Strong Performance Leads Company to Raise Annual Guidance PROVO,
Utah, July 29 /PRNewswire-FirstCall/ -- Nu Skin Enterprises, Inc.
(NYSE:NUS) today announced record second-quarter revenue of $322.6
million, up slightly from $321.7 million reported in the prior
year, but up 4 percent on a constant-currency basis. Earnings per
share for the quarter were $0.35, a 9 percent improvement over the
same quarter of 2008. Earnings per share, excluding restructuring
charges in the current quarter, were $0.36, a 13 percent
improvement over the prior-year period. Operating income improved
19 percent. "We're very pleased with the direction of our business
and the progress we are making towards achieving our annual goals,"
said Truman Hunt, president and chief executive officer. "We
continue to generate healthy results in a difficult economic
environment. "Our growth is a result of continued strength in the
skin care category, with sales up 14 percent, driven by strong
sales of our Galvanic Spa System. Additionally, our business
transformation efforts, most recently in Japan, have helped us
track ahead of our operating margin targets." Regional Results
North Asia. Second-quarter revenue in North Asia was $146.7
million, compared to $151.0 million for the same period in 2008.
North Asia's results were negatively impacted approximately 1
percent by foreign currency fluctuations, due to a 26 percent
weakening of the Korean Won compared to the prior year. Japan
recorded a local-currency revenue decline of 6 percent while South
Korea local-currency revenue improved 11 percent. The number of
executive distributors in the region was down 3 percent while the
number of active distributors declined 2 percent. Americas. Revenue
in the Americas improved 9 percent to $62.2 million, compared to
$57.3 million in the prior-year period. The United States posted a
5 percent revenue increase during the quarter, while Canada and
Latin America local-currency revenue grew by 69 percent and 30
percent, respectively. The number of executive distributors in the
region improved 9 percent while the number of active distributors
decreased 2 percent compared to the prior year. Greater China.
Second-quarter revenue in Greater China was $52.8 million, compared
to $55.8 million in the prior-year period. Foreign currency
fluctuations negatively impacted revenue by 3 percent.
Local-currency revenue in Mainland China improved 6 percent over
the same quarter in 2008. Taiwan local currency revenue increased 1
percent, and Hong Kong local-currency revenue was down 18 percent,
reflecting significant sales in the prior year at a regional
distributor convention held in Hong Kong. The executive distributor
count in the region declined 5 percent, while the number of active
distributors was down 21 percent compared to the prior-year,
primarily a reflection of the on-going transition in the company's
business model in China. Europe. Revenue from Europe was $32.2
million, a 6 percent improvement over the prior-year period, with
solid growth in each region within Europe. Results in the region
were negatively impacted approximately 16 percent by foreign
currency fluctuations. Executive and active distributor counts in
Europe increased 20 percent and 25 percent, respectively, compared
to the prior-year period. South Asia/Pacific. Revenue in South
Asia/Pacific was $28.7 million, an improvement of 5 percent
compared to the prior year. Sales in the quarter were negatively
impacted 11 percent by currency fluctuations. The region's
second-quarter executive count improved 17 percent while the active
distributor count increased 5 percent compared to the same period
in 2008. Operational Performance The company's gross margin during
the quarter was 81.2 percent, a 40-basis-point decline compared to
the prior-year period, due primarily to foreign currency
fluctuations and shifting product mix. Selling expenses, as a
percent of revenue, were 41.7 percent in the second quarter, an
80-basis-point improvement due to distributor compensation plan
modifications aimed at rewarding productivity. General and
administrative expenses improved to $91.3 million, or 28.3 percent
of revenue, compared to $96.5 million, or 30.0 percent of revenue
in the prior-year period. Prior-year results included expenses
associated with conventions in Japan and Hong Kong. The company
incurred restructuring charges of $1.6 million during the quarter
related to the continued restructuring of Japan. The company's
income tax rate for the quarter was 37.4 percent. The company's
cash position at the end of the quarter was $125.3 million.
Dividend payments during the quarter were $7.2 million. The company
repurchased $3.9 million of its outstanding shares during the
quarter. Outlook "Our strong first-half performance keeps us on
course to achieve another year of record results," said Hunt. "We
look forward to the next phase of our ageLOC launch in October when
we will introduce a highly innovative anti-aging skin care system.
ageLOC represents our proprietary approach to attacking the sources
of aging, as opposed to just the signs and symptoms. We believe
these ageLOC developments represent our most significant product
innovation in our 25-year history. "As we continue to export
successful and proven sales programs throughout our markets, we
expect to sustain increases in distributor productivity. For
example, we introduced a new feature to our distributor
compensation model called the 'Wealth Maximizer' in the United
States and Europe last year with excellent results. In the second
quarter, we launched this compensation feature in Japan and
Southeast Asia with encouraging early indicators. "We are
generating improved profitability from our concerted efforts to
operate the business more efficiently around the world. We are
particularly encouraged by the restructuring work in Japan and
anticipate continued improvement going forward," concluded Hunt.
