UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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January 16, 2013
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Date of Report (Date of earliest event reported)
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NU SKIN ENTERPRISES, INC.
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(Exact name of registrant as specified in its charter)
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Delaware
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001-12421
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87-0565309
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification Number)
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75 West Center Street
Provo, UT 84601
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(Address of principal executive offices and zip code)
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(801) 345-1000
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(Registrant's telephone number, including area code)
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N/A
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(Former name or former address, if changed since last report)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
□ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
□ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
| □ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| □ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c)) |
Item 2.02 Results of Operations and Financial Condition.
On January 16, 2013, Nu Skin Enterprises, Inc. (the "Company") issued a press release announcing its preliminary financial results for the fourth quarter and year ended December 31, 2012, and certain other information. A copy of the Company's press release is attached as Exhibit 99.1 to this report and incorporated by reference. On January 17, 2013, the Company's chief financial officer will present at an investor conference where he will discuss the Company's preliminary financial results for the fourth quarter and year ended December 31, 2012, and certain other information. A copy of the investor presentation is available on the Company's website and is attached as Exhibit 99.2 to this report and incorporated by reference.
The information furnished pursuant to this Item 2.02 and the exhibits hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
The investor presentation furnished herewith in Exhibit 99.2 contains certain results and projections that exclude certain items as indicated in the release. Management believes these non-GAAP financial measures assist management and investors in evaluating, and comparing from period to period, results from ongoing operations in a more meaningful and consistent manner while also highlighting more meaningful trends in the results of operations. A reconciliation of each non-GAAP financial measure to GAAP is provided in the press release furnished herewith.
Item 9.01 Financial Statements and Exhibits
(c) Exhibit.
| 99.1 | Nu Skin Enterprises' press release dated January 16, 2013, regarding financial results for the fourth quarter and year ended December 31, 2012. |
99.2 Nu Skin Enterprises' investor presentation dated January 17, 2013.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
NU SKIN ENTERPRISES, INC.
(Registrant)
(Registrant)
/s/ Ritch Wood
Ritch Wood
Chief Financial Officer
Chief Financial Officer
Date: January 16, 2013
EXHIBIT INDEX
Exhibit No. Exhibit Description
| 99.1 | Nu Skin Enterprises' press release dated January 16, 2013, regarding financial results for the fourth quarter and year ended December 31, 2012. |
| 99.2 | Nu Skin Enterprises' investor presentation dated January 17, 2013. |
Exhibit 99.1
IMMEDIATE RELEASE
CONTACTS:
Investors — Scott Pond (801) 345-2657, spond@nuskin.com
Media — Kara Schneck (801) 345-2116, kschneck@nuskin.com
Media — Kara Schneck (801) 345-2116, kschneck@nuskin.com
NU SKIN ENTERPRISES PROVIDES UPDATE ON FOURTH-QUARTER RESULTS
Company Sees Significant Revenue Increase; Fifth Consecutive Record Year
PROVO, Utah — Jan. 16, 2013 — In advance of an upcoming presentation at the ICR XChange Conference, Nu Skin Enterprises, Inc. (NYSE: NUS) today provided an update on anticipated results for the fourth quarter of 2012. The company now projects fourth-quarter revenue of approximately $588 million, representing growth of 19 percent over the prior year. The impact of foreign currency exchange on revenue will be negligible for the quarter. Earnings per share are estimated to be from $0.94 to $0.96. The company will provide full details on its fourth-quarter results when it reports earnings on Feb. 6, 2013.
"Our business continues to perform very well," said Truman Hunt, president and chief executive officer. "When we forecasted results for 2012, we knew that we faced a difficult fourth-quarter comparison as a result of recognizing approximately $90 million of revenue from our product launch in the fourth quarter of 2011. However, as a result of the dedicated efforts of our sales leaders and corporate personnel around the world, revenue growth will be 19 percent in the fourth quarter, surpassing prior revenue guidance by $58 million."
The company's estimated revenue of $2.17 billion for the year represents growth of more than 24 percent in 2012, the company's fifth consecutive record year. Earnings growth is anticipated to be approximately 30 percent. In addition, the company repurchased $200 million of its stock during the year, approximately 7 percent of total shares outstanding. The company also recently announced its intention to significantly increase its dividend payment by 50 percent beginning with the first dividend in 2013, resulting in an increase of 140 percent in dividend payout over the last three years.
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Guidance Update
Jan. 16, 2013
Page 2
"We continue to believe that 2013 will be yet another record year. As forecasts become clearer for our ageLOC weight management launch in the back half of 2013, we look forward to updating the market on our full-year guidance. We see great enthusiasm building for this launch, reinforcing our forecast for strong results," concluded Hunt.
