EX-99.1 2 ex99-1.htm PRESS RELEASE DATED OCTOBER 22, 2013
 
 
FOR IMMEDIATE RELEASE
 
CONTACTS:
Investors — Scott Pond (801) 345-2657, spond@nuskin.com
Media — Kara Schneck (801) 345-2116, kschneck@nuskin.com
 

 

NU SKIN ENTERPRISES REPORTS RECORD THIRD-QUARTER RESULTS
AND RAISES 2013 GUIDANCE

PROVO, Utah — Oct. 22, 2013 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced record third-quarter results with revenue of $927.6 million, a 76 percent increase over the prior-year period. Revenue was negatively impacted 3 percent by foreign currency fluctuations. Earnings per share for the quarter were $1.80, a 107 percent year-over-year improvement.

Additionally, the company announced that it is significantly increasing its full-year 2013 revenue guidance to $3.18 billion to $3.21 billion. The new guidance includes a projected negative currency impact of 4 percent for the year. The company now expects 2013 earnings to be $5.77 to $5.82 per share.

"We are extremely pleased with our third-quarter results," said Truman Hunt, president and chief executive officer. "The momentum we have established in the first half of the year has accelerated as we posted gains throughout the world, with particularly impressive results in the Greater China and South Asia/Pacific regions, as well as South Korea.
 
"We are delighted to see such a tremendous response to the initial introduction of our ageLOC TR90 weight management system. We began the limited-time-offer of the TR90 system in September, starting in the Greater China and South Asia/Pacific regions and generated approximately $205 million in limited-time-offer sales in the quarter. We expect this momentum to continue through the fourth quarter as the rest of our regions participate in this global limited-time offer."
 

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Nu Skin Enterprises, Inc.
Oct. 22, 2013
Page 2
 
 
 
Regional Results
 
Greater China. In Greater China, third-quarter revenue increased 240 percent to $464.6 million, compared to $136.6 million in the prior-year period. The region's results were positively impacted 9 percent by foreign currency fluctuations. Regional revenue included $157.9 million from limited-time-offer (LTO) sales in the third quarter, while the prior year included $20.8 million in LTO revenue. The sales leader count in the region improved 255 percent, while the number of actives increased 123 percent compared to the prior year.

North Asia. Third-quarter revenue in North Asia increased 11 percent to $204.7 million, compared to $184.7 million for the same period in 2012. The region's results were negatively impacted 12 percent by foreign currency fluctuations. Japan local-currency revenue declined 3 percent while South Korea generated local-currency revenue growth of 71 percent. The number of sales leaders in the region was up 15 percent and the number of actives improved 28 percent.

South Asia/Pacific. Revenue in South Asia/Pacific was $127.5 million, a 40 percent improvement compared to the prior year. The region's results included $45.9 million from LTO sales in the third quarter, while the prior-year included $29.3 million in LTO revenue. The region's results were negatively impacted 6 percent by foreign currency fluctuations. The region's third-quarter sales leader count improved 58 percent and actives increased 19 percent compared to the same period in 2012.

Americas. Revenue in the Americas improved 22 percent over the prior-year period to $85.7 million. The region's results were negatively impacted 7 percent by foreign currency fluctuations. The number of sales leaders in the region improved 28 percent and the number of actives increased 8 percent compared to the prior year.

 
 
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Nu Skin Enterprises, Inc.
Oct. 22, 2013
Page 3
 
 
EMEA. Revenue in the EMEA region increased 4 percent to $45.1 million, primarily as a result of foreign currency fluctuations. The number of sales leaders declined 5 percent while actives increased 2 percent, compared to the prior year.

 
Operational Performance
 
The company's operating margin improved to 18.1 percent for the quarter, compared to 15.7 percent in the prior year, as a result of strong LTO sales. Gross margin during the quarter was 84.9 percent, 140 basis points above the prior year, due primarily to the TR90 launch in Greater China and South Asia/Pacific. Selling expenses, as a percent of revenue, were 49.3 percent in the third quarter, compared to 44.8 percent in the prior-year period. The increase was a result of the successful execution of the LTO, driving sales and selling expenses higher as sales leaders qualified for promotional incentives and a higher commission level. General and administrative expenses, as a percent of revenue, were 17.5 percent, a significant improvement from 23.1 percent reported in the prior-year.

The company's income tax rate for the quarter was 34.3 percent compared to 35.2 percent in the prior-year period. The company's cash and short-term investment position at the end of the quarter was $566 million. Dividend payments during the quarter were $17.8 million, and the company repurchased $76 million of its outstanding shares.
 

Outlook
 
"Our optimism is a product of robust sales force growth and our innovative product portfolio," said Hunt. "Our sales force has built strong consumer demand for our ageLOC TR90 system, with a very positive initial response to our product release. We continue to improve our execution as we strategically develop and launch innovative products, ensuring a vibrant business opportunity for our sales leaders.

