really early in their business, being able to get earnings going. And so the idea with one price is to institutionalize that retail margin into the product. We felt that LumiSpa iO was a perfect opportunity because -- largely because this product is the iO technology add such greater consumer value than the 1.0, the non-connected device. So we really are bringing this out to the market. We are planning to roll it out globally with LumiSpa iO and we will be introducing it across a few others, I think, three to four other products around the globe as we continue to learn our way or lean further into social commerce. This will be really important that we talked about the adoption of social commerce into Asia in the past and how it's somewhat more difficult. And one of the areas has been the reselling of a retail price product to friends and associates even online that there's an apprehension to do that in some Asian communities. And so this one price model will make it easier for our affiliates to sell it at that one price, we believe around the globe. Q – Unidentified Analyst: Great. That's helpful. And then if I could just ask about the team meetings you have, as you said it was in London. Can you talk about whether post those meetings happening, it has translated to either improving activity or productivity amongst the sales force? And then just juxtaposed against the full challenging macro travel restrictions, and a very digital-oriented strategy in Nu Vision 2025. How did that change the way you're thinking about in-person meetings and incentivizing and catalyzing activity from sales leaders? Thanks.

Yes. No question that – the world -- macro factors over the last 2.5 years has evolved our thinking around this. And we continue to learn but most certainly, as we look to the future and we look to social commerce proliferation, that model specifically online meetings are definitely an important part of it. But the offline, the face-to-face or the hybrid approach is really important for training, motivating and aligning with our leadership. And so we do expect moving into the future, that more and more face-to-face meetings will be a hybrid part of just like the workplace, very much a hybrid part of our of our approach to growth. We continue to believe that in-person face-to-face is important. But even in London, we were not able to meet, for example, with our Chinese team at least because they were unable to receive visas to leave China. And so even in some of our Asia markets as recently as May we were not able to meet with them face-to-face. And those lockdowns continue to be challenging. I think as governments around the globe learn how to adapt to this hybrid economy, we will continue to lean into online and limited offline meetings. We have an upcoming live event for our US market in September that, by the way, any of you who are interested in attending that, we would love to have you. It's only for the US, it's not a global meeting but we anticipate having that around September 7. So please reach out to Scott on. If you're interested, we can get you information. And we do those sorts of limited meetings in markets where local governments are more favorable. Last comment I'll make on meetings within China. I will say there is still severe restrictions, lockdowns on face-to-face or person types of meetings due to the COVID implications there. And so we're very limited there, and we really have to rely upon limited online meetings there. Q –Unidentified Analyst: Got it. Thanks for the color. I'll pause there now and then pass it on. Thanks.

Thanks, Chad.

Thank you. Kevin. Next up is going to be Christine Chen [ph] with Stifel. One second, and I will let you know when you’re live. Christine, you are up. Q – Unidentified Analyst: Perfect. This is Christine on for Mark. I have two questions. One being, I guess, you had just talked about restrictions in China, and there are some indications coming out of there that suggest that no COVID policy will continue definitely. Do you just have a reasonable time line going back to positive revenue growth in China? That's the first one.

Yes, Christine, thanks and give Mark our regards as well. Yes. Regarding China, you're absolutely right. It's uncertain. The future is uncertain there for the COVID restrictions in the one -- the no case structure there. We really are leaning directly into digital first. Our investments in we shop last year, my shop this year, we continue to just really invest in a digital first because we – in the mid-term, don't want to be reliant upon face-to-face, the way that the traditional China business has been. It's really hard for us to forecast out positive growth in that market, and Mark can maybe talk a little bit more on his thoughts around that. The way we're looking at the model from the enterprise standpoint is we're really focusing on growth outside of China with the uncertainty there in the market, although we believe in the long-term, potential of this market. We all know it's an enormous beauty and wellness market. We know there's a lot of uncertainty in the short-term. We believe that the economy needs to needs to start to shape in the right direction. And so we're really trying to position ourselves as we move forward into this China evolves locally to being a digital-first company that reaches our customers and our salesforce via that digital-first model, and that's more of a mid-term horizon. But you'd add to that point.

I think it's too early for us to project when China can return back to normal until we start seeing some stabilization, until we start seeing a period of time when there aren't daily and weekly updates of lockdowns in various provinces around China. I think it'd be too early for us to project China returning to any level of growth.

Yes. And I might just -- sorry, Christine, I might just also just remind everyone because it's -- China has been such a critical part of the revenue equation for the company and the future state remains to be seen, but it is certainly under 20% of the business today. It's much more geographically diverse, which I think for us and frankly, any company this day is a very good thing to be. It's a definite focus for us is making that balance continue as we go. Q – Unidentified Analyst: Okay. Thank you. That's helpful. The second question being that 5% price increase taken at the start of this past quarter, are you seeing any pricing elasticity? And do you have any key takeaways from that price increase? What are your thoughts on maybe price offsetting costs, some of that gross margin pressure? Thanks.

Yes. I'll talk to maybe the consumer side and Mark can talk to the margin side on price increases. Just to reaffirm, we are very committed to addressing the impact of inflation on the business and on our margin structure. We are also very customer-obsessed. And we are very concerned about the broader pressure that's coming through consumers around the globe. And so we're very careful in how we do price increases. We did execute a price increase in the spring. We'll continue to look at opportunities there in the fall and beyond as inflation continues to be managed and monitored around the globe. It's hard to say in our price point, which tends to be masstige and above, how much pricing pressure there really is. And I would say if the inflation -- we're really in an unprecedented inflationary levels. And so it's hard for us to really know, but I think it's fair to understand that the consumer wallets being really squeezed. And so certainly, there would be pricing pressure even on more masstige and premium-priced products. Fortunately, I do feel that our devices, for instance, are -- even with price increases, continue to be very reasonably priced in markets of premium devices. We see product devices that are much more expensive than that -- than ours. And so I think the value proposition remains strong, but we'll continue to balance consumer purchasing capability versus the margin trade-offs. And so far, I don't think we've hit a ceiling there. But Mark, maybe

I would say that we were happy to see sequential improvement in gross margin in Q2, we're projecting for the second half margin stabilization, which basically means we're expecting margins about where they are today and there's going to be a number of puts and takes in our business, foreign exchange movement, and we're seeing a heavy headwind in foreign exchange. That does impact gross margin, and it hurts our gross margin. Obviously, inflation and cost increases in raw materials also hurt our gross margin. And then we offset that with just the work we're doing to try to take cost out of our product and then the price increases, which we've flowed through to kind of keep gross margins about where they are. The new product introductions really help us. Those on average, have better than average gross margins, and we should see lift from those over time. Q – Unidentified Analyst: Great. Thanks.

Thanks, Christine. And it doesn't look like we have any other hands raised. So I think we'll go ahead and wrap up the call. If you do have any questions, we would like to set up time with Scott or Mark, myself, we're more than happy to find the time with you for certain. So let me just thank you all for joining. And so to summarize, our views, while the macro environment is uncertain, we remain acutely focused on our vision on this new vision 2025 and on executing our multi-year transformation to becoming the world's leading integrated beauty and wellness company. As we laid out in Investor Day earlier this year, we have confidence in our capabilities as an innovative beauty and wellness company and a beauty device systems leader, combined with our global affiliate channel to enable our transformation into this new space. We believe in the vision and we believe it will return greater value to shareholders over the next few years as we scale our integrated beauty and wellness platform. And with that, we'll go ahead and end the call. Thanks again for joining us.