QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO
_____________
|
|
||
(Exact name of registrant as specified in its charter)
|
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
|
||
(Address of principal executive offices, including zip code)
|
(
|
||
(Registrant’s telephone number, including area code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
||
|
|
|
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Smaller reporting company
|
Emerging growth company
|
Page
|
|||
Part I.
|
Financial Information
|
||
Item 1.
|
|||
1
|
|||
2
|
|||
3
|
|||
4
|
|||
6
|
|||
7
|
|||
Item 2.
|
17 | ||
Item 3.
|
25 | ||
Item 4.
|
25 | ||
Part II.
|
Other Information
|
||
Item 1.
|
26 | ||
Item 1A.
|
26 | ||
Item 2.
|
27 | ||
Item 3.
|
27 | ||
Item 4.
|
27 | ||
Item 5.
|
27 | ||
Item 6.
|
28 | ||
29 |
June 30,
2022
|
December 31,
2021
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Current investments
|
|
|
||||||
Accounts receivable, net
|
|
|
||||||
Inventories, net
|
|
|
||||||
Prepaid expenses and other
|
|
|
||||||
Total current assets
|
|
|
||||||
Property and equipment, net
|
|
|
||||||
Operating lease right-of-use assets
|
|
|
||||||
Goodwill
|
|
|
||||||
Other intangible assets, net
|
|
|
||||||
Other assets
|
|
|
||||||
Total assets
|
$
|
|
$
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
|
$
|
|
||||
Accrued expenses
|
|
|
||||||
Current portion of long-term debt
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Operating lease liabilities
|
|
|
||||||
Long-term debt
|
|
|
||||||
Other liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (Notes 5 and 11)
|
|
|
||||||
Stockholders’ equity:
|
||||||||
Class A common stock –
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Treasury stock, at cost –
|
(
|
)
|
(
|
)
|
||||
Accumulated other comprehensive loss
|
(
|
)
|
(
|
)
|
||||
Retained earnings
|
|
|
||||||
Total stockholders’ equity
|
|
|
||||||
Total liabilities and stockholders’
equity
|
$
|
|
$
|
|
Three Months Ended
June 30,
|
Six
Months Ended
June 30,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Revenue
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Cost of sales
|
|
|
|
|
||||||||||||
Gross profit
|
|
|
|
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Selling expenses
|
|
|
|
|
||||||||||||
General and administrative expenses
|
|
|
|
|
||||||||||||
Total operating expenses
|
|
|
|
|
||||||||||||
Operating income
|
|
|
|
|
||||||||||||
Other income (expense), net
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Income before provision for income taxes
|
|
|
|
|
||||||||||||
Provision for income taxes
|
|
|
|
|
||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Net income per share (Note 6):
|
||||||||||||||||
Basic
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Diluted
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Weighted-average common shares outstanding (000s):
|
||||||||||||||||
Basic
|
|
|
|
|
||||||||||||
Diluted
|
|
|
|
|
Three Months Ended
June 30,
|
Six
Months Ended
June 30,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Net income
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Other comprehensive (loss) income, net of tax:
|
||||||||||||||||
Foreign currency translation adjustment, net of taxes of $
|
(
|
)
|
|
(
|
)
|
(
|
)
|
|||||||||
Net unrealized gains/(losses) on cash flow hedges, net of taxes of $(
|
|
(
|
)
|
|
|
|||||||||||
Reclassification adjustment for realized losses/(gains) in current earnings on cash flow hedges, net
of taxes of $
|
(
|
)
|
|
(
|
)
|
|
||||||||||
(
|
)
|
|
(
|
)
|
(
|
)
|
||||||||||
Comprehensive income
|
$
|
|
$
|
|
$
|
|
$
|
|
For the Three Months Ended June 30, 2022
|
||||||||||||||||||||||||
Class A
Common Stock
|
Additional
Paid-in Capital
|
Treasury
Stock
|
Accumulated Other
Comprehensive Loss
|
Retained
Earnings
|
Total
|
|||||||||||||||||||
Balance at April 1, 2022
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||||||
Net income
|
|
|
|
|
|
|
||||||||||||||||||
Other comprehensive loss, net of tax
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Repurchase of Class A common stock (Note 6)
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Exercise of employee stock options (
|
|
|
|
|
|
|
||||||||||||||||||
Stock-based compensation
|
|
|
|
|
|
|
||||||||||||||||||
Cash dividends
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Balance at June 30, 2022
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
For the Three Months Ended June 30, 2021
|
||||||||||||||||||||||||
Class A
Common Stock
|
Additional
Paid-in Capital
|
Treasury
Stock
|
Accumulated Other
Comprehensive Loss
|
Retained
Earnings
|
Total
|
|||||||||||||||||||
Balance at April 1, 2021
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||||||
Net income
|
|
|
|
|
|
|
||||||||||||||||||
Other comprehensive income, net of tax
|
|
|
|
|
|
|
||||||||||||||||||
Repurchase of Class A common stock (Note 6)
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Exercise of employee stock options (
|
|
|
|
|
|
|
||||||||||||||||||
Stock-based compensation
|
|
|
|
|
|
|
||||||||||||||||||
Cash dividends
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Balance at June 30, 2021
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
For the Six Months Ended June 30, 2022
|
||||||||||||||||||||||||
Class A
Common
Stock
|
Additional
Paid-in
Capital
|
Treasury
Stock
|
Accumulated
Other
Comprehensive
Loss
|
Retained
Earnings
|
Total
|
|||||||||||||||||||
Balance at January 1, 2022
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||||||
Net income
|
|
|
|
|
|
|
||||||||||||||||||
Other comprehensive loss, net of tax
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Repurchase of Class A common stock (Note 6)
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Exercise of employee stock options (
|
|
(
|
)
|
|
|
|
|
|||||||||||||||||
Stock-based compensation
|
|
|
|
|
|
|
||||||||||||||||||
Cash dividends
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Balance at June 30, 2022
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
For the Six
Months Ended June 30, 2021
|
||||||||||||||||||||||||
Class A
Common Stock
|
Additional
Paid-in Capital
|
Treasury
Stock
|
Accumulated Other
Comprehensive Loss
|
Retained
Earnings
|
Total
|
|||||||||||||||||||
Balance at January 1, 2021
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||||||
Net income
|
|
|
|
|
|
|
||||||||||||||||||
Other comprehensive loss, net of tax
|
|
|
|
(
|
)
|
|
(
|
)
|
||||||||||||||||
Repurchase of Class A common stock (Note 6)
|
|
|
(
|
)
|
|
|
(
|
)
|
||||||||||||||||
Exercise of employee stock options (
|
|
(
|
)
|
|
|
|
|
|||||||||||||||||
Stock-based compensation
|
|
|
|
|
|
|
||||||||||||||||||
Cash dividends
|
|
|
|
|
(
|
)
|
(
|
)
|
||||||||||||||||
Balance at June 30, 2021
|
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
Six
Months Ended
June 30,
|
||||||||
2022
|
2021
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
|
$
|
|
||||
Adjustments to reconcile net income to cash flows from operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Non-cash lease expense
|
|
|
||||||
Stock-based compensation
|
|
|
||||||
Foreign currency losses
|
|
|
||||||
Loss on disposal of assets
|
|
|
||||||
Deferred taxes
|
|
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable, net
|
(
|
)
|
(
|
)
|
||||
Inventories, net
|
|
(
|
)
|
|||||
Prepaid expenses and other
|
(
|
)
|
(
|
)
|
||||
Other assets
|
|
(
|
)
|
|||||
Accounts payable
|
|
(
|
)
|
|||||
Accrued expenses
|
(
|
)
|
(
|
)
|
||||
Other liabilities
|
(
|
)
|
|
|||||
Net cash provided by operating activities
|
|
|
||||||
Cash flows from investing activities:
|
||||||||
Purchases of property and equipment
|
(
|
)
|
(
|
)
|
||||
Proceeds on investment sales
|
|
|
||||||
Purchases of investments
|
(
|
)
|
(
|
)
|
||||
Acquisitions, net of cash acquired
|
( |
) | ||||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Exercise of employee stock options and taxes paid related to the net shares settlement of stock
awards
|
|
|
||||||
Payment of cash dividends
|
(
|
)
|
(
|
)
|
||||
Repurchases of shares of common stock
|
(
|
)
|
(
|
)
|
||||
Finance lease principal payments
|
(
|
)
|
(
|
)
|
||||
Payment of debt issuance costs
|
( |
) | ||||||
Payments of debt
|
(
|
)
|
(
|
)
|
||||
Proceeds from debt
|
|
|
||||||
Net cash used in financing activities
|
|
|
||||||
Effect of exchange rate changes on cash
|
(
|
)
|
(
|
)
|
||||
Net increase (decrease) in cash and cash equivalents
|
|
(
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
|
|
||||||
Cash and cash equivalents, end of period
|
$
|
|
$
|
|
1. |
The Company
|
2. |
Summary of Significant Accounting Policies
|
June 30,
2022
|
December 31,
2021
|
|||||||
Raw materials
|
$
|
|
$
|
|
||||
Finished goods
|
|
|
||||||
Total Inventory, net
|
$
|
|
$
|
|
3. |
Goodwill
|
June 30,
2022
|
December 31,
2021
|
|||||||
Nu Skin
|
||||||||
Americas
|
$
|
|
$
|
|
||||
Mainland China
|
|
|
||||||
Southeast Asia/Pacific
|
|
|
||||||
South Korea
|
|
|
||||||
Japan
|
|
|
||||||
EMEA
|
|
|
||||||
Hong Kong/Taiwan
|
|
|
||||||
Rhyz Investments
|
||||||||
Manufacturing
|
|
|
||||||
Rhyz Other
|
|
|
||||||
Total
|
$
|
|
$
|
|
4. |
Debt
|
Facility or Arrangement
|
Original
Principal Amount
|
Balance as of
June 30, 2022 (1)(2)
|
Balance as of
December 31, 2021
(1)(2)
|
Interest Rate
|
Repayment Terms
|
||||||||
2018 Credit Agreement term loan facility |
$ | $ |
|
||||||||||
2018 Credit Agreement revolving credit facility |
$ | |
|
||||||||||
Credit Agreement term loan facility
|
$
|
|
$
|
|
|
|
|
|
|||||
Credit Agreement revolving credit facility
|
$
|
|
|
|
|
(1) |
|
(2) |
|
5. |
Leases
|
Three Months Ended
June 30,
|
Six
Months Ended
June 30,
|
|||||||||||||||
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Operating lease expense
|
||||||||||||||||
Operating lease cost
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Variable lease cost
|
|
|
|
|
||||||||||||
Short-term lease cost
|
|
|
|
|
||||||||||||
Sublease income
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Finance lease expense
|
||||||||||||||||
Amortization of right-of-use assets
|
|
|
|
|
||||||||||||
Interest on lease liabilities
|
|
|
|
|
||||||||||||
Total lease expense
|
$
|
|
$
|
|
$
|
|
$
|
|
Six
Months Ended
June 30,
|
||||||||
2022
|
2021
|
|||||||
Operating cash outflow from operating leases
|
$
|
|
$
|
|
||||
Operating cash outflow from finance leases
|
$
|
|
$
|
|
||||
Financing cash outflow from finance leases
|
$
|
|
$
|
|
||||
Right-of-use assets obtained in exchange for operating lease obligations
|
$
|
|
$
|
|
||||
Right-of-use assets obtained in exchange for finance lease obligations
|
$
|
|
$
|
|
Year Ending December 31
|
Operating
Leases
|
Finance
Leases
|
||||||
2022
|
$
|
|
$
|
|
||||
2023
|
|
|
||||||
2024
|
|
|
||||||
2025
|
|
|
||||||
2026
|
|
|
||||||
Thereafter
|
|
|
||||||
Total
|
|
|
||||||
Less: Finance charges
|
|
|
||||||
Total principal liability
|
$
|
|
$
|
|
6. |
Capital Stock
|
7. |
Fair Value and Equity Investments
|
■ |
Level 1 – quoted prices in active markets for identical assets or liabilities;
|
■ |
Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
■ |
Level 3 – unobservable inputs based on the Company’s own assumptions.
