Segment Information

9 Months Ended

Sep. 30, 2020

Segment Information [Abstract]

Segment Information

10. Segment Information

The Company reports revenue from nine segments, consisting of its seven geographic Nu Skin segments—Mainland China, Americas/Pacific, South Korea, Southeast Asia, Japan, EMEA, and Hong Kong/Taiwan—and its Manufacturing and Grow Tech segments. The Other category includes miscellaneous corporate revenue and related adjustments. These segments reflect the way the chief operating decision maker evaluates the Company’s business performance and allocates resources.  Reported revenue includes only the revenue generated by sales to external customers.

Profitability by segment as determined under US GAAP is driven primarily by the Company’s transfer pricing policies. Segment contribution, which is the Company’s segment profitability metric presented in the table below, excludes certain intercompany charges, specifically royalties, license fees, transfer pricing, discrete charges and other miscellaneous items. These charges have been included in Corporate and other expenses. Corporate and other expenses also include costs related to the Company’s executive and administrative offices, information technology, research and development, and marketing and supply chain functions not recorded at the segment level.

The accounting policies of the segments are the same as those described in Note 2 – Summary of Significant Accounting Policies. The Company evaluates the performance of its segments based on revenue and segment contribution. Each segment records direct expenses related to its employees and its operations.

Summarized financial information for the Company’s reportable segments is shown in the following tables. Asset information is not reviewed or included with the Company’s internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment.

Revenue by Segment

	Three Months Ended September 30,						Nine Months Ended September 30,
(U.S. dollars in thousands)	2020			2019			2020		2019
Nu Skin
Mainland China	$	169,068		$	173,974		$	453,096	$	567,795
Americas/Pacific		151,465			83,635			353,957		262,932
South Korea		83,460			79,435			236,094		248,020
Southeast Asia		84,102			78,963			220,517		226,853
Japan		70,958			67,197			200,549		194,557
EMEA		61,411			35,742			147,590		120,960
Hong Kong/Taiwan		42,265			40,449			115,253		124,719
Other		(314	)		(62	)		374		(239	)
Total Nu Skin		662,415			559,333			1,727,430		1,745,597
Manufacturing (1)		40,910			30,601			105,975		91,430
Grow Tech		22			—			336		30
Total	$	703,347		$	589,934		$	1,833,741	$	1,837,057

(1) The Manufacturing segment had $10.9 million and $7.1 million of intersegment revenue for the three months ended September 30, 2020 and 2019, respectively, and $24.2 million and $19.5 million for the nine months ended September 30, 2020 and 2019, respectively. Intersegment revenue is eliminated in the consolidated financial statements, as well as the reported segment revenue in the table above.

Segment Contribution

	Three Months Ended September 30,						Nine Months Ended September 30,
(U.S. dollars in thousands)	2020			2019			2020			2019
Nu Skin
Mainland China	$	54,522		$	48,619		$	135,577		$	158,873
Americas/Pacific		26,256			12,875			61,184			41,314
South Korea		25,232			24,770			73,421			76,417
Southeast Asia		20,426			22,063			54,121			60,895
Japan		18,245			16,287			49,292			46,216
EMEA		7,111			1,529			11,084			6,114
Hong Kong/Taiwan		9,048			8,063			22,825			24,754
Nu Skin contribution		160,840			134,206			407,504			414,583
Manufacturing		6,749			4,577			15,000			11,598
Grow Tech		(5,322	)		(5,822	)		(17,659	)		(14,033	)
Total segment contribution		162,267			132,961			404,845			412,148
Corporate and other		(88,039	)		(63,069	)		(235,978	)		(199,401	)
Operating income		74,228			69,892			168,867			212,747
Other income (expense)		525			(4,979	)		(4,068	)		(11,153	)
Income before provision for income taxes	$	74,753		$	64,913		$	164,799		$	201,594

Depreciation and Amortization

	Three Months Ended September 30,				Nine Months Ended September 30,
(U.S. dollars in thousands)	2020		2019		2020		2019
Nu Skin
Mainland China	$	2,649	$	2,708	$	7,631	$	8,733
Americas/Pacific		268		213		766		633
South Korea		756		1,115		2,731		3,997
Southeast Asia		317		434		1,248		1,373
Japan		296		938		1,602		2,943
EMEA		231		268		731		980
Hong Kong/Taiwan		691		547		1,948		1,600
Total Nu Skin		5,208		6,223		16,657		20,259
Manufacturing		2,077		1,711		5,954		4,916
Grow Tech		1,302		1,244		3,775		3,064
Corporate and other		9,333		10,127		28,893		29,725
Total	$	17,920	$	19,305	$	55,279	$	57,964

Capital Expenditures

	Three Months Ended September 30,				Nine Months Ended September 30,
(U.S. dollars in thousands)	2020		2019		2020		2019
Nu Skin
Mainland China	$	9,000	$	10,614	$	12,577	$	13,328
Americas/Pacific		125		337		891		1,084
South Korea		173		972		537		1,051
Southeast Asia		1,254		140		1,893		459
Japan		1,484		267		3,132		1,385
EMEA		718		16		1,378		92
Hong Kong/Taiwan		7		99		23		1,653
Total Nu Skin		12,761		12,445		20,431		19,052
Manufacturing		2,113		1,100		13,221		4,281
Grow Tech		343		2,577		760		7,628
Corporate and other		4,901		7,448		14,398		21,823
Total	$	20,118	$	23,570	$	48,810	$	52,784