Company News

Nu Skin Enterprises Reports Strong First-Quarter Results And Increases Annual Guidance

PROVO, Utah, April 26, 2018 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced first-quarter financial results and increased its annual guidance.

Nu Skin Enterprises, Inc. logo (PRNewsFoto/Nu Skin Enterprises, Inc.)

Executive Summary

Q1 2018 vs. Prior-Year Quarter

Revenue:

$616.2 million, +24%
      •    +7% fx impact

Earnings Per Share (EPS):

$0.64, which includes a $0.12 negative impact associated with the settlement of a convertible note and a $0.03 charge from purchase accounting, compared to $0.51

Sales Leaders:

63,500, +16%

Customers:

1,086,000, +11%

"We delivered strong first-quarter results highlighted by 24 percent growth in revenue, which included a 7 percent foreign currency benefit," said Ritch Wood, chief executive officer. "Our revenue growth was driven by an 11 percent increase in customers and a 16 percent improvement in the number of sales leaders. We are encouraged by the early execution of our growth strategy centered on engaging platforms, enabling products and empowering programs."

Q1 2018 Year-Over-Year Operating Results

Revenue:

$616.2 million compared to $499.1 million

Gross Margin:

76.3% compared to 77.7%
           Gross margin of core Nu Skin business was 77.9%

Selling Expenses:

41.8% of revenue compared to 41.9%

G&A Expenses:

24.9% of revenue compared to 26.6%

Operating Margin:

9.6% compared to 9.3%

Other Income / (Expense):

$1.2 million income compared to ($4.6) million expense

Income Tax Rate:

41.0% compared to 34.1%

EPS:

$0.64, which includes a $0.12 impact associated with the settlement of a convertible note and a $0.03 charge from purchase accounting, compared to $0.51

Stockholder Value

Dividend Payments:

$19.8 million

Stock Repurchases:

$17.4 million; $110.6 million remaining in authorization

Q2 and Full-Year 2018 Outlook

Q2 2018 Revenue:

$630 to $650 million, 15% to 18% growth
      •     Approximately +5% fx impact

Q2 2018 EPS:

$0.86 to $0.91 which includes an estimated $0.05 purchase accounting charge

2018 Revenue:

$2.51 billion to $2.56 billion, 10% to 12% growth
          Approximately +3% fx impact

2018 EPS

$3.45 to $3.65 which includes the first quarter $0.12 convertible note impact and an estimated $0.16 purchase accounting charge for the year

"Based on the strength of first-quarter results and our initiatives for the remainder of the year, we are increasing our annual revenue guidance by $70 million," said Wood. "We remain focused on building momentum and executing our customer growth strategy by increasing social sharing capabilities with additional training and tools, driving innovation with ageLOC LumiSpa and other new products, and continuing the roll out of Velocity, our enhanced sales compensation program."

"We generated 24 percent year-over-year revenue growth and strong earnings performance in the quarter," said Mark Lawrence, chief financial officer. "As previously disclosed, we incurred a charge associated with the early conversion of our convertible note, which was not included in our original guidance and negatively impacted first-quarter earnings by $0.12 per share. In addition, due to purchase accounting, we incurred a $0.03 charge related to the amortization of intangibles from our recent acquisitions.

"For the year, we are increasing our annual revenue guidance to $2.51 billion to $2.56 billion with earnings per share of $3.45 to $3.65. This earnings guidance reflects the $0.12 negative impact related to the convertible note and approximately $0.16 of estimated amortization of intangibles from the acquisitions which were not included in our previous guidance. The most significant impact of the amortization will be in 2018. We are projecting second-quarter revenue of $630 to $650 million and earnings per share of $0.86 to $0.91," concluded Lawrence.

Conference Call

The Nu Skin management team will host a conference call with the investment community on April 26, 2018, 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 May 10, 2018.

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. 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. The ageLOC brand has generated a loyal following for such products as the ageLOC LumiSpa skin cleansing and treatment device, 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 in Asia, the Americas, Europe, Africa and the Pacific. 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.