|
Fair Value at June 30,
2022
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Financial assets (liabilities):
|
||||||||||||||||
Cash equivalents and current investments
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Derivative financial instruments asset
|
|
|
|
|
||||||||||||
Life insurance contracts
|
|
|
|
|
||||||||||||
Contingent consideration
|
|
|
(
|
)
|
(
|
)
|
||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
Fair Value at December 31, 2021
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Financial assets (liabilities):
|
||||||||||||||||
Cash equivalents and current investments
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Derivative financial instruments asset
|
|
|
|
|
||||||||||||
Life insurance contracts
|
|
|
|
|
||||||||||||
Contingent consideration
|
|
|
(
|
)
|
(
|
)
|
||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
Beginning balance at January 1
|
$
|
|
$
|
|
||||
Actual return on plan assets
|
(
|
)
|
|
|||||
Purchases and issuances
|
|
|
||||||
Sales and settlements
|
|
(
|
)
|
|||||
Transfers into Level 3
|
|
|
||||||
Ending balance at June 30
|
$
|
|
$
|
|
2022
|
2021
|
|||||||
Beginning balance at January 1
|
$
|
(
|
)
|
$
|
(
|
)
|
||
Additions from acquisitions
|
|
(
|
)
|
|||||
Changes in fair value of contingent consideration
|
|
(
|
)
|
|||||
Ending balance at June 30
|
$
|
(
|
)
|
$
|
(
|
)
|
8. |
Income Taxes
|
9. |
Derivatives and Hedging Activities
|
Fair Values of
Derivative Instruments
|
||||||||||
Derivatives in Cash flow
Hedging Relationships:
|
Balance Sheet
Location
|
June 30,
2022
|
December 31,
2021
|
|||||||
Interest Rate Swap - Asset
|
Prepaid expenses and other
|
$
|
|
$
|
|
|||||
Interest Rate Swap - Asset
|
Other assets
|
$
|
|
$
|
|
Amount of Gain (Loss)
Recognized in OCI on Derivatives
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
Derivatives in Cash flow
|
June 30,
|
June 30,
|
||||||||||||||
Hedging Relationships:
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Interest Rate Swaps
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
Amount of Gain (Loss)
Reclassified from Accumulated
Other Comprehensive Loss into Income
|
||||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||
Derivatives in Cash flow
|
Income Statement
|
June 30,
|
June 30,
|
|||||||||||||||
Hedging Relationships:
|
Location
|
2022
|
2021
|
2022
|
2021
|
|||||||||||||
Interest Rate Swaps
|
Other income (expense), net
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
10. |
Segment Information
|
Three Months Ended
June 30,
|
Six
Months Ended
June 30,
|
|||||||||||||||
(U.S. dollars in thousands) |
2022 | 2021 | 2022 | 2021 | ||||||||||||
Nu Skin
|
||||||||||||||||
Americas
|
$ |
$ |
$ |
$ |
||||||||||||
Mainland China
|
|
|
|
|
|
|
|
|
||||||||
Southeast Asia/Pacific | ||||||||||||||||
South Korea
|
||||||||||||||||
Japan
|
||||||||||||||||
EMEA
|
||||||||||||||||
Hong Kong/Taiwan | ||||||||||||||||
Nu Skin other | ||||||||||||||||
Total Nu Skin |
||||||||||||||||
Rhyz Investments |
||||||||||||||||
Manufacturing (1) | ||||||||||||||||
Rhyz other | ||||||||||||||||
Total Rhyz Investments |
||||||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
(1) |
|
Three Months Ended
June 30,
|
Six
Months Ended
June 30,
|
|||||||||||||||
(U.S. dollars in thousands)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Nu Skin
|
||||||||||||||||
Americas
|
$ | $ | $ | $ | ||||||||||||
Mainland China
|
|
|
|
|
||||||||||||
Southeast Asia/Pacific
|
||||||||||||||||
South Korea
|
|
|
|
|
||||||||||||
Japan
|
|
|
|
|
||||||||||||
EMEA
|
||||||||||||||||
Hong Kong/Taiwan
|
|
|
|
|
||||||||||||
Nu Skin contribution
|
|
|
|
|
||||||||||||
Rhyz Investments
|
||||||||||||||||
Manufacturing
|
|
|
|
|
||||||||||||
Rhyz other
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Rhyz Investments contribution
|
(
|
)
|
|
|
|
|||||||||||
Total segment contribution
|
|
|
|
|
||||||||||||
Corporate and other
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Operating income
|
|
|
|
|
||||||||||||
Other income (expense)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Income before provision for income taxes
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended
June 30,
|
Six
Months Ended
June 30,
|
|||||||||||||||
(U.S. dollars in thousands)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Nu Skin
|
||||||||||||||||
Americas
|
$ |
$ |
$ |
$ |
||||||||||||
Mainland China
|
|
|
|
|
|
|
|
|
||||||||
Southeast Asia/Pacific
|
|
|
|
|
||||||||||||
South Korea
|
|
|
|
|
||||||||||||
Japan
|
||||||||||||||||
EMEA
|
|
|
|
|||||||||||||
Hong Kong/Taiwan
|
|
|
|
|
||||||||||||
Total Nu Skin
|
|
|
|
|
||||||||||||
Rhyz Investments
|
||||||||||||||||
Manufacturing
|
|
|
|
|
||||||||||||
Rhyz other
|
|
|
|
|
||||||||||||
Total Rhyz Investments
|
|
|
|
|
||||||||||||
Corporate and other
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended
June 30,
|
Six
Months Ended
June 30,
|
|||||||||||||||
(U.S. dollars in thousands)
|
2022
|
2021
|
2022
|
2021
|
||||||||||||
Nu Skin
|
||||||||||||||||
Americas
|
$ |
$ |
$ |
$ |
||||||||||||
Mainland China
|
|
|
|
|
|
|
|
|
||||||||
Southeast Asia/Pacific
|
|
|
||||||||||||||
South Korea
|
|
|
|
|
||||||||||||
Japan
|
|
|
|
|
||||||||||||
EMEA
|
||||||||||||||||
Hong Kong/Taiwan
|
|
|
|
|
||||||||||||
Total Nu Skin
|
|
|
|
|
||||||||||||
Rhyz Investments
|
||||||||||||||||
Manufacturing
|
|
|
|
|
||||||||||||
Rhyz other
|
|
|
|
|
||||||||||||
Total Rhyz Investments
|
|
|
|
|
||||||||||||
Corporate and other
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
11. |
Commitments and Contingencies
|
12. |
Acquisitions
|
13. |
Restructuring
|
14. |
Subsequent Events
|
ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Three Months Ended
June 30,
|
Constant-
Currency
|
Six Months Ended
June 30,
|
Constant-
Currency
|
|||||||||||||||||||||||||||||
2022
|
2021
|
Change
|
Change(1)
|
2022
|
2021
|
Change
|
Change(1)
|
|||||||||||||||||||||||||
Nu Skin
|
||||||||||||||||||||||||||||||||
Americas
|
$
|
124,445
|
$
|
138,512
|
(10
|
)%
|
(9
|
)%
|
$
|
248,025
|
$
|
272,273
|
(9
|
)%
|
(8
|
)%
|
||||||||||||||||
Mainland China
|
86,808
|
154,182
|
(44
|
)%
|
(42
|
)%
|
211,303
|
303,775
|
(30
|
)%
|
(31
|
)%
|
||||||||||||||||||||
Southeast Asia/Pacific
|
94,067
|
83,968
|
12
|
%
|
16
|
%
|
184,303
|
167,257
|
10
|
%
|
14
|
%
|
||||||||||||||||||||
South Korea
|
69,308
|
88,604
|
(22
|
)%
|
(12
|
)%
|
141,441
|
169,735
|
(17
|
)%
|
(8
|
)%
|
||||||||||||||||||||
Japan
|
55,952
|
68,020
|
(18
|
)%
|
(3
|
)%
|
117,743
|
137,884
|
(15
|
)%
|
(3
|
)%
|
||||||||||||||||||||
EMEA
|
50,871
|
83,115
|
(39
|
)%
|
(31
|
)%
|
103,839
|
159,295
|
(35
|
)%
|
(28
|
)%
|
||||||||||||||||||||
Hong Kong/Taiwan
|
39,327
|
38,529
|
2
|
%
|
6
|
%
|
77,821
|
74,874
|
4
|
%
|
6
|
%
|
||||||||||||||||||||
Nu Skin other
|
1,318
|
947
|
39
|
%
|
39
|
%
|
1,938
|
1,825
|
6
|
%
|
6
|
%
|
||||||||||||||||||||
Total Nu Skin
|
522,096
|
655,877
|
(20
|
)%
|
(15
|
)%
|
1,086,413
|
1,286,918
|
(16
|
)%
|
(12
|
)%
|
||||||||||||||||||||
Rhyz Investments
|
||||||||||||||||||||||||||||||||
Manufacturing
|
38,229
|
48,140
|
(21
|
)%
|
(21
|
)%
|
78,570
|
94,125
|
(17
|
)%
|
(17
|
)%
|
||||||||||||||||||||
Rhyz other
|
290
|
38
|
663
|
%
|
663
|
%
|
531
|
38
|
1,297
|
%
|
1,297
|
%
|
||||||||||||||||||||
Total Rhyz Investments
|
38,519
|
48,178
|
(20
|
)%
|
(20
|
)%
|
79,101
|
94,163
|
(16
|
)%
|
(16
|
)%
|
||||||||||||||||||||
Total
|
$
|
560,615
|
$
|
704,055
|
(20
|
)%
|
(15
|
)%
|
$
|
1,165,514
|
$
|
1,381,081
|
(16
|
)%
|
(12
|
)%
|
(1) |
Constant-currency revenue change is a non-GAAP financial measure. See “Non-GAAP Financial Measures,” below.
