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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May 3, 2017
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||||
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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, Utah 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))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4 (c))
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company □
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. □
Item 2.02 Results of Operations and Financial Condition.
On May 3, 2017, Nu Skin Enterprises, Inc. (the "Company") issued a press release announcing its financial results for the first quarter ended March 31, 2017, 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.
The information furnished pursuant to this Item 2.02 and the exhibit 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 press release furnished herewith in Exhibit 99.1 may contain non-GAAP financial measures. Management believes non-GAAP financial measures assist management and investors in evaluating and comparing period-to-period results and projections in a more meaningful and consistent manner.
| Item 9.01 |
Financial Statements and Exhibits.
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(d) Exhibit.
| 99.1 |
Nu Skin Enterprises' press release dated May 3, 2017, regarding financial results for the first quarter ended March 31, 2017.
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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/ Mark H. Lawrence
Mark H. Lawrence
Chief Financial Officer
Chief Financial Officer
Date: May 3, 2017
FOR IMMEDIATE RELEASE
NU SKIN ENTERPRISES REPORTS FIRST-QUARTER 2017 RESULTS
PROVO, Utah — May 3, 2017 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced first-quarter 2017 financial results.
Key Highlights
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Revenue:
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$499.1 million, a 6% improvement over Q1 2016; negatively impacted 1% by foreign currency fluctuations
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Earnings Per Share (EPS):
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$0.51, compared to $0.06 in Q1 2016 which included a $0.36 non-cash Japan customs charge
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Sales Leaders:
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54,600, a 1% year-over-year decrease
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Customers:
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980,000, a 2% year-over-year improvement
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"We are pleased to deliver strong first-quarter results, which demonstrates the progress we made executing on our strategic priorities to increase customer trial and acquisition," said Ritch Wood, chief executive officer. "Our quarterly results reflect solid growth in Mainland China, South Asia/Pacific and EMEA. Our expanding social selling efforts and the continued rollout of ageLOC Me and ageLOC Youth contributed to our strong revenue during the quarter, positioning us to deliver solid performance for 2017."
-more-
Nu Skin Enteprises, Inc.
May 3, 2017
Page 2
Q1 2017 Operating Results
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Revenue:
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$499.1 million, a 7% constant currency improvement
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Gross margin:
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77.7% compared to 70.8% in Q1 2016, or 77.4% when excluding the Q1 2016 Japan customs charge
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Selling Expenses:
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41.9% of revenue compared to 41.5% in Q1 2016
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G&A Expenses:
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26.6% of revenue compared to 27.6% in Q1 2016
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Operating Margin:
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9.3% compared to 1.7% in Q1 2016, or 8.4% when excluding the Japan customs charge
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Other Income / (Expense):
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($4.6) million, compared to ($2.9) million in Q1 2016; the change is primarily interest expense
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Income Tax Rate:
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34.1% compared to 37.3% in Q1 2016; benefitted from a new stock compensation accounting standard
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EPS:
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$0.51, a 21% increase compared to Q1 2016, when excluding the Japan customs charge
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Stockholder Value
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Dividend Payments:
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$19.0 million
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Stock Repurchases:
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$6.8 million; $192.9 million remaining in authorization
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2017 Outlook
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Q2 Revenue:
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$530 to $550 million; negative foreign currency impact of 1 to 2%; prior year included $106 million in LTO revenue
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Q2 EPS:
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$0.65 to $0.70
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2017 Revenue:
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$2.26 to $2.30 billion; negative foreign currency impact of approximately 2 to 3%
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2017 EPS
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$3.10 to $3.25
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"Looking forward, we will continue to focus on accelerating growth, driving innovation throughout our business, and empowering our customers and sales leaders with the products, programs, and platforms they need to succeed in a rapidly-evolving marketplace," said Wood. "A key component of our strategy is capitalizing on our early social selling success by expanding our reach through online channels globally. As part of this effort, we are making our product portfolio and business opportunity more accessible and attractive, particularly to the important millennial segment. We are confident that as we continue to execute on our initiatives, we will reach our 2017 business targets and will be well positioned for long-term growth and shareholder value creation."
