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Nu Skin Enterprises Reports Third-Quarter 2019 Results and Declares a $0.37 Dividend

Seeking Alpha
Nu Skin Enterprises Reports Third-Quarter 2019 Results and Declares a $0.37 Dividend

Nu Skin Enterprises Reports Third-Quarter 2019 Results and Declares a $0.37 Dividend

|PR Newswire|About: NUS

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

https://mma.prnewswire.com/media/893776/Nu_Skin_Enterprises_Logo.jpg

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 (TSRMF) 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

 

 

https://c212.net/c/img/favicon.png?sn=LA27030&sd=2019-11-05View original content to download multimedia:http://www.prnewswire.com/news-releases/nu-skin-enterprises-reports-third-quarter-2019-results-300952207.html

SOURCE Nu Skin Enterprises, Inc.

Nu Skin (NYSE:NUS) declares $0.37/share quarterly dividend, in line with previous.

Forward yield 3.2%

Payable Dec. 11; for shareholders of record Nov. 29; ex-div Nov. 27.

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