Nu Skin Enterprises Reports Record First-quarter 2021 Results

NU SKIN ENTERPRISES REPORTS RECORD FIRST-QUARTER 2021 RESULTS

Company announces first-quarter revenue growth of 31% and EPS growth of 153%,
raises annual guidance

PROVO, Utah — May 5, 2021 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced record first-quarter 2021 revenue and earnings per share.

 

Executive Summary

Q1 2021 vs. Prior-year Quarter

Revenue:

$677.0 million; +31%

·       +6% fx impact or $29.6 million

Earnings Per Share (EPS):

$0.91; +153%

Sales Leaders:

60,619; +22%

Customers:

1,517,260; +34%

“We are very pleased with a strong start to 2021 with our highest-ever first quarter revenue and earnings per share,” said Ritch Wood, chief executive officer. “Our innovative beauty and wellness product initiatives powered by our social commerce business model led to 34 percent growth in our customer base over the prior year and a 22 percent increase in global sales leaders. We were recognized again by Euromonitor as the world’s number one beauty device systems brand.* We continue to improve our geographic balance, driven by ongoing strong performance in the West, providing a more diversified and sustainable growth profile. Our manufacturing segment also achieved record results with 69 percent year-over-year revenue growth.”

 

Ryan Napierski, president and CEO-elect, added, “We continue to make progress toward our vision of becoming the world’s leading beauty and wellness company powered by our dynamic affiliate opportunity platform. We added innovative products to our portfolio with the launch of ageLOC Boost and Nutricentials Bioadaptives, and our markets are forecasting strong demand for new product innovations being introduced in the back half of the year. These include Beauty Focus Collagen+, which is the first product in a new beauty-from-within line, and ageLOC Meta, a metabolic health supplement and our next major Pharmanex product introduction. The West markets continue to lead out in adopting our social commerce business model with triple-digit growth. Our affiliates are leveraging this model to connect with more consumers and attract people interested in building their own socially enabled affiliate marketing business. In the East, we grew 14 percent in Japan and modestly in Mainland China and anticipate increased adoption of our social commerce strategy and digital tools.”

 

Q1 2021 Year-over-year Operating Results                                                                                                                                                                                  

Revenue:

$677.0 million compared to $518.0 million

·       +6% fx impact

Gross Margin:

74.8% compared to 75.7%

·       Nu Skin business was 77.8% compared to 78.1%

·       Impacted by growth in manufacturing segment

Selling Expenses:

40.4% compared to 39.8%

·       Nu Skin business was 43.4% compared to 42.0%

G&A Expenses:

25.1% compared to 28.9%

Operating Margin:

9.3% compared to 7.1%

Other Income / (Expense):

$1.6 million compared to ($6.2) million

Income Tax Rate:

26.5% compared to 35.1%

·       Benefited by geographic mix

EPS:

$0.91 compared to $0.36


Stockholder Value

Dividend Payments:

$19.3 million

Stock Repurchases:

$50.4 million

·       $275.4 million remaining in authorization

 

Q2 and Full-year 2021 Outlook

Q2 2021 Revenue:

$680 to $705 million; +11 to 15%

·       Approximately +5% fx impact

Q2 2021 EPS:

$0.97 to $1.07; +20 to 32%

2021 Revenue:

$2.80 to $2.87 billion; +9 to 11%

·       Approximately +3 to 4% fx impact

2021 EPS:

$4.05 to $4.30; +12 to 18%

 

Mark Lawrence, chief financial officer, added, “During the quarter, we continued our focus on generating shareholder value by improving operating margin through G&A optimization and leveraging our balance sheet to repurchase nearly one million shares. We continue to create synergistic value from our Rhyz manufacturing companies as they enabled the accelerated growth throughout the West. Given the strong start to the year, as well as the positive trends we have seen in customer and sales leader growth, we are increasing our annual revenue and EPS guidance.”

 

About Nu Skin Enterprises, Inc.

Founded more than 35 years ago, Nu Skin Enterprises, Inc. (NSE) empowers innovative companies 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.

 

* Source Euromonitor International Limited; Retail Value RSP terms; all channels; 2017 to 2020. Beauty Systems are at-home Skin Care Beauty Devices that are exclusively paired or recommended to be used with a topical consumable of the same brand. Claim verification based on Euromonitor custom research and methodology conducted January-March of 2021. Sales of at-home skin care beauty devices includes sales of electric facial cleansers as defined in Passport database. This category does not include hair care/removal appliances, body shavers, and oral care appliances.

