Nu Skin Enterprises Reports First-Quarter 2019 Results

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FOR IMMEDIATE RELEASE

NU SKIN ENTERPRISES REPORTS FIRST-QUARTER 2019 RESULTS

 

PROVO, Utah — April 30, 2019 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced first-quarter 2019 results.  

 

Executive Summary

Q1 2019 vs. Prior-Year Quarter

Revenue:

$623.6 million, +1%

·         7% constant currency growth

·         (6%) fx impact or ($33.3 M)

Earnings Per Share (EPS):

$0.77 compared to $0.64, + 20%

Sales Leaders:

63,248; consistent with the prior year

Customers:

1,193,206; +10%

“We are encouraged by the positive start to the year, which began with a strong first quarter highlighted by 7 percent local-currency growth,” said Ritch Wood, chief executive officer. “We were particularly pleased with local-currency revenue growth in nearly all our reporting segments, highlighted by 12 percent growth in Mainland China and 5 percent growth in Southeast Asia, or 6 percent and 2 percent on a reported basis, respectively. We continue to focus our global efforts on expanding our customer base through our Nu Skin growth strategy, which helped to drive a 10 percent increase in customers during the quarter.”

 

Q1 2019 Year-Over-Year Operating Results

Revenue:

$623.6 million compared to $616.2 million

·         7% constant currency growth

·         (6%) fx impact or ($33.3 M)

Gross Margin:

76.5% compared to 76.3%

·         Nu Skin business was 78.7%, compared to 77.9%

Selling Expenses:

40.0% of revenue compared to 41.8%

·         Nu Skin business was 42.0%, compared to 42.9%

G&A Expenses:

25.4% of revenue compared to 24.9%

Operating Margin:

11.0% compared to 9.6%

Other Income / (Expense):

($2.8) million expense compared to $1.2 million income

Income Tax Rate:

34.7% compared to 41.0%

EPS:

$0.77 compared to $0.64, +20%

Stockholder Value

Dividend Payments:

$20.5 million

Stock Repurchases:

$0.8 million; $470.2 million remaining in authorization

Q2 and Full-Year 2019 Outlook

Q2 2019 Revenue:

$660 to $680 million, 3% to 6% decline

·         Approximately (4%) to (5%) fx impact

·         Prior year included approximately $95 million of LumiSpa sales, driven by Mainland China introduction

Q2 2019 EPS:

$0.91 to $0.98

2019 Revenue:

$2.76 to $2.81 billion, 3% to 5% growth

·         Approximately (2%) to (3%) fx impact

2019 EPS

$3.80 to $4.05

“We remain confident in our growth prospects in 2019 as we focus on the continued execution of our growth strategy,” said Wood. “We will drive increased productivity by investing in technologies to better support our sales leaders, expanding our global beauty device systems with product introductions and line extensions, and optimizing our Velocity sales compensation program.”

 

“Our solid first quarter results keep us on track to achieve a strong year,” said Mark Lawrence, chief financial officer. “Our 2019 annual revenue guidance is $2.76 to $2.81 billion with an approximate 2 to 3 percent unfavorable foreign currency impact, and earnings per share of $3.80 to $4.05. For the second quarter, we project revenue of $660 to $680 million with an approximate 4 to 5 percent negative foreign currency impact. The prior-year period included a strong LumiSpa introduction in Mainland China while current year product launches are slated for the back half of the year. We project earnings per share of $0.91 to $0.98.”

 

Conference Call

The Nu Skin management team will host a conference call with the investment community on April 30, 2019, 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 May 14, 2019.

 

About Nu Skin Enterprises, Inc.

Founded 35 years ago, Nu Skin Enterprises, Inc. (NSE) empowers innovative companies to change the world with sustainable solutions, opportunities, technologies, and life-improving values. The company currently focuses its efforts around innovative consumer products, product manufacturing and automated controlled environment agriculture technology. The NSE family of companies includes Nu Skin, which develops and distributes a comprehensive line of premium-quality beauty and wellness solutions through a global network of sales leaders in Asia, the Americas, Europe, Africa and the Pacific; and a collection of manufacturing and technology innovation companies. Nu Skin Enterprises is traded on the New York Stock Exchange under the symbol "NUS." More information is available at nuskinenterprises.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, product launches, 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," “continue,” "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 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 March 31 are presented in the following table (in thousands).

