Full Press Release Details
NU SKIN ENTERPRISES REPORTS SECOND-QUARTER 2019 RESULTS
PROVO, Utah - Aug. 6, 2019 - Nu Skin Enterprises, Inc. (NYSE: NUS) today announced second-quarter 2019 results.
Q2 2019 vs. Prior-Year Quarter
| Revenue: | $623.5 million; (11%) (4%) fx impact or ($31 M) | ||
| Earnings Per Share (EPS): | $ 0.83; (8 %) | ||
| Sales Leaders: | 61,563; (14 %) | ||
| Customers: | 1,160,420; +1% |
"As previously announced, our second-quarter results were negatively impacted by limited sales meetings, media scrutiny and consumer sentiment in Mainland China in connection with the recently completed 100-day
review of the nutrition and direct sales industries," said Ritch Wood, chief executive officer. "Outside of Mainland China, most of our other markets performed in-line with expectations. Our customer numbers remained steady as we continued our
customer-focused initiatives globally, while sales leaders declined 14 percent, primarily due to Mainland China."
Q2 2019 Year-Over-Year Operating Results
| Revenue: | $623.5 million compared to $704.2 million (4%) fx impact or ($31 M) | ||
| Gross Margin: | 75.3% compared to 76.1% Higher percentage of manufacturing revenue Nu Skin business was 77.8% compared to 77.9% Impacted by fx, offset by cost savings | ||
| Selling Expenses: | 39.4% of revenue compared to 38.7% Nu Skin business was 41.5% | ||
| G&A Expenses: | 24.0% of revenue compared to 25.6% | ||
| Operating Margin: | 11.9% compared to 11.8% | ||
| Other Income / (Expense): | ($3.3) million compared to ($11.2) million | ||
| Income Tax Rate: | 34.6% compared to 28.8% | ||
| EPS: | $0.83 compared to $0.90 |
| Dividend Payments: | $20.6 million | ||
| Stock Repurchases: | Nil |
Q3 and Full-Year 2019 Outlook
| Q3 2019 Revenue: | $595 to $615 million; (9%) to (12%) Approximately (2%) fx impact | ||
| Q3 2019 EPS: | $ 0.74 to $0.81 | ||
| 2019 Revenue: | $2.48 billion to $2.52 billion; (6%) to (8%) Approximately (3%) to (4%) fx impact | ||
| 2019 EPS | $ 3.20 to $3.35 |
"We remain committed to our long-term growth strategy focused on attracting and retaining customers, and are confident that, despite recent external factors, we are moving in the right direction," said Wood. "We are encouraged by the resumption
of some sales leader meetings in key areas of Mainland China. We remain optimistic about our opportunities with several key initiatives slated for the back half of the year around our Nu Skin LIVE global sales conference. Additionally, we will
roll-out our new and improved Galvanic Spa beginning in September, which we believe will help drive global revenue. Finally, we are encouraged with the steady sales growth of our manufacturing platform, which we intend to continue to leverage
Mark Lawrence, chief financial officer, added, "Consistent with the guidance provided on July 16, we anticipate annual revenue in the $2.48 to $2.52 billion range, with an approximate 3 to 4 percent unfavorable
foreign currency impact, and earnings per share of $3.20 to $3.35. For the third quarter, we project revenue of $595 to $615 million, with an approximate 2 percent negative foreign currency impact, and earnings per share of $0.74 to $0.81."
The Nu Skin 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. 20, 2019.
About Nu Skin Enterprises, Inc.
Founded 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 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, strategies and initiatives; 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," "optimistic," "project," "estimate," "intend," "plan," "continue," "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.
