NUS
$40.35
Nu Skin Enterprises
($.02)
(.05%)
Earnings Details
2nd Quarter June 2019
Tuesday, August 6, 2019 4:53:00 PM
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Summary

Nu Skin Reaffirms

Nu Skin Enterprises (NUS) reported 2nd Quarter June 2019 earnings of $0.83 per share on revenue of $623.5 million. The consensus earnings estimate was $0.83 per share on revenue of $633.2 million. Revenue fell 11.5% compared to the same quarter a year ago.

The company said it expects third quarter earnings of $0.74 to $0.81 per share on revenue of $595.0 million to $615.0 million and continues to expect 2019 earnings of $3.20 to $3.35 per share on revenue of $2.48 billion to $2.52 billion. The current consensus earnings estimate is $0.79 per share on revenue of $635.9 million for the quarter ending September 30, 2019 and $3.27 per share on revenue of $2.50 billion for the year ending December 31, 2019.

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
$0.83
Earnings Whisper
-
Consensus Estimate
$0.83
Reported Revenue
$623.5 Mil
Revenue Estimate
$633.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Nu Skin Enterprises Reports Second-Quarter 2019 Results

PROVO, Utah, Aug. 6, 2019 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced second-quarter 2019 results.  

Executive Summary

Q2 2019 vs. Prior-Year Quarter

Revenue:

$623.5 million; (11%)

  • (4%) fx impact or ($31 M)

Earnings Per Share (EPS):

$0.83; (8%)

Sales Leaders:

61,563; (14%)

Customers:

1,160,420; +1%

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

"As previously announced, our second-quarter results were negatively impacted by limited sales meetings, media scrutiny and consumer sentiment in Mainland China in connection with the recently completed 100-day review of the nutrition and direct sales industries," said Ritch Wood, chief executive officer. "Outside of Mainland China, most of our other markets performed in-line with expectations. Our customer numbers remained steady as we continued our customer-focused initiatives globally, while sales leaders declined 14 percent, primarily due to Mainland China."

Q2 2019 Year-Over-Year Operating Results

Revenue:

$623.5 million compared to $704.2 million

  • (4%) fx impact or ($31 M)

Gross Margin:

75.3% compared to 76.1%

  • Higher percentage of manufacturing revenue 
  • Nu Skin business was 77.8% compared to 77.9%
  • Impacted by fx, offset by cost savings

Selling Expenses:

39.4% of revenue compared to 38.7%

  • Nu Skin business was 41.5%

G&A Expenses:

24.0% of revenue compared to 25.6%

Operating Margin:

11.9% compared to 11.8%

Other Income / (Expense):

($3.3) million compared to ($11.2) million

Income Tax Rate:

34.6% compared to 28.8%

EPS:

$0.83 compared to $0.90

 

Stockholder Value

Dividend Payments:

$20.6 million

Stock Repurchases:

Nil

 

Q3 and Full-Year 2019 Outlook

Q3 2019 Revenue:

$595 to $615 million; (9%) to (12%)

•  Approximately (2%) fx impact

Q3 2019 EPS:

$0.74 to $0.81

2019 Revenue:

$2.48 billion to $2.52 billion; (6%) to (8%)

•  Approximately (3%) to (4%) fx impact

2019 EPS

$3.20 to $3.35

"We remain committed to our long-term growth strategy focused on attracting and retaining customers, and are confident that, despite recent external factors, we are moving in the right direction," said Wood. "We are encouraged by the resumption of some sales leader meetings in key areas of Mainland China. We remain optimistic about our opportunities with several key initiatives slated for the back half of the year around our Nu Skin LIVE global sales conference. Additionally, we will roll-out our new and improved Galvanic Spa beginning in September, which we believe will help drive global revenue. Finally, we are encouraged with the steady sales growth of our manufacturing platform, which we intend to continue to leverage moving forward."

Mark Lawrence, chief financial officer, added, "Consistent with the guidance provided on July 16, we anticipate annual revenue in the $2.48 to $2.52 billion range, with an approximate 3 to 4 percent unfavorable foreign currency impact, and earnings per share of $3.20 to $3.35. For the third quarter, we project revenue of $595 to $615 million, with an approximate 2 percent negative foreign currency impact, and earnings per share of $0.74 to $0.81."

