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 THIRD-QUARTER 2016 RESULTS
PROVO, Utah - Nov. 3, 2016 - Nu Skin Enterprises, Inc. (NYSE: NUS) today announced third-quarter revenue above guidance at $604.2 million, compared to $571.3 million in the prior-year period. Quarterly revenue improved 6 percent, or 4 percent on a constant-currency basis. Earnings per share for the quarter were $0.98 and included a $0.09 positive impact from closing operations in Venezuela. Earnings per share in the prior-year period were $0.28 and were negatively impacted by several factors, including a $0.43 per share inventory write down.
"We are pleased that we exceeded guidance and posted year-over-year growth during the quarter," said Truman Hunt, president and chief executive officer. "We introduced ageLOC Youth in South Korea in the quarter and saw continued enthusiasm around the globe for our latest ageLOC products. We produced double-digit gains in North Asia and Greater China and posted growth in each of our regions with the exception of South Asia/Pacific, where a significant limited-time offer in the prior year made for a difficult comparison. We also generated modest growth in sales leaders globally."
Nu Skin Enterprises, Inc.
The company's regional revenue results for the three-month periods ended September 30 are presented in the following table (in thousands).
| 2016 | 2015 | % Change | Constant Currency % Change | |||||||||||||
| Greater China | $ | 216,460 | $ | 188,669 | 15% | 20% | ||||||||||
| North Asia | 208,677 | 167,748 | 24% | 14% | ||||||||||||
| South Asia/Pacific | 70,867 | 108,857 | (35%) | (36%) | ||||||||||||
| Americas | 71,250 | 70,775 | 1% | 3% | ||||||||||||
| EMEA | 36,908 | 35,259 | 5% | 5% | ||||||||||||
| Total | $ | 604,162 | $ | 571,308 | 6% | 4% |
The company's regional revenue results for the nine-month periods ended September 30 are presented in the following table (in thousands).
| 2016 | 2015 | % Change | Constant Currency % Change | |||||||||||||
| Greater China | $ | 611,887 | $ | 576,172 | 6% | 11% | ||||||||||
| North Asia | 525,771 | 512,757 | 3% | ---* | ||||||||||||
| South Asia/Pacific | 226,742 | 247,697 | (8%) | (5%) | ||||||||||||
| Americas | 204,882 | 234,115 | (12%) | (8%) | ||||||||||||
| EMEA | 107,186 | 104,108 | 3% | 4% | ||||||||||||
| Total | $ | 1,676,468 | $ | 1,674,849 | ---* | 2% |
*Less than a 1% change.
The Company's regional actives and sales leaders statistics are presented in the following table.
| As of September 30, 2016 | As of September 30, 2015 | % Increase (Decrease) | ||||||||||||||||||||||
| Actives | Sales Leaders | Actives | Sales Leaders | Actives | Sales Leaders | |||||||||||||||||||
| Greater China | 257,000 | 30,617 | 211,000 | 25,044 | 22% | 22% | ||||||||||||||||||
| North Asia | 334,000 | 18,688 | 374,000 | 18,038 | (11%) | 4% | ||||||||||||||||||
| South Asia/Pacific | 116,000 | 7,213 | 120,000 | 9,925 | (3%) | (27%) | ||||||||||||||||||
| Americas | 171,000 | 6,660 | 178,000 | 7,962 | (4%) | (16%) | ||||||||||||||||||
| EMEA | 121,000 | 4,104 | 110,000 | 4,120 | 10% | ---* | ||||||||||||||||||
| Total | 999,000 | 67,282 | 993,000 | 65,089 | 1% | 3% |
*Less than a 1% change.
"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.
Nu Skin Enterprises, Inc.
