NUS Nu Skin Enterprises Inc

Nu Skin Enterprises Inc. (NYSE: NUS) today announced first quarter results in line with guidance.

Executive Summary Q1 2024 vs. Prior-year Quarter

 

Revenue

$417.3 million; (13.3)%

• (3.8)% FX impact or $(18.2) million
• Rhyz revenue $62.5 million; 57.5%

Earnings Per Share (EPS)

$(0.01) or $0.09 excluding restructuring charges compared to $0.23 or $0.37 excluding restructuring charges

Customers

875,261; (19)%

Paid Affiliates

154,171; (30)% or (14)% excluding an adjustment to eligibility requirements

Sales Leaders

38,609; (12)%

“Our first quarter revenue came in at the mid-point of our guidance, negatively impacted more than anticipated by foreign currency headwinds, while our cost management efforts helped us post earnings per share in the upper half of our guide,” said Ryan Napierski, Nu Skin president and CEO. “We are continuing our business transformation efforts and making progress in developing our integrated beauty, wellness and lifestyle ecosystem. During the quarter, we again drove strong gains in our Rhyz business, growing nearly 60% year-over-year. In our Nu Skin core business, the macro-economic environment impacted affiliate and customer growth around the globe, but we are encouraged by the performance of our ageLOC WellSpa iO, RenuSpa iO and TRMe launches.

“At our annual top sales leader event, we aligned around the upcoming preview of our new MYND360 cognitive health line and saw healthy energy for the opening of India next year. We also introduced some new early affiliate rewards and top leader incentives to help drive customer acquisition and business growth. While we continue to navigate the challenges of a business transformation amid these disruptive times, we continue to evolve our strategy for both our Nu Skin and Rhyz businesses and remain focused on generating long-term growth and returning value to shareholders.”

Q1 2024 Year-over-year Operating Results

 

Revenue

$417.3 million compared to $481.5 million

• (3.8)% FX impact or $(18.2) million
• Rhyz revenue $62.5 million; 57.5%

Gross Margin

70.5% compared to 72.3%

• Nu Skin business was 76.9% compared to 76.4%

Selling Expenses

36.8% compared to 39.1%

• Nu Skin business was 41.7% compared to 41.7%

G&A Expenses

29.9% compared to 27.8%

Operating Margin

2.1% or 3.8% excluding restructuring charges compared to 3.3% or 5.4% excluding restructuring charges

Interest Expense

$7.3 million compared to $4.9 million

Other Income/(Expense)

$(0.4) million compared to $3.4 million

Income Tax Rate

148.4% or 48.5% excluding restructuring charges compared to 22.0%

EPS

$(0.01) or $0.09 excluding restructuring charges compared to $0.23 or $0.37 excluding restructuring charges 

Stockholder Value

 

Dividend Payments

$3.0 million

Stock Repurchases

$0.0 million

• $162.4 million remaining in authorization

Q2 and Full-year 2024 Outlook

 

Q2 2024 Revenue

$420 to $455 million; (16)% to (9)%

• Approximately (4) to (3)% FX impact

Q2 2024 EPS

$0.01 to $0.10 or $0.10 to $0.20 non-GAAP

2024 Revenue

$1.73 to $1.87 billion; (12)% to (5)%

• Approximately (3) to (2)% FX impact

2024 EPS

$0.77 to $1.16 or $0.95 to $1.35 non-GAAP

"We continue to implement strategic measures to refine our cost structure in line with business performance and strengthen our financial outlook," said James D. Thomas, chief financial officer. "The additional efficiencies garnered from our cost-saving initiatives underscore our dedication to boosting productivity. We remain vigilant in scrutinizing all facets of our operations and prioritizing initiatives to drive revenue, amplify margins and secure our financial position. Although negative foreign currency impacted our results more than initially expected and will likely continue to do so, we are keeping our 2024 guidance numbers intact. For the second quarter, we project sequential improvement with revenue of $420 to $455 million, assuming an increased foreign currency impact, with reported earnings per share of $0.01 to $0.10 or $0.10 to $0.20 excluding restructuring charges."

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 22, 2024.

About Nu Skin Enterprises Inc.

The Nu Skin Enterprises Inc. (NYSE: NUS) family of companies includes Nu Skin and Rhyz Inc. Nu Skin is an integrated beauty and wellness company, powered by a dynamic affiliate opportunity platform, which operates in nearly 50 markets worldwide. Backed by 40 years of scientific research, the company’s products help people look, feel and live their best with brands including Nu Skin® personal care, Pharmanex® nutrition and ageLOC® anti-aging, which includes an award-winning line of beauty device systems. Formed in 2018, Rhyz is a synergistic ecosystem of consumer, technology and manufacturing companies focused on innovation within the beauty, wellness and lifestyle categories.

