Nu Skin Enterprises Reports Third-Quarter 2020 Results And Raises Annual Guidance

Nu Skin Enterprises Reports Third-Quarter 2020 Results And Raises Annual Guidance

 

PROVO, Utah — Nov. 4, 2020 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced third-quarter results of 19 percent revenue growth and 37 percent earnings per share growth and raised its guidance for 2020.

 

Executive Summary

Q3 2020 vs. Prior-Year Quarter

Revenue:

$703.3 million; +19%

·       Less than (1%) fx impact

Earnings Per Share (EPS):

$1.08; +37%

Sales Leaders:

68,516; +12%

Customers:

1,539,511; +28%

 

“We continued to build momentum with accelerated results in the third quarter, as we generated revenue and earnings per share well above expectations,” said Ritch Wood, chief executive officer. “As we executed on our long-term strategy, we drove double-digit growth in both customers and sales leaders with revenue improvements in all but one reporting segment. We delivered strong double-digit growth in the Americas, Pacific and EMEA regions, with modest growth throughout most of Asia. Mainland China continues to stabilize with sequentially improving revenue, customers and sales leaders, and we remain on track for a return to year-over-year growth in China in the fourth quarter. Our manufacturing division contributed to our results with impressive 34 percent growth.

 

“We are outpacing our 2020 growth projections due to strong product demand and ongoing digital investments that empower our sales leaders and affiliates to build a socially enabled business. We are also benefitting from the current environment where more individuals are working from home and shopping online. Currently, approximately 90 percent of Nu Skin revenue is coming from digital transactions.”

 

Q3 2020 Year-Over-Year Operating Results                                                                             

Revenue:

$703.3 million compared to $589.9 million

·       Less than (1%) fx impact

Gross Margin:

73.9% compared to 76.2%

·       Nu Skin business was 76.3% compared to 78.6%

·       Impacted by increased freight charges and geographic mix

Selling Expenses:

39.9% compared to 39.3%

·       Nu Skin business was 42.4% compared to 41.5%

G&A Expenses:

23.5% compared to 25.1%

Operating Margin:

10.6% compared to 11.8%

·       Impacted by lower gross margin

Other Income / (Expense):

$0.5 million compared to ($5.0) million

Income Tax Rate:

24.7% compared to 32.1%

·       Benefited by geographic mix

EPS:

$1.08 compared to $0.79

 

Stockholder Value

Dividend Payments:

$19.2 million

Stock Repurchases:

$20.0 million

·       $342.8 million remaining in authorization

 

Q4 and Full-Year 2020 Outlook

Q4 2020 Revenue:

$720 to $750 million; +23 to 29%

·       Approximately +1% fx impact

Q4 2020 EPS:

$1.10 to $1.20; +53 to 67%

2020 Revenue:

$2.55 to $2.58 billion; +6 to 7%

·       Approximately (1%) fx impact

2020 EPS:

$3.35 to $3.45; +8 to 11%

“The growth in our core Nu Skin business is generating a great deal of energy ahead of our fourth-quarter ageLOC Boost and Nutricentials product introductions, and we continue to see increasing demand in our manufacturing segment. This gives us confidence that we will have a strong fourth quarter with momentum heading into 2021 when we fully launch these products and continue to extend our socially enabled business throughout our markets,” Wood concluded.

 

Mark Lawrence, chief financial officer, added, “Given our third-quarter results above previous guidance and momentum in the business, we are raising our guidance for the remainder of the year. As we look ahead to the fourth quarter, we anticipate revenue of $720 to $750 million, which includes an approximate 1 percent favorable foreign currency impact, and earnings per share of $1.10 to $1.20. We are raising our 2020 revenue guidance to $2.55 to $2.58 billion, which reflects a negative foreign currency impact of approximately 1 percent, and we anticipate annual earnings per share of $3.35 to $3.45.”

 

Conference Call

The Nu Skin Enterprises management team will host a conference call with the investment community today 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 Nov. 18, 2020.

