Nu Skin Enterprises Reports Third Quarter 2021 Results

approximatelyNu Skin Enterprises Reports Third Quarter 2021 Results

PROVO, Utah — Nov. 3, 2021 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced third quarter 2021 revenue of $641.2 million and earnings per share (EPS) of $0.97.

 

Executive Summary

Q3 2021 vs. Prior-year Quarter

Revenue:

$641.2 million; (9)%

·       +2% fx impact or $11.8 million

Earnings Per Share (EPS):

$0.97; (10)%

Sales Leaders:

58,565; (15)%

Customers:

1,395,271; (9)%

               

“As we previously announced, our third quarter revenue was lower than anticipated due to COVID delta variant disruptions as unexpected government restrictions interrupted selling and promotional activities in several markets, specifically in Mainland China and Southeast Asia,” said Ryan Napierski, Nu Skin president and CEO. “Despite these short-term impacts, we are encouraged by our continued growth in the U.S., which was driven by our Beauty Focus Collagen+ launch and double-digit growth in Korea due to successful product promotions and sales leader initiatives.

 

“Looking ahead, we anticipate the ongoing rollout of our Collagen+ and ageLOC Meta products in Q4 will build momentum going into next year. For 2022 and beyond, we remain focused on our vision of becoming the world’s leading beauty and wellness company, powered by our dynamic affiliate opportunity platform. We will work toward this by introducing our EmpowerMe personalized beauty and wellness strategy with connected beauty devices, increasing adoption of our affiliate-powered social commerce business model and expanding our digital platform. Amidst global uncertainty, we are confident in this strategy as we transform our company toward our vision for the future.”

 

Q3 2021 Year-over-year Operating Results               

Revenue:

$641.2 million compared to $703.3 million

·       +2% fx impact

Gross Margin:

75.2% compared to 73.9%

·       Nu Skin business was 78.6% compared to 76.3%

Selling Expenses:

39.9% compared to 39.9%

·       Nu Skin business was 42.7% compared to 42.4%

G&A Expenses:

25.1% compared to 23.5%

Operating Margin:

10.2% compared to 10.6%

Other Income / (Expense):

$2.8 million compared to $0.5 million

Income Tax Rate:

27.0% compared to 24.7%

EPS:

$0.97 compared to $1.08


Stockholder Value

Dividend Payments:

$19.0 million

Stock Repurchases:

$10.0 million

·       $255.4 million remaining in authorization

 

Q4 and Full-year 2021 Outlook

Q4 2021 Revenue:

$645 to $675 million; (10) to (14)%

·       Approximately (1)% fx impact

Q4 2021 EPS:

$0.90 to $1.00; (29) to (36)%

·       Prior year benefitted by 19.6% tax rate

2021 Revenue:

$2.67 to $2.70 billion; +3 to 5%

·       Approximately +2 to 3% fx impact

2021 EPS:

$3.93 to $4.03; +8 to 11%

Mark Lawrence, chief financial officer, added, “We are adjusting our 2021 forecast based on third quarter results and continued COVID uncertainty. Despite the difficult operating environment, we anticipate annual revenue growth of 3 to 5 percent on top of strong growth in 2020, with earnings per share growth of 8 to 11 percent.”

 

About Nu Skin Enterprises, Inc.

Nu Skin Enterprises, Inc. (NYSE: NUS) is a leading beauty and wellness company, powered by a dynamic affiliate opportunity platform. The company helps people live, look and feel their best with products that combine the best of science, technology and nature. Backed by more than 35 years of scientific research, Nu Skin develops innovative products including Nu Skin® personal care, Pharmanex® nutrition and the ageLOC® anti-aging brand, which includes an award-winning line of beauty device systems. Nu Skin operates in approximately 50 markets worldwide in the Americas, Asia, Europe, Africa and the Pacific. Rhyz Inc. is the company’s strategic investment arm that includes a collection of technology and manufacturing companies to support growth in the core Nu Skin business. Nu Skin is committed to sustainability, including global initiatives such as transitioning to reduced and sustainable packaging for all products by 2030. The Nu Skin Force for Good Foundation also strives to improve children’s health, education and economic circumstances throughout the world. For more information, visit nuskin.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, vision, initiatives, product pipeline and product introductions, digital tools, 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,” “remain,” “become,” “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, increased scrutiny of sales force actions, 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 following table sets forth revenue for the three-month periods ended September 30, 2021 and 2020 for each of our reportable segments (U.S. dollars in thousands):

