NU SKIN ENTERPRISES 1

Transcription

1 NU SKIN ENTERPRISES

2 Q HIGHLIGHTS GLOBAL REVENUE (in millions) $500 $450 $462.0 $400 $396.0 US Dollar Growth = 17% Local currency growth = 16% $350 FX benefit = 1% $300 $250 Q1 11 Q1 12

3 Q HIGHLIGHTS EARNINGS PER SHARE $0.80 OPERATING MARGIN 16% $0.70 $ % 15% $0.60 $0.50 *$ % 14.6% $ % $0.30 $0.20 Q Q % Q Q * Excludes $33 MM of charges related to a Japan customs ruling GAAP EPS = $0.24, Op Margin 6.3%

4 MAY 2 INCREASE STOCK REPURCHASE $250 million stock repurchase increase

5 MAY 7 GC/SEA SUCCESS $150 million in launch sales in Greater China and Southeast Asia Raised annual guidance by $40 million (increase EPS of $0.06)

6 COMMON QUESTIONS

7 Distributor-Direct Retail Customer these people purchase products directly from a Nu Skin distributor. Company-Direct Retail or Preferred Customer these people enjoy the benefits of our products but cannot build a Nu Skin business; preferred customers generally sign-up to receive Nu Skin products as part of a recurring monthly subscription. Approximately 50 percent of those who join Nu Skin directly do so as a retail or preferred customer in the U.S. Distributor those who sign up as a distributor purchase products at a wholesale discount for personal consumption or for resale. These people do not receive compensation on a multi-level basis. Approximately 44 percent of those who join Nu Skin do so as a distributor in the U.S. Executive Distributor people in this group have the intention of recruiting and building an active sales team. These individuals constitute Nu Skin s sales network. About 6 percent of those who join Nu Skin in the U.S. enter the process to become an executive distributor at the time they join the company. Additionally, approximately 10 percent of those who join Nu Skin as a customer or distributor subsequently decide to enter the process to become an executive distributor.

8 Nu Skin s sales network is comprised of (1) executive-level distributors and (2) those trying to qualify to become an executivelevel distributor. About 16 percent of those who sign up with Nu Skin choose to qualify for this sales network. We consider these distributors to be in our sales network because they are the only distributors who: Have declared their intention to build a sales network, Are eligible to receive commissions on a multi-level basis, and Are actively recruiting both customers and distributors. By contrast, Nu Skin s consumer network is comprised of (1) distributor-direct retail customers, (2) company-direct retail or preferred customers, and (3) non-executive distributors who are essentially wholesale consumers purchasing for personal consumption or resale. Those in our consumer network are not actively recruiting others into the business. Each month, an average of only 2 percent of those in the consumer network recruit a new preferred customer or distributor. On the other hand, our sales network is actively recruiting new customers and distributors. This reflects the fact that only those in the sales network are paid on a multi-level basis.

9 Seventy percent of our sales volume is derived from sales to company-direct retail and preferred customers, as well as distributors within our consumer network. Our sales network also resells products to distributor-direct retail customers. This volume is not included in the 70 percent calculation.

10 People earn money in two ways: (1) by reselling Nu Skin products to end consumers, and (2) by earning commissions on products sold to their consumer network and through their sales network. Nu Skin pays commissions solely for product sales and not for recruiting others. The company pays approximately 43 percent of its product revenue in commissions and incentives, with a record $751 million in commissions and incentives paid in Since its inception in 1984, Nu Skin has paid more than $8.5 billion in commissions and incentives. These sums do not include retail profit when products are resold to end consumers. *The $751 million in commissions and incentives paid in 2011 and the $8.5 billion in commissions and incentives paid since 1984 include compensation paid to our China sales force under a different business model.

11 In a multi-level compensation plan, people are compensated for their own product sales and the product sales of their sales network. Virtually every direct selling company employs a form of multi-level compensation. Any business that provides overrides to sales managers could also be considered a multi-level sales structure, whether or not they are involved in the direct sales industry. In Nu Skin s multi-level structure, commissions are only paid when a product is sold.

