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      Nu Skin Enterprises Reports First Quarter 2023 Financial Results

      Nu Skin logo (PRNewsfoto/Nu Skin Enterprises)

      News provided by

      Nu Skin Enterprises

      May 03, 2023, 16:06 ET

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      Company Reiterates 2023 Guidance

      PROVO, Utah, May 3, 2023 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced first quarter 2023 results in line with expectations.

      Executive Summary
      Q1 2023 vs. Prior-year Quarter

      Revenue:

      $481.5 million; (20)%

      •  (4)% FX impact or $(29) million

      Earnings Per Share
      (EPS):

      $0.23 or $0.37 excluding restructuring and impairment charges associated with the company's strategic resource reallocation, compared to $0.76

      Customers:

      1,083,536; (18)%

      Paid Affiliates:

      221,354; (12)%

      Sales Leaders:

      43,755; (17)%

      "First quarter results were in line with our guidance reflecting better-than-expected performance in South Korea and Mainland China, while the Americas and Southeast Asia continued to be impacted in large part by macro-economic factors including inflation and recession concerns," said Ryan Napierski, Nu Skin president and CEO. "Although our results were down due to a difficult comparison and persistent macro-economic challenges, we continue to make steady progress toward the key priorities that underpin our Nu Vision 2025 strategy. During the quarter, we experienced improving sequential trends in customers and paid affiliates in Mainland China. We also introduced ageLOC® TRMe®, our personalized weight management system in South Korea, driving healthy results. In addition, our ageLOC® LumiSpa® iO device continues to gain traction with more than 3.7 million treatments performed to date, while enhancements to the capabilities of our Vera® and Stela apps are driving customer conversion and user engagement. 

      "In the second half of this year, we'll further strengthen our position as the world's leading beauty device system brand with the introduction of ageLOC WellSpa iO™, our next connected device system focused on holistic wellness and beauty. We will also continue to evolve our social commerce business model to empower our micro- and nano-influencers to scale their businesses and will build on the continued adoption of Vera and Stela to develop deeper connections with our consumers and affiliates. With a dedicated team and a strong foundation, we remain confident in our Nu Vision 2025 strategy and are well positioned to drive long-term sustainable growth and shareholder value."

      Q1 2023 Year-over-year Operating Results                

      Revenue:

      $481.5 million compared to $604.9 million

      •  (4)% FX impact or $(29) million

      Gross Margin:

      72.3% compared to 73.3%

      •  Impacted by global inflationary pressure

      •  Nu Skin business was 76.4% compared to 76.5%

      Selling Expenses:

      39.1% compared to 40.1%

      •  Nu Skin business was 41.7% compared to 43.0%

      G&A Expenses:

      27.8% compared to 24.6%

      Operating Margin:

      3.3% or 5.4% excluding restructuring and impairment charges, compared to 8.6%

      Other Income /
      (Expense):

      $(1.5) million compared to $(1.5) million

      Income Tax Rate:

      22.0% compared to 23.6%

      EPS:

      $0.23 or $0.37 excluding restructuring and impairment charges compared to $0.76

      Stockholder Value

      Dividend Payments:

      $19.4 million

      Stock Repurchases:

      $0.0 million

      •  $175.4 million remaining in authorization

      Q2 and Full-year 2023 Outlook

      Q2 2023 Revenue:

      $485 to $525 million; (14) to (6)%

      •  Approximately (1) to (2)% FX impact

      Q2 2023 EPS:

      $0.45 to $0.55

      2023 Revenue:

      $2.03 to $2.18 billion; (9)% to (2)%

      •  Approximately (1) to (2)% FX impact

      2023 EPS:

      $2.27 to $2.67 or $2.41 to $2.81 non-GAAP

      "We are reiterating our 2023 guidance with gradual sequential improvements in our business throughout the year despite a challenging global macro environment," said James Thomas, interim chief financial officer. "We are managing our cost structure conservatively and are investing in key growth initiatives that support our Nu Vision 2025 strategy. Our annual revenue guidance remains at $2.03 to $2.18 billion, with an approximate 1 to 2 percent foreign currency headwind. We are also reiterating reported EPS of $2.27 to $2.67 and increasing non-GAAP EPS to $2.41 to $2.81, which excludes the first quarter restructuring charge of $9.8 million. For the second quarter, we project revenue of $485 to $525 million, assuming a negative foreign currency impact of approximately 1 to 2 percent, with reported earnings per share of $0.45 to $0.55."

      Conference Call

      The 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 on the same page through May 17, 2023.

      About Nu Skin Enterprises, Inc.

