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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 
November 5, 2019
  
 
Date of Report (Date of earliest event reported)
 

 
NU SKIN ENTERPRISES, INC.
  
 
(Exact name of registrant as specified in its charter)
 

Delaware
   001-12421
   87-0565309
(State or other jurisdiction of incorporation)
  
(Commission File Number)
  
(IRS Employer Identification Number)

 
75 West Center Street
Provo, Utah 84601
  
 
(Address of principal executive offices and zip code)
 

 
(801) 345-1000
  
 
(Registrant’s telephone number, including area code)
 

 
N/A
  
 
(Former name or former address, if changed since last report)
  

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock, $.001 par value
 NUS
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02
Results of Operations and Financial Condition.

On November 5, 2019, Nu Skin Enterprises, Inc. (the “Company”) issued a press release announcing its financial results for the three- and nine-month periods ended September 30, 2019, and certain other information. A copy of the press release is attached as Exhibit 99.1 to this report.

The information furnished pursuant to this Item 2.02 and the exhibit hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act except as shall be expressly set forth by specific reference in such filing.

The press release furnished herewith in Exhibit 99.1 contains non-GAAP financial measures. Management believes non-GAAP financial measures assist management and investors in evaluating and comparing period-to-period results and projections in a more meaningful and consistent manner.

Item 9.01
Financial Statements and Exhibits.

(d) Exhibits.

99.1
Nu Skin Enterprises’ press release dated November 5, 2019, regarding financial results for the three- and nine-month periods ended September 30, 2019.

104
Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
NU SKIN ENTERPRISES, INC.
 
(Registrant)
   
 
/s/ Mark H. Lawrence
  
 
Mark H. Lawrence
 
Chief Financial Officer
Date:  November 5, 2019
Exhibit 99.1


FOR IMMEDIATE RELEASE

NU SKIN ENTERPRISES REPORTS THIRD-QUARTER 2019 RESULTS

PROVO, Utah — Nov. 5, 2019 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced third-quarter 2019 results.

Executive Summary
Q3 2019 vs. Prior-Year Quarter

Revenue:
    
$589.9 million; (13%)
•       (2%) fx impact or ($12 M)
Earnings Per Share
(EPS):
    
$0.79; (16%)
Sales Leaders:
    
61,090; (16%)
Customers:
    
1,206,697;+4%

“We delivered strong profitability, with earnings per share at the high end of our range due to our focus on operational efficiencies,” said Ritch Wood, chief executive officer. “Revenue came in slightly below expectation, primarily due to the challenging regulatory environment in Mainland China, where meeting restrictions continued throughout the quarter. Despite this, our sequential sales leader trends stabilized both in China and globally, and recent product introductions and business incentives drove year-over-year increases in customer acquisition. Our manufacturing segment also continued to perform well, with revenue growing 18 percent this quarter.”

Q3 2019 Year-Over-Year Operating Results

Revenue:
    
$589.9 million compared to $675.3 million
•       (2%) fx impact or ($12 M)
Gross Margin:
    
76.2% compared to 76.7%
•       Nu Skin business was 78.6% compared to 78.7%
Selling Expenses:
    
39.3% of revenue compared to 40.2%
•       Nu Skin business was 41.5% compared to 41.8%
G&A Expenses:
    
25.1% of revenue compared to 24.5%
Operating Margin:
    
11.8% compared to 11.9%
Other Income /
(Expense):
    
($5.0) million compared to ($7.0) million
Income Tax Rate:
    
32.1% compared to 27.9%
EPS:
    
$0.79 compared to $0.94

Stockholder Value

Dividend Payments:
    
$20.6 million
Stock Repurchases:
    
Nil

Q4 and Full-Year 2019 Outlook

Q4 2019 Revenue:
    
$570 to $590 million; (17%) to (14%)
•      Approximately (2%) fx impact
Q4 2019 EPS:
    
$0.68 to $0.75
2019 Revenue:
    
$2.41 billion to $2.43 billion; (10%) to (9%)
•      Approximately (4%) fx impact
2019 EPS
    
$3.07 to $3.14

“In October, we hosted our global LIVE event in Salt Lake City to align and motivate our sales force and introduce our future product roadmap,” continued Wood. “These new products include our new and improved Galvanic Spa and accompanying consumable products, which are launching in many of our markets this quarter. We expect to introduce several new products in 2020, including a newly reformulated Tru Face Essence Ultra and new Galvanic gels. We also announced our next major product launch – an innovative daily-use beauty device – that we anticipate will be a strong driver for our business in the second half of 2020. We are excited to add this product to our top-ranked beauty device systems brand.”

