Nu Skin Enterprises Reports Record Second-Quarter Results Company raises annual sales forecast $90 million

PROVO, Utah, Aug. 1, 2013 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced record second-quarter results with revenue of $682.9 million, a 15 percent increase over the prior-year period. Revenue for the quarter was negatively impacted 3 percent by foreign currency fluctuations. Quarterly earnings per share increased 30 percent to $1.22 from $0.94 in the prior year.

"We are extremely pleased with second-quarter results that reflect the strong momentum of the business," said Truman Hunt, president and chief executive officer. "We are particularly pleased with these results given the record regional ageLOC product launches in the prior-year period. Additionally, we generated continued growth of both our consumer and sales leader base, reflected in 32 percent growth in actives and 23 percent growth in sales leaders. Overall, we saw healthy trends throughout the global business, particularly in the Greater China, North Asia and Americas regions."

"Sales force enthusiasm for the introduction of our ageLOC TR90 weight management system bodes well for a strong second half of the year. We plan to begin the limited-time offer of ageLOC TR90 in September and believe this new product provides an ideal vehicle for us to increase our presence in the growing weight management category."

Regional Results

Greater China. In Greater China, second-quarter revenue increased 35 percent to $269.1 million, compared to $199.7 million in the prior year, which included approximately $100 million in product launch revenue. The region's results were negatively impacted 3 percent by foreign currency fluctuations. The sales leader count in the region improved 51 percent, while the number of actives increased 121 percent compared to the prior year.

North Asia. Second-quarter revenue in North Asia was $196.8 million, compared to $177.7 million for the same period of 2012. The region's results were negatively impacted 12 percent by foreign currency fluctuations. Japan local-currency revenue improved 5 percent and South Korea generated local-currency revenue growth of 54 percent. The number of sales leaders in the region was up 21 percent while the number of actives improved 15 percent.

South Asia/Pacific. Revenue in South Asia/Pacific was $85.9 million, a 13 percent decline compared to the prior year. Revenue in the prior year included approximately $40 million in product launch sales. Results were not notably impacted by foreign currency fluctuations. The region's second-quarter sales leaders decreased 20 percent while actives increased 16 percent compared to the same period in 2012.

Americas. Revenue in the Americas improved 17 percent to $84.3 million, compared to $71.8 million in the prior-year period. The region's results were negatively impacted 5 percent by foreign currency fluctuations. The number of sales leaders in the region improved 16 percent while the number of actives increased 3 percent compared to the prior year.

EMEA. Revenue in the EMEA region was $46.8 million, a 2 percent improvement over the prior-year period. The region's results were positively impacted 1 percent by foreign currency fluctuations. Sales leaders decreased 3 percent, while actives increased 4 percent compared to the prior year.   

Operational Performance

The company's operating margin was 16.8 percent for the quarter, compared to 16.5 percent, while gross margin was 83.7 percent, compared to 83.9 percent in the prior year. Selling expenses, as a percent of revenue, were 45.2 percent in the second quarter. General and administrative expenses, as a percent of revenue, improved to 21.7 percent from 22.3 percent in the prior-year period. Other income (expense) reflected an expense of $1.1 million compared to a $3.4 million expense in the prior year. 

The company's income tax rate for the quarter was 34.4 percent compared to 36.1 percent in the prior-year period. The company's cash and short-term investment position at the end of the quarter was $411.4 million. Dividend payments were $17.6 million.

Outlook

"As we look to the back half of the year, we are ramping up for what we expect to be our largest-ever product launch," said Hunt. "Given the growth momentum of the business, we are again increasing the sales forecast for the remainder of the year. We expect the upcoming launch of ageLOC TR90 and the strength of the business in several key markets will lead to another record year as annual revenue will approach the $3 billion mark," Hunt concluded.

"Given the significant growth in our actives, we are raising our annual sales guidance by $90 million to $2.91 to $2.95 billion," said Ritch Wood, chief financial officer. We now expect earnings per share to be $5.05 to $5.15 and continue to project a negative 5 percent foreign currency impact to annual revenue."

"In the third quarter, we will introduce ageLOC TR90 for a limited time in the Greater China region and much of South Asia in advance of our global convention," continued Wood. "With these ageLOC TR90 sales, we anticipate third-quarter revenue to be between $790 and $810 million, with a negative currency impact to revenue of 6 to 7 percent. We anticipate earnings per share to be $1.35 to $1.40 for the quarter," concluded Wood.

The company's management will host a webcast with the investment community on Aug. 1, 2013, at 11 a.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 Nu Skin Enterprises' website, http://ir.nuskin.com. An archive of the webcast will be available at this same URL through Aug. 16, 2013. 

