PROVO, Utah, Feb. 15, 2018 /PRNewswire/ -- Nu Skin
Enterprises, Inc. (NYSE: NUS) today announced fourth-quarter and
2017 financial results.
Executive Summary
Q4 2017
Revenue:
|
$666.2 million, up
25.4%
• +3% fx impact
|
Earnings Per Share
(EPS):
|
$0.33 or $1.20
when excluding the impact of tax reform, compared to
$0.69 in Q4 2016, which included a $0.10 tax charge.
|
Sales
Leaders:
|
81,900 – 33%
year-over-year increase, benefitting from ageLOC
LumiSpa preview
|
Customers:
|
1,070,000 – 8%
year-over-year increase
|
Tax Reform
Impact:
|
Non-cash $47.7
million write-down of net deferred tax assets
|
2017 Annual
Revenue:
|
$2.28 billion, up
3%
•
less than (1%) fx impact
|
Earnings Per Share
(EPS):
|
$2.36 or $3.23 when
excluding the impact of tax reform, compared to
$2.55 in 2016, which included a $0.36 Japan customs
charge
|
"We concluded 2017 on a high note with solid quarterly results
driven by customer and sales leader growth," said Ritch Wood, chief executive officer. "Our growth
strategy, which remains focused on three key elements – engaging
platforms, enabling products and empowering programs, continues to
drive our positive results. According to plan, we introduced ageLOC
LumiSpa during the fourth quarter, which contributed to strong
results in most of our markets. We also experienced continued
momentum surrounding our social selling efforts, which we expect
will be a catalyst for continued customer growth in 2018 and
beyond."
Q4 2017 Year-Over-Year Operating Results
Revenue:
|
$666.2 million
compared to $531.3 million
|
Gross
Margin:
|
77.7% compared to
79.6%
|
Selling
Expenses:
|
39.8% of revenue
compared to 41.9%
|
G&A
Expenses:
|
23.0% of revenue
compared to 26.2%
|
Operating
Margin:
|
14.9% compared to
11.4%
|
Other Income /
(Expense):
|
($0.4) million
compared to $1.4 million
|
Income Tax
Rate:
|
81.5%, or 33.1% when
excluding the tax reform impact
|
EPS:
|
$0.33 or $1.20
when excluding the tax reform impact, compared to
$0.69, which included a $0.10 tax charge
|
Stockholder Value
Dividend
Payments:
|
$19.0
million
|
Stock
Repurchases:
|
$23.9 million; $128.0
million remaining in authorization
|
The fourth quarter provision for income taxes included the
following amounts related to the Tax Cuts and Jobs Act (TCJA).
These amounts, which are provisional, may require adjustments as
Internal Revenue Service (IRS) guidance is issued and as additional
analysis of the provisions of the TCJA are completed:
- $52.0 million write-down of our
foreign tax credit carryforward.
- $7.3 million charge related to a
tax on permanently reinvested foreign earnings that have not been
repatriated to the U.S.
- $11.6 million benefit related to
the remeasurement of U.S. net deferred tax liabilities at the lower
statutory rate.
2018 Outlook
Q1 2018
Revenue:
|
$550 to $570 million,
10 to 14% growth
• +4 to 5% fx impact
|
Q1 2018
EPS:
|
$0.65 to
$0.70
|
2018
Revenue:
|
$2.44 billion to
$2.49 billion, 7 to 9% growth
• +2 to 3% fx impact
|
2018
EPS
|
$3.45 to
$3.65
|
"Our 2018 guidance reflects optimism about our business
prospects for the coming year, with expected top- and bottom-line
growth," said Wood. "Our plans are focused on growing our customer
base by executing on our 3P – Platforms, Products, Programs –
growth strategy. We expect to further leverage the power of social
selling and believe this channel will empower our sales leaders to
reach a broader audience, helping to enable greater sales growth.
On the product front, we are accelerating the introduction of
innovative and socially shareable products, led by our recently
introduced ageLOC LumiSpa, which is rolling out globally in the
first half of 2018. We have also begun implementing sales
compensation enhancements to more effectively reward our sales
leaders and drive increased productivity.
"We also recently completed the acquisition of two manufacturing
partners in which we previously held non-controlling equity
ownership, as well as a packaging company. We anticipate these
acquisitions will be accretive to our annual results and will be
meaningful contributors to our future success," concluded Wood.
