Nu Skin Enterprises Reports Second-Quarter 2020 Results And Raises 2020 Guidance

Nu Skin Enterprises Reports Second-Quarter 2020 Results And Raises 2020 Guidance

PROVO, Utah — Aug. 5, 2020 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced second-quarter results above expectations and raised its revenue and earnings per share guidance for 2020.

 

Executive Summary

Q2 2020 vs. Prior-Year Quarter

Revenue:

$612.4 million; (2%)

·       (3%) fx impact or ($19.8) million

Earnings Per Share (EPS):

$0.81; (2%)

Sales Leaders:

56,036; (9%)

Customers:

1,499,900; +29%

“Our business performed well above expectations in the second quarter of 2020 driven by our socially enabled business model, strategic investments in technology and manufacturing, and our balanced product portfolio,” said Ritch Wood, chief executive officer. “Strong global customer growth of 29 percent in the quarter, driven by our focus on empowering sales leaders to reach more customers, resulted in constant currency revenue growth due to the strength of our business in the Americas and Europe. Our Mainland China business continues to recover with slight sequential revenue improvement and strong customer growth.

 

“I am particularly proud of the way our global sales leaders have embraced socially enabled commerce, with more than 85 percent of revenue in the quarter coming through digital transactions. In addition, our manufacturing division generated 20 percent revenue growth and increased stability in our supply chain. In the first half, we generated strong cash from operations, raised our dividend, strengthened our balance sheet and reduced our outstanding shares by nearly eight percent.”

 

Q2 2020 Year-Over-Year Operating Results                                                                             

Revenue:

$612.4 million compared to $623.5 million

·       (3%) fx impact or ($19.8) million

Gross Margin:

74.8% compared to 75.3%

·       Nu Skin business was 77.6% compared to 77.8%

Selling Expenses:

40.6% compared to 39.4%

·       Nu Skin business was 43.3% compared to 41.5%

G&A Expenses:

24.7% compared to 24.0%

Operating Margin:

9.5% compared to 11.9%

Other Income / (Expense):

$1.6 million compared to ($3.3) million

Income Tax Rate:

29.8% compared to 34.6%

EPS:

$0.81 compared to $0.83

Stockholder Value

Dividend Payments:

$19.4 million

Stock Repurchases:

$46.5 million

·       $362.8 million remaining in authorization

Q3 and Full-Year 2020 Outlook

Q3 2020 Revenue:

$605 to $635 million; +3 to 8%

·       Approximately (1 to 2%) fx impact

Q3 2020 EPS:

$0.78 to $0.88

2020 Revenue:

$2.37 to $2.45 billion; (2%) to +1%

·       Approximately (2 to 3%) fx impact

2020 EPS

$2.85 to $3.10

“Our performance so far this year gives us confidence for the second half and momentum as we move into 2021. We believe the improved productivity of our sales leaders is driving strong customer growth and will lead to sales force expansion as we move toward the introduction of our ageLOC Boost device and Nutricentials Bioadaptive Skin Care in the second half. We will continue to focus on the expansion of our socially enabled business around the world with the release of our latest digital tool, Vera, a personal product recommendation app. Overall, we are confident in the direction of our strategy and the future ahead,” Wood concluded.

 

Mark Lawrence, chief financial officer, added, “We delivered results above expectations and achieved constant currency revenue growth ahead of schedule. Given our performance in the first half and continued trends in our customer and sales leader pipeline, we are raising our guidance for the year. As we look ahead to the third quarter, we anticipate revenue of $605 to $635 million, which includes 1 to 2 percent unfavorable foreign currency impact, and earnings per share of $0.78 to $0.88. We are raising our 2020 revenue guidance to $2.37 to $2.45 billion, which reflects a negative foreign currency impact of 2 to 3 percent, and we anticipate annual earnings per share of $2.85 to $3.10.”

 

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 Aug. 19, 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, benefits to shareholders, 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 June 30, 2020 and 2019 for each of our reportable segments (U.S. dollars in thousands):

 

Three Months Ended

June 30,

 

 

 

Constant-Currency

 

2020

 

2019

 

Change

 

Change

Nu Skin

                     

Mainland China

$

146,332

 

$

185,333

 

 

(21%)

 

 

(18%)

Americas/Pacific

 

127,919

 

 

92,841

 

 

38%

 

 

48%

South Korea

 

76,915

 

 

84,732

 

 

(9%)

 

 

(5%)

Southeast Asia

 

66,829

 

 

75,395

 

 

(11%)

 

 

(9%)

Japan

 

68,291

 

 

65,251

 

 

5%

 

 

2%

EMEA

 

50,776

 

 

43,400

 

 

17%

 

 

21%

Hong Kong/Taiwan

 

37,161

 

 

43,712

 

 

(15%)

 

 

(17%)

Other

 

(85)

 

 

1,249

 

 

(107%)

 

 

(107%)

Total Nu Skin

 

574,138

   

591,913

   

(3%)

   

Manufacturing

 

37,918

   

31,557

   

20%

   

20%

Grow Tech

 

310

   

30

   

933%

   

933%

Total

$

612,366

 

$

623,500

 

 

(2%)

 

 

1%

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

 

Six Months Ended

June 30,

 

 

 

Constant-Currency

 

2020

 

2019

 

Change

 

Change

Nu Skin

                     

Mainland China

$

284,028

 

$

393,821

 

 

(28%)

 

 

(25%)