"Based on the strength of our business, we are increasing our 2009
guidance," said Ritch Wood, chief financial officer. We are
increasing our revenue guidance to $1.26 to $1.27 billion,
anticipating a negative impact from foreign currency fluctuations
of 3 to 5 percent for the year. We are increasing our earnings
guidance to $1.09 to $1.14 or $1.23 to $1.28 excluding an estimated
$0.14 restructuring charge. We expect third-quarter revenue of $312
to $317 million which anticipates a negative currency impact of 1
to 3 percent, and earnings per share in the $0.30 to $0.32 range,
including a $0.02 planned restructuring charge," concluded Wood.
Company management will host a webcast with the investment
community on July 29, 2009, at 11 a.m. (EDT). Those wishing to
access the webcast, as well as the financial information presented
during the call, can visit the Investor Relations page on Nu Skin
Enterprises' Web site, http://www.nuskinenterprises.com/. An
archive of the webcast will be available at this same URL through
Aug. 14, 2009. The Company For 25 years, Nu Skin Enterprises, Inc.
has been demonstrating its tradition of innovation through its
product portfolio, independent business opportunity and corporate
social responsibility initiatives. Nu Skin's scientific leadership
in both skin care and nutrition has established Nu Skin as a
premier anti-aging company, evidenced in its patent-pending
ageLOC(TM) anti-aging platform and flagship products including the
Galvanic Spa System II, Tru Face Essence Ultra, LifePak nano and
the g3 nutrition beverage. A global direct selling company, Nu Skin
operates in 48 markets worldwide and has more than 750,000
independent sales representatives. Nu Skin Enterprises is traded on
the New York Stock Exchange under the symbol "NUS." More
information is available at http://www.nuskinenteprises.com/.
Please note: This press release, particularly the "Outlook"
section, contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934 that represent
the company's current expectations and beliefs, including, among
other things: (i) management's positive outlook for the company;
(ii) management's expectations regarding the company's initiatives,
strategies, product development and launches, transformation
efforts and other innovation efforts; and (iii) management's
projections regarding revenue, earnings per share, the impact of
foreign currency fluctuations, operating margin and restructuring
charges for the year 2009 and for the third quarter of 2009 set
forth in the "Outlook" section. 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: (a) economic
conditions globally, including the current financial crisis and
decreased consumer confidence and spending, and related risks; (b)
the recent fluctuations of numerous foreign currencies and the
associated currency translation impact on our business if these
currencies continue to fluctuate; (c) uncertainty regarding the
impact on our business of increased regulatory scrutiny of the
direct selling industry in Japan and our efforts to increase
distributor compliance efforts in this market; (d) an increase in
complaints to consumer protection agencies in Japan regarding the
activities of some distributors and the associated risks to the
company's business if such increase results in further regulatory
scrutiny; (e) regulatory risks associated with the company's tools
and products, which could inhibit the company's ability to market a
tool or product in a market if it is determined to be a medical
device in any market, if distributors make unauthorized claims that
would cause such products to be classified as drugs, or if the
company is unable to obtain necessary product registrations in a
timely manner; (f) risks related to the recent swine flu outbreak,
which could negatively impact our business to the extent that it
inhibits travel, causes people to avoid interaction with other
people, or restricts our ability to produce or distribute any of
our porcine-sourced gelatin encapsulated products; (g) continued
regulatory scrutiny and investigations in Mainland China, which
have from time to time in the past, and could in the future,
negatively impact the company's business, including the
interruption of sales activities in stores, loss of licenses, and
the imposition of fines; (h) any failure of current or planned
initiatives or products to generate interest among distributors and
customers and generate sponsoring and selling activities on a
sustained basis; (i) any unanticipated negative response from
distributors regarding distributor compensation plan enhancements
planned for implementation in most of our Asian markets in 2009;
(j) any failure of the implementation of business transformation
initiatives to reduce overhead and drive growth, and any negative
impact of such initiatives on the company's ability to effectively
manage its operations; (k) adverse publicity related to the
