Company News

Nu Skin Enterprises Reports Strong Third-Quarter Results With 20 Percent Revenue Growth And 24 Percent Earnings Growth

PROVO, Utah, Nov. 7, 2018 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced strong third-quarter financial results with revenue of $675.3 million, an increase of 20 percent over the prior-year period. Earnings per share were $0.94, an increase of 24 percent over the prior-year period, or $1.01, an increase of 33 percent, when excluding a foreign currency translation loss of $0.07.

Nu Skin Logo (PRNewsfoto/Nu Skin Enterprises, Inc.)

Executive Summary

Q3 2018 vs. Prior-Year Quarter

Revenue:

$675.3 million, +20%

      •   (3%) fx impact

Earnings Per Share (EPS):

$0.94, +24% or $1.01, + 33% when excluding fx loss

      •   ($0.07) foreign currency translation loss

      •   ($0.04) purchase accounting charge

Sales Leaders:

73,100; +14%

Customers:

1,166,000; +9%

"We delivered strong year-over-year financial results with reported revenue growth in every region, highlighted by double-digit increases in Mainland China and Southeast Asia," said Ritch Wood, chief executive officer. "This is our fourth consecutive quarter of revenue growth of 20 percent or more, driven by the continued execution of our growth strategy focused on engaging platforms, enabling products and empowering programs which led to solid customer growth of 9 percent and sales leader growth of 14 percent."

Q3 2018 Year-Over-Year Operating Results

Revenue:

$675.3 million compared to $563.7 million

Gross Margin:

76.7% compared to 78.6%

      •   Nu Skin business was 78.7%

Selling Expenses:

40.2% of revenue compared to 41.7%

      •   Nu Skin business was 41.8%

G&A Expenses:

24.5% of revenue compared to 25.4%

Operating Margin:

11.9% compared to 11.4%

Other Income / (Expense):

($7.0) million expense compared to ($1.2) million expense

Income Tax Rate:

27.9% compared to 34.1%

EPS:

$0.94, which includes a ($0.07) foreign currency translation loss and a ($0.04) purchase accounting charge, compared to $0.76

Stockholder Value

Dividend Payments:

$20.3 million

Stock Repurchases:

$12.4 million; $492 million remaining in authorization

Q4 and Full-Year 2018 Outlook

Q4 2018 Revenue:

$665 to $685 million, 0% to 3% growth

      •   Approximately (4 to 5%) negative fx impact

Q4 2018 EPS:

$1.00 to $1.07 which includes an estimated $0.04 purchase accounting charge

2018 Revenue:

$2.66 billion to $2.68 billion, 17% to 18% growth

      •   Neutral fx impact

2018 EPS

$3.48 to $3.55 including ($0.20) fx and ($0.16) purchase accounting charges

"We continue to empower our sales leaders to effectively acquire customers through enabling social sharing, providing innovative products like ageLOC LumiSpa, and implementing our enhanced sales compensation program, Velocity. We are on pace to generate a very strong finish to this year which we believe sets us up well for 2019," Wood concluded.

"We generated 20 percent year-over-year revenue growth and 24 percent improvement in earnings in the quarter," said Mark Lawrence, chief financial officer. "For the year, we are increasing our annual revenue guidance to $2.66 billion to $2.68 billion with earnings per share of $3.48 to $3.55. This earnings guidance reflects the $0.20 foreign currency translation loss from the second and third quarters and the $0.16 purchase accounting charge. We are projecting fourth-quarter revenue of $665 to $685 million, including a 4 to 5 percent negative currency impact, and earnings per share of $1.00 to $1.07, or $1.04 to $1.11 when excluding the estimated $0.04 purchase accounting charge. As a reminder, in the fourth quarter of 2017, we held an ageLOC LumiSpa global introduction which generated $130 million in sales," concluded Lawrence.

Conference Call

The Nu Skin management team will host a conference call with the investment community on November 7, 2018, 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 Nov 21, 2018.

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 LumiSpa skin cleansing and treatment device, 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.

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, 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," "project," "anticipate," "estimate," "intend," "plan," "continue," "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:

  • adverse publicity related to the company's business, products, industry or any legal actions or complaints by the company's sales force or others;
  • 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;
  • 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;
  • risk of foreign currency fluctuations and the currency translation impact on the company's business associated with these fluctuations;
  • uncertainties regarding the future financial performance of the company's recent acquisitions;
  • 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 the company over-forecasts demand for a product or changes its 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;
  • unpredictable economic conditions and events globally;
  • 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
  • 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. Earnings per share excluding foreign-currency translation loss and projected earnings per share excluding purchase-accounting charge also are non-GAAP financial measures. Removing the impact of these items facilitates period-to-period comparisons of the company's performance.

The Company's revenue results by segment for the three-month periods ended September 30 are presented in the following table (in thousands).




%

Change


Constant
Currency

% Change



2018


2017













Mainland China

$            226,645


$         172,556


31%


34%


Americas/Pacific

93,580


85,672


9%


20%


South Korea

89,963


89,238


1%



Southeast Asia

86,307


71,141


21%


24%


Japan

63,649


62,513


2%


2%


Hong Kong/Taiwan

44,949


41,050


9%


10%


EMEA

42,819


40,133


7%


8%


Other

27,400


1,395


1,864%


1,864%


     Total

$            675,312


$         563,698


20%


23%











The Company's revenue results by segment for the nine-month periods ended September 30 are presented in the following table (in thousands).