12 GROWTH DRIVERS Strong Product Portfolio Sales Force Expansion Emerging Market Opportunity Profitability Improvements Strong Cash Position

13 STRONG PRODUCT PORTFOLIO NUTRITION PERSONAL CARE 45% Q Sales 55%

14 PRODUCT PORTFOLIO HIGHLIGHTS New ageloc product line is already a $1 billion brand ( ) Acquired LifeGen Technologies genetic research facility in Q New Innovation Center coming on line Q Committed to premium products that are demonstrable, innovative, and science-based

15 ageloc: LONG-TERM GROWTH POTENTIAL renew rejuvenate recharge/ renew Skin Treatment Daily Skin Care Cell Renewal/ Body Treatment Galvanic Spa 2007 Transformation 2009 recharge Cellular Energy Vitality R 2 /Body Galvanic restore Longevity Alpha 2015 Weight remodel Gamma 2013 Management reverse Tissue Repair Delta regenerate Personalization Kappa Applying ageloc science to existing products restage $250 M $175 M $100 M $100+ M

16 ageloc BODY GALVANIC SPA Minimizes the appearance of cellulite for a slimmer looking body Provides the body with a smooth, contoured appearance, and improves appearance of skin firmness Energizes, purifies, and moisturizes the skin Q launch in Americas and Pacific

17 ageloc R 2 Night: Purifies and restores cells while you sleep. Wake up feeling refreshed and renewed. Day: Kick-starts cells for maximum energy production, leaving you recharged and ready for the day. Q launch in North Asia Q launch in GC and SEA

18 GLOBAL PRODUCT LAUNCH SCHEDULE Japan Q1 Q2 Q3 Q4 Q1 Q2 Korea Greater China Americas South Asia/Pacific Pacific launch only EMEA Pre-Launch LTO Launch

19 GROWTH DRIVERS 1 2 Strong Product Portfolio Sales Force Expansion

20 REVENUE GROWTH MODEL ACCELERATED REVENUE GROWTH ACTIVE DISTRIBUTORS RATE OF PRODUCTIVITY RECRUITING RETENTION RATE OF PRODUCTIVITY

21 DISTRIBUTOR GROWTH 850,000 Good indicator of health of business 8% Active growth in Q % Executive growth in Q , , , ,000 45,000 40,000 35,000 30,000 25,000 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 ACTIVE EXECUTIVE 20,000 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12

22 Executive Distributors GLOBAL BUSINESS PROFILE 45,000 $500,000 41,000 Executives Revenue $450,000 37,000 33,000 $400,000 $350,000 Sales in Thousands USD 29,000 $300,000 25,000 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Q1 11 Q3 11 Q1 12 $250,000

23 SUBSCRIPTION PROGRAM RECURRING REVENUE AS A PERCENT OF SALES % 56%

24 GROWTH DRIVERS Strong Product Portfolio Sales Force Expansion Emerging Market Opportunity

25 GROWTH IN EMERGING MARKETS AS A PERCENT OF REVENUE 30.0% 27% Mainland China 25.0% 22% Southeast Asia Eastern Europe Central & South America 20.0% 15.0% 10.0% 18% 5.0% 0.0%

26 GREATER CHINA USD REVENUE TREND Tremendous opportunity as Mainland China continues to expand Substantial new product launch expected in Q Active Distributor Trend in Mainland China (YOY) 60% 49.5% 47.0% 41.9% 40% 36.9% 28.1% 28.0% 29.9% 24.7% 20% 14.7% 0% Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12

27 SOUTH ASIA / PACIFIC USD REVENUE TREND Key drivers include weight management and ageloc 33.8% CAGR since 2008 R 2 Q % 12% 28% 9% Singapore 17% Malaysia 2011 SALES 28% 4 Thailand Philippines Australia/New Zealand Indonesia

28 GROWTH DRIVERS Strong Product Portfolio Sales Force Expansion Emerging Market Opportunity Profitability Improvements

29 *Excludes restructuring and impairment of assets and other. ** Excludes impact of Japan customs case Q1 12 OPERATING MARGIN 18.0% 16.0% 15.3% 15.5% 14.0% 14.1% 12.0% 11.9% 10.0% 10.1% 8.0% 7.8% 6.0% 4.0% 2.0% 0.0% 2007* * ** Q1 2012

