Nu Skin Enterprises Reports 28 Percent Second-Quarter Revenue Growth And Raises Annual Guidance

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FOR IMMEDIATE RELEASE

 

NU SKIN ENTERPRISES REPORTS 28 PERCENT SECOND-QUARTER REVENUE GROWTH AND RAISES ANNUAL GUIDANCE

 

 

PROVO, Utah — Aug. 2, 2018 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced strong second-quarter financial results with revenue of $704.2 million, up 28 percent over the prior-year period, and earnings per share of $0.90, a 17 percent increase over the prior-year period. Quarterly earnings were negatively impacted by a foreign currency translation loss of $0.13 and a $0.05 purchase accounting charge.

 

Executive Summary

Q2 2018 vs. Prior-Year Quarter

Revenue:

$704.2 million, +28%

·         Core Nu Skin business +24%, including +4% fx impact

·         Acquired companies +4%

Earnings Per Share (EPS):

$0.90, +17%, including:

·         ($0.13) foreign currency translation loss

·         ($0.05) purchase accounting charge

Sales Leaders:

71,300, +21%

Customers:

1,148,000, +8%

“We continue to successfully execute on our customer growth strategy centered on engaging platforms, enabling products and empowering programs, which led to accelerated growth,” said Ritch Wood, chief executive officer. “Our customers grew by 8 percent and sales leaders grew by 21 percent, and we saw healthy revenue generation throughout the business, highlighted by double-digit increases in Mainland China, Southeast Asia and the Americas and Pacific. We are also pleased with the solid performance of our acquired businesses, which we anticipate will show increased benefits in our future results.”

 

Q2 2018 Year-Over-Year Operating Results

Revenue:

$704.2 million compared to $550.1 million

Gross Margin:

76.1% compared to 77.9%

·         Core Nu Skin business 77.9%

Selling Expenses:

38.7% of revenue compared to 41.5%

G&A Expenses:

25.6% of revenue compared to 24.6%

Operating Margin:

11.8% compared to 11.8%

Other Income / (Expense):

($11.2) million compared to ($2.7) million

Income Tax Rate:

28.8% compared to 32.2%

EPS:

$0.90, +17%, including:

·         ($0.13) foreign currency translation loss

·         ($0.05) purchase accounting charge

 

Stockholder Value

Dividend Payments:

$20.3 million

Stock Repurchases:

$18.4 million; $500 million available with new authorization

 

Q3 and 2018 Outlook

Q3 Revenue:

$650 to $670 million, 15% to 19% growth

·         Approximately (3%) fx impact

Q3 EPS:

$0.93 to $0.98, 22% to 29% growth

·         Includes ($0.04) purchase accounting charge

2018 Revenue:

$2.63 to $2.67 billion, 15% to 17% growth

·         Estimated +1% fx impact

·         Increase from prior outlook of $2.51 to $2.56 billion, which included a +3% fx impact

2018 EPS:

$3.50 to $3.65, including ($0.13) fx and ($0.16) purchase accounting charges

“Based on our strong first-half results, with double-digit growth in both the first and second quarters, we now see revenue growth of approximately 15 to 17 percent for the year,” said Wood. “We will continue to invest in social selling capabilities, product innovation and the ongoing rollout of our Velocity sales compensation program. We expect these initiatives, coupled with the capability improvements we are making through development and recent acquisitions, will drive additional upside. As a testament of our confidence in the strength of the business, our board of directors approved an increase to our stock repurchase authorization to $500 million.”

 

“We generated 28 percent year-over-year revenue growth and strong earnings performance in the quarter,” said Mark Lawrence, chief financial officer. “For the year, we are increasing our annual revenue guidance by $120 million to $2.63 billion to $2.67 billion with earnings per share of $3.50 to $3.65. This guidance includes $0.16 in purchase accounting charges and the $0.13 foreign currency translation loss from the second quarter. We are projecting third-quarter revenue of $650 to $670 million, including a negative 3 percent currency impact, and earnings per share of $0.93 to $0.98.”