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 new ageLOC® suite of products including the ageLOC® R2 nutritional supplement, ageLOC® Galvanic Spa System and ageLOC® Galvanic Body Spa™, as well as the 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, particularly the "Outlook" section, 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, initiatives, strategies, new product introductions and growth in the company's markets, including mainland China; statements of projections regarding revenue, earnings per share, foreign currency impact 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 distributors and customers and generate sponsoring and selling activities on a sustained basis;
  • risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support our planned initiatives or launch strategies, including possible ingredient supply limitations;
  • challenging economic conditions globally;
  • risk of foreign currency fluctuations and the currency translation impact on the company's business associated with these fluctuations;
  • risks associated with general inquiries and complaints to consumer protection agencies in Japan regarding the activities of some distributors;
  • risks associated with our ability to manage rapid growth, particularly in our greater China region;
  • 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;
  • continued regulatory scrutiny and investigations in Mainland China, which have from time to time in the past, and could in the future, negatively impact the company's business, including the interruption of sales activities in stores, loss of licenses, and the imposition of fines;
  • adverse publicity related to the company's business, products, industry or any legal actions or complaints by distributors or others;
  • 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, 2013 and 2012

(in thousands, except per share amounts)






2013


2012

Revenue:




        Greater China

$               269,146


$                199,728

        North Asia

196,757


177,695

        South Asia/Pacific

85,916


98,344

        Americas

84,289


71,766

        EMEA

46,819


45,702





Total revenue

682,927


593,235





Cost of sales

111,273


95,584





Gross profit

571,654


497,651





Operating expenses:




        Selling expenses

308,769


267,363

        General and administrative expenses

148,302


132,376

Total operating expenses

457,071


399,739





Operating income

114,583


97,912





Other income (expense), net

(1,187)


(3,369)

Income before provision for income taxes

113,396


94,543

Provision for income taxes

38,961


34,136





Net income

$                 74,435


$                  60,407





Net income per share:




        Basic

$                     1.27


$                      0.98

        Diluted

$                     1.22


$                      0.94





Weighted average common shares outstanding:




        Basic

58,620


61,706

        Diluted

61,121


64,230







NU SKIN ENTERPRISES, INC.

Consolidated Statements of Income (Unaudited)

For the Six Month Periods Ended June 30, 2013 and 2012

(in thousands, except per share amounts)






2013


2012

Revenue:




        Greater China

$               444,852


$               292,339

        North Asia

384,950


359,895

        South Asia/Pacific

153,158


175,665

        Americas

160,830


138,106

        EMEA

89,231


89,232





Total revenue

1,233,021


1,055,237





Cost of sales

201,318


171,340





Gross profit

1,031,703


883,897





Operating expenses:




        Selling expenses

550,652


469,898

        General and administrative expenses

283,809


244,424

Total operating expenses

834,461


714,322





Operating income

197,242


169,575





Other income (expense), net

(1,075)


266

Income before provision for income taxes

196,167


169,841

Provision for income taxes

67,450


61,605





Net income

$               128,717


$               108,236





Net income per share:




        Basic

$                     2.20


$                     1.75

        Diluted

$                     2.11


$                     1.67





Weighted average common shares outstanding:




        Basic

58,487


62,016

        Diluted

60,882


64,773







NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(in thousands)






June 30, 2013


December 31, 2012

ASSETS




Current assets:




        Cash and cash equivalents

$                402,678


$                320,025

        Current investments

8,754


13,378

        Accounts receivable

59,043


36,850

        Inventories, net

178,183


135,874

        Prepaid expenses and other

117,138


93,276


765,796


599,403





Property and equipment, net

304,619


229,787

Goodwill

112,446


112,446

Other intangible assets, net

87,644


92,518

Other assets

122,202


118,753

                Total assets

$             1,392,707


$             1,152,907





LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




        Accounts payable

$                  48,954


$                  47,882

        Accrued expenses

355,215


233,202

        Current portion of long-term debt

69,461


39,019


473,630


320,103





Long-term debt

128,664


154,963

Other liabilities

98,326


87,229

                Total liabilities

700,620


562,295





Stockholders' equity:




        Class A common stock

91


91

        Additional paid-in capital

332,588


317,293

       Treasury stock, at cost

(718,800)


(714,853)

        Accumulated other comprehensive loss

(55,272)


(51,822)

        Retained earnings

1,133,480


1,039,903


692,087


590,612

                Total liabilities and stockholders' equity

$             1,392,707


$             1,152,907







NU SKIN ENTERPRISES, INC.

Actives/Sales Leaders Statistics



As of June 30, 2013


As of June 30, 2012


% Increase (Decrease)



Actives


Sales Leaders


Actives


Sales Leaders


Actives


Sales Leaders














Greater China


376,000


30,455


170,000


20,182


121.2%


50.9%

North Asia


389,000


17,372


337,000


14,370


15.4%


20.9%

South Asia/Pacific


114,000


7,120


99,000


8,856


15.2%


(19.6%)

Americas


176,000


6,954


170,000


5,994


3.5%


16.0%

EMEA


124,000


4,484


119,000


4,626


4.2%


(3.1%)














Total


1,179,000


66,385


895,000


54,028


31.7%


22.9%















"Actives" are persons who purchased products directly from the company during the previous three months.

"Sales Leaders" are persons who have completed and who maintain specified sales requirements. Sales Leaders include our independent distributors who have completed and who maintain specified sales requirements, and our sales employees and contractual sales promoters in China, who have completed certain qualification requirements.

SOURCE Nu Skin Enterprises, Inc.



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