EX-99.1 2 ex99_1.htm PRESS RELEASE DATED FEBRUARY 13, 2019

Exhibit 99.1



FOR IMMEDIATE RELEASE

NU SKIN ENTERPRISES REPORTS FOURTH-QUARTER AND 2018 RESULTS
AND PROVIDES 2019 GUIDANCE

PROVO, Utah — Feb. 13, 2019 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced fourth-quarter and 2018 financial results.

Executive Summary

Q4 2018 vs. Prior-Year Quarter

Revenue:
   
$683.3 million, +3%
·      (4%) fx impact or ($26.8 M)
Earnings Per Share
(EPS):
   
($0.32), or $1.05 excluding impairment and restructuring charges, compared to $0.33, or $1.20 excluding the impact of U.S. tax reform in Q4 2017
·      ($1.37) impairment and restructuring charges
Sales Leaders:
   
73,400; (10%)
·       Up 16% since the end of Q1 2018
Customers:
   
1,244,000; +16%

2018 Annual

Revenue:
   
$2.68 billion, +18%
·      0.5% fx impact
Earnings Per Share
(EPS):
   
$2.16, or $3.52 excluding the impairment and restructuring charges, compared to $2.36, or $3.23 excluding the impact of U.S. tax reform

“We delivered another strong quarter despite a challenging comparison from the $130 million LumiSpa introduction in the prior year,” said Ritch Wood, chief executive officer. “We grew our revenue 18 percent for the year, with growth coming from virtually all of our segments. We were also encouraged that our customer acquisition strategy resulted in 16-percent growth in our customer base. And while our sales leader numbers were down year-over-year due to the LumiSpa introduction, we are pleased with 16 percent growth in sales leaders since the first quarter.”


Q4 2018 Year-Over-Year Operating Results

Revenue:
   
$683.3 million compared to $666.2 million
·      (4%) fx impact or ($26.8 M)
Gross Margin:
   
76.3% compared to 77.7%
Nu Skin business was 77.9%
Selling Expenses:
   
39.4% of revenue compared to 39.8%
·      Nu Skin business was 40.9%
G&A Expenses:
   
23.9% of revenue compared to 23.0%
Operating Margin:
   
2.7% or 14.1% when excluding impairment and restructuring charges, compared to 14.9%
Other Income /
(Expense):
   
($4.3) million expense compared to ($0.4) million expense
Income Tax Rate:
   
225% or 35.9% excluding impairment and restructuring charges, compared to 81.5% or 33.1% excluding the impact of U.S. tax reform
EPS:
   
($0.32), or $1.05 excluding impairment and restructuring charges, compared to $0.33, or $1.20 excluding the impact of U.S. tax reform
·       ($1.37) impairment and restructuring charges

Stockholder Value

Dividend Payments:
   
$20.2 million
Stock Repurchases:
   
$21.3 million; $471 million remaining in authorization

Q1 and Full-Year 2019 Outlook

Q1 2019 Revenue:
   
$615 to $635 million, 0 to 3% growth
·      6 to 8% constant currency growth
·      Approximately (5 to 6%) fx impact
Q1 2019 EPS:
   
$0.70 to $0.77
2019 Revenue:
   
$2.76 billion to $2.82 billion,  3 to 5% growth
·      5 to 7% constant currency growth
·      Approximately (2 to 3%) fx impact
2019 EPS
   
$3.80 to $4.05


“We are entering 2019 with strong momentum and are projecting meaningful constant-currency top-line growth with continued improvement on the bottom line,” said Wood. “We believe 2019 will be a pivotal year as we transform our digital platform to better support customers, while further enabling our sales leaders to leverage the power of social selling. Our product portfolio remains strong, and we plan to build on the breakout success of our LumiSpa skin treatment and cleansing device with the launch of LumiSpa Accent, a specialized eye treatment attachment. On the program front, our Velocity enhanced sales compensation program has now been rolled out in nearly every market, providing us with ongoing flexibility to drive and reward key behaviors from our sales force. We believe we can continue to grow our business and look forward to a strong 2019,” Wood concluded.

“Coming off a strong year, we are projecting continued growth in 2019,” said Mark Lawrence, chief financial officer. “We project first-quarter revenue of $615 to $635 million, including an approximate 5 to 6 percent negative currency impact, and earnings per share of $0.70 to $0.77. For the year, we are projecting annual revenue of $2.76 to $2.82 billion with a projected 2 to 3 percent negative foreign currency impact and earnings per share of $3.80 to $4.05. We look forward to providing additional details regarding our guidance and 2019 growth initiatives at our investor day event which will be held Feb. 28 at our headquarters,” concluded Lawrence.

Conference Call

The Nu Skin management team will host a conference call with the investment community on Feb. 13, 2019, 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 Feb. 27, 2019.

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, product launches, 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 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. Operating margin, income tax rate and earnings per share, each excluding impairment and restructuring charges and/or the impact of tax reform, also are non-GAAP financial measures. Impairment and restructuring charges are not part of the ongoing operations of our underlying business. The U.S. tax reform legislation was enacted in December 2017 and had a material impact on our tax rate and earnings per share. Removing the impact of these items facilitates period-to-period comparisons of the company’s performance. Please see the reconciliations of these items to our operating margin, income tax rate and earnings per share calculated under GAAP, below.

