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Nu Skin Enterprises Reports Second Quarter 2023 Financial Results

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Nu Skin Enterprises, Inc. (NYSE: NUS) announced second quarter 2023 results, reporting a revenue of $500.3 million, a decrease of 11% from the prior-year quarter. Earnings Per Share (EPS) stood at $0.54 compared to $0.67, with 1,041,118 customers and 187,652 paid affiliates. Despite macro-economic challenges, the company is optimistic about its Nu Vision 2025 strategy and plans to roll out new products and incentives to drive growth.
Positive
  • None.
Negative
  • Revenue declined by 11% year-over-year, with a negative impact from foreign exchange, and a decrease in customers and paid affiliates by 25% and 23% respectively. Operating margin also decreased from 9.2% to 8.5%. The company's outlook for Q3 and full-year 2023 projects a continued decline in revenue, with a negative foreign currency impact.

PROVO, Utah, Aug. 1, 2023 /PRNewswire/ -- Nu Skin Enterprises, Inc. (NYSE: NUS) today announced second quarter 2023 results in line with expectations.

Executive Summary
Q2 2023 vs. Prior-year Quarter

Revenue:

$500.3 million; (11)%

•  (3)% FX impact or $(16.4) million

Earnings Per Share (EPS):

$0.54 compared to $0.67 or $0.77 excluding charges associated with our exit from Grow Tech

Customers:

1,041,118; (25)%

Paid Affiliates:

187,652; (23)%

•  An adjustment to eligibility requirements accounted for approximately (13)% of the decline

Sales Leaders:

45,807; (9)%

 

"Our second quarter results improved sequentially and landed within our guidance range, driven in large part by year-over-year gains in Mainland China and our Rhyz segments," said Ryan Napierski, Nu Skin president and CEO. "We are seeing early signs of momentum building in Mainland China; however, we continue to be negatively impacted in several key markets by macro-economic factors and associated price increases that have had a dampening effect on consumer spending and customer acquisition.

"Despite the lingering macro challenges, we continue to make steady progress toward our Nu Vision 2025 strategy. In Q3 we will be rolling out ageLOC® TRMe®, our personalized weight management system, in China. Most other markets will begin introducing ageLOC WellSpa iO™, a smart device system focused on holistic wellness and beauty, with consumer launches in Q4 to help us drive year-over-year growth in the quarter. To complement these introductions, we will be introducing a new channel growth incentive in the second half to attract new affiliates and develop sales leaders. In addition, our Vera® and Stela apps continue to gain healthy traction as downloads and monthly active users exceed expectations.

"We continue to be pleased with the performance of Rhyz improving 33% year over year. As part of building our long-term enterprise strategy, we announced today the Rhyz acquisition of BeautyBio, an omnichannel, clean and clinically proven skincare and beauty device brand. BeautyBio's unique device IP in hydration facial and micro-needling technology will further strengthen Nu Skin's position as the world's best-selling beauty device systems brand.* Our expertise in devices, manufacturing and technology will help BeautyBio reach its potential as we explore synergies within the Rhyz ecosystem."

 

Q2 2023 Year-over-year Operating Results                

Revenue:

$500.3 million compared to $560.6 million

•  (3)% FX impact or $(16.4) million

Gross Margin:

72.9% compared to 73.6%

•  Nu Skin business was 77.2% compared to 77.0%

•  Impacted by revenue growth in Rhyz Manufacturing

Selling Expenses:

37.0% compared to 39.1%

•  Nu Skin business was 40.2% compared to 42.0%

G&A Expenses:

27.4% compared to 25.3%

Operating Margin:

8.5% compared to 9.2%

Other Income / (Expense):

$(5.4) million compared to $(8.6) million

Income Tax Rate:

27.5% compared to 20.2%

EPS:

$0.54 compared to $0.67 or $0.77 excluding charges associated with our exit from Grow Tech

Stockholder Value

Dividend Payments:

$19.5 million

Stock Repurchases:

$0.0 million

•  $175.4 million remaining in authorization

 

