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

Nu Skin Enterprises Reports Third Quarter 2023 Financial Results


PROVO, Utah, Nov. 1, 2023 /PRNewswire/ -- Nu Skin Enterprises Inc. (NYSE: NUS) today announced third quarter 2023 results.

Executive Summary
Q3 2023 vs. Prior-year Quarter

Revenue

$498.8 million; (7)%

   ?   (1)% FX impact or $(8.1) million

Earnings Per Share
(EPS)

$(0.74) or $0.56 excluding an inventory write-off compared to
$(0.51) or $0.47 excluding restructuring and impairment charges

Customers

978,907; (21)%

Paid Affiliates

186,162; (23)% or (13)% excluding an adjustment to eligibility
requirements

Sales Leaders

47,031; (6)%

"Our third quarter results were softer than expected as persistent macro-economic challenges in several of our key markets negatively affected consumer spending and customer acquisition, particularly in our Mainland China and Americas segments, along with a continued strong U.S. dollar," said Ryan Napierski, Nu Skin president and CEO. "Although we are disappointed in the third quarter results of our Nu Skin business, we are encouraged by stabilization and modest growth in three of our Nu Skin reporting segments, highlighted by double-digit gains in Europe/Africa. We are also pleased with accelerated growth of our Rhyz businesses as we lean further into our synergistic enterprise ecosystem.

"We continued to advance key initiatives aimed at driving long-term success, such as introducing ageLOC® WellSpa iOtm, a smart device system focused on holistic wellness and beauty; rolling out a new channel growth incentive; and gaining additional traction in monthly active users of our Vera® and Stela apps," continued Napierski. "Given the current global headwinds and their impact, we are strategically re-evaluating several aspects of our Nu Skin business, including our product portfolio, global processes and organization, and operational footprint. This is to ensure we continue executing on the transformational initiatives that will shape Nu Skin's future, including the introduction of a new mental wellness category in 2024. We are also aggressively managing costs to help drive growth and profitability as we work toward our long-term vision."

Q3 2023 Year-over-year Operating Results                

Revenue

$498.8 million compared to $537.8 million

   ?   (1)% FX impact or $(8.1) million

Gross Margin

58.6% or 71.8% excluding an inventory write-off compared to
67.7% or 72.7% excluding restructuring and impairment charges

   ?   Nu Skin business was 61.8% or 76.8% excluding inventory
       write-off compared
to 73.0% or 76.7% excluding
       restructuring and impairment charges

Selling Expenses

37.6% compared to 40.3%

   ?   Nu Skin business was 41.7% compared to 43.5%

G&A Expenses

26.2% compared to 25.7%

Operating Margin

(5.3)% or 7.9% excluding an inventory write-off compared to
(3.8)% or 6.8% excluding restructuring and impairment charges

Other Expense

$(8.1) million compared to $(8.7) million or $(5.4) million
excluding restructuring and impairment charges

Income Tax Rate

(7.3)% or 10.1% excluding an inventory write-off compared to
12.3% or 24.0% excluding restructuring and impairment charges

EPS

($0.74) or $0.56 excluding an inventory write-off compared to
$(0.51) or $0.47 excluding restructuring and impairment charges

Stockholder Value

Dividend Payments

$19.5 million

Stock Repurchases

$13.0 million

   ?   $162.4 million remaining in authorization

Q4 and Full-year 2023 Outlook

Q4 2023 Revenue

$440 to $480 million; (16)% to (8)%

   ?   Approximately (3) to (2)% FX impact

Q4 2023 EPS

$(0.14) to $0.01 or $0.15 to $0.30 non-GAAP

2023 Revenue

$1.92 to $1.96 billion; (14)% to (12)%

   ?   Approximately (3) to (2)% FX impact

2023 EPS

$(0.10) to $0.05 or $1.62 to $1.77 non-GAAP

"Given the state of our business and in line with our global strategic review, we made the decision to accelerate our product portfolio optimization resulting in a $65.7 million Q3 inventory write-off and are adjusting our annual guidance, which includes an anticipated Q4 restructuring charge of $15 to $25 million," added James D. Thomas, chief financial officer. "Our 2023 revenue is now expected to be $1.92 to $1.96 billion, with an approximate 3 percent foreign currency headwind. We anticipate reported EPS of $(0.10) to $0.05 or adjusted EPS of $1.62 to $1.77, which excludes inventory write-off and restructuring charges. For the fourth quarter, we project revenue of $440 to $480 million, assuming a negative foreign currency impact of approximately 3 percent, with reported earnings per share of $(0.14) to $0.01 or $0.15 to $0.30 when excluding the fourth quarter charge." 

