PROVO, Utah, Aug. 6, 2015 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced second-quarter results with revenue of $560.2 million compared to $650.0 million in the prior-year period. Revenue in the quarter was negatively impacted 7 percent by foreign currency fluctuations. Revenue in the second quarter of 2014 included $76 million in limited-time offer product sales, while there were no significant limited-time offers during the second quarter of 2015. Earnings per share for the quarter were $0.75, compared to $0.32 in the prior-year period which included a $50 million inventory write-down and a $25 million foreign currency charge related to Venezuela.
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"We are pleased the business performed at the high end of our expectations for the second quarter," said Truman Hunt, president and chief executive officer. "Additionally, we are encouraged by growth in the number of sales leaders sequentially, including a 19 percent increase in sales leaders in Mainland China. We believe that this trend signals growing sales leader energy as we build toward the introduction of our new ageLOC products in the second half of the year.
"Additionally, our financial performance and strong cash flow enabled us to repurchase approximately $50 million of shares in the second quarter. Overall, we are pleased with the direction of the business and continue to anticipate a return to revenue growth in the second half of the year."
Regional Results
The company's regional revenue results for the three-month periods ended June 30 are presented in the following table.
2015 2014 % Constant Currency Change % Change ------ -------- Greater China $200,136 $229,869 (13%) (13%) North Asia 172,943 195,995 (12%) (2%) Americas 83,468 89,911 (7%) 5% South Asia/Pacific 68,023 81,653 (17%) (9%) EMEA 35,639 52,599 (32%) (16%) ------ ------ Total $560,209 $650,027 (14%) (7%) ======== ========
The company's regional revenue results for the six-month periods ended June 30 are presented in the following table.
2015 2014 % Constant Currency Change % Change ------ -------- Greater China $387,503 $508,798 (24%) (23%) North Asia 345,009 391,456 (12%) (4%) Americas 163,340 169,820 (4%) 12% South Asia/Pacific 138,840 152,847 (9%) (2%) EMEA 68,849 98,167 (30%) (13%) ------ ------ Total $1,103,541 $1,321,088 (16%) (10%) ========== ==========
The company's regional actives and sales leaders statistics are presented in the following table.
As of June 30, 2015 As of June 30, 2014 % Increase (Decrease) ------------------- ------------------- -------------------- Actives Sales Leaders Actives Sales Leaders Actives Sales Leaders ------- ------------- ------- ------------- ------- ------------- Greater China 215,000 25,956 256,000 26,192 (16.0%) (0.9%) North Asia 387,000 16,991 393,000 17,186 (1.5%) (1.1%) Americas 180,000 7,892 189,000 7,627 (4.8%) 3.5% South Asia/ Pacific 120,000 7,279 120,000 7,450 - (2.3%) EMEA 113,000 4,042 121,000 4,468 (6.6%) (9.5%) ------- ----- ------- ----- Total 1,015,000 62,160 1,079,000 62,923 (5.9%) (1.2%) ========= ====== ========= ======
____________________ "Actives" are persons who purchased products directly from the company during the previous three months. "Sales Leaders" are independent distributors, and sales employees and independent marketers in China, who achieve certain qualification requirements.
Operational Performance
The company's operating margin for the quarter was 12.8 percent, compared to 8.4 percent in the second quarter of 2014. Gross margin during the quarter was 80.3 percent, versus 76.0 percent in the prior-year period. Last year's gross margin was unusually low due to the inventory write-down. Selling expenses were 42.7 percent of sales in the second quarter, compared to 43.6 percent in the prior-year period. General and administrative expenses were 24.8 percent of sales compared to 24.0 percent in the prior-year period. The company's effective income tax rate for the quarter was 35.3 percent, compared to 42.0 percent in the prior year. Last year's tax rate was abnormally high due to the tax impact of a foreign currency charge related to Venezuela. Cash and current investments at the end of the quarter were $303.9 million and debt was $252.1 million. Dividend payments during the quarter were $20.5 million. Cash flow from operations for the quarter was $85.4 million, and the company repurchased $49.6 million of its outstanding shares.
