EX-99.1 2 ex99-1.htm PRESS RELEASE DATED AUGUST 2, 2017

 
FOR IMMEDIATE RELEASE

NU SKIN ENTERPRISES REPORTS SECOND-QUARTER 2017 RESULTS
Increases 2017 FY EPS Guidance
PROVO, Utah — Aug. 2, 2017 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced second-quarter 2017 financial results. The Company reported second-quarter revenue of $550.1 million, which was at the high end of its outlook of $530 to $550 million, and earnings per share of $0.77, which exceeded its outlook of $0.65 to $0.70.

Executive Summary
Revenue:
$550.1 million, compared to $600.5 million in Q2 2016 which included $106 million in limited-time-offer (LTO) sales. Q2 2017 was negatively impacted 2% by foreign currency fluctuations.
Earnings Per Share (EPS):
$0.77 benefitted $0.04 by a lower-than-expected tax rate, compared to $0.79 in Q2 2016.
Sales Leaders:
58,900 – 11% year-over-year decrease impacted by prior-year LTOs.
Customers:
1,060,000 – 5% year-over-year improvement.

"We are pleased to deliver strong quarterly results as we implement our growth strategy," said Ritch Wood, chief executive officer. "We believe our second-quarter results provide momentum we can build on as we prepare to introduce several new products and significant business initiatives in the fourth quarter. We remain focused on customer acquisition and are encouraged by our year-over-year customer growth. Looking forward, we believe our product and business initiatives, coupled with our continued efforts to increase our customer base, will help support business and sales leader growth in the second half of the year."
 
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Nu Skin Enterprises, Inc.
Aug. 2, 2017
Page 2
 
Q2 2017 Year-Over-Year Operating Results
Revenue:
$550.1 million compared to $600.5 million.
Gross Margin:
77.9% compared to 78.7%.
Selling Expenses:
41.5% of revenue compared to 41.4%.
G&A Expenses:
24.6% of revenue compared to 24.0%.
Operating Margin:
11.8% compared to 13.3%.
Other Income / (Expense):
($2.7) million compared to ($11.1) million, which included a foreign currency loss from the translation of Yen-denominated debt in 2016.
Income Tax Rate:
32.2% compared to 35.0% – benefitted from exercise of stock options.
EPS:
$0.77 compared to $0.79.

Stockholder Value
 
Dividend Payments:
$19.1 million.
Stock Repurchases:
$15.3 million; $177.6 million remaining in authorization.

2017 Outlook
 
Q3 Revenue:
$540 to $560 million; 2% negative foreign currency impact.
Q3 EPS:
$0.71 to $0.76.
2017 Revenue:
$2.26 to $2.30 billion; 2 to 3% negative foreign currency impact.
2017 EPS
$3.20 to $3.30, an increase from the prior outlook of $3.10 to $3.25.

"As we move into the second half of the year, we remain focused on executing our three key growth drivers – platforms, products and programs," said Wood. "In the platforms area, we continue to drive social selling throughout our markets to expand our customer acquisition efforts. To support this strategy, we will introduce several new products at our 'Nu Skin LIVE!' global distributor event in October, including our ageLOC LumiSpa device. Additionally, we will begin to introduce new and enhanced programs designed to more effectively reward our sales leaders to drive growth. The progress we are making with these initiatives gives us confidence in our future," Wood concluded.
 
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Nu Skin Enterprises, Inc.
Aug. 2, 2017
Page 3
"Given our strong second-quarter financial results, we are raising our full year 2017 earnings per share outlook to $3.20 to $3.30 and reiterating our annual revenue guidance of $2.26 to $2.30 billion," said Mark Lawrence, chief financial officer. "For the third quarter we project revenue of $540 to $560 million and earnings per share of $0.71 to $0.76. Our new products and programs are planned for the fourth quarter with the primary focus around ageLOC LumiSpa, which we anticipate will generate approximately $100 million in sales," concluded Lawrence.
Conference Call
The Nu Skin management team will host a conference call with the investment community on Aug. 2 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 Aug. 18, 2017.
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 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, sales force and customer base, growth, initiatives and areas of focus, 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.
 