 

Conference Call

The Nu Skin management team will host a conference call with the investment community on Aug. 2, 2018, at 5 p.m. (ET). Those wishing to access the webcast, as well as the financial information presented during the call, can visit the Investor Relations page on the company’s website at ir.nuskin.com. A replay of the webcast will be available at the same URL through Aug. 16, 2018.

 

About Nu Skin Enterprises, Inc.

Founded more than 30 years ago, Nu Skin Enterprises, Inc. develops and distributes innovative consumer products, offering a comprehensive line of premium-quality beauty and wellness solutions. The company builds upon its scientific expertise in both skin care and nutrition to continually develop innovative product brands that include the Nu Skin® personal care brand, the Pharmanex® nutrition brand, and most recently, the ageLOC® anti-aging brand. The ageLOC brand has generated a loyal following for such products as the ageLOC LumiSpa skin cleansing and treatment device, ageLOC Youth nutritional supplement, the ageLOC Me® customized skin care system, as well as the ageLOC TR90® weight management and body shaping system. Nu Skin sells its products through a global network of sales leaders in Asia, the Americas, Europe, Africa and the Pacific. As a long-standing member of direct selling associations globally, Nu Skin is committed to the industry's consumer guidelines that protect and support those who sell and purchase its products through the direct selling channel. Nu Skin is traded on the New York Stock Exchange under the symbol "NUS." More information is available at nuskin.com.

 

 

Important Information Regarding Forward-Looking Statements: This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that represent the company’s current expectations and beliefs. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws and include, but are not limited to, statements of management’s expectations regarding the company’s performance, growth, strategies and initiatives; projections regarding revenue, earnings per share, foreign currency fluctuations and other financial items; statements of belief; and statements of assumptions underlying any of the foregoing. In some cases, you can identify these statements by forward-looking words such as "believe," "expect," "project," "anticipate," "estimate," "intend," "plan," “continue,” "targets," "likely," "will," "would," "could," "may," "might," the negative of these words and other similar words.

 

The forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed herein. These risks and uncertainties include, but are not limited to, the following:

 

·         adverse publicity related to the company's business, products, industry or any legal actions or complaints by the company's sales force or others;

·         risk that direct selling laws and regulations in any of our markets, including the United States and Mainland China, may be modified, interpreted or enforced in a manner that results in negative changes to our business model or negatively impacts our revenue, sales force or business, including through the interruption of sales activities, loss of licenses, imposition of fines, or any other adverse actions or events;

·         any failure of current or planned initiatives or products to generate interest among the company’s sales force and customers and generate sponsoring and selling activities on a sustained basis;

·         risk of foreign currency fluctuations and the currency translation impact on the company's business associated with these fluctuations;

·         uncertainties regarding the future financial performance of the company’s recent acquisitions;

·         risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support our planned initiatives or launch strategies, and increased risk of inventory write-offs if the company over-forecasts demand for a product or changes its planned initiatives or launch strategies;

·         regulatory risks associated with the company's products, which could require the company to modify its claims or inhibit the company's ability to import or continue selling a product in a market if it is determined to be a medical device or if it is unable to register the product in a timely manner under applicable regulatory requirements;

·         unpredictable economic conditions and events globally;

·         uncertainties related to the trade disputes between the U.S. and Mainland China, and associated risks if the trade disputes are prolonged or worsen, or additional changes or actions are taken by the two countries with respect to trade policies, that could further adversely impact exchange rates, the economies of both markets and consumer sentiment;  

·         uncertainties related to interpretation of, and forthcoming regulations under, the recently enacted U.S. tax reform legislation; the company’s future tax-planning initiatives; any prospective or retrospective increases in duties on the company's products imported into the company's markets outside of the United States; and any adverse results of tax audits or unfavorable changes to tax laws in the company's various markets; and

·         continued competitive pressures in the company's markets.

 

The company's financial performance and the forward-looking statements contained herein are further qualified by a detailed discussion of associated risks set forth in the documents filed by the company with the Securities and Exchange Commission. The forward-looking statements set forth the company's beliefs as of the date that such information was first provided and the company assumes no duty to update the forward-looking statements contained in this release to reflect any change except as required by law.