"Looking at 2018, we expect first-quarter revenue in the
$550 to $570
million range, which includes an approximate 4 to 5 percent
positive foreign currency impact," said Mark Lawrence, chief financial officer. "For the
full year, we are projecting revenue growth of 7 to 9 percent, or
$2.44 to $2.49
billion, including a favorable foreign currency impact of 2
to 3 percent, and earnings per share of $3.45 to $3.65. For
2018, excluding discrete items, we anticipate our effective tax
rate will be approximately 34 to 35 percent."
Conference Call
The Nu Skin management team will host a conference call with the
investment community on Feb. 15,
2018, 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 at the same URL through March 2, 2018.
About Nu Skin Enterprises, Inc.
Founded more than 30 years ago, Nu Skin Enterprises, Inc.
develops and distributes innovative consumer products, offering a
comprehensive line of premium-quality beauty and wellness
solutions. The company builds upon its scientific expertise in both
skin care and nutrition to continually develop innovative product
brands that include the Nu Skin® personal care brand,
the Pharmanex® nutrition brand, and most recently, the
ageLOC® anti-aging brand. The ageLOC brand has generated
a loyal following for such products as the ageLOC Youth nutritional
supplement, the ageLOC Me® customized skin care system,
as well as the ageLOC TR90® weight management and body
shaping system. Nu Skin sells its products through a global network
of sales leaders in Asia, the
Americas, Europe, Africa and the Pacific. As a long-standing
member of direct selling associations globally, Nu Skin is
committed to the industry's consumer guidelines that protect and
support those who sell and purchase its products through the direct
selling channel. Nu Skin is also traded on the New York Stock
Exchange under the symbol "NUS." More information is available at
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, sales force and customer base, growth, strategies,
initiatives and areas of focus, acquisitions and new product
introductions; projections regarding revenue, earnings per share,
foreign currency fluctuations, tax rates 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," "project,"
"anticipate," "estimate," "intend," "plan," "targets," "likely,"
"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:
- 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 our
markets, including the United
States and Mainland China, may be modified, interpreted or
enforced in a manner that results in negative changes to our
business model or negatively impacts our 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;
- 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 company's recent acquisitions;
- risks related to accurately predicting, delivering or
maintaining sufficient quantities of products to support our
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 the
company's ability to import or continue selling a product in a
market if it is determined to be a medical device or if it is
unable to register the product in a timely manner under applicable
regulatory requirements;
- unpredictable economic conditions and events
globally;
- uncertainties related to interpretation of, and forthcoming
regulations under, the recently enacted U.S. tax reform
legislation; 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 growth 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 this amount to the prior-year period's
revenue.
Earnings per share and income tax rate, each excluding the
impact of tax reform, also are non-GAAP financial measures. The Tax
Cuts and Jobs Act was enacted in December
2017 and had a material impact on the company's earnings per
share and tax rate. Removing its impact facilitates
period-to-period comparisons of the company's performance. Please
see the reconciliations of these items to our earnings per share
and income tax rate calculated under GAAP, below.
The Company's revenue results by segment for the three-month
periods ended December 31 are
presented in the following table (in thousands).
|
|
2017
|
|
2016
|
|
% Change
|
|
Constant
Currency %
Change
|
|
|
|
|
|
|
|
|
|
Mainland
China
|
|
$
222,333
|
|
$
139,095
|
|
59.8%
|
|
54.3%
|
South
Korea
|
|
103,066
|
|
98,354
|
|
4.8%
|
|
(0.3%)
|
Americas
|
|
95,412
|
|
71,708
|
|
33.1%
|
|
34.0%
|
South
Asia/Pacific
|
|
83,253
|
|
70,016
|
|
18.9%
|
|
16.8%
|
Japan
|
|
67,620
|
|
68,613
|
|
(1.4%)
|
|
1.5%
|
Hong
Kong/Taiwan
|
|
46,627
|
|
43,411
|
|
7.4%
|
|
4.5%
|
EMEA
|
|
47,890
|
|
40,132
|
|
19.3%
|
|
9.7%
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
666,201
|
|
$
531,329
|
|
25.4%
|
|
22.3%
|
The Company's revenue results by segment for the year ended
December 31 are presented in the
following table (in thousands).
