Nu Skin Enterprises Reports Third-Quarter 2020 Results And Raises Annual Guidance

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November 4, 2020 at 4:06 PM EST

Nu Skin Enterprises Reports Third-Quarter 2020 Results And Raises Annual Guidance

PROVO, Utah, Nov. 4, 2020 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced third-quarter results of 19 percent revenue growth and 37 percent earnings per share growth and raised its guidance for 2020.

Executive Summary
Q3 2020 vs. Prior-Year Quarter

Revenue:

$703.3 million; +19%

    •    Less than (1%) fx impact

Earnings Per Share (EPS):

$1.08; +37%

Sales Leaders:

68,516; +12%

Customers:

1,539,511; +28%

"We continued to build momentum with accelerated results in the third quarter, as we generated revenue and earnings per share well above expectations," said Ritch Wood, chief executive officer. "As we executed on our long-term strategy, we drove double-digit growth in both customers and sales leaders with revenue improvements in all but one reporting segment. We delivered strong double-digit growth in the Americas, Pacific and EMEA regions, with modest growth throughout most of Asia. Mainland China continues to stabilize with sequentially improving revenue, customers and sales leaders, and we remain on track for a return to year-over-year growth in China in the fourth quarter. Our manufacturing division contributed to our results with impressive 34 percent growth.

"We are outpacing our 2020 growth projections due to strong product demand and ongoing digital investments that empower our sales leaders and affiliates to build a socially enabled business. We are also benefitting from the current environment where more individuals are working from home and shopping online. Currently, approximately 90 percent of Nu Skin revenue is coming from digital transactions."

Q3 2020 Year-Over-Year Operating Results                                                                                

Revenue:

$703.3 million compared to $589.9 million

    •    Less than (1%) fx impact

Gross Margin:

73.9% compared to 76.2%

    •    Nu Skin business was 76.3% compared to 78.6%

    •    Impacted by increased freight charges and geographic mix

Selling Expenses:

39.9% compared to 39.3%

    •    Nu Skin business was 42.4% compared to 41.5%

G&A Expenses:

23.5% compared to 25.1%

Operating Margin:

10.6% compared to 11.8%

    •    Impacted by lower gross margin

Other Income / (Expense):

$0.5 million compared to ($5.0) million

Income Tax Rate:

24.7% compared to 32.1%

    •    Benefited by geographic mix

EPS:

$1.08 compared to $0.79

Stockholder Value

Dividend Payments:

$19.2 million

Stock Repurchases:

$20.0 million

    •    $342.8 million remaining in authorization

Q4 and Full-Year 2020 Outlook

Q4 2020 Revenue:

$720 to $750 million; +23 to 29%

    •    Approximately +1% fx impact

Q4 2020 EPS:

$1.10 to $1.20; +53 to 67%

2020 Revenue:

$2.55 to $2.58 billion; +6 to 7%

    •    Approximately (1%) fx impact

2020 EPS:

$3.35 to $3.45; +8 to 11%

"The growth in our core Nu Skin business is generating a great deal of energy ahead of our fourth-quarter ageLOC Boost and Nutricentials product introductions, and we continue to see increasing demand in our manufacturing segment. This gives us confidence that we will have a strong fourth quarter with momentum heading into 2021 when we fully launch these products and continue to extend our socially enabled business throughout our markets," Wood concluded.

Mark Lawrence, chief financial officer, added, "Given our third-quarter results above previous guidance and momentum in the business, we are raising our guidance for the remainder of the year. As we look ahead to the fourth quarter, we anticipate revenue of $720 to $750 million, which includes an approximate 1 percent favorable foreign currency impact, and earnings per share of $1.10 to $1.20. We are raising our 2020 revenue guidance to $2.55 to $2.58 billion, which reflects a negative foreign currency impact of approximately 1 percent, and we anticipate annual earnings per share of $3.35 to $3.45."

