Nu Skin Enterprises Reports Fourth-Quarter And 2019 Results And Provides 2020 Guidance

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Nu Skin Enterprises Reports Fourth-Quarter And 2019 Results And Provides 2020 Guidance

 

PROVO, Utah — Feb. 12, 2020 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced fourth-quarter and 2019 financial results.

 

Executive Summary

Q4 2019 vs. Prior-Year Quarter

Revenue:

$583.4 million, (15%)

·       (1%) fx impact or ($6.0 M)

Earnings Per Share (EPS):

$0.72, +325%

·       Prior year included impairment and restructuring charges

Sales Leaders:

54,760; (25%)

Customers:

1,162,905; (7%)

2019 Annual

Revenue:

$2.42 billion, (10%)

·       (3%) fx impact

Earnings Per Share (EPS):

$3.10, +44%

“In the fourth quarter our business performed in line with expectations,” said Ritch Wood, chief executive officer. “Our customer base remained relatively strong, however, our sales leader count was down in the quarter, primarily driven by a decline in Mainland China. We held a global convention in October, which generated enthusiasm among our worldwide sales force. Additionally, we reported 24 percent growth in our manufacturing entities, an area where we see strong opportunitites for continued expansion.”

 

Q4 2019 Year-Over-Year Operating Results

Revenue:

$583.4 million compared to $683.3 million

·       (1%) fx impact or ($6.0 M)

Gross Margin:

75.9% compared to 76.3%

·       Nu Skin business was 78.5% compared to 77.9%

Selling Expenses:

39.1% of revenue compared to 39.4%

·       Nu Skin business was 41.3% compared to 40.9%

G&A Expenses:

27.4% of revenue compared to 23.9%

·       Increase includes convention expense

Operating Margin:

9.4% compared to 2.7%  

·       Prior year included impairment and restructuring charges

Other Income / (Expense):

($1.1) million compared to ($4.3) million

Income Tax Rate:

25.1% compared to 225.3%

·       Prior-year tax rate negatively impacted by impairment and restructuring charges

EPS:

$0.72 compared to $(0.32)  

·       Prior year included ($1.37) impairment and restructuring impact


Stockholder Value

Dividend Payments:

$20.6 million

Stock Repurchases:

Nil


Q1 and Full-Year 2020 Outlook

Q1 2020 Revenue:

$480 to $510 million, (18 to 23%)

·        Approximately (2 to 3%) fx impact

Q1 2020 EPS:

$0.23 to $0.33

2020 Revenue:

$2.17 billion to $2.30 billion, (5 to 10%)

·       Approximately (1 to 2%) fx impact

2020 EPS:

$2.00 to $2.40

“In 2020, we are focused on building sales leaders by leveraging our technology enhancements and executing a strong product launch,” continued Wood. “We have an exciting product pipeline, including a new beauty device that we plan to introduce in the second half of the year, further expanding our top-ranked beauty device systems brand. We expect the momentum around this launch to provide opportunitites to accelerate customer and sales leader acquisition. Given the global business environment we are also focused on increasing operational efficiencies. We are confident in our ability to return the business to growth and drive shareholder value.

 

“As always, the health and safety of each member of our global Nu Skin family is our top priority. Following the recent coronavirus outbreak, we placed a temporary hold on all in-person meetings with our sales force and customers in Mainland China. We are closely monitoring this continuously evolving situation and following direction from government and health officials. While we expect the outbreak to significantly impact our business in the near term, we remain confident in our long-term opportunity in Mainland China and around the world. While the duration and global impact remain uncertain, our guidance reflects our current understanding of the situation,” concluded Wood.

“For the year, we are projecting a decline in sales in Mainland China of 20 to 25 percent and a negative foreign currency impact of 1 to 2 percent,” said Mark Lawrence, chief financial officer. “We currently anticipate the overall business will return to growth in the fourth quarter of 2020, driven by the launch of a new beauty device. We project first-quarter revenue of $480 to $510, including an approximate 2 to 3 percent negative currency impact, and earnings per share of $0.23 to $0.33. For the year, we are projecting annual revenue of $2.17 to $2.30 billion with a projected 1 to 2 percent negative foreign currency impact, and earnings per share of $2.00 to $2.40.”

 

Conference Call

The Nu Skin management team will host a conference call with the investment community on Feb. 12, 2020, 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 Feb. 26, 2020.

