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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Date of Report (Date of earliest event reported)
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(Exact name of registrant as specified in its charter)
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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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(Address of principal executive offices and zip code)
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(
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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:
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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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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 February 12, 2020, Nu Skin Enterprises, Inc. (the “Company”) issued a press release announcing its financial results for the three-month and annual periods ended
December 31, 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 9.01 |
Financial Statements and Exhibits.
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(d) Exhibits.
| 99.1 |
Nu Skin Enterprises’ press release dated February 12, 2020, regarding financial results for the three-month and annual periods ended December 31, 2019.
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| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document)
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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: February 12, 2020
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Exhibit 99.1
FOR IMMEDIATE RELEASE
NU SKIN ENTERPRISES REPORTS FOURTH-QUARTER AND 2019 RESULTS AND PROVIDES 2020 GUIDANCE
PROVO, Utah — Feb. 12, 2020 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced fourth-quarter and 2019 financial results.
Executive Summary
Q4 2019 vs. Prior-Year Quarter
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Revenue:
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$583.4 million, (15%)
• (1%) fx impact or ($6.0 M)
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Earnings Per Share
(EPS):
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$0.72, +325%
• Prior year included impairment
and restructuring charges
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Sales Leaders:
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54,760; (25%)
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Customers:
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1,162,905; (7%)
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2019 Annual
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Revenue:
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$2.42 billion, (10%)
• (3%) fx impact
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Earnings Per Share
(EPS):
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$3.10, +44%
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“In the fourth quarter our business performed in line with expectations,” said Ritch Wood, chief executive officer. “Our customer base remained relatively strong,
however, our sales leader count was down in the quarter, primarily driven by a decline in Mainland China. We held a global convention in October, which generated enthusiasm among our worldwide sales force. Additionally, we reported 24 percent
growth in our manufacturing entities, an area where we see strong opportunitites for continued expansion.”
Q4 2019 Year-Over-Year Operating Results
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Revenue:
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$583.4 million compared to $683.3 million
• (1%) fx impact or ($6.0 M)
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Gross Margin:
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75.9% compared to 76.3%
• Nu Skin business was 78.5%
compared to 77.9%
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Selling Expenses:
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39.1% of revenue compared to 39.4%
• Nu Skin business was 41.3%
compared to 40.9%
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G&A Expenses:
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27.4% of revenue compared to 23.9%
• Increase includes convention
expense
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Operating Margin:
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9.4% compared to 2.7%
• Prior year included impairment
and restructuring charges
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Other Income /
(Expense):
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($1.1) million compared to ($4.3) million
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Income Tax Rate:
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25.1% compared to 225.3%
• Prior-year tax rate negatively
impacted by impairment and restructuring charges
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EPS:
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$0.72 compared to $(0.32)
• Prior year included ($1.37)
impairment and restructuring impact
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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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Q1 and Full-Year 2020 Outlook
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Q1 2020 Revenue:
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• Approximately (2 to 3%) fx
impact
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Q1 2020 EPS:
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$0.23 to $0.33
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2020 Revenue:
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• Approximately (1 to 2%) fx
impact
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2020 EPS:
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“In 2020, we are focused on building sales leaders by leveraging our technology enhancements and executing a strong product launch,” continued Wood. “We have an exciting
product pipeline, including a new beauty device that we plan to introduce in the second half of the year, further expanding our top-ranked beauty device systems brand. We expect the momentum around this launch to provide opportunitites to
accelerate customer and sales leader acquisition. Given the global business environment we are also focused on increasing operational efficiencies. We are confident in our ability to return the business to growth and drive shareholder value.
“As always, the health and safety of each member of our global Nu Skin family is our top priority. Following the recent coronavirus outbreak, we placed a temporary hold
on all in-person meetings with our sales force and customers in Mainland China. We are closely monitoring this continuously evolving situation and following direction from government and health officials. While we expect the outbreak to
significantly impact our business in the near term, we remain confident in our long-term opportunity in Mainland China and around the world. While the duration and global impact remain uncertain, our guidance reflects our current understanding of
the situation,” concluded Wood.
“For the year, we are projecting a decline in sales in Mainland China of 20 to 25 percent and a negative foreign currency impact of 1 to 2 percent,” said Mark Lawrence,
chief financial officer. “We currently anticipate the overall business will return to growth in the fourth quarter of 2020, driven by the launch of a new beauty device. We project first-quarter revenue of $480 to $510, including an approximate 2 to
3 percent negative currency impact, and earnings per share of $0.23 to $0.33. For the year, we are projecting annual revenue of $2.17 to $2.30 billion with a projected 1 to 2 percent negative foreign currency impact, and earnings per share of $2.00
to $2.40.”
Conference Call
The Nu Skin management team will host a conference call with the investment community on Feb. 12, 2020, 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 Feb. 26, 2020.
