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 RECORD FIRST-QUARTER RESULTS
PROVO, Utah - May 6, 2014 - Nu Skin Enterprises, Inc. (NYSE: NUS) today announced record first-quarter results with revenue of $671.1 million, a 24 percent improvement over the prior-year period. Revenue was negatively impacted 4 percent by foreign currency fluctuations. Earnings per share for the quarter were $1.05, representing a 17 percent year-over-year improvement.
"We are pleased to report record first-quarter results, generating year-over-year growth in all five of our regions," said Truman Hunt, president and chief executive officer. "Our results are particularly encouraging given the business disruption we experienced in China during the first quarter, as well as currency headwinds we faced in many markets. With respect to China, our team took aggressive, proactive steps to address media and regulatory concerns in a timely manner. While these first-quarter events in China will have a negative impact on 2014 results, we are now focused on generating sustainable, long-term growth."
Greater China. In Greater China, first-quarter revenue increased 63 percent to $278.9 million, compared to $170.8 million in the prior-year period. The region's results were positively impacted 2 percent by foreign currency fluctuations. The sales leader count in the region improved 41 percent, while the number of actives increased 17 percent compared to the prior year.
Nu Skin Enterprises, Inc.
North Asia. First-quarter revenue in North Asia increased 5 percent to $195.5 million, compared to $185.9 million for the same period in 2013. The region's results were negatively impacted 4 percent by foreign currency fluctuations. South Korea generated local-currency revenue growth of 38 percent while Japan local-currency revenue declined 14 percent. The number of sales leaders in the region was up 7 percent and the number of actives improved 11 percent.
Americas. Revenue in the Americas improved 6 percent to $79.9 million, compared to $75.7 million in the prior-year period. The region's results were negatively impacted 12 percent by foreign currency fluctuations. The number of sales leaders in the region improved 17 percent and the number of actives improved 10 percent compared to the prior year.
South Asia/Pacific. Revenue in South Asia/Pacific was $71.2 million, a 6 percent increase compared to the prior year. The region's results were negatively impacted 10 percent by foreign currency fluctuations. The region's first-quarter sales leaders improved 27 percent while actives increased 17 percent compared to the same period in 2013.
EMEA. Revenue in the EMEA region was $45.6 million, a 9 percent improvement over the prior-year period. The region's results were negatively impacted 2 percent by foreign currency fluctuations. Sales leaders and actives increased 5 and 3 percent, respectively, compared to the prior year.
Operational Performance
The company's operating margin was 15.1 percent for the quarter, compared to 15.3 percent in the first quarter of 2013. Gross margin during the quarter was 84.1 percent, up 70 basis points over the prior-year period. Selling expenses, as a percent of revenue, were 46.7 percent in the first quarter, compared to 43.1 percent in the prior year. General and administrative expenses, as a percent of revenue, were 22.4 percent, compared to 25.0 percent in the prior-year period. Other income (expense), net reflected a loss of $3.6 million compared to a gain of $0.1 million in the prior year.
Nu Skin Enterprises, Inc.
The company's income tax rate for the quarter was 34.2 percent, compared to 34.4 percent in the prior-year period. The company's cash position at the end of the quarter was $284.6 million. Dividend payments during the quarter were $20.1 million, and the company repurchased $25.0 million of its outstanding shares.
"While we face a tough comparable in 2014 due to nearly 50 percent top-line growth in 2013, we look forward to the roll-out of our ageLOC TR90 weight management system, as well as the introduction of the ageLOC Tru Face Essence Ultra skin care serum in the Greater China region," said Hunt. "We continue to believe that our focus on innovating in the anti-aging product category will drive growth in consumer demand, as well as interest in Nu Skin's earnings opportunity.
"We are especially pleased to be moving forward in China, having recently resumed key business operations in the market. Last week, we also celebrated the opening of our Greater China Innovation Park in Shanghai. The new campus will serve as our regional headquarters and the local hub for our anti-aging research, product manufacturing, and sales operations. We remain optimistic about our long-term potential in China and continue to have high expectations for our business in all of our other regions," concluded Hunt.
"Because we are only a few days into the recommencement of promotional activities in China, it is difficult to forecast how the business will perform," said Ritch Wood, chief financial officer. "Ideally, we would have more time to monitor the direction of the business in China before providing updated guidance. That said, our current estimate of second-quarter revenue would be around $700 million with earnings per share of approximately $1.25."
The Nu Skin management team will host a conference call with the investment community on May 6, 2014, at 11 a.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 May 16, 2014.
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 new ageLOC line of products including 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, particularly the "Outlook" section, 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, initiatives, strategies and new product introductions; statements of projections regarding revenue and other financial items; statements of management's expectations regarding the potential of China and other markets; 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:
Nu Skin Enterprises, Inc.