Outlook
"Sales leader enthusiasm continues to build for our upcoming limited-time product launches that include ageLOC Youth, our most advanced anti-aging supplement, as well as ageLOC Me, a unique anti-aging skin care system that enables consumers to personalize a daily regimen based on individual preferences and skin care needs," said Hunt. "These new ageLOC products will be highlighted at our global sales leader convention in early October, and we anticipate they will help drive healthy year-over-year growth in the second half of 2015. We expect this momentum to continue as we begin to roll these products out on a full-time basis in 2016.
"We are also pleased with our progress in several key markets, particularly Mainland China, where we generated healthy sequential growth in both sales leaders and revenue. In the Greater China region, we will be rolling out our ageLOC Essentials line of cosmetic oils in the third quarter. As we move closer to our product launches, we expect positive trends to continue in our global sales force, and also anticipate growth in our active consumer base," concluded Hunt.
"We project second-half local-currency revenue growth of approximately 15 percent," said Ritch Wood, chief financial officer. "Our prior guidance anticipated a negative foreign currency impact of 7 percent in the third and fourth quarters. We now project a negative impact of 10 to 11 percent. Given this impact, we anticipate third-quarter revenue will be in the $600 to $620 million range with earnings per share of $0.96 to $1.00. We anticipate annual revenue to be in the $2.40 to $2.44 billion range, with earnings per share of $3.47 to $3.55 which includes a $0.12 expense associated with the Venezuela foreign currency charge in the first quarter of this year. Excluding this charge, earnings guidance would be in the range of $3.59 to $3.67. Including currency impact, this guidance reflects second-half reported revenue growth of between 5 and 6 percent," concluded Wood.
The Nu Skin management team will host a conference call with the investment community on Aug. 6, 2015, at 5 p.m. (EDT). Those wishing to access the webcast, as well as the financial information presented during the call, can visit the Investor Relations page on the company's website at ir.nuskin.com. A replay of the webcast will be available at the same URL through Aug. 21, 2015.
About Nu Skin Enterprises, Inc.
Nu Skin Enterprises, Inc. demonstrates its tradition of innovation through its comprehensive anti-aging product portfolio, independent business opportunity and corporate social responsibility initiatives. The company's scientific leadership in both skin care and nutrition has established Nu Skin as a premier anti-aging company. The company's anti-aging products feature the ageLOC(®) line of products including ageLOC(®) Tru Face(®) Essence Ultra firming serum, the ageLOC(®) TR90(®) weight management and body shaping system, ageLOC(®) R(2) nutritional supplement, and ageLOC(®) Transformation daily skin care system. A global direct selling company, Nu Skin operates in 53 markets worldwide and is traded on the New York Stock Exchange under the symbol "NUS." More information is available at http://www.nuskin.com.
Please Note: This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that represent the company's current expectations and beliefs. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws and include, but are not limited to, statements of management's expectations regarding the company's performance, growth, new product introductions, sales force and consumer base; projections regarding revenue, earnings per share, foreign currency fluctuations and other financial items; statements of belief; and statements of assumptions underlying any of the foregoing. In some cases, you can identify these statements by forward-looking words such as "believe," "expect," "project," "anticipate," "estimate," "intend," "plan," "targets," "likely," "will," "would," "could," "may," "might," the negative of these words and other similar words.
The forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed herein. These risks and uncertainties include, but are not limited to, the following:
-- any failure of current or planned initiatives or products to generate interest among our sales force and customers and generate sponsoring and selling activities on a sustained basis; -- risk of foreign currency fluctuations and the currency translation impact on the company's business associated with these fluctuations; -- risk that direct selling laws and regulations in any of our markets, including the United States and China, may be modified, interpreted or enforced in a manner that results in negative changes to our business model or negatively impacts our revenue, sales force or business, including through the interruption of sales activities, loss of licenses, imposition of fines, or any other adverse actions or events; -- risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support our planned initiatives or launch strategies, and increased risk of inventory write-offs if we over-forecast demand for a product or change our planned initiatives or launch strategies; -- regulatory risks associated with the company's products, which could require the company to modify its claims or inhibit the company's ability to import or continue selling a product in a market if it is determined to be a medical device or if it is unable to register the product in a timely manner under applicable regulatory requirements; -- adverse publicity related to the company's business, products, industry or any legal actions or complaints by the company's sales force or others; -- unpredictable economic conditions and events globally; -- any prospective or retrospective increases in duties on the company's products imported into the company's markets outside of the United States and any adverse results of tax audits or unfavorable changes to tax laws in the company's various markets; and -- continued competitive pressures in the company's markets.
