Nu Skin Enterprises Reports Third-Quarter Results
"We made significant progress during the third quarter," said
"Our sales results are heavily impacted by our product launch schedule. Last year's second-half launch, which generated approximately
Regional Results
EMEA. Revenue in the EMEA region was
Operational Performance
The company's operating margin was 16.4 percent for the quarter, compared to 18.5 percent in the third quarter of 2013. Gross margin during the quarter was 82.9 percent, versus 84.6 percent in the prior-year period. Selling expenses decreased to 41.2 percent in the third quarter, compared to 48.2 percent in the prior-year period, primarily due to higher-than-normal selling expenses in connection with last year's LTO. General and administrative expenses increased to 25.3 percent of sales, compared to 17.9 percent in the prior-year period, due primarily to the high LTO revenue in the prior-year period. The company's effective income tax rate for the quarter was 35.6 percent, compared to 34.3 percent in the prior-year period. Cash and current investments at the end of the quarter were
Outlook
"We are in a transition period as we set the stage to renew local-currency growth in 2015," said Hunt. "We remain focused on rekindling growth in
"During the third quarter, we started to increase the number of promotional meetings in
"The strength of the U.S. dollar will reduce our fourth-quarter results," said
"Given these factors, we anticipate fourth-quarter revenue of
The
About
Please Note: 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, initiatives, growth, strategies, sales force and new product development; statements regarding shareholder value and projections regarding revenue, earnings per share, foreign currency fluctuations and other financial items; statements of management's expectations and beliefs regarding
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 continuing media and regulatory scrutiny and investigations in
China , and any actions taken by the company or by regulators, could cause unanticipated complications or other difficulties in resuming promotional business activities inChina , make it more difficult to forecast results for the fourth quarter, and could negatively impact the company's revenue, sales force and business in this market, including the interruption of sales activities, loss of licenses, and the imposition of fines, and any other adverse actions or events; - uncertainty regarding whether our key indicators will in fact stabilize in response to our recent resumption of business promotional activities;
- risks related to negative publicity regarding recent media allegations and subsequent regulatory investigations and fines;
- risk that direct selling regulations in
China may be modified, interpreted or enforced in a manner that results in negative changes to our business model or the imposition of a range of potential penalties; - any failure of current or planned initiatives or products to generate interest among our sales force and customers and generate sponsoring and selling activities on a sustained basis;
- risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support our planned initiatives or launch strategies, and increased risk of inventory write-offs if we over-forecast demand for a product or change our planned initiatives or launch strategies;
- risk of foreign currency fluctuations and the currency translation impact on the company's business associated with these fluctuations;
- unpredictable economic conditions and events globally;
- regulatory risks associated with the company's products, which could require the company to modify its claims or inhibit the company's ability to import or continue selling a product in a market if it is determined to be a medical device or if it is unable to register the product in a timely manner under applicable regulatory requirements;
- adverse publicity related to the company's business, products, industry or any legal actions or complaints by the company's sales force or others;
- 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
NU SKIN ENTERPRISES, INC. |
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Consolidated Statements of Income (Unaudited) |
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For the Third Quarters Ended September 30, 2014 and 2013 |
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(in thousands, except per share amounts) |
|||
2014 |
2013 |
||
Revenue: |
|||
Greater China |
$ 226,744 |
$ 449,558 |
|
North Asia |
205,488 |
202,390 |
|
South Asia/Pacific |
88,915 |
126,972 |
|
Americas |
76,737 |
84,813 |
|
EMEA |
40,916 |
44,566 |
|
Total revenue |
638,800 |
908,299 |
|
Cost of sales |
109,275 |
139,816 |
|
Gross profit |
529,525 |
768,483 |
|
Operating expenses: |
|||