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 and growth opportunities, shareholder value, productivity, product previews and launches, transformation, evolution, investments, initiatives, digital tools and initiatives, and new market expansion; projections regarding revenue, expenses, margins, tax rates, earnings per share, foreign currency fluctuations, future dividends, uses of cash, financial position 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,” “accelerate,” “project,” “vision,” “continue,” “outlook,” “guidance,” “improve,” “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 the company’s sales force and customers and generate sponsoring and selling activities on a sustained basis;
• 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;
• economic conditions and events globally;
• competitive pressures in the company’s markets;
• risk that epidemics, including COVID-19 and related disruptions, or 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;
• 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; and
• 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.

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, operating margin and income tax rate, each excluding restructuring and/or 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 these charges facilitates period-to-period comparisons of the company’s performance. Please see the reconciliations of these items to our earnings per share, operating margin and income tax rate calculated under GAAP, below.

The following table sets forth revenue for the three-month periods ended March 31, 2024, and 2023 for each of our reportable segments (U.S. dollars in thousands):

Three Months Ended

March 31,

 

 

Constant- Currency

 

2024

 

2023

 

Change

 

Change

Nu Skin

Americas

$

75,031

 

$

101,157

 

 

(25.8)%

 

(20.1)%

Mainland China

 

61,067

 

 

67,976

 

 

(10.2)%

 

(6.1)%

Southeast Asia/Pacific

 

60,065

 

 

67,810

 

 

(11.4)%

 

(8.1)%

Japan

 

44,236

 

 

52,606

 

 

(15.9)%

 

 

(5.6)%

Europa & Africa

 

42,273

 

 

47,444

 

 

(10.9)%

 

(11.8)%

South Korea

 

40,963

 

 

70,324

 

 

(41.8)%

 

 

(39.3)%

Hong Kong/Taiwan

 

30,466

 

 

34,548

 

 

(11.8)%

 

(9.8)%

Nu Skin other

 

672

 

 

(115)

 

 

684.3%

 

 

684.3%

Total Nu Skin

354,773

441,750

(19.7)%

(15.6)%

Rhyz Investments

Manufacturing

50,302

35,767

40.6%

40.6%

Rhyz other

12,231

3,945

210.0%

210.0%

Total Rhyz Investments

62,533

39,712

57.5%

57.5%

Total

$

417,306

 

$

481,462

 

 

(13.3)%

 

(9.5)%

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, 2024, and 2023:

Three Months Ended March 31,

 

 

2024

 

2023

 

Change

Customers

 

 

 

 

 

 

 

Americas

 

199,399

266,378

(25)%

Mainland China

 

162,239

217,101

(25)%

Southeast Asia/Pacific

 

93,411

117,266

(20)%

Japan

 

108,808

115,161

 

(6)%

Europe & Africa

 

163,481

190,313

(14)%

South Korea

 

100,230

120,907

(17)%

Hong Kong/Taiwan

 

47,693

56,410

(15)%

Total Customers

875,261

1,083,536

(19)%

Paid Affiliates

 

 

 

 

 

 

 

Americas

 

29,081

38,707

(25)%

Mainland China

 

24,405

24,522

—

Southeast Asia/Pacific

 

29,778

36,431

(18)%

Japan(1)

 

21,679

37,155

(42)%

Europe & Africa(1)

 

18,313

27,654

(34)%

South Korea(1)

 

20,594

40,599

(49)%

Hong Kong/Taiwan(1)

 

10,321

16,286

(37)%

Total Paid Affiliates

154,171

221,354

(30)%

Sales Leaders

 

 

 

 

 

 

 

Americas

 

6,616

8,242

(20)%

Mainland China

9,600

10,034

(4)%

Southeast Asia/Pacific

 

5,570

6,337

(12)%

Japan

 

6,385

5,688

12%

Europe & Africa

 

3,715

4,524

(18)%

South Korea

 

4,122

6,242

(34)%

Hong Kong/Taiwan

 

2,601

2,688

(3)%

Total Sales Leaders

38,609

43,755

(12)%

(1)

The March 31, 2024, number is affected by a change in eligibility requirements for receiving certain rewards within our compensation structure. We plan to implement these changes in additional segments over the next several quarters. We estimate the change in eligibility requirements resulted in a reduction of approximately 14,000; 5,000; 13,000 and 3,000 for Japan, Europe & Africa, South Korea and Hong Kong/Taiwan, respectively.

• “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,

 

2024

 

2023

Revenue

$

417,306

 

$

481,462

Cost of sales

 

123,242

 

 

133,588

Gross profit

 

294,064

 

 

347,874

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Selling expenses

 

153,542

 

 

188,124

General and administrative expenses

 

124,566

 

 

133,899

Restructuring and impairment expenses

 

7,134

 

 

9,787

Total operating expenses

 

285,242

 

 

331,810

 

 

 

 

 

 

Operating income

 

8,822

 

 

16,064

Interest expense

 

7,325

 

 

4,888

Other income (expense), net

 

(396)

 

 

3,412

 

 

 

 

 

 

Income before provision for income taxes

 

1,101

 

 

14,588

Provision for income taxes

 

1,634

 

 

3,212

 

 

 

 

 

 

Net (loss) income

$

(533)

 

$

11,376

 

 

 

 

 

 

Net (loss) income per share:

