EX-99.1 2 ex99-1.htm PRESS RELEASE DATED AUGUST 2, 2018
 
 
FOR IMMEDIATE RELEASE
 

NU SKIN ENTERPRISES REPORTS 28 PERCENT SECOND-QUARTER REVENUE
GROWTH AND RAISES ANNUAL GUIDANCE

PROVO, Utah — Aug. 2, 2018 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced strong second-quarter financial results with revenue of $704.2 million, up 28 percent over the prior-year period, and earnings per share of $0.90, a 17 percent increase over the prior-year period. Quarterly earnings were negatively impacted by a foreign currency translation loss of $0.13 and a $0.05 purchase accounting charge.

Executive Summary
Q2 2018 vs. Prior-Year Quarter
 
Revenue:
$704.2 million, +28%
· Core Nu Skin business +24%, including +4% fx impact
· Acquired companies +4%
Earnings Per Share (EPS):
$0.90, +17%, including:
· ($0.13) foreign currency translation loss
· ($0.05) purchase accounting charge
Sales Leaders:
71,300, +21%
Customers:
1,148,000, +8%

"We continue to successfully execute on our customer growth strategy centered on engaging platforms, enabling products and empowering programs, which led to accelerated growth," said Ritch Wood, chief executive officer. "Our customers grew by 8 percent and sales leaders grew by 21 percent, and we saw healthy revenue generation throughout the business, highlighted by double-digit increases in Mainland China, Southeast Asia and the Americas and Pacific. We are also pleased with the solid performance of our acquired businesses, which we anticipate will show increased benefits in our future results."
 
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Nu Skin Enterprises, Inc.
Aug. 2, 2018
Page 2
 
Q2 2018 Year-Over-Year Operating Results

Revenue:
$704.2 million compared to $550.1 million
Gross Margin:
76.1% compared to 77.9%
· Core Nu Skin business 77.9%
Selling Expenses:
38.7% of revenue compared to 41.5%
G&A Expenses:
25.6% of revenue compared to 24.6%
Operating Margin:
11.8% compared to 11.8%
Other Income / (Expense):
($11.2) million compared to ($2.7) million
Income Tax Rate:
28.8% compared to 32.2%
EPS:
$0.90, +17%, including:
· ($0.13) foreign currency translation loss
· ($0.05) purchase accounting charge
Stockholder Value
Dividend Payments:
$20.3 million
Stock Repurchases:
$18.4 million; $500 million available with new authorization


Q3 and 2018 Outlook
Q3 Revenue:
$650 to $670 million, 15% to 19% growth
· Approximately (3%) fx impact
Q3 EPS:
$0.93 to $0.98, 22% to 29% growth
· Includes ($0.04) purchase accounting charge
2018 Revenue:
$2.63 to $2.67 billion, 15% to 17% growth
· Estimated +1% fx impact
· Increase from prior outlook of $2.51 to $2.56 billion, which included a +3% fx impact
2018 EPS:
$3.50 to $3.65, including ($0.13) fx and ($0.16) purchase accounting charges

"Based on our strong first-half results, with double-digit growth in both the first and second quarters, we now see revenue growth of approximately 15 to 17 percent for the year," said Wood. "We will continue to invest in social selling capabilities, product innovation and the ongoing rollout of our Velocity sales compensation program. We expect these initiatives, coupled with the capability improvements we are making through development and recent acquisitions, will drive additional upside. As a testament of our confidence in the strength of the business, our board of directors approved an increase to our stock repurchase authorization to $500 million."
 
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Nu Skin Enterprises, Inc.
 Aug. 2, 2018
Page 3
 
"We generated 28 percent year-over-year revenue growth and strong earnings performance in the quarter," said Mark Lawrence, chief financial officer. "For the year, we are increasing our annual revenue guidance by $120 million to $2.63 billion to $2.67 billion with earnings per share of $3.50 to $3.65. This guidance includes $0.16 in purchase accounting charges and the $0.13 foreign currency translation loss from the second quarter. We are projecting third-quarter revenue of $650 to $670 million, including a negative 3 percent currency impact, and earnings per share of $0.93 to $0.98."
Conference Call
The Nu Skin management team will host a conference call with the investment community on Aug. 2, 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 Aug. 16, 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 traded on the New York Stock Exchange under the symbol "NUS." More information is available at nuskin.com.
 