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

   
2018
   
2017
   
%
Change
   
Constant
Currency
% Change
 
                         
Mainland China
 
$
217,040
   
$
222,333
     
(2
%)
   
2
%
Americas/Pacific
   
95,175
     
102,335
     
(7
%)
   
3
%
South Korea
   
102,840
     
103,066
     
     
2
%
Southeast Asia
   
80,500
     
73,920
     
9
%
   
13
%
Japan
   
63,953
     
67,620
     
(5
%)
   
(6
%)
Hong Kong/Taiwan
   
47,746
     
46,627
     
2
%
   
4
%
EMEA
   
50,584
     
47,890
     
6
%
   
10
%
Other
   
25,449
     
2,410
     
956
%
   
956
%
Total
 
$
683,287
   
$
666,201
     
3
%
   
7
%

The Company’s revenue results by segment for the year ended December 31 are presented in the following table (in thousands).

   
2018
   
2017
   
%
Change
   
Constant
Currency
% Change
 
                         
Mainland China
 
$
886,472
   
$
716,991
     
24
%
   
21
%
Americas/Pacific
   
385,034
     
342,429
     
12
%
   
20
%
South Korea
   
373,357
     
361,692
     
3
%
   
1
%
Southeast Asia
   
316,890
     
268,631
     
18
%
   
18
%
Japan
   
254,939
     
256,085
     
     
(2
%)
Hong Kong/Taiwan
   
185,893
     
166,696
     
12
%
   
11
%
EMEA
   
182,394
     
160,275
     
14
%
   
10
%
Other
   
94,029
     
6,300
     
1,393
%
   
1,393
%
Total
 
$
2,679,008
   
$
2,279,099
     
18
%
   
17
%


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

   
2018
   
2017
   
% Increase
(Decrease)
 
   
Customers
   
Sales
Leaders
   
Customers
   
Sales
Leaders
   
Customers
   
Sales
Leaders
 
                                     
Mainland China
   
304,000
     
33,100
     
193,000
     
40,600
     
58
%
   
(18
%)
Americas/Pacific
   
249,000
     
8,300
     
244,000
     
8,900
     
2
%
   
(7
%)
South Korea
   
182,000
     
7,600
     
173,000
     
8,400
     
5
%
   
(10
%)
Southeast Asia
   
153,000
     
8,900
     
122,000
     
8,000
     
25
%
   
11
%
Japan
   
130,000
     
5,900
     
132,000
     
6,600
     
(2
%)
   
(11
%)
Hong Kong/Taiwan
   
77,000
     
4,800
     
71,000
     
4,700
     
8
%
   
2
%
EMEA
   
149,000
     
4,800
     
135,000
     
4,700
     
10
%
   
2
%
                                                 
Total
   
1,244,000
     
73,400
     
1,070,000
     
81,900
     
16
%
   
(10
%)

“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)
(in thousands, except per share amounts)

     
Three Months Ended
December 31,
     
Years Ended
December 31,
  
   
2018
   
2017
   
2018
   
2017
 
                         
Revenue
 
$
683,287
   
$
666,201
   
$
2,679,008
   
$
2,279,099
 
Cost of sales
   
161,853
     
148,459
     
634,140
     
502,078
 
                                 
Gross profit
   
521,434
     
517,742
     
2,044,868
     
1,777,021
 
                                 
Operating expenses:
                               
Selling expenses
   
269,052
     
265,378
     
1,071,020
     
938,024
 
General and administrative expenses
   
163,265
     
153,244
     
662,302
     
564,514
 
Restructuring and impairment expenses
   
70,686
     
     
70,686
     
 
                                 
Total operating expenses
   
503,003
     
418,622
     
1,804,008
     
1,502,538
 
                                 
Operating income
   
18,431
     
99,120
     
240,860
     
274,483
 
Other income (expense), net
   
(4,254
)
   
(446
)
   
(21,194
)
   
(8,916
)
                                 
Income before provision for income taxes
   
14,177
     
98,674
     
219,666
     
265,567
 
Provision for income taxes
   
31,936
     
80,439
     
97,779
     
136,130
 
                                 
Net income
 
$
(17,759
)
 
$
18,235
   
$
121,887
   
$
129,437
 
                                 
Net income per share:
                               
Basic
 
$
(0.32
)
 
$
0.35
   
$
2.21
   
$
2.45
 
Diluted
 
$
(0.32
)
 
$
0.33
   
$
2.16
   
$
2.36
 
                                 
Weighted-average common shares outstanding (000s):
                               
Basic
   
55,453
     
52,722
     
55,170
     
52,806
 
Diluted
   
56,341
     
55,053
     
56,476
     
54,852
 


NU SKIN ENTERPRISES, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands)

