Le Lézard
Classified in: Health, Business, Covid-19 virus
Subjects: ERN, ERP

Nu Skin Enterprises Reports Second Quarter Financial Results


PROVO, Utah, Aug. 4, 2022 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced second quarter 2022 results.

Executive Summary
Q2 2022 vs. Prior-year Quarter

Revenue:

$560.6 million; (20)%

  • (5)% FX impact or $(34.6) million

Earnings Per Share (EPS):

$0.67 or $0.77 excluding charges associated with our Q4 2021 exit from Grow Tech, compared to $1.15 in Q2 2021

Customers:

1,380,615; (6)%

Paid Affiliates:

242,133; (16)%

Sales Leaders:

50,085; (24)%

"As previously announced, our second quarter results were impacted by extended COVID-related factors in Mainland China, distractions in EMEA related to the ongoing conflict, weaker global economic conditions impacting emerging markets and the record strength of the U.S. dollar," said Ryan Napierski, Nu Skin president and CEO. "Despite these challenges, we delivered our ninth consecutive quarter of growth in the U.S. on the strength of new product launches and our social commerce model. Additionally, we drove year-over-year growth in our Southeast Asia/Pacific and Hong Kong/Taiwan segments due to the successful launch of ageLOC Meta and early social commerce adoption.

"Looking toward the balance of the year, we remain focused on Nu Vision 2025, including:

"Given the current landscape, we are taking aggressive measures to re-align our capabilities and resources with a focus on delivering Nu Vision 2025, which will result in a restructuring event in the second half and reduced operating expenses going forward. While we anticipate macro factors will continue to weigh on the business in the short-term, we remain confident in the direction and potential of our vision."

Q2 2022 Year-over-year Operating Results                

Revenue:

$560.6 million compared to $704.1 million

  • (5)% FX impact

Gross Margin:

73.6% compared to 75.6%

  • Impacted by product mix and foreign currency exchange
  • Nu Skin business was 77.0% compared to 78.3%

Selling Expenses:

39.1% compared to 39.9%

  • Nu Skin business was 42.0% compared to 42.8%

G&A Expenses:

25.3% compared to 23.6%

Operating Margin:

9.2% compared to 12.1%

Other Income / (Expense):

$(8.6) million or $(2.9) million excluding charges associated with our Q4 2021 exit from Grow Tech, compared to $(4.0) million

Income Tax Rate:

20.2% compared to 27.1%

EPS:

$0.67 or $0.77 excluding charges associated with our Q4 2021 exit from Grow Tech, compared to $1.15 in Q2 2021

 

Stockholder Value

Dividend Payments:

$19.4 million

Stock Repurchases:

$10.0 million

  • $225.4 million remaining in authorization

 

Q3 and Full-year 2022 Outlook

Q3 2022 Revenue:

$550 to $590 million; (13) to (8)%

  • Approximately (6)% FX impact

Q3 2022 EPS:

$0.04 to $0.22 or $0.70 to $0.85 non-GAAP

2022 Revenue:

$2.33 to $2.41 billion; (14) to (11)%

  • Approximately (5)% FX impact

2022 EPS:

$2.46 to $2.76 or $3.30 to $3.60 non-GAAP

 

"In light of the heightened global uncertainties and their impact on our business, we are adjusting our annual guidance," added Mark Lawrence, chief financial officer. "Our 2022 revenue guidance is now expected to be $2.33 to $2.41 billion, with an approximate 5 percent foreign currency headwind. We anticipate reported EPS of $2.46 to $2.76 or $3.30 to $3.60 excluding the Q2 charges associated with our Q4 2021 exit from Grow Tech, as well as second half restructuring and impairment charges of $35 to $45 million associated with the strategic reallocation of our capabilities and resources toward Nu Vision 2025. We believe these actions will benefit the balance of 2022 and provide approximately $100 million in cost savings in 2023. For the third quarter, we project revenue of $550 to $590 million, assuming a negative foreign currency impact of approximately 6 percent, with reported earnings per share of $0.04 to $0.22 or $0.70 to $0.85 when excluding the third-quarter charge of approximately $30 million of the $35 to $45 million estimate."

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 Aug. 18, 2022.