"We have high expectations for our business in the fourth quarter and in 2014 as we continue to execute the rollout of TR90. More than 15,000 people will join us in Salt Lake City this week for our bi-annual global convention. We also look forward to sharing our business plan and financial projections for 2014 at our analyst day on Nov. 21." Hunt concluded.
 
 
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Nu Skin Enterprises, Inc.
Oct. 22, 2013
Page 4
 
 
"Given the tremendous quarter, as well as our outlook for the remainder of the year, we are significantly raising our 2013 guidance," said Ritch Wood, chief financial officer. "We project the fourth quarter will be our first billion-dollar quarter, with anticipated revenue of $1.02 to $1.05 billion. We estimate a negative currency impact of approximately 6 percent in the fourth quarter, with projected earnings per share of $1.85 to $1.90. This forecast includes projected sales of TR90 in the fourth quarter of approximately $350 million."

The company's management will host a webcast with the investment community on Oct. 22, 2013, at 11 a.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 Nu Skin Enterprises' website, http://ir.nuskin.com. An archive of the webcast will be available at this same URL through Nov. 8, 2013.

About Nu Skin Enterprises, Inc.
 
Nu Skin Enterprises, Inc. demonstrates its tradition of innovation through its comprehensive anti-aging product portfolio, independent business opportunity and corporate social responsibility initiatives. The company's scientific leadership in both skin care and nutrition has established Nu Skin as a premier anti-aging company. The company's anti-aging products feature the new ageLOC® suite of products including the ageLOC® R2 nutritional supplement, ageLOC® Galvanic Spa System and ageLOC® Galvanic Body Spa™, as well as the ageLOC® Transformation daily skin care system. A global direct selling company, Nu Skin operates in 53 markets worldwide and is traded on the New York Stock Exchange under the symbol "NUS." More information is available at http://www.nuskin.com.

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Nu Skin Enterprises, Inc.
Oct. 22, 2013
Page 5
 

Please Note: This press release, particularly the "Outlook" section, 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, strategies and new product introductions; statements of projections regarding revenue, operating margin, earnings per share, foreign currency impact 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 distributors and customers and generate sponsoring and selling activities on a sustained basis;
·
risks associated with rapid growth globally, which could strain our ability to effectively manage our operations, and result in, among other things, product delays or shortages, operating mistakes and errors, inadequate customer service, inappropriate claims or promotions by our sales force, and governmental inquires and investigations, all of which could harm our revenue and ability to generate sustained growth and result in unanticipated expenses.
·
risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support our planned initiatives or launch strategies, including possible ingredient supply limitations;
·
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;
·
continued regulatory scrutiny and investigations in Mainland China, which have from time to time in the past, and could in the future, negatively impact the company's business, including the interruption of sales activities in stores, loss of licenses, and the imposition of fines;
·
risks associated with general inquiries and complaints to consumer protection agencies in Japan regarding the activities of some distributors;
·
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 distributors 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 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.
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Nu Skin Enterprises, Inc.
Oct. 22, 2013
Page 6
NU SKIN ENTERPRISES, INC.
 
Consolidated Statements of Income (Unaudited)
 
For the Third Quarters Ended September 30, 2013 and 2012
 
(in thousands, except per share amounts)
 
 
 
   
 
 
 
2013
   
2012
 
Revenue:
 
   
 
Greater China
 
$
464,605
   
$
136,633
 
North Asia
   
204,714
     
184,743
 
South Asia/Pacific
   
127,545
     
91,124
 
Americas
   
85,654
     
70,479
 
EMEA
   
45,094
     
43,203
 
Total revenue
   
927,612
     
526,182
 
 
               
Cost of sales
   
139,816
     
86,768
 
               
Gross profit
   
787,796
     
439,414
 
 
               
Operating expenses:
               
Selling expenses
   
456,975
     
235,701
 
General and administrative expenses
   
162,546
     
121,346
 
Total operating expenses
   
619,521
     
357,047
 
 
               
Operating income
   
168,275
     
82,367
 
 
               
Other income (expense), net
   
504
     
1,239
 
Income before provision for income taxes
   
168,779
     
83,606
 
Provision for income taxes
   
57,879
     
29,430
 
               
Net income
 
$
110,900
   
$
54,176
 
 
               
Net income per share:
               
Basic
 
$
1.89
   
$
0.91
 
Diluted
 
$
1.80
   
$
0.87
 
 
               
Weighted average common shares outstanding:
               
Basic
   
58,661
     
59,780
 
Diluted
   
61,508
     
62,060
 
 
               

 
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Nu Skin Enterprises, Inc.
Oct. 22, 2013
Page 7
 
 
NU SKIN ENTERPRISES, INC.
 