      Nu Skin Enterprises, Inc. (NYSE: NUS) is a global integrated beauty and wellness company, powered by a dynamic affiliate opportunity platform. The company helps people look, feel and live their best with products that combine the best of science, technology and nature. Backed by nearly 40 years of scientific research, Nu Skin develops innovative products including Nu Skin® personal care, Pharmanex® nutrition and the ageLOC® anti-aging brand which includes an award-winning line of beauty device systems. Nu Skin operates in nearly 50 markets worldwide in the Americas, Asia, Europe, Africa and the Pacific. Rhyz Inc. is the company's strategic investment arm that includes a collection of technology and manufacturing companies to support growth in the core Nu Skin business. Nu Skin is committed to sustainability, including global initiatives such as transitioning to reduced and sustainable packaging for all products by 2030. The Nu Skin Force for Good Foundation also strives to improve children's health, education and economic circumstances throughout the world. For more information, visit 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 macro-environment and the company's performance, growth, shareholder value, strategies, transformation, initiatives, product pipeline and product introductions, digital and social-commerce tools and initiatives, customers, sales leaders, and affiliates; projections regarding revenue, expenses, operating income, earnings per share, foreign currency fluctuations, uses of cash 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," "anticipate," "project," "continue," "outlook," "guidance," "remain," "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 COVID-19 and related disruptions, 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, increased scrutiny of sales force actions, 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, including trade policies, associated with operating in Mainland China and other international markets;
      • 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;
      • the company's future tax-planning initiatives; any prospective or retrospective increases in duties or tariffs 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.

      Earnings per share and operating margin, each excluding restructuring and impairment charges, also are non-GAAP financial measures. Restructuring and impairment charges are not part of the ongoing operations of our underlying business. The company believes that these non-GAAP financial measures are useful to investors, lenders and analysts because removing the impact of restructuring and impairment charges facilitates period-to-period comparisons of the company's performance. Please see the reconciliations of these items to our earnings per share and operating margin calculated under GAAP, below.

      The following table sets forth revenue for the three-month periods ended March 31, 2023 and 2022 for each of our reportable segments (U.S. dollars in thousands):


      Three Months Ended

      March 31,




      Constant-
      Currency


      2023


      2022


      Change


      Change

      Nu Skin












      Americas

      $

      101,157


      $

      123,580



      (18) %



      (15) %

      South Korea


      70,324



      72,133



      (3) %



      3 %

      Mainland China


      67,976



      124,495



      (45) %



      (41) %

      Southeast Asia/Pacific


      67,810



      90,236



      (25) %



      (21) %

      Japan


      52,606



      61,791



      (15) %



      (3) %

      EMEA


      47,444



      52,968



      (10) %



      (6) %

      Hong Kong/Taiwan


      34,548



      38,494



      (10) %



      (5) %

      Nu Skin other


      (115)



      620



      (119) %



      (119) %

      Total Nu Skin


      441,750



      564,317



      (22) %



      (17) %

      Rhyz Investments












      Manufacturing


      35,767



      40,341



      (11) %



      (11) %

      Rhyz other


      3,945



      241



      1537 %



      1537 %

      Total Rhyz Investments


      39,712



      40,582



      (2) %



      (2) %

      Total

      $

      481,462


      $

      604,899



      (20) %



      (16) %

      The following table provides information concerning the number of Customers, Paid Affiliates and Sales Leaders in our core Nu Skin business for the three-month periods ended March 31, 2023 and 2022:


      Three Months Ended

      March 31,




      2023


      2022


      Change

      Customers








      Americas


      266,378



      318,458


      (16) %

      South Korea


      120,907



      140,648


      (14) %

      Mainland China


      217,101



      289,060


      (25) %

      Southeast Asia/Pacific


      117,266



      165,657


      (29) %

      Japan


      115,161



      122,616


      (6) %

      EMEA


      190,313



      216,037


      (12) %

      Hong Kong/Taiwan


      56,410



      68,975


      (18) %

      Total Customers


      1,083,536



      1,321,451


      (18) %

      Paid Affiliates








      Americas


      38,707



      46,317


      (16) %

      South Korea


      40,599



      49,474


      (18) %

      Mainland China


      24,522



      22,783


      8 %

      Southeast Asia/Pacific


      36,431



      43,347


      (16) %

      Japan


      37,155



      38,096


      (2) %

      EMEA


      27,654



      33,914


      (18) %

      Hong Kong/Taiwan


      16,286



      17,928


      (9) %

      Total Paid Affiliates


      221,354



      251,859


      (12) %

      Sales Leaders








      Americas


      8,242



      9,548


      (14) %

      South Korea


      6,242



      6,072


      3 %

      Mainland China(1)


      10,034



      14,146


      (29) %

      Southeast Asia/Pacific


      6,337



      8,012


      (21) %

      Japan


      5,688



      5,977


      (5) %

      EMEA


      4,524



      5,455


      (17) %

      Hong Kong/Taiwan


      2,688



      3,253


      (17) %

      Total Sales Leaders


      43,755



      52,463


      (17) %


      (1)  The March 31, 2023 number reflects a modified Sales Leader definition, as described in our quarterly report on Form 10-Q.

      • "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 directly from members of our sales force.
      • "Paid Affiliates" are any Brand Affiliates, as well as members of our sales force 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 achieved certain qualification requirements as of the end of each month of the quarter.