   
December 31,
2018
   
December 31,
2017
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
 
$
386,911
   
$
426,399
 
Current investments
   
11,346
     
11,847
 
Accounts receivable
   
53,282
     
33,196
 
Inventories, net
   
295,821
     
253,454
 
Prepaid expenses and other
   
51,877
     
52,893
 
     
799,237
     
777,789
 
                 
Property and equipment, net
   
464,535
     
464,587
 
Goodwill
   
196,573
     
114,954
 
Other intangible assets, net
   
89,989
     
67,647
 
Other assets
   
144,112
     
164,895
 
Total assets
 
$
1,694,446
   
$
1,589,872
 
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
               
Current liabilities:
               
Accounts payable
 
$
47,617
   
$
50,341
 
Accrued expenses
   
322,583
     
319,189
 
Current portion of long-term debt
   
69,455
     
77,840
 
     
439,655
     
447,370
 
                 
Long-term debt
   
361,008
     
310,790
 
Other liabilities
   
111,916
     
127,116
 
Total liabilities
   
912,579
     
885,276
 
                 
Stockholders’ equity:
               
Class A common stock
   
91
     
91
 
Additional paid-in capital
   
552,564
     
466,349
 
Treasury stock, at cost
   
(1,326,605
)
   
(1,304,694
)
Accumulated other comprehensive loss
   
(79,934
)
   
(66,318
)
Retained earnings
   
1,635,751
     
1,609,168
 
     
781,867
     
704,596
 
Total liabilities and stockholders’ equity
 
$
1,694,446
   
$
1,589,872
 


NU SKIN ENTERPRISES, INC.
Reconciliation of Earnings Per Share Excluding Impact of Restructuring and Tax
Reform to GAAP Earnings Per Share
(in thousands, except per share amounts)


  
Three Months Ended
December 31,
     
Years Ended
December 31,
  

 
2018
   
2017
   
2018
   
2017
 
                         
Net income
 
$
(17,759
)
 
$
18,235
   
$
121,887
   
$
129,437
 
Impact of restructuring and impairment:
                               
Restructuring and impairment
   
70,686
     
     
70,686
     
 
Inventory write-off
   
7,240
     
     
7,240
     
 
Income tax impact
   
(1,086
)
   
     
(1,086
)
   
 
Impact of tax reform on provision for income taxes
   
     
47,729
     
     
47,729
 
Adjusted net income
 
$
59,081
   
$
65,964
   
$
198,727
   
$
177,166
 
                                 
Diluted earnings per share
 
$
(0.32
)
 
$
0.33
   
$
2.16
   
$
2.36
 
Diluted earning per share, excluding restructuring and tax reform impact
 
$
1.05
   
$
1.20
   
$
3.52
   
$
3.23
 
                                 
Weighted-average common shares outstanding (000s):
   
56,341
     
55,053
     
56,476
     
54,852
 

NU SKIN ENTERPRISES, INC.
Reconciliation of Operating Margin Excluding Impact of Restructuring to GAAP
Operating Margin
(in thousands, except per share amounts)

   
Three Months Ended
December 31,
   
Years Ended
December 31,
 
   
2018
   
2017
   
2018
   
2017
 
                         
Operating income
 
$
18,431
   
$
99,120
   
$
240,860
   
$
274,483
 
Impact of restructuring and impairment:
                               
Restructuring and impairment
   
70,686
     
     
70,686
     
 
Inventory write-off
   
7,240
     
     
7,240
     
 
Adjusted operating income
 
$
96,357
   
$
99,120
   
$
318,786
   
$
274,483
 
                                 
Operating margin
   
2.7
%
   
14.9
%
   
9.0
%
   
12.0
%
Operating margin, excluding restructuring impact
   
14.1
%
   
14.9
%
   
11.9
%
   
12.0
%
                                 
Revenue
 
$
683,287
   
$
666,201
   
$
2,679,008
   
$
2,279,099
 


NU SKIN ENTERPRISES, INC.
Reconciliation of Effective Tax Rate Excluding Impact of Restructuring and Tax
Reform to GAAP Effective Tax Rate
(in thousands, except per share amounts)

   
Three Months Ended
December 31,
   
Years Ended
December 31,
 
   
2018
   
2017
   
2018
   
2017
 
                         
Provision for income taxes
 
$
31,936
   
$
80,439
   
$
97,779
   
$
136,130
 
Impact of restructuring on tax provision
   
1,086
     
     
1,086
     
 
Impact of tax reform on provision for income taxes
   
     
(47,729
)
   
     
(47,729
)
Provision for income taxes, excluding impact of restructuring and tax reform
 
$
33,022
   
$
32,710
   
$
98,865
   
$
88,401
 
                                 
Income before provision for income taxes
 
$
14,177
   
$
98,674
   
$
219,666
   
$
265,567
 
Impact of restructuring and impairment:
                               
Restructuring and impairment
   
70,686
     
     
70,686
     
 
Inventory write-off
   
7,240
     
     
7,240
     
 
Income before provision for income taxes, excluding impact of restructuring and tax reform
 
$
92,103
   
$
98,674
   
$
297,592
   
$
265,567
 
                                 
Effective tax rate
   
225.3
%
   
81.5
%
   
44.5
%
   
51.3
%
Effective tax rate, excluding restructuring and tax reform impact
   
35.9
%
   
33.1
%
   
33.2
%
   
33.3
%

# # #

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