Nu Skin Enterprises Inc. (NYSE: NUS) today announced second
quarter results in line with top-line guidance.
Executive Summary
Q2 2024 vs. Prior-year Quarter
Revenue
$439.1 million; (12.2)%
- (4.2)% FX impact or $(21.0) million
- Rhyz revenue $67.8 million; 32.3%
Earnings Per Share
(EPS)
$(2.38) or $0.21 excluding restructuring
and impairment charges, compared to $0.54
Customers
893,514; (14)%
Paid Affiliates
155,486; (17)% or (9)% excluding an
adjustment to eligibility requirements
Sales Leaders
38,592; (16)%
“We are pleased with our progress as we perform to plan
on our transformational efforts, and we are on track as evidenced
by our second quarter results,” said Ryan Napierski, Nu Skin
president and CEO. “Our revenue was in-line with our expectations
despite a 4 percent FX headwind, while adjusted earnings per share
slightly exceeded our projections due to heightened operational
discipline, excluding our restructuring and impairment charges. As
our core Nu Skin business continues to navigate the macro-economic
environment, we were encouraged by sequential gains in several of
our markets including the U.S. and most of Southeast Asia/Pacific.
Additionally, our Rhyz business grew 32 percent versus the
prior-year quarter led by strong performances in our Mavely
affiliate platform and manufacturing companies.
“We are intensifying our transformation efforts to become a
leading integrated beauty, wellness and lifestyle ecosystem by
building synergistic value between our Nu Skin core and Rhyz. In
late July, we held our first Western market, in-person affiliate
event in over five years with a similar event for Eastern markets
coming in September. At the event, we were able to drive energy and
alignment among our leaders as we previewed our MYND360 cognitive
health division and promoted new activation efforts to grow our
salesforce. We also announced plans for a Nu Skin/Mavely app, with
Mavely’s more than 1,200 brands and 70,000 everyday influencers,
for our Nu Skin affiliates, anticipated for second-half
introduction in the U.S.
“We are enhancing our developing market strategy including a
revised business model, targeted product offering and streamlined
operating infrastructure beginning with Latin America and parts of
Southeast Asia in the second half. In addition, we are intensifying
our plans to enter India with a proprietary business model that
will be a catalyst for expansion into other emerging markets. We
are also exploring integrated brand building initiatives, including
digital marketing and third-party marketplaces, as we strive to be
wherever our customers seek to find us.”
Q2 2024 Year-over-year Operating
Results
Revenue
$439.1 million compared to $500.3
million
- (4.2)% FX impact or $(21.0) million
- Rhyz revenue $67.8 million; +32.3%
Gross Margin
70.0% compared to 72.9%
- Nu Skin business was 76.1% compared to 77.2%
Selling Expenses
37.7% compared to 37.0%
- Nu Skin business was 42.2% compared to 40.2%
G&A Expenses
26.9% compared to 27.4%
Operating Margin
(28.6)% or 5.4% excluding restructuring
and impairment charges compared to 8.5%
Interest Expense
$6.7 million compared to $5.8 million
Other Income/(Expense)
$0.6 million compared to $0.4 million
Income Tax Rate
10.2% or 41.4% excluding restructuring and
impairment charges compared to 27.5%
EPS
$(2.38) or $0.21 excluding restructuring
and impairment charges compared to $0.54
Stockholder Value
Dividend Payments
$3.0 million
Stock Repurchases
$0.0 million
- $162.4 million remaining in authorization
Q3 and Full-year 2024 Outlook
Q3 2024 Revenue
$430 to $465 million; (14)% to (7)%
- Approximately (4) to (3)% FX impact
Q3 2024 EPS
$0.08 to $0.18 or $0.15 to $0.25
non-GAAP
2024 Revenue
$1.73 to $1.81 billion; (12)% to (8)%
- Approximately (4) to (3)% FX impact
2024 EPS
$(2.01) to $(1.81) or $0.75 to $0.95
non-GAAP
“As we continue to refine our operating model during our
transformation, we remain diligent in pursuing cost saving
initiatives going forward, including additional product portfolio
optimization along with expense management,” said James D. Thomas,
chief financial officer. “We remain on track with our cost
efficiency program as reflected by our reductions in G&A
expense, helping to protect profitability despite revenue
pressures. During the quarter, we generated $51.2 million in cash
from operations, reduced inventory levels and paid down debt to
strengthen our balance sheet. We also performed an impairment
analysis and recorded a $141 million non-cash charge for impairment
of goodwill and other intangibles as a result of the decline in
stock price and current market conditions.