Americas/Pacific

 

202,492

 

 

179,297

 

 

13%

 

 

21%

South Korea

 

152,634

 

 

168,585

 

 

(9%)

 

 

(5%)

Southeast Asia

 

136,415

 

 

147,890

 

 

(8%)

 

 

(6%)

Japan

 

129,591

 

 

127,360

 

 

2%

 

 

EMEA

 

86,179

 

 

85,218

 

 

1%

 

 

4%

Hong Kong/Taiwan

 

72,988

 

 

84,270

 

 

(13%)

 

 

(15%)

Other

 

688

 

 

(177)

 

 

(489%)

 

 

(488%)

Total Nu Skin

 

1,065,015

   

1,186,264

   

(10%)

   

(7%)

Manufacturing

 

65,065

   

60,829

   

7%

   

7%

Grow Tech

 

314

   

30

   

947%

   

947%

Total

$

1,130,394

 

$

1,247,123

 

 

(9%)

 

 

(7%)

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

 

As of

June 30, 2020

 

As of

June 30, 2019

 

% Increase (Decrease)

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

 

 

 

 

 

 

 

 

 

 

 

 

Mainland China

 

321,946

 

 

17,104

 

 

226,877

 

 

24,336

 

 

42%

 

 

(30%)

Americas/Pacific

 

424,236

 

 

10,787

 

 

253,684

 

 

8,161

 

 

67%

 

 

32%

South Korea

 

159,926

 

 

6,881

 

 

180,365

 

 

7,239

 

 

(11%)

 

 

(5%)

Southeast Asia

 

155,822

 

 

6,790

 

 

137,450

 

 

7,417

 

 

13%

 

 

(8%)

Japan

 

125,332

 

 

6,011

 

 

127,900

 

 

5,931

 

 

(2%)

 

 

1%

EMEA

 

247,057

 

 

5,120

 

 

164,055

 

 

4,256

 

 

51%

 

 

20%

Hong Kong/Taiwan

 

65,581

 

 

3,343

 

 

70,089

 

 

4,223

 

 

(6%)

 

 

(21%)

Total

 

1,499,900

 

 

56,036

 

 

1,160,420

 

 

61,563

 

 

29%

 

 

(9%)

“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

June 30,

 

Six Months Ended

June 30,

 

2020

 

2019

 

2020

 

2019

                       

Revenue

$

612,366

 

$

623,500

 

$

1,130,394

 

$

1,247,123

Cost of sales

 

154,110

 

 

154,028

 

 

279,903

 

 

300,692

Gross profit

 

458,256

 

 

469,472

 

 

850,491

 

 

946,431

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

248,628

 

 

245,828

 

 

454,670

 

 

495,536

General and administrative expenses

 

151,554

 

 

149,442

 

 

301,182

 

 

308,040

Total operating expenses

 

400,182

 

 

395,270

 

 

755,852

 

 

803,576

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

58,074

 

 

74,202

 

 

94,639

 

 

142,855

Other income (expense), net

 

1,581

 

 

(3,326)

 

 

(4,593)

 

 

(6,174)

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

59,655

 

 

70,876

 

 

90,046

 

 

136,681

Provision for income taxes

 

17,804

 

 

24,527

 

 

28,465

 

 

47,330

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

41,851

 

$

46,349

 

$

61,581

 

$

89,351

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.81

 

$

0.83

 

$

1.15

 

$

1.61

Diluted

$

0.81

 

$

0.83

 

$

1.15

 

$

1.59

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding (000s):

 

 

 

 

 

 

 

 

 

 

 

Basic

 

51,872

 

 

55,536

 

 

53,466

 

 

55,486

Diluted

 

51,925

 

 

55,943

 

 

53,502

 

 

56,030

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)

 

   June 30, 2020

 

December 31, 2019

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

375,512

 

$

335,630

Current investments

 

10,788

 

 

8,413

Accounts receivable, net

 

64,371

 

 

50,378

Inventories, net

 

261,969

 

 

275,891

Prepaid expenses and other

 

73,200

 

 

69,854

 Total current assets

 

785,840

 

 

740,166

 

 

 

 

 

 

Property and equipment, net

 

444,848

 

 

453,604

Right-of-use assets

 

142,700

   

144,326

Goodwill

 

196,573

 

 

196,573

Other intangible assets, net

 

76,161

 

 

80,321

Other assets

 

148,371

 

 

154,016

Total assets

$

1,794,493

 

$

1,769,006

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

51,655

 

$

38,979

Accrued expenses

 

337,980

 

 

290,281

Current portion of long-term debt

 

95,000

 

 

27,500

 Total current liabilities

 

484,635

 

 

356,760

           

 

 

 

 

 

 

Operating lease liabilities

 

103,043

 

 

105,701

Long-term debt

 

319,932

 

 

334,461

Other liabilities

 

94,871

 

 

96,795

Total liabilities

 

1,002,481

 

 

893,717

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Class A common stock

 

91

 

 

91

Additional paid-in capital

 

563,115

 

 

557,544

Treasury stock, at cost

 

(1,427,064)

 

 

(1,324,826)

Accumulated other comprehensive loss

 

(93,441)

 

 

(85,292)

Retained earnings

 

1,749,311

 

 

1,727,772

Total stockholders' equity

 

792,012

 

 

875,289

Total liabilities and stockholders’ equity

$

1,794,493

 

$

1,769,006

# # #

 

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

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

Divider