Selling expenses |
263,203 |
437,662 |
|
General and administrative expenses |
161,366 |
162,546 |
|
Total operating expenses |
424,569 |
600,208 |
|
Operating income |
104,956 |
168,275 |
|
Other income, net |
1,073 |
504 |
|
Income before provision for income taxes |
106,029 |
168,779 |
|
Provision for income taxes |
37,721 |
579,879 |
|
Net income |
$ 68,308 |
$ 110,900 |
|
Net income per share: |
|||
Basic |
$ 1.15 |
$ 1.89 |
|
Diluted |
$ 1.12 |
$ 1.80 |
|
Weighted average common shares outstanding: |
|||
Basic |
59,249 |
58,661 |
|
Diluted |
60,777 |
61,508 |
NU SKIN ENTERPRISES, INC. |
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Consolidated Statements of Income (Unaudited) |
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For the Nine-Month Periods Ended September 30, 2014 and 2013 |
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(in thousands, except per share amounts) |
|||
2014 |
2013 |
||
Revenue: |
|||
Greater China |
$ 735,542 |
$ 881,621 |
|
North Asia |
596,944 |
583,112 |
|
South Asia/Pacific |
241,762 |
279,511 |
|
Americas |
246,557 |
243,938 |
|
EMEA |
139,083 |
132,750 |
|
Total revenue |
1,959,888 |
2,120,932 |
|
Cost of sales |
371,929 |
341,134 |
|
Gross profit |
1,587,959 |
1,779,798 |
|
Operating expenses: |
|||
Selling expenses |
859,879 |
967,926 |
|
General and administrative expenses |
467,190 |
446,355 |
|
Total operating expenses |
1,327,069 |
1,414,281 |
|
Operating income |
260,890 |
365,517 |
|
Other (expense), net |
(37,554) |
(571) |
|
Income before provision for income taxes |
223,336 |
364,946 |
|
Provision for income taxes |
80,667 |
125,329 |
|
Net income |
$ 142,669 |
$ 239,617 |
|
Net income per share: |
|||
Basic |
$ 2.42 |
$ 4.09 |
|
Diluted |
$ 2.34 |
$ 3.91 |
|
Weighted average common shares outstanding: |
|||
Basic |
59,058 |
58,544 |
|
Diluted |
61,010 |
61,234 |
NU SKIN ENTERPRISES, INC. |
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Consolidated Balance Sheets (Unaudited) |
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(in thousands) |
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September 30, 2014 |
December 31, 2013 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ 194,944 |
$ 525,153 |
|
Current investments |
12,227 |
21,974 |
|
Accounts receivable |
40,612 |
68,652 |
|
Inventories, net |
369,107 |
339,669 |
|
Prepaid expenses and other |
188,532 |
162,886 |
|
805,422 |
1,118,334 |
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Property and equipment, net |
440,352 |
396,042 |
|
Goodwill |
112,446 |
112,446 |
|
Other intangible assets, net |
77,234 |
83,168 |
|
Other assets |
137,795 |
111,072 |
|
Total assets |
$ 1,573,249 |
$ 1,821,062 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current liabilities: |
|||
Accounts payable |
$ 28,275 |
$ 82,684 |
|
Accrued expenses |
328,973 |
626,284 |
|
Current portion of long-term debt |
92,926 |
67,824 |
|
450,174 |
776,792 |
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Long-term debt |
95,783 |
113,852 |
|
Other liabilities |
87,885 |
71,799 |
|
Total liabilities |
633,842 |
962,443 |
|
Stockholders' equity: |
|||
Class A common stock |
91 |
91 |
|
Additional paid-in capital |
412,177 |
397,383 |
|
Treasury stock, at cost |
(843,878) |
(826,904) |
|
Accumulated other comprehensive loss |
(44,964) |
(46,228) |
|
Retained earnings |
1,415,981 |
1,334,277 |
|
939,407 |
858,619 |
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Total liabilities and stockholders' equity |
$ 1,573,249 |
$ 1,821,062 |
NU SKIN ENTERPRISES, INC. Actives/Sales Leaders Statistics |
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As of September 30, 2014 |
As of September 30, 2013 |
% Increase (Decrease) |
||||||||||||
Actives |
Sales Leaders |
Actives |
Sales Leaders |
Actives |
Sales Leaders |
|||||||||
Greater China |
238,000 |
24,823 |
418,000 |
57,780 |
(43.1%) |
(57.0%) |
||||||||
North Asia |
398,000 |
17,153 |
430,000 |
17,994 |
(7.4%) |
(4.7%) |
||||||||
South Asia/Pacific |
121,000 |
7,881 |
125,000 |
9,280 |
(3.2%) |
(15.1%) |
||||||||
Americas |
186,000 |
7,244 |
179,000 |
7,461 |
3.9% |
(2.9%) |
||||||||
EMEA |
113,000 |
4,103 |
121,000 |
4,375 |
(6.6%) |
(6.2%) |
||||||||
Total |
1,056,000 |
61,204 |
1,273,000 |
96,890 |
(17.0%) |
(36.8%) |
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"Actives" are persons who purchased products directly from the company during the previous three months.
"Sales Leaders" include our independent distributors who have completed and who maintain specified sales requirements, and our sales employees and contractual sales promoters in Mainland China, who have completed certain qualification requirements.
SOURCE
Investors -- Scott Pond (801) 345-2657, spond@nuskin.com, Media -- Kara Schneck (801) 345-2116, kschneck@nuskin.com