NUS
$63.96
Nu Skin Enterprises
$.09
.14%
Earnings Details
2nd Quarter June 2017
Wednesday, August 2, 2017 4:15:00 PM
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Summary

Nu Skin Sees Third Quarter Below Estimates but 2017 Above

Nu Skin Enterprises (NUS) reported 2nd Quarter June 2017 earnings of $0.77 per share on revenue of $550.1 million. The consensus earnings estimate was $0.70 per share on revenue of $544.6 million. Revenue fell 8.4% compared to the same quarter a year ago.

The company said it expects third quarter earnings of $0.71 to $0.76 per share on revenue of $540.0 million to $560.0 million. The current consensus earnings estimate is $1.00 per share on revenue of $597.0 million for the quarter ending September 30, 2017. The company also said it now expects 2017 earnings of $3.20 to $3.30 per share and continues to expect revenue of $2.26 billion to $2.30 billion. The company's previous guidance was earnings of $3.10 to $3.25 per share and the current consensus earnings estimate is $3.07 per share on revenue of $2.27 billion for the year ending December 31, 2017.

Nu Skin Enterprises Inc is a direct selling company, which develops and distributes anti-aging personal care products and nutritional supplements that are sold under the Nu Skin and Pharmanex category brands.

Results
Reported Earnings
$0.77
Earnings Whisper
-
Consensus Estimate
$0.70
Reported Revenue
$550.1 Mil
Revenue Estimate
$544.6 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Nu Skin Enterprises Reports Second-Quarter 2017 Results

Nu Skin Enterprises, Inc. (NUS) today announced second-quarter 2017 financial results. The Company reported second-quarter revenue of $550.1 million, which was at the high end of its outlook of $530 to $550 million, and earnings per share of $0.77, which exceeded its outlook of $0.65 to $0.70.

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Executive Summary
Revenue:
$550.1 million, compared to $600.5 million in Q2 2016 which included $106 million in limited-time-offer (LTO) sales. Q2 2017 was negatively impacted 2% by foreign currency fluctuations.
Earnings Per Share (EPS): $0.77 benefitted $0.04 by a lower-than-expected tax rate, compared to $0.79 in Q2 2016.
Sales Leaders:
58,900 - 11% year-over-year decrease impacted by prior-year LTOs.
Customers:
1,060,000 - 5% year-over-year improvement.

"We are pleased to deliver strong quarterly results as we implement our growth strategy," said Ritch Wood, chief executive officer. "We believe our second-quarter results provide momentum we can build on as we prepare to introduce several new products and significant business initiatives in the fourth quarter. We remain focused on customer acquisition and are encouraged by our year-over-year customer growth. Looking forward, we believe our product and business initiatives, coupled with our continued efforts to increase our customer base, will help support business and sales leader growth in the second half of the year."

Q2 2017 Year-Over-Year Operating Results
Revenue:
$550.1 million compared to $600.5 million.
Gross Margin:
77.9% compared to 78.7%.
Selling Expenses:
41.5% of revenue compared to 41.4%.
G&A Expenses:
24.6% of revenue compared to 24.0%.
Operating Margin:
11.8% compared to 13.3%.
Other Income / (Expense): ($2.7) million compared to ($11.1) million, which included a foreign currency loss from the translation of Yen-denominated debt in 2016.
Income Tax Rate:
32.2% compared to 35.0% - benefitted from exercise of stock options.
EPS:
$0.77 compared to $0.79.
Stockholder Value
Dividend Payments: $19.1 million.
Stock Repurchases: $15.3 million; $177.6 million remaining in authorization.
2017 Outlook
Q3 Revenue:
$540 to $560 million; 2% negative foreign currency impact.
Q3 EPS:
$0.71 to $0.76.
2017 Revenue: $2.26 to $2.30 billion; 2 to 3% negative foreign currency impact.
2017 EPS
$3.20 to $3.30, an increase from the prior outlook of $3.10 to $3.25.

"As we move into the second half of the year, we remain focused on executing our three key growth drivers - platforms, products and programs," said Wood. "In the platforms area, we continue to drive social selling throughout our markets to expand our customer acquisition efforts. To support this strategy, we will introduce several new products at our ’Nu Skin LIVE!’ global distributor event in October, including our ageLOC LumiSpa device. Additionally, we will begin to introduce new and enhanced programs designed to more effectively reward our sales leaders to drive growth. The progress we are making with these initiatives gives us confidence in our future," Wood concluded.

"Given our strong second-quarter financial results, we are raising our full year 2017 earnings per share outlook to $3.20 to $3.30 and reiterating our annual revenue guidance of $2.26 to $2.30 billion," said Mark Lawrence, chief financial officer. "For the third quarter we project revenue of $540 to $560 million and earnings per share of $0.71 to $0.76. Our new products and programs are planned for the fourth quarter with the primary focus around ageLOC LumiSpa, which we anticipate will generate approximately $100 million in sales," concluded Lawrence.

Conference Call

The Nu Skin management team will host a conference call with the investment community on Aug. 2 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. 18, 2017.

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 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, sales force and customer base, growth, initiatives and areas of focus, and new product introductions; 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," "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:

any failure of current or planned initiatives or products to generate interest among our 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;

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;

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 we over-forecast demand for a product or change our 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;

adverse publicity related to the company’s business, products, industry or any legal actions or complaints by the company’s sales force or others;

-- unpredictable economic conditions and events globally;

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 favorable 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.

