QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _____________ |
(Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) |
(Address of principal executive offices, including zip code) |
( |
||
(Registrant’s telephone number, including area code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
||
Accelerated filer ☐ |
|
Non-accelerated filer ☐ |
Smaller reporting company |
Emerging growth company |
Page |
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Part I. |
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Item 1. |
1 |
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1 |
|||
2 |
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3 |
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4 |
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5 |
|||
6 |
|||
Item 2. |
16 |
||
Item 3. |
23 |
||
Item 4. |
23 |
||
Part II. |
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Item 1. |
24 |
||
Item 1A. |
24 |
||
Item 2. |
24 |
||
Item 3. |
24 |
||
Item 4. |
24 |
||
Item 5. |
24 |
||
Item 6. |
25 |
||
26 |
March 31, 2021 |
December 31, 2020 |
|||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ |
$ |
||||||
Current investments |
||||||||
Accounts receivable, net |
||||||||
Inventories, net |
||||||||
Prepaid expenses and other |
||||||||
Total current assets |
||||||||
Property and equipment, net |
||||||||
Operating lease right-of-use assets |
||||||||
Goodwill |
||||||||
Other intangible assets, net |
||||||||
Other assets |
||||||||
Total assets |
$ |
$ |
||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ |
$ |
||||||
Accrued expenses |
||||||||
Current portion of long-term debt |
||||||||
Total current liabilities |
||||||||
Operating lease liabilities |
||||||||
Long-term debt |
||||||||
Other liabilities |
||||||||
Total liabilities |
||||||||
Commitments and contingencies (Note 5 and 11) |
||||||||
Stockholders’ equity: |
||||||||
Class A common stock – |
||||||||
Additional paid-in capital |
||||||||
Treasury stock, at cost – |
( |
) |
( |
) |
||||
Accumulated other comprehensive loss |
( |
) |
( |
) |
||||
Retained earnings |
||||||||
Total stockholders’ equity |
||||||||
Total liabilities and stockholders’ equity |
$ |
$ |
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Revenue |
$ |
$ |
||||||
Cost of sales |
||||||||
Gross profit |
||||||||
Operating expenses: |
||||||||
Selling expenses |
||||||||
General and administrative expenses |
||||||||
Total operating expenses |
||||||||
Operating income |
||||||||
Other income (expense), net |
( |
) |
||||||
Income before provision for income taxes |
||||||||
Provision for income taxes |
||||||||
Net income |
$ |
$ |
||||||
Net income per share (Note 6): |
||||||||
Basic |
$ |
$ |
||||||
Diluted |
$ |
$ |
||||||
Weighted-average common shares outstanding (000s): |
||||||||
Basic |
||||||||
Diluted |
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Net income |
$ |
$ |
||||||
Other comprehensive (loss) income, net of tax: |
||||||||
Foreign currency translation adjustment, net of taxes of $( |
( |
) |
( |
) |
||||
Net unrealized gains/(losses) on cash flow hedges, net of taxes of $( |
||||||||
Less: Reclassification adjustment for realized losses/(gains) in current earnings, net of taxes of $( |
||||||||
( |
) |
( |
) |
|||||
Comprehensive income |
$ |
$ |
For the Three Months Ended March 31, 2021 |
||||||||||||||||||||||||
Class A Common Stock |
Additional Paid-in Capital |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
|||||||||||||||||||
Balance at January 1, 2021 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
||||||||||||||
Net income |
||||||||||||||||||||||||
Other comprehensive loss, net of tax |
( |
) |
( |
) |
||||||||||||||||||||
Repurchase of Class A common stock (Note 6) |
( |
) |
( |
) |
||||||||||||||||||||
Exercise of employee stock options ( |
( |
) |
( |
) |
||||||||||||||||||||
Stock-based compensation |
||||||||||||||||||||||||
Cash dividends |
( |
) |
( |
) |
||||||||||||||||||||
Balance at March 31, 2021 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
For the Three Months Ended March 31, 2020 |
||||||||||||||||||||||||
Class A Common Stock |
Additional Paid-in Capital |
Treasury Stock |
Accumulated Other Comprehensive Loss |
Retained Earnings |
Total |
|||||||||||||||||||
Balance at January 1, 2020 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
||||||||||||||
Net income |
||||||||||||||||||||||||
Other comprehensive income, net of tax |
( |
) |
( |
) |
||||||||||||||||||||
Repurchase of Class A common stock (Note 6) |
( |
) |
( |
) |
||||||||||||||||||||
Exercise of employee stock options ( |
( |
) |
( |
) |
||||||||||||||||||||
Stock-based compensation |
||||||||||||||||||||||||
Cash dividends |
( |
) |
( |
) |
||||||||||||||||||||
Balance at March 31, 2020 |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
$ |
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Cash flows from operating activities: |
||||||||
Net income |
$ |
$ |
||||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
||||||||
Non-cash lease expense |
||||||||
Stock-based compensation |
||||||||
Foreign currency losses |
||||||||
Loss on disposal of assets |
||||||||
Deferred taxes |
||||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
||||||||
Inventories, net |
( |
) |
||||||
Prepaid expenses and other |
( |
) |
||||||
Other assets |
( |
) |
( |
) |
||||
Accounts payable |
||||||||
Accrued expenses |
( |
) |
||||||
Other liabilities |
||||||||
Net cash (used in) /provided by operating activities |
( |
) |
||||||
Cash flows from investing activities: |
||||||||
Purchases of property and equipment |
( |
) |
( |
) |
||||
Proceeds on investment sales |
||||||||
Purchases of investments |
( |
) |
( |
) |
||||
Net cash used in investing activities |
( |
) |
( |
) |
||||
Cash flows from financing activities: |
||||||||
Exercise of employee stock options and taxes paid related to the net shares settlement of stock awards |
( |
) |
( |
) |
||||
Payment of cash dividends |
( |
) |
( |
) |
||||
Repurchases of shares of common stock |
( |
) |
( |
) |
||||
Finance lease principal payments |
( |
) |
||||||
Payments of debt |
( |
) |
( |