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 more than 35 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 approximately 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 company's performance, growth, shareholder value, strategies, vision, transformation, initiatives, product pipeline and product introductions, digital and social-commerce tools and initiatives, customers, sales leaders, affiliates, and operational improvements; 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," "outlook," "guidance," "remain," "become," "plan," "potential," "expand," "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:

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 other income (expense), each excluding restructuring and impairment charges and/or charges associated with our Grow Tech exit, also are non-GAAP financial measures. Restructuring and impairment charges and charges associated with our Grow Tech exit 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 and charges associated with our Grow Tech exit facilitates period-to-period comparisons of the company's performance. Please see the reconciliations of these items to our earnings per share and other income (expense) calculated under GAAP, below.

The following table sets forth revenue for the three-month periods ended June 30, 2022 and 2021 for each of our reportable segments (U.S. dollars in thousands):


Three Months Ended

June 30,




Constant-
Currency


2022


2021


Change


Change

Nu Skin












Americas

$

124,445


$

138,512



(10) %



(9) %

Mainland China


86,808



154,182



(44) %



(42) %

Southeast Asia/Pacific


94,067



83,968



12 %



16 %

South Korea


69,308



88,604



(22) %



(12) %

Japan


55,952



68,020



(18) %



(3) %

EMEA


50,871



83,115



(39) %



(31) %

Hong Kong/Taiwan


39,327



38,529



2 %



6 %

Nu Skin other


1,318



947



39 %



39 %

Total Nu Skin


522,096



655,877



(20) %



(15) %

Rhyz Investments












Manufacturing


38,229



48,140



(21) %



(21) %

Rhyz other


290



38



663 %



663 %

Total Rhyz Investments


38,519



48,178



(20) %



(20) %

Total

$

560,615


$

704,055



(20) %



(15) %

 

The following table sets forth revenue for the six-month periods ended June 30, 2022 and 2021 for each of our reportable segments (U.S. dollars in thousands):


Six Months Ended

June 30,




Constant-
Currency


2022


2021


Change


Change

Nu Skin












Americas

$

248,025


$

272,273



(9) %



(8) %

Mainland China


211,303



303,775



(30) %



(31) %

Southeast Asia/Pacific


184,303



167,257



10 %



14 %

South Korea


141,441



169,735



(17) %



(8) %

Japan


117,743



137,884



(15) %



(3) %

EMEA


103,839



159,295



(35) %



(28) %

Hong Kong/Taiwan


77,821



74,874



4 %



6 %

Nu Skin other


1,938



1,825



6 %



6 %

Total Nu Skin


1,086,413



1,286,918



(16) %



(12) %

Rhyz Investments












Manufacturing


78,570



94,125



(17) %



(17) %

Rhyz other


531



38



1,297 %



1,297 %

Total Rhyz Investments


79,101



94,163



(16) %



(16) %

Total

$

1,165,514


$

1,381,081



(16) %



(12) %

 

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 June 30, 2022 and 2021:


Three Months Ended

June 30,



Customers

2022


2021


Change

Americas


302,849



368,052


(18) %

Mainland China

$

392,268



328,526


19 %

    Southeast Asia/Pacific


152,775



165,221


(8) %

    South Korea


135,290



153,282


(12) %

    Japan


122,643



125,734


(2) %

    EMEA


205,379



261,881


(22) %

    Hong Kong/Taiwan


69,411



64,861


7 %

Total


1,380,615



1,467,557


(6) %

 


Three Months Ended

June 30,



Paid Affiliates

2022


2021


Change

    Americas


44,523



53,492


(17) %

Mainland China

$

19,257



39,889


(52) %

    Southeast Asia/Pacific


41,512



44,734


(7) %

    South Korea


48,605



52,680


(8) %

    Japan


38,269



38,623


(1) %

    EMEA


32,323



42,682


(24) %

    Hong Kong/Taiwan


17,644



17,815


(1) %

Total


242,133



289,915


(16) %

 


Three Months Ended

June 30,



Sales Leaders

2022


2021


Change

Americas


9,320



11,752


(21) %

Mainland China

$

11,458



20,946


(45) %

    Southeast Asia/Pacific


8,407



8,190


3 %

    South Korea


6,557



7,701


(15) %

    Japan


6,097



6,057


1 %

    EMEA


5,192



8,002


(35) %

    Hong Kong/Taiwan


3,054



3,446


(11) %

Total


50,085



66,094


(24) %

 

"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 products directly from members of our sales force.

