PROVO, Utah, Nov. 5, 2019 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced third-quarter 2019 results. 

Executive Summary

Q3 2019 vs. Prior-Year Quarter


Revenue:

$589.9 million; (13%)

   •  (2%) fx impact or ($12 M)

Earnings Per Share (EPS):

$0.79; (16%)

Sales Leaders:

61,090; (16%)

Customers:

1,206,697; +4%

"We delivered strong profitability, with earnings per share at the high end of our range due to our focus on operational efficiencies," said Ritch Wood, chief executive officer. "Revenue came in slightly below expectation, primarily due to the challenging regulatory environment in Mainland China, where meeting restrictions continued throughout the quarter. Despite this, our sequential sales leader trends stabilized both in China and globally, and recent product introductions and business incentives drove year-over-year increases in customer acquisition. Our manufacturing segment also continued to perform well, with revenue growing 18 percent this quarter."

Q3 2019 Year-Over-Year Operating Results


Revenue:

$589.9 million compared to $675.3 million

   •  (2%) fx impact or ($12 M)

Gross Margin:

76.2% compared to 76.7%

   •  Nu Skin business was 78.6% compared to 78.7%

Selling Expenses:

39.3% of revenue compared to 40.2%

   •  Nu Skin business was 41.5% compared to 41.8%

G&A Expenses:

25.1% of revenue compared to 24.5%

Operating Margin:

11.8% compared to 11.9%

Other Income / (Expense):

($5.0) million compared to ($7.0) million

Income Tax Rate:

32.1% compared to 27.9%

EPS:

$0.79 compared to $0.94

 

Stockholder Value


Dividend Payments:

$20.6 million

Stock Repurchases:

Nil

 

Q4 and Full-Year 2019 Outlook


Q4 2019 Revenue:

$570 to $590 million; (17%) to (14%)

    •  Approximately (2%) fx impact

Q4 2019 EPS:

$0.68 to $0.75

2019 Revenue:

$2.41 billion to $2.43 billion; (10%) to (9%)

   •  Approximately (4%) fx impact

2019 EPS

$3.07 to $3.14

"In October, we hosted our global LIVE event in Salt Lake City to align and motivate our sales force and introduce our future product roadmap," continued Wood. "These new products include our new and improved Galvanic Spa and accompanying consumable products, which are launching in many of our markets this quarter. We expect to introduce several new products in 2020, including a newly reformulated Tru Face Essence Ultra and new Galvanic gels. We also announced our next major product launch – an innovative daily-use beauty device – that we anticipate will be a strong driver for our business in the second half of 2020. We are excited to add this product to our top-ranked beauty device systems brand."

Mark Lawrence, chief financial officer, added, "Our fourth quarter revenue guidance is $570 to $590 million, which includes an approximate 2 percent unfavorable foreign currency impact, and earnings per share outlook is for $0.68 to $0.75, considering expenses related to LIVE. For the full year, we project revenue of $2.41 to $2.43 billion, with an approximate 4 percent negative foreign currency impact and earnings per share of $3.07 to $3.14."

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 Nov. 19, 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;
  • 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;
  • 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 September 30, 2019 and 2018 for each of our reportable segments (U.S. dollars in thousands):


Three Months Ended

September 30,




Constant-
Currency


2019


2018


Change


Change









Nu Skin












Mainland China

$

173,974


$

226,645



(23)%



(21)%

Americas/Pacific


83,635



93,580



(11)%



(7)%

South Korea


79,435



89,963



(12)%



(6)%

Southeast Asia


78,963



86,307



(9)%



(10)%

Japan


67,197



63,649



6%



2%

Hong Kong/Taiwan


40,449



44,949



(10)%



(9)%

EMEA


35,742



42,819



(17)%



(13)%

Other


(62)



1,378



(104)%



(104)%

Total Nu Skin


559,333



649,290



(14)%



(12)%

Manufacturing


30,601



26,022



18%



18%

Grow Tech








Total

$

589,934


$

675,312



(13)%



(11)%

The following table sets forth revenue for the nine-month periods ended September 30, 2019 and 2018 for each of our reportable segments (U.S. dollars in thousands):