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 this 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, 2019 and 2018 for each of our reportable segments (U.S. dollars in thousands):
| Three Months Ended June 30, | Constant- Currency | |||||||||||||||
| 2019 | 2018 | Change | Change | |||||||||||||
| Nu Skin | ||||||||||||||||
| Mainland China | $ | 185,333 | $ | 245,256 | (24 | %) | (19 | %) | ||||||||
| Americas/Pacific | 92,841 | 103,990 | (11 | %) | (6 | %) | ||||||||||
| South Korea | 84,732 | 91,624 | (8 | %) | - | |||||||||||
| Southeast Asia | 75,395 | 79,223 | (5 | %) | (3 | %) | ||||||||||
| Japan | 65,251 | 64,113 | 2 | % | 2 | % | ||||||||||
| Hong Kong/Taiwan | 43,712 | 52,206 | (16 | %) | (14 | %) | ||||||||||
| EMEA | 43,400 | 44,010 | (1 | %) | 5 | % | ||||||||||
| Other | 1,249 | 1,030 | 21 | % | 21 | % | ||||||||||
| Total Nu Skin | 591,913 | 681,452 | (13 | %) | (9 | %) | ||||||||||
| Manufacturing | 31,557 | 22,738 | 39 | % | 39 | % | ||||||||||
| Grow Tech | 30 | - | - | - | ||||||||||||
| Total | $ | 623,500 | $ | 704,190 | (11 | %) | (7 | %) |
The following table sets forth revenue for the six-month periods ended June 30, 2019 and 2018 for each of our reportable segments (U.S. dollars in thousands):
| Six Months Ended June 30, | Constant- Currency | |||||||||||||||
| 2019 | 2018 | Change | Change | |||||||||||||
| Nu Skin | ||||||||||||||||
| Mainland China | $ | 393,821 | $ | 442,787 | (11 | %) | (5 | %) | ||||||||
| Americas/Pacific | 179,297 | 196,279 | (9 | %) | (2 | %) | ||||||||||
| South Korea | 168,585 | 180,554 | (7 | %) | (1 | %) | ||||||||||
| Southeast Asia | 147,890 | 150,083 | (1 | %) | 1 | % | ||||||||||
| Japan | 127,360 | 127,337 | - | 1 | % | |||||||||||
| Hong Kong/Taiwan | 84,270 | 93,198 | (10 | %) | (7 | %) | ||||||||||
| EMEA | 85,218 | 88,991 | (4 | %) | 3 | % | ||||||||||
| Other | (177 | ) | 1,265 | (114 | %) | (114 | %) | |||||||||
| Total Nu Skin | 1,186,264 | 1,280,494 | (7 | %) | (2 | %) | ||||||||||
| Manufacturing | 60,829 | 39,915 | 52 | % | 52 | % | ||||||||||
| Grow Tech | 30 | - | - | - | ||||||||||||
| Total | $ | 1,247,123 | $ | 1,320,409 | (6 | %) | (1 | %) |
The company's Customers and Sales Leaders statistics by segment for the three-month periods ended June 30 are presented in the following table:
| As of June 30, 2019 | As of June 30, 2018 | % Increase (Decrease) | ||||||||||||||||||||||
| Customers | Sales Leaders | Customers | Sales Leaders | Customers | Sales Leaders | |||||||||||||||||||
| Mainland China | 226,877 | 24,336 | 209,456 | 33,378 | 8 | % | (27 | %) | ||||||||||||||||
| Americas/Pacific | 253,684 | 8,161 | 265,431 | 8,964 | (4 | %) | (9 | %) | ||||||||||||||||
| South Korea | 180,365 | 7,239 | 183,978 | 6,875 | (2 | %) | 5 | % | ||||||||||||||||
| Southeast Asia | 137,450 | 7,417 | 134,601 | 7,597 | 2 | % | (2 | %) | ||||||||||||||||
| Japan | 127,900 | 5,931 | 131,593 | 5,972 | (3 | %) | (1 | %) | ||||||||||||||||
| Hong Kong/Taiwan | 70,089 | 4,223 | 75,828 | 4,196 | (8 | %) | 1 | % | ||||||||||||||||
| EMEA | 164,055 | 4,256 | 147,048 | 4,355 | 12 | % | (2 | %) | ||||||||||||||||
| Total | 1,160,420 | 61,563 | 1,147,935 | 71,337 | 1 | % | (14 | %) |