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 Rhyz, our strategic investment arm which includes 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, shareholder value, product launches, sales force, customer base, strategies and initiatives; projections regarding revenue, earnings per share, foreign currency fluctuations, other financial items and
non-financial performance metrics; 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,”
“potential,” “anticipate,” “project,” “estimate,” “intend,” “plan,” “continue,” “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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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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| • |
risk that epidemics, including the recent outbreak of coronavirus, and other crises could negatively impact our business;
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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 that 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 December 31, 2019 and 2018 for each of our reportable segments (U.S. dollars in thousands):
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Constant-
Currency
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|||||||||||||||
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2019
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2018
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Change
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Change
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||||||||||||
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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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154,731
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$
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217,040
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(29
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%)
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(28
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%)
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||||||||
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Americas/Pacific
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86,146
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95,175
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(9
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%)
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(6
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%)
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South Korea
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81,958
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102,840
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(20
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%)
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(17
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%)
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Southeast Asia
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74,767
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80,500
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(7
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%)
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(10
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%)
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Japan
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65,482
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63,953
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2
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%
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(1
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%)
|
||||||||||
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EMEA
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46,205
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50,584
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(9
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%)
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(6
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%)
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||||||||||
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Hong Kong/Taiwan
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41,616
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47,746
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(13
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%)
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(14
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%)
|
||||||||||
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Other
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1,860
|
780
|
138
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%
|
138
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%
|
||||||||||
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Total Nu Skin
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552,765
|
658,618
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(16
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%)
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(15
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%)
|
||||||||||
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Manufacturing
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30,487
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24,669
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24
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%
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24
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%
|
||||||||||
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Grow Tech
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107
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-
|
100
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%
|
100
|
%
|
||||||||||
|
Total
|
$
|
583,359
|
$
|
683,287
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(15
|
%)
|
(14
|
%)
|
||||||||
The following table sets forth revenue for the years ended December 31, 2019 and 2018 for each of our reportable segments (U.S. dollars in thousands):
|
Constant-
Currency
|
||||||||||||||||
|
2019
|
2018
|
Change
|
Change
|
|||||||||||||
|
Nu Skin
|
||||||||||||||||
|
Mainland China
|
$
|
722,526
|
$
|
886,472
|
(18
|
%)
|
(15
|
%)
|
||||||||
|
Americas/Pacific
|
349,078
|
385,034
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(9
|
%)
|
(4
|
%)
|
||||||||||
|
South Korea
|
329,978
|
373,357
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(12
|
%)
|
(6
|
%)
|
||||||||||
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Southeast Asia
|
301,620
|
316,890
|
(5
|
%)
|
(5
|
%)
|
||||||||||
|
Japan
|
260,039
|
254,939
|
2
|
%
|
1
|
%
|
||||||||||
|
EMEA
|
167,165
|
182,394
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(8
|
%)
|
(3
|
%)
|
||||||||||
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Hong Kong/Taiwan
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166,335
|
185,893
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(11
|
%)
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(9
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%)
|
||||||||||
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Other
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1,621
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3,423
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(53