Operational Performance
The company's operating margin for the quarter was 13.6 percent, compared to 7.4 percent in the prior-year period. Gross margin for the quarter was 79.2 percent, compared to 73.3 percent in the prior-year quarter. Comparisons for both gross and operating margins were impacted by the China inventory charge in the third quarter of 2015. Selling expenses, as a percent of revenue, were 42.3 percent, compared to 42.1 percent in the prior-year period. General and administrative expenses, as a percent of revenue, were 23.3 percent, compared to 23.8 percent in the prior-year period. The company incurred a loss in Other Income/Expense of $5.7 million compared to $14.4 million in the prior-year period. The company's effective income tax rate for the quarter was 25.8 percent, compared to 42.1 percent in the third quarter of last year. The decrease in the effective tax rate is the result of a tax benefit from closing operations in Venezuela. Dividend payments during the quarter were $19.9 million, and the company repurchased $17.4 million of its outstanding shares, with $405 million remaining in the authorized share repurchase plan at the end of the quarter.
"We are raising our guidance for the year given strong results in the third quarter," said Hunt. "Fourth-quarter promotional activities are focused on driving consumer loyalty. South Korea and South Asia will run ageLOC Me incentives, the Americas will launch ageLOC Me, and Japan and South Korea will launch ageLOC Youth. In addition, we have chosen to push the launch of ageLOC Me in the Greater China region to January of 2017.
"Toward the end of the quarter we began deploying funds to repurchase stock, and anticipate that by the end of 2016 we will have utilized the $210 million acquired through the convertible note investment made by Ping An Securities," concluded Hunt.
"We are raising our revenue guidance for the year to $2.23 to $2.25 billion assuming a negative currency impact of approximately 2 percent," said Ritch Wood, chief financial officer. "For the fourth quarter, we project revenue of $550 to $570 million including a negative currency impact of 0 to 2 percent. We project fourth-quarter earnings per share of $0.77 to $0.81. We look forward to discussing our 2017 plans with shareholders at our annual investor day to be held on December 7, 2016 in New York," concluded Wood.
Nu Skin Enterprises, Inc.
The Nu Skin management team will host a conference call with the investment community on Nov. 3, 2016 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 Nov. 18, 2016.
About Nu Skin Enterprises, Inc.
Founded more than 30 years ago, Nu Skin Enterprises, Inc. develops and distributes innovative consumer products, offering a comprehensive line of premium-quality beauty and wellness solutions in more than 50 markets worldwide. The company builds upon its scientific expertise in both skin care and nutrition to continually develop innovative product brands that include the Nu Skin personal care brand, the Pharmanex nutrition brand, and most recently, the ageLOC anti-aging brand. Since its introduction in 2008, the ageLOC brand has generated more than $5 billion in sales, and built a loyal following for such products as the ageLOC Youth nutritional supplement, the ageLOC Me customized skin care system, as well as the ageLOC TR90 weight management and body shaping system. Nu Skin sells its products through a global network of sales leaders. As a long-standing member of direct selling associations globally, Nu Skin is committed to the industry's consumer guidelines that protect and support those who sell and purchase its products through the direct selling channel. Nu Skin is also traded on the New York Stock Exchange under the symbol "NUS." More information is available at nuskin.com.
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, initiatives, sales force, consumers and new product introductions; 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:
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.
Non-GAAP Financial Measures: Constant-currency revenue growth 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 this amount to the prior-year period's revenue.
Nu Skin Enterprises, Inc.
| NU SKIN ENTERPRISES, INC. | ||||||||
| Consolidated Statements of Income (Unaudited) | ||||||||
| For the Third Quarters Ended September 30, 2016 and 2015 | ||||||||
| (in thousands, except per share amounts) | ||||||||
| 2016 | 2015 | |||||||
| Revenue | $ | 604,162 | $ | 571,308 | ||||
| Cost of sales | 125,863 | 152,755 | ||||||
| Gross profit | 478,299 | 418,553 | ||||||
| Operating expenses: | ||||||||
| Selling expenses | 255,274 | 240,260 | ||||||
| General and administrative expenses | 140,651 | 135,752 | ||||||
| Total operating expenses | 395,925 | 376,012 | ||||||
| Operating income | 82,374 | 42,541 | ||||||
| Other income, net | (5,695 | ) | (14,428 | ) | ||||
| Income before provision for income taxes | 76,679 | 28,113 | ||||||
| Provision for income taxes | 19,807 | 11,846 | ||||||
| Net income | $ | 56,872 | $ | 16,267 | ||||
| Net income per share: | ||||||||
| Basic | $ | 1.02 | $ | 0.28 | ||||
| Diluted | $ | 0.98 | $ | 0.28 | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 55,983 | 57,725 | ||||||
| Diluted | 57,852 | 58,663 |
Nu Skin Enterprises, Inc.