 

About Nu Skin Enterprises, Inc.

Founded more than 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 that 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, product launches, customers and sales leaders, strategies and initiatives; statements of management’s expectations regarding the future status of the COVID-19 pandemic globally and across the company’s markets, and government and public behavior in response to such status; 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,” “anticipate,” “project,” “outlook,” “guidance,” “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:

  • risk that epidemics, including the ongoing COVID-19 outbreak, and other crises could negatively impact our business;
  • 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;
  • 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;
  • political, legal, tax and regulatory uncertainties associated with operating in international markets, including Mainland China;
  • uncertainty regarding meeting restrictions and other government scrutiny in Mainland China, as well as 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 September 30, 2020 and 2019 for each of our reportable segments (U.S. dollars in thousands):

 

Three Months Ended

September 30,

 

 

 

Constant-Currency

 

2020

 

2019

 

Change

 

Change

Nu Skin

                     

Mainland China

$

169,068

 

$

173,974

 

 

(3)%

 

 

(4)%

Americas/Pacific

 

151,465

 

 

83,635

 

 

81%

 

 

90%

South Korea

 

83,460

 

 

79,435

 

 

5%

 

 

5%

Southeast Asia

 

84,102

 

 

78,963

 

 

7%

 

 

8%

Japan

 

70,958

 

 

67,197

 

 

6%

 

 

4%

EMEA

 

61,411

 

 

35,742

 

 

72%

 

 

67%

Hong Kong/Taiwan

 

42,265

 

 

40,449

 

 

4%

 

 

Other

 

(314)

 

 

(62)

 

 

(406)%

 

 

(403)%

Total Nu Skin

 

662,415

   

559,333

   

18%

   

19%

Manufacturing

 

40,910

   

30,601

   

34%

   

34%

Grow Tech

 

22

   

   

100%

   

100%

Total

$

703,347

 

$

589,934

 

 

19%

 

 

19%

 

 

The following table sets forth revenue for the nine-month periods ended September 30, 2020 and 2019 for each of our reportable segments (U.S. dollars in thousands):

 

 

Nine Months Ended

September 30,

 

 

 

Constant-Currency

 

2020

 

2019

 

Change

 

Change

Nu Skin

                     

Mainland China

$

453,096

 

$

567,795

 

 

(20)%

 

 

(19)%

Americas/Pacific

 

353,957

 

 

262,932

 

 

35%

 

 

43%

South Korea

 

236,094

 

 

248,020

 

 

(5)%

 

 

(2)%

Southeast Asia

 

220,517

 

 

226,853

 

 

(3)%

 

 

(1)%

Japan

 

200,549

 

 

194,557

 

 

3%

 

 

2%

EMEA

 

147,590

 

 

120,960

 

 

22%

 

 

23%

Hong Kong/Taiwan

 

115,253

 

 

124,719

 

 

(8)%

 

 

(10)%

Other

 

374

 

 

(239)

 

 

256%

 

 

256%

Total Nu Skin

 

1,727,430

   

1,745,597

   

(1)%

   

1%

Manufacturing

 

105,975

   

91,430

   

16%

   

16%

Grow Tech

 

336

   

30

   

1,020%

   

1,020%

Total

$

1,833,741

 

$

1,837,057

 

 

 

 

2%

The Company's Customers and Sales Leaders statistics by segment as of September 30, 2020 and 2019 are presented in the following table:

 

 

As of

September 30, 2020

 

As of

September 30, 2019

 

% Increase (Decrease)

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

 

 

 

 

 

 

 

 

 

 

 

 

Mainland China

 

341,386

 

 

20,970

 

 

317,257

 

 

23,776

 

 

8%

 

 

(12)%

Americas/Pacific

 

438,889

 

 

14,400

 

 

229,013

 

 

7,760

 

 

92%

 

 

86%

South Korea

 

164,256

 

 

7,973

 

 

169,589

 

 

7,363

 

 

