November 3, 2016
	Date of Report (Date of earliest event reported)
	NU SKIN ENTERPRISES, INC.
	(Exact name of registrant as specified in its charter)
Delaware		001-12421		87-0565309
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification Number)
	75 West Center Street Provo, Utah 84601
	(Address of principal executive offices and zip code)
	(801) 345-1000
	(Registrant's telephone number, including area code)
	N/A
	(Former name or former address, if changed since last report)

 

 

 

 

FOR IMMEDIATE RELEASE

CONTACTS:

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

"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."

 

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Nu Skin Enterprises, Inc.

Nov. 3, 2016

Page 2

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.

 

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"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.

 

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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.

Outlook

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:

·	any failure of current or planned initiatives or products to generate interest among our sales force and customers and generate sponsoring and selling activities on a sustained basis;

·	risk of foreign currency fluctuations and the currency translation impact on the company's business associated with these fluctuations;

 

 

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risk that direct selling laws and regulations in any of our markets, including the United States and China, may be modified, interpreted or enforced in a manner that results in negative changes to our business model or negatively impacts our revenue, sales force or business, including through the interruption of sales activities, loss of licenses, imposition of fines, or any other adverse actions or events;

·	risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support our planned initiatives or launch strategies, and increased risk of inventory write-offs if we over-forecast demand for a product or change our planned initiatives or launch strategies;

·

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;

·	adverse publicity related to the company's business, products, industry or any legal actions or complaints by the company's sales force or others;

·	unpredictable economic conditions and events globally;

·	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

·	continued 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.

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.
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.
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.
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

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