Nu Skin third quarter revenues increase 15% to record $383.6 million

Nu Skin Enterprises, Inc. (NYSE: NUS) today announced record third-quarter results, with revenue of $383.6 million, a 15 percent improvement over the prior-year period. Quarterly revenue was positively impacted 4 percent by foreign currency fluctuations. Earnings per share for the quarter were $0.55, a 38 percent improvement over the prior year.

"Our ageLOC anti-aging platform gives us a long-term competitive advantage with highly innovative anti-aging solutions in both skin care and nutrition," said Truman Hunt, president and chief executive officer. "We have now rolled out the ageLOC Transformation skin care system in all of our markets and are generating strong, sustained revenue growth worldwide. We are particularly pleased with the emerging markets of South Asia/Pacific and Mainland China where we posted local currency revenue gains of 43 percent and 29 percent, respectively."

"In September we also initiated a limited-time offer of our first ageLOC nutritional product, ageLOC Vitality, generating very encouraging results in Japan and the United States. Both markets experienced revenue trend improvements during the quarter, benefiting from distributor enthusiasm surrounding the new ageLOC Vitality product."

Regional Results

North Asia. Third-quarter revenue in North Asia grew 12 percent to $170.5 million, compared to $152.4 million for the same period in 2009. Revenue was positively impacted 8 percent by foreign currency fluctuations. Local-currency revenue increased 20 percent in South Korea, offsetting a 2 percent local currency decline in Japan. The number of executive and active distributors in the region was up 3 percent and 1 percent, respectively, compared to the prior year.

Americas. Third-quarter revenue in the Americas was $63.7 million, compared to $61.3 million for the prior year. Revenue in the United States improved 8 percent, offsetting local currency declines of 5 percent in Canada, and 23 percent in Latin America. The number of executive distributors in the region increased 2 percent compared to the prior year, while the number of active distributors declined 4 percent.

Greater China. Revenue in Greater China improved 16 percent to $63.3 million for the quarter, and was positively impacted 2 percent by foreign currency fluctuations. Local-currency revenue in Mainland China improved 29 percent, while Taiwan and Hong Kong revenue improved 8 percent and 6 percent, respectively, over the prior-year period. The executive distributor count in the region increased 16 percent and the number of active distributors improved 12 percent.

South Asia/Pacific. Revenue in South Asia/Pacific was $50.2 million for the third quarter, a 55 percent improvement over the prior year. Regional results were driven by solid performances in all markets and were positively impacted 12 percent by foreign currency fluctuations. The region's third-quarter executive count improved 35 percent, while the active distributor count increased 13 percent.

Europe. Third-quarter revenue in Europe was $35.7 million, a 6 percent improvement over the prior year. Results in the region were negatively impacted approximately 9 percent by foreign currency fluctuations. Executive and active distributor counts in the region increased 11 percent and 10 percent, respectively, compared to the prior year.

Operational Performance

The company's operating margin improved to 13.8 percent, compared to 12.3 percent in the prior year. Gross margin also improved during the quarter to 82.1 percent, representing a 70 basis-point improvement, primarily as a result of sales of higher-margin products and stronger foreign currencies against the U.S. dollar. Selling expenses, as a percent of revenue, were 42.3 percent, a 30 basis-point increase over the prior year. General and administrative expenses, as a percent of revenue, were 25.9 percent, a 90 basis-point improvement over the prior year as the company continues to leverage revenue growth to improve profitability.

The company's income tax rate for the quarter was 32.4 percent, consistent with the prior year period. Dividend payments during the quarter were $7.7 million and the company repurchased $10.7 million of its outstanding shares.

Outlook

"Given our strong performance, we are on pace to post another year of record revenue and earnings," said Hunt. "We are creating healthy growth with our ageLOC anti-aging platform, generating solid gains in our global business and making steady improvements in operational efficiency.

"The catalyst for our growth over the past few years has been the infusion of ageLOC anti-aging science into our skin care line. We are now taking the battle against aging 'inside' with the introduction of ageLOC Vitality. Recognizing that one of the first signs of aging is diminished energy levels, ageLOC Vitality is scientifically formulated to promote healthy gene activity associated with youthful energy production. The initial reaction to our limited-time offering of ageLOC Vitality was very promising, and we look forward to broadening distribution during the fourth quarter," concluded Hunt.

"We are raising our 2010 projected revenue and earnings per share guidance to $1.52 to $1.53 billion and $2.04 to $2.07, respectively," said Ritch Wood, chief financial officer. "We expect currency to benefit revenue about 1 to 2 percent in the fourth quarter and project revenue in the $388 to $398 million range with earnings per share in the $0.51 to $0.54 range. On November 18, we will be hosting our annual investor day and look forward to providing more detail on our business plans as well as our 2011 financial projections," concluded Wood.

SOURCE Nu Skin Enterprises, Inc.