(3)%

 

 

8%

Southeast Asia

 

163,536

 

 

8,357

 

 

145,845

 

 

7,936

 

 

12%

 

 

5%

Japan

 

126,896

 

 

6,523

 

 

128,373

 

 

5,964

 

 

(1)%

 

 

9%

EMEA

 

235,202

 

 

6,226

 

 

147,758

 

 

4,060

 

 

59%

 

 

53%

Hong Kong/Taiwan

 

69,346

 

 

4,067

 

 

68,862

 

 

4,231

 

 

1%

 

 

(4)%

Total

 

1,539,511

 

 

68,516

 

 

1,206,697

 

 

61,090

 

 

28%

 

 

12%

 

“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

September 30,

 

Nine Months Ended

September 30,

 

2020

 

2019

 

2020

 

2019

                       

Revenue

$

703,347

 

$

589,934

 

$

1,833,741

 

$

1,837,057

Cost of sales

 

183,374

 

 

140,162

 

 

463,277

 

 

440,854

Gross profit

 

519,973

 

 

449,772

 

 

1,370,464

 

 

1,396,203

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

280,695

 

 

231,937

 

 

735,365

 

 

727,473

General and administrative expenses

 

165,050

 

 

147,943

 

 

466,232

 

 

455,983

Total operating expenses

 

445,745

 

 

379,880

 

 

1,201,597

 

 

1,183,456

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

74,228

 

 

69,892

 

 

168,867

 

 

212,747

Other income (expense), net

 

525

 

 

(4,979)

 

 

(4,068)

 

 

(11,153)

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

74,753

 

 

64,913

 

 

164,799

 

 

201,594

Provision for income taxes

 

18,446

 

 

20,823

 

 

46,911

 

 

68,153

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

56,307

 

$

44,090

 

$

117,888

 

$

133,441

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

1.10

 

$

0.79

 

$

2.24

 

$

2.40

Diluted

$

1.08

 

$

0.79

 

$

2.23

 

$

2.39

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding (000s):

 

 

 

 

 

 

 

 

 

 

 

Basic

 

51,308

 

 

55,548

 

 

52,741

 

 

55,507

Diluted

 

52,243

 

 

55,788

 

 

52,906

 

 

55,950

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)

 

 

September 30, 2020

 

December 31, 2019

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

366,710

 

$

335,630

Current investments

 

11,301

 

 

8,413

Accounts receivable, net

 

60,016

 

 

50,378

Inventories, net

 

270,319

 

 

275,891

Prepaid expenses and other

 

63,916

 

 

69,854

 Total current assets

 

772,262

 

 

740,166

 

 

 

 

 

 

Property and equipment, net

 

456,083

 

 

453,604

Right-of-use assets

 

165,749

   

144,326

Goodwill

 

196,573

 

 

196,573

Other intangible assets, net

 

74,391

 

 

80,321

Other assets

 

151,653

 

 

154,016

Total assets

$

1,816,711

 

$

1,769,006

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

55,298

 

$

38,979

Accrued expenses

 

381,052

 

 

290,281

Current portion of long-term debt

 

30,000

 

 

27,500

 Total current liabilities

 

466,350

 

 

356,760

           

 

 

 

 

 

 

Operating lease liabilities

 

121,439

 

 

105,701

Long-term debt

 

312,664

 

 

334,461

Other liabilities

 

88,785

 

 

96,795

Total liabilities

 

989,238

 

 

893,717

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Class A common stock

 

91

 

 

91

Additional paid-in capital

 

570,491

 

 

557,544

Treasury stock, at cost

 

(1,446,374)

 

 

(1,324,826)

Accumulated other comprehensive loss

 

(83,108)

 

 

(85,292)

Retained earnings

 

1,786,373

 

 

1,727,772

Total stockholders' equity

 

827,473

 

 

875,289

Total liabilities and stockholders’ equity

$

1,816,711

 

$

1,769,006

 

# # #

 

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

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

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