-more-
Nu Skin Enteprises, Inc.
May 3, 2017
Page 3
"Our financial results in the first quarter put us on track to achieve our previously announced annual guidance," said Mark Lawrence, chief financial officer. "As we discussed at our investor day, we had significant limited-time-offers (LTOs) of $106 and $56 million in the second and third quarters of 2016. In the fourth quarter, we will begin a significant product introduction of our new ageLOC LumiSpa skin renewal and deep-cleansing device, which we anticipate will generate approximately $100 million in sales. These LTOs and product introductions will significantly impact our comparable sales and guidance for the balance of the year. We reiterate our 2017 forecast of $2.26 to $2.30 billion in revenue, and earnings per share of $3.10 to $3.25. We project second-quarter revenue of $530 to $550 million and earnings per share of $0.65 to $0.70," concluded Lawrence.
Conference CallThe Nu Skin management team will host a conference call with the investment community on May 3, 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 May 19, 2017.
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. 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. The ageLOC brand has generated 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 in Asia, the Americas, Europe, Africa and the Pacific. 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.
-more-Nu Skin Enteprises, Inc.
May 3, 2017
Page 4
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, sales force and customer base, growth, shareholder value creation, initiatives and areas of focus, 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:
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·
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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;
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·
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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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·
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risk that direct selling laws and regulations in any of our markets, including the United States and Mainland 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;
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·
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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;
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·
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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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·
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adverse publicity related to the company's business, products, industry or any legal actions or complaints by the company's sales force or others;
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·
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unpredictable economic conditions and events globally;
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·
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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 favorable changes to tax laws in the company's various markets; and
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·
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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.
-more-
Nu Skin Enteprises, Inc.
May 3, 2017
Page 5
Non-GAAP Financial Measures: Earnings per share, gross margin and operating margin, each excluding the Japan customs charge, and constant-currency revenue growth are non-GAAP financial measures. Constant-currency revenue growth 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. Management believes that the 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. These measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures.
-more-
Nu Skin Enteprises, Inc.
May 3, 2017
Page 6
The Company's revenue results by segment for the three-month periods ended March 31 are presented in the following table (in thousands).
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2017
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2016
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%
Change
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Constant Currency
% Change
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Mainland China
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$
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150,004
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$
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118,655
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26.4%
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33.1%
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South Korea
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82,471
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86,118
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(4.2%)
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(8.2%)
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South Asia/Pacific
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69,798
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63,578
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9.8%
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11.0%
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Americas
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65,658
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65,748
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(0.1%)
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(0.4%)
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||||||||||
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Japan
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61,156
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65,091
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(6.0%)
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(7.3%)
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||||||||||
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Hong Kong/Taiwan
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35,948
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40,056
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(10.3%)
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(13.4%)
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||||||||||
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EMEA
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34,064
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32,585
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4.5%
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6.6%
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|
||||||||||
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Total
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$
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499,099
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$
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471,831
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5.8%
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6.6%
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The company's Customers and Sales Leaders statistics by segment for the three-month periods ended March 31 are presented in the following table.
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2017
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2016
|
% Increase (Decrease)
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||||||||||||||||||||||
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Customers
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Sales Leaders
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Customers
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Sales Leaders
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Customers
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Sales Leaders
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|||||||||||||||||||
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Mainland China
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176,000
|
19,100
|
142,000
|
16,900
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23.9%
|
|
13.0%
|
|
||||||||||||||||
|
South Korea
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189,000
|
8,000
|
208,000
|
8,800
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(9.1%)
|
|
(9.1%)
|
|
||||||||||||||||
|
South Asia/Pacific
|
116,000
|
6,900
|
110,000
|
6,800
|
5.5%
|
|
1.5%
|
|
||||||||||||||||
|
Americas
|
172,000
|
6,200
|
164,000
|
6,900
|
4.9%
|
|
(10.1%)
|
|
||||||||||||||||
|
Japan
|
132,000
|
6,400
|
145,000
|
7,000
|
(9.0%)
|
|
(8.6%)
|
|
||||||||||||||||
|
Hong Kong/Taiwan
|
70,000
|
3,900
|
77,000
|
4,800
|
(9.1%)
|
|
(18.8%)
|
|
||||||||||||||||
|
EMEA
|
125,000
|
4,100
|
112,000
|
3,800
|
11.6%
|
|
7.9%
|
|
||||||||||||||||
|
Total
|
980,000
|
54,600
|
958,000
|
55,000
|
2.3%
|
|
(0.7%)
|
|
||||||||||||||||
"Customers" 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.
