Company News

Nu Skin Enterprises Reports Second-Quarter 2016 Results
Company Raises Annual Guidance

PROVO, Utah, Aug. 4, 2016 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced second-quarter results with revenue above guidance at $600.5 million, compared to $560.2 million in the prior-year period. Quarterly revenue improved 7 percent, or 10 percent on a constant-currency basis. Earnings per share for the quarter were $0.79 compared to $0.75 in the prior-year period. Earnings were negatively impacted $0.13 per share due to foreign currency translation charges recorded in other income/expense.

"We are pleased with our second-quarter results and remain optimistic about the future as we continue to introduce our latest ageLOC products," said Truman Hunt, president and chief executive officer. "During the quarter, we held significant product introduction events in South Asia/Pacific and Greater China, generating revenue growth of 36 and 18 percent, respectively. We are also encouraged with the increase in sales leaders during the quarter, a reflection of the strength of our product launches."

Regional Results

The company's regional revenue results for the three-month periods ended June 30 are presented in the following table.



2016


2015


%

Change


Constant

Currency

% Change










Greater China


$         236,716


$         200,136


18%


24%

North Asia


165,885


172,943


(4%)


(6%)

Americas


67,884


83,468


(19%)


(15%)

South Asia/Pacific


92,297


68,023


36%


42%

EMEA


37,693


35,639


6%


5%










Total


$         600,475


$         560,209


7%


10%

The company's regional revenue results for the six-month periods ended June 30 are presented in the following table.



2016


2015


%

Change


Constant

Currency

% Change










Greater China


$        395,427


$        387,503


2%


7%

North Asia


317,094


345,009


(8%)


(7%)

Americas


133,632


163,340


(18%)


(13%)

South Asia/Pacific


155,875


138,840


12%


19%

EMEA


70,278


68,849


2%


3%










Total


$      1,072,306


$      1,103,541


(3%)


1%

The Company's regional actives and sales leaders statistics are presented in the following table.


As of June 30, 2016


As of June 30, 2015


% Increase (Decrease)



Actives


Sales Leaders


Actives


Sales Leaders


Actives


Sales Leaders
















Greater China


257,000


31,554


215,000


25,956


19.5%


21.6%


North Asia


356,000


16,128


387,000


16,991


(8.0%)


(5.1%)


Americas


165,000


6,515


180,000


7,892


(8.3%)


(17.4%)


South Asia/Pacific


113,000


7,747


120,000


7,279


(5.8%)


6.4%


EMEA


121,000


4,168


113,000


4,042


7.1%


3.1%
















Total


1,012,000


66,112


1,015,000


62,160


(0.3%)


6.4%





















"Actives" are persons who purchased products directly from the company during the previous three months.


"Sales Leaders" are independent distributors, and sales employees and independent marketers in China, who achieve certain qualification requirements.

Operational Performance

The company's operating margin improved to 13.3 percent, compared to 12.8 percent in the prior-year period. Gross margin for the quarter was 78.7 percent, compared to 80.3 percent in the prior-year quarter. Both gross and operating margins continued to be negatively impacted by foreign currency fluctuations. Selling expenses, as a percent of revenue, were 41.4 percent, compared to 42.7 percent in the second quarter of 2015. General and administrative expenses, as a percent of revenue, were 24.0 percent, compared to 24.8 percent in the prior-year period. The company's effective income tax rate for the quarter was 35.0 percent, compared to 35.3 percent in the second quarter of last year. Dividend payments during the quarter were $19.9 million, and the company repurchased $4.3 million of its outstanding shares, with $422.7 million remaining in the authorized share repurchase plan at the end of the quarter.

Outlook

"We are pleased with the solid results of our product launches and growth of our sales force in the second quarter, which we believe will positively impact our business going forward," said Hunt. "In July, we executed a highly successful introduction of ageLOC Youth in South Korea, and we look forward to new product initiatives in all of our regions throughout the remainder of the year.

"Our balance sheet continues to be strong, boosted by positive cash flow from operations for the quarter of $139 million, with continued improvements to our inventory balance. Our cash balance includes approximately $200 million of proceeds from the recent investment by Ping An Securities during the second quarter, which we plan to deploy in repurchasing shares over the balance of the year," concluded Hunt.

"We are pleased with our results this quarter and are raising our revenue guidance for the year to $2.20 to $2.24 billion, assuming a negative foreign currency impact of 2 to 3 percent," said Ritch Wood, chief financial officer. "For the third quarter, we project revenue of $560 to $580 million including a negative currency impact of 1 to 2 percent. We project third-quarter earnings per share of $0.80 to $0.84, and full-year earnings per share of $2.44 to $2.54, or $2.80 to $2.90 when excluding a $0.36 per share non-cash Japan customs charge taken in the first quarter."

The Nu Skin management team will host a conference call with the investment community on Aug. 4 at 5 p.m. (EDT). 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, 2016.