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
|||||||||||||||||||||||
2022
|
2021
|
Change
|
2022
|
2021
|
Change
|
|||||||||||||||||||
Nu Skin
|
||||||||||||||||||||||||
Americas
|
$
|
30,026
|
$
|
28,998
|
4
|
%
|
$
|
55,149
|
$
|
57,743
|
(4
|
)%
|
||||||||||||
Mainland China
|
12,945
|
51,480
|
(75
|
)%
|
41,940
|
90,919
|
(54
|
)%
|
||||||||||||||||
Southeast Asia/Pacific
|
24,367
|
21,213
|
15
|
%
|
47,773
|
40,861
|
17
|
%
|
||||||||||||||||
South Korea
|
20,578
|
28,892
|
(29
|
)%
|
43,321
|
55,417
|
(22
|
)%
|
||||||||||||||||
Japan
|
13,451
|
16,461
|
(18
|
)%
|
28,764
|
34,442
|
(16
|
)%
|
||||||||||||||||
EMEA
|
6,162
|
13,681
|
(55
|
)%
|
9,998
|
22,577
|
(56
|
)%
|
||||||||||||||||
Hong Kong/Taiwan
|
9,161
|
8,560
|
7
|
%
|
17,851
|
15,908
|
12
|
%
|
||||||||||||||||
Total Nu Skin
|
116,690
|
169,285
|
(31
|
)%
|
244,796
|
317,867
|
(23
|
)%
|
||||||||||||||||
Rhyz Investments
|
||||||||||||||||||||||||
Manufacturing
|
1,188
|
6,764
|
(82
|
)%
|
4,480
|
12,590
|
(64
|
)%
|
||||||||||||||||
Rhyz other
|
(1,299
|
)
|
(519
|
)
|
(150
|
)%
|
(2,345
|
)
|
(519
|
)
|
(352
|
)%
|
||||||||||||
Total Rhyz Investments
|
$ |
(111
|
)
|
$ |
6,245
|
(102
|
)%
|
$ |
2,135
|
$ |
12,071
|
82
|
%
|
● |
“Customers” are persons who have purchased directly from the Company during the three months ended as of the date indicated. Our Customer numbers include members of our sales force who made such a purchase, including Paid Affiliates and
those who qualify as Sales Leaders, but they do not include consumers who purchase products directly from members of our sales force.
|
● |
“Paid Affiliates” are any Brand Affiliates, as well as sales employees and independent marketers in Mainland China, who earned sales compensation during the three-month period. In all of our markets besides Mainland China, we refer to
members of our independent sales force as “Brand Affiliates” because their primary role is to promote our brand and products through their personal social networks.
|
● |
“Sales Leaders” are the three-month average of our monthly Brand Affiliates, as well as sales employees and independent marketers in Mainland China, who had achieved certain qualification requirements as of the end of each month of the
quarter.
|
Three Months Ended
June 30,
|
||||||||||||
Customers
|
2022
|
2021
|
Change
|
|||||||||
Americas
|
302,849
|
368,052
|
(18
|
)%
|
||||||||
Mainland China
|
|
392,268
|
328,526
|
19
|
%
|
|||||||
Southeast Asia/Pacific
|
152,775
|
165,221
|
(8
|
)%
|
||||||||
South Korea
|
135,290
|
153,282
|
(12
|
)%
|
||||||||
Japan
|
122,643
|
125,734
|
(2
|
)%
|
||||||||
EMEA
|
205,379
|
261,881
|
(22
|
)%
|
||||||||
Hong Kong/Taiwan
|
69,411
|
64,861
|
7
|
%
|
||||||||
Total
|
1,380,615
|
1,467,557
|
(6
|
)%
|
Three Months Ended
June 30,
|
||||||||||||
Paid Affiliates
|
2022
|
2021
|
Change
|
|||||||||
Americas
|
44,523
|
53,492
|
(17
|
)%
|
||||||||
Mainland China
|
|
19,257
|
39,889
|
(52
|
)%
|
|||||||
Southeast Asia/Pacific
|
41,512
|
44,734
|
(7
|
)%
|
||||||||
South Korea
|
48,605
|
52,680
|
(8
|
)%
|
||||||||
Japan
|
38,269
|
38,623
|
(1
|
)%
|
||||||||
EMEA
|
32,323
|
42,682
|
(24
|
)%
|
||||||||
Hong Kong/Taiwan
|
17,644
|
17,815
|
(1
|
)%
|
||||||||
Total
|
242,133
|
289,915
|
(16
|
)%
|
Three Months Ended
June 30,
|
||||||||||||
Sales Leaders
|
2022
|
2021
|
Change
|
|||||||||
Americas
|
9,320
|
11,752
|
(21
|
)%
|
||||||||
Mainland China
|
|
11,458
|
20,946
|
(45
|
)%
|
|||||||
Southeast Asia/Pacific
|
8,407
|
8,190
|
3
|
%
|
||||||||
South Korea
|
6,557
|
7,701
|
(15
|
)%
|
||||||||
Japan
|
6,097
|
6,057
|
1
|
%
|
||||||||
EMEA
|
5,192
|
8,002
|
(35
|
)%
|
||||||||
Hong Kong/Taiwan
|
3,054
|
3,446
|
(11
|
)%
|
||||||||
Total
|
50,085
|
66,094
|
(24
|
)%
|
● |
purchases and expenditures for computer systems and equipment, software, and application development;
|
● |
the expansion and upgrade of facilities in our various markets; and
|
● |
a new manufacturing plant in Mainland China.
|
ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4. |
CONTROLS AND PROCEDURES
|
ITEM 1. |
LEGAL PROCEEDINGS
|
ITEM 1A. |
RISK FACTORS
|
● |
any adverse publicity or negative public perception regarding us, our products or ingredients, our distribution channel, or our industry or competitors;
|
● |
lack of interest in, dissatisfaction with, or the technical failure of, existing or new products;
|
● |
lack of compelling products or income opportunities, including through our sales compensation plans and incentive trips and other offerings;
|
● |
negative sales force reaction to changes in our sales compensation plans or to our failure to make changes that would be necessary to keep our compensation competitive with the market;
|
● |
interactions with our company, including our actions to enforce our policies and procedures and the quality of our customer service;
|
● |
any regulatory actions or charges against us or others in our industry, as well as regulatory changes that impact product formulations and sales viability;
|
● |
general economic, business, public health and geopolitical conditions, including employment levels, employment trends such as the gig and sharing economies, pandemics or other conditions
that curtail person-to-person interactions, and the ongoing conflict in Russia and Ukraine which has caused distraction to our sales force;
|
● |
changes in the policies of social media platforms used to prospect or recruit potential consumers and sales force participants;
|
● |
our and our sales force’s ability to provide a positive customer experience and to facilitate customer loyalty;
|
● |
recruiting efforts of our competitors and changes in consumer-loyalty trends; and
|
● |
potential saturation or maturity levels in a given market, which could negatively impact our ability to attract and retain our sales force in such market.
|
● |
the possibility that a government might ban or severely restrict our sales compensation and business models;
|
● |
the possibility that local civil unrest, political instability, or changes in diplomatic or trade relationships might disrupt our operations in one or more markets—for example, the ongoing conflict in Russia and
Ukraine has caused distraction to our sales force;
|
● |
the lack of well-established or reliable legal systems in certain areas where we operate;
|
● |
the presence of high inflation in the economies of international markets in which we operate;
|
● |
the possibility that a government authority might impose legal, tax, customs, or other financial burdens on us or our sales force, due, for example, to the structure of our operations in various markets;
|
● |
the possibility that a government authority might challenge the status of our sales force as independent contractors or impose employment or social taxes on our sales force; and
|
● |
the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash.
|
ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
(a)
|
(b)
|
(c)
|
(d)
|
|||||||||||||
Period
|
Total
Number
of Shares
Purchased
|
Average
Price Paid
per Share
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
Approximate Dollar
Value of Shares that May
Yet Be Purchased Under
the Plans or Programs
(in millions)(1)
|
||||||||||||
April 1 - 30, 2022
|
—
|
$
|
—
|
—
|
$
|
235.4
|
||||||||||
May 1 - 31, 2022
|
109,818
|
44.64
|
109,818
|
$
|
230.5
|
|||||||||||
June 1 - 30, 2022
|
112,017
|
45.55
|
112,017
|
$
|
225.4
|
|||||||||||
Total
|
221,835
|
$
|
45.10
|
221,835
|
(1) |
In August 2018, we announced that our board of directors approved a stock repurchase plan. Under this plan, our board of directors authorized the repurchase of up to $500 million of our outstanding Class A common stock on the open market
or in privately negotiated transactions.
|
ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4. |
MINE SAFETY DISCLOSURES
|
ITEM 5. |
OTHER INFORMATION
|
ITEM 6. |
EXHIBITS
|
Exhibits
Regulation S-K
Number
|
Description
|
|
Amended and Restated Credit Agreement among the Company, various financial institutions, and Bank of America, N.A. as administrative agent, dated as of June 14, 2022 (incorporated by reference to Exhibit 10.1
to the Company's Current Report on Form 8-K filed June 17, 2022).
|
||
Certification by Ryan S. Napierski, Chief Executive Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification by Mark H. Lawrence, Chief Financial Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
||
Certification by Ryan S. Napierski, Chief Executive Officer, pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
Certification by Mark H. Lawrence, Chief Financial Officer, pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
||
101.INS
|
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document
|
|
104
|
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
|
August 4, 2022
|
||
NU SKIN ENTERPRISES, INC.