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Nu Skin Enterprises, Inc.
Aug. 2, 2017
Page 4
 
 
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 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;
·
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;
·
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 favorable 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.
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Nu Skin Enterprises, Inc.
Aug. 2, 2017
Page 5

The Company's revenue results by segment for the three-month periods ended June 30 are presented in the following table (in thousands).
   
2017
    
2016
    
%
Change
    
Constant Currency
% Change
  
                         
Mainland China
  
$
172,098
    
$
184,344
      
  (6.6%)
 
    
  (1.9%)
 
South Korea
    
86,917
      
93,036
      
  (6.6%)
 
    
  (9.2%)
 
Americas
    
77,096
      
67,884
      
13.6%
 
    
15.0%
 
South Asia/Pacific
    
67,935
      
92,297
      
(26.4%)
 
    
(24.7%)
 
Japan
    
64,796
      
72,849
      
(11.1%)
 
    
  (8.4%)
 
Hong Kong/Taiwan
    
43,071
      
52,372
      
(17.8%)
 
    
(20.7%)
 
EMEA
    
38,188
      
37,693
      
  1.3%
 
    
  2.6%
 
                                 
Total
  
$
550,101
    
$
600,475
      
  (8.4%)
 
    
  (6.8%)
 

The Company's revenue results by segment for the six-month periods ended June 30 are presented in the following table (in thousands).
 
   
2017
    
2016
    
%
Change
    
Constant Currency
% Change
  
                         
Mainland China
  
$
322,102
    
$
302,999
      
  6.3%)
 
    
11.8%
 
South Korea
    
169,388
      
179,154
      
  (5.5%)
 
    
  (8.7%)
 
Americas
    
142,754
      
133,632
      
  6.8%
 
    
  7.5%
 
South Asia/Pacific
    
137,733
      
155,875
      
(11.6%)
 
    
(10.2%)
 
Japan
    
125,952
      
137,940
      
  (8.7%)
 
    
  (7.9%)
 
Hong Kong/Taiwan
    
79,019
      
92,428
      
(14.5%)
 
    
(17.5%)
 
EMEA
    
72,252
      
70,278
      
  2.8%
 
    
  4.4%
 
                                 
Total
  
$
1,049,200
    
$
1,072,306
      
  (2.2%)
 
    
  (0.9%)
 

The company's Customers and Sales Leaders statistics by segment for the three-month periods ended June 30 are presented in the following table.

   
2017
    
2016
    
% Increase (Decrease)
  
   
Customers
    
Sales Leaders
    
Customers
    
Sales Leaders
    
Customers
    
Sales Leaders
  
                                     
Mainland China
    
207,000
      
22,600
      
179,000
      
26,300
      
15.6%
 
    
(14.1%)
 
South Korea
    
188,000
      
7,700
      
216,000
      
8,900
      
(13.0%)
 
    
(13.5%)
 
Americas
    
209,000
      
7,000
      
165,000
      
6,500
      
26.7%
 
    
  7.7%
 
South Asia/Pacific
    
125,000
      
7,100
      
113,000
      
7,700
      
10.6%
 
    
(7.8%)
 
Japan
    
134,000
      
6,400
      
140,000
      
7,200
      
  (4.3%)
 
    
(11.1%)
 
Hong Kong/Taiwan
    
68,000
      
3,900
      
78,000
      
5,300
      
(12.8%)
 
    
(26.4%)
 
EMEA
    
129,000
      
4,200
      
121,000
      
4,200
      
  6.6%
 
    
—
  
                                                 
Total
    
1,060,000
      
58,900
      
1,012,000
      
66,100
      
  4.7%
 
    
(10.9%)
 


"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.
 
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Nu Skin Enterprises, Inc.
Aug. 2, 2017
Page 6

NU SKIN ENTERPRISES, INC.
  