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 Nov. 15, 2023.

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 nearly 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. Rhyz is the strategic investment arm of Nu Skin Enterprises. 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, shareholder value, strategies, transformation, initiatives, product pipeline and product introductions/launches, digital and social-commerce tools and initiatives, customers, sales leaders, and affiliates; projections regarding revenue, expenses, future restructuring and impairment charges, 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," "aim," "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:

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, gross margin, operating margin, other expense and income tax rate, each excluding inventory write-off charges and/or restructuring and impairment charges, also are non-GAAP financial measures. Inventory write-off charges and 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 inventory write-off charges and 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, gross margin, operating margin, other expense and income tax rate calculated under GAAP, below.

The following table sets forth revenue for the three-month periods ended September 30, 2023, and 2022 for each of our reportable segments (U.S. dollars in thousands):


Three Months Ended

September 30,




Constant-
Currency


2023


2022


Change


Change

Nu Skin












Americas

$

91,671


$

131,591



(30) %



(27) %

Mainland China


70,225



75,151



(7) %



(1) %

Southeast Asia/Pacific


68,743



83,502



(18) %



(16) %

South Korea


63,709



67,237



(5) %



(7) %

Japan


53,399



53,276



?



5 %

Europe & Africa


50,048



45,099



11 %



3 %

Hong Kong/Taiwan


40,724



39,587



3 %



6 %

Nu Skin other


(274)



496



(155) %



(155) %

Total Nu Skin


438,245



495,939



(12) %



(10) %

Rhyz Investments












Manufacturing


49,714



41,328



20 %



20 %

Rhyz other


10,813



538



1910 %



1910 %

Total Rhyz Investments


60,527



41,866



45 %



45 %

Total

$

498,772


$

537,805



(7) %



(6) %

The following table sets forth revenue for the nine-month periods ended September 30, 2023, and 2022 for each of our reportable segments (U.S. dollars in thousands):


Nine Months Ended

September 30,




Constant-
Currency


2023


2022


Change


Change

Nu Skin












Americas

$

300,469


$

379,616



(21) %



(17) %

Mainland China


226,563



286,454



(21) %



(16) %

Southeast Asia/Pacific


200,317



267,805



(25) %



(23) %

South Korea


187,719



208,678



(10) %



(8) %

Japan


156,867



171,019



(8) %



(1) %

Europe & Africa


144,460



148,938



(3) %



(4) %

Hong Kong/Taiwan


112,380



117,408



(4) %



(1) %

Nu Skin other


208



2,434



(91) %



(91) %

Total Nu Skin


1,328,983



1,582,352



(16) %



(13) %

Rhyz Investments












Manufacturing


131,032



119,898



9 %



9 %

Rhyz other


20,476



1,069



1815 %



1815 %

Total Rhyz Investments


151,508



120,967



25 %



25 %

Total

$

1,480,491


$

1,703,319



(13) %



(10) %

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 September 30, 2023, and 2022: 


Three Months Ended

September 30,




2023


2022


Change

Customers








Americas


231,215



316,123


(27) %

Mainland China


189,221



256,183


(26) %

Southeast Asia/Pacific


111,151



153,432


(28) %

South Korea


109,550



134,549


(19) %

Japan


114,316



121,202


(6) %

Europe & Africa


169,320



187,906


(10) %

Hong Kong/Taiwan


54,134



69,989


(23) %

Total Customers


978,907



1,239,384


(21) %









Paid Affiliates








Americas


32,769



44,745


(27) %

Mainland China


27,509



23,088


19 %

Southeast Asia/Pacific


33,574



40,624


(17) %

South Korea(1)


24,110



47,852


(50) %

Japan


37,695



38,119


(1) %

Europe & Africa(1)


19,254



31,409


(39) %

Hong Kong/Taiwan(1)


11,251



17,439


(35) %

Total Paid Affiliates


186,162



243,276


(23) %









Sales Leaders








Americas


7,537



9,545


(21) %

Mainland China


12,647



11,897


6 %

Southeast Asia/Pacific


6,351



7,618


(17) %

South Korea


6,436



6,992


(8) %

Japan


7,087



6,063


17 %

Europe & Africa


4,105



4,777


(14) %

Hong Kong/Taiwan


2,868



2,932


(2) %

Total Sales Leaders


47,031



49,824


(6) %


(1)  The September 30, 2023, 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.