|
||
By:
|
/s/ Mark H. Lawrence
|
|
Mark H. Lawrence
|
||
Chief Financial Officer
|
||
(Duly Authorized Officer and Principal Financial Officer)
|
1. |
I have reviewed this quarterly report on Form 10-Q of Nu Skin Enterprises, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 4, 2022
|
/s/ Ryan S. Napierski
|
|
Ryan S. Napierski
|
||
Chief Executive Officer
|
1. |
I have reviewed this quarterly report on Form 10-Q of Nu Skin Enterprises, Inc.;
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4. |
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5. |
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the
audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
|
(b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: August 4, 2022
|
/s/ Mark H. Lawrence
|
|
Mark H. Lawrence
|
||
Chief Financial Officer
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 4, 2022
|
/s/ Ryan S. Napierski
|
|
Ryan S. Napierski
|
||
Chief Executive Officer
|
1. |
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2. |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: August 4, 2022
|
/s/ Mark H. Lawrence
|
|
Mark H. Lawrence
|
||
Chief Financial Officer
|
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares shares in Millions |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Stockholders' equity: | ||
Common stock, shares authorized (in shares) | 500.0 | 500.0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares issued (in shares) | 90.6 | 90.6 |
Treasury stock (in shares) | 39.9 | 40.7 |
Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Consolidated Statements of Income [Abstract] | ||||
Revenue | $ 560,615 | $ 704,055 | $ 1,165,514 | $ 1,381,081 |
Cost of sales | 148,100 | 171,975 | 309,599 | 342,541 |
Gross profit | 412,515 | 532,080 | 855,915 | 1,038,540 |
Operating expenses: | ||||
Selling expenses | 219,426 | 280,589 | 462,125 | 556,554 |
General and administrative expenses | 141,562 | 166,115 | 290,118 | 333,697 |
Total operating expenses | 360,988 | 446,704 | 752,243 | 890,251 |
Operating income | 51,527 | 85,376 | 103,672 | 148,289 |
Other income (expense), net | (8,640) | (4,012) | (10,093) | (2,430) |
Income before provision for income taxes | 42,887 | 81,364 | 93,579 | 145,859 |
Provision for income taxes | 8,650 | 22,026 | 20,626 | 39,091 |
Net income | $ 34,237 | $ 59,338 | $ 72,953 | $ 106,768 |
Net income per share (Note 6): | ||||
Basic (in dollars per share) | $ 0.68 | $ 1.18 | $ 1.45 | $ 2.12 |
Diluted (in dollars per share) | $ 0.67 | $ 1.15 | $ 1.43 | $ 2.06 |
Weighted-average common shares outstanding: | ||||
Basic (in shares) | 50,368 | 50,115 | 50,181 | 50,409 |
Diluted (in shares) | 50,960 | 51,557 | 50,959 | 51,850 |
Consolidated Statements of Comprehensive Income (Unaudited) (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Other comprehensive (loss) income, net of tax: | ||||
Foreign currency translation adjustment, tax | $ 36 | $ 3 | $ 29 | $ 1 |
Net unrealized gains/(losses) on foreign currency cash flow hedges, tax | (436) | 168 | (2,179) | (671) |
Reclassification adjustment for realized losses/(gains) in current earnings on cash flow hedges, tax | $ 65 | $ (8) | $ 61 | $ (14) |
Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands |
Common Stock [Member]
Class A [Member]
|
Additional Paid-in Capital [Member] |
Treasury Stock [Member] |
Accumulated Other Comprehensive Loss [Member] |
Retained Earnings [Member] |
Total |
---|---|---|---|---|---|---|
Balance at beginning of period at Dec. 31, 2020 | $ 91 | $ 579,801 | $ (1,461,593) | $ (64,768) | $ 1,840,740 | $ 894,271 |
Stockholders' Equity [Roll Forward] | ||||||
Net income | 0 | 0 | 0 | 0 | 106,768 | 106,768 |
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | (3,785) | 0 | (3,785) |
Repurchase of Class A common stock (Note 6) | 0 | 0 | (60,410) | 0 | 0 | (60,410) |
Exercise of employee stock options/vesting of stock awards | 0 | (6,208) | 12,136 | 0 | 0 | 5,928 |
Stock-based compensation | 0 | 13,383 | 0 | 0 | 0 | 13,383 |
Cash dividends | 0 | 0 | 0 | 0 | (38,329) | (38,329) |
Balance at end of period at Jun. 30, 2021 | 91 | 586,976 | (1,509,867) | (68,553) | 1,909,179 | 917,826 |
Balance at beginning of period at Mar. 31, 2021 | 91 | 579,204 | (1,505,076) | (71,626) | 1,868,881 | 871,474 |
Stockholders' Equity [Roll Forward] | ||||||
Net income | 0 | 0 | 0 | 0 | 59,338 | 59,338 |
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | 3,073 | 0 | 3,073 |
Repurchase of Class A common stock (Note 6) | 0 | 0 | (10,004) | 0 | 0 | (10,004) |
Exercise of employee stock options/vesting of stock awards | 0 | 1,192 | 5,213 | 0 | 0 | 6,405 |
Stock-based compensation | 0 | 6,580 | 0 | 0 | 0 | 6,580 |
Cash dividends | 0 | 0 | 0 | 0 | (19,040) | (19,040) |
Balance at end of period at Jun. 30, 2021 | 91 | 586,976 | (1,509,867) | (68,553) | 1,909,179 | 917,826 |
Balance at beginning of period at Dec. 31, 2021 | 91 | 601,703 | (1,526,860) | (73,896) | 1,911,734 | 912,772 |
Stockholders' Equity [Roll Forward] | ||||||
Net income | 0 | 0 | 0 | 0 | 72,953 | 72,953 |
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | (16,742) | 0 | (16,742) |
Repurchase of Class A common stock (Note 6) | 0 | 0 | (20,010) | 0 | 0 | (20,010) |
Exercise of employee stock options/vesting of stock awards | 0 | (1,503) | 26,101 | 0 | 0 | 24,598 |
Stock-based compensation | 0 | 6,149 | 0 | 0 | 0 | 6,149 |
Cash dividends | 0 | 0 | 0 | 0 | (38,685) | (38,685) |
Balance at end of period at Jun. 30, 2022 | 91 | 606,349 | (1,520,769) | (90,638) | 1,946,002 | 941,035 |
Balance at beginning of period at Mar. 31, 2022 | 91 | 599,258 | (1,526,778) | (69,528) | 1,931,157 | 934,200 |
Stockholders' Equity [Roll Forward] | ||||||
Net income | 0 | 0 | 0 | 0 | 34,237 | 34,237 |
Other comprehensive income (loss), net of tax | 0 | 0 | 0 | (21,110) | 0 | (21,110) |
Repurchase of Class A common stock (Note 6) | 0 | 0 | (10,004) | 0 | 0 | (10,004) |
Exercise of employee stock options/vesting of stock awards | 0 | 5,069 | 16,013 | 0 | 0 | 21,082 |
Stock-based compensation | 0 | 2,022 | 0 | 0 | 0 | 2,022 |
Cash dividends | 0 | 0 | 0 | 0 | (19,392) | (19,392) |
Balance at end of period at Jun. 30, 2022 | $ 91 | $ 606,349 | $ (1,520,769) | $ (90,638) | $ 1,946,002 | $ 941,035 |
Consolidated Statements of Stockholders' Equity (Unaudited) (Parenthetical) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Stockholders' Equity [Roll Forward] | ||||
Exercise of employee stock options (in shares) | 0.7 | 0.2 | 1.1 | 0.5 |
The Company |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 | |||
The Company [Abstract] | |||
The Company |
Nu Skin Enterprises, Inc. (the “Company”) is a holding company, with Nu Skin, being the primary operating unit. Nu Skin develops and distributes
premium-quality, innovative beauty and wellness products that are sold worldwide under the Nu Skin, Pharmanex and ageLOC brands and a small number of other products and services. The Company reports revenue from nine segments, consisting of its seven
geographic Nu Skin segments—Americas,
which includes Canada, Latin America and the United States; Mainland China; Southeast Asia/Pacific, which includes Australia, Indonesia, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam; South Korea; Japan; Europe, Middle
East and Africa (“EMEA”), which includes markets in Europe as well as Israel and South Africa; and Hong Kong/Taiwan, which also includes Macau—and two
Rhyz Investments segments—Manufacturing, which includes manufacturing and packaging subsidiaries it has acquired; and Rhyz other, which includes other investments by its Rhyz strategic investment arm (the Company’s subsidiaries operating within
each segment are collectively referred to as the “Subsidiaries”).
|
Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies |
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of
America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by US GAAP for complete financial statements. The unaudited consolidated financial statements include the accounts of the Company and its Subsidiaries. All significant intercompany accounts and transactions are eliminated
in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered
necessary for a fair statement of the Company’s financial information as of June 30, 2022, and for the three-and six-month periods ended June 30, 2022 and 2021. The results of operations
of any interim period are not necessarily indicative of the results of operations to be expected for the fiscal year. The consolidated balance sheet as of December 31, 2021 has been prepared using information from the audited financial statements at that date. For further information, refer to the
consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Reclassifications
Certain prior period amounts have been reclassified to conform to the current
presentation. The Company reclassified $2.7 million and $4.9 million of events and other miscellaneous selling costs from the general and administration expenses
line to the second
line on the consolidated statement of income for the quarter and first half of 2021, respectively. The Company believes these costs are better reflected in selling expenses. The reclassification had no impact
on operating income for the second quarter or first half of 2021.
Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued, ASU
2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for
a limited time to ease the potential burden in accounting for the effects of reference rate reform on financial reporting. The guidance provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other
transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 applies only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be
discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The amendments in ASU
2020-04 are elective and are effective upon issuance for all entities. The Company had previously elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to
assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. In the second quarter of 2022, the Company elected the hedge accounting expedient that allows an update to the hedged risk
in active hedging relationships without de-designation as the Company’s debt transitioned to Secured Overnight Financing Rate (“SOFR”). Application of these expedients preserves the presentation of derivatives consistent with past presentation. The
Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
Inventory
Inventories consist of the following (U.S. dollars in thousands):
Revenue Recognition
Contract Liabilities – Customer Loyalty Programs
Contract liabilities, recorded as deferred revenue within the accrued expenses line in the consolidated balance sheets, include loyalty point
program deferrals with certain customers which are accounted for as a reduction in the transaction price and are generally recognized as points are redeemed for additional products.