%

Change


Constant
Currency

% Change



2018


2017













Mainland China

$            669,432


$         494,658


35%


30%


Americas/Pacific

289,859


240,094


21%


27%


South Korea

270,517


258,626


5%



Southeast Asia

236,390


194,711


21%


20%


Japan

190,986


188,465


1%


(1%)


Hong Kong/Taiwan

138,147


120,069


15%


14%


EMEA

131,810


112,385


17%


10%


Other

68,580


3,890


1,663%


1,663%


     Total

$         1,995,721


$      1,612,898


24%


21%


The company's Customers and Sales Leaders statistics by segment for the three-month periods ended September 30 are presented in the following table.


2018


2017


% Increase

(Decrease)



Customers


Sales Leaders


Customers


Sales Leaders


Customers


Sales Leaders














Mainland China


210,000


33,300


190,000


25,600


11%


30%

Americas/Pacific


277,000


8,500


237,000


8,000


17%


6%

South Korea


180,000


7,700


185,000


8,400


(3%)


(8%)

Southeast Asia


147,000


8,700


127,000


7,100


16%


23%

Japan


131,000


6,200


131,000


6,500



(5%)

Hong Kong/Taiwan


76,000


4,400


71,000


4,300


7%


2%

EMEA


145,000


4,300


128,000


4,300


13%















Total


1,166,000


73,100


1,069,000


64,200


9%


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)

(in thousands, except per share amounts)






Three Months Ended


Nine Months Ended


September 30,


September 30,


2018


2017


2018


2017









Revenue

$     675,312


$     563,698


$   1,995,721


$   1,612,898

Cost of sales 

157,457


120,832


472,287


353,619









Gross profit

517,855


442,866


1,523,434


1,259,279









Operating expenses:








        Selling expenses

271,509


235,285


801,968


672,646

        General and administrative expenses

165,671


143,219


499,037


411,270









Total operating expenses

437,180


378,504


1,301,005


1,083,916









Operating income

80,675


64,362


222,429


175,363

Other income (expense), net

(6,982)


(1,172)


(16,940)


(8,470)









Income before provision for income taxes      

73,693


63,190


205,489


166,893

Provision for income taxes

20,547


21,518


65,843


55,691









Net income

$      53,146


$      41,672


$        139,646


$        111,202









Net income per share:








        Basic

$          0.96


$          0.79


$            2.54


$            2.10

        Diluted

$          0.94


$          0.76


$            2.47


$            2.04









Weighted-average common shares outstanding (000s):








        Basic

55,603


52,873


55,075


52,834

        Diluted

56,704


54,834


56,539


54,519

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(in thousands)






September 30,

 2018


December 31,
2017

ASSETS




Current assets:




        Cash and cash equivalents

$                390,066


$                426,399

        Current investments

11,388


11,847

        Accounts receivable

57,175


33,196

        Inventories, net

289,291


253,454

        Prepaid expenses and other

78,395


52,893


826,315


777,789





Property and equipment, net

496,704


464,587

Goodwill

187,423


114,954

Other intangible assets, net

91,957


67,647

Other assets

143,838


164,895

                Total assets

$             1,746,237


$             1,589,872





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




        Accounts payable

$                  52,843


$                  50,341

        Accrued expenses

292,962


319,189

        Current portion of long-term debt

82,455


77,840


428,260


447,370





Long-term debt

365,767


310,790

Other liabilities

120,076


127,116

                Total liabilities

914,103


885,276





Stockholders' equity:




        Class A common stock

91


91

        Additional paid-in capital

545,234


466,349

       Treasury stock, at cost

(1,306,012)


(1,304,694)

        Accumulated other comprehensive loss

(82,555)


(66,318)

        Retained earnings

1,675,376


1,609,168


832,134


704,596

                Total liabilities and stockholders' equity

$             1,746,237


$             1,589,872

 

NU SKIN ENTERPRISES, INC.

Reconciliation of Earnings Per Share

Excluding Foreign-Currency Translation Loss to

GAAP Earnings Per Share

(in thousands, except per share amounts)




 Q3 2018

Net income


$               53,146

Foreign-currency translation loss


4,766

Tax impact of foreign-currency translation loss


(548)

Net income, excluding foreign-currency translation loss


$               57,364

Weighted-average common shares outstanding


56,704

Diluted earnings per share


$                   0.94

Diluted earnings per share, excluding foreign-currency translation loss


$                   1.01




Q3 2017 diluted earnings per share


$                   0.76

Year-over-year earnings per share increase


24%

Year-over-year earnings per share increase, excluding Q3 2018 foreign-currency translation loss


33%

Nu Skin Social Media Channels
 fb.com/nuskin   twitter.com/nuskin  instagram.com/nuskin

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/nu-skin-enterprises-reports-strong-third-quarter-results-with-20-percent-revenue-growth-and-24-percent-earnings-growth-300745995.html

SOURCE Nu Skin Enterprises, Inc.

Media: media@nuskin.com, (801) 345-6397 or Investors: investorrelations@nuskin.com, (801) 345-3577­­­