 

Three Months Ended

March 31,

 

 

 

Constant

Currency

 

2019

 

2018

 

Change

 

Change(1)

 

 

 

 

 

 

 

 

Nu Skin

                     

Mainland China

$

208,488

 

$

197,531

 

 

6%

 

 

12%

Americas/Pacific

 

86,456

 

 

92,289

 

 

(6)%

 

 

2%

South Korea

 

83,853

 

 

88,930

 

 

(6)%

 

 

(1)%

Southeast Asia

 

72,495

 

 

70,860

 

 

2%

 

 

5%

Japan

 

62,109

 

 

63,224

 

 

(2)%

 

 

Hong Kong/Taiwan

 

40,558

 

 

40,992

 

 

(1)%

 

 

2%

EMEA

 

41,818

 

 

44,981

 

 

(7)%

 

 

1%

Other

 

(1,426)

 

 

235

 

 

(707)%

 

 

(707)%

Total Nu Skin

 

594,351

   

599,042

   

(1)%

   

5%

Manufacturing

 

29,272

   

17,177

   

70%

   

70%

Grow Tech

 

   

   

   

Total

$

623,623

 

$

616,219

 

 

1%

 

 

7%

The company’s Customers and Sales Leaders statistics by segment for the three-month periods ended March 31 are presented in the following table.

 

 

As of

March 31, 2019

 

As of

March 31, 2018

 

% Increase (Decrease)

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

 

 

 

 

 

 

 

 

 

 

 

 

Mainland China

 

272,053

 

 

26,986

 

 

200,231

 

 

27,045

 

 

36%

 

 

Americas/Pacific

 

242,925

 

 

7,862

 

 

245,588

 

 

8,248

 

 

(1)%

 

 

(5)%

South Korea

 

181,150

 

 

6,671

 

 

179,384

 

 

7,338

 

 

1%

 

 

(9)%

Southeast Asia

 

138,112

 

 

7,071

 

 

117,689

 

 

6,559

 

 

17%

 

 

8%

Japan

 

126,526

 

 

5,840

 

 

128,598

 

 

6,198

 

 

(2)%

 

 

(6)%

Hong Kong/Taiwan

 

70,354

 

 

3,959

 

 

72,401

 

 

3,864

 

 

(3)%

 

 

2%

EMEA

 

162,086

 

 

4,859

 

 

141,673

 

 

4,246

 

 

14%

 

 

14%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Total

 

1,193,206

 

 

63,248

 

 

1,085,564

 

 

63,498

 

 

10%

 

 

“Customers” are persons who purchased products directly from the company during the previous three months. Our Customer numbers do not include consumers who purchase products directly from members of our sales force.


“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)

(U.S. dollars in thousands, except per share amounts)

 

Three Months Ended

March 31,

 

2019

 

2018

           

Revenue

$

623,623

 

$

616,219

Cost of sales

 

146,664

 

 

146,281

Gross profit

 

476,959

 

 

469,938

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Selling expenses

 

249,708

 

 

257,702

General and administrative expenses

 

158,598

 

 

153,246

Total operating expenses

 

408,306

 

 

410,948

 

 

 

 

 

 

Operating income

 

68,653

 

 

58,990

Other income (expense), net

 

(2,848)

 

 

1,207

 

 

 

 

 

 

Income before provision for income taxes

 

65,805

 

 

60,197

Provision for income taxes

 

22,803

 

 

24,658

 

 

 

 

 

 

Net income

$

43,002

 

$

35,539

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

Basic

$

0.78

 

$

0.66

Diluted

$

0.77

 

$

0.64

 

 

 

 

 

 

Weighted-average common shares outstanding (000s):

 

 

 

 

 

Basic

 

55,436

 

 

53,997

Diluted

 

56,128

 

 

55,959


NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)

 

   March 31, 2019

 

December 31, 2018

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

310,288

 

$

386,911

Current investments

 

8,038

 

 

11,346

Accounts receivable

 

57,390

 

 

53,282

Inventories, net

 

304,311

 

 

295,821

Prepaid expenses and other

 

67,655

 

 

51,877

 

 

747,682

 

 

799,237

 

 

 

 

 

 

Property and equipment, net

 

445,605

 

 

464,535

Right-of-use assets

 

117,329

   

Goodwill

 

196,573

 

 

196,573

Other intangible assets, net

 

86,935

 

 

89,989

Other assets

 

160,977

 

 

144,112

Total assets

$

1,755,101

 

$

1,694,446

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

52,273

 

$

47,617

Accrued expenses

 

304,770

 

 

322,583

Current portion of long-term debt

 

45,000

 

 

69,455

 

 

402,043

 

 

439,655

           

Operating lease liability

 

81,075

 

 

Long-term debt

 

356,247

 

 

361,008

Other liabilities

 

104,541

 

 

111,916

Total liabilities

 

943,906

 

 

912,579

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Class A common stock – 500 million shares authorized, $0.001 par value, 90.6 million shares issued

 

91

 

 

91

Additional paid-in capital

 

553,270

 

 

552,564

Treasury stock, at cost – 35.0 million and 35.2 million shares

 

(1,325,251)

 

 

(1,326,605)

Accumulated other comprehensive loss

 

(75,794)

 

 

(79,934)

Retained earnings

 

1,658,879

 

 

1,635,751

 

 

811,195

 

 

781,867

Total liabilities and stockholders’ equity

$

1,755,101

 

$

1,694,446

# # #

 

 

Nu Skin Social Media Channels

 fb.com/nuskin   twitter.com/nuskin   instagram.com/nuskin

 

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

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

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