Nu Skin Enterprises Reports Fourth-Quarter Revenue Growth Of 28 Percent And EPS Growth Of 94 Percent

Company provides strong initial 2021 outlook

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Feb 10, 2021, 20:02 ET

PROVO, Utah, Feb. 10, 2021 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced fourth-quarter 2020 results, achieving 28 percent revenue growth and 94 percent earnings per share (EPS) growth. For the full year, revenue increased seven percent and EPS increased 17 percent. In addition, the company is projecting five to nine percent revenue growth and EPS of $3.80 to $4.10 in 2021.

Executive Summary
Q4 2020 vs. Prior-year Quarter

Revenue:	$748.2 million; +28% • +4% fx impact
Earnings Per Share (EPS):	$1.40; +94%
Sales Leaders:	70,435; +29%
Customers:	1,557,302; +34%

2020 Annual vs. 2019

Revenue:

$2.58 billion; +7%

• Less than (1%) fx impact

Earnings Per Share
(EPS):

$3.63; +17%

"Our strong fourth-quarter results were driven by exceptional customer growth of 34 percent compared to the prior year," said Ritch Wood, chief executive officer. "We grew revenue in each of our reporting segments with particular strength in the West markets where our brand affiliates have more broadly adopted social commerce to share our products. The successful Boost and Nutricentials product introductions helped generate 28 percent revenue and 29 percent sales leader growth in the quarter. In addition, our manufacturing segment continued to generate strong results, posting 42 percent revenue growth in the quarter and playing a critical role in our ability to keep product in stock, even with increased demand and global supply chain constraints.

"I am proud of the work and execution of our entire team, especially our global sales force, as we grew both revenue and earnings amidst the uncertainty of the pandemic. We strengthened our balance sheet, repurchased more than five million shares of stock, innovated in our product pipeline, enhanced our digital capabilities and established a path for double-digit earnings growth going forward," concluded Wood.

Q4 2020 Year-over-year Operating Results

Revenue:	$748.2 million compared to $583.4 million • +4% fx impact
Gross Margin:	74.0% compared to 75.9% • Nu Skin business was 76.5% compared to 78.5% • Impacted by increased freight charges and geographic mix
Selling Expenses:	38.0% compared to 39.1% • Nu Skin business was 40.3% compared to 41.3%
G&A Expenses:	24.1% compared to 27.4%
Operating Margin:	11.9% compared to 9.4%
Other Income / (Expense):	$2.7 million compared to ($1.1) million
Income Tax Rate:	19.6% compared to 25.1% • Benefited by geographic mix
EPS:	$1.40 compared to $0.72

Stockholder Value

Dividend Payments:

$19.1 million

Stock Repurchases:

$17.0 million

• $325.8 million remaining in authorization

Q1 and Full-year 2021 Outlook

Q1 2021 Revenue:	$610 to $640 million; +18 to 24% • Approximately +3% fx impact
Q1 2021 EPS:	$0.65 to $0.75; +81 to 108%
2021 Revenue:	$2.71 to $2.81 billion; +5 to 9% • Approximately +2 to 3% fx impact
2021 EPS:	$3.80 to $4.10; +5 to 13%

"We expect a strong 2021 driven by our robust product pipeline and digital initiatives combined with steady growth in both our customers and sales leaders," continued Wood. "We plan to expand our customer reach through the Boost and Nutricentials launches in the first half and the introduction of our new product innovations in the second half. We remain focused on balancing our geographic profile through the expansion of our social commerce business and our manufacturing segment. We are forecasting high single-digit revenue growth and expect solid improvement in our operating margin, together driving toward a double-digit increase in earnings per share. Additionally, we increased our quarterly dividend for the 20^th consecutive year, a remarkable feat that demonstrates the durability of the Nu Skin business model."

Mark Lawrence, chief financial officer, added, "Our guidance reflects the strong momentum coming out of 2020 and our focused strategy for 2021. Looking to the first quarter, we anticipate revenue of $610 to $640 million, a growth of 18 to 24 percent including an approximate three percent favorable foreign currency impact. We project earnings per share of $0.65 to $0.75, approximately double the prior year. For our initial full-year 2021 guidance, we anticipate revenue of $2.71 to $2.81 billion, reflecting a positive foreign currency impact of approximately two to three percent. We anticipate annual earnings per share of $3.80 to $4.10."

Investor Day
The Nu Skin Enterprises management team will host an investor day event Feb. 11 at noon (ET). Those wishing to access the webcast, as well as the information presented, can visit the Investor Relations page on the company's website at ir.nuskin.com. A replay of the event will be available at the same URL through Feb. 25, 2021.

About Nu Skin Enterprises, Inc.
Founded more than 35 years ago, Nu Skin Enterprises, Inc. (NSE) empowers innovative companies to change the world with sustainable solutions, opportunities, technologies and life-improving values. The company currently focuses its efforts around innovative consumer products, product manufacturing and controlled environment agriculture technology. The NSE family of companies includes Nu Skin, which develops and distributes a comprehensive line of premium-quality beauty and wellness solutions through a global network of sales leaders in Asia, the Americas, Europe, Africa and the Pacific; and Rhyz, our strategic investment arm that includes a collection of sustainable manufacturing and technology innovation companies. Nu Skin Enterprises is traded on the New York Stock Exchange under the symbol "NUS." More information is available at nuskinenterprises.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, product pipeline and product launches, customers and sales leaders, strategies and initiatives; projections regarding revenue, operating margin, earnings per share, foreign currency fluctuations 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," "plan," "forecast," "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:

risk that epidemics, including the ongoing COVID-19 pandemic, 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, 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 associated with operating in international markets, including Mainland China;
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, including trade policies and tariffs;
the company's future tax-planning initiatives; any prospective or retrospective increases in duties 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.