Q3 and Full-year 2023 Outlook

Q3 2023 Revenue:

$500 to $540 million; (7)% to 0.5%

•  Approximately (2) to (1)% FX impact

Q3 2023 EPS:

$0.54 to $0.69

2023 Revenue:

$2.00 to $2.08 billion; (10)% to (6)%

•  Approximately (3) to (2)% FX impact

2023 EPS:

$2.15 to $2.45 or $2.30 to $2.60 non-GAAP

 

"Taking into account first half results, a stronger-than-expected U.S. dollar and recent acquisitions, we are adjusting our 2023 guidance, which continues to show sequential improvements in the back half of the year with a return to year-over-year growth in the fourth quarter," said James D. Thomas, chief financial officer. "We now anticipate our annual revenue to be $2.00 to $2.08 billion, with an approximate 2 to 3 percent foreign currency headwind. We are also adjusting reported EPS of $2.15 to $2.45, or $2.30 to $2.60 excluding first quarter restructuring charges. For the third quarter, we project revenue of $500 to $540 million, assuming a negative foreign currency impact of approximately 1 to 2 percent, with reported earnings per share of $0.54 to $0.69. In summary, while the persistence of macro headwinds has made the journey more challenging than expected, we continue to invest in key growth initiatives that support our long-term enterprise strategy and remain confident in our direction and future."

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. 15, 2023.

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 nearly 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. Rhyz is the strategic investment arm of Nu Skin Enterprises. Formed in 2018, Rhyz is a synergistic ecosystem of consumer, technology and manufacturing companies focused on innovation within the beauty, wellness and lifestyle categories.

*Source Euromonitor International Limited; Retail Value RSP terms; all channels; 2017 to 2022. 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 April - June of 2023. 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 macro-environment and the company's performance, growth, shareholder value, strategies, transformation, initiatives, product pipeline and product introductions/launches, digital and social-commerce tools and initiatives, benefits of the BeautyBio acquisition, customers, sales leaders, and affiliates; projections regarding revenue, expenses, operating income, earnings per share, foreign currency fluctuations, uses of cash 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," "continue," "outlook," "guidance," "remain," "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 COVID-19 and related disruptions, 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, increased scrutiny of sales force actions, 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, 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;
  • unpredictable economic conditions and events globally;
  • 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; 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.

Earnings per share, excluding charges associated with our exit from Grow Tech or restructuring and impairment charges, is also a non-GAAP financial measure. Charges associated with our exit from Grow Tech and 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 charges associated with our exit from Grow Tech and restructuring and impairment charges facilitates period-to-period comparisons of the company's performance. Please see the reconciliations of these items to our earnings per share and operating margin calculated under GAAP, below.

The following table sets forth revenue for the three-month periods ended June 30, 2023 and 2022 for each of our reportable segments (U.S. dollars in thousands):


Three Months Ended

June 30,




Constant-
Currency


2023


2022


Change


Change

Nu Skin












Americas

$

107,641


$

124,445



(14) %



(10) %

Mainland China


88,362



86,808



2 %



8 %

Southeast Asia/Pacific


63,764



94,067



(32) %



(30) %

South Korea


53,686



69,308



(23) %



(19) %

Japan


50,862



55,952



(9) %



(4) %

Europe & Africa


46,968



50,871



(8) %



(9) %

Hong Kong/Taiwan


37,108



39,327



(6) %



(3) %

Nu Skin other


597



1,318



(55) %



(55) %

Total Nu Skin


448,988



522,096



(14) %



(11) %

Rhyz Investments












Manufacturing


45,551



38,229



19 %



19 %

Rhyz other


5,718



290



1872 %



1872 %

Total Rhyz Investments


51,269



38,519



33 %



33 %

Total

$

500,257


$

560,615



(11) %



(8) %

 

The following table sets forth revenue for the six-month periods ended June 30, 2023 and 2022 for each of our reportable segments (U.S. dollars in thousands):