Ritch Wood, the company's chief financial officer, will be presenting at the ICR XChange conference on Jan. 17 at noon (EDT). Those wishing to access the webcast and accompanying slides can visit the Investor Relations page on Nu Skin Enterprises' website, http://ir.nuskin.com. An archive of the webcast will be available at this same URL through Feb, 1, 2013.
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® suite of products including the ageLOC® R2 nutritional supplement, ageLOC® Galvanic Spa System and ageLOC® Galvanic Body Spa™, as well as the ageLOC® Transformation daily skin care system. A global direct selling company, Nu Skin operates in 53 markets worldwide and has more than 900,000 active distributors and preferred customers. Nu Skin is traded on the New York Stock Exchange under the symbol 'NUS'. More information is available at http://www.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, initiatives, strategies and new product introductions; statements of estimates or projections regarding revenue, earnings per share, foreign currency impact, the amount and timing of future dividend payments 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.
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Guidance Update
Jan. 16, 2013
Page 3
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:
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estimates and guidance concerning anticipated revenue, earnings per share and the impact of foreign currency are preliminary estimates, and actual results may differ from the estimates and guidance provided based on a number of factors, including higher than anticipated expenses, changes in reserves, and year-end and other financial statement or audit adjustments;
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the actual declaration and payment of the planned dividends by the Board of Directors is subject to any changes in the company's net earnings, financial condition, cash requirements, future prospects or other factors deemed relevant by the company's board of directors that could cause the Board of Directors to reduce or discontinue the payment of currently planned quarterly dividends;
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any failure of current or planned initiatives or products to generate interest among distributors and customers and generate sponsoring and selling activities on a sustained basis;
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risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support our planned initiatives or launch strategies, including possible ingredient supply limitations;
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challenging economic conditions globally;
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risk of foreign currency fluctuations and the currency translation impact on the company's business associated with these fluctuations;
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risks associated with general inquiries and complaints to consumer protection agencies in Japan regarding the activities of some distributors;
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regulatory risks associated with the company's products, which could require the company to modify its claims or inhibit the company's ability to import or continue selling a product in a market if it is determined to be a medical device or if it is unable to register the product in a timely manner under applicable regulatory requirements;
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continued regulatory scrutiny and investigations in Mainland China, which have from time to time in the past, and could in the future, negatively impact the company's business, including the interruption of sales activities in stores, loss of licenses, and the imposition of fines;
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adverse publicity related to the company's business, products, industry or any legal actions or complaints by distributors or others;
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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
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continued competitive pressures in the company's markets.
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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.
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Exhibit 99.1
NU SKIN ENTERPRISES *
* Safe Harbor StatementThis presentation 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, new product introductions and research and development efforts; statements of estimates or projections regarding revenue, earnings per share, operating margin, gross margin, cash from operations, the amount and timing of future dividend payments, cash flow, 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: estimates and guidance concerning anticipated revenue, earnings per share and the impact of foreign currency are preliminary estimates, and actual results may differ from the estimates and guidance provided based on a number of factors, including higher than anticipated expenses, changes in reserves, and year-end and other financial statement or audit adjustments;the actual declaration and payment of the planned dividends by the Board of Directors is subject to any changes in the company's net earnings, financial condition, cash requirements, future prospects or other factors deemed relevant by the company's board of directors that could cause the Board of Directors to reduce or discontinue the payment of currently planned quarterly dividends;any failure of current or planned initiatives or products to generate interest among distributors and customers and generate sponsoring and selling activities on a sustained basis;risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support our planned initiatives or launch strategies, including possible ingredient supply limitations;challenging economic conditions globally;risk of foreign currency fluctuations and the currency translation impact on the company's business associated with these fluctuations;risks associated with general inquiries and complaints to consumer protection agencies in Japan regarding the activities of some distributors;regulatory risks associated with the company's products, which could require the company to modify its claims or inhibit the company's ability to import or continue selling a product in a market if it is determined to be a medical device or if it is unable to register the product in a timely manner under applicable regulatory requirements;continued regulatory scrutiny and investigations in Mainland China, which have from time to time in the past, and could in the future, negatively impact the company's business, including the interruption of sales activities in stores, loss of licenses, and the imposition of fines;adverse publicity related to the company's business, products, industry or any legal actions or complaints by distributors or others;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; andcontinued 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.