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, strategies and initiatives; projections regarding revenue, earnings per share, foreign currency fluctuations, tax rates 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," "continue," "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:

  • 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 our markets, including the United States and Mainland 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;
  • 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;
  • 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 company's recent acquisitions;
  • 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 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 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;
  • unpredictable economic conditions and events globally;
  • 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 growth 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 this amount to the prior-year period's revenue.

The Company's revenue results by segment for the three-month periods ended March 31 are presented in the following table (in thousands).




%


Constant
Currency


2018


2017


Change


% Change









Mainland China

$            197,531


$         150,004


32%


22%

Americas/Pacific

92,289


71,425


29%


32%

South Korea

88,930


82,471


8%


1%

Southeast Asia

70,860


63,025


12%


7%

Japan

63,224


61,156


3%


(2%)

EMEA

44,981


34,064


32%


15%

Hong Kong/Taiwan

40,992


35,948


14%


11%

Other

17,412


1,006


1,631%


1,631%

     Total

$            616,219


$         499,099


24%


17%

The company's Customers and Sales Leaders statistics by segment for the three-month periods ended March 31are presented in the following table.


2018


2017


% Increase
(Decrease)


Customers


Sales
Leaders


Customers


Sales
Leaders


Customers


Sales
Leaders













Mainland China

200,000


27,000


176,000


19,100


14%


41%

Americas/Pacific

246,000


8,200


191,000


6,900


29%


19%

South Korea

179,000


7,300


189,000


8,000


(5%)


(9%)

Southeast Asia

118,000


6,600


98,000


6,200


20%


6%

Japan

129,000


6,200


132,000


6,400


(2%)


(3%)

EMEA

142,000


4,300


124,000


4,100


15%


5%

Hong Kong/Taiwan

72,000


3,900


70,000


3,900


3%














Total

1,086,000


63,500


980,000


54,600


11%


16%

_____________________

"Customers" 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.

 

NU SKIN ENTERPRISES, INC.

Consolidated Statements of Income (Unaudited)

For the First Quarters Ended March 31, 2018 and 2017

(in thousands, except per share amounts)






2018


2017





Revenue

$              616,219


$              499,099





Cost of sales

146,281


111,266





Gross profit

469,938


387,833





Operating expenses:




        Selling expenses

257,702


209,008

        General and administrative expenses

153,246


132,563

Total operating expenses

410,948


341,571





Operating income

58,990


46,262





Other income (expense), net

1,207


(4,567)

Income before provision for income taxes

60,197


41,695

Provision for income taxes

24,658


14,206





Net income

$                35,539


$                27,489





Net income per share:




        Basic

$                    0.66


$                    0.52

        Diluted

$                    0.64


$                    0.51





Weighted average common shares outstanding:




        Basic

53,997


52,678

        Diluted

55,959


54,057

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(in thousands)






March 31, 2018


December 31, 2017

ASSETS




Current assets:




        Cash and cash equivalents

$                421,484


$                426,399

        Current investments

8,615


11,847

        Accounts receivable

54,014


33,196

        Inventories, net

282,983


253,454

        Prepaid expenses and other

66,705


52,893


833,801


777,789





Property and equipment, net

508,476


464,587

Goodwill

187,423


114,954

Other intangible assets, net

100,601


67,647

Other assets

144,368


164,895

                Total assets

$             1,774,669


$             1,589,872





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




        Accounts payable

$                  62,253


$                  50,341

        Accrued expenses

309,536


319,189

        Current portion of long-term debt

362,659


77,840


734,448


447,370





Long-term debt

107,275


310,790

Other liabilities

133,818


127,116

                Total liabilities

975,541


885,276





Stockholders' equity:




        Class A common stock

91


91

        Additional paid-in capital

523,233


466,349

       Treasury stock, at cost

(1,280,586)


(1,304,694)

        Accumulated other comprehensive loss

(55,474)


(66,318)

        Retained earnings

1,611,864


1,609,168


799,128


704,596

                Total liabilities and stockholders' equity

$             1,774,669


$             1,589,872

Nu Skin Social Media Channels
  fb.com/nuskin    twitter.com/nuskin    instagram.com/nuskin

 

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SOURCE Nu Skin Enterprises, Inc.

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