| NU SKIN ENTERPRISES, INC. | ||||||||
| Consolidated Statements of Income (Unaudited) | ||||||||
| For the Nine-Month Periods Ended September 30, 2016 and 2015 | ||||||||
| (in thousands, except per share amounts) | ||||||||
| 2016 | 2015 | |||||||
| Revenue | $ | 1,676,468 | $ | 1,674,849 | ||||
| Cost of sales | 391,937 | 368,073 | ||||||
| Gross profit | 1,284,531 | 1,306,776 | ||||||
| Operating expenses: | ||||||||
| Selling expenses | 699,196 | 713,714 | ||||||
| General and administrative expenses | 415,014 | 410,074 | ||||||
| Total operating expenses | 1,114,210 | 1,123,788 | ||||||
| Operating income | 170,321 | 182,988 | ||||||
| Other (expense), net | (19,618 | ) | (29,454 | ) | ||||
| Income before provision for income taxes | 150,703 | 153,534 | ||||||
| Provision for income taxes | 45,802 | 56,328 | ||||||
| Net income | $ | 104,901 | $ | 97,206 | ||||
| Net income per share: | ||||||||
| Basic | $ | 1.87 | $ | 1.66 | ||||
| Diluted | $ | 1.85 | $ | 1.63 | ||||
| Weighted average common shares outstanding: | ||||||||
| Basic | 55,963 | 58,403 | ||||||
| Diluted | 56,586 | 59,565 |
Nu Skin Enterprises, Inc.
| NU SKIN ENTERPRISES, INC. | ||||||||
| Consolidated Balance Sheets (Unaudited) | ||||||||
| (in thousands) | ||||||||
| September 30, 2016 | December 31, 2015 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 516,994 | $ | 289,354 | ||||
| Current investments | 15,603 | 14,371 | ||||||
| Accounts receivable | 35,985 | 35,464 | ||||||
| Inventories, net | 253,350 | 265,256 | ||||||
| Prepaid expenses and other | 160,537 | 101,947 | ||||||
| 982,469 | 706,392 | |||||||
| Property and equipment, net | 451,571 | 454,537 | ||||||
| Goodwill | 114,954 | 112,446 | ||||||
| Other intangible assets, net | 65,408 | 67,009 | ||||||
| Other assets | 137,413 | 165,459 | ||||||
| Total assets | $ | 1,751,815 | $ | 1,505,843 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 40,490 | $ | 28,832 | ||||
| Accrued expenses | 337,562 | 310,916 | ||||||
| Current portion of long-term debt | 73,328 | 67,849 | ||||||
| 451,380 | 407,597 | |||||||
| Long-term debt | 356,298 | 181,745 | ||||||
| Other liabilities | 89,726 | 90,880 | ||||||
| Total liabilities | 897,404 | 680,222 | ||||||
| Stockholders' equity: | ||||||||
| Class A common stock | 91 | 91 | ||||||
| Additional paid-in capital | 431,563 | 419,921 | ||||||
| Treasury stock, at cost | (1,047,975 | ) | (1,017,063 | ) | ||||
| Accumulated other comprehensive loss | (68,523 | ) | (71,269 | ) | ||||
| Retained earnings | 1,539,255 | 1,493,941 | ||||||
| 854,411 | 825,621 | |||||||
| Total liabilities and stockholders' equity | $ | 1,751,815 | $ | 1,505,843 |