Six Months Ended

June 30,




Constant-
Currency


2023


2022


Change


Change

Nu Skin












Americas

$

208,798


$

248,025



(16) %



(12) %

Mainland China


156,338



211,303



(26) %



(21) %

Southeast Asia/Pacific


131,574



184,303



(29) %



(26) %

South Korea


124,010



141,441



(12) %



(8) %

Japan


103,468



117,743



(12) %



(3) %

Europe & Africa


94,412



103,839



(9) %



(8) %

Hong Kong/Taiwan


71,656



77,821



(8) %



(4) %

Nu Skin other


482



1,938



(75) %



(75) %

Total Nu Skin


890,738



1,086,413



(18) %



(14) %

Rhyz Investments












Manufacturing


81,318



78,570



3 %



3 %

Rhyz other


9,663



531



1720 %



1720 %

Total Rhyz Investments


90,981



79,101



15 %



15 %

Total

$

981,719


$

1,165,514



(16) %



(12) %

 

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, 2023 and 2022:

 


Three Months Ended

June 30,




2023


2022


Change

Customers








Americas


263,138



302,849


(13) %

Mainland China


214,907



392,268


(45) %

Southeast Asia/Pacific


106,283



152,775


(30) %

South Korea


112,019



135,290


(17) %

Japan


112,484



122,643


(8) %

Europe & Africa


177,472



205,379


(14) %

Hong Kong/Taiwan


54,815



69,411


(21) %

Total Customers


1,041,118



1,380,615


(25) %




Paid Affiliates








Americas


36,048



44,523


(19) %

Mainland China


28,825



19,257


50 %

Southeast Asia/Pacific


32,769



41,512


(21) %

South Korea(1)


23,012



48,605


(53) %

Japan


36,765



38,269


(4) %

Europe & Africa(1)


19,906



32,323


(38) %

Hong Kong/Taiwan(1)


10,327



17,644


(41) %

Total Paid Affiliates


187,652



242,133


(23) %




Sales Leaders








Americas


7,872



9,320


(16) %

Mainland China(2)


13,777



11,458


20 %

Southeast Asia/Pacific


5,814



8,407


(31) %

South Korea


5,784



6,557


(12) %

Japan


5,853



6,097


(4) %

Europe & Africa


4,105



5,192


(21) %

Hong Kong/Taiwan


2,602



3,054


(15) %

Total Sales Leaders


45,807



50,085


(9) %


(1)  The June 30, 2023 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.

(2)  The June 30, 2023 number reflects a modified Sales Leader definition, as described in our quarterly report on Form 10-Q.

  • "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,


2023


2022


2023


2022

Revenue

$

500,257


$

560,615


$

981,719


$

1,165,514

Cost of sales


135,542



148,100



269,130



309,599

Gross profit


364,715



412,515



712,589



855,915













Operating expenses:












Selling expenses


185,165



219,426



373,289



462,125

General and administrative expenses


137,044



141,562



270,943



290,118

Restructuring and impairment expenses






9,787



Total operating expenses


322,209



360,988



654,019



752,243













Operating income


42,506



51,527



58,570



103,672

Other expense, net


(5,393)



(8,640)



(6,869)



(10,093)













Income before provision for income taxes


37,113



42,887



51,701



93,579

Provision for income taxes


10,221



8,650



13,433



20,626













Net income

$

26,892


$

34,237


$

38,268


$

72,953













Net income per share:












Basic

$

0.54


$

0.68


$

0.77


$

1.45

Diluted

$

0.54


$

0.67


$

0.76


$

1.43













Weighted-average common shares outstanding (000s):












Basic


49,931



50,368



49,789



50,181

Diluted


50,161



50,960



50,098



50,959

 

NU SKIN ENTERPRISES, INC.