) |
||||
Proceeds from debt |
||||||||
Net cash used in financing activities |
( |
) |
( |
) |
||||
Effect of exchange rate changes on cash |
( |
) |
( |
) |
||||
Net increase (decrease) in cash and cash equivalents |
( |
) |
||||||
Cash and cash equivalents, beginning of period |
||||||||
Cash and cash equivalents, end of period |
$ |
$ |
1. | The Company |
2. | Summary of Significant Accounting Policies |
March 31, 2021 |
December 31, 2020 |
|||||||
Raw materials |
$ |
$ |
||||||
Finished goods |
||||||||
Total Inventory, net |
$ |
$ |
3. | Goodwill |
March 31, 2021 |
December 31, 2020 |
|||||||
Nu Skin |
||||||||
Mainland China |
$ |
$ |
||||||
Americas/Pacific |
||||||||
South Korea |
||||||||
EMEA |
||||||||
Japan |
||||||||
Southeast Asia |
||||||||
Hong Kong/Taiwan |
||||||||
Manufacturing |
||||||||
Grow Tech |
||||||||
Total |
$ |
$ |
4. | Debt |
Facility or Arrangement |
Original Principal Amount |
Balance as of March 31, 2021(1)(2) |
Balance as of December 31, 2020(1)(2) |
Interest Rate |
Repayment Terms |
||||||||
Credit Agreement term loan facility |
$ |
$ |
$ |
||||||||||
Credit Agreement revolving credit facility |
$ |
(1) |
(2) |
5. | Leases |
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Operating lease expense |
||||||||
Operating lease cost |
$ |
$ |
||||||
Variable lease cost |
||||||||
Short-term lease cost |
||||||||
Sublease income |
( |
) |
( |
) |
||||
Finance lease expense |
||||||||
Amortization of right-of-use assets |
||||||||
Interest on lease liabilities |
||||||||
Total lease expense |
$ |
$ |
Three Months Ended March 31, |
||||||||
2021 |
2020 |
|||||||
Operating cash outflow from operating leases |
$ |
$ |
||||||
Operating cash outflow from finance leases |
$ |
$ |
||||||
Financing cash outflow from finance leases |
$ |
$ |
||||||
Right-of-use assets obtained in exchange for operating lease obligations |
$ |
$ |
||||||
Right-of-use assets obtained in exchange for finance lease obligations |
$ |
$ |
Year Ending December 31 |
Operating Leases |
Finance Leases |
||||||
2021 |
$ |
$ |
||||||
2022 |
||||||||
2023 |
||||||||
2024 |
||||||||
2025 |
||||||||
Thereafter |
||||||||
Total |
||||||||
Less: Finance charges |
||||||||
Total principal liability |
$ |
$ |
6. | Capital Stock |
7. | Fair Value |
◾ | Level 1 – quoted prices in active markets for identical assets or liabilities; |
◾ | Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; |
◾ | Level 3 – unobservable inputs based on the Company’s own assumptions. |
Fair Value at March 31, 2021 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Financial assets (liabilities): |
||||||||||||||||
Cash equivalents and current investments |
$ |
$ |
$ |
$ |
||||||||||||
Derivative financial instruments asset |
||||||||||||||||
Life insurance contracts |
||||||||||||||||
Derivative financial instruments liability |
( |
) |
( |
) |
||||||||||||
Contingent consideration |
( |
) |
( |
) |
||||||||||||
Total |
$ |
$ |
$ |
$ |
Fair Value at December 31, 2020 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Financial assets (liabilities): |
||||||||||||||||
Cash equivalents and current investments |
$ |
$ |
$ |
$ |
||||||||||||
Derivative financial instruments asset |
||||||||||||||||
Life insurance contracts |
||||||||||||||||
Derivative financial instruments liability |
( |
) |
( |
) |
||||||||||||
Contingent consideration |
( |
) |
( |
) |
||||||||||||
Total |
$ |
$ |
$ |
$ |
Beginning balance at January 1, 2021 |
$ |
|||
Actual return on plan assets |
||||
Purchase and issuances |
||||
Sales and settlements |
( |
) |
||
Transfers into Level 3 |
||||
Ending balance at March 31, 2021 |
$ |
Beginning balance at January 1, 2021 |
$ |
( |
) |
|
Changes in fair value of contingent consideration |
( |
) |
||
Ending balance at March 31, 2021 |
$ |
( |
) |
8. | Income Taxes |
9. | Derivatives and Hedging Activities |
Fair Values of Derivative Instruments |
||||||||
Derivatives in Cash flow Hedging Relationships: |
Balance Sheet Location |
March 31, 2021 |
December 31, 2020 |
|||||
Interest Rate Swap - Asset |
Other Assets |
$ |
$ |
|||||
Interest Rate Swap - Liability |
Accrued Expenses |
$ |
$ |
Amount of Gain or (Loss) Recognized in OCI on Derivative |
||||||
Three Months Ended |
||||||
Derivatives in Cash flow |
March 31, |
|||||
Hedging Relationships: |
2021 |
2020 |
||||
Interest Rate Swaps |
$ |
$ |
Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Loss into Income |
||||||||
Three Months Ended |
||||||||
Derivatives in Cash flow |
Income Statement |
March 31, |
||||||
Hedging Relationships: |
Location |
2021 |
2020 |
|||||
Interest Rate Swaps |
Other Income |
$ |
( |
$ |
10. | Segment Information |
Three Months Ended March 31, |
||||||||
(U.S. dollars in thousands) |
2021 |
2020 |
||||||
Nu Skin |
||||||||
Mainland China |
$ |
$ |
||||||
Americas/Pacific |
||||||||
South Korea |
||||||||
EMEA |
||||||||
Japan |
||||||||
Southeast Asia |
||||||||
Hong Kong/Taiwan |
||||||||
Other |
||||||||
Total Nu Skin |
||||||||
Manufacturing (1) |
||||||||
Grow Tech |
||||||||
Total |
$ |
$ |
(1) |
Three Months Ended March 31, |
||||||||
(U.S. dollars in thousands) |
2021 |
2020 |
||||||
Nu Skin |
||||||||
Mainland China |
$ |
$ |
||||||
Americas/Pacific |
||||||||
South Korea |
||||||||
EMEA |
||||||||
Japan |
||||||||
Southeast Asia |
||||||||
Hong Kong/Taiwan |
||||||||
Nu Skin contribution |
||||||||
Manufacturing |
||||||||
Grow Tech |
( |
) |
( |
) |
||||
Total segment contribution |
||||||||
Corporate and other |
( |
) |
( |
) |
||||
Operating income |
||||||||
Other income (expense) |
( |
) |
||||||
Income before provision for income taxes |
$ |
$ |
Three Months Ended March 31, |
||||||||
(U.S. dollars in thousands) |
2021 |
2020 |
||||||
Nu Skin |
||||||||
Mainland China |
$ |
$ |
||||||
Americas/Pacific |
||||||||
South Korea |
||||||||
EMEA |
||||||||
Japan |
||||||||
Southeast Asia |
||||||||
Hong Kong/Taiwan |
||||||||
Total Nu Skin |
||||||||
Manufacturing |
||||||||
Grow Tech |
||||||||
Corporate and other |
||||||||
Total |
$ |
$ |
Three Months Ended March 31, |
||||||||
(U.S. dollars in thousands) |
2021 |
2020 |
||||||
Nu Skin |
||||||||
Mainland China |