|
|
2017
|
|
2016
|
|
%
Change
|
|
Constant
Currency %
Change
|
|
|
|
|
|
|
|
|
|
Mainland
China
|
|
$
716,991
|
|
$
610,414
|
|
17.5%
|
|
18.9%
|
South
Korea
|
|
361,692
|
|
413,696
|
|
(12.6%)
|
|
(14.9%)
|
Americas
|
|
317,380
|
|
276,590
|
|
14.7%
|
|
15.5%
|
South
Asia/Pacific
|
|
299,980
|
|
296,758
|
|
1.1%
|
|
1.7%
|
Japan
|
|
256,085
|
|
279,042
|
|
(8.2%)
|
|
(5.2%)
|
Hong
Kong/Taiwan
|
|
166,696
|
|
183,979
|
|
(9.4%)
|
|
(12.1%)
|
EMEA
|
|
160,275
|
|
147,318
|
|
8.8%
|
|
5.6%
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
2,279,099
|
|
$
2,207,797
|
|
3.2%
|
|
3.3%
|
The company's Customers and Sales Leaders statistics by segment
for the three-month periods ended December
31 are presented in the following table.
|
2017
|
|
2016
|
|
% Increase
(Decrease)
|
|
|
Customers
|
|
Sales
Leaders
|
|
Customers
|
|
Sales
Leaders
|
|
Customers
|
|
Sales
Leaders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainland
China
|
|
193,000
|
|
40,600
|
|
175,000
|
|
22,000
|
|
10.3%
|
|
84.5%
|
South
Korea
|
|
173,000
|
|
8,400
|
|
192,000
|
|
9,600
|
|
(9.9%)
|
|
(12.5%)
|
Americas
|
|
222,000
|
|
8,000
|
|
166,000
|
|
6,700
|
|
33.7%
|
|
19.4%
|
South
Asia/Pacific
|
|
144,000
|
|
8,900
|
|
116,000
|
|
7,600
|
|
24.1%
|
|
17.1%
|
Japan
|
|
132,000
|
|
6,600
|
|
137,000
|
|
6,700
|
|
(3.6%)
|
|
(1.5%)
|
Hong
Kong/Taiwan
|
|
71,000
|
|
4,700
|
|
73,000
|
|
4,600
|
|
(2.7%)
|
|
2.2%
|
EMEA
|
|
135,000
|
|
4,700
|
|
129,000
|
|
4,400
|
|
4.7%
|
|
6.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
1,070,000
|
|
81,900
|
|
988,000
|
|
61,600
|
|
8.3%
|
|
33.0%
|
|
|
|
|
|
|
|
|
|
|
|
"Customers"
are persons who purchased products directly from the company during
the previous three months.
|
|
"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)
|
For the Fourth
Quarters Ended December 31, 2017 and 2016
|
(in thousands, except
per share amounts)
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
Revenue
|
$
666,201
|
|
$
531,329
|
|
|
|
|
Cost of
sales
|
148,459
|
|
108,520
|
|
|
|
|
Gross
profit
|
517,742
|
|
422,809
|
|
|
|
|
Operating
expenses:
|
|
|
|
Selling
expenses
|
265,378
|
|
222,887
|
General
and administrative expenses
|
153,244
|
|
139,139
|
Total operating
expenses
|
418,622
|
|
362,026
|
|
|
|
|
Operating
income
|
99,120
|
|
60,783
|
|
|
|
|
Other
(expense)/income, net
|
(446)
|
|
1,353
|
Income before
provision for income taxes
|
98,674
|
|
62,136
|
Provision for income
taxes
|
80,439
|
|
23,951
|
|
|
|
|
Net
income
|
$
18,235
|
|
$
38,185
|
|
|
|
|
Net income per
share:
|
|
|
|
Basic
|
$
0.35
|
|
$
0.71
|
Diluted
|
$
0.33
|
|
$
0.69
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
Basic
|
52,722
|
|
53,769
|
Diluted
|
55,053
|
|
55,539
|
NU SKIN
ENTERPRISES, INC.