Mark Lawrence, chief financial officer, added, “Our fourth quarter revenue guidance is $570 to $590 million, which includes an approximate 2 percent unfavorable foreign currency impact, and earnings per share outlook is for $0.68 to $0.75, considering expenses related to LIVE. For the full year, we project revenue of $2.41 to $2.43 billion, with an approximate 4 percent negative foreign currency impact and earnings per share of $3.07 to $3.14.”

Conference Call
The Nu Skin 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. 19, 2019.
 
About Nu Skin Enterprises, Inc.
Founded 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 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, 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,” “continue,” “anticipate,” “optimistic,” “project,” “estimate,” “intend,” “plan,” “continue,” “likely,” “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:

 •
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;

•
uncertainty regarding the continued impact of the 100-day review and 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, 2019 and 2018 for each of our reportable segments (U.S. dollars in thousands):

   
Three Months Ended
September 30,
          
Constant-
Currency
  
   
2019
    
2018
    
Change
    
Change
  
                         
Nu Skin
                        
Mainland China
  
$
173,974
    
$
226,645
      
(23
)%
    
(21
)%
Americas/Pacific
    
83,635
      
93,580
      
(11
)%
    
(7
)%
South Korea
    
79,435
      
89,963
      
(12
)%
    
(6
)%
Southeast Asia
    
78,963
      
86,307
      
(9
)%
    
(10
)%
Japan
    
67,197
      
63,649
      
6
%
    
2
%
Hong Kong/Taiwan
    
40,449
      
44,949
      
(10
)%
    
(9
)%
EMEA
    
35,742
      
42,819
      
(17
)%
    
(13
)%
Other
    
(62
)
    
1,378
      
(104
)%
    
(104
)%
Total Nu Skin
    
559,333
      
649,290
      
(14
)%
    
(12
)%
Manufacturing
    
30,601
      
26,022
      
18
%
    
18
%
Grow Tech
    
—
      
—
      
—
      
—
  
Total
  
$
589,934
    
$
675,312
      
(13
)%
    
(11
)%

The following table sets forth revenue for the nine-month periods ended September 30, 2019 and 2018 for each of our reportable segments (U.S. dollars in thousands):

   
Nine Months Ended
September 30,
          
Constant-
Currency
  
   
2019
    
2018
    
Change
    
Change
  
                         
Nu Skin
                        
Mainland China
  
$
567,795
    
$
669,432
      
(15
)%
    
(11
)%
Americas/Pacific
    
262,932
      
289,859
      
(9
)%
    
(3
)%
South Korea
    
248,020
      
270,517
      
(8
)%
    
(2
)%
Southeast Asia
    
226,853
      
236,390
      
(4
)%
    
(3
)%
Japan
    
194,557
      
190,986
      
2
%
    
1
%
Hong Kong/Taiwan
    
124,719
      
138,147
      
(10
)%
    
(8
)%
EMEA
    
120,960
      
131,810
      
(8
)%
    
(2
)%
Other
    
(239
)
    
2,643
      
(109
)%
    
(109
)%
Total Nu Skin
    
1,745,597
      
1,929,784
      
(10
)%
    
(6
)%
Manufacturing
    
91,430
      
65,937
      
39
%
    
39
%
Grow Tech
    
30
      
—
      
—
      
—
  
Total
  
$
1,837,057
    
$
1,995,721
      
(8
)%
    
(4
)%

The company’s Customers and Sales Leaders statistics by segment for the three-month periods ended September 30 are presented in the following table:

   
As of
September 30, 2019
    
As of
September 30, 2018
    
% Increase (Decrease)
  