$ |
$ |
||||||
Americas/Pacific |
||||||||
South Korea |
||||||||
EMEA |
||||||||
Japan |
||||||||
Southeast Asia |
||||||||
Hong Kong/Taiwan |
||||||||
Total Nu Skin |
||||||||
Manufacturing |
||||||||
Grow Tech |
||||||||
Corporate and other |
||||||||
Total |
$ |
$ |
11. | Commitments and Contingencies |
12. | Acquisitions |
13. | Subsequent Events |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended March 31, |
Constant-Currency |
|||||||||||||||
2021 |
2020 |
Change |
Change (1) |
|||||||||||||
Nu Skin |
||||||||||||||||
Mainland China |
$ |
149,593 |
$ |
137,696 |
9 |
% |
1 |
% |
||||||||
Americas/Pacific |
149,465 |
74,573 |
100 |
% |
97 |
% |
||||||||||
South Korea |
81,131 |
75,719 |
7 |
% |
— |
|||||||||||
EMEA |
76,180 |
35,403 |
115 |
% |
98 |
% |
||||||||||
Japan |
69,864 |
61,300 |
14 |
% |
11 |
% |
||||||||||
Southeast Asia |
67,585 |
69,586 |
(3 |
)% |
(5 |
)% |
||||||||||
Hong Kong/Taiwan |
36,345 |
35,827 |
1 |
% |
(3 |
)% |
||||||||||
Other |
705 |
773 |
(9 |
)% |
(9 |
)% |
||||||||||
Total Nu Skin |
630,868 |
490,877 |
29 |
% |
22 |
% |
||||||||||
Manufacturing |
45,985 |
27,147 |
69 |
% |
69 |
% |
||||||||||
Grow Tech |
173 |
4 |
4,225 |
% |
4,225 |
% |
||||||||||
Total |
$ |
677,026 |
$ |
518,028 |
31 |
% |
25 |
% |
(1) | Constant-currency revenue change is a non-GAAP financial measure. See “Non-GAAP Financial Measures,” below. |
Three Months Ended March 31, |
||||||||||||
2021 |
2020 |
Change |
||||||||||
Nu Skin |
||||||||||||
Mainland China |
$ |
39,439 |
$ |
37,387 |
5 |
% |
||||||
Americas/Pacific |
32,144 |
11,280 |
185 |
% |
||||||||
South Korea |
26,525 |
24,099 |
10 |
% |
||||||||
EMEA |
8,896 |
631 |
1,310 |
% |
||||||||
Japan |
17,981 |
14,592 |
23 |
% |
||||||||
Southeast Asia |
16,249 |
16,718 |
(3 |
)% |
||||||||
Hong Kong/Taiwan |
7,348 |
6,938 |
6 |
% |
||||||||
Total Nu Skin |
148,582 |
111,645 |
33 |
% |
||||||||
Manufacturing |
5,826 |
2,849 |
104 |
% |
||||||||
Grow Tech |
(6,091 |
) |
(6,850 |
) |
11 |
% |
As of March 31, 2021 |
As of March 31, 2020 |
% Increase (Decrease) |
||||||||||||||||||||||
Customers |
Sales Leaders |
Customers |
Sales Leaders |
Customers |
Sales Leaders |
|||||||||||||||||||
Mainland China |
316,000 |
16,716 |
271,536 |
16,159 |
16 |
% |
3 |
% |
||||||||||||||||
Americas/Pacific |
407,413 |
12,340 |
214,139 |
6,930 |
90 |
% |
78 |
% |
||||||||||||||||
South Korea |
152,390 |
7,099 |
174,004 |
6,608 |
(12 |
)% |
7 |
% |
||||||||||||||||
EMEA |
296,001 |
7,950 |
140,344 |
4,237 |
111 |
% |
88 |
% |
||||||||||||||||
Japan |
126,525 |
6,131 |
119,784 |
5,635 |
6 |
% |
9 |
% |
||||||||||||||||
Southeast Asia |
152,889 |
6,882 |
145,116 |
6,634 |
5 |
% |
4 |
% |
||||||||||||||||
Hong Kong/Taiwan |
66,042 |
3,501 |
66,024 |
3,348 |
— |
5 |
% |
|||||||||||||||||
Total |
1,517,260 |
60,619 |
1,130,947 |
49,551 |
34 |
% |
22 |
% |
● | the expansion and upgrade of facilities in our various markets; |
● | purchases and expenditures for computer systems and equipment, software, and application development; and |
● | a new manufacturing plant in Mainland China |
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
ITEM 1A. | RISK FACTORS |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
(a) |
(b) |
(c) |
(d) |
|||||||||||||
Period |
Total Number of Shares Purchased |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in millions)(1) |
||||||||||||
January 1 - 31, 2021 |
— |
$ |
— |
— |
$ |
325.8 |
||||||||||
February 1 - 28, 2021 |
317,217 |
49.36 |
317,217 |
$ |
310.2 |
|||||||||||
March 1 - 31, 2021 |
670,187 |
51.85 |
670,187 |
$ |
275.4 |
|||||||||||
Total |
987,404 |
$ |
51.05 |
987,404 |
(1) | In August 2018, we announced that our board of directors approved a stock repurchase plan. Under this plan, our board of directors authorized the repurchase of up to $500 million of our outstanding Class A common stock on the open market or in privately negotiated transactions. |
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
ITEM 6. | EXHIBITS |
Exhibits Regulation S-K Number |
Description |
|
Employment Letter Agreement with Connie Tang. |
||
Certification by Ritch N. Wood, Chief Executive Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
||
Certification by Mark H. Lawrence, Chief Financial Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
||
Certification by Ritch N. Wood, Chief Executive Officer, pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
||
Certification by Mark H. Lawrence, Chief Financial Officer, pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
||
101.INS |
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
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101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
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101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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104 |
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
NU SKIN ENTERPRISES, INC. |
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By: |
/s/ Mark H. Lawrence |
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Mark H. Lawrence |
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Chief Financial Officer |
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(Duly Authorized Officer and Principal Financial Officer) |
1. |
I have reviewed this quarterly report on Form 10-Q of Nu Skin Enterprises, Inc.;
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2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
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Date: May 5, 2021
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/s/ Ritch N. Wood
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|
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Ritch N. Wood
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|
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Chief Executive Officer
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1. |
I have reviewed this quarterly report on Form 10-Q of Nu Skin Enterprises, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely
to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over
financial reporting.