Consolidated Balance Sheets (Unaudited)

(U.S. dollars in thousands)






June 30,

2023


December 31,

2022

ASSETS




Current assets:




Cash and cash equivalents

$

235,554


$

264,725

Current investments


16,772



13,784

Accounts receivable, net


67,166



47,360

Inventories, net


372,250



346,183

Prepaid expenses and other


100,833



87,816

 Total current assets


792,575



759,868







Property and equipment, net


430,328



444,806

Operating lease right-of-use assets


94,707



98,734

Goodwill


229,469



206,432

Other intangible assets, net


112,619



66,701

Other assets


234,078



244,429

Total assets

$

1,893,776


$

1,820,970







LIABILITIES AND STOCKHOLDERS' EQUITY






Current liabilities:






Accounts payable

$

49,529


$

53,963

Accrued expenses


255,510



280,280

Current portion of long-term debt


140,000



25,000

 Total current liabilities


445,039



359,243







Operating lease liabilities


74,487



76,540

Long-term debt


367,753



377,466

Other liabilities


111,152



110,425

Total liabilities


998,431



923,674







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


615,579



613,278

Treasury stock, at cost – 40.6 million and 41.1 million shares


(1,557,777)



(1,569,061)

Accumulated other comprehensive loss


(101,446)



(86,509)

Retained earnings


1,938,898



1,939,497

Total stockholders' equity


895,345



897,296

Total liabilities and stockholders' equity

$

1,893,776


$

$1,820,970

 

NU SKIN ENTERPRISES, INC.
Reconciliation of Earnings Per Share Excluding Impact of Restructuring to GAAP Earnings Per Share
(in thousands, except for per share amounts)
















Three Months Ended
June 30,


Six Months Ended
June 30,



2023


2022


2023


2022

Net income


$

26,892


$

34,237


$

38,268


$

72,953

Impact of restructuring and impairment expense:













Restructuring and impairment



-



-



9,787



-

Tax impact



-



-



(2,593)



-

Impact of charges associated with our Q4 exit from Grow Tech:













Unrealized loss on investment



-



5,711






5,711

Tax impact



-



(459)






(459)

Adjusted net income


$

26,892


$

39,489


$

45,462


$

78,205



























Diluted earnings per share


$

0.54


$

0.67


$

0.76


$

1.43

Diluted earnings per share, excluding restructuring impact


$

0.54


$

0.77


$

0.91


$

1.53














Weighted-average common shares outstanding (000)



50,161



50,960



50,098



50,959

 

NU SKIN ENTERPRISES, INC.
Reconciliation of Earnings Per Share Excluding Impact of Restructuring to GAAP Earnings Per Share











Year ended December 31,




2023 - Low-end


2023 High-end


Earnings Per Share


$

2.15


$

2.45


Impact of Q1 restructuring and impairment expense:








Restructuring and impairment



0.20



0.20


Tax impact



(0.05)



(0.05)


Adjusted EPS


$

2.30


$

2.60


 

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SOURCE Nu Skin Enterprises

FAQ

What are Nu Skin Enterprises, Inc.'s (NYSE: NUS) Q2 2023 revenue results?

Nu Skin Enterprises, Inc. (NYSE: NUS) reported a revenue of $500.3 million for Q2 2023, a decrease of 11% from the prior-year quarter.

How did Nu Skin Enterprises, Inc. (NYSE: NUS) Q2 2023 revenue compare to the previous year?

The Q2 2023 revenue of Nu Skin Enterprises, Inc. (NYSE: NUS) decreased by 11% compared to the previous year.

What is the earnings per share (EPS) for Nu Skin Enterprises, Inc. (NYSE: NUS) in Q2 2023?

The EPS for Nu Skin Enterprises, Inc. (NYSE: NUS) in Q2 2023 was $0.54 compared to $0.67 in the previous year.

How many customers did Nu Skin Enterprises, Inc. (NYSE: NUS) have in Q2 2023?

Nu Skin Enterprises, Inc. (NYSE: NUS) had 1,041,118 customers in Q2 2023.

What is the outlook for Nu Skin Enterprises, Inc. (NYSE: NUS) in Q3 and full-year 2023?

The outlook for Nu Skin Enterprises, Inc. (NYSE: NUS) in Q3 and full-year 2023 projects a continued decline in revenue, with a negative foreign currency impact.

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