 

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 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 Rhyz, our strategic investment arm which includes a collection of sustainable 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, shareholder value, product launches, sales force, customer base, strategies and initiatives; projections regarding revenue, earnings per share, foreign currency fluctuations, other financial items and non-financial performance metrics; 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,” “potential,” “anticipate,” “project,” “estimate,” “intend,” “plan,” “continue,” “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 the company’s markets, including the United States and Mainland China, may be modified, interpreted or enforced in a manner that results in negative changes to the company’s business model or negatively impacts its 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;
  • risk that epidemics, including the recent outbreak of coronavirus, and other crises could negatively impact our business;
  • 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;
  • uncertainty regarding the continued impact of the 100-day review and negative media and consumer sentiment in Mainland China on our business operations and results;
  • 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 businesses the company has acquired;
  • risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support 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 its ability to import or continue selling a product in a market if the product is determined to be a medical device or if the company is unable to register the product in a timely manner under applicable regulatory requirements;
  • unpredictable economic conditions and events globally, including trade policies and tariffs;
  • 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 change 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 that amount to the prior-year period’s revenue. The company believes that constant-currency revenue change is useful to investors, lenders and analysts because such information enables them to gauge the impact of foreign-currency fluctuations on the company’s revenue from period to period.

 

The following table sets forth revenue for the three-month periods ended December 31, 2019 and 2018 for each of our reportable segments (U.S. dollars in thousands):

 

   

 

 

 

Constant-Currency

 

2019

 

2018

 

Change

 

Change

 

 

 

 

 

 

 

 

Nu Skin

                     

Mainland China

$

 154,731

 

$

 217,040

 

 

(29%)

 

 

(28%)

Americas/Pacific

 

 86,146

 

 

 95,175

 

 

(9%)

 

 

(6%)

South Korea

 

 81,958

 

 

 102,840

 

 

(20%)

 

 

(17%)

Southeast Asia

 

 74,767

 

 

 80,500

 

 

(7%)

 

 

(10%)

Japan

 

 65,482

 

 

 63,953

 

 

2%

 

 

(1%)

EMEA

 

 46,205

 

 

 50,584

 

 

(9%)

 

 

(6%)

Hong Kong/Taiwan

 

 41,616

 

 

 47,746

 

 

(13%)

 

 

(14%)

Other

 

 1,860

 

 

 780

 

 

138%

 

 

138%

Total Nu Skin

 

 552,765

   

 658,618

   

(16%)

 

 

(15%)

Manufacturing

 

 30,487

   

 24,669

   

24%

   

24%

Grow Tech

 

 107

   

 -  

   

100%

   

100%

Total

$

 583,359

 

$

 683,287

 

 

(15%)

 

 

(14%)

                         

 

 

 

The following table sets forth revenue for the years ended December 31, 2019 and 2018 for each of our reportable segments (U.S. dollars in thousands):

 

   

 

 

 

Constant-Currency

 

2019

 

2018

 

Change

 

Change

 

 

 

 

 

 

 

 

Nu Skin

                     

Mainland China

$

 722,526

 

$

 886,472

 

 

(18%)

 

 

(15%)

Americas/Pacific

 

 349,078

 

 

 385,034

 

 

(9%)

 

 

(4%)

South Korea

 

 329,978

 

 

 373,357

 

 

(12%)

 

 

(6%)

Southeast Asia

 

 301,620

 

 

 316,890

 

 

(5%)

 

 

(5%)

Japan

 

 260,039

 

 

 254,939

 

 

2%

 

 

1%

EMEA

 

 167,165

 

 

 182,394

 

 

(8%)

 

 

(3%)

Hong Kong/Taiwan

 

 166,335

 

 

 185,893

 

 

(11%)

 

 

(9%)

Other

 

 1,621

 

 

 3,423

 

 

(53%)

 

 

(53%)

Total Nu Skin

 

 2,298,362

   

 2,588,402

   

(11%)

   

(8%)

Manufacturing

 

 121,917

   

 90,606

   

35%

   

35%

Grow Tech

 

 137

   

 -  

   

100%

   

100%

Total

$

 2,420,416

 

$

 2,679,008

 

 

(10%)

 

 

(7%)

 

 

 

The company's Customers and Sales Leaders statistics by segment for the three-month periods ended December 31, 2019 and 2018 are presented in the following table:

 

 

2019

 

2018

 

% Increase (Decrease)

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

 

 

 

 

 

 

 

 

 

 

 