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/s/ Mark H. Lawrence
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|
|
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Mark H. Lawrence
|
|
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Chief Financial Officer
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: May 5, 2021
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/s/ Ritch N. Wood
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|
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Ritch N. Wood
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|
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Chief Executive Officer
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1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Date: May 5, 2021
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/s/ Mark H. Lawrence
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|
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Mark H. Lawrence
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|
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Chief Financial Officer
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Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Stockholders' equity: | ||
Common stock, shares authorized (in shares) | 500.0 | 500.0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares issued (in shares) | 90.6 | 90.6 |
Treasury stock (in shares) | 40.4 | 39.7 |
Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
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Consolidated Statements of Income (Unaudited) [Abstract] | ||
Revenue | $ 677,026 | $ 518,028 |
Cost of sales | 170,566 | 125,793 |
Gross profit | 506,460 | 392,235 |
Operating expenses: | ||
Selling expenses | 273,746 | 206,042 |
General and administrative expenses | 169,801 | 149,628 |
Total operating expenses | 443,547 | 355,670 |
Operating income | 62,913 | 36,565 |
Other income (expense), net | 1,582 | (6,174) |
Income before provision for income taxes | 64,495 | 30,391 |
Provision for income taxes | 17,065 | 10,661 |
Net income | $ 47,430 | $ 19,730 |
Net income per share (Note 6): | ||
Basic (in dollars per share) | $ 0.94 | $ 0.36 |
Diluted (in dollars per share) | $ 0.91 | $ 0.36 |
Weighted-average common shares outstanding: | ||
Basic (in shares) | 50,706 | 55,059 |
Diluted (in shares) | 52,172 | 55,101 |
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Consolidated Statements of Comprehensive Income (Unaudited) [Abstract] | ||
Net income | $ 47,430 | $ 19,730 |
Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustment, net of taxes of $(2) and $(3) for the three months ended March 31, 2021 and 2020, respectively | (9,919) | (14,997) |
Net unrealized gains/(losses) on cash flow hedges, net of taxes of $(839), and zero for the for the three months ended March 31, 2021 and 2020, respectively | 3,040 | 0 |
Less: Reclassification adjustment for realized losses/(gains) in current earnings, net of taxes of $(6) and zero for the three months ended March 31, 2021 and 2020, respectively | 21 | 0 |
Other comprehensive (loss) income, net of tax | (6,858) | (14,997) |
Comprehensive income | $ 40,572 | $ 4,733 |
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
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Other comprehensive (loss) income, net of tax: | ||
Foreign currency translation adjustment, tax | $ (2) | $ (3) |
Net unrealized gains/(losses) on cash flow hedges, tax | (839) | 0 |
Reclassification adjustment for realized losses/(gains) in current earnings, tax | $ (6) | $ 0 |
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands |
Common Stock [Member]
Class A [Member]
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Additional Paid-in Capital [Member] |
Treasury Stock [Member] |
Accumulated Other Comprehensive Loss [Member] |
Retained Earnings [Member] |
Total |
---|---|---|---|---|---|---|
Balance at beginning of period at Dec. 31, 2019 | $ 91 | $ 557,544 | $ (1,324,826) | $ (85,292) | $ 1,727,772 | $ 875,289 |
Stockholders' Equity [Roll Forward] | ||||||
Net income | 0 | 0 | 0 | 0 | 19,730 | 19,730 |
Other comprehensive (loss) income, net of tax | 0 | 0 | 0 | (14,997) | 0 | (14,997) |
Repurchase of Class A common stock (Note 6) | 0 | 0 | (60,886) | 0 | 0 | (60,886) |
Exercise of employee stock options/vesting of stock awards | 0 | (3,083) | 1,676 | 0 | 0 | (1,407) |
Stock-based compensation | 0 | 3,455 | 0 | 0 | 0 | 3,455 |
Cash dividends | 0 | 0 | 0 | 0 | (20,686) | (20,686) |
Balance at end of period at Mar. 31, 2020 | 91 | 557,916 | (1,384,036) | (100,289) | 1,726,816 | 800,498 |
Balance at beginning of period at Dec. 31, 2020 | 91 | 579,801 | (1,461,593) | (64,768) | 1,840,740 | 894,271 |
Stockholders' Equity [Roll Forward] | ||||||
Net income | 0 | 0 | 0 | 0 | 47,430 | 47,430 |
Other comprehensive (loss) income, net of tax | 0 | 0 | 0 | (6,858) | 0 | (6,858) |
Repurchase of Class A common stock (Note 6) | 0 | 0 | (50,406) | 0 | 0 | (50,406) |
Exercise of employee stock options/vesting of stock awards | 0 | (7,400) | 6,923 | 0 | 0 | (477) |
Stock-based compensation | 0 | 6,803 | 0 | 0 | 0 | 6,803 |
Cash dividends | 0 | 0 | 0 | 0 | (19,289) | (19,289) |
Balance at end of period at Mar. 31, 2021 | $ 91 | $ 579,204 | $ (1,505,076) | $ (71,626) | $ 1,868,881 | $ 871,474 |
Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
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Stockholders' Equity [Roll Forward] | ||
Exercise of employee stock options (in shares) | 0.3 | 0.1 |
The Company |
3 Months Ended | ||
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Mar. 31, 2021 | |||
The Company [Abstract] | |||
The Company |
Nu Skin Enterprises, Inc. (the “Company”) is a holding company, with Nu Skin, a leading global direct selling company, being the primary operating unit. Nu Skin develops and distributes premium-quality, innovative personal care products and wellness products that are sold worldwide under the Nu Skin, Pharmanex and ageLOC brands and a small number of other products and services. The Company reports revenue from nine segments, consisting of its seven geographic Nu Skin segments—Mainland China; Americas/Pacific, which includes Australia, Canada, Latin America, New Zealand and the United States; South Korea; Europe, Middle East and Africa (“EMEA”), which includes markets in Europe as well as Israel, Russia and South Africa; Japan; Southeast Asia, which includes Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam; and Hong Kong/Taiwan, which also includes Macau—its Manufacturing segment, which includes manufacturing and packaging subsidiaries it has acquired; and its Grow Tech segment, which focuses on developing controlled-environment agriculture technologies (the Company’s subsidiaries operating within each segment are collectively referred to as the “Subsidiaries”).
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Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies |
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. The unaudited consolidated financial statements include the accounts of the Company and its Subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial information as of March 31, 2021, and for the three-month periods ended March 31, 2021 and 2020. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the fiscal year. The consolidated balance sheet as of December 31, 2020 has been prepared using information from the audited financial statements at that date. For further information, refer to the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Accounting Pronouncements
In March 2020, the FASB issued, ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for the effects of reference rate reform on financial reporting. The guidance provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 applies only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The amendments in ASU 2020-04 are elective and are effective upon issuance for all entities. The Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
Inventory
Inventories consist of the following (U.S. dollars in thousands):
Revenue Recognition
Contract Liabilities – Customer Loyalty Programs
Contract liabilities, recorded as deferred revenue within the accrued expenses line in the consolidated balance sheets, include loyalty point program deferrals with certain customers which are accounted for as a reduction in the transaction price and are generally recognized as points are redeemed for additional products.
The balance of deferred revenue related to contract liabilities as of March 31, 2021 and December 31, 2020 was $19.8 million and $18.2 million, respectively. The contract liabilities impact to revenue for the three-month periods ended March 31, 2021, and 2020 was a decrease of $1.6 million and an increase of $0.6 million, respectively.
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Goodwill |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
The Company’s reporting units for goodwill are its operating segments, which are also its reportable segments.