“Given that we have performed in-line with expectations for the
first half of the year while also considering the increasing FX
headwind, we believe it prudent to narrow our annual revenue
guidance range. We are now projecting 2024 revenue in the $1.73 to
$1.81 billion range, with earnings of $(2.01) to $(1.81) or $0.75
to $0.95 excluding restructuring and impairment charges. Our Q3
guidance assumes continued sequential improvement with projected
revenue of $430 to $465 million and earnings per share of $0.08 to
$0.18 or $0.15 to $0.25 excluding restructuring and impairment
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 Aug. 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, strategies, sales force, shareholder value, product
previews and launches, product portfolio optimization,
transformation, evolution, operational and financial initiatives,
digital tools and initiatives, new market expansion, and plans for
developing and emerging markets; 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,” “become,” “”plan,” accelerate,”
“project,” “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 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 June 30, 2024, and 2023 for each of our reportable
segments (U.S. dollars in thousands):
Three Months Ended June
30,
Constant-Currency
2024
2023
Change
Change
Nu Skin
Americas
$
84,935
$
107,641
(21.1
)%
(15.1
)%
Mainland China
64,710
88,362
(26.8
)%
(24.5
)%
Southeast Asia/Pacific
60,341
63,764
(5.4
)%
(0.5
)%
Japan
42,587
50,862
(16.3
)%
(4.9
)%
South Korea
44,119
53,686
(17.8
)%
(14.3
)%
Europe & Africa
40,714
46,968
(13.3
)%
(12.3
)%
Hong Kong/Taiwan
33,846
37,108
(8.8
)%
(5.5
)%
Nu Skin other
(4
)
597
(100.7
)%
(100.8
)%
Total Nu Skin
371,248
448,988
(17.3
)%
(12.6
)%
Rhyz Investments
Manufacturing
51,473
45,551
13.0
%
13.0
%
Rhyz other
16,360
5,718
186.1
%
186.1
%
Total Rhyz Investments
67,833
51,269
32.3
%
32.3
%
Total
$
439,081
$
500,257
(12.2
)%
(8.0
)%
The following table sets forth revenue for the six-month periods
ended June 30, 2024, and 2023 for each of our reportable segments
(U.S. dollars in thousands):
Six Months Ended June
30,
Constant-Currency
2024
2023
Change
Change
Nu Skin
Americas
$
159,966
$
208,798
(23.4
)%
(17.5
)%
Mainland China
125,777
156,338
(19.5
)%
(16.5
)%
Southeast Asia/Pacific
120,406
131,574
(8.5
)%
(4.4
)%
Japan
86,823
103,468
(16.1
)%
(5.3
)%
South Korea
85,082
124,010
(31.4
)%
(28.5
)%
Europe & Africa
82,987
94,412
(12.1
)%
(12.1
)%
Hong Kong/Taiwan
64,312
71,656
(10.2
)%
(7.6
)%
Nu Skin other
668
482
38.6
%
38.6
%
Total Nu Skin
726,021
890,738
(18.5
)%
(14.1
)%
Rhyz Investments
Manufacturing
101,775
81,318
25.2
%
25.2
%
Rhyz other
28,591
9,663
195.9
%
195.9
%
Total Rhyz Investments
130,366
90,981
43.3
%
43.3
%
Total
$
856,387
$
981,719
(12.8
)%
(8.8
)%
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, 2024, and
2023:
Three Months Ended
June 30,
2024
2023
Change
Customers
Americas
226,626
263,138
(14)%
Mainland China
179,021
214,907
(17)%
Southeast Asia/Pacific
88,662
106,283
(17)%
Japan
109,357
112,484
(3)%
South Korea
99,358
112,019
(11)%
Europe & Africa
143,336
177,472
(19)%
