EX-99.1 2 ex99-1.htm PRESS RELEASE DATED NOVEMBER 3, 2016

 
 
 
 
FOR IMMEDIATE RELEASE

CONTACTS:
Investors — Scott Pond (801) 345-2657, spond@nuskin.com
 Media — Kara Schneck (801) 345-2116, kschneck@nuskin.com



NU SKIN ENTERPRISES REPORTS THIRD-QUARTER 2016 RESULTS

PROVO, Utah — Nov. 3, 2016 — Nu Skin Enterprises, Inc. (NYSE: NUS) today announced third-quarter revenue above guidance at $604.2 million, compared to $571.3 million in the prior-year period. Quarterly revenue improved 6 percent, or 4 percent on a constant-currency basis. Earnings per share for the quarter were $0.98 and included a $0.09 positive impact from closing operations in Venezuela. Earnings per share in the prior-year period were $0.28 and were negatively impacted by several factors, including a $0.43 per share inventory write down.

"We are pleased that we exceeded guidance and posted year-over-year growth during the quarter," said Truman Hunt, president and chief executive officer. "We introduced ageLOC Youth in South Korea in the quarter and saw continued enthusiasm around the globe for our latest ageLOC products. We produced double-digit gains in North Asia and Greater China and posted growth in each of our regions with the exception of South Asia/Pacific, where a significant limited-time offer in the prior year made for a difficult comparison. We also generated modest growth in sales leaders globally."
 
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Nu Skin Enterprises, Inc.
Nov. 3, 2016
Page 2
Regional Results

The company's regional revenue results for the three-month periods ended September 30 are presented in the following table (in thousands).

   
2016
    
2015
    
%
Change
    
Constant Currency
% Change
  
                         
Greater China
  
$
216,460
    
$
188,669
      
15%
 
    
20%
 
North Asia
    
208,677
      
167,748
      
24%
 
    
14%
 
South Asia/Pacific
    
70,867
      
108,857
      
(35%)
 
    
(36%)
 
Americas
    
71,250
      
70,775
      
  1%
 
    
  3%
 
EMEA
    
36,908
      
35,259
      
  5%
 
    
  5%
 
                                 
Total
  
$
604,162
    
$
571,308
      
  6%
 
    
  4%
 

The company's regional revenue results for the nine-month periods ended September 30 are presented in the following table (in thousands).

   
2016
    
2015
    
%
Change
    
Constant Currency
% Change
  
                         
Greater China
  
$
611,887
    
$
576,172
      
  6%
 
    
11%
 
North Asia
    
525,771
      
512,757
      
  3%
 
    
---*
 
South Asia/Pacific
    
226,742
      
247,697
      
  (8%)
 
    
  (5%)
 
Americas
    
204,882
      
234,115
      
(12%)
 
    
  (8%)
 
EMEA
    
107,186
      
104,108
      
  3%
 
    
  4%
 
                                 
Total
  
$
1,676,468
    
$
1,674,849
      
  ---*
 
    
  2%
 
*Less than a 1% change.

The Company's regional actives and sales leaders statistics are presented in the following table.

   
As of September 30, 2016
         As of September 30, 2015    
% Increase (Decrease)
  
   
Actives
    
Sales Leaders
    
Actives
    
Sales Leaders
    
Actives
    
Sales Leaders
  
                                     
Greater China
    
257,000
      
30,617
      
211,000
      
25,044
      
22%
 
    
22%
 
North Asia
    
334,000
      
18,688
      
374,000
      
18,038
      
(11%)
 
    
  4%
 
South Asia/Pacific
    
116,000
      
7,213
      
120,000
      
9,925
      
  (3%)
 
    
(27%)
 
Americas
    
171,000
      
6,660
      
178,000
      
7,962
      
  (4%)
 
    
(16%)
 
EMEA
    
121,000
      
4,104
      
110,000
      
4,120
      
10%
 
    
 ---*
 
                                                 
Total
    
999,000
      
67,282
      
993,000
      
65,089
      
  1%
 
    
  3%
 
*Less than a 1% change.
 
"Actives" 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.
 
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Nu Skin Enterprises, Inc.
Nov. 3, 2016
Page 3

Operational Performance
 
The company's operating margin for the quarter was 13.6 percent, compared to 7.4 percent in the prior-year period. Gross margin for the quarter was 79.2 percent, compared to 73.3 percent in the prior-year quarter. Comparisons for both gross and operating margins were impacted by the China inventory charge in the third quarter of 2015. Selling expenses, as a percent of revenue, were 42.3 percent, compared to 42.1 percent in the prior-year period. General and administrative expenses, as a percent of revenue, were 23.3 percent, compared to 23.8 percent in the prior-year period. The company incurred a loss in Other Income/Expense of $5.7 million compared to $14.4 million in the prior-year period. The company's effective income tax rate for the quarter was 25.8 percent, compared to 42.1 percent in the third quarter of last year. The decrease in the effective tax rate is the result of a tax benefit from closing operations in Venezuela. Dividend payments during the quarter were $19.9 million, and the company repurchased $17.4 million of its outstanding shares, with $405 million remaining in the authorized share repurchase plan at the end of the quarter.
Outlook
"We are raising our guidance for the year given strong results in the third quarter," said Hunt. "Fourth-quarter promotional activities are focused on driving consumer loyalty. South Korea and South Asia will run ageLOC Me incentives, the Americas will launch ageLOC Me, and Japan and South Korea will launch ageLOC Youth. In addition, we have chosen to push the launch of ageLOC Me in the Greater China region to January of 2017.
 "Toward the end of the quarter we began deploying funds to repurchase stock, and anticipate that by the end of 2016 we will have utilized the $210 million acquired through the convertible note investment made by Ping An Securities," concluded Hunt.
"We are raising our revenue guidance for the year to $2.23 to $2.25 billion assuming a negative currency impact of approximately 2 percent," said Ritch Wood, chief financial officer. "For the fourth quarter, we project revenue of $550 to $570 million including a negative currency impact of 0 to 2 percent. We project fourth-quarter earnings per share of $0.77 to $0.81. We look forward to discussing our 2017 plans with shareholders at our annual investor day to be held on December 7, 2016 in New York," concluded Wood.
 