The following table presents goodwill allocated to the Company’s reportable segments for the periods ended March 31, 2021 and December 31, 2020 (U.S. dollars in thousands):
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Debt |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt |
Credit Agreement
On April 18, 2018, the Company entered into a Credit Agreement (the “Credit Agreement”) with several financial institutions as lenders and Bank of America, N.A., as administrative agent. The Credit Agreement provides for a $400 million term loan facility and a $350 million revolving credit facility, each with a term of five years. Both facilities bear interest at the London Interbank Offered Rate (“LIBOR”), plus a margin based on the consolidated leverage ratio. The term loan facility amortizes in quarterly installments in amounts resulting in an annual amortization of 5.0% during the first and second years, 7.5% during the third and fourth years and 10.0% during the fifth year after the closing date of the Credit Agreement, with the remainder payable at final maturity. The Credit Agreement requires the Company to maintain a consolidated leverage ratio not exceeding 2.25 to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00. As of March 31, 2021, the Company was in compliance with all covenants under the Credit Agreement.
The following table summarizes the Company’s debt facilities as of March 31, 2021 and December 31, 2020:
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Leases |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
As of March 31, 2021, the weighted average remaining lease term was 6.6 and 4.5 years for operating and finance leases, respectively. As of March 31, 2021, the weighted average discount rate was 4.1% and 3.8% for operating and finance leases, respectively.
The components of lease expense were as follows (U.S. dollars in thousands):
Supplemental cash flow information related to leases was as follows (U.S. dollars in thousands):
Maturities of lease liabilities were as follows (U.S. dollars in thousands):
The Company has additional lease liabilities of $0.3 million which have not yet commenced as of March 31, 2021, and as such, have not been recognized on the consolidated balance sheets.
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Capital Stock |
3 Months Ended | ||
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Mar. 31, 2021 | |||
Capital Stock [Abstract] | |||
Capital Stock |
Net income per share
Net income per share is computed based on the weighted-average number of common shares outstanding during the periods presented. Additionally, diluted earnings per share data gives effect to all potentially dilutive common shares that were outstanding during the periods presented. For the three-month periods ended March 31, 2021 and 2020, the only dilutive common shares outstanding relate to the Company’s outstanding stock awards and options. For the three-month periods ended March 31, 2021 and 2020, stock options of 0.1 million and 1.0 million, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.
Dividends
In , the Company’s board of directors declared a quarterly cash dividend of $0.38 per share. This quarterly cash dividend of $19.3 million was paid on March 10, 2021 to stockholders of record on February 26, 2021. In , the board of directors declared a quarterly cash dividend of $0.38 per share to be paid on June 9, 2021 to shareholders of record on May 28, 2021.
Repurchase of common stock
During the three-month periods ended March 31, 2021 and 2020, the Company repurchased 1.0 million shares and 2.6 million shares of its Class A common stock under its stock repurchase plans for $50.4 million and $60.9 million, respectively. As of March 31, 2021, $275.4 million was available for repurchases under the Company’s stock repurchase plan.
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Fair Value |
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Fair Value [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value |
The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximates fair values due to the short-term nature of these instruments. Fair value estimates are made at a specific point in time, based on relevant market information.
The FASB Codification defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. On a quarterly basis, the Company measures at fair value certain financial assets, including cash equivalents. Accounting standards specify a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:
Accounting standards permit companies, at their option, to measure certain financial instruments and other eligible items at fair value. The Company has elected not to apply the fair value option to existing eligible items beyond what is required by US GAAP.
The following tables present the fair value hierarchy for those assets measured at fair value on a recurring basis (U.S. dollars in thousands):
The following table provides a summary of changes in fair value of the Company’s Level 3 marketable securities (U.S. dollars in thousands):
The following table provides a summary of changes in fair value of the Company’s Level 3 contingent consideration (U.S. dollars in thousands):
Contingent consideration: Contingent consideration represents the obligations incurred in connection with acquisitions. The estimate of fair value of the contingent consideration obligations requires subjective assumptions to be made regarding the future business results, discount rates, discount periods and probabilities assigned to various potential business result scenarios and was determined using probability assessments with respect to the likelihood of reaching various targets or of achieving certain milestones. The fair value measurement is based on significant inputs unobservable in the market and thus represents a level 3 measurement. Changes in current expectations of progress could change the probability of achieving the targets within the measurement periods and result in an increase or decrease in the fair value of the contingent consideration obligation.
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Income Taxes |
3 Months Ended | ||
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Mar. 31, 2021 | |||
Income Taxes [Abstract] | |||
Income Taxes |
Provision for income taxes for the first quarter of 2021 was $17.1 million, compared to $10.7 million for the prior-year period. The effective tax rates for the first quarter 2021 was 26.5% of pre-tax income compared to 35.1% in the prior-year period.
The Company accounts for income taxes in accordance with ASC Topic 740 ‘‘Income Taxes.’’ These standards establish financial accounting and reporting standards for the effects of income taxes that result from an enterprise’s activities during the current and preceding years. The Company takes an asset and liability approach for financial accounting and reporting of income taxes. The Company pays income taxes in many foreign jurisdictions based on the profits realized in those jurisdictions, which can be significantly impacted by terms of intercompany transactions between the Company and its foreign affiliates. Deferred tax assets and liabilities are created in this process. The Company has netted these deferred tax assets and deferred tax liabilities by jurisdiction. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be ultimately realized. The Company had net deferred tax assets of $29.9 million and $34.8 million as of March 31, 2021 and December 31, 2020, respectively.
The Company evaluates its indefinite reinvestment assertions with respect to foreign earnings for each quarter. For all foreign earnings, the Company accrues the applicable foreign income taxes. For the earnings that have been indefinitely reinvested, the Company does not accrue foreign withholding taxes. Undistributed earnings that the Company has indefinitely reinvested, for which no foreign withholding taxes have been provided, aggregate to $60.0 million as of December 31, 2020. If the amount designated as indefinitely reinvested as of December 31, 2020 was repatriated to the United States, the amount of incremental taxes would be approximately $6.0 million. The Company intends to utilize the indefinitely reinvested offshore earnings to fund foreign investments, specifically capital expenditures.
The Company files income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions. The Company is no longer subject to tax examinations from the IRS for all years for which tax returns have been filed before 2020. With a few exceptions, the Company is no longer subject to state and local income tax examination by tax authorities for the years before 2016. In 2009, the Company entered into a voluntary program with the IRS called Compliance Assurance Process (“CAP”). The objective of CAP is to contemporaneously work with the IRS to achieve federal tax compliance and resolve all or most of the issues prior to filing of the tax return. The Company has elected to participate in CAP for 2021 and may elect to continue participating in CAP for future tax years; the Company may withdraw from the program at any time. In major foreign jurisdictions, the Company is generally no longer subject to income tax examinations for years before 2015. However, statutes of limitations in certain countries may be as long as ten years. The Company is currently under examination in certain foreign jurisdictions; however, the outcomes of those reviews are not yet determinable. The Company’s unrecognized tax benefits relate to multiple jurisdictions. Due to potential increases in unrecognized tax benefits from the multiple jurisdictions in which the Company operates, as well as the expiration of various statutes of limitations, it is reasonably possible that the Company’s gross unrecognized tax benefits, net of foreign currency adjustments, may decrease in the next 12 months by approximately $0.1 to $1.1 million.
