Full Press Release Details
Investors - Scott Pond (801) 345-2657, spond@nuskin.com
Media - Kara Schneck (801) 345-2116, kschneck@nuskin.com
NU SKIN ENTERPRISES REPORTS SECOND-QUARTER 2015 RESULTS
PROVO, Utah - Aug. 6, 2015 - Nu Skin Enterprises, Inc. (NYSE: NUS) today announced second-quarter results with revenue of $560.2 million compared to $650.0 million in the prior-year period. Revenue in the quarter was negatively impacted 7 percent by foreign currency fluctuations. Revenue in the second quarter of 2014 included $76 million in limited-time offer product sales, while there were no significant limited-time offers during the second quarter of 2015. Earnings per share for the quarter were $0.75, compared to $0.32 in the prior-year period which included a $50 million inventory write-down and a $25 million foreign currency charge related to Venezuela.
"We are pleased the business performed at the high end of our expectations for the second quarter," said Truman Hunt, president and chief executive officer. "Additionally, we are encouraged by growth in the number of sales leaders sequentially, including a 19 percent increase in sales leaders in Mainland China. We believe that this trend signals growing sales leader energy as we build toward the introduction of our new ageLOC products in the second half of the year.
Nu Skin Enterprises, Inc.
"Additionally, our financial performance and strong cash flow enabled us to repurchase approximately $50 million of shares in the second quarter. Overall, we are pleased with the direction of the business and continue to anticipate a return to revenue growth in the second half of the year."
The company's regional revenue results for the three-month periods ended June 30 are presented in the following table.
| 2015 | 2014 | % Change | Constant Currency % Change | |||||||||||||
| Greater China | $ | 200,136 | $ | 229,869 | (13%) | (13%) | ||||||||||
| North Asia | 172,943 | 195,995 | (12%) | (2%) | ||||||||||||
| Americas | 83,468 | 89,911 | (7%) | 5% | ||||||||||||
| South Asia/Pacific | 68,023 | 81,653 | (17%) | (9%) | ||||||||||||
| EMEA | 35,639 | 52,599 | (32%) | (16%) | ||||||||||||
| Total | $ | 560,209 | $ | 650,027 | (14%) | (7%) |
The company's regional revenue results for the six-month periods ended June 30 are presented in the following table.
| 2015 | 2014 | % Change | Constant Currency % Change | |||||||||||||
| Greater China | $ | 387,503 | $ | 508,798 | (24%) | (23%) | ||||||||||
| North Asia | 345,009 | 391,456 | (12%) | (4%) | ||||||||||||
| Americas | 163,340 | 169,820 | (4%) | 12% | ||||||||||||
| South Asia/Pacific | 138,840 | 152,847 | (9%) | (2%) | ||||||||||||
| EMEA | 68,849 | 98,167 | (30%) | (13%) | ||||||||||||
| Total | $ | 1,103,541 | $ | 1,321,088 | (16%) | (10%) |
The company's regional actives and sales leaders statistics are presented in the following table.
| As of June 30, 2015 | As of June 30, 2014 | % Increase (Decrease) | |||||||||||
| Actives | Sales Leaders | Actives | Sales Leaders | Actives | Sales Leaders | ||||||||
| Greater China | 215,000 | 25,956 | 256,000 | 26,192 | (16.0%) | (0.9%) | |||||||
| North Asia | 387,000 | 16,991 | 393,000 | 17,186 | (1.5%) | (1.1%) | |||||||
| Americas | 180,000 | 7,892 | 189,000 | 7,627 | (4.8%) | 3.5% | |||||||
| South Asia/Pacific | 120,000 | 7,279 | 120,000 | 7,450 | (2.3%) | ||||||||
| EMEA | 113,000 | 4,042 | 121,000 | 4,468 | (6.6%) | (9.5%) | |||||||
| Total | 1,015,000 | 62,160 | 1,079,000 | 62,923 | (5.9%) | (1.2%) |
Nu Skin Enterprises, Inc.
"Actives" are persons who purchased products directly from the company during the previous three months.
"Sales Leaders" are independent distributors, and sales employees and independent marketers in China, who achieve certain qualification requirements.