Hong Kong/Taiwan
47,154
54,815
(14)%
Total Customers
893,514
1,041,118
(14)%
Paid Affiliates
Americas
29,531
36,048
(18)%
Mainland China
24,404
28,825
(15)%
Southeast Asia/Pacific(1)
29,701
32,769
(9)%
Japan(1)
21,575
36,765
(41)%
South Korea
22,116
23,012
(4)%
Europe & Africa
17,402
19,906
(13)%
Hong Kong/Taiwan
10,757
10,327
4%
Total Paid Affiliates
155,486
187,652
(17)%
Sales Leaders
Americas
6,070
7,872
(23)%
Mainland China
10,266
13,777
(25)%
Southeast Asia/Pacific
5,601
5,814
(4)%
Japan
6,116
5,853
4%
South Korea
4,689
5,784
(19)%
Europe & Africa
3,432
4,105
(16)%
Hong Kong/Taiwan
2,418
2,602
(7)%
Total Sales Leaders
38,592
45,807
(16)%
(1) The June 30, 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.
- “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
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Revenue
$
439,081
$
500,257
$
856,387
$
981,719
Cost of sales
131,904
135,542
255,146
269,130
Gross profit
307,177
364,715
601,241
712,589
Operating expenses:
Selling expenses
165,463
185,165
319,005
373,289
General and administrative expenses
117,921
137,044
242,487
270,943
Restructuring and impairment expenses
149,350
—
156,484
9,787
Total operating expenses
432,734
322,209
717,976
654,019
Operating income (loss)
(125,557
)
42,506
(116,735
)
58,570
Interest expense
6,720
5,769
14,045
10,657
Other expense, net
629
376
233
3,788
Income (loss) before provision for income
taxes
(131,648
)
37,113
(130,547
)
51,701
Provision (benefit) for income taxes
(13,390
)
10,221
(11,756
)
13,433
Net income (loss)
$
(118,258
)
$
26,892
$
(118,791
)
$
38,268
Net income (loss) per share:
Basic
$
(2.38
)
$
0.54
$
(2.39
)
$
0.77
Diluted
$
(2.38
)
$
0.54
$
(2.39
)
$
0.76
Weighted-average common shares outstanding
(000s):
Basic
49,688
49,931
49,613
49,789
Diluted
49,688
50,161
49,613
50,098
NU SKIN ENTERPRISES,
INC.
Consolidated Balance Sheets
(Unaudited)
(U.S. dollars in thousands)
June 30,
2024
December 31,
2023
ASSETS
Current assets:
Cash and cash equivalents
$
224,250
$
256,057
Current investments
8,671
11,759
Accounts receivable, net
71,554
72,879
Inventories, net
243,994
279,978
Prepaid expenses and other
105,937
81,198
Total current assets
654,406
701,871
Property and equipment, net
411,918
432,965
Operating lease right-of-use assets
88,071
90,107
Goodwill
99,885
230,768
Other intangible assets, net
88,464
105,309
Other assets
243,228
245,443
Total assets
$
1,585,972
$
1,806,463
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
36,305
$
43,505
Accrued expenses
242,288
260,366
Current portion of long-term debt
30,000
25,000
Total current liabilities
308,593
328,871
Operating lease liabilities
70,318
70,943
Long-term debt
428,327
478,040
Other liabilities
92,570
106,641
Total liabilities
899,808
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
621,440
621,853
Treasury stock, at cost – 40.9 million and
41.1 million shares
(1,564,090
)
(1,570,440
)
Accumulated other comprehensive loss
(116,995
)
(100,006
)
Retained earnings
1,745,718
1,870,470
Total stockholders' equity
686,164
821,968
Total liabilities and stockholders’
equity
$
1,585,972
$
1,806,463
NU SKIN ENTERPRISES, INC.
