NU Skin Enterprises Inc
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Consumer Staples : Personal Products | Small Cap Value
Company profile

Nu Skin Enterprises, Inc. is a direct selling company that develops and distributes personal care products and nutritional supplements, and a range of other products and services. The Company offers anti-aging personal care products and nutritional supplements under its Nu Skin and Pharmanex brands. The Nu Skin brand offers a range of products, including ageLOC Me customized skin care system, ageLOC Spa systems and ageLOC Transformation anti-aging skin care system. The Pharmanex product line includes ageLOC Youth nutritional supplement, ageLOC TR90 weight management and body shaping system, and LifePak nutritional supplements. The Company has operations in various geographic regions, including Greater China, North Asia, Americas, South Asia/Pacific, and Europe, the Middle East and Africa (EMEA). It is focused on offering ageLOC Youth nutritional supplement and ageLOC Me personalized skin care system. The Company also offers household products and technology services.

Closing Price
$51.95
Day's Change
0.77 (1.50%)
Bid
--
Ask
--
B/A Size
--
Day's High
52.27
Day's Low
50.74
Volume
(Average)
Volume:
311,202

10-day average volume:
288,082
311,202

Nu Skin Enterprises Reports Second-Quarter 2020 Results And Raises 2020 Guidance

4:06 pm ET August 5, 2020 (PR Newswire) Print

Nu Skin Enterprises, Inc. (NYSE: NUS) today announced second-quarter results above expectations and raised its revenue and earnings per share guidance for 2020.

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Executive Summary
Q2 2020 vs. Prior-Year Quarter
Revenue:                  $612.4 million; (2%)
                          -  (3%) fx impact or ($19.8) million
Earnings Per Share (EPS): $0.81; (2%)
Sales Leaders:            56,036; (9%)
Customers:                1,499,900; +29%

"Our business performed well above expectations in the second quarter of 2020 driven by our socially enabled business model, strategic investments in technology and manufacturing, and our balanced product portfolio," said Ritch Wood, chief executive officer. "Strong global customer growth of 29 percent in the quarter, driven by our focus on empowering sales leaders to reach more customers, resulted in constant currency revenue growth due to the strength of our business in the Americas and Europe. Our Mainland China business continues to recover with slight sequential revenue improvement and strong customer growth.

"I am particularly proud of the way our global sales leaders have embraced socially enabled commerce, with more than 85 percent of revenue in the quarter coming through digital transactions. In addition, our manufacturing division generated 20 percent revenue growth and increased stability in our supply chain. In the first half, we generated strong cash from operations, raised our dividend, strengthened our balance sheet and reduced our outstanding shares by nearly eight percent."

Q2 2020 Year-Over-Year Operating Results
Revenue:                  $612.4 million compared to $623.5 million
                          -  (3%) fx impact or ($19.8) million
Gross Margin:             74.8% compared to 75.3%
                          -  Nu Skin business was 77.6% compared to 77.8%
Selling Expenses:         40.6% compared to 39.4%
                          -  Nu Skin business was 43.3% compared to 41.5%
G&A Expenses:             24.7% compared to 24.0%
Operating Margin:         9.5% compared to 11.9%
Other Income / (Expense): $1.6 million compared to ($3.3) million
Income Tax Rate:          29.8% compared to 34.6%
EPS:                      $0.81 compared to $0.83
Stockholder Value
Dividend Payments: $19.4 million
Stock Repurchases: $46.5 million
                   -  $362.8 million remaining in authorization
Q3 and Full-Year 2020 Outlook
Q3 2020 Revenue: $605 to $635 million; +3 to 8%
                 -  Approximately (1 to 2%) fx impact
Q3 2020 EPS:     $0.78 to $0.88
2020 Revenue:    $2.37 to $2.45 billion; (2%) to +1%
                 -  Approximately (2 to 3%) fx impact
2020 EPS         $2.85 to $3.10

"Our performance so far this year gives us confidence for the second half and momentum as we move into 2021. We believe the improved productivity of our sales leaders is driving strong customer growth and will lead to sales force expansion as we move toward the introduction of our ageLOC Boost device and Nutricentials Bioadaptive Skin Care in the second half. We will continue to focus on the expansion of our socially enabled business around the world with the release of our latest digital tool, Vera, a personal product recommendation app. Overall, we are confident in the direction of our strategy and the future ahead," Wood concluded.