 

Non-GAAP Financial Measures: Constant-currency revenue growth is a non-GAAP financial measure that removes the impact of fluctuations in foreign-currency exchange rates, thereby facilitating period-to-period comparisons of the company’s performance. It is calculated by translating the current period’s revenue at the same average exchange rates in effect during the applicable prior-year period and then comparing this amount to the prior-year period’s revenue.

 

 

 

The Company’s revenue results by segment for the three-month periods ended June 30 are presented in the following table (in thousands).

 

 

 

2018

 

2017

 

%

Change

 

Constant Currency

% Change

 

 

 

 

 

 

 

 

 

Mainland China

 

$ 245,256

 

$      172,098

 

    43%

 

    33%

Americas/Pacific

 

   103,990

 

         82,997

 

    25%

 

    31%

South Korea

 

   91,624

 

       86,917

 

      5%

 

      1%

Southeast Asia

 

      79,223 

 

        60,545

 

    31%

 

    28%

Japan

 

      64,113

 

        64,796

 

      (1%)

 

      (3%)

Hong Kong/Taiwan

 

       52,206

 

         43,071

 

    21%

 

    21%

EMEA

 

        44,010

 

      38,188

 

    15%

 

      7%

Other

 

   23,768

 

       1,489

 

1,496%

 

1,496%

 

 

 

 

 

 

 

 

 

Total

 

$  704,190

 

$     550,101

 

    28%

 

    24%

 

The Company’s revenue results by segment for the six-month periods ended June 30 are presented in the following table (in thousands).

 

 

 

2018

 

2017

 

%

Change

 

Constant Currency

% Change

 

 

 

 

 

 

 

 

 

Mainland China

 

$    442,787

 

$   322,102

 

     37%

 

     27%

Americas/Pacific

 

    196,279

 

     154,422

 

     27%

 

     31%

South Korea

 

   180,554

 

    169,388

 

       7%

 

       1%

Southeast Asia

 

     150,083

 

   123,570

 

     21%

 

     18%

Japan

 

    127,337

 

      125,952

 

       1%

 

       (2%)

Hong Kong/Taiwan

 

      93,198

 

       79,019

 

     18%

 

     16%

EMEA

 

     88,991

 

     72,252

 

     23%

 

     11%

Other

 

  41,180

 

     2,495

 

1,551%

 

1,551%

 

 

 

 

 

 

 

 

 

Total

 

$ 1,320,409

 

$  1,049,200

 

     26%

 

     21%

 

 

The company’s Customers and Sales Leaders statistics by segment for the three-month periods ended June 30 are presented in the following table.

 

2018

 

2017

 

% Increase (Decrease)

 

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

 

 

 

 

 

 

 

 

 

 

 

 

 

Mainland China

 

209,000

 

33,400

 

207,000

 

 22,600

 

  1%

 

48%

Americas/Pacific

 

265,000

 

  9,000

 

230,000

 

   7,800

 

15%

 

15%

South Korea

 

184,000

 

  6,900

 

188,000

 

 7,700

 

  (2%)

 

(10%)

Southeast Asia

 

 135,000

 

 7,500

 

104,000

 

 6,300

 

30%

 

19%

Japan

 

132,000

 

    6,000

 

134,000

 

    6,400

 

  (1%)

 

  (6%)

Hong Kong/Taiwan

 

  76,000

 

  4,200

 

68,000

 

  3,900

 

12%

 

  8%

EMEA

 

 147,000

 

  4,300

 

 129,000

 

  4,200

 

14%

 

  2%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

  1,148,000

 

  71,300

 

  1,060,000

 

  58,900

 

  8%

 

21%

 

“Customers” are persons who purchased products directly from the company during the previous three months.


“Sales Leaders” are independent distributors, and sales employees and independent marketers in China, who achieve certain qualification requirements.

 

 

NU SKIN ENTERPRISES, INC.