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 Aug. 20, 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 this 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 June 30, 2019 and 2018 for each of our reportable segments (U.S. dollars in thousands):


Three Months Ended

June 30,




Constant-
Currency


2019


2018


Change


Change









Nu Skin












Mainland China

$

185,333


$

245,256



(24%)



(19%)

Americas/Pacific


92,841



103,990



(11%)



(6%)

South Korea


84,732



91,624



(8%)



Southeast Asia


75,395



79,223



(5%)



(3%)

Japan


65,251



64,113



2%



2%

Hong Kong/Taiwan


43,712



52,206



(16%)



(14%)

EMEA


43,400



44,010



(1%)



5%

Other


1,249



1,030



21%



21%

Total Nu Skin


591,913



681,452



(13%)



(9%)

Manufacturing


31,557



22,738



39%



39%

Grow Tech


30







Total

$

623,500


$

704,190



(11%)



(7%)

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


Six Months Ended

June 30,




Constant-
Currency


2019


2018


Change


Change









Nu Skin












Mainland China

$

393,821


$

442,787



(11%)



(5%)

Americas/Pacific


179,297



196,279



(9%)



(2%)

South Korea


168,585



180,554



(7%)



(1%)

Southeast Asia


147,890



150,083



(1%)



1%

Japan


127,360



127,337





1%

Hong Kong/Taiwan


84,270



93,198



(10%)



(7%)

EMEA


85,218



88,991



(4%)



3%

Other


(177)



1,265



(114%)



(114%)

Total Nu Skin


1,186,264



1,280,494



(7%)



(2%)

Manufacturing


60,829



39,915



52%



52%

Grow Tech


30







Total

$

1,247,123


$

1,320,409



(6%)



(1%)

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


As of

June 30, 2019


As of

June 30, 2018


% Increase (Decrease)


Customers


Sales
Leaders


Customers


Sales
Leaders


Customers


Sales
Leaders













Mainland China


226,877



24,336



209,456



33,378



8%



(27%)

Americas/Pacific


253,684



8,161



265,431



8,964



(4%)



(9%)

South Korea


180,365



7,239



183,978



6,875



(2%)



5%

Southeast Asia


137,450



7,417



134,601



7,597



2%



(2%)

Japan


127,900



5,931



131,593



5,972



(3%)



(1%)

Hong Kong/Taiwan


70,089



4,223



75,828



4,196



(8%)



1%

EMEA


164,055



4,256



147,048



4,355



12%



(2%)



















Total


1,160,420



61,563



1,147,935



71,337



1%



(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)

(U.S. dollars in thousands, except per share amounts)



Three Months Ended

June 30,


Six Months Ended

June 30,


2019


2018


2019


2018













Revenue

$

623,500


$

704,190


$

1,247,123


$

1,320,409

Cost of sales


154,028



168,549



300,692



314,830

Gross profit


469,472



535,641



946,431



1,005,579













Operating expenses:












Selling expenses


245,828



272,757



495,536



530,459

General and administrative expenses


149,442



180,120



308,040



333,366

Total operating expenses


395,270



452,877



803,576



863,825













Operating income


74,202



82,764



142,855



141,754

Other income (expense), net


(3,326)



(11,165)



(6,174)



(9,958)













Income before provision for income taxes


70,876



71,599



136,681



131,796

Provision for income taxes


24,527



20,638



47,330



45,296













Net income

$

46,349


$

50,961


$

89,351


$

86,500













Net income per share:












Basic

$

0.83


$

0.92


$

1.61


$

1.58

Diluted

$

0.83


$

0.90


$

1.59


$

1.53













Weighted-average common shares outstanding (000s):












Basic


55,536



55,608



55,486



54,807

Diluted


55,943



56,713



56,030



56,430

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)



   June 30,
2019


December 31,
2018

ASSETS




Current assets:




Cash and cash equivalents

$

360,632


$

386,911

Current investments


7,733



11,346

Accounts receivable


61,571



53,282

Inventories, net


292,696



295,821

Prepaid expenses and other


65,551



51,877

 Total current assets


788,183



799,237







Property and equipment, net


442,990



464,535

Right-of-use assets


118,507



Goodwill


196,573



196,573

Other intangible assets, net


84,482



89,989

Other assets


160,363



144,112

Total assets

$

1,791,098


$

1,694,446







LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






Accounts payable

$

48,551


$

47,617

Accrued expenses


306,497



322,583

Current portion of long-term debt


59,500



69,455

 Total current liabilities


414,548



439,655













Operating lease liabilities


84,102



Long-term debt


348,986



361,008

Other liabilities


108,512



111,916

Total liabilities


956,148



912,579













Stockholders' equity:






Class A common stock


91



91

Additional paid-in capital


556,294



552,564

Treasury stock, at cost


(1,324,834)



(1,326,605)

Accumulated other comprehensive loss


(81,276)



(79,934)

Retained earnings


1,684,675



1,635,751

Total stockholders' equity


834,950



781,867

Total liabilities and stockholders' equity

$

1,791,098


$

1,694,446

 

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SOURCE Nu Skin Enterprises, Inc.