Mark Lawrence, chief financial officer, added, "We delivered results above expectations and achieved constant currency revenue growth ahead of schedule. Given our performance in the first half and continued trends in our customer and sales leader pipeline, we are raising our guidance for the year. As we look ahead to the third quarter, we anticipate revenue of $605 to $635 million, which includes 1 to 2 percent unfavorable foreign currency impact, and earnings per share of $0.78 to $0.88. We are raising our 2020 revenue guidance to $2.37 to $2.45 billion, which reflects a negative foreign currency impact of 2 to 3 percent, and we anticipate annual earnings per share of $2.85 to $3.10."

Conference Call The Nu Skin Enterprises management team will host a conference call with the investment community today at 5 p.m. (ET). Those wishing to access the webcast, as well as the financial information presented during the call, can visit the Investor Relations page on the company's website at ir.nuskin.com. A replay of the webcast will be available at the same URL through Aug. 19, 2020.

About Nu Skin Enterprises, Inc. Founded more than 35 years ago, Nu Skin Enterprises, Inc. (NSE) empowers innovative companies to change the world with sustainable solutions, opportunities, technologies and life-improving values. The company currently focuses its efforts around innovative consumer products, product manufacturing and controlled environment agriculture technology. The NSE family of companies includes Nu Skin, which develops and distributes a comprehensive line of premium-quality beauty and wellness solutions through a global network of sales leaders in Asia, the Americas, Europe, Africa and the Pacific; and Rhyz, our strategic investment arm that includes a collection of sustainable manufacturing and technology innovation companies. Nu Skin Enterprises is traded on the New York Stock Exchange under the symbol "NUS." More information is available at nuskinenterprises.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, customers and sales leaders, benefits to shareholders, strategies and initiatives; statements of management's expectations regarding the future status of the COVID-19 pandemic globally and across the company's markets, and government and public behavior in response to such status; 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," "continue," "anticipate," "project," "outlook," "guidance," "plan," "continue," "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:

-- risk that epidemics, including the ongoing COVID-19 outbreak, and other crises could negatively impact our business;

-- 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 the company's markets, including the United States and Mainland China, may be modified, interpreted or enforced in a manner that results in negative changes to the company's business model or negatively impacts its 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;

-- political, legal, tax and regulatory uncertainties associated with operating in international markets, including Mainland China;

-- uncertainty regarding meeting restrictions and other government scrutiny in Mainland China, as well as negative media and consumer sentiment in Mainland China on our business operations and results;

-- 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 businesses the company has acquired;

-- risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support 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 its ability to import or continue selling a product in a market if the product is determined to be a medical device or if the company is unable to register the product in a timely manner under applicable regulatory requirements;

-- unpredictable economic conditions and events globally, including trade policies and tariffs;

-- 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 change 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 that amount to the prior-year period's revenue. The company believes that constant-currency revenue change is useful to investors, lenders and analysts because such information enables them to gauge the impact of foreign-currency fluctuations on the company's revenue from period to period.

The following table sets forth revenue for the three-month periods ended June 30, 2020 and 2019 for each of our reportable segments (U.S. dollars in thousands):

                 Three Months Ended                    Constant-
                 June 30,                              Currency
                 2020         2019         Change      Change
Nu Skin
Mainland China   $   146,332  $   185,333      (21%)        (18%)
Americas/Pacific     127,919      92,841       38%          48%
South Korea          76,915       84,732       (9%)         (5%)
Southeast Asia       66,829       75,395       (11%)        (9%)
Japan                68,291       65,251       5%           2%
EMEA                 50,776       43,400       17%          21%
Hong Kong/Taiwan     37,161       43,712       (15%)        (17%)
Other                (85)         1,249        (107%)       (107%)
Total Nu Skin        574,138      591,913      (3%)         --
Manufacturing        37,918       31,557       20%          20%
Grow Tech            310          30           933%         933%
Total            $   612,366  $   623,500      (2%)         1%

The following table sets forth revenue for the six-month periods ended June 30, 2020 and 2019 for each of our reportable segments (U.S. dollars in thousands):