"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 June 30, | Six Months Ended June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue | $ | 623,500 | $ | 704,190 | $ | 1,247,123 | $ | 1,320,409 | ||||||||
| Cost of sales | 154,028 | 168,549 | 300,692 | 314,830 | ||||||||||||
| Gross profit | 469,472 | 535,641 | 946,431 | 1,005,579 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling expenses | 245,828 | 272,757 | 495,536 | 530,459 | ||||||||||||
| General and administrative expenses | 149,442 | 180,120 | 308,040 | 333,366 | ||||||||||||
| Total operating expenses | 395,270 | 452,877 | 803,576 | 863,825 | ||||||||||||
| Operating income | 74,202 | 82,764 | 142,855 | 141,754 | ||||||||||||
| Other income (expense), net | (3,326 | ) | (11,165 | ) | (6,174 | ) | (9,958 | ) | ||||||||
| Income before provision for income taxes | 70,876 | 71,599 | 136,681 | 131,796 | ||||||||||||
| Provision for income taxes | 24,527 | 20,638 | 47,330 | 45,296 | ||||||||||||
| Net income | $ | 46,349 | $ | 50,961 | $ | 89,351 | $ | 86,500 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.83 | $ | 0.92 | $ | 1.61 | $ | 1.58 | ||||||||
| Diluted | $ | 0.83 | $ | 0.90 | $ | 1.59 | $ | 1.53 | ||||||||
| Weighted-average common shares outstanding (000s): | ||||||||||||||||
| Basic | 55,536 | 55,608 | 55,486 | 54,807 | ||||||||||||
| Diluted | 55,943 | 56,713 | 56,030 | 56,430 |
NU SKIN ENTERPRISES, INC.
Consolidated Balance Sheets (Unaudited)
(U.S. dollars in thousands)
| June 30, 2019 | December 31, 2018 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 360,632 | $ | 386,911 | ||||
| Current investments | 7,733 | 11,346 | ||||||
| Accounts receivable | 61,571 | 53,282 | ||||||
| Inventories, net | 292,696 | 295,821 | ||||||
| Prepaid expenses and other | 65,551 | 51,877 | ||||||
| Total current assets | 788,183 | 799,237 | ||||||
| Property and equipment, net | 442,990 | 464,535 | ||||||
| Right-of-use assets | 118,507 | - | ||||||
| Goodwill | 196,573 | 196,573 | ||||||
| Other intangible assets, net | 84,482 | 89,989 | ||||||
| Other assets | 160,363 | 144,112 | ||||||
| Total assets | $ | 1,791,098 | $ | 1,694,446 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 48,551 | $ | 47,617 | ||||
| Accrued expenses | 306,497 | 322,583 | ||||||
| Current portion of long-term debt | 59,500 | 69,455 | ||||||
| Total current liabilities | 414,548 | 439,655 | ||||||
| Operating lease liabilities | 84,102 | - | ||||||
| Long-term debt | 348,986 | 361,008 | ||||||
| Other liabilities | 108,512 | 111,916 | ||||||
| Total liabilities | 956,148 | 912,579 | ||||||
| Stockholders' equity: | ||||||||
| Class A common stock | 91 | 91 | ||||||
| Additional paid-in capital | 556,294 | 552,564 | ||||||
| Treasury stock, at cost | (1,324,834 | ) | (1,326,605 | ) | ||||
| Accumulated other comprehensive loss | (81,276 | ) | (79,934 | ) | ||||
| Retained earnings | 1,684,675 | 1,635,751 | ||||||
| Total stockholders' equity | 834,950 | 781,867 | ||||||
| Total liabilities and stockholders' equity | $ | 1,791,098 | $ | 1,694,446 |
Media: media@nuskin.com, (801) 345-6397
Investors: investorrelations@nuskin.com, (801) 345-3577