30 * Excludes impact of Japan customs case OPERATING MARGIN FACTORS 16.0% +6.2% 15.3% 12.0% +1.5% 8.0% 7.8% -0.2% 4.0% 0.0% FY 2007 Gross Margin* Selling Exp. G&A FY 2011*

31 *Excludes restructuring and impairment of assets and other. ** Excludes impact of Japan customs case EARNINGS PER SHARE $3.00 $2.69 $2.50 $2.11 $2.00 $1.50 $1.51 $1.00 $0.75 $1.02 $0.50 $ * * **

32 GROWTH DRIVERS Strong Product Portfolio Sales Force Expansion Emerging Market Opportunity Profitability Improvements Strong Cash Position

33 Millions USD CASH FROM OPERATIONS $250 $224 $200 $188 $150 $134 $100 $103 $50 $49 $

34 UTILIZE CASH FLOW TO CREATE SHAREHOLDER VALUE: STRONG BALANCE SHEET (in millions USD) $300 $250 $200 $150 $100 $50 Cash Debt

35 INCREASING DIVIDEND HISTORY $0.80 $0.80 $ % $0.60 $0.59 $0.50 $0.40 $0.30 $0.20 $0.20 $0.24 $0.28 $0.32 $0.36 $0.40 $0.42 $0.44 $0.46 $0.50 $0.10 $ Projected

36 STOCK REPURCHASE ACTIVITY ~$48 MM Average purchase amount per year 2.3 MM $21.43 ~2% Average shares purchased per year Average share purchase price Outstanding shares repurchased per year FY 2011 Repurchased $66 MM (1.9 MM shares) at a weighted average price of $35.08

37 THIS PRESENTATION INCLUDES SOME FORWARD LOOKING STATEMENTS. THESE STATEMENTS INVOLVE RISKS AND UNCERTAINTIES AND ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE DISCUSSED OR ANTICIPATED. WE ENCOURAGE YOU TO REFER TO OUR SEC FILINGS FOR A COMPLETE DISCUSSION OF THESE RISKS. ALSO, CERTAIN FINANCIAL NUMBERS MAY BE DISCUSSED THAT DIFFER FROM COMPARABLE NUMBERS OBTAINED IN OUR FINANCIAL STATEMENTS. WE BELIEVE THESE NON-GAAP FINANCIAL NUMBERS ASSIST MANAGEMENT AND INVESTORS IN EVALUATING AND COMPARING PERIOD TO PERIOD RESULTS IN A MORE MEANINGFUL AND CONSISTENT MANNER.

38 GAAP RECONCILATION Q1 & FY2011 Q1 & Annual 2011 In millions of US$ (except per share data) Q1 FY Q1 Annual 2011 % 2011 % Revenue % 1, % Return on invested capital 10.4% 22.5% Cost of Sales % % Gross Margin % 1, % Return on equity 13.1% 26.7% Operating Expenses Return on asset 7.1% 15.5% Selling Expenses % % General & Administrative % % Working capital as a % of revenue 14.3% Asset Impairment - 0.0% - 0.0% Restructuring Costs - 0.0% - 0.0% Days of inventory supply Total Operating % 1, % Trailing four quarter revenue $ 1,569 $ 1,744 Operating Income % % Other Income (0.5) -0.1% (7.0) -0.4% Average four quarter revenue growth 12.5% Income Before Tax % % Income Taxes % % Gross margin 74.6% 81.5% Net Income % % Distributor Incentives (%) 42.7% 43.1% Millions of Shares O/S Diluted EPS G&A (%) 25.6% 25.0% Interest expense Operating margin 6.3% 13.4% Depreciation Amortization Net income margin 3.9% 8.8% FAS 123R Equity Compensation Trailing four quarters EPS $ 1.87 $ 2.38 EBTIDA EBTIDAR EBITDA/Revenue 8.5% 15.2% Income Tax Rate 37.5% 32.4% EBITDAR/Revenue 9.5% 16.0%