The balance of deferred revenue related to contract liabilities as of June 30, 2022 and December 31, 2021 was $18.4
million and $22.0 million, respectively. The contract liabilities impact to revenue for the three-month
periods ended June 30, 2022, and 2021 was an increase of $2.4 million and a decrease
of $4.0 million, respectively. The impact to revenue for the six-month periods ended June 30, 2022, and 2021 was an increase of $3.6 million and a decrease of $5.6 million, respectively.
|
Goodwill |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
The Company’s reporting units for goodwill are its operating segments, which are also its reportable segments.
The following table presents goodwill allocated to the Company’s reportable segments
for the periods ended June 30, 2022 and
December 31, 2021 (U.S. dollars in thousands):
|
Debt |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt |
2018 Credit Agreement
On April 18, 2018, the Company entered into a Credit Agreement (the “2018 Credit Agreement”) with several financial institutions as lenders and Bank
of America, N.A., as administrative agent. The 2018 Credit Agreement provided for a $400 million term loan facility and a $350 million revolving credit facility, each with a term of five years. Both facilities bore interest at the LIBOR, plus a margin based on the consolidated leverage ratio. The term loan facility amortized in quarterly installments in amounts resulting in an annual amortization of 5.0% during the first and second years, 7.5%
during the third and fourth years and 10.0% during the fifth year after the closing date of the 2018 Credit Agreement, with the remainder
payable at final maturity. The 2018 Credit Agreement required the Company to maintain a consolidated leverage ratio not exceeding 2.25 to
1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00.
Credit Agreement
On June 14, 2022, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with several financial institutions as lenders and Bank of
America, N.A., as administrative agent, which amended and restated the 2018 Credit Agreement. The Credit Agreement provides for a $400
million term loan facility and a $500 million revolving credit facility, each with a term of five years. Both facilities bear interest at the SOFR, plus a margin based on the Company’s consolidated leverage ratio. Commitment fees payable under the Credit Agreement
are also based on the consolidated leverage ratio as defined in the Credit Agreement and range from 0.175% to 0.30% on the unused portion of the total lender commitments then in effect. The term loan facility amortizes in quarterly installments in amounts
resulting in an annual amortization of 2.5% during the first year and 5.0% during the second, third, fourth and fifth years after the closing date of the Credit Agreement, with the remainder payable at final maturity. The Credit Agreement is
guaranteed by certain of the Company's domestic subsidiaries and collateralized by assets of such subsidiaries, including a pledge of 65%
of the capital stock of certain foreign subsidiaries. The Credit Agreement requires the Company to maintain a consolidated leverage ratio not exceeding 2.75
to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00. As of June 30, 2022, the Company was in compliance with
all covenants under the Credit Agreement.
The following table summarizes the Company’s debt facilities as of June 30, 2022 and December 31, 2021:
|
Leases |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases |
As of June 30, 2022, the weighted average remaining lease term was 8.2 and 3.3 years for operating and
finance leases, respectively. As of June 30, 2022, the weighted average discount rate was 3.6% and 3.8% for operating and finance leases, respectively.
The components of lease expense were as follows (U.S. dollars in thousands):
Supplemental cash flow information related to leases was as follows (U.S. dollars in thousands):
Maturities of lease liabilities were as follows (U.S. dollars in thousands):
The Company has additional lease liabilities of $0.3 million which have not yet commenced as of June 30, 2022, and as such, have not been recognized on the consolidated balance sheets.
|
Capital Stock |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 | |||
Capital Stock [Abstract] | |||
Capital Stock |
Net income per share
Net income per share is computed based on the weighted-average number of common
shares outstanding during the periods presented. Additionally, diluted earnings per share data gives effect to all potentially dilutive common shares that were outstanding during the periods presented. For the three-month periods ended June 30, 2022 and 2021, stock options of 0.1 million and 0.1 million, respectively, and for the six-month periods ended June 30, 2022 and 2021, stock options of 0.1 million and 0.1 million, respectively, were excluded from the calculation of diluted earnings per
share because they were anti-dilutive.
Dividends
In
and , the Company’s board of directors declared
quarterly cash dividends of $0.385 per share. These quarterly cash dividends of $19.3 million and $19.4 million were paid on March 9, 2022 and June 8, 2022,
respectively, to stockholders of record on February 28, 2022 and May 27, 2022, respectively. In , the Company’s board
of directors declared a quarterly cash dividend of $0.385 per share to be paid on September 7, 2022 to stockholders of record on August 26, 2022.
Repurchase of common stock
During the three-month periods ended June 30, 2022 and 2021, the Company repurchased 0.2
million and 0.2 million shares of its Class A common stock under its stock repurchase plan for $10.0 million and $10.0 million,
respectively. During the six-month periods ended June 30, 2022 and 2021,
the Company repurchased 0.4 million shares and 1.2 million shares of its Class A common stock under its stock repurchase plan for $20.0 million
and $60.4 million, respectively. As of June 30, 2022, $225.4
million was available for repurchases under the Company’s stock repurchase plan.
|
Fair Value and Equity Investments |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value and Equity Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value and Equity Investments |
Fair Value
The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximates fair values
due to the short-term nature of these instruments. The carrying value of debt approximates fair value due to the variable 30-day interest
rate. Fair value estimates are made at a specific point in time, based on relevant market information.
The FASB Codification defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or
most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. On a quarterly basis, the Company measures at fair value certain financial assets, including cash equivalents.
Accounting standards specify a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect data obtained from independent sources, while unobservable inputs
reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:
Accounting standards permit companies, at their option, to measure certain financial instruments and other eligible items at fair value. The Company
has elected not to apply the fair value option to existing eligible items beyond what is required by US GAAP.
The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (U.S. dollars in
thousands):
The following table provides a summary of changes in fair value of the Company’s Level 3 life insurance contracts (U.S. dollars in thousands):
Life insurance contracts: Accounting Standards
Codification (“ASC”) 820 preserves practicability exceptions to fair value measurements provided by other applicable provisions of U.S. GAAP. The guidance in ASC 715-30-35-60 allows a reporting entity, as a practical expedient, to use cash
surrender value or conversion value as an expedient for fair value when it is present. Accordingly, the Company determines the fair value of its life insurance contracts as the cash-surrender value of life insurance policies held in its Rabbi
Trust.
The following table provides a summary of changes in fair value of the Company’s Level 3 contingent consideration (U.S. dollars in thousands):
Contingent consideration: Contingent consideration represents the obligations
incurred in connection with acquisitions. The estimate of fair value of the contingent consideration obligations requires subjective assumptions to be made regarding the future business results, discount rates, discount periods and probabilities
assigned to various potential business result scenarios and was determined using probability assessments with respect to the likelihood of reaching various targets or of achieving certain milestones. The fair value measurement is based on significant
inputs unobservable in the market and thus represents a Level 3 measurement. Changes in current expectations of progress could change the probability of achieving the targets within the measurement periods and result in an increase or decrease in the
fair value of the contingent consideration obligation.
Equity Investments
The Company maintains equity investments in companies which are accounted for
under the measurement alternative described in ASC 321-10-35-2 for equity securities that lack readily determinable fair values. The
carrying amount of equity securities held by the Company without readily determinable fair values was $28.1 million at each of June 30, 2022 and December 31, 2021. During the three months ended September 30, 2021 the Company recognized $18.1 million upward fair value adjustments, based on the valuation of additional equity issued by the investee which was deemed to be an observable transaction of a similar
investment under ASC 321. The third quarter of 2021 gain was recorded within Other income (expense), net on the Consolidated Statement of Comprehensive
Operations. The upward fair value adjustment represents a nonrecurring fair value measurement based on observable price changes and is classified as a Level 3 fair value measurement.
|
Income Taxes |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 | |||
Income Taxes [Abstract] | |||
Income Taxes |
Provision for income
taxes for the three- and six-month periods ended June 30, 2022 was $8.7 million and $20.6 million, compared to $22.0 million and $39.1 million for the prior-year periods. The effective tax rates for the three- and six-month periods ended June 30, 2022 were 20.2% and 22.0% of pre-tax income
compared to 27.1% and 26.8%
in the prior-year periods.
The Company accounts for income taxes in accordance with ASC Topic 740 “Income Taxes.” These standards establish financial accounting and reporting
standards for the effects of income taxes that result from an enterprise’s activities during the current and preceding years. The Company takes an asset and liability approach for financial accounting and reporting of income taxes. The Company pays
income taxes in many foreign jurisdictions based on the profits realized in those jurisdictions, which can be significantly impacted by terms of intercompany transactions between the Company and its foreign affiliates. Deferred tax assets and
liabilities are created in this process. The Company has netted these deferred tax assets and deferred tax liabilities by jurisdiction. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be
ultimately realized. The Company had net deferred tax assets of $21.3 million and $24.1 million as of June 30, 2022 and December 31, 2021, respectively.
The Company evaluates its indefinite reinvestment assertions with respect to foreign earnings for each quarter. For all foreign earnings, the
Company accrues the applicable foreign income taxes. For the earnings that have been indefinitely reinvested, the Company does not accrue foreign withholding taxes. Undistributed earnings that the Company has indefinitely reinvested, for which no
foreign withholding taxes have been provided, aggregate to $60.0 million as of December 31, 2021. If the amount designated as indefinitely
reinvested as of December 31, 2021 was repatriated to the United States, the amount of incremental taxes would be approximately $6.0
million. The Company intends to utilize the indefinitely reinvested offshore earnings to fund foreign investments, specifically capital expenditures.
The Company files income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions. In 2009, the Company entered into a voluntary
program with the IRS called Compliance Assurance Process (“CAP”). The objective of CAP is to contemporaneously work with the IRS to achieve federal tax compliance and resolve all or most of the issues prior to filing of the tax return. As of
December 31, 2021, tax years through 2020 have been audited and are effectively closed to further examination. For tax years 2021 and 2022, the Company is in the Bridge phase of the CAP program, pursuant to which the IRS will not accept
disclosures, will not conduct reviews and will not provide letters of assurance for the Bridge years. There are limited circumstances under which tax years in the Bridge phase will be opened for examination. The Company may elect to continue
participating in CAP for future tax years; the Company may withdraw from the program at any time. With a few exceptions, the Company is no longer subject to state and local income tax examination by tax authorities for the years before 2018. In
major foreign jurisdictions, the Company is generally no longer subject to income tax examinations for years before 2016. However, statutes of limitations in certain countries may be as long as ten years. The Company is currently under examination in certain foreign jurisdictions; however, the outcomes of those reviews are not yet determinable. The Company’s
unrecognized tax benefits relate to multiple jurisdictions. Due to potential increases in unrecognized tax benefits from the multiple jurisdictions in which the Company operates, as well as the expiration of various statutes of limitations, it is
reasonably possible that the Company’s gross unrecognized tax benefits, net of foreign currency adjustments, may increase in the next 12 months by approximately $2.0 to $3.0 million.
|
Derivatives and Hedging Activities |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging Activities |
Risk Management Objective of Using Derivatives
The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide
variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its
assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future
known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts
and its known or expected cash payments principally related to the Company’s borrowings.