About Nu Skin Enterprises, Inc.

Founded more than 30 years ago, Nu Skin Enterprises, Inc. develops and distributes innovative consumer products, offering a comprehensive line of premium-quality beauty and wellness solutions in more than 50 markets worldwide. The company builds upon its scientific expertise in both skin care and nutrition to continually develop innovative product brands that include the Nu Skin® personal care brand, the Pharmanex® nutrition brand, and most recently, the ageLOC® anti-aging brand. Since its introduction in 2008, the ageLOC brand has generated more than $5 billion in sales, and built a loyal following for such products as the ageLOC Youth nutritional supplement, the ageLOC Me® customized skin care system, as well as the ageLOC TR90® weight management and body shaping system. Nu Skin sells its products through a global network of sales leaders. As a long-standing member of direct selling associations globally, Nu Skin is committed to the industry's consumer guidelines that protect and support those who sell and purchase its products through the direct selling channel. Nu Skin is also traded on the New York Stock Exchange under the symbol "NUS." More information is available at nuskin.com.

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, growth, initiatives and new product introductions; 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," "project," "anticipate," "estimate," "intend," "plan," "targets," "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:

  • 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;
  • risk of foreign currency fluctuations and the currency translation impact on the company's business associated with these fluctuations;
  • risk that direct selling laws and regulations in any of our markets, including the United States and China, may be modified, interpreted or enforced in a manner that results in negative changes to our business model or negatively impacts our 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;
  • 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;
  • 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;
  • risk that litigation, investigations or other legal matters could result in settlements, assessments or damages that significantly affect financial results;
  • unpredictable economic conditions and events globally;
  • 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.

 

NU SKIN ENTERPRISES, INC.

Consolidated Statements of Income (Unaudited)

For the Second Quarters Ended June 30, 2016 and 2015

(in thousands, except per share amounts)






2016


2015





Revenue

$              600,475


$              560,209





Cost of sales

128,205


110,263





Gross profit

472,270


449,946





Operating expenses:




        Selling expenses

248,363


239,449

        General and administrative expenses

144,109


138,696

Total operating expenses

392,472


378,145





Operating income

79,798


71,801





Other income (expense), net

(11,060)


(2,758)

Income before provision for income taxes

68,738


69,043

Provision for income taxes

24,025


24,386





Net income

$                 44,713


$                 44,657





Net income per share:




        Basic

$                     0.80


$                     0.76

        Diluted

$                     0.79


$                     0.75





Weighted average common shares outstanding:




        Basic

55,952


58,506

        Diluted

56,356


59,713

 

NU SKIN ENTERPRISES, INC.

Consolidated Statements of Income (Unaudited)

For the Six-Month Periods Ended June 30, 2016 and 2015

(in thousands, except per share amounts)






2016


2015





Revenue

$            1,072,306


$             1,103,541





Cost of sales

266,074


215,318





Gross profit

806,232


888,223





Operating expenses:




        Selling expenses

443,922


473,454

        General and administrative expenses

274,363


274,322

Total operating expenses

718,285


747,776





Operating income

87,947


140,447





Other income (expense), net

(13,923)


(15,026)

Income before provision for income taxes

74,024


125,421

Provision for income taxes

25,995


44,482





Net income

$                 48,029


$                 80,939





Net income per share:




        Basic

$                     0.86


$                     1.38

        Diluted

$                     0.85


$                     1.35





Weighted average common shares outstanding:




        Basic

55,953


58,747

        Diluted

56,388


59,994

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(in thousands)






June 30, 2016


December 31, 2015

ASSETS




Current assets:




        Cash and cash equivalents

$                544,848


$                289,354

        Current investments

11,503


14,371

        Accounts receivable

31,706


35,464

        Inventories, net

259,933


265,256

        Prepaid expenses and other

162,710


101,947


1,010,700


706,392





Property and equipment, net

453,342


454,537

Goodwill

114,954


112,446

Other intangible assets, net

67,410


67,009

Other assets

134,463


165,459

                Total assets

$             1,780,869


$             1,505,843





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




        Accounts payable

$                  43,360


$                  28,832

        Accrued expenses

350,849


310,916

        Current portion of long-term debt

96,896


67,849


491,105


407,597





Long-term debt

362,051


181,745

Other liabilities

97,473


90,880

                Total liabilities

950,629


680,222





Stockholders' equity:




        Class A common stock

91


91

        Additional paid-in capital

431,459


419,921

       Treasury stock, at cost

(1,032,117)


(1,017,063)

        Accumulated other comprehensive loss

(71,463)


(71,269)

        Retained earnings

1,502,270


1,493,941


830,240


825,621

                Total liabilities and stockholders' equity

$             1,780,869


$             1,505,843

 

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SOURCE Nu Skin Enterprises, Inc.

Investors -- Scott Pond (801) 345-2657, spond@nuskin.com; or Media -- Kara Schneck (801) 345-2116, kschneck@nuskin.com