PROVO, Utah, Feb. 12, 2020 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced fourth-quarter and 2019 financial results.

Executive Summary
Q4 2019 vs. Prior-Year Quarter

Revenue:

$583.4 million, (15%)

     •  (1%) fx impact or ($6.0 M)

Earnings Per Share
(EPS):

$0.72, +325%

     •  Prior year included impairment and restructuring charges

Sales Leaders:

54,760; (25%)

Customers:

1,162,905; (7%)

2019 Annual

Revenue:

$2.42 billion, (10%)

     •  (3%) fx impact

Earnings Per Share
(EPS):

$3.10, +44%

"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 opportunities for continued expansion."

Q4 2019 Year-Over-Year Operating Results

Revenue:

$583.4 million compared to $683.3 million

     •  (1%) fx impact or ($6.0 M)

Gross Margin:

75.9% compared to 76.3%

     •  Nu Skin business was 78.5% compared to 77.9%

Selling Expenses:

39.1% of revenue compared to 39.4%

     •  Nu Skin business was 41.3% compared to 40.9%

G&A Expenses:

27.4% of revenue compared to 23.9%

     •  Increase includes convention expense

Operating Margin:

9.4% compared to 2.7%  

     •  Prior year included impairment and restructuring charges

Other Income /
Expense):

($1.1) million compared to ($4.3) million

Income Tax Rate:

25.1% compared to 225.3%

     •  Prior-year tax rate negatively impacted by impairment and restructuring charges

EPS:

$0.72 compared to $(0.32)  

     •  Prior year included ($1.37) impairment and restructuring impact

Stockholder Value

Dividend Payments:

$20.6 million

Stock Repurchases:

Nil

Q1 and Full-Year 2020 Outlook

Q1 2020 Revenue:

$480 to $510 million, (18 to 23%)

     •   Approximately (2 to 3%) fx impact

Q1 2020 EPS:

$0.23 to $0.33

2020 Revenue:

$2.17 billion to $2.30 billion, (5 to 10%)

     •  Approximately (1 to 2%) fx impact

2020 EPS:

$2.00 to $2.40

"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 opportunities 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:

  • 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 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;
  • risk that epidemics, including the recent outbreak of coronavirus, and other crises could negatively impact our business;
  • 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;
  • 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;
  • 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 businesses the company has acquired;
  • 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;
  • 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;
  • unpredictable economic conditions and events globally, including trade policies and tariffs;
  • 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 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):






Constant-






Currency


2019


2018


Change


Change









Nu Skin












Mainland China

$

154,731


$

217,040



(29%)



(28%)

Americas/Pacific


86,146



95,175



(9%)



(6%)

South Korea


81,958



102,840



(20%)



(17%)

Southeast Asia


74,767



80,500



(7%)



(10%)

Japan


65,482



63,953



2%



(1%)

EMEA


46,205



50,584



(9%)



(6%)

Hong Kong/Taiwan


41,616



47,746



(13%)



(14%)

Other


1,860



780



138%



138%

Total Nu Skin


552,765



658,618



(16%)



(15%)

Manufacturing


30,487



24,669



24%



24%

Grow Tech


107



-



100%



100%

Total

$

583,359


$

683,287



(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



(9%)



(4%)

South Korea


329,978



373,357



(12%)



(6%)

Southeast Asia


301,620



316,890



(5%)



(5%)

Japan


260,039



254,939



2%



1%

EMEA


167,165



182,394



(8%)



(3%)

Hong Kong/Taiwan


166,335



185,893



(11%)



(9%)

Other


1,621



3,423



(53%)



(53%)

Total Nu Skin


2,298,362



2,588,402



(11%)



(8%)

Manufacturing


121,917



90,606



35%



35%

Grow Tech


137



-



100%



100%

Total

$

2,420,416


$

2,679,008



(10%)



(7%)

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:


2019


2018


% Increase (Decrease)


Customers


Sales
Leaders


Customers


Sales
Leaders


Customers


Sales
Leaders













Mainland China


292,812



17,987



303,789



33,129



(4%)



(46%)

Americas/Pacific


220,216



7,607



248,609



8,354



(11%)



(9%)

South Korea


168,972



7,251



182,026



7,565



(7%)



(4%)

Southeast Asia


136,349



7,480



153,465



8,933



(11%)



(16%)

Japan


125,557



5,916



130,181



5,916



(4%)



-

EMEA


153,330



4,619



149,085



4,791



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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