Consolidated Statements of Income (Unaudited)
 
For the Nine-Month Periods Ended September 30, 2013 and 2012
 
(in thousands, except per share amounts)
 
 
 
   
 
 
 
2013
   
2012
 
Revenue:
 
   
 
Greater China
 
$
909,457
   
$
428,972
 
North Asia
   
589,664
     
544,638
 
South Asia/Pacific
   
280,703
     
266,789
 
Americas
   
246,484
     
208,585
 
EMEA
   
134,325
     
132,435
 
Total revenue
   
2,160,633
     
1,581,419
 
 
               
Cost of sales
   
341,134
     
258,108
 
               
Gross profit
   
1,819,499
     
1,323,311
 
 
               
Operating expenses:
               
Selling expenses
   
1,007,627
     
705,599
 
General and administrative expenses
   
446,355
     
365,770
 
Total operating expenses
   
1,453,982
     
1,071,369
 
 
               
Operating income
   
365,517
     
251,942
 
 
               
Other income (expense), net
   
(571
)
   
1,505
 
Income before provision for income taxes
   
364,946
     
253,447
 
Provision for income taxes
   
125,329
     
91,035
 
               
Net income
 
$
239,617
   
$
162,412
 
 
               
Net income per share:
               
Basic
 
$
4.09
   
$
2.65
 
Diluted
 
$
3.91
   
$
2.55
 
 
               
Weighted average common shares outstanding:
               
Basic
   
58,544
     
61,265
 
Diluted
   
61,234
     
63,742
 
 
               

 
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Nu Skin Enterprises, Inc.
Oct. 22, 2013
Page 8

NU SKIN ENTERPRISES, INC.
 
Consolidated Balance Sheets (Unaudited)
 
(in thousands)
 
 
 
   
 
 
 
September 30, 2013
   
December 31, 2012
 
ASSETS
 
   
 
Current assets:
 
   
 
Cash and cash equivalents
 
$
553,499
   
$
320,025
 
Current investments
   
12,099
     
13,378
 
Accounts receivable
   
50,506
     
36,850
 
Inventories, net
   
254,187
     
135,874
 
Prepaid expenses and other
   
143,066
     
93,276
 
   
1,013,357
     
599,403
 
 
               
Property and equipment, net
   
352,709
     
229,787
 
Goodwill
   
112,446
     
112,446
 
Other intangible assets, net
   
85,901
     
92,518
 
Other assets
   
124,074
     
118,753
 
            Total assets
 
$
1,688,487
   
$
1,152,907
 
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
Accounts payable
 
$
67,516
   
$
47,882
 
Accrued expenses
   
572,432
     
233,202
 
Current portion of long-term debt
   
68,562
     
39,019
 
 
   
708,510
     
320,103
 
               
Long-term debt
   
120,606
     
154,963
 
Other liabilities
   
116,942
     
87,229
 
Total liabilities
   
946,058
     
562,295
 
 
               
Stockholders' equity:
               
Class A common stock
   
91
     
91
 
Additional paid-in capital
   
357,701
     
317,293
 
Treasury stock, at cost
   
(788,128
)
   
(714,853
)
 Retained earnings
   
1,226,629
     
1,039,903
 
Accumulated other comprehensive loss
   
(53,864
)
   
(51,822
)
 
   
742,429
     
590,612
 
                          Total liabilities and stockholders' equity
 
$
1,688,487
   
$
1,152,907
 

 
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Nu Skin Enterprises, Inc.
Oct. 22, 2013
Page 9
 

NU SKIN ENTERPRISES, INC.
Actives/Sales Leaders Statistics
 
 
 
 
As of September 30, 2013
   
As of September 30, 2012
   
% Increase (Decrease)
 
 
 
Actives
   
Sales Leaders
   
Actives
   
Sales Leaders
   
Actives
   
Sales Leaders
 
 
 
   
   
   
   
   
 
Greater China
   
418,000
     
57,780
     
188,000
     
16,269
     
122.3%
 
   
       255.2%
 
North Asia
   
430,000
     
17,994
     
336,000
     
15,603
     
28.0%
 
   
         15.3%
 
South Asia/Pacific
   
125,000
     
9,280
     
105,000
     
5,880
     
19.0%
 
   
         57.8%
 
Americas
   
179,000
     
7,461
     
166,000
     
5,831
     
7.8%
 
   
         28.0%
 
EMEA
   
121,000
     
4,375
     
118,000
     
4,581
     
2.5%
 
   
(4.5%)
 
 
                                               
Total
   
1,273,000
     
96,890
     
913,000
     
48,164
     
39.4%
 
   
101.2%
 



 
"Actives" are persons who purchased products directly from the company during the three months ended as of the date indicated.

"Sales Leaders" include our independent distributors who have completed and who maintain specified sales requirements, and our sales employees and contractual sales promoters in China, who have completed certain qualification requirements.