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%)
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(53
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%)
|
||||||||||
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Total Nu Skin
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2,298,362
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2,588,402
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(11
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%)
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(8
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%)
|
||||||||||
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Manufacturing
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121,917
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90,606
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35
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%
|
35
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%
|
||||||||||
|
Grow Tech
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137
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-
|
100
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%
|
100
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%
|
||||||||||
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Total
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$
|
2,420,416
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$
|
2,679,008
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(10
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%)
|
(7
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%)
|
||||||||
The company’s Customers and Sales Leaders statistics by segment for the three-month periods ended December 31, 2019 and 2018 are presented in the following table:
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2019
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2018
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% Increase (Decrease)
|
||||||||||||||||||||||
|
Customers
|
Sales
Leaders
|
Customers
|
Sales Leaders
|
Customers
|
Sales Leaders
|
|||||||||||||||||||
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Mainland China
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292,812
|
17,987
|
303,789
|
33,129
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(4
|
%)
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(46
|
%)
|
||||||||||||||||
|
Americas/Pacific
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220,216
|
7,607
|
248,609
|
8,354
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(11
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%)
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(9
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%)
|
||||||||||||||||
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South Korea
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168,972
|
7,251
|
182,026
|
7,565
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(7
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%)
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(4
|
%)
|
||||||||||||||||
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Southeast Asia
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136,349
|
7,480
|
153,465
|
8,933
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(11
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%)
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(16
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%)
|
||||||||||||||||
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Japan
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125,557
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5,916
|
130,181
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5,916
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(4
|
%)
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-
|
|||||||||||||||||
|
EMEA
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153,330
|
4,619
|
149,085
|
4,791
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3
|
%
|
(4
|
%)
|
||||||||||||||||
|
Hong Kong/Taiwan
|
65,669
|
3,900
|
76,891
|
4,767
|
(15
|
%)
|
(18
|
%)
|
||||||||||||||||
|
Total
|
1,162,905
|
54,760
|
1,244,046
|
73,455
|
(7
|
%)
|
(25
|
%)
|
||||||||||||||||
“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
December 31,
|
Years Ended
December 31,
|
|||||||||||||||
|
2019
|
2018
|
2019
|
2018
|
|||||||||||||
|
Revenue
|
$
|
583,359
|
$
|
683,287
|
$
|
2,420,416
|
$
|
2,679,008
|
||||||||
|
Cost of sales
|
140,566
|
161,853
|
581,420
|
634,140
|
||||||||||||
|
Gross profit
|
442,793
|
521,434
|
1,838,996
|
2,044,868
|
||||||||||||
|
Operating expenses:
|
||||||||||||||||
|
Selling expenses
|
228,127
|
269,052
|
955,600
|
1,071,020
|
||||||||||||
|
General and administrative expenses
|
159,987
|
163,265
|
615,970
|
662,302
|
||||||||||||
|
Restructuring and Impairment
|
—
|
70,686
|
—
|
70,686
|
||||||||||||
|
Total operating expenses
|
388,114
|
503,003
|
1,571,570
|
1,804,008
|
||||||||||||
|
Operating income
|
54,679
|
18,431
|
267,426
|
240,860
|
||||||||||||
|
Other income (expense), net
|
(1,101
|
)
|
(4,254
|
)
|
(12,254
|
)
|
(21,194
|
)
|
||||||||
|
Income before provision for income taxes
|
53,578
|
14,177
|
255,172
|
219,666
|
||||||||||||
|
Provision for income taxes
|
13,466
|
31,936
|
81,619
|
97,779
|
||||||||||||
|
Net income
|
$
|
40,112
|
$
|
(17,759
|
)
|
$
|
173,553
|
$
|
121,887
|
|||||||
|
Net income per share:
|
||||||||||||||||
|
Basic
|
$
|
0.72
|
$
|
(0.32
|
)
|
$
|
3.13
|
$
|
2.21
|
|||||||
|
Diluted
|
$
|
0.72
|
$
|
(0.32
|
)
|
$
|
3.10
|
$
|
2.16
|
|||||||
|
Weighted-average common shares outstanding (000s):
|
||||||||||||||||
|
Basic
|
55,548
|
55,453
|
55,518
|
55,170
|
||||||||||||
|
Diluted
|
55,807
|
56,341
|
55,927
|
56,476
|
||||||||||||
NU SKIN ENTERPRISES, INC.
Consolidated Balance Sheets (Unaudited)
(U.S. dollars in thousands)
|
December 31,
2019
|
December 31,
2018
|
|||||||
|
ASSETS
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$
|
335,630
|
$
|
386,911
|
||||
|
Current investments
|
8,413
|
11,346
|
||||||
|
Accounts receivable
|
50,378
|
53,282
|
||||||
|
Inventories, net
|
275,891
|
295,821
|
||||||
|
Prepaid expenses and other
|
69,854
|
51,877
|
||||||
|
Total current assets
|
740,166
|
799,237
|
||||||
|
Property and equipment, net
|
453,604
|
464,535
|
||||||
|
Right-of-use assets
|
144,326
|
—
|
||||||
|
Goodwill
|
196,573
|
196,573
|
||||||
|
Other intangible assets, net
|
80,321
|
89,989
|
||||||
|
Other assets
|
154,016
|
144,112
|
||||||
|
Total assets
|
$
|
1,769,006
|
$
|
1,694,446
|
||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$
|
38,979
|
$
|
47,617
|
||||
|
Accrued expenses
|
290,281
|
322,583
|
||||||
|
Current portion of long-term debt
|
27,500
|
69,455
|
||||||
|
Total current liabilities
|
356,760
|
439,655
|
||||||
|
Operating lease liabilities
|
105,701
|
—
|
||||||
|
Long-term debt
|
334,461
|
361,008
|
||||||
|
Other liabilities
|
96,795
|
111,916
|
||||||
|
Total liabilities
|
893,717
|
912,579
|
||||||
|
Stockholders’ equity:
|
||||||||
|
Class A common stock
|
91
|
91
|
||||||
|
Additional paid-in capital
|
557,544
|
552,564
|
||||||
|
Treasury stock, at cost
|
(1,324,826
|
)
|
(1,326,605
|
)
|
||||
|
Accumulated other comprehensive loss
|
(85,292
|
)
|
(79,934
|
)
|
||||
|
Retained earnings
|
1,727,772
|
1,635,751
|
||||||
|
Total stockholders’ equity
|
875,289
|
781,867
|
||||||
|
Total liabilities and stockholders’ equity
|
$
|
1,769,006
|
$
|
1,694,446
|
||||
# # #
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Investors: investorrelations@nuskin.com, (801) 345-3577