NU SKIN ENTERPRISES, INC. PROVO, Utah, May 3, 2017 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced first-quarter 2017 financial results.
Key Highlights
Revenue: $499.1 million, a 6% improvement over Q1 2016; negatively impacted 1% by foreign currency fluctuations
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Earnings Per
Share (EPS): $0.51, compared to $0.06 in Q1 2016 which included a $0.36 non-cash Japan customs charge
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Sales Leaders: 54,600, a 1% year-over-year
decrease
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Customers: 980,000, a 2% year-over-year
improvement
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"We are pleased to deliver strong first-quarter results, which demonstrates the progress we made executing on our strategic priorities to increase customer trial and acquisition," said Ritch Wood, chief executive officer. "Our quarterly results reflect solid growth in Mainland China, South Asia/Pacific and EMEA. Our expanding social selling efforts and the continued rollout of ageLOC Me and ageLOC Youth contributed to our strong revenue during the quarter, positioning us to deliver solid performance for 2017."
Q1 2017 Operating Results
Revenue: $499.1 million, a 7% constant currency improvement
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Gross margin: 77.7% compared to 70.8% in Q1 2016,
or 77.4% when excluding the Q1 2016
Japan customs charge
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Selling 41.9% of revenue compared to 41.5%
Expenses: in Q1 2016
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G&A Expenses: 26.6% of revenue compared to 27.6%
in Q1 2016
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Operating 9.3% compared to 1.7% in Q1 2016, or
Margin: 8.4% when excluding the Japan
customs charge
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Other Income / ($4.6) million, compared to ($2.9)
(Expense): million in Q1 2016; the change is
primarily interest expense
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Income Tax 34.1% compared to 37.3% in Q1 2016;
Rate: benefitted from a new stock
compensation accounting standard
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EPS: $0.51, a 21% increase compared to Q1 2016, when excluding the Japan customs charge
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Stockholder Value
Dividend Payments: $19.0 million
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Stock Repurchases: $6.8 million; $192.9 million remaining in authorization
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2017 Outlook
Q2 Revenue: $530 to $550 million; negative foreign currency impact of 1 to 2%; prior year included $106 million in LTO revenue
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Q2 EPS: $0.65 to $0.70
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2017 Revenue: $2.26 to $2.30 billion; negative foreign currency impact of approximately 2 to 3%
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2017 EPS $3.10 to $3.25
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"Looking forward, we will continue to focus on accelerating growth, driving innovation throughout our business, and empowering our customers and sales leaders with the products, programs, and platforms they need to succeed in a rapidly-evolving marketplace," said Wood. "A key component of our strategy is capitalizing on our early social selling success by expanding our reach through online channels globally. As part of this effort, we are making our product portfolio and business opportunity more accessible and attractive, particularly to the important millennial segment. We are confident that as we continue to execute on our initiatives, we will reach our 2017 business targets and will be well positioned for long-term growth and shareholder value creation."
"Our financial results in the first quarter put us on track to achieve our previously announced annual guidance," said Mark Lawrence, chief financial officer. "As we discussed at our investor day, we had significant limited-time-offers (LTOs) of $106 and $56 million in the second and third quarters of 2016. In the fourth quarter, we will begin a significant product introduction of our new ageLOC LumiSpa skin renewal and deep-cleansing device, which we anticipate will generate approximately $100 million in sales. These LTOs and product introductions will significantly impact our comparable sales and guidance for the balance of the year. We reiterate our 2017 forecast of $2.26 to $2.30 billion in revenue, and earnings per share of $3.10 to $3.25. We project second-quarter revenue of $530 to $550 million and earnings per share of $0.65 to $0.70," concluded Lawrence.
Conference Call
The Nu Skin management team will host a conference call with the investment community on May 3, 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 May 19, 2017.
About Nu Skin Enterprises, Inc.