Consolidated Statements of Income (Unaudited)

For the Second Quarters Ended June 30, 2018 and 2017

(in thousands, except per share amounts)

 

 

 

 

 

2018

 

2017

 

 

 

 

Revenue

$               704,190

 

$               550,101

 

 

 

 

Cost of sales

                 168,549

 

                 121,521

 

 

 

 

Gross profit

                 535,641

 

                 428,580

 

 

 

 

Operating expenses:

 

 

 

        Selling expenses

                 272,757

 

                 228,353

        General and administrative expenses

                 180,120

 

                 135,488

Total operating expenses

                 452,877

 

                 363,841

 

 

 

 

Operating income

                   82,764

 

                   64,739

 

 

 

 

Other income (expense), net

                  (11,165)

 

                    (2,731)

Income before provision for income taxes

                   71,599

 

                   62,008

Provision for income taxes

                   20,638

 

                   19,967

 

 

 

 

Net income

$                 50,961

 

$                 42,041

 

 

 

 

Net income per share:

 

 

 

        Basic

$                    0.92    

 

$                    0.79    

        Diluted

$                    0.90

 

$                    0.77

 

 

 

 

Weighted average common shares outstanding:

 

 

 

        Basic

                  55,608

 

                  52,929

        Diluted

                  56,713

 

                  54,839

 

 





NU SKIN ENTERPRISES, INC.

Consolidated Statements of Income (Unaudited)

For the Six-Month Periods Ended June 30, 2018 and 2017

(in thousands, except per share amounts)

 

 

 

 

 

2018

 

2017

 

 

 

 

Revenue

$            1,320,409

 

$            1,049,200

 

 

 

 

Cost of sales

                 314,830

 

                 232,787

 

 

 

 

Gross profit

              1,005,579

 

                 816,413

 

 

 

 

Operating expenses:

 

 

 

        Selling expenses

                 530,459

 

                 437,361

        General and administrative expenses

                 333,366

 

                 268,051

Total operating expenses

                 863,825

 

                 705,412

 

 

 

 

Operating income

                 141,754

 

                 111,001

 

 

 

 

Other income (expense), net

                    (9,958)

 

                    (7,298)

Income before provision for income taxes

                 131,796

 

                  103,703

Provision for income taxes

                   45,296

 

                   34,173

 

 

 

 

Net income

$                 86,500

 

$                 69,530

 

 

 

 

Net income per share:

 

 

 

        Basic

$                     1.58

 

$                     1.32

        Diluted

$                     1.53

 

$                     1.28

 

 

 

 

Weighted average common shares outstanding:

 

 

 

        Basic

                   54,807

 

                   52,804

        Diluted

                   56,430

 

                   54,466

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(in thousands)

 

 

 

 

 

June 30, 2018

 

December 31, 2017

ASSETS

 

 

 

Current assets:

 

 

 

        Cash and cash equivalents

$                402,031

 

$                426,399

        Current investments

                      8,200

 

                    11,847

        Accounts receivable

                    50,180

 

                    33,196

        Inventories, net

                  283,730

 

                  253,454

       Prepaid expenses and other

                    70,898

 

                    52,893

 

                  815,039

 

                  777,789

 

 

 

 

Property and equipment, net

                  503,452

 

                  464,587

Goodwill

                  187,423

 

                  114,954

Other intangible assets, net

                    95,887

 

                    67,647

Other assets

                  144,562

 

                  164,895

               Total assets

$             1,746,363

 

$             1,589,872

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities:

 

 

 

        Accounts payable

$                58,920     

 

$                 50,341     

        Accrued expenses

                  290,653

 

                  319,189

        Current portion of long-term debt

                    97,481

 

                    77,840

 

           447,054          

 

           447,370          

 

 

 

 

Long-term debt

                  370,525

 

                  310,790

Other liabilities

                  125,250

 

                  127,116

                Total liabilities

                  942,829

 

                  885,276

 

 

 

 

Stockholders’ equity:

 

 

 

        Class A common stock

     91        

 

      91        

       Additional paid-in capital

                  532,996

 

                  466,349

       Treasury stock, at cost

              (1,296,628)

 

              (1,304,694)

       Accumulated other comprehensive loss

                   (75,460)

 

                   (66,318)

       Retained earnings

               1,642,535

 

               1,609,168

 

                  803,534

 

                  704,596

              Total liabilities and stockholders’ equity

$             1,746,363

 

$             1,589,872

# # #

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CONTACTS:
Media: media@nuskin.com, (801) 345-6397

Investors: investorrelations@nuskin.com,  (801) 345-3577­­­

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