company's business, products, industry or any legal actions or
complaints by distributors or others similar to claims made against
some of the company's competitors; and (l) 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, including the company's Annual Report on Form
10-K filed on February 27, 2009 and Quarterly Report on Form 10-Q
filed on May 8, 2009. The forward-looking statements set forth the
company's beliefs as of the date of this release, 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. NU
SKIN ENTERPRISES, INC. Consolidated Statements of Income
(Unaudited) For the Second Quarters Ended June 30, 2009 and 2008
(in thousands, except per share amounts) 2009 2008 ---- ----
Revenue: North Asia $ 146,712 $ 151,025 Americas 62,240 57,253
Greater China 52,753 55,778 Europe 32,173 30,445 South Asia/Pacific
28,687 27,212 ------ ------ Total revenue 322,565 321,713 Cost of
sales 60,637 59,319 ------ ------ Gross profit 261,928 262,394
------- ------- Operating expenses: Selling expenses 134,630
136,983 General and administrative expenses 91,286 96,480
Restructuring charges 1,561 - ----- ----- Total operating expenses
227,477 233,463 ------- ------- Operating income 34,451 28,931
Other income (expense), net 882 4,110 ---- ----- Income before
provision for income taxes 35,333 33,041 Provision for income taxes
13,219 12,440 ------ ------ Net income $ 22,114 $ 20,601 =======
======= Net income per share: Basic $ 0.35 $ 0.32 Diluted $ 0.35 $
0.32 Weighted average common shares outstanding: Basic 63,109
63,561 Diluted 63,726 64,269 NU SKIN ENTERPRISES, INC. Consolidated
Statements of Income (Unaudited) For the Six Month Periods Ended
June 30, 2009 and 2008 (in thousands, except per share amounts)
2009 2008 ---- ---- Revenue: North Asia $ 286,530 $ 300,459
Americas 120,656 107,669 Greater China 100,223 105,682 Europe
58,847 53,278 South Asia/Pacific 52,507 52,714 ------ ------ Total
revenue 618,763 619,802 Cost of sales 114,443 113,516 -------
------- Gross profit 504,320 506,286 ------- ------- Operating
expenses: Selling expenses 257,794 264,896 General and
administrative expenses 180,977 185,035 Restructuring charges
10,947 - ------ ------- Total operating expenses 449,718 449,931
------- ------- Operating income 54,602 56,355 Other income
(expense), net (354) (1,719) ---- ------- Income before provision
for income taxes 54,248 54,636 Provision for income taxes 20,293
20,546 ------ ------ Net income $ 33,955 $ 34,090 ======= =======
Net income per share: Basic $ 0.54 $ 0.54 Diluted $ 0.53 $ 0.53
Weighted average common shares outstanding: Basic 63,221 63,509
Diluted 63,585 64,242 NU SKIN ENTERPRISES, INC. Consolidated
Balance Sheets (Unaudited) (in thousands) June 30, December 31,
2009 2008 ------------- ------------ ASSETS Current assets: Cash
and cash equivalents $ 125,302 $ 114,586 Accounts receivable 20,614
16,496 Inventories, net 111,922 114,378 Prepaid expenses and other
45,950 44,944 ------ ------ 303,788 290,404 Property and equipment,
net 75,958 82,336 Goodwill 112,446 112,446 Other intangible assets,
net 83,974 87,888 Other assets 131,433 136,698 ------- -------
Total assets $ 707,599 $ 709,772 ======== ======== LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 19,218
$ 20,378 Accrued expenses 119,573 115,794 Current portion of
long-term debt 29,024 30,196 ------ ------ 167,815 166,368
Long-term debt 138,981 158,760 Other liabilities 66,238 68,464
------ ------ Total liabilities 373,034 393,592 ------- -------
Stockholders' equity: Class A common stock 91 91 Additional paid-in
capital 222,403 218,928 Treasury stock, at cost (421,810) (417,017)
Retained earnings 603,662 584,239 Accumulated other comprehensive
loss (69,781) (70,061) -------- -------- 334,565 316,180 -------
------- Total liabilities and stockholders' equity $ 707,599 $
709,772 ======== ======== NU SKIN ENTERPRISES, INC.
Distributor/Preferred Customer Growth by Market As of June 30, As
of June 30, % Increase 2009 2008 (Decrease) -------------------
-------------------- -------------------- Active* Executive Active*
Executive Active* Executive --------- --------- ---------
---------- --------- --------- North Asia 322,000 13,803 329,000
14,292 (2.1%) (3.4%) Americas 171,000 5,385 174,000 4,921 (1.7%)
9.4% Greater China 103,000 6,129 130,000 6,443 (20.8%) (4.9%)
Europe 89,000 3,173 71,000 2,648 25.4% 19.8% South Asia/ Pacific
67,000 2,525 64,000 2,168 4.7% 16.5% ------ ----- ------ -----
Total 752,000 31,015 768,000 30,472 (2.1%) 1.8% ======= ======
======= ====== * Active distributors include preferred customers
and distributors purchasing products directly from the company
during the quarter. DATASOURCE: Nu Skin Enterprises, Inc. CONTACT:
Investors, Scott Pond, +1-801-345-2657, , or Media, Kara Schneck,
+1-801-345-2116, , both of Nu Skin Enterprises, Inc. Web Site:
http://www.nuskinenterprises.com/
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