 

 

 

 

 

Basic

$

(0.01)

 

$

0.23

Diluted

$

(0.01)

 

$

0.23

 

 

 

 

 

 

Weighted-average common shares outstanding (000s):

 

 

 

 

 

Basic

 

49,538

 

 

49,644

Diluted

 

49,538

 

 

50,058

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)

 

 

 

 

 

March 31,

2024

 

December 31, 2023

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

212,532

 

$

256,057

Current investments

 

8,674

 

 

11,759

Accounts receivable, net

 

67,041

 

 

72,879

Inventories, net

 

265,100

 

 

279,978

Prepaid expenses and other

 

93,913

 

 

81,198

Total current assets

 

647,260

 

 

701,871

 

 

 

 

 

 

Property and equipment, net

 

422,818

 

 

432,965

Operating lease right-of-use assets

93,092

90,107

Goodwill

 

230,768

 

 

230,768

Other intangible assets, net

 

101,933

 

 

105,309

Other assets

 

246,044

 

 

245,443

Total assets

$

1,741,915

 

$

1,806,463

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

32,237

 

$

43,505

Accrued expenses

 

247,068

 

 

260,366

Current portion of long-term debt

 

30,000

 

 

25,000

Total current liabilities

 

309,305

 

 

328,871

 

Operating lease liabilities

 

74,198

 

 

70,943

Long-term debt

 

453,183

 

 

478,040

Other liabilities

 

95,023

 

 

106,641

Total liabilities

 

931,709

 

 

984,495

 

 

 

 

 

 

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

 

618,706

 

 

621,853

Treasury stock, at cost – 40.9 million and 41.1 million shares

 

(1,564,942)

 

 

(1,570,440)

Accumulated other comprehensive loss

 

(110,607)

 

 

(100,006)

Retained earnings

 

1,866,958

 

 

1,870,470

Total stockholders’ equity

 

810,206

 

 

821,968

Total liabilities and stockholders’ equity

$

1,741,915

 

$

1,806,463

 

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

 

 

 

 

 

 

 

 

 

Three months ended March 31,

 

 

2024

 

2023

Operating Income

 

$

8,822

 

$

16,064

Impact of restructuring and impairment:

 

 

 

 

 

 

Restructuring and impairment

 

 

7,134

 

 

9,787

Adjusted operating income

 

$

15,956

 

$

25,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

2.1%

 

 

3.3%

Operating margin, excluding restructuring impact

 

 

3.8%

 

 

5.4%

 

 

 

 

 

 

 

Revenue

 

$

417,306

 

$

481,462

 

NU SKIN ENTERPRISES, INC. Reconciliation of Effective Tax Rate Excluding Impact of Restructuring to GAAP Effective Tax Rate (in thousands, except for per share amounts)

 

 

 

 

 

 

 

 

 

Three months ended March 31,

 

 

2024

 

2023

Provision (benefit) for income taxes

 

$

1,634

 

$

3,212

Impact of restructuring on provision for income taxes

 

 

2,356

 

 

2,593

Provision for income taxes, excluding impact of restructuring

 

$

3,990

 

$

5,805

 

 

 

 

 

 

 

Income before provision for income taxes

 

 

1,101

 

 

14,588

Impact of restructuring and impairment expense:

 

 

 

 

 

 

Restructuring and impairment

 

 

7,134

 

 

9,787

Income before provision for income taxes, excluding impact of restructuring

 

$

8,235

 

$

24,375

 

 

 

 

 

 

 

Effective tax rate

 

 

148.4%

 

 

22.0%

Effective tax rate, excluding restructuring impact

 

 

48.5%

 

 

23.8%

 

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,

 

 

2024

 

2023

Net (loss) income

 

$

(533)

 

$

11,376

Impact of restructuring and impairment expense:

 

 

 

 

 

 

Restructuring and impairment

 

 

7,134

 

 

9,787

Tax impact

 

 

(2,356)

 

 

(2,593)

Adjusted net income

 

$

4,245

 

$

18,570

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

(0.01)

 

$

0.23

Diluted earnings per share, excluding restructuring impact

 

$

0.09

 

$

0.37

 

 

 

 

 

 

 

Weighted-average common shares outstanding (000)

 

 

49,538

 

 

50,058

 

NU SKIN ENTERPRISES, INC.

Reconciliation of Earnings Per Share Excluding Impact of Restructuring to GAAP Earnings Per Share

 

 

 

Three months ended June 30,

 

Year ended December 31,

 

 

2024 - Low-end

 

2024 High-end

 

2024 - Low-end

 

2024 High-end

Earnings Per Share

 

$

0.01

 

$

0.10

 

$

0.77

 

$

1.16

Impact of restructuring expense:

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring

 

 

0.15

 

 

0.15

 

 

0.29

 

 

0.29

Tax impact

 

 

(0.06)

 

 

(0.05)

 

 

(0.11)

 

 

(0.10)

Adjusted EPS

 

$

0.10

 

$

0.20

 

$

0.95

 

$

1.35

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240508284158/en/

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