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish
this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for
the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. During 2022, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive
Income and subsequently reclassified into interest expense/income in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to
interest expense/income as interest payments are made/received on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $5.8 million will be reclassified as a reduction to interest expense.
As of June 30, 2022 and December 31, 2021, the Company had four
outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk with a total notional amount of $200
million.
Fair Values of Derivative Instruments on the Balance Sheet
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet:
Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income
The tables below present the effect of cash flow hedge accounting on Accumulated Other Comprehensive Income.
|
Segment Information |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
The Company reports revenue from nine
segments, consisting of its seven geographic Nu Skin segments—Americas, Mainland China, Southeast Asia/Pacific, South Korea, Japan, EMEA,
and Hong Kong/Taiwan—and two Rhyz Investments segments—Manufacturing and Rhyz other. The Nu Skin other category includes miscellaneous
corporate revenue and related adjustments. The Rhyz other segment includes other investments by our Rhyz strategic investment arm. These segments reflect the way the chief operating decision maker evaluates the Company’s business performance and
allocates resources. Reported revenue includes only the revenue generated by sales to external customers.
Profitability by segment as determined under US GAAP is driven primarily by the Company’s transfer pricing policies. Segment contribution, which is
the Company’s segment profitability metric presented in the table below, excludes certain intercompany charges, specifically royalties, license fees, transfer pricing, discrete charges and other miscellaneous items. These charges have been included
in Corporate and other expenses. Corporate and other expenses also include costs related to the Company’s executive and administrative offices, information technology, research and development, and marketing and supply chain functions not recorded at
the segment level.
Prior year segment information has been recast to reflect the move of the Pacific components from the “America/Pacific” operating segment to the “Southeast
Asia/Pacific” operating segment to comply with current segment presentation. Prior year segment information has been recast to reflect the fourth quarter 2021 exit of the Grow Tech segment, which has been recast to Corporate and other expenses.
Consolidated financial information is not affected.
The accounting policies of the segments are the same as those described in Note 2 – Summary of Significant Accounting Policies. The Company
evaluates the performance of its segments based on revenue and segment contribution. Each segment records direct expenses related to its employees and its operations.
Summarized financial information for the Company’s reportable segments is shown in the following tables. Asset information is not reviewed or
included with the Company’s internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment.
Revenue by Segment
Segment Contribution
Depreciation and Amortization
Capital Expenditures
|
Commitments and Contingencies |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 | |||
Commitments and Contingencies [Abstract] | |||
Commitments and Contingencies |
The Company is subject to government regulations pertaining to product formulation, labeling and packaging, product claims and advertising, and the
Company’s direct selling system. The Company is also subject to the jurisdiction of numerous foreign tax and customs authorities. Any assertions or determination that either the Company or the Company’s sales force is not in compliance with existing
statutes, laws, rules or regulations could have a material adverse effect on the Company’s operations. In addition, in any country or jurisdiction, the adoption of new statutes, laws, rules or regulations or changes in the interpretation of existing
statutes, laws, rules or regulations could have a material adverse effect on the Company and its operations. No assurance can be given that the Company’s compliance with applicable statutes, laws, rules and regulations will not be challenged by
foreign authorities or that such challenges will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company and its Subsidiaries are defendants in litigation, investigations and other
proceedings involving various matters. Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to have a material adverse effect on the Company’s consolidated financial condition, results of
operations or cash flows.
The Company is subject to regular audits by federal, state and foreign tax authorities. These audits may result in additional tax liabilities. The
Company believes it has appropriately provided for income taxes for all years. Several factors drive the calculation of its tax reserves. Some of these factors include: (i) the expiration of various statutes of limitations; (ii) changes in tax law
and regulations; (iii) issuance of tax rulings; and (iv) settlements with tax authorities. Changes in any of these factors may result in adjustments to the Company’s reserves, which would impact its reported financial results.
|
Acquisitions |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 | |||
Acquisitions [Abstract] | |||
Acquisitions |
In April 2021, the Company acquired 100% ownership in
MyFavoriteThings, Inc. (“Mavely”), making Mavely a wholly owned subsidiary of the Company. The acquisition enables the Company to continue to expand its digital tools. The purchase price for Mavely was $16.8 million, net of cash acquired of $0.4 million and $0.9 million to be paid within six months, all payable in cash. In addition, there is potential for an incremental $24.0 million in contingent consideration, which becomes payable if certain revenue and profitability targets are reached in 2021, 2022 and 2023. The fair
value of the contingent consideration recorded on the acquisition date was $8.7 million. The Company allocated the gross purchase price of
$29.4 million to the assets acquired and liabilities assumed at estimated fair values. The estimated fair value of assets acquired included
$16.4 million of intangible assets, $0.4
million of cash, $0.1 million of accounts receivable, and also resulted in a deferred tax liability of $3.5 million. The excess purchase price over the aggregate fair value of assets acquired less liabilities assumed of $12.6 million was recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies. None of the goodwill is expected to be
deductible for income tax purposes. The intangible assets acquired were comprised of $2.0 million for customer relationships, $11.3 million for technology, $2.8 million
for trademarks and $0.3 million for other intangibles. The intangibles were assigned useful lives of 8 years for the technology and tradename, approximately 4 years for the customer relationships and 3 years for the other intangibles. All the goodwill was assigned to our Rhyz
other segment. The allocation of the fair value of assets acquired and liabilities assumed for the acquisition was finalized during the three months ended September 30, 2021.
|
Restructuring |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 | |||
Restructuring [Abstract] | |||
Restructuring |
In the fourth quarter of 2021, the Company determined to exit the Grow Tech segment, to better align its resources on key strategic initiatives
to achieve the future growth objectives and priorities of the core Nu Skin business. The Grow Tech segment was pursuing the commercialization of controlled-environment agriculture for use in the agriculture feed industry. This segment had been
operating as part of the Company’s Rhyz strategic investment arm. As a result of the restructuring program, the Company recorded a non-cash charge of $38.5
million in 2021, including $9.2 million for impairment of goodwill, $9.0 million for impairment of intangibles, $13.7 million of fixed asset
impairments and $6.6 million for inventory write-off, and $20.0 million of cash charges, including $6.5 million for employee severance
and $13.5 million for other related cash charges with our restructuring. As of December 31, 2021, the $20.0 million liability related to cash charges was recorded within Accrued expenses. During the first quarter of 2022, the Company made cash payments
of $11.6 million, leaving an ending restructuring accrual of $8.3 million as of March 31, 2022. During the second quarter of 2022, the Company made cash payments of $8.0 million, leaving an ending restructuring accrual of $0.3 million as of
June 30, 2022. The Company expects to pay out the remaining liability in the third quarter of 2022. The restructuring charges were recorded in the previous Grow Tech segment, which in the current year has been recast to Corporate and Other.
|
Subsequent Events |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 | |||
Subsequent Events [Abstract] | |||
Subsequent Events |
In August of 2022, the Company adopted a strategic plan to focus resources on the Company’s strategic priorities and optimize future growth and
profitability. The global program includes workforce reductions and footprint optimization. The Company estimates total charges under the program will approximate $35–$45 million, with $30–$35 million in cash charges of severance and lease termination cost and $5–$10 million of non-cash charges of
impairment of fixed assets related to the footprint optimization. The Company expects to substantially complete the program during the back half of 2022.
|
Summary of Significant Accounting Policies (Policies) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Basis of Accounting | The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. | ||||||||||||||||||||||||||||||||||||
Consolidation | The unaudited consolidated financial statements include the accounts of the Company and its Subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. | ||||||||||||||||||||||||||||||||||||
Reclassifications |
Reclassifications
Certain prior period amounts have been reclassified to conform to the current
presentation. The Company reclassified $2.7 million and $4.9 million of events and other miscellaneous selling costs from the general and administration expenses
line to the second
line on the consolidated statement of income for the quarter and first half of 2021, respectively. The Company believes these costs are better reflected in selling expenses. The reclassification had no impact
on operating income for the second quarter or first half of 2021.
|
||||||||||||||||||||||||||||||||||||
Accounting Pronouncements |
Accounting Pronouncements
In March 2020, the Financial Accounting Standards Board (“FASB”) issued, ASU
2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for
a limited time to ease the potential burden in accounting for the effects of reference rate reform on financial reporting. The guidance provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other
transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 applies only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be
discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The amendments in ASU
2020-04 are elective and are effective upon issuance for all entities. The Company had previously elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to
assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. In the second quarter of 2022, the Company elected the hedge accounting expedient that allows an update to the hedged risk
in active hedging relationships without de-designation as the Company’s debt transitioned to Secured Overnight Financing Rate (“SOFR”). Application of these expedients preserves the presentation of derivatives consistent with past presentation. The
Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
|
||||||||||||||||||||||||||||||||||||
Inventory |
Inventory
Inventories consist of the following (U.S. dollars in thousands):
|
||||||||||||||||||||||||||||||||||||
Revenue Recognition |
Revenue Recognition
Contract Liabilities – Customer Loyalty Programs
Contract liabilities, recorded as deferred revenue within the accrued expenses line in the consolidated balance sheets, include loyalty point
program deferrals with certain customers which are accounted for as a reduction in the transaction price and are generally recognized as points are redeemed for additional products.
