Nu Skin Enterprises Reports Record First-Quarter 2021 Results

Company announces first-quarter revenue growth of 31% and EPS growth of 153%,raises annual guidance

News provided by

May 05, 2021, 16:06 ET

PROVO, Utah, May 5, 2021 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced record first-quarter 2021 revenue and earnings per share.

Executive Summary
Q1 2021 vs. Prior-year Quarter

Revenue:	$677.0 million; +31% • +6% fx impact or $29.6 million
Earnings Per Share (EPS):	$0.91; +153%
Sales Leaders:	60,619; +22%
Customers:	1,517,260; +34%

"We are very pleased with a strong start to 2021 with our highest-ever first quarter revenue and earnings per share," said Ritch Wood, chief executive officer. "Our innovative beauty and wellness product initiatives powered by our social commerce business model led to 34 percent growth in our customer base over the prior year and a 22 percent increase in global sales leaders. We were recognized again by Euromonitor as the world's number one beauty device systems brand.^* We continue to improve our geographic balance, driven by ongoing strong performance in the West, providing a more diversified and sustainable growth profile. Our manufacturing segment also achieved record results with 69 percent year-over-year revenue growth."

Ryan Napierski, president and CEO-elect, added, "We continue to make progress toward our vision of becoming the world's leading beauty and wellness company powered by our dynamic affiliate opportunity platform. We added innovative products to our portfolio with the launch of ageLOC Boost and Nutricentials Bioadaptives, and our markets are forecasting strong demand for new product innovations being introduced in the back half of the year. These include Beauty Focus Collagen+, which is the first product in a new beauty-from-within line, and ageLOC Meta, a metabolic health supplement and our next major Pharmanex product introduction. The West markets continue to lead out in adopting our social commerce business model with triple-digit growth. Our affiliates are leveraging this model to connect with more consumers and attract people interested in building their own socially enabled affiliate marketing business. In the East, we grew 14 percent in Japan and modestly in Mainland China and anticipate increased adoption of our social commerce strategy and digital tools."

Q1 2021 Year-over-year Operating Results

Revenue:	$677.0 million compared to $518.0 million • +6% fx impact
Gross Margin:	74.8% compared to 75.7% • Nu Skin business was 77.8% compared to 78.1% • Impacted by growth in manufacturing segment
Selling Expenses:	40.4% compared to 39.8% • Nu Skin business was 43.4% compared to 42.0%
G&A Expenses:	25.1% compared to 28.9%
Operating Margin:	9.3% compared to 7.1%
Other Income / (Expense):	$1.6 million compared to ($6.2) million
Income Tax Rate:	26.5% compared to 35.1% • Benefited by geographic mix
EPS:	$0.91 compared to $0.36

Stockholder Value

Dividend Payments:

$19.3 million

Stock Repurchases:

$50.4 million

• $275.4 million remaining in authorization

Q2 and Full-year 2021 Outlook

Q2 2021 Revenue:	$680 to $705 million; +11 to 15% • Approximately +5% fx impact
Q2 2021 EPS:	$0.97 to $1.07; +20 to 32%
2021 Revenue:	$2.80 to $2.87 billion; +9 to 11% • Approximately +3 to 4% fx impact
2021 EPS:	$4.05 to $4.30; +12 to 18%

Mark Lawrence, chief financial officer, added, "During the quarter, we continued our focus on generating shareholder value by improving operating margin through G&A optimization and leveraging our balance sheet to repurchase nearly one million shares. We continue to create synergistic value from our Rhyz manufacturing companies as they enabled the accelerated growth throughout the West. Given the strong start to the year, as well as the positive trends we have seen in customer and sales leader growth, we are increasing our annual revenue and EPS guidance."

About Nu Skin Enterprises, Inc.

Founded more than 35 years ago, Nu Skin Enterprises, Inc. (NSE) empowers innovative companies 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.