"Sales Leaders" are independent distributors, and sales employees and independent marketers in China, who achieve certain qualification requirements.
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Nu Skin Enteprises, Inc.
May 3, 2017
Page 7
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NU SKIN ENTERPRISES, INC.
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||||||||
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Consolidated Statements of Income (Unaudited)
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||||||||
|
For the First Quarters Ended March 31, 2017 and 2016
|
||||||||
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(in thousands, except per share amounts)
|
||||||||
|
2017
|
2016
|
|||||||
|
Revenue
|
$
|
499,099
|
$
|
471,831
|
||||
|
Cost of sales
|
111,266
|
137,869
|
||||||
|
Gross profit
|
387,833
|
333,962
|
||||||
|
Operating expenses:
|
||||||||
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Selling expenses
|
209,008
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195,559
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||||||
|
General and administrative expenses
|
132,563
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130,254
|
||||||
|
Total operating expenses
|
341,571
|
325,813
|
||||||
|
Operating income
|
46,262
|
8,149
|
||||||
|
Other income (expense), net
|
(4,567
|
)
|
(2,863
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)
|
||||
|
Income before provision for income taxes
|
41,695
|
5,286
|
||||||
|
Provision for income taxes
|
14,206
|
1,970
|
||||||
|
Net income
|
$
|
27,489
|
$
|
3,316
|
||||
|
Net income per share:
|
||||||||
|
Basic
|
$
|
0.52
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$
|
0.06
|
||||
|
Diluted
|
$
|
0.51
|
$
|
0.06
|
||||
|
Weighted average common shares outstanding:
|
||||||||
|
Basic
|
52,678
|
55,955
|
||||||
|
Diluted
|
54,057
|
56,411
|
||||||
-more-
Nu Skin Enteprises, Inc.
May 3, 2017
Page 8
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NU SKIN ENTERPRISES, INC.
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Consolidated Balance Sheets (Unaudited)
|
||||||||
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(in thousands)
|
||||||||
|
March 31, 2017
|
December 31, 2016
|
|||||||
|
ASSETS
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$
|
335,578
|
$
|
357,246
|
||||
|
Current investments
|
11,759
|
10,880
|
||||||
|
Accounts receivable
|
28,838
|
31,199
|
||||||
|
Inventories, net
|
251,947
|
249,936
|
||||||
|
Prepaid expenses and other
|
77,717
|
65,076
|
||||||
|
705,839
|
714,337
|
|||||||
|
Property and equipment, net
|
450,607
|
444,732
|
||||||
|
Goodwill
|
114,954
|
114,954
|
||||||
|
Other intangible assets, net
|
61,678
|
63,553
|
||||||
|
Other assets
|
161,338
|
136,469
|
||||||
|
Total assets
|
$
|
1,494,416
|
$
|
1,474,045
|
||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$
|
42,076
|
$
|
41,261
|
||||
|
Accrued expenses
|
253,359
|
275,023
|
||||||
|
Current portion of long-term debt
|
99,482
|
82,727
|
||||||
|
394,917
|
399,011
|
|||||||
|
Long-term debt
|
329,001
|
334,165
|
||||||
|
Other liabilities
|
82,913
|
76,799
|
||||||
|
Total liabilities
|
806,831
|
809,975
|
||||||
|
Stockholders' equity:
|
||||||||
|
Class A common stock
|
91
|
91
|
||||||
|
Additional paid-in capital
|
449,762
|
439,635
|
||||||
|
Treasury stock, at cost
|
(1,251,788
|
)
|
(1,250,123
|
)
|
||||
|
Accumulated other comprehensive loss
|
(74,771
|
)
|
(84,122
|
)
|
||||
|
Retained earnings
|
1,564,291
|
1,558,589
|
||||||
|
687,585
|
664,070
|
|||||||
|
Total liabilities and stockholders' equity
|
$
|
1,494,416
|
$
|
1,474,045
|
||||
-more-
Nu Skin Enteprises, Inc.