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

2017
2016
%
Constant
Change
Currency
% Change
Mainland China
$ 172,098
$ 184,344
(6.6%)
(1.9%)
South Korea
86,917
93,036
(6.6%)
(9.2%)
Americas
77,096
67,884
13.6%
15.0%
South Asia/Pacific
67,935
92,297
(26.4%)
(24.7%)
Japan
64,796
72,849
(11.1%)
(8.4%)
Hong Kong/Taiwan
43,071
52,372
(17.8%)
(20.7%)
EMEA
38,188
37,693
1.3%
2.6%
Total
$ 550,101
$ 600,475
(8.4%)
(6.8%)

The Company’s revenue results by segment for the six-month periods ended June 30 are presented in the following table (in thousands).

2017
2016
%
Constant
Change
Currency
% Change
Mainland China
$ 322,102
$ 302,999
6.3%
11.8%
South Korea
169,388
179,154
(5.5%)
(8.7%)
Americas
142,754
133,632
6.8%
7.5%
South Asia/Pacific
137,733
155,875
(11.6%)
(10.2%)
Japan
125,952
137,940
(8.7%)
(7.9%)
Hong Kong/Taiwan
79,019
92,428
(14.5%)
(17.5%)
EMEA
72,252
70,278
2.8%
4.4%
Total
$ 1,049,200
$ 1,072,306
(2.2%)
(0.9%)

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

2017
2016
% Increase (Decrease)
Customers
Sales Leaders
Customers
Sales Leaders
Customers
Sales Leaders
Mainland China
207,000
22,600
179,000
26,300
15.6%
(14.1%)
South Korea
188,000
7,700
216,000
8,900
(13.0%)
(13.5%)
Americas
209,000
7,000
165,000
6,500
26.7%
7.7%
South Asia/Pacific
125,000
7,100
113,000
7,700
10.6%
(7.8%)
Japan
134,000
6,400
140,000
7,200
(4.3%)
(11.1%)
Hong Kong/Taiwan
68,000
3,900
78,000
5,300
(12.8%)
(26.4%)
EMEA
129,000
4,200
121,000
4,200
6.6%
--
Total
1,060,000
58,900
1,012,000
66,100
4.7%
(10.9%)

"Customers" are persons who purchased products directly from the company during the previous three months.

"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)
For the Second Quarters Ended June 30, 2017 and 2016
(in thousands, except per share amounts)
2017
2016
Revenue
$ 550,101
$ 600,475
Cost of sales
121,521
128,205
Gross profit
428,580
472,270
Operating expenses:
Selling expenses
228,353
248,363
General and administrative expenses
135,488
144,109
Total operating expenses
363,841
392,472
Operating income
64,739
79,798
Other income (expense), net
(2,731)
(11,060)
Income before provision for income taxes
62,008
68,738
Provision for income taxes
19,967
24,025
Net income
$ 42,041
$ 44,713
Net income per share:
Basic
$0.79
$0.80
Diluted
$0.77
$0.79
Weighted average common shares outstanding:
Basic
52,929
55,952
Diluted
54,839
56,356
NU SKIN ENTERPRISES, INC.
Consolidated Statements of Income (Unaudited)
For the Six-Month Periods Ended June 30, 2017 and 2016
(in thousands, except per share amounts)
2017
2016
Revenue
$ 1,049,200
$ 1,072,306
Cost of sales
232,787
266,074
Gross profit
816,413
806,232
Operating expenses:
Selling expenses
437,361
443,922
General and administrative expenses
268,051
274,363
Total operating expenses
705,412
718,285
Operating income
111,001
87,947
Other income (expense), net
(7,298)
(13,923)
Income before provision for income taxes
103,703
74,024
Provision for income taxes
34,173
25,995
Net income
$ 69,530
$ 48,029
Net income per share:
Basic
$1.32
$0.86
Diluted
$1.28
$0.85
Weighted average common shares outstanding:
Basic
52,804
55,953
Diluted
54,466
56,388
NU SKIN ENTERPRISES, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands)
June 30, 2017
December 31, 2016
ASSETS
Current assets:
Cash and cash equivalents
$ 345,102
$ 357,246
Current investments
7,982
10,880
Accounts receivable
35,010
31,199
Inventories, net
246,658
249,936
Prepaid expenses and other
85,547
65,076
720,299
714,337
Property and equipment, net
450,707
444,732
Goodwill
114,954
114,954
Other intangible assets, net
59,802
63,553
Other assets
161,383
136,469
Total assets
$ 1,507,145
$ 1,474,045
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$ 37,846
$ 41,261
Accrued expenses
262,123
275,023
Current portion of long-term debt
100,533
82,727
400,502
399,011
Long-term debt
324,059
334,165
Other liabilities
83,014
76,799
Total liabilities
807,575
809,975
Stockholders’ equity:
Class A common stock
91
91
Additional paid-in capital
448,928
439,635
Treasury stock, at cost
(1,261,983)
(1,250,123)
Accumulated other comprehensive loss
(74,743)
(84,122)
Retained earnings
1,587,277
1,558,589
699,570
664,070
Total liabilities and stockholders’ equity
$ 1,507,145
$ 1,474,045

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SOURCE Nu Skin Enterprises, Inc.

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