 

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 pipeline and product introductions, customers and sales leaders, affiliates, 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,” “anticipate,” “project,” “outlook,” “guidance,” “plan,” “forecast,” “expand,” “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 pandemic, 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;

·       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 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

 

2021

 

2020

 

Change

 

Change

Nu Skin

                     

Mainland China

$

149,593

 

$

137,696

 

 

9%

 

 

1%

Americas/Pacific

 

149,465

 

 

74,573

 

 

100%

 

 

97%

South Korea

 

81,131

 

 

75,719

 

 

7%

 

 

EMEA

 

76,180

 

 

35,403

 

 

115%

 

 

98%

Japan

 

69,864

 

 

61,300

 

 

14%

 

 

11%

Southeast Asia

 

67,585

 

 

69,586

 

 

(3)%

 

 

(5)%

Hong Kong/Taiwan

 

36,345

 

 

35,827

 

 

1%

 

 

(3)%

Other

 

705

 

 

773

 

 

(9)%

 

 

(9)%

Total Nu Skin

 

630,868

   

490,877

   

29%

   

22%

Manufacturing

 

45,985

   

27,147

   

69%

   

69%

Grow Tech

 

173

   

4

   

4,225%

   

4,225%

Total

$

677,026

 

$

518,028

 

 

31%

 

 

25%

The company's Customers and Sales Leaders statistics by segment as of March 31, 2021 and 2020 are presented in the following table:

As of

March 31, 2021

 

As of

March 31, 2020

 

% Increase (Decrease)

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

Mainland China

 

316,000

 

 

16,716

 

 

271,536

 

 

16,159

 

 

16%

 

 

3%

Americas/Pacific

 

407,413

 

 

12,340

 

 

214,139

 

 

6,930

 

 

90%

 

 

78%

South Korea

 

152,390

 

 

7,099

 

 

174,004

 

 

6,608

 

 

(12)%

 

 

7%

EMEA

 

296,001

 

 

7,950

 

 

140,344

 

 

4,237

 

 

111%

 

 

88%

Japan

 

126,525

 

 

6,131

 

 

119,784

 

 

5,635

 

 

6%

 

 

9%

Southeast Asia

 

152,889

 

 

6,882

 

 

145,116

 

 

6,634

 

 

5%

 

 

4%

Hong Kong/Taiwan

 

66,042

 

 

3,501

 

 

66,024

 

 

3,348

 

 

 

 

5%

Total

 

1,517,260

 

 

60,619

 

 

1,130,947

 

 

49,551

 

 

34%

 

 

22%

“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,

 

2021

 

2020

           

Revenue

$

677,026

 

$

518,028

Cost of sales

 

170,566

 

 

125,793

Gross profit

 

506,460

 

 

392,235

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Selling expenses

 

273,746

 

 

206,042

General and administrative expenses

 

169,801

 

 

149,628

Total operating expenses

 

443,547

 

 

355,670

 

 

 

 

 

 

Operating income

 

62,913

 

 

36,565

Other income (expense), net

 

1,582

 

 

(6,174)

 

 

 

 

 

 

Income before provision for income taxes

 

64,495

 

 

30,391

Provision for income taxes

 

17,065

 

 

10,661

 

 

 

 

 

 

Net income

$

47,430

 

$

19,730

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

Basic

$

0.94

 

$

0.36

Diluted

$

0.91

 

$

0.36

 

 

 

 

 

 

Weighted-average common shares outstanding (000s):

 

 

 

 

 

Basic

 

50,706

 

 

55,059

Diluted

 

52,172

 

 

55,101

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)

 

March 31,    2021

 

December 31, 2020

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

339,099

 

$

402,683

Current investments

 

23,615

 

 

21,216

Accounts receivable, net

 

60,625

 

 

63,370

Inventories, net

 

363,431

 

 

314,366

Prepaid expenses and other

 

114,118

 

 

101,563

 Total current assets

 

900,888

 

 

903,198

 

 

 

 

 

 

Property and equipment, net

 

464,247

 

 

468,181

Operating lease right-of-use assets

 

147,129

   

155,104

Goodwill

 

202,979

 

 

202,979

Other intangible assets, net

 

87,135

 

 

89,532

Other assets

 

147,721

 

 

138,082

Total assets

$

1,950,099

 

$

1,957,076

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

67,083

 

$

66,174

Accrued expenses

 

404,493

 

 

446,682

Current portion of long-term debt

 

90,000

 

 

30,000

 Total current liabilities

 

561,576

 

 

542,856

 

         

Operating lease liabilities

 

108,237

 

 

112,275

Long-term debt

 

298,120

 

 

305,393

Other liabilities

 

110,692

 

 

102,281

Total liabilities

 

1,078,625

 

 

1,062,805

 

 

 

 

 

 

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

 

579,204

 

 

579,801

Treasury stock, at cost – 40.4 million and 39.7 million shares

 

(1,505,076)

 

 

(1,461,593)

Accumulated other comprehensive loss

 

(71,626)

 

 

(64,768)

Retained earnings

 

1,868,881

 

 

1,840,740

Total stockholders' equity

 

871,474

 

 

894,271

Total liabilities and stockholders’ equity

$

1,950,099

 

$

1,957,076

 

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