                 Six Months Ended                          Constant-
                 June 30,                                  Currency
                 2020           2019           Change      Change
Nu Skin
Mainland China   $   284,028    $   393,821        (28%)        (25%)
Americas/Pacific     202,492        179,297        13%          21%
South Korea          152,634        168,585        (9%)         (5%)
Southeast Asia       136,415        147,890        (8%)         (6%)
Japan                129,591        127,360        2%           --
EMEA                 86,179         85,218         1%           4%
Hong Kong/Taiwan     72,988         84,270         (13%)        (15%)
Other                688            (177)          (489%)       (488%)
Total Nu Skin        1,065,015      1,186,264      (10%)        (7%)
Manufacturing        65,065         60,829         7%           7%
Grow Tech            314            30             947%         947%
Total            $   1,130,394  $   1,247,123      (9%)         (7%)

The company's Customers and Sales Leaders statistics by segment as of June 30, 2020 and 2019 are presented in the following table:

                 As of                       As of                       % Increase (Decrease)
                 June 30, 2020               June 30, 2019
                 Customers       Sales       Customers       Sales       Customers   Sales
                                 Leaders                     Leaders                 Leaders
Mainland China        321,946        17,104       226,877        24,336       42%         (30%)
Americas/Pacific      424,236        10,787       253,684        8,161        67%         32%
South Korea           159,926        6,881        180,365        7,239        (11%)       (5%)
Southeast Asia        155,822        6,790        137,450        7,417        13%         (8%)
Japan                 125,332        6,011        127,900        5,931        (2%)        1%
EMEA                  247,057        5,120        164,055        4,256        51%         20%
Hong Kong/Taiwan      65,581         3,343        70,089         4,223        (6%)        (21%)
Total                 1,499,900      56,036       1,160,420      61,563       29%         (9%)

"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)
(U.S. dollars in thousands, except per share amounts)
                                                   Three Months Ended          Six Months Ended
                                                   June 30,                    June 30,
                                                   2020          2019          2020            2019
Revenue                                            $    612,366  $    623,500  $    1,130,394  $    1,247,123
Cost of sales                                           154,110       154,028       279,903         300,692
Gross profit                                            458,256       469,472       850,491         946,431
Operating expenses:
Selling expenses                                        248,628       245,828       454,670         495,536
General and administrative expenses                     151,554       149,442       301,182         308,040
Total operating expenses                                400,182       395,270       755,852         803,576
Operating income                                        58,074        74,202        94,639          142,855
Other income (expense), net                             1,581         (3,326)       (4,593)         (6,174)
Income before provision for income taxes                59,655        70,876        90,046          136,681
Provision for income taxes                              17,804        24,527        28,465          47,330
Net income                                         $    41,851   $    46,349   $    61,581     $    89,351
Net income per share:
Basic                                              $    0.81     $    0.83     $    1.15       $    1.61
Diluted                                            $    0.81     $    0.83     $    1.15       $    1.59
Weighted-average common shares outstanding (000s):
Basic                                                   51,872        55,536        53,466          55,486
Diluted                                                 51,925        55,943        53,502          56,030
NU SKIN ENTERPRISES, INC.
Consolidated Balance Sheets (Unaudited)
(U.S. dollars in thousands)
                                           June 30,            December 31,
                                           2020                2019
ASSETS
Current assets:
Cash and cash equivalents                  $      375,512      $      335,630
Current investments                               10,788              8,413
Accounts receivable, net                          64,371              50,378
Inventories, net                                  261,969             275,891
Prepaid expenses and other                        73,200              69,854
Total current assets                              785,840             740,166
Property and equipment, net                       444,848             453,604
Right-of-use assets                               142,700             144,326
Goodwill                                          196,573             196,573
Other intangible assets, net                      76,161              80,321
Other assets                                      148,371             154,016
Total assets                               $      1,794,493    $      1,769,006
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                           $      51,655       $      38,979
Accrued expenses                                  337,980             290,281
Current portion of long-term debt                 95,000              27,500
Total current liabilities                         484,635             356,760
Operating lease liabilities                       103,043             105,701
Long-term debt                                    319,932             334,461
Other liabilities                                 94,871              96,795
Total liabilities                                 1,002,481           893,717
Stockholders' equity:
Class A common stock                              91                  91
Additional paid-in capital                        563,115             557,544
Treasury stock, at cost                           (1,427,064)         (1,324,826)
Accumulated other comprehensive loss              (93,441)            (85,292)
Retained earnings                                 1,749,311           1,727,772
Total stockholders' equity                        792,012             875,289
Total liabilities and stockholders' equity $      1,794,493    $      1,769,006

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SOURCE Nu Skin Enterprises, Inc.

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