SUSTAINING GROWTH *
ESTIMATED Q4 2012 RESULTS *
Growth Rate 24.4%YOY Revenue $2.17 Billion EPS $3.49-3.51 2012 Estimated Operating Margin 15.7% * Estimated 2012 RESULTS
Estimated Millions USD 2003 – 2012 ANNUAL REVENUE * 10 Yr. CAGR = 9.2%5 Yr. CAGR = 14.8%3 Yr. CAGR = 18.8%
33% CAGR Estimated 2007 – 2012 EARNINGS PER SHARE *Excludes restructuring and impairment of assets and other. ** Excludes impact of Japan customs case. *
Estimated Millions USD 2007 – 2012 CASH FROM OPERATIONS * ~
We are building on SOLID BUSINESS FUNDAMENTALS to sustain LONG-TERM GROWTH *
Nu Skin leverages the direct selling channel to build a STRONG CONSUMER BASE and ACTIVE SALES NETWORKAGELOC: a compelling product platform with a ROBUST PRODUCT PIPELINEPRODUCT LAUNCH PROCESS delivers solid resultsInvesting in CHANNEL INNOVATIONExperienced MANAGEMENT and SALES LEADERS driving GROWTH in every geographic regionSTRONG BALANCE SHEET and CASH FLOW * SUSTAINING GROWTH
Nu Skin leverages the direct selling channel to build a STRONG CONSUMER BASE and ACTIVE SALES NETWORK *
30%Sales Network 60% PARTICIPATING WITH NU SKIN ExecutiveDistributor RetailCustomer PreferredCustomer Distributor CONSUMER NETWORK SALES NETWORK 70%Consumer Network 56% 50% * 15%
* SOURCES: *U.S. Direct Selling Association (DSA) definition. **Word of Mouth Marketing Association (WOMMA). DIRECT SELLINGThe sale of a consumer product or service, person-to-person, away from a fixed retail location, marketed through independent sales representatives.* ADVANTAGESPerson-to-personAbility to demonstrate and educateHarnesses word of mouth advertising of consumers worldwide trust recommendations from friends or family more than any other form of advertising** 92%
* SOURCE: U.S. Direct Selling Association (DSA). 85% OF DIRECT SELLING PARTICIPANTS REPORT GOOD, VERY GOOD,OR EXCELLENTEXPERIENCE WITH DIRECT SELLING 77% OF DIRECT SELLING PARTICIPANTS HAVE BEEN WITH THEIR COMPANY FOR MORE THAN A YEAR PURCHASED PRODUCTS OF U.S. ADULTS HAVE 74% FROM A DIRECT SELLER IN THE U.S. …
92 MILLION Involved in directselling worldwide 19% 2010 * SOURCE: World Federation of Direct Selling Associations (WFDSA) $153 BILLION In 2011 global retail sales generated 8% 2011 8% CAGR 1998-2011 22 MARKETS generated > $1 BILLION WORLDWIDE…
NU SKIN'S CONSUMER BASE * More than 70% of our sales volume is sold to our consumer network CONSUMER NETWORK 85% 85% of the people who purchase from Nu Skin never join the sales network
U.S. REGULATORY REVIEWS 1994 & 1997 FTC Formal reviewsMinor modifications to business practicesNo changes to our core compensation plan28-year history – operating in more than 50 countries *
U.S. CONSUMER PROTECTIVE PRACTICES Generous Company Return Policies12-month 90% refund policyNo cancellation of distributorship to return products Return rate averages 3-5% of salesDistributor Participation PoliciesNo product purchase required $25 refundable signup kit to become a distributor (non-commissionable, not for profit)No annual renewal feeDistributors purchase directly from companyNo distributor-owned retail stores *
U.S. CONSUMER PROTECTIVE POLICIES (cont.) Full DisclosureAverage earnings summary – Nu Skin has disclosed average income levels for over 20 years in a very conservative fashionCompany integrityRecognized by BBB (A+ rating)BBB accredited since 198621 BBB inquiries in 3 yearsAbide by DSA Code of Ethics *
BALANCE BETWEEN PERSONAL CARE AND NUTRITION ~50% ~50% *
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repair 2017 PersonalizationNutrition Kappa revitalize 2015 PersonalizationSkin Care Delta restage 2012-18 remodel Gamma 2013 Weight Management restore Alpha 2015 Healthy Aging Applying ageLOC science to existing products recharge/renew R2/Body Galvanic 2011 Cell Renewal/Body Treatment Galvanic Spa 2007 Transformation 2009 recharge Vitality 2010 Skin Treatment Daily Skin Care Cellular Energy renew rejuvenate AGELOC PRODUCT PIPELINE *