 

Mainland China

 

292,812

 

 

17,987

 

 

303,789

 

 

33,129

 

 

(4%)

 

 

(46%)

Americas/Pacific

 

220,216

 

 

7,607

 

 

248,609

 

 

8,354

 

 

(11%)

 

 

(9%)

South Korea

 

168,972

 

 

7,251

 

 

182,026

 

 

7,565

 

 

(7%)

 

 

(4%)

Southeast Asia

 

136,349

 

 

7,480

 

 

153,465

 

 

8,933

 

 

(11%)

 

 

(16%)

Japan

 

125,557

 

 

5,916

 

 

130,181

 

 

5,916

 

 

(4%)

 

 

-

EMEA

 

153,330

 

 

4,619

 

 

149,085

 

 

4,791

 

 

3%

 

 

(4%)

Hong Kong/Taiwan

 

65,669

 

 

3,900

 

 

76,891

 

 

4,767

 

 

(15%)

 

 

(18%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

1,162,905

 

 

54,760

 

 

1,244,046

 

 

73,455

 

 

(7%)

 

 

(25%)

“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

December 31,

 

Years Ended

December 31,

 

2019

 

2018

 

2019

 

2018

                       

Revenue

$

583,359

 

$

683,287

 

$

2,420,416

 

$

2,679,008

Cost of sales

 

140,566

 

 

161,853

 

 

581,420

 

 

634,140

Gross profit

 

442,793

 

 

521,434

 

 

1,838,996

 

 

2,044,868

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

228,127

 

 

269,052

 

 

955,600

 

 

1,071,020

General and administrative expenses

 

159,987

 

 

163,265

 

 

615,970

 

 

662,302

Restructuring and Impairment

 

 

 

70,686

 

 

 

 

70,686

Total operating expenses

 

388,114

 

 

503,003

 

 

1,571,570

 

 

1,804,008

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

54,679

 

 

18,431

 

 

267,426

 

 

240,860

Other income (expense), net

 

(1,101)

 

 

(4,254)

 

 

(12,254)

 

 

(21,194)

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

53,578

 

 

14,177

 

 

255,172

 

 

219,666

Provision for income taxes

 

13,466

 

 

31,936

 

 

81,619

 

 

97,779

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

40,112

 

$

(17,759)

 

$

173,553

 

$

121,887

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.72

 

$

(0.32)

 

$

3.13

 

$

2.21

Diluted

$

0.72

 

$

(0.32)

 

$

3.10

 

$

2.16

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding (000s):

 

 

 

 

 

 

 

 

 

 

 

Basic

 

55,548

 

 

55,453

 

 

55,518

 

 

55,170

Diluted

 

55,807

 

 

56,341

 

 

55,927

 

 

56,476

 

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)

 

 

 December 31, 2019

 

December 31, 2018

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

335,630

 

$

386,911

Current investments

 

8,413

 

 

11,346

Accounts receivable

 

50,378

 

 

53,282

Inventories, net

 

275,891

 

 

295,821

Prepaid expenses and other

 

69,854

 

 

51,877

 Total current assets

 

740,166

 

 

799,237

 

 

 

 

 

 

Property and equipment, net

 

453,604

 

 

464,535

Right-of-use assets

 

144,326

   

Goodwill

 

196,573

 

 

196,573

Other intangible assets, net

 

80,321

 

 

89,989

Other assets

 

154,016

 

 

144,112

Total assets

$

1,769,006

 

$

1,694,446

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

38,979

 

$

47,617

Accrued expenses

 

290,281

 

 

322,583

Current portion of long-term debt

 

27,500

 

 

69,455

 Total current liabilities

 

356,760

 

 

439,655

 

 

 

 

 

 

           

Operating lease liabilities

 

105,701

 

 

Long-term debt

 

334,461

 

 

361,008

Other liabilities

 

96,795

 

 

111,916

Total liabilities

 

893,717

 

 

912,579

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Class A common stock

 

91

 

 

91

Additional paid-in capital

 

557,544

 

 

552,564

Treasury stock, at cost

 

(1,324,826)

 

 

(1,326,605)

Accumulated other comprehensive loss

 

(85,292)

 

 

(79,934)

Retained earnings

 

1,727,772

 

 

1,635,751

Total stockholders' equity

 

875,289

 

 

781,867

Total liabilities and stockholders’ equity

$

1,769,006

 

$

1,694,446

 

# # #

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

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