 

Three Months Ended

September 30,

 

 

 

Constant-

Currency

 

2021

 

2020

 

Change

 

Change

Nu Skin

                     

Mainland China

$

134,291

 

$

169,068

 

 

(21)%

 

 

(26)%

Americas

 

131,482

 

 

133,618

 

 

(2)%

 

 

(2)%

South Korea

 

91,989

 

 

83,460

 

 

10%

 

 

8%

Southeast Asia/Pacific

 

79,081

 

 

101,949

 

 

(22)%

 

 

(23)%

EMEA

 

55,839

 

 

61,411

 

 

(9)%

 

 

(11)%

Japan

 

65,117

 

 

70,958

 

 

(8)%

 

 

(5)%

Hong Kong/Taiwan

 

39,921

 

 

42,265

 

 

(6)%

 

 

(8)%

Nu Skin other

 

889

 

 

(314)

 

 

383%

 

 

382%

Total Nu Skin

 

598,609

   

662,415

   

(10)%

   

(11)%

Rhyz Investments

                     

Manufacturing

 

41,635

   

40,910

   

2%

   

2%

Grow Tech

 

783

   

22

   

3,459%

   

3,459%

Rhyz other

 

125

   

           

Total Rhyz Investments

 

42,543

   

40,932

   

4%

   

4%

Total

$

641,152

 

$

703,347

 

 

(9)%

 

 

(11)%

The following table sets forth revenue for the nine-month periods ended September 30, 2021 and 2020 for each of our reportable segments (U.S. dollars in thousands):

 

Nine Months Ended

September 30,

 

 

 

Constant-

Currency

 

2021

 

2020

 

Change

 

Change

Nu Skin

                     

Mainland China

$

438,066

 

$

453,096

 

 

(3)%

 

 

(11)%

Americas

 

403,755

 

 

312,436

 

 

29%

 

 

28%

South Korea

 

261,724

 

 

236,094

 

 

11%

 

 

5%

Southeast Asia/Pacific

 

246,338

 

 

262,038

 

 

(6)%

 

 

(9)%

EMEA

 

215,134

 

 

147,590

 

 

46%

 

 

36%

Japan

 

203,001

 

 

200,549

 

 

1%

 

 

2%

Hong Kong/Taiwan

 

114,795

 

 

115,253

 

 

 

 

(4)%

Nu Skin other

 

2,350

 

 

374

 

 

528%

 

 

530%

Total Nu Skin

 

1,885,163

   

1,727,430

   

9%

   

5%

Rhyz Investments

                     

Manufacturing

 

135,760

   

105,975

   

28%

   

28%

Grow Tech

 

1,147

   

336

   

241%

   

241%

Rhyz other

 

163

   

           

Total Rhyz Investments

 

137,070

   

106,311

   

29%

   

29%

Total

$

2,022,233

 

$

1,833,741

 

 

10%

 

 

6%

The company's Customers and Sales Leaders statistics by segment as of September 30, 2021 and 2020 are presented in the following table:

 

As of

September 30, 2021

 

As of

September 30, 2020

 

% Increase (Decrease)

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

 

Customers

 

Sales Leaders

Mainland China

 

355,256

 

 

13,838

 

 

341,386

 

 

20,970

 

 

4%

 

 

(34)%

Americas

 

324,880

 

 

12,127

 

 

397,936

 

 

12,798

 

 

(18)%

 

 

(5)%

South Korea

 

156,439

 

 

9,448

 

 