Consolidated Statements of Income (Unaudited)
  
For the Second Quarters Ended June 30, 2017 and 2016
  
(in thousands, except per share amounts)
  
             
   
2017
    
2016
  
             
Revenue
  
$
550,101
    
$
600,475
  
                 
Cost of sales
    
121,521
      
128,205
  
                 
Gross profit
    
428,580
      
472,270
  
                 
Operating expenses:
                
Selling expenses
    
228,353
      
248,363
  
General and administrative expenses
    
135,488
      
144,109
  
Total operating expenses
    
363,841
      
392,472
  
                 
Operating income
    
64,739
      
79,798
  
                 
Other income (expense), net
    
(2,731
)
    
(11,060
)
Income before provision for income taxes
    
62,008
      
68,738
  
Provision for income taxes
    
19,967
      
24,025
  
                 
Net income
  
$
42,041
    
$
44,713
  
                 
Net income per share:
                
Basic
  
$
0.79
    
$
0.80
  
 Diluted
  
$
0.77
    
$
0.79
  
                 
Weighted average common shares outstanding:
                
Basic
    
52,929
      
55,952
  
 Diluted
    
54,839
      
56,356
  
 
 
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Nu Skin Enterprises, Inc.
Aug. 2, 2017
Page 7


NU SKIN ENTERPRISES, INC.
  
Consolidated Statements of Income (Unaudited)
  
For the Six-Month Periods Ended June 30, 2017 and 2016
  
(in thousands, except per share amounts)
  
             
   
2017
    
2016
  
             
Revenue
  
$
1,049,200
    
$
1,072,306
  
                 
Cost of sales
    
232,787
      
266,074
  
                 
Gross profit
    
816,413
      
806,232
  
                 
Operating expenses:
                
Selling expenses
    
437,361
      
443,922
  
 General and administrative expenses
    
268,051
      
274,363
  
Total operating expenses
    
705,412
      
718,285
  
                 
Operating income
    
111,001
      
87,947
  
                 
Other income (expense), net
    
(7,298
)
    
(13,923
)
Income before provision for income taxes
    
103,703
      
74,024
  
Provision for income taxes
    
34,173
      
25,995
  
                 
Net income
  
$
69,530
    
$
48,029
  
                 
Net income per share:
                
Basic
  
$
1.32
    
$
0.86
  
 Diluted
  
$
1.28
    
$
0.85
  
                 
Weighted average common shares outstanding:
                
Basic
    
52,804
      
55,953
  
 Diluted
    
54,466
      
56,388
  


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Nu Skin Enterprises, Inc.
Aug. 2, 2017
Page 8

NU SKIN ENTERPRISES, INC.
  
Consolidated Balance Sheets (Unaudited)
  
(in thousands)
  
             
   
June 30,
2017
    
December 31,
2016
  
ASSETS
            
Current assets:
            
Cash and cash equivalents
  
$
345,102
    
$
357,246
  
Current investments
    
7,982
      
10,880
  
Accounts receivable
    
35,010
      
31,199
  
Inventories, net
    
246,658
      
249,936
  
 Prepaid expenses and other
    
85,547
      
65,076
  
     
720,299
      
714,337
  
                 
Property and equipment, net
    
450,707
      
444,732
  
Goodwill
    
114,954
      
114,954
  
Other intangible assets, net
    
59,802
      
63,553
  
Other assets
    
161,383
      
136,469
  
 Total assets
  
$
1,507,145
    
$
1,474,045
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
Current liabilities:
                
Accounts payable
  
$
37,846
    
$
41,261
  
Accrued expenses
    
262,123
      
275,023
  
 Current portion of long-term debt
    
100,533
      
82,727
  
     
400,502
      
399,011
  
                 
Long-term debt
    
324,059
      
334,165
  
Other liabilities
    
83,014
      
76,799
  
Total liabilities
    
807,575
      
809,975
  
                 
Stockholders' equity:
                
Class A common stock
    
91
      
91
  
 Additional paid-in capital
    
448,928
      
439,635
  
       Treasury stock, at cost
    
(1,261,983
)
    
(1,250,123
)
 Accumulated other comprehensive loss
    
(74,743
)
    
(84,122
)
 Retained earnings
    
1,587,277
      
1,558,589
  
     
699,570
      
664,070
  
 Total liabilities and stockholders' equity
  
$
1,507,145
    
$
1,474,045
  

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


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