The company's financial performance and the forward-looking statements contained herein are further qualified by a detailed discussion of associated risks set forth in the documents filed by the company with the Securities and Exchange Commission. The forward-looking statements set forth the company's beliefs as of the date that such information was first provided and the company assumes no duty to update the forward-looking statements contained in this release to reflect any change except as required by law.
NU SKIN ENTERPRISES, INC. Consolidated Statements of Income (Unaudited) For the Second Quarters Ended June 30, 2015 and 2014 (in thousands, except per share amounts) 2015 2014 ---- ---- Revenue $560,209 $650,027 Cost of sales 110,263 156,010 ------- ------- Gross profit 449,946 494,017 ------- ------- Operating expenses: Selling expenses 239,449 283,575 General and administrative expenses 138,696 155,705 ------- ------- Total operating expenses 378,145 439,280 ------- ------- Operating income 71,801 54,737 Other income (expense), net (2,758) (21,119) ------ ------- Income before provision for income taxes 69,043 33,618 Provision for income taxes 24,386 14,111 ------ ------ Net income $44,657 $19,507 ======= ======= Net income per share: Basic $0.76 $0.33 Diluted $0.75 $0.32 Weighted average common shares outstanding: Basic 58,506 59,052 Diluted 59,713 61,118
NU SKIN ENTERPRISES, INC. Consolidated Statements of Income (Unaudited) For the Six-Month Periods Ended June 30, 2015 and 2014 (in thousands, except per share amounts) 2015 2014 ---- ---- Revenue $1,103,541 $1,321,088 Cost of sales 215,318 262,654 ------- ------- Gross profit 888,223 1,058,434 ------- --------- Operating expenses: Selling expenses 473,454 596,676 General and administrative expenses 274,322 305,824 ------- ------- Total operating expenses 747,776 902,500 ------- ------- Operating income 140,447 155,934 Other income (expense), net (15,026) (38,627) ------- ------- Income before provision for income taxes 125,421 117,307 Provision for income taxes 44,482 42,946 ------ ------ Net income $80,939 $74,361 ======= ======= Net income per share: Basic $1.38 $1.26 Diluted $1.35 $1.22 Weighted average common shares outstanding: Basic 58,747 58,961 Diluted 59,994 61,177
NU SKIN ENTERPRISES, INC. Consolidated Balance Sheets (Unaudited) (in thousands) June 30, 2015 December 31, 2014 ------------- ----------------- ASSETS Current assets: Cash and cash equivalents $292,414 $288,415 Current investments 11,518 11,793 Accounts receivable 43,543 35,834 Inventories, net 305,027 338,491 Prepaid expenses and other 155,205 160,134 ------- ------- 807,707 834,667 Property and equipment, net 473,216 464,783 Goodwill 112,446 112,446 Other intangible assets, net 70,900 75,062 Other assets 138,351 127,476 ------- ------- Total assets $1,602,620 $1,614,434 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $39,464 $34,712 Accrued expenses 306,319 300,847 Current portion of long- term debt 74,966 82,770 ------ ------ 420,749 418,329 Long-term debt 177,178 164,567 Other liabilities 100,808 89,100 ------- ------ Total liabilities 698,735 671,996 ------- ------- Stockholders' equity: Class A common stock 91 91 Additional paid-in capital 418,243 414,394 Treasury stock, at cost (933,040) (862,608) Accumulated other comprehensive loss (63,251) (51,521) Retained earnings 1,481,842 1,442,082 --------- --------- 903,885 942,438 ------- ------- Total liabilities and stockholders' equity $1,602,620 $1,614,434 ========== ==========
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SOURCE Nu Skin Enterprises, Inc.