PR Newswire | Nov 4, 2020 04:06PM EST

Guidance

11/04 15:06 CST

Nu Skin Enterprises Reports Third-Quarter 2020 Results And Raises Annual Guidance PROVO, Utah, Nov. 4, 2020

PROVO, Utah, Nov. 4, 2020 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced third-quarter results of 19 percent revenue growth and 37 percent earnings per share growth and raised its guidance for 2020.

Executive SummaryQ3 2020 vs. Prior-Year Quarter

$703.3 million; +19% Revenue: ? Less than (1%) fx impact

Earnings Per Share (EPS):$1.08; +37%

Sales Leaders: 68,516; +12%

Customers: 1,539,511; +28%

"We continued to build momentum with accelerated results in the third quarter, as we generated revenue and earnings per share well above expectations," said Ritch Wood, chief executive officer. "As we executed on our long-term strategy, we drove double-digit growth in both customers and sales leaders with revenue improvements in all but one reporting segment. We delivered strong double-digit growth in the Americas, Pacific and EMEA regions, with modest growth throughout most of Asia. Mainland China continues to stabilize with sequentially improving revenue, customers and sales leaders, and we remain on track for a return to year-over-year growth in China in the fourth quarter. Our manufacturing division contributed to our results with impressive 34 percent growth.

"We are outpacing our 2020 growth projections due to strong product demand and ongoing digital investments that empower our sales leaders and affiliates to build a socially enabled business. We are also benefitting from the current environment where more individuals are working from home and shopping online. Currently, approximately 90 percent of Nu Skin revenue is coming from digital transactions."

Q3 2020 Year-Over-Year Operating Results

$703.3 million compared to $589.9 million Revenue: ? Less than (1%) fx impact

73.9% compared to 76.2% Gross Margin: ? Nu Skin business was 76.3% compared to 78.6% ? Impacted by increased freight charges and geographic mix

39.9% compared to 39.3% Selling Expenses: ? Nu Skin business was 42.4% compared to 41.5%

G&A Expenses: 23.5% compared to 25.1%

10.6% compared to 11.8% Operating Margin: ? Impacted by lower gross margin

Other Income / (Expense):$0.5 million compared to ($5.0) million

24.7% compared to 32.1% Income Tax Rate: ? Benefited by geographic mix

EPS: $1.08 compared to $0.79

Stockholder Value

Dividend Payments:$19.2 million

$20.0 million Stock Repurchases: ? $342.8 million remaining in authorization

Q4 and Full-Year 2020 Outlook

$720 to $750 million; +23 to 29% Q4 2020 Revenue: ? Approximately +1% fx impact

Q4 2020 EPS: $1.10 to $1.20; +53 to 67%

$2.55 to $2.58 billion; +6 to 7% 2020 Revenue: ? Approximately (1%) fx impact

2020 EPS: $3.35 to $3.45; +8 to 11%

"The growth in our core Nu Skin business is generating a great deal of energy ahead of our fourth-quarter ageLOC Boost and Nutricentials product introductions, and we continue to see increasing demand in our manufacturing segment. This gives us confidence that we will have a strong fourth quarter with momentum heading into 2021 when we fully launch these products and continue to extend our socially enabled business throughout our markets," Wood concluded.

Mark Lawrence, chief financial officer, added, "Given our third-quarter results above previous guidance and momentum in the business, we are raising our guidance for the remainder of the year. As we look ahead to the fourth quarter, we anticipate revenue of $720 to $750 million, which includes an approximate 1 percent favorable foreign currency impact, and earnings per share of $1.10 to $1.20. We are raising our 2020 revenue guidance to $2.55 to $2.58 billion, which reflects a negative foreign currency impact of approximately 1 percent, and we anticipate annual earnings per share of $3.35 to $3.45."

Conference CallThe Nu Skin Enterprises management team will host a conference call with the investment community today at 5 p.m. (ET). Those wishing to access the webcast, as well as the financial information presented during the call, can visit the Investor Relations page on the company's website at ir.nuskin.com. A replay of the webcast will be available at the same URL through Nov. 18, 2020.

About Nu Skin Enterprises, Inc.Founded more than 35 years ago, Nu Skin Enterprises, Inc. (NSE) empowers innovative companies to change the world with sustainable solutions, opportunities, technologies and life-improving values. The company currently focuses its efforts around innovative consumer products, product manufacturing and controlled environment agriculture technology. The NSE family of companies includes Nu Skin, which develops and distributes a comprehensive line of premium-quality beauty and wellness solutions through a global network of sales leaders in Asia, the Americas, Europe, Africa and the Pacific; and Rhyz, our strategic investment arm that includes a collection of sustainable manufacturing and technology innovation companies. Nu Skin Enterprises is traded on the New York Stock Exchange under the symbol "NUS." More information is available at nuskinenterprises.com.