Founded more than 30 years ago, Nu Skin Enterprises, Inc. develops and distributes innovative consumer products, offering a comprehensive line of premium-quality beauty and wellness solutions. The company builds upon its scientific expertise in both skin care and nutrition to continually develop innovative product brands that include the Nu Skin(®) personal care brand, the Pharmanex(®) nutrition brand, and most recently, the ageLOC(®) anti-aging brand. The ageLOC brand has generated a loyal following for such products as the ageLOC Youth nutritional supplement, the ageLOC Me(®) customized skin care system, as well as the ageLOC TR90(®) weight management and body shaping system. Nu Skin sells its products through a global network of sales leaders in Asia, the Americas, Europe, Africa and the Pacific. As a long-standing member of direct selling associations globally, Nu Skin is committed to the industry's consumer guidelines that protect and support those who sell and purchase its products through the direct selling channel. Nu Skin is also traded on the New York Stock Exchange under the symbol "NUS." More information is available at nuskin.com.
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, sales force and customer base, growth, shareholder value creation, initiatives and areas of focus, and new product introductions; projections regarding revenue, earnings per share, foreign currency fluctuations, and other financial items; statements of belief; and statements of assumptions underlying any of the foregoing. In some cases, you can identify these statements by forward-looking words such as "believe," "expect," "project," "anticipate," "estimate," "intend," "plan," "targets," "likely," "will," "would," "could," "may," "might," the negative of these words and other similar words.
The forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking statements or views expressed herein. These risks and uncertainties include, but are not limited to, the following:
-- any failure of current or planned initiatives or products to generate
interest among our sales force and customers and generate sponsoring and
selling activities on a sustained basis;
-- risk of foreign currency fluctuations and the currency translation
impact on the company's business associated with these fluctuations;
-- risk that direct selling laws and regulations in any of our markets,
including the United States and Mainland 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 favorable 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: Earnings per share, gross margin and operating margin, each excluding the Japan customs charge, and constant-currency revenue growth are non-GAAP financial measures. Constant-currency revenue growth is calculated by translating the current period's revenue at the same average exchange rates in effect during the applicable prior-year period and then comparing this amount to the prior-year period's revenue. Management believes that the non-GAAP financial measures assist management and investors in evaluating, and comparing from period to period, results from ongoing operations in a more meaningful and consistent manner while also highlighting more meaningful trends in the results of operations. These measures are used in addition to and in conjunction with results presented in accordance with GAAP and should not be relied upon to the exclusion of GAAP financial measures.
The Company's revenue results by segment for the three-month periods ended March 31 are presented in the following table (in thousands).
2017 2016 % Constant
Currency
Change
% Change
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Mainland China $150,004 $118,655 26.4% 33.1%
South Korea 82,471 86,118 (4.2%) (8.2%)
South Asia/Pacific 69,798 63,578 9.8% 11.0%
Americas 65,658 65,748 (0.1%) (0.4%)
Japan 61,156 65,091 (6.0%) (7.3%)
Hong Kong/Taiwan 35,948 40,056 (10.3%) (13.4%)
EMEA 34,064 32,585 4.5% 6.6%
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Total $499,099 $471,831 5.8% 6.6%
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The company's Customers and Sales Leaders statistics by segment for the three-month periods ended March 31 are presented in the following table.
2017 2016 % Increase (Decrease)
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Customers Sales Leaders Customers Sales Leaders Customers Sales Leaders
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Mainland China 176,000 19,100 142,000 16,900 23.9% 13.0%
South Korea 189,000 8,000 208,000 8,800 (9.1%) (9.1%)
South Asia/Pacific 116,000 6,900 110,000 6,800 5.5% 1.5%
Americas 172,000 6,200 164,000 6,900 4.9% (10.1%)
Japan 132,000 6,400 145,000 7,000 (9.0%) (8.6%)
Hong Kong/Taiwan 70,000 3,900 77,000 4,800 (9.1%) (18.8%)
EMEA 125,000 4,100 112,000 3,800 11.6% 7.9%
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Total 980,000 54,600 958,000 55,000 2.3% (0.7%)
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"Customers" 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.
NU SKIN ENTERPRISES, INC.