   
Customers
    
Sales
Leaders
    
Customers
    
Sales
Leaders
    
Customers
    
Sales
Leaders
  
                                     
Mainland China
    
317,257
      
23,776
      
210,212
      
33,335
      
51
%
    
(29
)%
Americas/Pacific
    
229,013
      
7,760
      
276,923
      
8,475
      
(17
)%
    
(8
)%
South Korea
    
169,589
      
7,363
      
180,254
      
7,700
      
(6
)%
    
(4
)%
Southeast Asia
    
145,845
      
7,936
      
146,586
      
8,668
      
(1
)%
    
(8
)%
Japan
    
128,373
      
5,964
      
130,831
      
6,182
      
(2
)%
    
(4
)%
Hong Kong/Taiwan
    
68,862
      
4,231
      
75,985
      
4,402
      
(9
)%
    
(4
)%
EMEA
    
147,758
      
4,060
      
144,977
      
4,320
      
2
%
    
(6
)%
                                                 
Total
    
1,206,697
      
61,090
      
1,165,768
      
73,082
      
4
%
    
(16
)%

“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,
  
   
2019
    
2018
    
2019
    
2018
  
                         
Revenue
  
$
589,934
    
$
675,312
    
$
1,837,057
    
$
1,995,721
  
Cost of sales
    
140,162
      
157,457
      
440,854
      
472,287
  
Gross profit
    
449,772
      
517,855
      
1,396,203
      
1,523,434
  
                                 
Operating expenses:
                                
Selling expenses
    
231,937
      
271,509
      
727,473
      
801,968
  
General and administrative expenses
    
147,943
      
165,671
      
455,983
      
499,037
  
Total operating expenses
    
379,880
      
437,180
      
1,183,456
      
1,301,005
  
                                 
Operating income
    
69,892
      
80,675
      
212,747
      
222,429
  
Other income (expense), net
    
(4,979
)
    
(6,982
)
    
(11,153
)
    
(16,940
)
                                 
Income before provision for income taxes
    
64,913
      
73,693
      
201,594
      
205,489
  
Provision for income taxes
    
20,823
      
20,547
      
68,153
      
65,843
  
                                 
Net income
  
$
44,090
    
$
53,146
    
$
133,441
    
$
139,646
  
                                 
Net income per share:
                                
Basic
  
$
0.79
    
$
0.96
    
$
2.40
    
$
2.54
  
Diluted
  
$
0.79
    
$
0.94
    
$
2.39
    
$
2.47
  
                                 
Weighted-average common shares outstanding (000s):
                                
Basic
    
55,548
      
55,603
      
55,507
      
55,075
  
Diluted
    
55,788
      
56,704
      
55,950
      
56,539
  

NU SKIN ENTERPRISES, INC.
Consolidated Balance Sheets (Unaudited)
(U.S. dollars in thousands)

   
September 30,
2019
    
December 31,
2018
  
ASSETS
            
Current assets:
            
Cash and cash equivalents
  
$
320,034
    
$
386,911
  
Current investments
    
7,458
      
11,346
  
Accounts receivable
    
56,342
      
53,282
  
Inventories, net
    
282,997
      
295,821
  
Prepaid expenses and other
    
72,298
      
51,877
  
Total current assets
    
739,129
      
799,237
  
                 
Property and equipment, net
    
447,653
      
464,535
  
Right-of-use assets
    
115,557
      
—
  
Goodwill
    
196,573
      
196,573
  
Other intangible assets, net
    
83,172
      
89,989
  
Other assets
    
154,821
      
144,112
  
Total assets
  
$
1,736,905
    
$
1,694,446
  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
Current liabilities:
                
Accounts payable
  
$
39,404
    
$
47,617
  
Accrued expenses
    
304,003
      
322,583
  
Current portion of long-term debt
    
25,000
      
69,455
  
Total current liabilities
    
368,407
      
439,655
  
                 
                 
Operating lease liabilities
    
80,953
      
—
  
Long-term debt
    
341,724
      
361,008
  
Other liabilities
    
100,021
      
111,916
  
Total liabilities
    
891,105
      
912,579
  
                 
Stockholders’ equity:
                
Class A common stock
    
91
      
91
  
Additional paid-in capital
    
557,283
      
552,564
  
Treasury stock, at cost
    
(1,324,826
)
    
(1,326,605
)
Accumulated other comprehensive loss
    
(94,961
)
    
(79,934
)
Retained earnings
    
1,708,213
      
1,635,751
  
Total stockholders’ equity
    
845,800
      
781,867
  
Total liabilities and stockholders’ equity
  
$
1,736,905
    
$
1,694,446
  

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