"Paid Affiliates" are any Brand Affiliates, as well as sales employees and independent marketers 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 had 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

June 30,


Six Months Ended

June 30,


2022


2021


2022


2021

Revenue

$

560,615


$

704,055


$

1,165,514


$

1,381,081

Cost of sales


148,100



171,975



309,599



342,541

Gross profit


412,515



532,080



855,915



1,038,540













Operating expenses:












Selling expenses


219,426



280,589



462,125



556,554

General and administrative expenses


141,562



166,115



290,118



333,697

Total operating expenses


360,988



446,704



752,243



890,251













Operating income


51,527



85,376



103,672



148,289

Other income (expense), net


(8,640)



(4,012)



(10,093)



(2,430)













Income before provision for income taxes


42,887



81,364



93,579



145,859

Provision for income taxes


8,650



22,026



20,626



39,091













Net income

$

34,237


$

59,338


$

72,953


$

106,768













Net income per share:












Basic

$

0.68


$

1.18


$

1.45


$

2.12

Diluted

$

0.67


$

1.15


$

1.43


$

2.06













Weighted-average common shares outstanding (000s):












Basic


50,368



50,115



50,181



50,409

Diluted


50,960



51,557



50,959



51,850

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)



June 30,

2022


December 31,

2021

ASSETS




Current assets:




Cash and cash equivalents

$

363,923


$

339,593

Current investments


17,877



15,221

Accounts receivable, net


43,694



41,299

Inventories, net


354,211



399,931

Prepaid expenses and other


103,188



76,906

 Total current assets


882,893



872,950







Property and equipment, net


443,036



453,674

Operating lease right-of-use assets


118,413



120,973

Goodwill


206,432



206,432

Other intangible assets, net


72,665



76,991

Other assets


177,462



175,460

Total assets

$

1,900,901


$

1,906,480







LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






Accounts payable

$

55,013


$

49,993

Accrued expenses


289,130



372,201

Current portion of long-term debt


40,000



107,500

 Total current liabilities


384,143



529,694







Operating lease liabilities


90,156



88,759

Long-term debt


387,179



268,781

Other liabilities


98,388



106,474

Total liabilities


959,866



993,708







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


606,349



601,703

Treasury stock, at cost ? 39.9 million and 40.7 million shares


(1,520,769)



(1,526,860)

Accumulated other comprehensive loss


(90,638)



(73,896)

Retained earnings


1,946,002



1,911,734

Total stockholders' equity


941,035



912,772

Total liabilities and stockholders' equity

$

1,900,901


$

1,906,480

 

NU SKIN ENTERPRISES, INC.

Reconciliation of Earnings Per Share Excluding Charges Associated with Our Q4 2021 Exit from Grow Tech to GAAP Earnings Per Share

(in thousands, except per share amounts)



Three Months Ended
June 30, 2022








Net income

$                               34,237



Impact of charges associated with our Q4 2021 exit from Grow Tech:




        Unrealized investment loss

5,711



       Income tax impact

(459)



Adjusted net income

$                               39,489







Diluted earnings per share

$                                   0.67



Diluted earnings per share, excluding charges associated with our Q4 2021 exit from Grow Tech

$                                   0.77







Weighted-average common shares outstanding (000s):

50,960



 

NU SKIN ENTERPRISES, INC.

Reconciliation of Other Income (Expense), Net Excluding Charges Associated with Our Q4 2021 Exit from Grow Tech to GAAP Other Income (Expense), Net

(in thousands)



Three Months Ended
June 30, 2022








Other income (expense), net

$                              (8,640)



Impact of charges associated with our Q4 2021 exit from Grow Tech:




       Unrealized investment loss

5,711



Adjusted Other income (expense), net

$                              (2,929)







 

NU SKIN ENTERPRISES, INC.

Reconciliation of Earnings Per Share Excluding Certain Charges to GAAP Earnings Per Share



Three Months Ended


Year Ended


September 30, 2022


December 31, 2022


Low End


High End


Low End


High End









Earnings per share

$               0.04


$                0.22


$                 2.46


$                2.76

Impact of charges associated with our second half restructuring and impairment charges:








        Restructuring and Impairment

0.59


0.59


0.88


0.88

       Income tax impact

0.07


0.04


(0.13)


(0.13)

Impact of charges associated with our Q4 2021 exit from Grow Tech:








       Unrealized investment loss

?


?


0.11


0.11

       Income tax impact

?


?


(0.02)


(0.02)

Adjusted Earnings per share

$               0.70


$                0.85


$                 3.30


$                3.60









 

SOURCE Nu Skin Enterprises


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