NU SKIN ENTERPRISES, INC.

Consolidated Statements of Income (Unaudited)

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






Three Months Ended

September 30,


Nine Months Ended

September 30,


2023


2022


2023


2022

Revenue

$

498,772


$

537,805


$

1,480,491


$

1,703,319

Cost of sales


206,505



173,500



475,635



483,099

Gross profit


292,267



364,305



1,004,856



1,220,220













Operating expenses:












   Selling expenses


187,750



216,478



561,039



678,603

   General and administrative expenses


130,882



137,987



401,825



428,105

   Restructuring and impairment expenses 


?



30,124



9,787



30,124

Total operating expenses


318,632



384,589



972,651



1,136,832













Operating income (loss)


(26,365)



(20,284)



32,205



83,388

Other expense, net


(8,086)



(8,680)



(14,955)



(18,773)













Income (loss) before provision for income taxes


(34,451)



(28,964)



17,250



64,615

Provision (benefit) for income taxes


2,504



(3,574)



15,937



17,052













Net income (loss)

$

(36,955)


$

(25,390)


$

1,313


$

47,563













Net income (loss) per share:












Basic

$

(0.74)


$

(0.51)


$

0.03


$

0.95

Diluted

$

(0.74)


$

(0.51)


$

0.03


$

0.94













Weighted-average common shares outstanding (000s):












Basic


49,859



50,199



49,812



50,187

Diluted


49,859



50,199



50,029



50,822

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)






September 30,

2023


December 31,

2022

ASSETS




Current assets:




Cash and cash equivalents

$

233,314


$

264,725

Current investments


16,673



13,784

Accounts receivable, net


77,251



47,360

Inventories, net


291,103



346,183

Prepaid expenses and other


82,781



87,816

 Total current assets


701,122



759,868







Property and equipment, net


428,932



444,806

Operating lease right-of-use assets


86,315



98,734

Goodwill


229,469



206,432

Other intangible assets, net


108,972



66,701

Other assets


238,281



244,429

Total assets

$

1,793,091


$

1,820,970







LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






Accounts payable

$

48,583


$

53,963

Accrued expenses


245,432



280,280

Current portion of long-term debt


140,000



25,000

 Total current liabilities


434,015



359,243







Operating lease liabilities


68,208



76,540

Long-term debt


362,896



377,466

Other liabilities


105,785



110,425

Total liabilities


970,904



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


619,193



613,278

Treasury stock, at cost ? 41.2 million and 41.1 million shares


(1,570,718)



(1,569,061)

Accumulated other comprehensive loss


(108,836)



(86,509)

Retained earnings


1,882,457



1,939,497

Total stockholders' equity


822,187



897,296

Total liabilities and stockholders' equity

$

1,793,091


$

$1,820,970

 

NU SKIN ENTERPRISES, INC.
Reconciliation of Gross Margin Excluding Impact of Inventory Write-off to GAAP Gross Margin
(in thousands, except for per share amounts)

















Three months ended
September 30,


Nine months ended
September 30,




2023


2022


2023


2022


Gross Profit


$

292,267


$

364,305


$

1,004,856


$

1,220,220


Impact of inventory write-off



65,728



26,905



65,728



26,905


Adjusted Gross Profit


$

357,995


$

391,210


$

1,070,584


$

1,247,125
















Gross Margin



58.6 %



67.7 %



67.9 %



71.6 %


Gross Margin, excluding inventory
write-off impact



71.8 %



72.7 %



72.3 %



73.2 %
















Revenue


$

498,772


$

537,805


$

1,480,491


$

1,703,319


 

NU SKIN ENTERPRISES, INC.
Reconciliation of Core Nu Skin Business Gross Margin Excluding Impact of Inventory Write-off to GAAP
Gross Margin
(in thousands, except for per share amounts)



















Three months ended
September 30,








2023


2022


Gross Profit








$

270,630


$

361,895


Impact of inventory write-off









65,728



18,549


Adjusted Gross Profit








$

336,358


$

380,444
















Gross Margin









61.8 %



73.0 %


Gross Margin, excluding inventory
write-off impact









76.8 %



76.7 %
















Revenue








$

438,245


$

495,939


 