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 First Quarters Ended March 31, 2014 and 2013 | ||||||||
| (in thousands, except per share amounts) | ||||||||
| 2014 | 2013 | |||||||
| Revenue: | ||||||||
| Greater China | $ | 278,929 | $ | 170,822 | ||||
| North Asia | 195,461 | 185,910 | ||||||
| Americas | 79,909 | 75,692 | ||||||
| South Asia/Pacific | 71,194 | 66,957 | ||||||
| EMEA | 45,568 | 41,924 | ||||||
| Total revenue | 671,061 | 541,305 | ||||||
| Cost of sales | 106,644 | 90,045 | ||||||
| Gross profit | 564,417 | 451,260 | ||||||
| Operating expenses: | ||||||||
| Selling expenses | 313,101 | 233,094 | ||||||
| General and administrative expenses | 150,119 | 135,507 | ||||||
| Total operating expenses | 463,220 | 368,601 | ||||||
| Operating income | 101,197 | 82,659 | ||||||
| Other income (expense), net | (3,604 | ) | 112 | |||||
| Income before provision for income taxes | 97,593 | 82,771 | ||||||
| Provision for income taxes | 33,332 | 28,489 | ||||||
| Net income | $ | 64,261 | $ | 54,282 | ||||
| Net income per share: | ||||||||
| Basic | $ | 1.09 | $ | 0.93 | ||||
| Diluted | $ | 1.05 | $ | 0.90 | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 58,869 | 58,352 | ||||||
| Diluted | 61,227 | 60,566 |
Nu Skin Enterprises, Inc.
| NU SKIN ENTERPRISES, INC. | ||||||||
| Consolidated Balance Sheets (Unaudited) | ||||||||
| (in thousands) | ||||||||
| March 31, 2014 | December 31, 2013 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 284,580 | $ | 525,153 | ||||
| Current investments | 18,703 | 21,974 | ||||||
| Accounts receivable | 56,644 | 68,652 | ||||||
| Inventories, net | 410,668 | 339,669 | ||||||
| Prepaid expenses and other | 149,523 | 162,886 | ||||||
| 920,118 | 1,118,334 | |||||||
| Property and equipment, net | 411,929 | 396,042 | ||||||
| Goodwill | 112,446 | 112,446 | ||||||
| Other intangible assets, net | 81,377 | 83,168 | ||||||
| Other assets | 115,751 | 111,072 | ||||||
| Total assets | $ | 1,641,621 | $ | 1,821,062 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 51,276 | $ | 82,684 | ||||
| Accrued expenses | 449,434 | 626,284 | ||||||
| Current portion of long-term debt | 88,031 | 67,824 | ||||||
| 588,741 | 776,792 | |||||||
| Long-term debt | 109,882 | 113,852 | ||||||
| Other liabilities | 79,418 | 71,799 | ||||||
| Total liabilities | 778,041 | 962,443 | ||||||
| Stockholders' equity: | ||||||||
| Class A common stock | 91 | 91 | ||||||
| Additional paid-in capital | 399,677 | 397,383 | ||||||
| Treasury stock, at cost | (848,335 | ) | (826,904 | ) | ||||
| Accumulated other comprehensive loss | (66,250 | ) | (46,228 | ) | ||||
| Retained earnings | 1,378,397 | 1,334,277 | ||||||
| 863,580 | 858,619 | |||||||
| Total liabilities and stockholders' equity | $ | 1,641,621 | $ | 1,821,062 |
Nu Skin Enterprises, Inc.
| NU SKIN ENTERPRISES, INC. Actives/Sales Leaders Statistics | ||||||||||||||||||||||||
| As of March 31, 2014 | As of March 31, 2013 | % Increase (Decrease) | ||||||||||||||||||||||
| Actives | Sales Leaders | Actives | Sales Leaders | Actives | Sales Leaders | |||||||||||||||||||
| Greater China | 305,000 | 31,118 | 261,000 | 22,011 | 16.9% | 41.4% | ||||||||||||||||||
| North Asia | 400,000 | 17,794 | 361,000 | 16,682 | 10.8% | 6.7% | ||||||||||||||||||
| Americas | 180,000 | 7,339 | 163,000 | 6,273 | 10.4% | 17.0% | ||||||||||||||||||
| South Asia/Pacific | 115,000 | 6,787 | 98,000 | 5,337 | 17.3% | 27.2% | ||||||||||||||||||
| EMEA | 122,000 | 4,326 | 119,000 | 4,118 | 2.5% | 5.1% | ||||||||||||||||||
| Total | 1,122,000 | 67,364 | 1,002,000 | 54,421 | 12.0% | 23.8% |
"Actives" are persons who purchased products directly from the company during the previous three months.
"Sales Leaders" include our independent distributors who have completed and who maintain specified sales requirements, and our sales employees and contractual sales promoters in Mainland China, who have completed certain qualification requirements.