Important Information Regarding Forward-Looking Statements:This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that represent the company's current expectations and beliefs. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws and include, but are not limited to, statements of management's expectations regarding the company's performance, growth, product launches, customers and sales leaders, strategies and initiatives; statements of management's expectations regarding the future status of the COVID-19 pandemic globally and across the company's markets, and government and public behavior in response to such status; projections regarding revenue, earnings per share, foreign currency fluctuations and other financial items; statements of belief; and statements of assumptions underlying any of the foregoing. In some cases, you can identify these statements by forward-looking words such as "believe," "expect," "continue," "anticipate," "project," "outlook," "guidance," "plan," "continue," "will," "would," "could," "may," "might," the negative of these words and other similar words.

The forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed herein. These risks and uncertainties include, but are not limited to, the following:

* risk that epidemics, including the ongoing COVID-19 outbreak, and other crises could negatively impact our business; * adverse publicity related to the company's business, products, industry or any legal actions or complaints by the company's sales force or others; * risk that direct selling laws and regulations in any of the company's markets, including the United States and Mainland China, may be modified, interpreted or enforced in a manner that results in negative changes to the company's business model or negatively impacts its revenue, sales force or business, including through the interruption of sales activities, loss of licenses, imposition of fines, or any other adverse actions or events; * any failure of current or planned initiatives or products to generate interest among the company's sales force and customers and generate sponsoring and selling activities on a sustained basis; * political, legal, tax and regulatory uncertainties associated with operating in international markets, including Mainland China; * uncertainty regarding meeting restrictions and other government scrutiny in Mainland China, as well as negative media and consumer sentiment in Mainland China on our business operations and results; * risk of foreign-currency fluctuations and the currency translation impact on the company's business associated with these fluctuations; * uncertainties regarding the future financial performance of the businesses the company has acquired; * risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support planned initiatives or launch strategies, and increased risk of inventory write-offs if the company over-forecasts demand for a product or changes its planned initiatives or launch strategies; * regulatory risks associated with the company's products, which could require the company to modify its claims or inhibit its ability to import or continue selling a product in a market if the product is determined to be a medical device or if the company is unable to register the product in a timely manner under applicable regulatory requirements; * unpredictable economic conditions and events globally, including trade policies and tariffs; * uncertainties related to interpretation of, and forthcoming regulations under, the recently enacted U.S. tax reform legislation; the company's future tax-planning initiatives; any prospective or retrospective increases in duties on the company's products imported into the company's markets outside of the United States; and any adverse results of tax audits or unfavorable changes to tax laws in the company's various markets; and * continued competitive pressures in the company's markets.

The company's financial performance and the forward-looking statements contained herein are further qualified by a detailed discussion of associated risks set forth in the documents filed by the company with the Securities and Exchange Commission. The forward-looking statements set forth the company's beliefs as of the date that such information was first provided, and the company assumes no duty to update the forward-looking statements contained in this release to reflect any change except as required by law.

Non-GAAP Financial Measures:Constant-currency revenue change is a non-GAAP financial measure that removes the impact of fluctuations in foreign-currency exchange rates, thereby facilitating period-to-period comparisons of the company's performance. It is calculated by translating the current period's revenue at the same average exchange rates in effect during the applicable prior-year period and then comparing that amount to the prior-year period's revenue. The company believes that constant-currency revenue change is useful to investors, lenders and analysts because such information enables them to gauge the impact of foreign-currency fluctuations on the company's revenue from period to period.

The following table sets forth revenue for the three-month periods ended September 30, 2020 and 2019 for each of our reportable segments (U.S. dollars in thousands):

Three Months Ended Constant- Currency September 30,

2020 2019 Change Change

Nu Skin

Mainland China $ 169,068 $ 173,974 (3)% (4)%

Americas/Pacific 151,465 83,635 81% 90%

South Korea 83,460 79,435 5% 5%

Southeast Asia 84,102 78,963 7% 8%

Japan 70,958 67,197 6% 4%

EMEA 61,411 35,742 72% 67%

Hong Kong/Taiwan 42,265 40,449 4% -

Other (314) (62) (406)% (403)%

Total Nu Skin 662,415 559,333 18% 19%

Manufacturing 40,910 30,601 34% 34%

Grow Tech 22 - 100% 100%

Total $ 703,347 $ 589,934 19% 19%

The following table sets forth revenue for the nine-month periods ended September 30, 2020 and 2019 for each of our reportable segments (U.S. dollars in thousands):