The following table sets forth revenue for the three-month periods ended December 31, 2020 and 2019 for each of our reportable segments (U.S. dollars in thousands):

	Three Months Ended December 31,						Constant- Currency
	2020		2019		Change		Change
Nu Skin
Mainland China	$	172,442	$	154,731		11%		5%
Americas/Pacific		157,984		86,146		83%		86%
South Korea		90,384		81,958		10%		5%
Southeast Asia		82,191		74,767		10%		10%
Japan		73,132		65,482		12%		7%
EMEA		82,656		46,205		79%		68%
Hong Kong/Taiwan		45,864		41,616		10%		5%
Other		(391)		1,860		(121)%		(121)%
Total Nu Skin		704,262		552,765		27%		23%
Manufacturing		43,364		30,487		42%		42%
Grow Tech		567		107		430%		430%
Total	$	748,193	$	583,359		28%		24%

The following table sets forth revenue for the years ended December 31, 2020 and 2019 for each of our reportable segments (U.S. dollars in thousands):

	Year Ended December 31,						Constant- Currency
	2020		2019		Change		Change
Nu Skin
Mainland China	$	625,538	$	722,526		(13)%		(14)%
Americas/Pacific		511,941		349,078		47%		53%
South Korea		326,478		329,978		(1)%		—
Southeast Asia		302,708		301,620		—		1%
Japan		273,681		260,039		5%		3%
EMEA		230,246		167,165		38%		35%
Hong Kong/Taiwan		161,117		166,335		(3)%		(6)%
Other		(17)		1,621		(101)%		(101)%
Total Nu Skin		2,431,692		2,298,362		6%		6%
Manufacturing		149,339		121,917		22%		22%
Grow Tech		903		137		559%		559%
Total	$	2,581,934	$	2,420,416		7%		7%

The Company's Customers and Sales Leaders statistics by segment as of December 31, 2020 and 2019 are presented in the following table:

	2020				2019				% Increase (Decrease)
	Customers		Sales Leaders		Customers		Sales Leaders		Customers		Sales Leaders

Mainland China		381,460		21,990		292,812		17,987		30%		22%
Americas/Pacific		404,955		14,439		220,216		7,607		84%		90%
South Korea		158,953		7,059		168,972		7,251		(6)%		(3)%
Southeast Asia		154,355		8,903		136,349		7,480		13%		19%
Japan		128,400		6,318		125,557		5,916		2%		7%
EMEA		258,587		7,063		153,330		4,619		69%		53%
Hong Kong/Taiwan		70,592		4,663		65,669		3,900		7%		20%
Total		1,557,302		70,435		1,162,905		54,760		34%		29%

"Customers" are persons who purchased products directly from the company during the previous three months. Our Customer numbers do not include consumers who purchase products directly from members of our sales force.

"Sales Leaders" are independent distributors, and sales employees and independent marketers in China, who achieve certain qualification requirements.

NU SKIN ENTERPRISES, INC.
Consolidated Statements of Income (Unaudited)
(U.S. dollars in thousands, except per share amounts)

	Three Months Ended December 31,				Years Ended December 31,
	2020		2019		2020		2019

Revenue	$	748,193	$	583,359	$	2,581,934	$	2,420,416
Cost of sales		194,751		140,566		658,028		581,420
Gross profit		553,442		442,793		1,923,906		1,838,996

Operating expenses:
Selling expenses		284,129		228,127		1,019,494		955,600
General and administrative expenses		180,616		159,987		646,848		615,970
Total operating expenses		464,745		388,114		1,666,342		1,571,570

Operating income		88,697		54,679		257,564		267,426
Other income (expense), net		2,736		(1,101)		(1,332)		(12,254)

Income before provision for income taxes		91,433		53,578		256,232		255,172
Provision for income taxes		17,966		13,466		64,877		81,619

Net income	$	73,467	$	40,112	$	191,355	$	173,553

Net income per share:
Basic	$	1.44	$	0.72	$	3.66	$	3.13
Diluted	$	1.40	$	0.72	$	3.63	$	3.10

Weighted-average common shares outstanding (000s):
Basic		50,971		55,548		52,296		55,518
Diluted		52,403		55,807		52,765		55,927

NU SKIN ENTERPRISES, INC.
Consolidated Balance Sheets (Unaudited)
(U.S. dollars in thousands)

	December 31, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	402,683	$	335,630
Current investments		21,216		8,413
Accounts receivable, net		63,370		50,378
Inventories, net		314,366		275,891
Prepaid expenses and other		101,563		69,854
Total current assets		903,198		740,166

Property and equipment, net		468,181		453,604
Operating lease right-of-use assets		155,104		144,326
Goodwill		202,979		196,573
Other intangible assets, net		89,532		80,321
Other assets		138,082		154,016
Total assets	$	1,957,076	$	1,769,006

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	66,174	$	38,979
Accrued expenses		446,682		290,281
Current portion of long-term debt		30,000		27,500
Total current liabilities		542,856		356,760


Operating lease liabilities		112,275		105,701
Long-term debt		305,393		334,461
Other liabilities		102,281		96,795
Total liabilities		1,062,805		893,717


Stockholders' equity:
Class A common stock		91		91
Additional paid-in capital		579,801		557,544
Treasury stock, at cost		(1,461,593)		(1,324,826)
Accumulated other comprehensive loss		(64,768)		(85,292)
Retained earnings		1,840,740		1,727,772
Total stockholders' equity		894,271		875,289
Total liabilities and stockholders' equity	$	1,957,076	$	1,769,006