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Derivatives and Hedging Activities |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging Activities |
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for the Company making variable-rate payments over the life of the agreements without exchange of the underlying notional amount. During 2021, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense/income in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense/income as interest payments are made/received on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $83 thousand will be reclassified as an increase to interest expense.
As of March 31, 2021 and December 31, 2020, the Company had four outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk with a total notional amount of $200 million.
Fair Values of Derivative Instruments on the Balance Sheet
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet:
Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income
The tables below present the effect of cash flow hedge accounting on Accumulated Other Comprehensive Income.
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Segment Information |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Information [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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.
In the first quarter of 2021, as a result of a change in the Company’s transfer pricing policies in the Americas/Pacific, the segment contribution calculation has been adjusted, the prior year Americas/Pacific and Corporate and other has been recast to conform with the new policy.
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
Segment Contribution
Depreciation and Amortization
Capital Expenditures
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Commitments and Contingencies |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 | |||
Commitments and Contingencies [Abstract] | |||
Commitments and Contingencies |
The Company is subject to government regulations pertaining to product formulation, labeling and packaging, product claims and advertising, and the Company’s direct selling system. The Company is also subject to the jurisdiction of numerous foreign tax and customs authorities. Any assertions or determination that either the Company or the Company’s sales force is not in compliance with existing statutes, laws, rules or regulations could have a material adverse effect on the Company’s operations. In addition, in any country or jurisdiction, the adoption of new statutes, laws, rules or regulations or changes in the interpretation of existing statutes, laws, rules or regulations could have a material adverse effect on the Company and its operations. No assurance can be given that the Company’s compliance with applicable statutes, laws, rules and regulations will not be challenged by foreign authorities or that such challenges will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company and its Subsidiaries are defendants in litigation, investigations and other proceedings involving various matters. Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.
The Company is subject to regular audits by federal, state and foreign tax authorities. These audits may result in additional tax liabilities. The Company believes it has appropriately provided for income taxes for all years. Several factors drive the calculation of its tax reserves. Some of these factors include: (i) the expiration of various statutes of limitations; (ii) changes in tax law and regulations; (iii) issuance of tax rulings; and (iv) settlements with tax authorities. Changes in any of these factors may result in adjustments to the Company’s reserves, which would impact its reported financial results.
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Acquisitions |
3 Months Ended | ||
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Mar. 31, 2021 | |||
Acquisitions [Abstract] | |||
Acquisitions |
In December 2020, the Company acquired 100% of the outstanding equity interest of Ingredient Innovations International Company (“3i”). The purchase price for 3i was $15.7 million, net of cash acquired of $2.1 million and $0.8 million to be paid within six months, all payable in cash. In addition, there is potential for an incremental $7.0 million in contingent consideration, which becomes payable if certain performance targets are reached in 2021 and 2022. The fair value of the contingent consideration recorded on the acquisition date is $3.1 million. The Company allocated the gross purchase price of $24.5 million to the assets acquired and liabilities assumed at estimated fair values. The estimated fair value of assets acquired included $14.4 million of intangible assets, $0.3 million of property and equipment, $2.1 million of cash, $0.8 million of accounts receivable and less than $0.3 million of inventory, and the acquisition also included approximately $0.3 million of current liabilities and resulted in a deferred tax liability of $3.1 million. The excess purchase price over the aggregate fair value of assets acquired less liabilities assumed of $6.4 million was recorded as goodwill. The intangible assets acquired were comprised of $3.7 million for Customer relationships, $10.0 million for technology and $0.7 million for other intangibles, all with an assigned estimated useful life of approximately 8 years. All the goodwill was assigned to our Manufacturing segment. The allocation of the fair value of assets acquired and liabilities assumed for the acquisition was finalized during the three months ended March 31, 2021.
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Subsequent Events |
3 Months Ended | ||
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Mar. 31, 2021 | |||
Subsequent Events [Abstract] | |||
Subsequent Events |
On April 19, 2021, the Company acquired 100% ownership in MyFavoriteThings, Inc. (“MyFavoriteThings”) making MyFavoriteThings a wholly owned subsidiary of the Company. MyFavoriteThings is a digital technology development company. Under the terms of the purchase agreement, the Company has agreed to pay $17.0 million in cash in exchange for 100% ownership in MyFavoriteThings, subject to adjustment for certain closing items. In addition, there is potential for an incremental $24.0 million in contingent consideration, which becomes payable if certain performance targets are reached in 2021, 2022 and 2023.
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Summary of Significant Accounting Policies (Policies) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Basis of Accounting | The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. | ||||||||||||||||||||||||||||||||||||
Consolidation | The unaudited consolidated financial statements include the accounts of the Company and its Subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. | ||||||||||||||||||||||||||||||||||||
Accounting Pronouncements |
Accounting Pronouncements
In March 2020, the FASB issued, ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for the effects of reference rate reform on financial reporting. The guidance provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 applies only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The amendments in ASU 2020-04 are elective and are effective upon issuance for all entities. The Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
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Inventory |
Inventory
Inventories consist of the following (U.S. dollars in thousands):
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Revenue Recognition |
Revenue Recognition
Contract Liabilities – Customer Loyalty Programs
Contract liabilities, recorded as deferred revenue within the accrued expenses line in the consolidated balance sheets, include loyalty point program deferrals with certain customers which are accounted for as a reduction in the transaction price and are generally recognized as points are redeemed for additional products.
The balance of deferred revenue related to contract liabilities as of March 31, 2021 and December 31, 2020 was $19.8 million and $18.2 million, respectively. The contract liabilities impact to revenue for the three-month periods ended March 31, 2021, and 2020 was a decrease of $1.6 million and an increase of $0.6 million, respectively.
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Summary of Significant Accounting Policies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Inventories |
Inventories consist of the following (U.S. dollars in thousands):
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Goodwill (Tables) |
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
The following table presents goodwill allocated to the Company’s reportable segments for the periods ended March 31, 2021 and December 31, 2020 (U.S. dollars in thousands):
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Facilities |
The following table summarizes the Company’s debt facilities as of March 31, 2021 and December 31, 2020:
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Leases (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Expense |
The components of lease expense were as follows (U.S. dollars in thousands):
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Supplemental Cash Flow Information Related to Leases |
Supplemental cash flow information related to leases was as follows (U.S. dollars in thousands):
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Maturities of Operating Lease Liabilities |
Maturities of lease liabilities were as follows (U.S. dollars in thousands):
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Fair Value (Tables) |
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Fair Value [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets Measured at Fair Value on a Recurring Basis |
The following tables present the fair value hierarchy for those assets measured at fair value on a recurring basis (U.S. dollars in thousands):
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Changes in Fair Value of Level 3 Marketable Securities |
The following table provides a summary of changes in fair value of the Company’s Level 3 marketable securities (U.S. dollars in thousands):
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Changes in Fair Value of Level 3 Contingent Consideration |
The following table provides a summary of changes in fair value of the Company’s Level 3 contingent consideration (U.S. dollars in thousands):
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Derivatives and Hedging Activities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Derivative Instruments on the Balance Sheet |
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet:
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Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income |
The tables below present the effect of cash flow hedge accounting on Accumulated Other Comprehensive Income.
