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Nu Skin (NUS) Q3 Earnings Beat Estimates, Revenues Down

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Nu Skin Enterprises, Inc. (NUS - Free Report) delivered third-quarter 2021 results, with the top and the bottom line beating the Zacks Consensus Estimate. However, revenues and earnings declined year over year. Quarterly performance was hurt by disruptions caused by the COVID delta variant. Based on the third-quarter results, management revised its 2021 guidance downward.

The company is optimistic about the ongoing launch of Collagen+ and ageLOC Meta products during the fourth quarter. Management is on track to introduce EmpowerMe, a personalized beauty and wellness strategy with connected beauty devices. Nu Skin is also committed to improve the adoption of its affiliate-powered social commerce business model, while expanding its digital presence.

Q3 Highlights

Nu Skin reported quarterly earnings of 97 cents a share, which beat the Zacks Consensus Estimate of 86 cents. However, the metric declined 10% from $1.08 per share reported in the year-ago quarter.

Revenues of $641.2 million fell 9% year over year on a reported basis. Revenues included a positive impact of 2% from foreign-currency fluctuations. On a constant-currency (cc) basis, revenues declined 11%. Management highlighted that revenues were lower than anticipated owing to the disruptions caused by the spread of the COVID delta variant. This led to unexpected government restrictions hindering selling as well as promotional activities across various markets, especially Mainland China and Southeast Asia. That said, the company was impressed by continued growth in the United States on the back of the Beauty Focus Collagen+ launch. Also, double-digit growth in Korea driven by product promotions and sales leader initiatives were a breather. The top line surpassed the Zacks Consensus Estimate of $639.2 million.

Nu Skin Enterprises, Inc. Price, Consensus and EPS Surprise

 

Nu Skin Enterprises, Inc. Price, Consensus and EPS Surprise

Nu Skin Enterprises, Inc. price-consensus-eps-surprise-chart | Nu Skin Enterprises, Inc. Quote


Sales leaders were down 15% year over year to 58,565. Nu Skin’s customer base dropped 9% to 1,395,271.

Gross profit of $482.2 million decreased from almost $520 million reported in the year-ago quarter. Gross margin expanded year over year from 73.9% to 75.2%. Nu Skin business’ gross margin expanded to 78.6% from 76.3% driven by favorable product mix, product cost declines as well as supply chain efficiencies.

Selling expenses declined from $280.7 million in the prior-year quarter to $255.7 million. As a percentage of sales, the metric came in at 39.9% and remained flat year over year. Nu Skin business’ selling expenses were 42.7% of sales, up from 42.4% in the year-ago quarter.

General and administrative expenses of $161.1 million decreased from $165.1 million in the year-ago quarter. The company’s effective expenses management contributed to the upside. As a percentage of sales, general and administrative expenses expanded from 23.5% to 25.1%.

Operating income of $65.4 million declined from $74.2 million in the year-ago quarter. Further, operating margin was 10.2%, down from 10.6% reported in the year-ago quarter.

Segmental Results

Segment-wise, revenues (at cc) declined 26% in Mainland China, 2% in Americas, 23% in Southeast Asia/Pacific, 11% in EMEA, 5% in Japan and 8% in Hong Kong/Taiwan. The same increased 8% in South Korea at cc. Total Nu Skin revenues of $598.6 million fell 11% at cc from the prior-year quarter’s figure of $662.4 million.

The company benefited from impressive revenue growth in the Grow Tech business at cc. Revenues in the Manufacturing business increased 2% at cc.

Other Financial Details

Nu Skin ended the quarter with cash and cash equivalents of $282.4 million, long-term debt of $278.6 million and total stockholders' equity of $936.5 million.

During the reported quarter, the company paid out dividends of $19 million and repurchased $10 million worth of shares. With this, it currently has $255.4 million remaining under the current share repurchase authorization.

In a separate press release, Nu Skin announced a dividend of 38 cents per share payable on Dec 8, 2021, to shareholders of record as of Nov 26.

Zacks Investment ResearchImage Source: Zacks Investment Research

Guidance

Based on the third-quarter results, management adjusted its 2021 guidance downward. The company now anticipates 2021 revenues in the range of $2.67-$2.70 billion, which calls for an increase of 3-5% year over year. The metric was previously expected in the range of $2.81-$2.87 billion, suggesting an increase of 9-11% year over year. The company envisions a favorable currency impact of 2-3% on 2021 revenues.

Management now expects 2021 earnings per share (EPS) in the range of $3.93-$4.03, indicating an increase of 8-11%. Earlier, the company had projected EPS within $4.30-$4.50, suggesting a rise of 18-14%.

For the fourth quarter of 2021, the company projects revenues of $645-$675 million that includes unfavorable currency impacts of nearly 1%. The projection suggests a decline of 10-14% from the year-ago quarter’s level. Quarterly EPS is anticipated between 90 cents and $1.00, indicating 29-36% slump from the year-ago quarter’s levels.

The Zacks Rank #5 (Strong Sell) stock has slumped 25.5% in the past three months compared with the industry’s 18.2% decline.

Top 3 Picks

Inter Parfums, Inc. (IPAR - Free Report) , currently sporting a Zacks Rank #1 (Strong Buy), has a trailing four-quarter earnings surprise of 25.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

e.l.f. Beauty (ELF - Free Report) , currently carrying a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 48.9%, on average.

Helen of Troy (HELE - Free Report) , currently carrying a Zacks Rank #2, has a trailing four-quarter earnings surprise of 19.8%, on average.

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