Nine Months Ended Constant- Currency September 30,

2020 2019 Change Change

Nu Skin

Mainland China $ 453,096 $ 567,795 (20)% (19)%

Americas/Pacific 353,957 262,932 35% 43%

South Korea 236,094 248,020 (5)% (2)%

Southeast Asia 220,517 226,853 (3)% (1)%

Japan 200,549 194,557 3% 2%

EMEA 147,590 120,960 22% 23%

Hong Kong/Taiwan 115,253 124,719 (8)% (10)%

Other 374 (239) 256% 256%

Total Nu Skin 1,727,430 1,745,597 (1)% 1%

Manufacturing 105,975 91,430 16% 16%

Grow Tech 336 30 1,020% 1,020%

Total $ 1,833,741 $ 1,837,057 - 2%

The Company's Customers and Sales Leaders statistics by segment as of September 30, 2020 and 2019 are presented in the following table:

As of As of % Increase (Decrease) September 30, 2020 September 30, 2019

Customers Sales Customers Sales Customers Sales Leaders Leaders Leaders

Mainland China 341,386 20,970 317,257 23,776 8% (12)%

Americas/Pacific 438,889 14,400 229,013 7,760 92% 86%

South Korea 164,256 7,973 169,589 7,363 (3)% 8%

Southeast Asia 163,536 8,357 145,845 7,936 12% 5%

Japan 126,896 6,523 128,373 5,964 (1)% 9%

EMEA 235,202 6,226 147,758 4,060 59% 53%

Hong Kong/Taiwan 69,346 4,067 68,862 4,231 1% (4)%

Total 1,539,511 68,516 1,206,697 61,090 28% 12%

"Customers" are persons who purchased products directly from the company during the previous three months. Our Customer numbers do not include consumers who purchase products directly from members of our sales force.

"Sales Leaders" are independent distributors, and sales employees and independent marketers in China, who achieve certain qualification requirements.

NU SKIN ENTERPRISES, INC.

Consolidated Statements of Income (Unaudited)

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

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Revenue $ 703,347 $ 589,934 $ 1,833,741 $ 1,837,057

Cost of sales 183,374 140,162 463,277 440,854

Gross profit 519,973 449,772 1,370,464 1,396,203

Operating expenses:

Selling expenses 280,695 231,937 735,365 727,473

General and administrative 165,050 147,943 466,232 455,983expenses

Total operating expenses 445,745 379,880 1,201,597 1,183,456

Operating income 74,228 69,892 168,867 212,747

Other income (expense), net 525 (4,979) (4,068) (11,153)

Income before provision for 74,753 64,913 164,799 201,594income taxes

Provision for income taxes 18,446 20,823 46,911 68,153

Net income $ 56,307 $ 44,090 $ 117,888 $ 133,441

Net income per share:

Basic $ 1.10 $ 0.79 $ 2.24 $ 2.40

Diluted $ 1.08 $ 0.79 $ 2.23 $ 2.39

Weighted-average common sharesoutstanding (000s):

Basic 51,308 55,548 52,741 55,507

Diluted 52,243 55,788 52,906 55,950

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)

September 30, December 31, 2020 2019

ASSETS

Current assets:

Cash and cash equivalents $ 366,710 $ 335,630

Current investments 11,301 8,413

Accounts receivable, net 60,016 50,378

Inventories, net 270,319 275,891

Prepaid expenses and other 63,916 69,854

Total current assets 772,262 740,166

Property and equipment, net 456,083 453,604

Right-of-use assets 165,749 144,326

Goodwill 196,573 196,573

Other intangible assets, net 74,391 80,321

Other assets 151,653 154,016

Total assets $ 1,816,711 $ 1,769,006

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 55,298 $ 38,979

Accrued expenses 381,052 290,281

Current portion of long-term debt 30,000 27,500

Total current liabilities 466,350 356,760

Operating lease liabilities 121,439 105,701

Long-term debt 312,664 334,461

Other liabilities 88,785 96,795

Total liabilities 989,238 893,717

Stockholders' equity:

Class A common stock 91 91

Additional paid-in capital 570,491 557,544

Treasury stock, at cost (1,446,374) (1,324,826)

Accumulated other comprehensive loss (83,108) (85,292)

Retained earnings 1,786,373 1,727,772

Total stockholders' equity 827,473 875,289

Total liabilities and stockholders' equity $ 1,816,711 $ 1,769,006

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SOURCE Nu Skin Enterprises, Inc.