Nine Months Ended

September 30,




Constant-
Currency


2019


2018


Change


Change









Nu Skin












Mainland China

$

567,795


$

669,432



(15)%



(11)%

Americas/Pacific


262,932



289,859



(9)%



(3)%

South Korea


248,020



270,517



(8)%



(2)%

Southeast Asia


226,853



236,390



(4)%



(3)%

Japan


194,557



190,986



2%



1%

Hong Kong/Taiwan


124,719



138,147



(10)%



(8)%

EMEA


120,960



131,810



(8)%



(2)%

Other


(239)



2,643



(109)%



(109)%

Total Nu Skin


1,745,597



1,929,784



(10)%



(6)%

Manufacturing


91,430



65,937



39%



39%

Grow Tech


30







Total

$

1,837,057


$

1,995,721



(8)%



(4)%

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


As of

September 30, 2019


As of

September 30, 2018


% Increase (Decrease)


Customers


Sales
Leaders


Customers


Sales
Leaders


Customers


Sales
Leaders













Mainland China


317,257



23,776



210,212



33,335



51%



(29)%

Americas/Pacific


229,013



7,760



276,923



8,475



(17)%



(8)%

South Korea


169,589



7,363



180,254



7,700



(6)%



(4)%

Southeast Asia


145,845



7,936



146,586



8,668



(1)%



(8)%

Japan


128,373



5,964



130,831



6,182



(2)%



(4)%

Hong Kong/Taiwan


68,862



4,231



75,985



4,402



(9)%



(4)%

EMEA


147,758



4,060



144,977



4,320



2%



(6)%



















Total


1,206,697



61,090



1,165,768



73,082



4%



(16)%

"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

September 30,


Nine Months Ended

September 30,


2019


2018


2019


2018













Revenue

$

589,934


$

675,312


$

1,837,057


$

1,995,721

Cost of sales


140,162



157,457



440,854



472,287

Gross profit


449,772



517,855



1,396,203



1,523,434













Operating expenses:












Selling expenses


231,937



271,509



727,473



801,968

General and administrative expenses


147,943



165,671



455,983



499,037

Total operating expenses


379,880



437,180



1,183,456



1,301,005













Operating income


69,892



80,675



212,747



222,429

Other income (expense), net


(4,979)



(6,982)



(11,153)



(16,940)













Income before provision for income taxes


64,913



73,693



201,594



205,489

Provision for income taxes


20,823



20,547



68,153



65,843













Net income

$

44,090


$

53,146


$

133,441


$

139,646













Net income per share:












Basic

$

0.79


$

0.96


$

2.40


$

2.54

Diluted

$

0.79


$

0.94


$

2.39


$

2.47













Weighted-average common shares outstanding (000s):












Basic


55,548



55,603



55,507



55,075

Diluted


55,788



56,704



55,950



56,539

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)



   September 30,

 2019


December 31,
2018

ASSETS




Current assets:




Cash and cash equivalents

$

320,034


$

386,911

Current investments


7,458



11,346

Accounts receivable


56,342



53,282

Inventories, net


282,997



295,821

Prepaid expenses and other


72,298



51,877

 Total current assets


739,129



799,237







Property and equipment, net


447,653



464,535

Right-of-use assets


115,557



Goodwill


196,573



196,573

Other intangible assets, net


83,172



89,989

Other assets


154,821



144,112

Total assets

$

1,736,905


$

1,694,446







LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






Accounts payable

$

39,404


$

47,617

Accrued expenses


304,003



322,583

Current portion of long-term debt


25,000



69,455

 Total current liabilities


368,407



439,655













Operating lease liabilities


80,953



Long-term debt


341,724



361,008

Other liabilities


100,021



111,916

Total liabilities


891,105



912,579













Stockholders' equity:






Class A common stock


91



91

Additional paid-in capital


557,283



552,564

Treasury stock, at cost


(1,324,826)



(1,326,605)

Accumulated other comprehensive loss


(94,961)



(79,934)

Retained earnings


1,708,213



1,635,751

Total stockholders' equity


845,800



781,867

Total liabilities and stockholders' equity

$

1,736,905


$

1,694,446

 

 

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