164,256

 

 

7,973

 

 

(5)%

 

 

18%

Southeast Asia/Pacific

 

162,048

 

 

7,607

 

 

204,489

 

 

9,959

 

 

(21)%

 

 

(24)%

EMEA

 

210,705

 

 

5,726

 

 

235,202

 

 

6,226

 

 

(10)%

 

 

(8)%

Japan

 

123,453

 

 

6,029

 

 

126,896

 

 

6,523

 

 

(3)%

 

 

(8)%

Hong Kong/Taiwan

 

62,490

 

 

3,790

 

 

69,346

 

 

4,067

 

 

(10)%

 

 

(7)%

Total

 

1,395,271

 

 

58,565

 

 

1,539,511

 

 

68,516

 

 

(9)%

 

 

(15)%

“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,

 

2021

 

2020

 

2021

 

2020

                       

Revenue

$

641,152

 

$

703,347

 

$

2,022,233

 

$

1,833,741

Cost of sales

 

158,907

 

 

183,374

 

 

501,448

 

 

463,277

Gross profit

 

482,245

 

 

519,973

 

 

1,520,785

 

 

1,370,464

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

255,719

 

 

280,695

 

 

807,358

 

 

735,365

General and administrative expenses

 

161,142

 

 

165,050

 

 

499,754

 

 

466,232

Total operating expenses

 

416,861

 

 

445,745

 

 

1,307,112

 

 

1,201,597

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

65,384

 

 

74,228

 

 

213,673

 

 

168,867

Other income (expense), net

 

2,781

 

 

525

 

 

351

 

 

(4,068)

 

 

 

 

 

 

 

 

 

 

 

 

Income before provision for income taxes

 

68,165

 

 

74,753

 

 

214,024

 

 

164,799

Provision for income taxes

 

18,436

 

 

18,446

 

 

57,527

 

 

46,911

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

49,729

 

$

56,307

 

$

156,497

 

$

117,888

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.99

 

$

1.10

 

$

3.11

 

$

2.24

Diluted

$

0.97

 

$

1.08

 

$

3.03

 

$

2.23

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding (000s):

 

 

 

 

 

 

 

 

 

 

 

Basic

 

50,098

 

 

51,308

 

 

50,304

 

 

52,741

Diluted

 

51,260

 

 

52,243

 

 

51,629

 

 

52,906

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)

 

September 30, 2021

 

December 31, 2020

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

282,412

 

$

402,683

Current investments

 

19,190

 

 

21,216

Accounts receivable, net

 

52,441

 

 

63,370

Inventories, net

 

415,203

 

 

314,366

Prepaid expenses and other

 

121,626

 

 

101,563

 Total current assets

 

890,872

 

 

903,198

 

 

 

 

 

 

Property and equipment, net

 

464,049

 

 

468,181

Operating lease right-of-use assets

 

128,887

   

155,104

Goodwill

 

215,582

 

 

202,979

Other intangible assets, net

 

88,497

 

 

89,532

Other assets

 

186,522

 

 

138,082

Total assets

$

1,974,409

 

$

1,957,076

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

52,023

 

$

66,174

Accrued expenses

 

378,573

 

 

446,682

Current portion of long-term debt

 

110,000

 

 

30,000

 Total current liabilities

 

540,596

 

 

542,856

 

         

Operating lease liabilities

 

95,741

 

 

112,275

Long-term debt

 

278,563

 

 

305,393

Other liabilities

 

123,032

 

 

102,281

Total liabilities

 

1,037,932

 

 

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

 

590,678

 

 

579,801

Treasury stock, at cost – 40.5 million and 39.7 million shares

 

(1,518,535)

 

 

(1,461,593)

Accumulated other comprehensive loss

 

(75,658)

 

 

(64,768)

Retained earnings

 

1,939,901

 

 

1,840,740

Total stockholders' equity

 

936,477

 

 

894,271

Total liabilities and stockholders’ equity

$

1,974,409

 

$

1,957,076

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