Consolidated Statements of Income (Unaudited)
For the First Quarters Ended March 31, 2017 and 2016
(in thousands, except per share amounts)
2017 2016
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Revenue $499,099 $471,831
Cost of sales 111,266 137,869
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Gross profit 387,833 333,962
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Operating expenses:
Selling expenses 209,008 195,559
General and administrative expenses 132,563 130,254
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Total operating expenses 341,571 325,813
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Operating income 46,262 8,149
Other income (expense), net (4,567) (2,863)
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Income before provision for income
taxes 41,695 5,286
Provision for income taxes 14,206 1,970
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Net income $27,489 $3,316
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Net income per share:
Basic $0.52 $0.06
Diluted $0.51 $0.06
Weighted average common shares outstanding:
Basic 52,678 55,955
Diluted 54,057 56,411
NU SKIN ENTERPRISES, INC.
Consolidated Balance Sheets (Unaudited)
(in thousands)
March 31, 2017 December 31, 2016
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ASSETS
Current assets:
Cash and cash equivalents $335,578 $357,246
Current investments 11,759 10,880
Accounts receivable 28,838 31,199
Inventories, net 251,947 249,936
Prepaid expenses and other 77,717 65,076
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705,839 714,337
Property and equipment, net 450,607 444,732
Goodwill 114,954 114,954
Other intangible assets, net 61,678 63,553
Other assets 161,338 136,469
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Total assets $1,494,416 $1,474,045
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $42,076 $41,261
Accrued expenses 253,359 275,023
Current portion of long-
term debt 99,482 82,727
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394,917 399,011
Long-term debt 329,001 334,165
Other liabilities 82,913 76,799
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Total liabilities 806,831 809,975
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Stockholders' equity:
Class A common stock 91 91
Additional paid-in capital 449,762 439,635
Treasury stock, at cost (1,251,788) (1,250,123)
Accumulated other
comprehensive loss (74,771) (84,122)
Retained earnings 1,564,291 1,558,589
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687,585 664,070
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Total liabilities and
stockholders' equity $1,494,416 $1,474,045
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NU SKIN ENTERPRISES, INC.
Reconciliation of GAAP Gross Profit to
Gross Profit Excluding Japan Customs Expense
(in thousands)
Quarter Ended
March 31,
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2017 2016
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Revenue as reported $499,099 $471,831
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GAAP gross profit as reported $387,833 $333,962
Japan customs expense - 31,355
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Gross profit excluding Japan customs
expense $387,833 $365,317
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GAAP gross profit as a percent of
revenue 77.7% 70.8%
Gross profit as a percent of revenue
excluding Japan customs expense 77.7% 77.4%
NU SKIN ENTERPRISES, INC.
Reconciliation of GAAP Operating Income to
Operating Income Excluding Japan Customs Expense
(in thousands)
Quarter Ended
March 31,
---------
2017 2016
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Revenue as reported $499,099 $471,831
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GAAP operating income as reported $46,262 $8,149
Japan customs expense - 31,355
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Operating income excluding Japan
customs expense $46,262 $39,504
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GAAP operating income as a percent
of revenue 9.3% 1.7%
Operating income as a percent of
revenue excluding Japan customs
expense
9.3% 8.4%
NU SKIN ENTERPRISES, INC.
Reconciliation of GAAP Diluted Earnings Per Share to
Diluted Earnings Per Share Excluding Japan Customs Expense
(in thousands, except per share amounts)
Quarter Ended %
March 31, Increase
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2017 2016
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GAAP net income as
reported $27,489 $3,316
Japan customs expense - 31,355
Tax effect of Japan
customs expense - (11,257)
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Net income excluding Japan
customs expense $27,489 $23,414
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GAAP diluted earnings per
share $0.51 $0.06 750.0%
Diluted earnings per share
excluding Japan customs
expense $0.51 $0.42 21.4%
Diluted weighted-average
common shares outstanding 54,057 56,411
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SOURCE Nu Skin Enterprises, Inc.