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Nu Skin Enterprises, Inc.
Nov. 3, 2016
Page 4
The Nu Skin management team will host a conference call with the investment community on Nov. 3, 2016 at 5 p.m. (EDT). 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. 18, 2016.

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 in more than 50 markets worldwide. 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. Since its introduction in 2008, the ageLOC brand has generated more than $5 billion in sales, and built 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. 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.
Please Note: 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, initiatives, sales force, consumers 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;
 
 
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Nu Skin Enterprises, Inc.
Nov. 3, 2016
Page 5
 
 
 
 
·
risk that direct selling laws and regulations in any of our markets, including the United States and 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 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 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.


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Nu Skin Enterprises, Inc.
Nov. 3, 2016
Page 6


NU SKIN ENTERPRISES, INC.
  
Consolidated Statements of Income (Unaudited)
  
For the Third Quarters Ended September 30, 2016 and 2015
  
(in thousands, except per share amounts)
  
             
   
2016
    
2015
  
             
Revenue
  
$
604,162
    
$
571,308
  
                 
Cost of sales
    
125,863
      
152,755
  
                 
Gross profit
    
478,299
      
418,553
  
                 
Operating expenses:
                
Selling expenses
    
255,274
      
240,260
  
General and administrative expenses
    
140,651
      
135,752
  
Total operating expenses
    
395,925
      
376,012
  
                 
Operating income
    
82,374
      
42,541
  
                 
Other income, net
    
(5,695
)
    
(14,428
)
Income before provision for income taxes
    
76,679
      
28,113
  
Provision for income taxes
    
19,807
      
11,846
  
                 
Net income
  
$
56,872
    
$
16,267
  
                 
Net income per share:
                
Basic
  
$
1.02
    
$
0.28
  
 Diluted
  
$
0.98
    
$
0.28
  
                 
Weighted average common shares outstanding:
                
Basic
    
55,983
      
57,725
  
 Diluted
    
57,852
      
58,663
  
 
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Nu Skin Enterprises, Inc.
Nov. 3, 2016
Page 7

NU SKIN ENTERPRISES, INC.
  
Consolidated Statements of Income (Unaudited)
  
For the Nine-Month Periods Ended September 30, 2016 and 2015
  
(in thousands, except per share amounts)
  
             
   
2016
    
2015
  
             
Revenue
  
$
1,676,468
    
$
1,674,849
  
                 
Cost of sales
    
391,937
      
368,073
  
                 
Gross profit
    
1,284,531
      
1,306,776
  
                 
Operating expenses:
                
Selling expenses
    
699,196
      
713,714
  
 General and administrative expenses
    
415,014
      
410,074
  
Total operating expenses
    
1,114,210
      
1,123,788
  
                 
Operating income
    
170,321
      
182,988
  
                 
Other (expense), net
    
(19,618
)
    
(29,454
)
Income before provision for income taxes
    
150,703
      
153,534
  
Provision for income taxes
    
45,802
      
56,328
  
                 
Net income
  
$
104,901
    
$
97,206
  
                 
Net income per share:
                
Basic
  
$
1.87
    
$
1.66
  
 Diluted
  
$
1.85
    
$
1.63
  
                 
Weighted average common shares outstanding:
                
Basic
    
55,963
      
58,403
  
 Diluted
    
56,586
      
59,565
  
 
 
 
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Nu Skin Enterprises, Inc.
Nov. 3, 2016
Page 8
NU SKIN ENTERPRISES, INC.
  
Consolidated Balance Sheets (Unaudited)
  
(in thousands)
  
             
   
September 30, 2016
    
December 31, 2015
  
ASSETS
            
Current assets:
            
Cash and cash equivalents
  
$
516,994
    
$
289,354
  
Current investments
    
15,603
      
14,371
  
Accounts receivable
    
35,985
      
35,464
  
Inventories, net
    
253,350
      
265,256
  
 Prepaid expenses and other
    
160,537
      
101,947
  
     
982,469
      
706,392
  
                 
Property and equipment, net
    
451,571
      
454,537
  
Goodwill
    
114,954
      
112,446
  
Other intangible assets, net
    
65,408
      
67,009
  
Other assets
    
137,413
      
165,459
  
 Total assets
  
$
1,751,815
    
$
1,505,843
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
Current liabilities:
                
Accounts payable
  
$
40,490
    
$
28,832
  
Accrued expenses
    
337,562
      
310,916
  
 Current portion of long-term debt
    
73,328
      
67,849
  
     
451,380
      
407,597
  
                 
Long-term debt
    
356,298
      
181,745
  
Other liabilities
    
89,726
      
90,880
  
Total liabilities
    
897,404
      
680,222
  
                 
Stockholders' equity:
                
Class A common stock
    
91
      
91
  
 Additional paid-in capital
    
431,563
      
419,921
  
       Treasury stock, at cost
    
(1,047,975
)
    
(1,017,063
)
 Accumulated other comprehensive loss
    
(68,523
)
    
(71,269
)
 Retained earnings
    
1,539,255
      
1,493,941
  
     
854,411
      
825,621
  
 Total liabilities and stockholders' equity
  
$
1,751,815
    
$
1,505,843
  


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