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue by Segment |
Revenue by Segment
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Segment Contribution |
Segment Contribution
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Depreciation and Amortization and Capital Expenditures |
Depreciation and Amortization
Capital Expenditures
|
The Company (Details) |
3 Months Ended |
---|---|
Mar. 31, 2021
Segment
| |
The Company [Abstract] | |
Number of reportable segments | 9 |
Number of geographic segments | 7 |
Summary of Significant Accounting Policies, Inventory (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Inventories [Abstract] | ||
Raw materials | $ 143,998 | $ 118,877 |
Finished goods | 219,433 | 195,489 |
Total Inventory, net | $ 363,431 | $ 314,366 |
Summary of Significant Accounting Policies, Revenue Recognition (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
|
Contract Liabilities - Customer Loyalty Programs [Abstract] | |||
Contract liabilities for customer loyalty programs | $ 19.8 | $ 18.2 | |
Contract liabilities impact to revenue | $ (1.6) | $ 0.6 |
Goodwill (Details) - USD ($) $ in Thousands |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Goodwill [Abstract] | ||
Goodwill | $ 202,979 | $ 202,979 |
Mainland China [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 32,179 | 32,179 |
Americas/Pacific [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 9,449 | 9,449 |
South Korea [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 29,261 | 29,261 |
EMEA [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 2,875 | 2,875 |
Japan [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 16,019 | 16,019 |
Southeast Asia [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 18,537 | 18,537 |
Hong Kong/Taiwan [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 6,634 | 6,634 |
Manufacturing [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 78,875 | 78,875 |
Grow Tech [Member] | ||
Goodwill [Abstract] | ||
Goodwill | $ 9,150 | $ 9,150 |
Debt, Debt Facilities (Details) - USD ($) $ in Thousands |
3 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
Apr. 18, 2018 |
|||||
Debt [Abstract] | |||||||
Current portion of long-term debt | $ 90,000 | $ 30,000 | |||||
Credit Agreement [Member] | |||||||
Debt [Abstract] | |||||||
Unamortized debt issuance costs | 1,900 | 2,100 | |||||
Credit Agreement Term Loan Facility [Member] | |||||||
Debt [Abstract] | |||||||
Original principal amount | 400,000 | $ 400,000 | |||||
Balance | [1],[2] | $ 330,000 | 337,500 | ||||
Interest rate | Variable 30 day: 1.86% | ||||||
Interest rate | 1.86% | ||||||
Term of variable rate | 30 days | ||||||
Repayment terms | 35% of the principal amount is payable in increasing quarterly installments over a five-year period that began on June 30, 2018, with the remainder payable at the end of the five-year term. | ||||||
Percentage of principal payable in installments | 35.00% | ||||||
Term of loan | 5 years | ||||||
Current portion of long-term debt | $ 30,000 | 30,000 | |||||
Credit Agreement Revolving Credit Facility [Member] | |||||||
Debt [Abstract] | |||||||
Balance | [1],[2] | $ 60,000 | $ 0 | ||||
Interest rate | Variable 30 day: 1.86% | ||||||
Interest rate | 1.86% | ||||||
Term of variable rate | 30 days | ||||||
Repayment terms | Revolving line of credit expires April 18, 2023. | ||||||
Term of loan | 5 years | ||||||
|
Capital Stock, Net Income per Share (Details) - shares shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Stock Options [Member] | ||
Net Income per Share [Abstract] | ||
Anti-dilutive shares excluded from calculation of diluted earnings per share (in shares) | 0.1 | 1.0 |
Capital Stock, Dividends (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | |||
---|---|---|---|---|---|
Mar. 10, 2021 |
Apr. 30, 2021 |
Feb. 28, 2021 |
Mar. 31, 2021 |
Mar. 31, 2020 |
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Dividends per Share [Abstract] | |||||
Payment of cash dividends | $ 19,289 | $ 20,686 | |||
Dividend Declared 2021-Q1 [Member] | |||||
Dividends per Share [Abstract] | |||||
Dividend payable, date declared | 2021-02 | ||||
Dividend payable per share (in dollars per share) | $ 0.38 | ||||
Payment of cash dividends | $ 19,300 | ||||
Dividend payable, date paid | Mar. 10, 2021 | ||||
Dividend payable, date of record | Feb. 26, 2021 | ||||
Dividend Declared 2021-Q2 [Member] | Subsequent Event [Member] | |||||
Dividends per Share [Abstract] | |||||
Dividend payable, date declared | 2021-05 | ||||
Dividend payable per share (in dollars per share) | $ 0.38 | ||||
Dividend payable, date paid | Jun. 09, 2021 | ||||
Dividend payable, date of record | May 28, 2021 |
Capital Stock, Repurchase of Common Stock (Details) - USD ($) $ in Thousands, shares in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Repurchases of Common Stock [Abstract] | ||
Class A common stock repurchased | $ 50,406 | $ 60,886 |
Amount available for repurchases | $ 275,400 | |
Treasury Stock [Member] | ||
Repurchases of Common Stock [Abstract] | ||
Class A common stock repurchased (in shares) | 1.0 | 2.6 |
Class A common stock repurchased | $ 50,406 | $ 60,886 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
|
Income Taxes [Abstract] | |||
Provision for income taxes | $ 17,065 | $ 10,661 | |
Effective tax rate | 26.50% | 35.10% | |
Net deferred tax assets | $ 29,900 | $ 34,800 | |
Undistributed earnings of non-U.S. subsidiaries | 60,000 | ||
Incremental taxes if undistributed earnings on non-U.S. subsidiaries were repatriated | $ 6,000 | ||
Minimum [Member] | |||
Income Taxes [Abstract] | |||
Decrease in unrecognized tax benefits within the next 12 months that is reasonably possible | $ (100) | ||
Maximum [Member] | |||
Income Taxes [Abstract] | |||
Statute of limitations related to income tax examinations | 10 years | ||
Income Taxes [Abstract] | |||
Decrease in unrecognized tax benefits within the next 12 months that is reasonably possible | $ (1,100) |
Derivatives and Hedging Activities, Fair Value of Derivative Instruments on the Balance Sheet (Details) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021
USD ($)
Derivatives
|
Dec. 31, 2020
USD ($)
Derivatives
|
|
Derivatives and Hedging Activities [Abstract] | ||
Gain to be reclassified to interest expense during next twelve months | $ 83 | |
Number of outstanding derivatives held | Derivatives | 4 | 4 |
Notional amount | $ 200,000 | $ 200,000 |
Interest Rate Swaps [Member] | Designated as Hedging Instrument [Member] | Other Assets [Member] | ||