      NU SKIN ENTERPRISES, INC.

      Consolidated Statements of Income (Unaudited)

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



      Three Months Ended


      March 31,


      2023


      2022

      Revenue

      $

      481,462


      $

      604,899

      Cost of sales


      133,588



      161,499

      Gross profit


      347,874



      443,400







      Operating expenses:




           Selling expenses

      188,124



      242,699

           General and administrative expenses

      133,899



      148,556

           Restructuring and impairment expenses


      9,787



      —

      Total operating expenses


      331,810



      391,255







      Operating income

      16,064



      52,145

      Other income (expense), net


      (1,476)



      (1,453)







      Income before provision for income taxes

      14,588



      50,692

      Provision for income taxes


      3,212



      11,976







      Net income

      $

      11,376


      $

      38,716







      Net income per share:




           Basic

      $

      0.23


      $

      0.77

           Diluted

      $

      0.23


      $

      0.76







      Weighted-average common shares outstanding (000s):






           Basic


      49,644



      49,991

           Diluted


      50,058



      51,066

      NU SKIN ENTERPRISES, INC.

      Consolidated Balance Sheets (Unaudited)

      (U.S. dollars in thousands)






      March 31,

      2023


      December 31,

      2022

      ASSETS




      Current assets:




      Cash and cash equivalents

      $

      229,941


      $

      264,725

      Current investments


      16,774



      13,784

      Accounts receivable, net


      60,008



      47,360

      Inventories, net


      366,537



      346,183

      Prepaid expenses and other


      100,302



      87,816

       Total current assets


      773,562



      759,868







      Property and equipment, net


      437,986



      444,806

      Operating lease right-of-use assets


      98,683



      98,734

      Goodwill


      206,432



      206,432

      Other intangible assets, net


      64,711



      66,701

      Other assets


      243,271



      244,429

      Total assets

      $

      1,824,645


      $

      1,820,970







      LIABILITIES AND STOCKHOLDERS' EQUITY






      Current liabilities:






      Accounts payable

      $

      49,494


      $

      53,963

      Accrued expenses


      275,774



      280,280

      Current portion of long-term debt


      47,500



      25,000

       Total current liabilities


      372,768



      359,243







      Operating lease liabilities


      78,776



      76,540

      Long-term debt


      372,609



      377,466

      Other liabilities


      107,522



      110,425

      Total liabilities


      931,675



      923,674







      Commitments and contingencies












      Stockholders' equity:






      Class A common stock – 500 million shares authorized, $0.001 par value, 90.6 million shares
      issued


      91



      91

      Additional paid-in capital


      611,483



      613,278

      Treasury stock, at cost – 40.7 million and 41.1 million shares


      (1,559,080)



      (1,569,061)

      Accumulated other comprehensive loss


      (91,005)



      (86,509)

      Retained earnings


      1,931,481



      1,939,497

      Total stockholders' equity


      892,970



      897,296

      Total liabilities and stockholders' equity

      $

      1,824,645


      $

      $1,820,970

      NU SKIN ENTERPRISES, INC.
      Reconciliation of Operating Margin Excluding Impact of Restructuring and Impairment
      to GAAP Operating Margin
      (in thousands, except for per share amounts)











      Three months ended
      March 31,




      2023


      2022


      Operating Income


      $

      16,064


      $

      52,145


      Impact of restructuring and impairment:








      Restructuring and impairment



      9,787



      -


      Adjusted operating income


      $

      25,851


      $

      52,145


















      Operating margin



      3.3 %



      8.6 %


      Operating margin, excluding restructuring impact



      5.4 %



      8.6 %










      Revenue


      $

      481,462


      $

      604,899


      NU SKIN ENTERPRISES, INC.
      Reconciliation of Earnings Per Share Excluding Impact of Restructuring to GAAP
      Earnings Per Share
      (in thousands, except for per share amounts)











      Three Months Ended
      March 31,




      2023


      2022


      Net income


      $

      11,376


      $

      38,716


      Impact of restructuring and impairment expense:








      Restructuring and impairment



      9,787



      -


      Tax impact



      (2,593)



      -


      Adjusted net income


      $

      18,570


      $

      38,716


















      Diluted earnings per share


      $

      0.23


      $

      0.76


      Diluted earnings per share, excluding restructuring impact


      $

      0.37


      $

      0.76










      Weighted-average common shares outstanding (000)



      50,058



      51,066


      NU SKIN ENTERPRISES, INC.
      Reconciliation of Earnings Per Share Excluding Impact of Restructuring to GAAP
      Earnings Per Share











      Year ended December 31,




      2023 - Low-
      end


      2023 High-
      end


      Earnings Per Share


      $

      2.27


      $

      2.67


      Impact of restructuring and impairment expense:








      Restructuring and impairment



      0.19



      0.19


      Tax impact



      (0.05)



      (0.05)


      Adjusted EPS


      $

      2.41


      $

      2.81


      SOURCE Nu Skin Enterprises

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