The balance of deferred revenue related to contract liabilities as of June 30, 2022 and December 31, 2021 was $18.4
million and $22.0 million, respectively. The contract liabilities impact to revenue for the three-month
periods ended June 30, 2022, and 2021 was an increase of $2.4 million and a decrease
of $4.0 million, respectively. The impact to revenue for the six-month periods ended June 30, 2022, and 2021 was an increase of $3.6 million and a decrease of $5.6 million, respectively.
|
Summary of Significant Accounting Policies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||
Inventories |
Inventories consist of the following (U.S. dollars in thousands):
|
Goodwill (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill |
The following table presents goodwill allocated to the Company’s reportable segments
for the periods ended June 30, 2022 and
December 31, 2021 (U.S. dollars in thousands):
|
Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Facilities |
The following table summarizes the Company’s debt facilities as of June 30, 2022 and December 31, 2021:
|
Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Expense |
The components of lease expense were as follows (U.S. dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information Related to Leases |
Supplemental cash flow information related to leases was as follows (U.S. dollars in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Maturities of Lease Liabilities |
Maturities of lease liabilities were as follows (U.S. dollars in thousands):
|
Fair Value and Equity Investments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value and Equity Investments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets (Liabilities) Measured at Fair Value on a Recurring Basis |
The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (U.S. dollars in
thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Fair Value of Level 3 Life Insurance Contracts |
The following table provides a summary of changes in fair value of the Company’s Level 3 life insurance contracts (U.S. dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Fair Value of Level 3 Contingent Consideration |
The following table provides a summary of changes in fair value of the Company’s Level 3 contingent consideration (U.S. dollars in thousands):
|
Derivatives and Hedging Activities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives and Hedging Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Values of Derivative Instruments on the Balance Sheet |
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income |
The tables below present the effect of cash flow hedge accounting on Accumulated Other Comprehensive Income.
|
Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue by Segment |
Revenue by Segment
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Contribution |
Segment Contribution
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Depreciation and Amortization and Capital Expenditures |
Depreciation and Amortization
Capital Expenditures
|
The Company (Details) |
6 Months Ended |
---|---|
Jun. 30, 2022
Segment
| |
The Company [Abstract] | |
Number of reportable segments | 9 |
Number of geographic segments | 7 |
Number of Rhyz Investments segments | 2 |
Summary of Significant Accounting Policies, Reclassifications (Details) - Reclassification Adjustment [Member] - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2021 |
Jun. 30, 2021 |
|
General and Administration Expenses [Member] | ||
Reclassifications [Abstract] | ||
Events and other miscellaneous selling costs | $ (2.7) | $ (4.9) |
Selling Expenses [Member] | ||
Reclassifications [Abstract] | ||
Events and other miscellaneous selling costs | $ 2.7 | $ 4.9 |
Summary of Significant Accounting Policies, Inventory (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Inventories [Abstract] | ||
Raw materials | $ 152,777 | $ 179,891 |
Finished goods | 201,434 | 220,040 |
Total Inventory, net | $ 354,211 | $ 399,931 |
Summary of Significant Accounting Policies, Revenue Recognition (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
Contract Liabilities - Customer Loyalty Programs [Abstract] | |||||
Contract liabilities for customer loyalty programs | $ 18.4 | $ 18.4 | $ 22.0 | ||
Contract liabilities, increase (decrease) to revenue | $ 2.4 | $ (4.0) | $ 3.6 | $ (5.6) |
Goodwill (Details) - USD ($) $ in Thousands |
Jun. 30, 2022 |
Dec. 31, 2021 |
---|---|---|
Goodwill [Abstract] | ||
Goodwill | $ 206,432 | $ 206,432 |
Americas [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 9,449 | 9,449 |
Mainland China [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 32,179 | 32,179 |
Southeast Asia/Pacific [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 18,537 | 18,537 |
South Korea [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 29,261 | 29,261 |
Japan [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 16,019 | 16,019 |
EMEA [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 2,875 | 2,875 |
Hong Kong/Taiwan [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 6,634 | 6,634 |
Manufacturing [Member] | ||
Goodwill [Abstract] | ||
Goodwill | 78,875 | 78,875 |
Rhyz Other [Member] | ||
Goodwill [Abstract] | ||
Goodwill | $ 12,603 | $ 12,603 |
Debt, Debt Facilities (Details) - USD ($) $ in Thousands |
6 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 14, 2022 |
Dec. 31, 2021 |
Apr. 18, 2018 |
|||||
Debt [Abstract] | ||||||||
Term of variable rate | 30 days | |||||||
Current portion of long-term debt | $ 40,000 | $ 107,500 | ||||||
2018 Credit Agreement [Member] | ||||||||
Debt [Abstract] | ||||||||
Unamortized debt issuance costs | 1,200 | |||||||
2018 Credit Agreement Term Loan Facility [Member] | ||||||||
Debt [Abstract] | ||||||||
Original principal amount | 400,000 | $ 400,000 | ||||||
Balance | [1],[2] | $ 0 | 307,500 | |||||
Interest rate | Variable 30 day: 2.80% | |||||||
Interest rate | 2.80% | |||||||
Term of variable rate | 30 days | |||||||
Repayment terms | Principal amount was paid in full during June 2022. | |||||||
Term of loan | 5 years | |||||||
Current portion of long-term debt | 37,500 | |||||||
2018 Credit Agreement Revolving Credit Facility [Member] | ||||||||
Debt [Abstract] | ||||||||
Balance | [1],[2] | $ 0 | 70,000 | |||||
Interest rate | Variable 30 day: 2.72% | |||||||
Interest rate | 2.72% | |||||||
Term of variable rate | 30 days | |||||||
Repayment terms | Principal amount was paid in full during June 2022 and credit line was closed. | |||||||
Term of loan | 5 years | |||||||
Credit Agreement [Member] | ||||||||
Debt [Abstract] | ||||||||
Unamortized debt issuance costs | $ 2,800 | |||||||
Credit Agreement Term Loan Facility [Member] | ||||||||
Debt [Abstract] | ||||||||
Original principal amount | 400,000 | $ 400,000 | ||||||
Balance | [1],[2] | $ 400,000 | 0 | |||||
Interest rate | Variable 30 day: 3.11% | |||||||
Interest rate | 3.11% | |||||||
Term of variable rate | 30 days | |||||||
Repayment terms | 21% of the principal amount is payable in increasing quarterly installments over a five-year period that begins on September 30, 2022, with the remainder payable at the end of the five-year term | |||||||
Percentage of principal payable in installments | 21.00% | |||||||
Term of loan | 5 years | |||||||
Current portion of long-term debt | $ 10,000 | |||||||
Credit Agreement Revolving Credit Facility [Member] | ||||||||
Debt [Abstract] | ||||||||
Balance | [1],[2] | $ 30,000 | $ 0 | |||||
Interest rate | Variable 30 day: 2.11% | |||||||
Interest rate | 3.11% | |||||||
Term of variable rate | 30 days | |||||||
Repayment terms | Revolving line of credit expires June 14, 2027 | |||||||
Term of loan | 5 years | |||||||
|
Capital Stock, Net Income per Share (Details) - shares shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Stock Options [Member] | ||||
Net Income per Share [Abstract] | ||||
Anti-dilutive shares excluded from calculation of diluted earnings per share (in shares) | 0.1 | 0.1 | 0.1 | 0.1 |
Capital Stock, Repurchase of Common Stock (Details) - USD ($) $ in Thousands, shares in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Repurchases of Common Stock [Abstract] | ||||
Class A common stock repurchased | $ 10,004 | $ 10,004 | $ 20,010 | $ 60,410 |
Amount available for repurchases | $ 225,400 | $ 225,400 | ||
Treasury Stock [Member] | ||||
Repurchases of Common Stock [Abstract] | ||||
Class A common stock repurchased (in shares) | 0.2 | 0.2 | 0.4 | 1.2 |
Class A common stock repurchased | $ 10,004 | $ 10,004 | $ 20,010 | $ 60,410 |
Fair Value and Equity Investments, Equity Investments (Details) - Equity Securities [Member] - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Sep. 30, 2021 |
Jun. 30, 2022 |
Dec. 31, 2021 |
|
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Carrying amount of equity securities without readily determinable fair values | $ 28.1 | $ 28.1 | |
Other Income (Expense), Net [Member] | |||
Equity Securities without Readily Determinable Fair Value [Line Items] | |||
Upward fair value adjustments on equity securities | $ 18.1 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
Income Taxes [Abstract] | |||||
Provision for income taxes | $ 8,650 | $ 22,026 | $ 20,626 | $ 39,091 | |
Effective tax rate | 20.20% | 27.10% | 22.00% | 26.80% | |
Net deferred tax assets | $ 21,300 | $ 21,300 | $ 24,100 | ||
Undistributed earnings of non-U.S. subsidiaries | 60,000 | ||||
Incremental taxes if undistributed earnings on non-U.S. subsidiaries were repatriated | $ 6,000 | ||||
Minimum [Member] | |||||
Income Taxes [Abstract] | |||||
Increase in unrecognized tax benefits within the next 12 months that is reasonably possible | 2,000 | $ 2,000 | |||
Maximum [Member] | |||||
Income Taxes [Abstract] | |||||
Statute of limitations related to income tax examinations | 10 years | ||||
Income Taxes [Abstract] | |||||
Increase in unrecognized tax benefits within the next 12 months that is reasonably possible | $ 3,000 | $ 3,000 |
Derivatives and Hedging Activities, Fair Value of Derivative Instruments on the Balance Sheet (Details) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2022
