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Nu Skin Q1 Revenue Down 13% To $471.8 Million

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Nu Skin Enterprises , Inc. announced first-quarter results above guidance, with revenue of $471.8 million, compared to $543.3 million in the prior-year period.

Revenue was negatively impacted approximately 5 percent by foreign currency fluctuations.

Earnings per share for the quarter were $0.06, or $0.42 excluding a non-cash charge associated with a recent Japan customs ruling. This compares to earnings per share in the prior-year period of $0.60. The company also announced that it is raising its guidance for the year.

“Our first-quarter performance was in line with our expectations and we are optimistic about the impact of upcoming product launches, which began in April and will continue in the second quarter,” said Truman Hunt, president and chief executive officer.

“We are seeing an enthusiastic response to the introductions of ageLOC Youth and ageLOC Me, and we anticipate that these product launches will drive core business improvement throughout the remainder of 2016.”

The company’s operating margin was 1.7 percent, or 8.4 percent when excluding charges related to the Japan customs ruling, compared to 12.6 percent in the prior year. While the company has appealed the Japan customs ruling, a non-cash charge of $31.4 million, the full amount disputed, was recorded in the quarter.

Gross margin for the quarter was 70.8 percent, or 77.4 percent when excluding the customs expense, compared to 80.7 percent in the prior year. Both gross and operating margins were also negatively impacted by foreign currency fluctuations and lower revenue.

Selling expenses, as a percent of revenue, were 41.5 percent, compared to 43.1 percent in the first quarter of 2015. General and administrative expenses, as a percent of revenue, were 27.6 percent, compared to 25.0 percent in the prior-year period.

Foreign currency fluctuations were the primary reason for a loss of $2.9 million reported in other income/expense. The company’s effective income tax rate for the quarter was 37.3 percent, compared to 35.7 percent in the prior year.

Dividend payments during the quarter were $19.8 million and the company repurchased $20.0 million, or approximately 1 percent of its shares outstanding.

“We are in the early stages of a new product cycle and are looking forward to the continued roll out of ageLOC Me and ageLOC Youth in the second quarter, with additional product events scheduled in the back-half of the year,” said Hunt.

“In the second quarter, we have limited-time offers of ageLOC Me in Greater China and ageLOC Youth in South Asia, and we introduce ageLOC Me on a full-time basis in Japan,” concluded Hunt.  

“We expect constant-currency revenue growth of 6 to 8 percent in the second quarter and are raising our revenue guidance for the year to $2.16 to $2.20 billion, assuming a negative foreign currency impact of 4 to 5 percent,” said Ritch Wood, chief financial officer.

Regional Results

The company’s regional revenue results for the three-month periods ended March 31 are presented in the following table.

   

2016

 

2015

 

%
Change

 

Constant
Currency

% Change

                 

Greater China

 

158,711

 

187,367

 

(15.3%)

 

(11.7%)

North Asia

 

151,209

 

172,066

 

(12.1%)

 

(8.9%)

Americas

 

65,748

 

79,872

 

(17.7%)

 

(11.0%)

South Asia/Pacific

 

63,578

 

70,817

 

(10.2%)

 

(2.6%)

EMEA

 

32,585

 

33,210

 

(1.9%)

 

1.4%

                 

Total

 

$471,831

 

$543,332

 

(13.2%)

 

(8.7%)

 

The company’s regional actives and sales leader statistics are presented in the following table.

 

2016

 

2015

 

% Increase (Decrease)

   

Actives

 

Sales
Leaders

 

Actives

 

Sales
Leaders

 

Actives

 

Sales
Leaders

                         

Greater China

 

219,000

 

21,698

 

235,000

 

22,533

 

(6.8%)

 

(3.7%)

North Asia

 

353,000

 

15,820

 

386,000

 

16,984

 

(8.5%)

 

(6.9%)

Americas

 

164,000

 

6,901

 

177,000

 

7,164

 

(7.3%)

 

(3.7%)

South Asia/Pacific

 

110,000

 

6,772

 

120,000

 

7,060

 

(8.3%)

 

(4.1%)

EMEA

 

112,000

 

3,768

 

110,000

 

3,811

 

1.8%

 

(1.1%)

                         

Total

 

958,000

 

54,959

 

1,028,000

 

57,552

 

(6.8%)

 

(4.5%)

                         
                     
 

 

“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.

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