^* Source Euromonitor International Limited; Retail Value RSP terms; all channels; 2017 to 2020. Beauty Systems are at-home Skin Care Beauty Devices that are exclusively paired or recommended to be used with a topical consumable of the same brand. Claim verification based on Euromonitor custom research and methodology conducted January-March of 2021. Sales of at-home skin care beauty devices includes sales of electric facial cleansers as defined in Passport database. This category does not include hair care/removal appliances, body shavers, and oral care appliances.

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 introductions, customers and sales leaders, affiliates, strategies and initiatives; projections regarding revenue, 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 Company's revenue results by segment for the three-month periods ended March 31 are presented in the following table (in thousands).

	Three Months Ended March 31,						Constant-Currency
	2021		2020		Change		Change
Nu Skin
Mainland China	$	149,593	$	137,696		9%		1%
Americas/Pacific		149,465		74,573		100%		97%
South Korea		81,131		75,719		7%		—
EMEA		76,180		35,403		115%		98%
Japan		69,864		61,300		14%		11%
Southeast Asia		67,585		69,586		(3)%		(5)%
Hong Kong/Taiwan		36,345		35,827		1%		(3)%
Other		705		773		(9)%		(9)%
Total Nu Skin		630,868		490,877		29%		22%
Manufacturing		45,985		27,147		69%		69%
Grow Tech		173		4		4,225%		4,225%
Total	$	677,026	$	518,028		31%		25%

The company's Customers and Sales Leaders statistics by segment as of March 31, 2021 and 2020 are presented in the following table:

	As of March 31, 2021				As of March 31, 2020				% Increase (Decrease)
	Customers		Sales Leaders		Customers		Sales Leaders		Customers		Sales Leaders
Mainland China		316,000		16,716		271,536		16,159		16%		3%
Americas/Pacific		407,413		12,340		214,139		6,930		90%		78%
South Korea		152,390		7,099		174,004		6,608		(12)%		7%
EMEA		296,001		7,950		140,344		4,237		111%		88%
Japan		126,525		6,131		119,784		5,635		6%		9%
Southeast Asia		152,889		6,882		145,116		6,634		5%		4%
Hong Kong/Taiwan		66,042		3,501		66,024		3,348		—		5%
Total		1,517,260		60,619		1,130,947		49,551		34%		22%

"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 March 31,
	2021		2020

Revenue	$	677,026	$	518,028
Cost of sales		170,566		125,793
Gross profit		506,460		392,235

Operating expenses:
Selling expenses		273,746		206,042
General and administrative expenses		169,801		149,628
Total operating expenses		443,547		355,670

Operating income		62,913		36,565
Other income (expense), net		1,582		(6,174)

Income before provision for income taxes		64,495		30,391
Provision for income taxes		17,065		10,661

Net income	$	47,430	$	19,730

Net income per share:
Basic	$	0.94	$	0.36
Diluted	$	0.91	$	0.36

Weighted-average common shares outstanding (000s):
Basic		50,706		55,059
Diluted		52,172		55,101

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

	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	339,099	$	402,683
Current investments		23,615		21,216
Accounts receivable, net		60,625		63,370
Inventories, net		363,431		314,366
Prepaid expenses and other		114,118		101,563
Total current assets		900,888		903,198

Property and equipment, net		464,247		468,181
Operating lease right-of-use assets		147,129		155,104
Goodwill		202,979		202,979
Other intangible assets, net		87,135		89,532
Other assets		147,721		138,082
Total assets	$	1,950,099	$	1,957,076

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	67,083	$	66,174
Accrued expenses		404,493		446,682
Current portion of long-term debt		90,000		30,000
Total current liabilities		561,576		542,856

Operating lease liabilities		108,237		112,275
Long-term debt		298,120		305,393
Other liabilities		110,692		102,281
Total liabilities		1,078,625		1,062,805

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		579,204		579,801
Treasury stock, at cost – 40.4 million and 39.7 million shares		(1,505,076)		(1,461,593)
Accumulated other comprehensive loss		(71,626)		(64,768)
Retained earnings		1,868,881		1,840,740
Total stockholders' equity		871,474		894,271
Total liabilities and stockholders' equity	$	1,950,099	$	1,957,076