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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August 1, 2019
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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)
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| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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| ☐ |
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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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Class A Common Stock, $.001 par value
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NUS
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New York Stock Exchange
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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.
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On August 6, 2019, Nu Skin Enterprises, Inc. (the “Company”) issued a press release announcing its financial results for the three- and six-month periods ended June 30, 2019, and certain other information. A copy of the press release is attached
as Exhibit 99.1 to this report.
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 contains 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 5.02 |
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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(b), (c)
On August 1, 2019, James D. Thomas was appointed as the Company’s Chief Accounting Officer. Mark H. Lawrence, the Company’s Chief Financial Officer, previously served as both the principal financial officer and the principal accounting officer.
Effective as of August 1, 2019, Mr. Thomas assumed responsibilities as the principal accounting officer in the new role of Chief Accounting Officer.
Mr. Thomas, 41, has more than 15 years of experience in the accounting and finance fields and has served in financial reporting positions with the Company for the past eight years. He served as Corporate Controller from June 2011 to June 2017
and then as Vice President of Global Accounting and Reporting from June 2017 until his current promotion. He served one year in the Company’s internal audit department prior to these roles. Before joining the Company, he worked as Assistant
Controller of another publicly reporting company and served in the assurance practice at PricewaterhouseCoopers LLP. Mr. Thomas holds B.S. and Master of Accounting degrees from Utah State University.
As Chief Accounting Officer, Mr. Thomas will earn an annual salary of $285,000, and his target incentive bonus will be 40% of his annual salary. He will continue to be eligible to receive equity awards at the
discretion of the Executive Compensation Committee of the Company’s Board of Directors, and he will participate in other benefit and perquisite programs generally available to senior vice president-level employees of the Company.
Mr. Thomas does not have a family relationship with any of the Company’s directors or executive officers, and the Company does not have any reportable related-person transactions involving Mr. Thomas. Other than as described herein, there are no
arrangements or understandings between Mr. Thomas and any other person pursuant to which Mr. Thomas was selected as Chief Accounting Officer.
| Item 9.01 |
Financial Statements and Exhibits.
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| (d) |
Exhibit.
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| 99.1 |
Nu Skin Enterprises’ press release dated August 6, 2019, regarding financial results for the three- and six-month periods ended June 30, 2019.
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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.
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NU SKIN ENTERPRISES, INC.
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(Registrant)
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/s/ Mark H. Lawrence
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Mark H. Lawrence
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Chief Financial Officer
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Date: August 6, 2019
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Exhibit 99.1
FOR IMMEDIATE RELEASE
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.
Executive Summary
Q2 2019 vs. Prior-Year Quarter
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Revenue:
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$623.5 million; (11%)
• (4%) fx impact or ($31 M)
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Earnings Per Share
(EPS):
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$ 0.83; (8 %)
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Sales Leaders:
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61,563; (14 %)
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Customers:
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1,160,420; +1%
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“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
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Revenue:
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$623.5 million compared to $704.2 million
• (4%) fx impact or ($31 M)
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Gross Margin:
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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
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Selling Expenses:
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39.4% of revenue compared to 38.7%
• Nu Skin business was 41.5%
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G&A Expenses:
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24.0% of revenue compared to 25.6%
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Operating Margin:
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11.9% compared to 11.8%
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Other Income /
(Expense):
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($3.3) million compared to ($11.2) million
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Income Tax Rate:
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34.6% compared to 28.8%
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EPS:
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$0.83 compared to $0.90
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Stockholder Value
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Dividend Payments:
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$20.6 million
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Stock Repurchases:
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Nil
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Q3 and Full-Year 2019 Outlook
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Q3 2019 Revenue:
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• Approximately (2%) fx impact
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Q3 2019 EPS:
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$ 0.74 to $0.81
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2019 Revenue:
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• Approximately (3%) to (4%) fx impact
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2019 EPS
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$ 3.20 to $3.35
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“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
moving forward.”
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.”
Conference Call
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:
| • |
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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| • |
risk that direct selling laws and regulations in any of the company’s markets, including the United States and Mainland China, may be modified, interpreted or enforced in a manner that results in negative
changes to the company’s business model or negatively impacts its 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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| • |
any failure of current or planned initiatives or products to generate interest among the company’s sales force and customers and generate sponsoring and selling activities on a sustained basis;
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| • |
uncertainty regarding the continued impact of the 100 day review and negative media and consumer sentiment in Mainland China on our business operations and results;
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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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| • |
uncertainties regarding the future financial performance of the businesses the company has acquired;
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| • |
risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support planned initiatives or launch strategies, and increased risk of inventory write-offs if the
company over-forecasts demand for a product or changes its planned initiatives or launch strategies;
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| • |
regulatory risks associated with the company’s products, which could require the company to modify its claims or inhibit its ability to import or continue selling a product in a market if the product is
determined to be a medical device or if the company is unable to register the product in a timely manner under applicable regulatory requirements;
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| • |
unpredictable economic conditions and events globally, including trade policies and tariffs;
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| • |
uncertainties related to interpretation of, and forthcoming regulations under, the recently enacted U.S. tax reform legislation; the company’s future tax-planning initiatives; 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.
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,
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Constant-
Currency
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|||||||||||||||
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2019
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2018
|
Change
|
Change
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|||||||||||||
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Nu Skin
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||||||||||||||||
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Mainland China
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$
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185,333
|
$
|
245,256
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(24
|
%)
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(19
|
%)
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||||||||
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Americas/Pacific
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92,841
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103,990
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(11
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%)
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(6
|
%)
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||||||||||
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South Korea
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84,732
|
91,624
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(8
|
%)
|
—
|
|||||||||||
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Southeast Asia
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75,395
|
79,223
|
(5
|
%)
|
(3
|
%)
|
||||||||||
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Japan
|
65,251
|
64,113
|
2
|
%
|
2
|
%
|
||||||||||
|
Hong Kong/Taiwan
|
43,712
|
52,206
|
(16
|
%)
|
(14
|
%)
|
||||||||||
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EMEA
|
43,400
|
44,010
|
(1
|
%)
|
5
|
%
|
||||||||||
|
Other
|
1,249
|
1,030
|
21
|
%
|
21
|
%
|
||||||||||
|
Total Nu Skin
|
591,913
|
681,452
|
(13
|
%)
|
(9
|
%)
|
||||||||||
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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:
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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
|
||||
# # #
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Investors: investorrelations@nuskin.com, (801) 345-3577