* At the core of this system will be a collection of clinically proven weight management products. * THE AGELOC GAMMA SYSTEM
The Company has developed aCOMPELLING PRODUCT LAUNCH CYCLE that is CREATING STRONG GROWTH *
TWO-YEAR LAUNCH CYCLE * 2009 2011 2013 2015 2017 DELTA GAMMA ALPHA 2007
PHASE 3:Product Roll-out & Channel Growth PHASE 2:Market LTO& Channel Growth PHASE 1:Global LTO& Channel Growth NU SKIN PRODUCT TWO-YEARLAUNCH CYCLE *
Nu Skin's experienced MANAGEMENTand SALES LEADERS are driving GROWTH in every geographic region *
2003 - 2012 LOCAL CURRENCY REVENUE TREND -5.25% CAGR JAPAN REVENUE TREND IN JAPAN (YOY) Projecting 5.6% growth in 2012Body Galvanic Spa LTO - Q4 2012 (revenue +27%)Modeling 1-3% revenue growth in 2013 * *Includes negative impact of ~3% from natural disasters in March 2011
ACTIVES/SALES LEADERS GROWTH 18.9% CAGR Body Galvanic Spa LTO – Q4 2012 Improving revenue trends in H2 2012Estimated 8% local currency revenue growth in 2012Modeling 10-12% revenue growth in 2013 * SOUTH KOREA
ageLOC TFEU LTO – Q4 2012 Estimated 19% U.S. growth in 2012 (excluding $12.5 million of convention sales to int'l dist. in 2011)Latin America estimated 75% revenue growth in 2012Modeling 12-15% revenue growth in 2013 9.5% CAGR 2003 - 2012 USD REVENUE TREND * AMERICAS
Expansion into Vietnam in Q3 2012Estimated 2012 revenue = $330 million Modeling 5-10% revenue growth in 2013 4 2012SALES 17.7% CAGR SOUTH ASIA / PACIFIC *
Estimated 25% local currency growth in 2012Body Galvanic Spa LTO - Q1 2012 R2 LTO - Q4 2012Modeling 12-15% revenue growthin 2013 20.4% CAGR EMEA *
Mainland China rapidly growing direct selling marketGreater China HQ to be completed in 2013Estimated 60% revenue growth in 2012Modeling 15-18% revenue growth in 2013 * REVENUE TREND IN MAINLAND CHINA 17.3% CAGR GREATER CHINA 55% CAGR
Nu Skin will continue to demonstrate the STRENGTH of its business through SOLID RESULTS *
Latin America development 4 Channel innovation and infrastructure 3 2 Product discovery and development KEY INVESTMENTS * Global sales force incentives 1
*Excludes restructuring and impairment of assets and other. Estimated Projected ** Excludes impact of Japan customs case. 2007 – 2013 OPERATING MARGIN * Improvement in operating margin back-half weighted
2013 CASH FLOW MODELING * 2012 2013 D&A $34 MM $38 - $42 MM Stock option expense $22 MM $23 - $26 MM Capital expense $100 MM $130 - $150 MM Debt payments $26 MM $40 MM Dividends $50 MM $75 MM
16.1% CAGR INCREASING DIVIDEND HISTORY * Projected
$200 MM (4.5 MM shares or 7% of outstanding shares)Weighted average purchase price of <$44. Outstanding shares repurchased per year ~2% Average share purchase price $21.43 Average shares purchased per year 2.3 MM * 2004 - 2011 2012 STOCK REPURCHASE ACTIVITY
Nu Skin leverages the direct selling channel to build a STRONG CONSUMER BASE and ACTIVE SALES NETWORKAGELOC: a compelling product platform with a ROBUST PRODUCT PIPELINEPRODUCT LAUNCH PROCESS delivers solid resultsInvesting in CHANNEL INNOVATIONExperienced MANAGEMENT and SALES LEADERS driving GROWTH in every geographic regionSTRONG BALANCE SHEET and CASH FLOW * SUSTAINING GROWTH
2007 2008 2009 2010 2011 Gross Margin 81.9% 81.7% 81.7% 82.3% 81.5% Percentage impact of Japan customs ruling 0.0% 0.0% 0.0% 0.0% 1.9% Gross Margin excluding Japan customs ruling 81.9% 81.7% 81.7% 82.3% 83.4% Operating Margin 6.1% 10.1% 11.1% 14.1% 13.4% Percentage impact of restructuring 1.7% 0.0% 0.8% 0.0% 0.0% Percentage impact of Japan customs ruling 0.0% 0.0% 0.0% 0.0% 1.9% Operating Margin excluding restructuring and Japan customs ruling 7.8% 10.1% 11.9% 14.1% 15.3% Earnings per share $ 0.67 $ 1.02 $ 1.40 $ 2.11 $ 2.38 Impact of restructuring 0.17 - 0.11 - - Impact of Japan customs ruling - - - - 0.31 Earnings per share excluding restructuring and Japan customs ruling $ 0.84 $ 1.02 $ 1.51 $ 2.11 $ 2.69 GAAP RECONCILIATION *