Operational Performance
The company's operating margin for the quarter was 12.8 percent, compared to 8.4 percent in the second quarter of 2014. Gross margin during the quarter was 80.3 percent, versus 76.0 percent in the prior-year period. Last year's gross margin was unusually low due to the inventory write-down. Selling expenses were 42.7 percent of sales in the second quarter, compared to 43.6 percent in the prior-year period. General and administrative expenses were 24.8 percent of sales compared to 24.0 percent in the prior-year period. The company's effective income tax rate for the quarter was 35.3 percent, compared to 42.0 percent in the prior year. Last year's tax rate was abnormally high due to the tax impact of a foreign currency charge related to Venezuela. Cash and current investments at the end of the quarter were $303.9 million and debt was $252.1 million. Dividend payments during the quarter were $20.5 million. Cash flow from operations for the quarter was $85.4 million, and the company repurchased $49.6 million of its outstanding shares.
"Sales leader enthusiasm continues to build for our upcoming limited-time product launches that include ageLOC Youth, our most advanced anti-aging supplement, as well as ageLOC Me, a unique anti-aging skin care system that enables consumers to personalize a daily regimen based on individual preferences and skin care needs," said Hunt. "These new ageLOC products will be highlighted at our global sales leader convention in early October, and we anticipate they will help drive healthy year-over-year growth in the second half of 2015. We expect this momentum to continue as we begin to roll these products out on a full-time basis in 2016.
"We are also pleased with our progress in several key markets, particularly Mainland China, where we generated healthy sequential growth in both sales leaders and revenue. In the Greater China region, we will be rolling out our ageLOC Essentials line of cosmetic oils in the third quarter. As we move closer to our product launches, we expect positive trends to continue in our global sales force, and also anticipate growth in our active consumer base," concluded Hunt.
Nu Skin Enterprises, Inc.
"We project second-half local-currency revenue growth of approximately 15 percent," said Ritch Wood, chief financial officer. "Our prior guidance anticipated a negative foreign currency impact of 7 percent in the third and fourth quarters. We now project a negative impact of 10 to 11 percent. Given this impact, we anticipate third-quarter revenue will be in the $600 to $620 million range with earnings per share of $0.96 to $1.00. We anticipate annual revenue to be in the $2.40 to $2.44 billion range, with earnings per share of $3.47 to $3.55 which includes a $0.12 expense associated with the Venezuela foreign currency charge in the first quarter of this year. Excluding this charge, earnings guidance would be in the range of $3.59 to $3.67. Including currency impact, this guidance reflects second-half reported revenue growth of between 5 and 6 percent," concluded Wood.
The Nu Skin management team will host a conference call with the investment community on Aug. 6, 2015, at 5 p.m. (EDT). 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. 21, 2015.
About Nu Skin Enterprises, Inc.
Nu Skin Enterprises, Inc. demonstrates its tradition of innovation through its comprehensive anti-aging product portfolio, independent business opportunity and corporate social responsibility initiatives. The company's scientific leadership in both skin care and nutrition has established Nu Skin as a premier anti-aging company. The company's anti-aging products feature the ageLOC line of products including ageLOC Tru Face Essence Ultra firming serum, the ageLOC TR90 weight management and body shaping system, ageLOC R2 nutritional supplement, and ageLOC Transformation daily skin care system. A global direct selling company, Nu Skin operates in 53 markets worldwide and is traded on the New York Stock Exchange under the symbol "NUS." More information is available at http://www.nuskin.com.
Nu Skin Enterprises, Inc.
Please Note: 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, new product introductions, sales force and consumer base; projections regarding revenue, earnings per share, foreign currency fluctuations and other financial items; statements of belief; and statements of assumptions underlying any of the foregoing. In some cases, you can identify these statements by forward-looking words such as "believe," "expect," "project," "anticipate," "estimate," "intend," "plan," "targets," "likely," "will," "would," "could," "may," "might," the negative of these words and other similar words.
The forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed herein. These risks and uncertainties include, but are not limited to, the following:
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.
