Nu Skin Q2 Revenue Up 7% To $600.5 Million

 

Nu Skin Enterprises, Inc. (NYSE: NUS) today announced second-quarter results with revenue above guidance at $600.5 million, compared to $560.2 million in the prior-year period.

Quarterly revenue improved 7 percent, or 10 percent on a constant-currency basis. Earnings per share for the quarter were $0.79 compared to $0.75 in the prior-year period. Earnings were negatively impacted $0.13 per share due to foreign currency translation charges recorded in other income/expense.

We are pleased with our second-quarter results and remain optimistic about the future as we continue to introduce our latest ageLOC products, said Truman Hunt, president and chief executive officer.

During the quarter, we held significant product introduction events in South Asia/Pacific and Greater China, generating revenue growth of 36 and 18 percent, respectively. We are also encouraged with the increase in sales leaders during the quarter, a reflection of the strength of our product launches.

Regional Results

The company's regional revenue results for the three-month periods ended June 30 are presented in the following table.

		2016		2015		% Change		Constant Currency % Change
Greater China		$         236,716		$         200,136		18%		24%
North Asia		165,885		172,943		(4%)		(6%)
Americas		67,884		83,468		(19%)		(15%)
South Asia/Pacific		92,297		68,023		36%		42%
EMEA		37,693		35,639		6%		5%
Total		$         600,475		$         560,209		7%		10%

The company's regional revenue results for the six-month periods ended June 30 are presented in the following table.

		2016		2015		% Change		Constant Currency % Change
Greater China		$        395,427		$        387,503		2%		7%
North Asia		317,094		345,009		(8%)		(7%)
Americas		133,632		163,340		(18%)		(13%)
South Asia/Pacific		155,875		138,840		12%		19%
EMEA		70,278		68,849		2%		3%
Total		$      1,072,306		$      1,103,541		(3%)		1%

The Company's regional actives and sales leaders statistics are presented in the following table.

			As of June 30, 2016						As of June 30, 2015					% Increase (Decrease)
			Actives			Sales Leaders		Actives			Sales Leaders			Actives		Sales Leaders
Greater China			257,000			31,554		215,000			25,956			19.5%		21.6%
North Asia			356,000			16,128		387,000			16,991			(8.0%)		(5.1%)
Americas			165,000			6,515		180,000			7,892			(8.3%)		(17.4%)
South Asia/Pacific			113,000			7,747		120,000			7,279			(5.8%)		6.4%
EMEA			121,000			4,168		113,000			4,042			7.1%		3.1%
Total			1,012,000			66,112		1,015,000			62,160			(0.3%)		6.4%
Actives 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.

Operational Performance

The company's operating margin improved to 13.3 percent, compared to 12.8 percent in the prior-year period. Gross margin for the quarter was 78.7 percent, compared to 80.3 percent in the prior-year quarter. Both gross and operating margins continued to be negatively impacted by foreign currency fluctuations.

Selling expenses, as a percent of revenue, were 41.4 percent, compared to 42.7 percent in the second quarter of 2015. General and administrative expenses, as a percent of revenue, were 24.0 percent, compared to 24.8 percent in the prior-year period. The company's effective income tax rate for the quarter was 35.0 percent, compared to 35.3 percent in the second quarter of last year. Dividend payments during the quarter were $19.9 million, and the company repurchased $4.3 million of its outstanding shares, with $422.7 million remaining in the authorized share repurchase plan at the end of the quarter.

Outlook

We are pleased with the solid results of our product launches and growth of our sales force in the second quarter, which we believe will positively impact our business going forward, said Hunt. In July, we executed a highly successful introduction of ageLOC Youth in South Korea, and we look forward to new product initiatives in all of our regions throughout the remainder of the year.

Our balance sheet continues to be strong, boosted by positive cash flow from operations for the quarter of $139 million, with continued improvements to our inventory balance. Our cash balance includes approximately $200 million of proceeds from the recent investment by Ping An Securities during the second quarter, which we plan to deploy in repurchasing shares over the balance of the year, concluded Hunt.

We are pleased with our results this quarter and are raising our revenue guidance for the year to $2.20 to $2.24 billion, assuming a negative foreign currency impact of 2 to 3 percent, said Ritch Wood, chief financial officer. For the third quarter, we project revenue of $560 to $580 million including a negative currency impact of 1 to 2 percent. We project third-quarter earnings per share of $0.80 to $0.84, and full-year earnings per share of $2.44 to $2.54, or $2.80 to $2.90 when excluding a $0.36 per share non-cash Japan customs charge taken in the first quarter.

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 in more than 50 markets worldwide. 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.

Since its introduction in 2008, the ageLOC brand has generated more than $5 billion in sales, and built 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. 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.