|
Consolidated
Statements of Income (Unaudited)
|
For the Years
Ended December 31, 2017 and 2016
|
(in thousands, except
per share amounts)
|
|
|
|
|
|
2017
|
|
2016
|
|
|
|
|
Revenue
|
$
2,279,099
|
|
$
2,207,797
|
|
|
|
|
Cost of
sales
|
502,078
|
|
500,457
|
|
|
|
|
Gross
profit
|
1,777,021
|
|
1,707,340
|
|
|
|
|
Operating
expenses:
|
|
|
|
Selling
expenses
|
938,024
|
|
922,083
|
General
and administrative expenses
|
564,514
|
|
554,153
|
Total operating
expenses
|
1,502,538
|
|
1,476,236
|
|
|
|
|
Operating
income
|
274,483
|
|
231,104
|
|
|
|
|
Other
(expense)/income, net
|
(8,916)
|
|
(18,265)
|
Income before
provision for income taxes
|
265,567
|
|
212,839
|
Provision for income
taxes
|
136,130
|
|
69,753
|
|
|
|
|
Net
income
|
$
129,437
|
|
$
143,086
|
|
|
|
|
Net income per
share:
|
|
|
|
Basic
|
$
2.45
|
|
$
2.58
|
Diluted
|
$
2.36
|
|
$
2.55
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
Basic
|
52,806
|
|
55,412
|
Diluted
|
54,852
|
|
56,097
|
NU SKIN
ENTERPRISES, INC.
|
Consolidated
Balance Sheets (Unaudited)
|
As of December 31,
2017 and 2016
|
(in
thousands)
|
|
|
|
|
|
2017
|
|
2016
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and
cash equivalents
|
$
426,399
|
|
$
357,246
|
Current
investments
|
11,847
|
|
10,880
|
Accounts receivable
|
33,196
|
|
31,199
|
Inventories, net
|
253,454
|
|
249,936
|
Prepaid expenses and
other
|
52,893
|
|
65,076
|
|
777,789
|
|
714,337
|
|
|
|
|
Property and
equipment, net
|
464,587
|
|
444,732
|
Goodwill
|
114,954
|
|
114,954
|
Other intangible
assets, net
|
67,647
|
|
63,553
|
Other
assets
|
164,895
|
|
136,469
|
Total
assets
|
$
1,589,872
|
|
$
1,474,045
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
50,341
|
|
$
41,261
|
Accrued
expenses
|
319,189
|
|
275,023
|
Current portion of long-term debt
|
77,840
|
|
82,727
|
|
447,370
|
|
399,011
|
|
|
|
|
Long-term
debt
|
310,790
|
|
334,165
|
Other
liabilities
|
127,116
|
|
76,799
|
Total
liabilities
|
885,276
|
|
809,975
|
|
|
|
|
Stockholders'
equity:
|
|
|
|
Class A
common stock
|
91
|
|
91
|
Additional
paid-in capital
|
466,349
|
|
439,635
|
Treasury stock,
at cost
|
(1,304,694)
|
|
(1,250,123)
|
Accumulated
other comprehensive loss
|
(66,318)
|
|
(84,122)
|
Retained
earnings
|
1,609,168
|
|
1,558,589
|
|
704,596
|
|
664,070
|
Total liabilities and stockholders'
equity
|
$
1,589,872
|
|
$
1,474,045
|
NU SKIN
ENTERPRISES, INC.
|
Reconciliation of
Earnings Per Share Excluding Impact of Tax Reform to
|
GAAP Earnings Per
Share
|
(in thousands,
except per share amounts)
|
|
|
|
2017
|
|
Q4
2017
|
Net income
|
|
$
129,437
|
|
$
18,235
|
Impact of tax reform
on provision for income taxes
|
|
47,729
|
|
47,729
|
Net income, excluding
impact of tax reform
|
|
$
177,166
|
|
$
65,964
|
Weighted-average
common shares outstanding
|
|
54,852
|
|
55,053
|
Diluted earnings per
share
|
|
$
2.36
|
|
$
0.33
|
Diluted earnings per
share, excluding tax reform impact
|
|
$
3.23
|
|
$
1.20
|
|
|
|
|
|
|
|
|
|
|
NU SKIN
ENTERPRISES, INC.
|
Reconciliation of
Effective Tax Rate Excluding Impact of Tax Reform to
|
GAAP Effective Tax
Rate
|
(in
thousands)
|
|
|
|
2017
|
|
Q4
2017
|
Provision for income
taxes
|
|
$
136,130
|
|
$
80,439
|
Impact of tax reform
on provision for income taxes
|
|
(47,729)
|
|
(47,729)
|
Provision for income
taxes, excluding impact of tax reform
|
|
$
88,401
|
|
$
32,710
|
Income before
provision for income taxes
|
|
$
265,567
|
|
$
98,674
|
Effective tax
rate
|
|
51.3%
|
|
81.5%
|
Effective tax rate,
excluding tax reform impact
|
|
33.3%
|
|
33.1%
|
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SOURCE Nu Skin Enterprises, Inc.