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Nu Skin Enterprises, Inc.
Aug. 2, 2018
Page 4
 
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 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 the trade disputes between the U.S. and Mainland China, and associated risks if the trade disputes are prolonged or worsen, or additional changes or actions are taken by the two countries with respect to trade policies, that could further adversely impact exchange rates, the economies of both markets and consumer sentiment;  
·
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.
 
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Nu Skin Enterprises, Inc.
 Aug. 2, 2018
Page 5

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, 2018
Page 6

The Company's revenue results by segment for the three-month periods ended June 30 are presented in the following table (in thousands).

   
2018
    
2017
    
%
Change
    
Constant
Currency
% Change
  
                         
Mainland China
  
$
245,256
    
$
172,098
      
     43%
 
    
      33%
 
Americas/Pacific
    
103,990
      
82,997
      
     25%
 
    
      31%
 
South Korea
    
91,624
      
86,917
      
       5%
 
    
        1%
 
Southeast Asia
    
79,223
      
60,545
      
     31%
 
    
      28%
 
Japan
    
64,113
      
64,796
      
       (1%)
 
    
        (3%)
 
Hong Kong/Taiwan
    
52,206
      
43,071
      
     21%
 
    
      21%
 
EMEA
    
44,010
      
38,188
      
     15%
 
    
        7%
 
Other
    
23,768
      
1,489
      
1,496%
 
    
1,496%
 
                                 
Total
  
$
704,190
    
$
550,101
      
     28%
 
    
     24%
 

The Company's revenue results by segment for the six-month periods ended June 30 are presented in the following table (in thousands).

   
2018
    
2017
    
%
Change
    
Constant
Currency
% Change
  
                         
Mainland China
  
$
442,787
    
$
322,102
      
    37%
 
    
    27%
 
Americas/Pacific
    
196,279
      
154,422
      
    27%
 
    
    31%
 
South Korea
    
180,554
      
169,388
      
      7%
 
    
      1%
 
Southeast Asia
    
150,083
      
123,570
      
    21%
 
    
    18%
 
Japan
    
127,337
      
125,952
      
      1%
 
    
      (2%)
 
Hong Kong/Taiwan
    
93,198
      
79,019
      
    18%
 
    
    16%
 
EMEA
    
88,991
      
72,252
      
     23%
 
    
    11%
 
Other
    
41,180
      
2,495
      
1,551%
 
    
1,551%
 
                                 
Total
  
$
1,320,409
    
$
1,049,200
      
    26%
 
    
    21%
 

 
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Nu Skin Enterprises, Inc.
 Aug. 2, 2018
Page 7

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

   
2018
    
2017
    
% Increase (Decrease)
  
   
Customers
    
Sales Leaders
    
Customers
    
Sales Leaders
    
Customers
    
Sales Leaders
  
                                     
Mainland China
    
209,000
      
33,400
      
207,000
      
22,600
      
  1%
 
    
48%
 
Americas/Pacific
    
265,000
      
9,000
      
230,000
      
7,800
      
15%
 
    
15%
 
South Korea
    
184,000
      
6,900
      
188,000
      
7,700
      
  (2%)
 
    
(10%)
 
Southeast Asia
    
135,000
      
7,500
      
104,000
      
6,300
      
30%
 
    
19%
 
Japan
    
132,000
      
6,000
      
134,000
      
6,400
      
  (1%)
 
    
  (6%)
 
Hong Kong/Taiwan
    
76,000
      
4,200
      
68,000
      
3,900
      
12%
 
    
  8%
 
EMEA
    
147,000
      
4,300
      
129,000
      
4,200
      
14%
 
    
  2%
 
                                                 
Total
    
1,148,000
      
71,300
      
1,060,000
      
58,900
      
  8%
 
    
21%
 


"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, 2018
Page 8

NU SKIN ENTERPRISES, INC.
  