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 Nov. 18, 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, 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 September 30, 2020 and 2019 for each of our reportable segments (U.S. dollars in thousands):


Three Months Ended

September 30,




Constant-
Currency


2020


2019


Change


Change

Nu Skin












Mainland China

$

169,068


$

173,974



(3)%



(4)%

Americas/Pacific


151,465



83,635



81%



90%

South Korea


83,460



79,435



5%



5%

Southeast Asia


84,102



78,963



7%



8%

Japan


70,958



67,197



6%



4%

EMEA


61,411



35,742



72%



67%

Hong Kong/Taiwan


42,265



40,449



4%



Other


(314)



(62)



(406)%



(403)%

Total Nu Skin


662,415



559,333



18%



19%

Manufacturing


40,910



30,601



34%



34%

Grow Tech


22





100%



100%

Total

$

703,347


$

589,934



19%



19%

The following table sets forth revenue for the nine-month periods ended September 30, 2020 and 2019 for each of our reportable segments (U.S. dollars in thousands):


Nine Months Ended

September 30,




Constant-
Currency


2020


2019


Change


Change

Nu Skin












Mainland China

$

453,096


$

567,795



(20)%



(19)%

Americas/Pacific


353,957



262,932



35%



43%

South Korea


236,094



248,020



(5)%



(2)%

Southeast Asia


220,517



226,853



(3)%



(1)%

Japan


200,549



194,557



3%



2%

EMEA


147,590



120,960



22%



23%

Hong Kong/Taiwan


115,253



124,719



(8)%



(10)%

Other


374



(239)



256%



256%

Total Nu Skin


1,727,430



1,745,597



(1)%



1%

Manufacturing


105,975



91,430



16%



16%

Grow Tech


336



30



1,020%



1,020%

Total

$

1,833,741


$

1,837,057





2%

The Company's Customers and Sales Leaders statistics by segment as of September 30, 2020 and 2019 are presented in the following table:


As of

September 30, 2020


As of

September 30, 2019


% Increase (Decrease)


Customers


Sales
Leaders


Customers


Sales
Leaders


Customers


Sales
Leaders













Mainland China


341,386



20,970



317,257



23,776



8%



(12)%

Americas/Pacific


438,889



14,400



229,013



7,760



92%



86%

South Korea


164,256



7,973



169,589



7,363



(3)%



8%

Southeast Asia


163,536



8,357



145,845



7,936



12%



5%

Japan


126,896



6,523



128,373



5,964



(1)%



9%

EMEA


235,202



6,226



147,758



4,060



59%



53%

Hong Kong/Taiwan


69,346



4,067



68,862



4,231



1%



(4)%

Total


1,539,511



68,516



1,206,697



61,090



28%



12%

"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,


2020


2019


2020


2019













Revenue

$

703,347


$

589,934


$

1,833,741


$

1,837,057

Cost of sales


183,374



140,162



463,277



440,854

Gross profit


519,973



449,772



1,370,464



1,396,203













Operating expenses:












Selling expenses


280,695



231,937



735,365



727,473

General and administrative expenses


165,050



147,943



466,232



455,983

Total operating expenses


445,745



379,880



1,201,597



1,183,456













Operating income


74,228



69,892



168,867



212,747

Other income (expense), net


525



(4,979)



(4,068)



(11,153)













Income before provision for income taxes


74,753



64,913



164,799



201,594

Provision for income taxes


18,446



20,823



46,911



68,153













Net income

$

56,307


$

44,090


$

117,888


$

133,441













Net income per share:












Basic

$

1.10


$

0.79


$

2.24


$

2.40

Diluted

$

1.08


$

0.79


$

2.23


$

2.39













Weighted-average common shares outstanding (000s):












Basic


51,308



55,548



52,741



55,507

Diluted


52,243



55,788



52,906



55,950

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)



September 30,
2020


December 31,
2019

ASSETS




Current assets:




Cash and cash equivalents

$

366,710


$

335,630

Current investments


11,301



8,413

Accounts receivable, net


60,016



50,378

Inventories, net


270,319



275,891

Prepaid expenses and other


63,916



69,854

 Total current assets


772,262



740,166







Property and equipment, net


456,083



453,604

Right-of-use assets


165,749



144,326

Goodwill


196,573



196,573

Other intangible assets, net


74,391



80,321

Other assets


151,653



154,016

Total assets

$

1,816,711


$

1,769,006







LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






Accounts payable

$

55,298


$

38,979

Accrued expenses


381,052



290,281

Current portion of long-term debt


30,000



27,500

 Total current liabilities


466,350



356,760













Operating lease liabilities


121,439



105,701

Long-term debt


312,664



334,461

Other liabilities


88,785



96,795

Total liabilities


989,238



893,717













Stockholders' equity:






Class A common stock


91



91

Additional paid-in capital


570,491



557,544

Treasury stock, at cost


(1,446,374)



(1,324,826)

Accumulated other comprehensive loss


(83,108)



(85,292)

Retained earnings


1,786,373



1,727,772

Total stockholders' equity


827,473



875,289

Total liabilities and stockholders' equity

$

1,816,711


$

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