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

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August 5, 2020 at 4:06 PM EDT

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

PROVO, Utah, Aug. 5, 2020 /PRNewswire/ -- 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

 

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SOURCE Nu Skin Enterprises, Inc.

Media: media@nuskin.com, (801) 345-6397, Investors: investorrelations@nuskin.com, (801) 345-3577­­­