May 3, 2017
Page 9
|
NU SKIN ENTERPRISES, INC.
Reconciliation of GAAP Gross Profit to
Gross Profit Excluding Japan Customs Expense
|
||||||||
|
(in thousands)
|
||||||||
|
Quarter Ended
March 31,
|
||||||||
|
2017
|
2016
|
|||||||
|
Revenue as reported
|
$
|
499,099
|
$
|
471,831
|
||||
|
GAAP gross profit as reported
|
$
|
387,833
|
$
|
333,962
|
||||
|
Japan customs expense
|
—
|
31,355
|
||||||
|
Gross profit excluding Japan customs expense
|
$
|
387,833
|
$
|
365,317
|
||||
|
GAAP gross profit as a percent of revenue
|
77.7%
|
|
70.8%
|
|
||||
|
Gross profit as a percent of revenue excluding Japan customs expense
|
77.7%
|
|
77.4%
|
|
||||
|
NU SKIN ENTERPRISES, INC.
Reconciliation of GAAP Operating Income to
Operating Income Excluding Japan Customs Expense
|
||||||||
|
(in thousands)
|
||||||||
|
Quarter Ended
March 31,
|
||||||||
|
2017
|
2016
|
|||||||
|
Revenue as reported
|
$
|
499,099
|
$
|
471,831
|
||||
|
GAAP operating income as reported
|
$
|
46,262
|
$
|
8,149
|
||||
|
Japan customs expense
|
—
|
31,355
|
||||||
|
Operating income excluding Japan customs expense
|
$
|
46,262
|
$
|
39,504
|
||||
|
GAAP operating income as a percent of revenue
|
9.3%
|
|
1.7%
|
|
||||
|
Operating income as a percent of revenue excluding Japan
customs expense
|
9.3%
|
|
8.4%
|
|
||||
-more-
Nu Skin Enteprises, Inc.
May 3, 2017
Page 10
|
NU SKIN ENTERPRISES, INC.
Reconciliation of GAAP Diluted Earnings Per Share to
Diluted Earnings Per Share Excluding Japan Customs Expense
|
||||||||||||
|
(in thousands, except per share amounts)
|
||||||||||||
|
Quarter Ended
March 31,
|
%
Increase
|
|||||||||||
|
2017
|
2016
|
|||||||||||
|
GAAP net income as reported
|
$
|
27,489
|
$
|
3,316
|
||||||||
|
Japan customs expense
|
—
|
31,355
|
||||||||||
|
Tax effect of Japan customs expense
|
—
|
(11,257
|
)
|
|||||||||
|
Net income excluding Japan customs expense
|
$
|
27,489
|
$
|
23,414
|
||||||||
|
GAAP diluted earnings per share
|
$
|
0.51
|
$
|
0.06
|
750.0%
|
|
||||||
|
Diluted earnings per share excluding Japan customs expense
|
$
|
0.51
|
$
|
0.42
|
21.4%
|
|
||||||
|
Diluted weighted-average common shares outstanding
|
54,057
|
56,411
|
||||||||||
CONTACTS:
Media: media@nuskin.com, (801) 345-6397
Media: media@nuskin.com, (801) 345-6397
Investors: investorrelations@nuskin.com, (801) 345-3577
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