Nu Skin Enterprises, Inc.
| NU SKIN ENTERPRISES, INC. | ||||||||
| Consolidated Statements of Income (Unaudited) | ||||||||
| For the Second Quarters Ended June 30, 2015 and 2014 | ||||||||
| (in thousands, except per share amounts) | ||||||||
| 2015 | 2014 | |||||||
| Revenue | $ | 560,209 | $ | 650,027 | ||||
| Cost of sales | 110,263 | 156,010 | ||||||
| Gross profit | 449,946 | 494,017 | ||||||
| Operating expenses: | ||||||||
| Selling expenses | 239,449 | 283,575 | ||||||
| General and administrative expenses | 138,696 | 155,705 | ||||||
| Total operating expenses | 378,145 | 439,280 | ||||||
| Operating income | 71,801 | 54,737 | ||||||
| Other income (expense), net | (2,758 | ) | (21,119 | ) | ||||
| Income before provision for income taxes | 69,043 | 33,618 | ||||||
| Provision for income taxes | 24,386 | 14,111 | ||||||
| Net income | $ | 44,657 | $ | 19,507 | ||||
| Net income per share: | ||||||||
| Basic | $ | 0.76 | $ | 0.33 | ||||
| Diluted | $ | 0.75 | $ | 0.32 | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 58,506 | 59,052 | ||||||
| Diluted | 59,713 | 61,118 |
Nu Skin Enterprises, Inc.
| NU SKIN ENTERPRISES, INC. | ||||||||
| Consolidated Statements of Income (Unaudited) | ||||||||
| For the Six-Month Periods Ended June 30, 2015 and 2014 | ||||||||
| (in thousands, except per share amounts) | ||||||||
| 2015 | 2014 | |||||||
| Revenue | $ | 1,103,541 | $ | 1,321,088 | ||||
| Cost of sales | 215,318 | 262,654 | ||||||
| Gross profit | 888,223 | 1,058,434 | ||||||
| Operating expenses: | ||||||||
| Selling expenses | 473,454 | 596,676 | ||||||
| General and administrative expenses | 274,322 | 305,824 | ||||||
| Total operating expenses | 747,776 | 902,500 | ||||||
| Operating income | 140,447 | 155,934 | ||||||
| Other income (expense), net | (15,026 | ) | (38,627 | ) | ||||
| Income before provision for income taxes | 125,421 | 117,307 | ||||||
| Provision for income taxes | 44,482 | 42,946 | ||||||
| Net income | $ | 80,939 | $ | 74,361 | ||||
| Net income per share: | ||||||||
| Basic | $ | 1.38 | $ | 1.26 | ||||
| Diluted | $ | 1.35 | $ | 1.22 | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 58,747 | 58,961 | ||||||
| Diluted | 59,994 | 61,177 |
Nu Skin Enterprises, Inc.
| NU SKIN ENTERPRISES, INC. | ||||||||
| Consolidated Balance Sheets (Unaudited) | ||||||||
| (in thousands) | ||||||||
| June 30, 2015 | December 31, 2014 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 292,414 | $ | 288,415 | ||||
| Current investments | 11,518 | 11,793 | ||||||
| Accounts receivable | 43,543 | 35,834 | ||||||
| Inventories, net | 305,027 | 338,491 | ||||||
| Prepaid expenses and other | 155,205 | 160,134 | ||||||
| 807,707 | 834,667 | |||||||
| Property and equipment, net | 473,216 | 464,783 | ||||||
| Goodwill | 112,446 | 112,446 | ||||||
| Other intangible assets, net | 70,900 | 75,062 | ||||||
| Other assets | 138,351 | 127,476 | ||||||
| Total assets | $ | 1,602,620 | $ | 1,614,434 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 39,464 | $ | 34,712 | ||||
| Accrued expenses | 306,319 | 300,847 | ||||||
| Current portion of long-term debt | 74,966 | 82,770 | ||||||
| 420,749 | 418,329 | |||||||
| Long-term debt | 177,178 | 164,567 | ||||||
| Other liabilities | 100,808 | 89,100 | ||||||
| Total liabilities | 698,735 | 671,996 | ||||||
| Stockholders' equity: | ||||||||
| Class A common stock | 91 | 91 | ||||||
| Additional paid-in capital | 418,243 | 414,394 | ||||||
| Treasury stock, at cost | (933,040 | ) | (862,608 | ) | ||||
| Accumulated other comprehensive loss | (63,251 | ) | (51,521 | ) | ||||
| Retained earnings | 1,481,842 | 1,442,082 | ||||||
| 903,885 | 942,438 | |||||||
| Total liabilities and stockholders' equity | $ | 1,602,620 | $ | 1,614,434 |