USD ($)
Derivatives
|
Dec. 31, 2021
USD ($)
Derivatives
|
|
Derivatives and Hedging Activities [Abstract] | ||
Loss to be reclassified to interest expense during next twelve months | $ 5,800 | |
Number of outstanding derivatives held | Derivatives | 4 | 4 |
Notional amount | $ 200,000 | $ 200,000 |
Interest Rate Swaps [Member] | Designated as Hedging Instrument [Member] | Prepaid Expenses and Other [Member] | ||
Derivatives and Hedging Activities [Abstract] | ||
Fair value, asset | 5,830 | 557 |
Interest Rate Swaps [Member] | Designated as Hedging Instrument [Member] | Other Assets [Member] | ||
Derivatives and Hedging Activities [Abstract] | ||
Fair value, asset | $ 10,546 | $ 6,033 |
Derivatives and Hedging Activities, Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income (Details) - Interest Rate Swaps [Member] - Designated as Hedging Instrument [Member] - Cash Flow Hedges [Member] - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Other Income (Expense), Net [Member] | ||||
Derivatives and Hedging Activities [Abstract] | ||||
Gain (loss) reclassified from accumulated other comprehensive loss into income | $ 301 | $ (38) | $ 283 | $ (65) |
Other Comprehensive Income [Member] | ||||
Derivatives and Hedging Activities [Abstract] | ||||
Gain (loss) recognized in OCI | $ 2,014 | $ (778) | $ 10,071 | $ 3,101 |
Segment Information, Segment Contribution (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Segment Contribution [Abstract] | ||||
Operating income | $ 51,527 | $ 85,376 | $ 103,672 | $ 148,289 |
Other income (expense) | (8,640) | (4,012) | (10,093) | (2,430) |
Income before provision for income taxes | 42,887 | 81,364 | 93,579 | 145,859 |
Operating Segment [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 116,579 | 175,530 | 246,931 | 329,938 |
Operating Segment [Member] | Nu Skin [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 116,690 | 169,285 | 244,796 | 317,867 |
Operating Segment [Member] | Americas [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 30,026 | 28,998 | 55,149 | 57,743 |
Operating Segment [Member] | Mainland China [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 12,945 | 51,480 | 41,940 | 90,919 |
Operating Segment [Member] | Southeast Asia/Pacific [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 24,367 | 21,213 | 47,773 | 40,861 |
Operating Segment [Member] | South Korea [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 20,578 | 28,892 | 43,321 | 55,417 |
Operating Segment [Member] | Japan [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 13,451 | 16,461 | 28,764 | 34,442 |
Operating Segment [Member] | EMEA [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 6,162 | 13,681 | 9,998 | 22,577 |
Operating Segment [Member] | Hong Kong/Taiwan [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 9,161 | 8,560 | 17,851 | 15,908 |
Operating Segment [Member] | Rhyz Investments [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | (111) | 6,245 | 2,135 | 12,071 |
Operating Segment [Member] | Manufacturing [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | 1,188 | 6,764 | 4,480 | 12,590 |
Operating Segment [Member] | Rhyz Other [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | (1,299) | (519) | (2,345) | (519) |
Corporate and Other [Member] | ||||
Segment Contribution [Abstract] | ||||
Operating income | $ (65,052) | $ (90,154) | $ (143,259) | $ (181,649) |
Segment Information, Depreciation and Amortization and Capital Expenditures (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2022 |
Jun. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | $ 18,634 | $ 19,581 | $ 35,764 | $ 37,925 |
Capital expenditures | 9,539 | 17,476 | 19,818 | 36,849 |
Operating Segments [Member] | Nu Skin [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 4,828 | 6,281 | 9,878 | 12,619 |
Capital expenditures | 3,516 | 4,249 | 8,712 | 14,196 |
Operating Segments [Member] | Americas [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 192 | 235 | 391 | 466 |
Capital expenditures | 87 | 87 | 129 | 199 |
Operating Segments [Member] | Mainland China [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 2,676 | 3,276 | 5,560 | 6,615 |
Capital expenditures | 2,052 | 3,416 | 6,120 | 11,933 |
Operating Segments [Member] | Southeast Asia/Pacific [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 381 | 383 | 762 | 737 |
Capital expenditures | 56 | 358 | 124 | 923 |
Operating Segments [Member] | South Korea [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 372 | 973 | 760 | 1,963 |
Capital expenditures | 216 | 18 | 578 | 508 |
Operating Segments [Member] | Japan [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 245 | 226 | 522 | 479 |
Capital expenditures | 184 | 0 | 184 | 91 |
Operating Segments [Member] | EMEA [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 244 | 283 | 474 | 569 |
Capital expenditures | 385 | 258 | 778 | 430 |
Operating Segments [Member] | Hong Kong/Taiwan [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 718 | 905 | 1,409 | 1,790 |
Capital expenditures | 536 | 112 | 799 | 112 |
Operating Segments [Member] | Rhyz Investments [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 3,874 | 3,282 | 7,796 | 5,970 |
Capital expenditures | 1,222 | 5,662 | 2,430 | 9,000 |
Operating Segments [Member] | Manufacturing [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 3,282 | 2,887 | 6,612 | 5,575 |
Capital expenditures | 1,222 | 5,662 | 2,430 | 9,000 |
Operating Segments [Member] | Rhyz Other [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 592 | 395 | 1,184 | 395 |
Capital expenditures | 0 | 0 | 0 | 0 |
Corporate and Other [Member] | ||||
Summarized Financial Information [Abstract] | ||||
Depreciation and amortization | 9,932 | 10,018 | 18,090 | 19,336 |
Capital expenditures | $ 4,801 | $ 7,565 | $ 8,676 | $ 13,653 |
Acquisitions (Details) - USD ($) $ in Thousands |
1 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2021 |
Jun. 30, 2022 |
Jun. 30, 2021 |
Dec. 31, 2021 |
|
Acquisitions [Abstract] | ||||
Purchase price, net of cash acquired | $ 0 | $ 18,963 | ||
Fair Value of Assets Acquired [Abstract] | ||||
Goodwill | $ 206,432 | $ 206,432 | ||
Mavely [Member] | ||||
Acquisitions [Abstract] | ||||
Percentage interest acquired | 100.00% | |||
Purchase price, net of cash acquired | $ 16,800 | |||
Cash acquired | 400 | |||
Accrued liability | 900 | |||
Incremental contingent consideration | 24,000 | |||
Contingent consideration | 8,700 | |||
Gross purchase price | 29,400 | |||
Fair Value of Assets Acquired [Abstract] | ||||
Intangible assets | 16,400 | |||
Cash | 400 | |||
Accounts receivable | 100 | |||
Deferred tax liability | 3,500 | |||
Goodwill | 12,600 | |||
Mavely [Member] | Customer Relationships [Member] | ||||
Fair Value of Assets Acquired [Abstract] | ||||
Intangible assets | 2,000 | |||
Useful life | 4 years | |||
Mavely [Member] | Technology [Member] | ||||
Fair Value of Assets Acquired [Abstract] | ||||
Intangible assets | 11,300 | |||
Useful life | 8 years | |||
Mavely [Member] | Trademarks [Member] | ||||
Fair Value of Assets Acquired [Abstract] | ||||
Intangible assets | 2,800 | |||
Mavely [Member] | Tradenames [Member] | ||||
Fair Value of Assets Acquired [Abstract] | ||||
Useful life | 8 years | |||
Mavely [Member] | Other Intangibles [Member] | ||||
Fair Value of Assets Acquired [Abstract] | ||||
Intangible assets | $ 300 | |||
Useful life | 3 years |
Restructuring (Details) - Grow Tech [Member] - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
|
Restructuring [Abstract] | |||
Non-cash impairment charges | $ 38.5 | ||
Impairment of goodwill | 9.2 | ||
Impairment of intangible assets | 9.0 | ||
Impairment of fixed assets | 13.7 | ||
Inventory write-off | 6.6 | ||
Cash charges associated with restructuring | 20.0 | ||
Employee severance | 6.5 | ||
Other related restructuring charges | 13.5 | ||
Cash payments | $ 8.0 | $ 11.6 | |
Ending restructuring accrual | $ 0.3 | $ 8.3 | |
Accrued Expenses [Member] | |||
Restructuring [Abstract] | |||
Liability related to cash charges | $ 20.0 |
Subsequent Events (Details) - Subsequent Event [Member] $ in Millions |
Aug. 04, 2022
USD ($)
|
---|---|
Minimum [Member] | |
Subsequent Events [Abstract] | |
Estimated restructuring costs | $ 35 |
Maximum [Member] | |
Subsequent Events [Abstract] | |
Estimated restructuring costs | 45 |
Severance and Lease Termination [Member] | Minimum [Member] | |
Subsequent Events [Abstract] | |
Estimated restructuring costs | 30 |
Severance and Lease Termination [Member] | Maximum [Member] | |
Subsequent Events [Abstract] | |
Estimated restructuring costs | 35 |
Impairment of Fixed Assets Related to Footprint Optimization [Member] | Minimum [Member] | |
Subsequent Events [Abstract] | |
Estimated restructuring costs | 5 |
Impairment of Fixed Assets Related to Footprint Optimization [Member] | Maximum [Member] | |
Subsequent Events [Abstract] | |
Estimated restructuring costs | $ 10 |
,6YIP;D!
M@@'J<$<\2<>3C/)<<"&KO!-QQJSK3&-.AOUZJE^HL;7 ?!3Z.EL3YL*0A*%&
MU@+S,/%.<*4=5SK*];>2"P%V)5^GTD:5&KUZ"!-C8DT8<3$,M(A$)BP@)-2]
M+4T8@FY /&CGZG=<_=$EYL\=*V.9%AO GI04$DQ %)*.K:"H$7V7;8$C31T;IHZ'XY1Y
M8GUOL#)^J(0F^=E7<,R.?<%&!UL%3PXEUM;]3F=]C:,W;R2E4;O])-SQLA
M<]D9JYHMHA.R__'[KAP- 'OX P+8 YO7N'_):ON>6SR9:;:AVW"C-;;RI
M'HW*">F",K<:;P7B[.Q/0)/,9&11EJ.,RBWNHL>Q'^!2>J6DK0S]32YA^10_
M0AWVBK"=(A?LJ, _.CFD<1A0%C)V1%Z\-RSV\N*CAM%_SQ?&:HS]?R_9V(M(
M7A;AZN',M+R$Z0 3WH"^@\'L]:LH#=\=43#9*Y@20J4W5D06-MUMS:>J:#,&-WP>;9[LC:>/A>+3^MQ [8KG1
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MYQ:K/:WF"^,6K5XO;<5_W?#K+[;AXZ;OORNDD*\N5J:UE8:-#U",6C
GJE*SNWU3#/?W&0G(C_K.%CQ-]]>'<1,=K\DX,/O^!E
M^DG;K6Z&8^A1MW7\X_+^*R*]-;X+7GSKS@?=;.; P*:E6&A7V.'@23L):1GC
M"%.\TIU9N/:>VZ:J-S/CP4E?05-T8]S&L\JUR!X6[=)'-EM38VK&]>S?F\&1
MWOC^L-&QO>%^VA[X?G//W:;M-Q%TX0H2O5_!=;L*=KW9Q4G"20K(88UO]7UX
MKY;6S#F$'38H[IFI;%#9E?Z",\VMKC>P[L/B 1XX0Q(+K["@D.3P?%A!+:;OMV"3!,FWMP0
MS\_P6?$/"ZUW8+M/QWKA#^A_@;/?4$L#!!0 ( -N9!%7U=N6 U04 X/
M 9 >&PO=V]R:W-H965T<^FM_8Y?V$F$-D+!0NPC3.!*P( A
MB;@U&0G06$$%ITD#$+-K99UOD+9$U6D35:>M4;5?D:W1^([+'#H47:VJ#D?7
MB_K%!RT^21MON>4,Q!VM">&"DG:'#.(AA]+;>Y.K6$PGTZ,S<2-CE:HRD.ID
M?K]>@_Z0VX