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
|
|
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SOURCE Nu Skin Enterprises