Derivatives and Hedging Activities [Abstract] | ||
Fair value, asset | 5,030 | 1,145 |
Interest Rate Swaps [Member] | Designated as Hedging Instrument [Member] | Accrued Expenses [Member] | ||
Derivatives and Hedging Activities [Abstract] | ||
Fair value, liability | $ 83 | $ 105 |
Derivatives and Hedging Activities, Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Details) - Interest Rate Swaps [Member] - Designated as Hedging Instrument [Member] - Cash Flow Hedges [Member] - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Other Income [Member] | ||
Derivatives and Hedging Activities [Abstract] | ||
Gain (loss) reclassified from accumulated other comprehensive loss into income | $ (27) | $ 0 |
Other Comprehensive Loss [Member] | ||
Derivatives and Hedging Activities [Abstract] | ||
Gain or (loss) recognized in OCI | $ 3,879 | $ 0 |
Segment Information, Segment Contribution (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Segment Contribution [Abstract] | ||
Operating income | $ 62,913 | $ 36,565 |
Other income (expense) | 1,582 | (6,174) |
Income before provision for income taxes | 64,495 | 30,391 |
Operating Segment [Member] | ||
Segment Contribution [Abstract] | ||
Operating income | 148,317 | 107,644 |
Operating Segment [Member] | Nu Skin [Member] | ||
Segment Contribution [Abstract] | ||
Operating income | 148,582 | 111,645 |
Operating Segment [Member] | Mainland China [Member] | ||
Segment Contribution [Abstract] | ||
Operating income | 39,439 | 37,387 |
Operating Segment [Member] | Americas/Pacific [Member] | ||
Segment Contribution [Abstract] | ||
Operating income | 32,144 | 11,280 |
Operating Segment [Member] | South Korea [Member] | ||
Segment Contribution [Abstract] | ||
Operating income | 26,525 | 24,099 |
Operating Segment [Member] | EMEA [Member] | ||
Segment Contribution [Abstract] | ||
Operating income | 8,896 | 631 |
Operating Segment [Member] | Japan [Member] | ||
Segment Contribution [Abstract] | ||
Operating income | 17,981 | 14,592 |
Operating Segment [Member] | Southeast Asia [Member] | ||
Segment Contribution [Abstract] | ||
Operating income | 16,249 | 16,718 |
Operating Segment [Member] | Hong Kong/Taiwan [Member] | ||
Segment Contribution [Abstract] | ||
Operating income | 7,348 | 6,938 |
Operating Segment [Member] | Manufacturing [Member] | ||
Segment Contribution [Abstract] | ||
Operating income | 5,826 | 2,849 |
Operating Segment [Member] | Grow Tech [Member] | ||
Segment Contribution [Abstract] | ||
Operating income | (6,091) | (6,850) |
Corporate and Other [Member] | ||
Segment Contribution [Abstract] | ||
Operating income | $ (85,404) | $ (71,079) |
Segment Information, Depreciation and Amortization and Capital Expenditures (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Summarized Financial Information [Abstract] | ||
Depreciation and amortization | $ 18,344 | $ 19,095 |
Capital expenditures | 19,373 | 19,387 |
Operating Segments [Member] | Nu Skin [Member] | ||
Summarized Financial Information [Abstract] | ||
Depreciation and amortization | 6,338 | 5,582 |
Capital expenditures | 9,947 | 4,545 |
Operating Segments [Member] | Mainland China [Member] | ||
Summarized Financial Information [Abstract] | ||
Depreciation and amortization | 3,339 | 2,424 |
Capital expenditures | 8,517 | 2,861 |
Operating Segments [Member] | Americas/Pacific [Member] | ||
Summarized Financial Information [Abstract] | ||
Depreciation and amortization | 256 | 245 |
Capital expenditures | 278 | 694 |
Operating Segments [Member] | South Korea [Member] | ||
Summarized Financial Information [Abstract] | ||
Depreciation and amortization | 990 | 1,057 |
Capital expenditures | 490 | 169 |
Operating Segments [Member] | EMEA [Member] | ||
Summarized Financial Information [Abstract] | ||
Depreciation and amortization | 286 | 258 |
Capital expenditures | 172 | 27 |
Operating Segments [Member] | Japan [Member] | ||
Summarized Financial Information [Abstract] | ||
Depreciation and amortization | 253 | 472 |
Capital expenditures | 91 | 157 |
Operating Segments [Member] | Southeast Asia [Member] | ||
Summarized Financial Information [Abstract] | ||
Depreciation and amortization | 329 | 487 |
Capital expenditures | 399 | 633 |
Operating Segments [Member] | Hong Kong/Taiwan [Member] | ||
Summarized Financial Information [Abstract] | ||
Depreciation and amortization | 885 | 639 |
Capital expenditures | 0 | 4 |
Operating Segments [Member] | Manufacturing [Member] | ||
Summarized Financial Information [Abstract] | ||
Depreciation and amortization | 2,688 | 1,815 |
Capital expenditures | 3,338 | 10,505 |
Operating Segments [Member] | Grow Tech [Member] | ||
Summarized Financial Information [Abstract] | ||
Depreciation and amortization | 1,339 | 1,225 |
Capital expenditures | 942 | 178 |
Corporate and Other [Member] | ||
Summarized Financial Information [Abstract] | ||
Depreciation and amortization | 7,979 | 10,473 |
Capital expenditures | $ 5,146 | $ 4,159 |
Acquisitions (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended |
---|---|---|
Dec. 31, 2020 |
Mar. 31, 2021 |
|
Fair Value of Assets Acquired [Abstract] | ||
Goodwill | $ 202,979 | $ 202,979 |
3i [Member] | ||
Acquisitions [Abstract] | ||
Percentage of entity acquired | 100.00% | |
Purchase price, net of cash acquired | $ 15,700 | |
Cash acquired | 2,100 | |
Accrued liability | 800 | |
Incremental contingent consideration | 7,000 | |
Contingent consideration | 3,100 | |
Gross purchase price | 24,500 | |
Fair Value of Assets Acquired [Abstract] | ||
Intangible assets | 14,400 | |
Property and equipment | 300 | |
Cash | 2,100 | |
Accounts receivable | 800 | |
Inventory | 300 | |
Current liabilities | 300 | |
Deferred tax liability | 3,100 | |
Goodwill | 6,400 | |
Useful life | 8 years | |
3i [Member] | Customer Relationships [Member] | ||
Fair Value of Assets Acquired [Abstract] | ||
Intangible assets | 3,700 | |
3i [Member] | Technology [Member] | ||
Fair Value of Assets Acquired [Abstract] | ||
Intangible assets | 10,000 | |
3i [Member] | Other Intangibles [Member] | ||
Fair Value of Assets Acquired [Abstract] | ||
Intangible assets | $ 700 |
Subsequent Events (Details) - MyFavoriteThings, Inc. [Member] - Subsequent Event [Member] $ in Millions |
Apr. 19, 2021
USD ($)
|
---|---|
Subsequent Events [Abstract] | |
Percentage of entity acquired | 100.00% |
Cash purchase price | $ 17.0 |
Incremental contingent consideration | $ 24.0 |
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