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

















Three months ended
September 30,


Nine months ended
September 30,




2023


2022


2023


2022


Operating Income


$

(26,365)


$

(20,284)


$

32,205


$

83,388


Impact of restructuring and
impairment



-



30,124



9,787



30,124


Impact of inventory write-off



65,728



26,905



65,728



26,905


Adjusted operating income


$

39,363


$

36,745


$

107,720


$

140,417






























Operating margin



-5.3 %



-3.8 %



2.2 %



4.9 %


Operating margin, excluding
restructuring and inventory write-
off impact



7.9 %



6.8 %



7.3 %



8.2 %
















Revenue


$

498,772


$

537,805


$

1,480,491


$

1,703,319


 

NU SKIN ENTERPRISES, INC.

Reconciliation of Other Income (Expense), Net Excluding Impact of Q4 2021 Exit from Grow Tech to
GAAP Other Income (Expense), Net
 

(in thousands, except for per share amounts)

















Three months ended
September 30,


Nine months ended
September 30,



2023


2022


2023


2022


Other income (expense), net


$

(8,086)


$

(8,680)


$

(14,955)


$

(18,773)


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














Unrealized investment loss



-



3,298



-



9,009


Adjusted other income (expense), net


$

(8,086)


$

(5,382)


$

(14,955)


$

(9,764)


 

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

















Three months ended
September 30,


Nine months ended
September 30,




2023


2022


2023


2022


Provision (benefit) for income taxes


$

2,504


$

(3,574)


$

15,937


$

17,052


Impact of restructuring and
inventory write-off on provision for
income taxes



650



11,095



3,243



11,554


Provision for income taxes,
excluding impact of restructuring
and inventory-write-off


$

3,154


$

7,521


$

19,180


$

28,606
















Income before provision for income
taxes



(34,451)



(28,964)



17,250



64,615


Impact of inventory write-off



65,728



26,905



65,728



26,905


Impact of restructuring and impairment



-



30,124



9,787



30,124


Impact of charges associated with
our exit from Grow Tech:














Unrealized investment loss



-



3,298



-



9,009


Income before provision for income
taxes, excluding impact of
restructuring and inventory write-off


$

31,277


$

31,363


$

92,765


$

130,653
















Effective tax rate



-7.3 %



12.3 %



92.4 %



26.4 %


Effective tax rate, excluding
restructuring and inventory write-off
impact



10.1 %



24.0 %



20.7 %



21.9 %


 

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
















Three months ended
September 30,


Nine months ended
September 30,



2023


2022


2023


2022

Net income


$

(36,955)


$

(25,390)


$

1,313


$

47,563

Impact of restructuring and inventory
write-off expense:













Restructuring and impairment



-



30,124



9,787



30,124

Inventory write-off



65,728



26,905



65,728



26,905

Tax impact



(650)



(10,469)



(3,243)



(10,469)

Impact of charges associated with our
exit from Grow Tech:













Unrealized loss on investment



-



3,298



-



9,009

Tax impact



-



(626)



-



(1,085)

Tax impact



-



-



-



-

Adjusted net income


$

28,123


$

23,842


$

73,585


$

102,047



























Diluted earnings per share


$

(0.74)


$

(0.51)


$

0.03


$

0.94

Diluted earnings per share, excluding
restructuring and inventory write-off
impact


$

0.56


$

0.47


$

1.47


$

2.01














Weighted-average common shares
outstanding (000)



49,859



50,199



50,029



50,822

 

NU SKIN ENTERPRISES, INC.
Reconciliation of Earnings Per Share Excluding Impact of Restructuring and Inventory Write-off to GAAP
Earnings Per Share
















Three months ended
December 31,


Year ended December 31,



2023 - Low-
end


2023 High-
end


2023 - Low-
end


2023 High-
end

Earnings Per Share


$

(0.14)


$

0.01


$

(0.10)


$

0.05

Impact of restructuring expense:













Restructuring



0.40



0.40



0.60



0.60

Tax impact



(0.11)



(0.11)



(0.18)



(0.18)

Impact of inventory write-off:













Inventory write-off









1.31



1.31

Tax impact









(0.01)



(0.01)

Adjusted EPS


$

0.15


$

0.30


$

1.62


$

1.77

 

 

SOURCE Nu Skin Enterprises


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