Consolidated Statements of Income (Unaudited)
  
For the Second Quarters Ended June 30, 2018 and 2017
  
(in thousands, except per share amounts)
  
             
   
2018
    
2017
  
             
Revenue
  
$
704,190
    
$
550,101
  
                 
Cost of sales
    
168,549
      
121,521
  
                 
Gross profit
    
535,641
      
428,580
  
                 
Operating expenses:
                
Selling expenses
    
272,757
      
228,353
  
General and administrative expenses
    
180,120
      
135,488
  
Total operating expenses
    
452,877
      
363,841
  
                 
Operating income
    
82,764
      
64,739
  
                 
Other income (expense), net
    
(11,165
)
    
(2,731
)
Income before provision for income taxes
    
71,599
      
62,008
  
Provision for income taxes
    
20,638
      
19,967
  
                 
Net income
  
$
50,961
    
$
42,041
  
                 
Net income per share:
                
Basic
  
$
0.92
    
$
0.79
  
 Diluted
  
$
0.90
    
$
0.77
  
                 
Weighted average common shares outstanding:
                
Basic
    
55,608
      
52,929
  
 Diluted
    
56,713
      
54,839
  

 
 
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Nu Skin Enterprises, Inc.
 Aug. 2, 2018
Page 9


NU SKIN ENTERPRISES, INC.
  
Consolidated Statements of Income (Unaudited)
  
For the Six-Month Periods Ended June 30, 2018 and 2017
  
(in thousands, except per share amounts)
  
             
   
2018
    
2017
  
             
Revenue
  
$
1,320,409
    
$
1,049,200
  
                 
Cost of sales
    
314,830
      
232,787
  
                 
Gross profit
    
1,005,579
      
816,413
  
                 
Operating expenses:
                
Selling expenses
    
530,459
      
437,361
  
 General and administrative expenses
    
333,366
      
268,051
  
Total operating expenses
    
863,825
      
705,412
  
                 
Operating income
    
141,754
      
111,001
  
                 
Other income (expense), net
    
(9,958
)
    
(7,298
)
Income before provision for income taxes
    
131,796
      
103,703
  
Provision for income taxes
    
45,296
      
34,173
  
                 
Net income
  
$
86,500
    
$
69,530
  
                 
Net income per share:
                
Basic
  
$
1.58
    
$
1.32
  
 Diluted
  
$
1.53
    
$
1.28
  
                 
Weighted average common shares outstanding:
                
Basic
    
54,807
      
52,804
  
 Diluted
    
56,430
      
54,466
  

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Nu Skin Enterprises, Inc.
 Aug. 2, 2018
Page 10





NU SKIN ENTERPRISES, INC.
  
Consolidated Balance Sheets (Unaudited)
  
(in thousands)
  
             
   
June 30, 2018
    
December 31, 2017
  
ASSETS
            
Current assets:
            
Cash and cash equivalents
  
$
402,031
    
$
426,399
  
Current investments
    
8,200
      
11,847
  
Accounts receivable
    
50,180
      
33,196
  
Inventories, net
    
283,730
      
253,454
  
 Prepaid expenses and other
    
70,898
      
52,893
  
     
815,039
      
777,789
  
                 
Property and equipment, net
    
503,452
      
464,587
  
Goodwill
    
187,423
      
114,954
  
Other intangible assets, net
    
95,887
      
67,647
  
Other assets
    
144,562
      
164,895
  
 Total assets
  
$
1,746,363
    
$
1,589,872
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
Current liabilities:
                
Accounts payable
  
$
58,920
    
$
50,341
  
Accrued expenses
    
290,653
      
319,189
  
 Current portion of long-term debt
    
97,481
      
77,840
  
     
447,054
      
447,370
  
                 
Long-term debt
    
370,525
      
310,790
  
Other liabilities
    
125,250
      
127,116
  
Total liabilities
    
942,829
      
885,276
  
                 
Stockholders' equity:
                
Class A common stock
    
91
      
91
  
 Additional paid-in capital
    
532,996
      
466,349
  
       Treasury stock, at cost
    
(1,296,628
)
    
(1,304,694
)
 Accumulated other comprehensive loss
    
(75,460
)
    
(66,318
)
 Retained earnings
    
1,642,535
      
1,609,168
  
     
803,534
      
704,596
  
 Total liabilities and stockholders' equity
  
$
1,746,363
    
$
1,589,872
  


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