Reconciliation of Operating Margin Excluding Impact of
Restructuring and Impairment to GAAP Operating Margin (in
thousands, except for per share amounts)
Three months ended June
30,
Six months ended June
30,
2024
2023
2024
2023
Operating Income
$
(125,557
)
$
42,506
$
(116,735
)
$
58,570
Impact of restructuring and
impairment:
Restructuring and impairment
149,350
-
156,484
9,787
Adjusted operating income
$
23,793
$
42,506
$
39,749
$
68,357
Operating margin
(28.6
)%
8.5
%
(13.6
)%
6.0
%
Operating margin, excluding restructuring
impact
5.4
%
8.5
%
4.6
%
7.0
%
Revenue
$
439,081
$
500,257
$
856,387
$
981,719
NU SKIN ENTERPRISES, INC.
Reconciliation of Effective Tax Rate Excluding Impact of
Restructuring and Impairment to GAAP Effective Tax Rate (in
thousands, except for per share amounts)
Three months ended June
30,
Six months ended June
30,
2024
2023
2024
2023
Provision (benefit) for income taxes
$
(13,390
)
$
10,221
$
(11,756
)
$
13,433
Impact of restructuring and impairment on
provision for income taxes
20,715
-
23,071
2,593
Provision for income taxes, excluding
impact of restructuring and impairment
$
7,325
$
10,221
$
11,315
$
16,026
Income before provision for income
taxes
(131,648
)
37,113
(130,547
)
51,701
Impact of restructuring and impairment
expense:
Restructuring and impairment
149,350
-
156,484
9,787
Income before provision for income taxes,
excluding impact of restructuring and impairment
$
17,702
$
37,113
$
25,937
$
61,488
Effective tax rate
10.2
%
27.5
%
9.0
%
26.0
%
Effective tax rate, excluding
restructuring and impairment impact
41.4
%
27.5
%
43.6
%
26.1
%
NU SKIN ENTERPRISES, INC.
Reconciliation of Earnings Per Share Excluding Impact of
Restructuring and Impairment to GAAP Earnings Per Share (in
thousands, except for per share amounts)
Three months ended June
30,
Six months ended June
30,
2024
2023
2024
2023
Net income
$
(118,258
)
$
26,892
$
(118,791
)
$
38,268
Impact of restructuring and impairment
expense:
Restructuring and impairment
149,350
-
156,484
9,787
Tax impact
(20,715
)
-
(23,071
)
(2,593
)
Adjusted net income
$
10,377
$
26,892
$
14,622
$
45,462
Diluted earnings per share
$
(2.38
)
$
0.54
$
(2.39
)
$
0.76
Diluted earnings per share, excluding
restructuring impact
$
0.21
$
0.54
$
0.29
$
0.91
Weighted-average common shares outstanding
(000)
49,688
50,161
49,613
50,098
NU SKIN ENTERPRISES, INC.
Reconciliation of Earnings Per Share Excluding Impact of
Restructuring and Impairment to GAAP Earnings Per Share
Three months ended
September 30, 2024
Year ended December 31,
2024
Low end
High end
Low end
High end
Earnings Per Share
$
0.08
$
0.18
$
(2.01
)
$
(1.81
)
Impact of restructuring and impairment
expense:
Restructuring and impairment
0.10
0.10
3.25
3.25
Tax impact
(0.03
)
(0.03
)
(0.50
)
(0.50
)
Adjusted EPS
$
0.15
$
0.25
$
0.75
$
0.95
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