Nu Skin Enterprises, Inc. · NYSE:NUS
Nu Skin Enterprises — Q4 2012 Earnings Presentation
41 slides from Nu Skin Enterprises's earnings presentation, Jan 17, 2013
Slide 1: Nu Skin Enterprises
NU SKIN ENTERPRISES *
Slide 2: Safe Harbor Statement
* Safe Harbor StatementThis presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that represent the company's current expectations and beliefs. All statements
Slide 3: Sustaining Growth
SUSTAINING GROWTH *
Slide 4: Estimated Q4 2012 Results
ESTIMATED Q4 2012 RESULTS Revenue Q4 2014 Q4 2012 Q4 2011 Q4 2012
Slide 5: Estimated 2012 Results
Growth Rate 24.4%YOY Revenue $2.17 Billion EPS $3.49-3.51 2012 Estimated Operating Margin 15.7% * Estimated 2012 RESULTS
Slide 6: 2003–2012 Annual Revenue
Estimated Millions USD 2003 – 2012 ANNUAL REVENUE * 10 Yr. CAGR = 9.2%5 Yr. CAGR = 14.8%3 Yr. CAGR = 18.8%
Slide 7: 2007–2012 Earnings Per Share
33% CAGR Estimated 2007 – 2012 EARNINGS PER SHARE *Excludes restructuring and impairment of assets and other. ** Excludes impact of Japan customs case. *
Slide 8: 2007–2012 Cash From Operations
Estimated Millions USD 2007 – 2012 CASH FROM OPERATIONS * ~
Slide 9: Building on Solid Business Fundamentals to Sustain Long-Term Growth
We are building on SOLID BUSINESS FUNDAMENTALS to sustain LONG-TERM GROWTH *
Slide 10: Key Business Strengths Overview
Nu Skin leverages the direct selling channel to build a STRONG CONSUMER BASE and ACTIVE SALES NETWORKAGELOC: a compelling product platform with a ROBUST PRODUCT PIPELINEPRODUCT LAUNCH PROCESS delivers solid resultsInvesting in CHANNEL INNOVATIONExperienced MANAGEMENT and SALES LEADERS driving GROWTH
Slide 11: Direct Selling Channel Builds Strong Consumer Base and Sales Network
Nu Skin leverages the direct selling channel to build a STRONG CONSUMER BASE and ACTIVE SALES NETWORK *
Slide 12: Participating With Nu Skin: Consumer and Sales Network
30%Sales Network 60% PARTICIPATING WITH NU SKIN ExecutiveDistributor RetailCustomer PreferredCustomer Distributor CONSUMER NETWORK SALES NETWORK 70%Consumer Network 56% 50% * 15%
Slide 13: Direct Selling Definition and Advantages
* SOURCES: *U.S. Direct Selling Association (DSA) definition. **Word of Mouth Marketing Association (WOMMA). DIRECT SELLINGThe sale of a consumer product or service, person-to-person, away from a fixed retail location, marketed through independent sales representatives.* ADVANTAGESPerson-to-personAb
Slide 14: Direct Selling Participant Experience
* SOURCE: U.S. Direct Selling Association (DSA). 85% OF DIRECT SELLING PARTICIPANTS REPORT GOOD, VERY GOOD,OR EXCELLENTEXPERIENCE WITH DIRECT SELLING 77% OF DIRECT SELLING PARTICIPANTS HAVE BEEN WITH THEIR COMPANY FOR MORE THAN A YEAR PURCHASED PRODUCTS OF U.S. ADULTS HAVE 74% FROM A DIRECT SELLER I
Slide 15: Global Direct Selling Participants and Retail Sales
92 MILLION Involved in directselling worldwide 19% 2010 * SOURCE: World Federation of Direct Selling Associations (WFDSA) $153 BILLION In 2011 global retail sales generated 8% 2011 8% CAGR 1998-2011 22 MARKETS generated > $1 BILLION WORLDWIDE…
Slide 16: Nu Skin's Consumer Base
NU SKIN'S CONSUMER BASE * More than 70% of our sales volume is sold to our consumer network CONSUMER NETWORK 85% 85% of the people who purchase from Nu Skin never join the sales network
Slide 17: U.S. Regulatory Reviews
U.S. REGULATORY REVIEWS 1994 & 1997 FTC Formal reviewsMinor modifications to business practicesNo changes to our core compensation plan28-year history – operating in more than 50 countries *
Slide 18: U.S. Consumer Protective Practices
U.S. CONSUMER PROTECTIVE PRACTICES Generous Company Return Policies12-month 90% refund policyNo cancellation of distributorship to return products Return rate averages 3-5% of salesDistributor Participation PoliciesNo product purchase required $25 refundable signup kit to become a distributor (non-c
Slide 19: U.S. Consumer Protective Policies (cont.)
U.S. CONSUMER PROTECTIVE POLICIES (cont.) Full DisclosureAverage earnings summary – Nu Skin has disclosed average income levels for over 20 years in a very conservative fashionCompany integrityRecognized by BBB (A+ rating)BBB accredited since 198621 BBB inquiries in 3 yearsAbide by DSA Code of Ethic
Slide 20: Balance Between Personal Care and Nutrition
BALANCE BETWEEN PERSONAL CARE AND NUTRITION ~50% ~50% *
Slide 21: ageLOC
O) OGeLoc
Slide 22: ageLOC Product Pipeline
repair 2017 PersonalizationNutrition Kappa revitalize 2015 PersonalizationSkin Care Delta restage 2012-18 remodel Gamma 2013 Weight Management restore Alpha 2015 Healthy Aging Applying ageLOC science to existing products recharge/renew R2/Body Galvanic 2011 Cell Renewal/Body Treatment Galvanic Spa 2
Slide 23: The ageLOC Gamma System
* At the core of this system will be a collection of clinically proven weight management products. * THE AGELOC GAMMA SYSTEM
Slide 24: Compelling Product Launch Cycle Creating Strong Growth
The Company has developed aCOMPELLING PRODUCT LAUNCH CYCLE that is CREATING STRONG GROWTH *
Slide 25: Two-Year Launch Cycle
TWO-YEAR LAUNCH CYCLE * 2009 2011 2013 2015 2017 DELTA GAMMA ALPHA 2007
Slide 26: Nu Skin Product Two-Year Launch Cycle Phases
PHASE 3:Product Roll-out & Channel Growth PHASE 2:Market LTO& Channel Growth PHASE 1:Global LTO& Channel Growth NU SKIN PRODUCT TWO-YEARLAUNCH CYCLE *
Slide 27: Management and Sales Leaders Driving Growth in Every Region
Nu Skin's experienced MANAGEMENTand SALES LEADERS are driving GROWTH in every geographic region *
Slide 28: Japan Revenue Trend
2003 - 2012 LOCAL CURRENCY REVENUE TREND -5.25% CAGR JAPAN REVENUE TREND IN JAPAN (YOY) Projecting 5.6% growth in 2012Body Galvanic Spa LTO - Q4 2012 (revenue +27%)Modeling 1-3% revenue growth in 2013 * *Includes negative impact of ~3% from natural disasters in March 2011
Slide 29: South Korea
ACTIVES/SALES LEADERS GROWTH 18.9% CAGR Body Galvanic Spa LTO – Q4 2012 Improving revenue trends in H2 2012Estimated 8% local currency revenue growth in 2012Modeling 10-12% revenue growth in 2013 * SOUTH KOREA
Slide 30: Americas
ageLOC TFEU LTO – Q4 2012 Estimated 19% U.S. growth in 2012 (excluding $12.5 million of convention sales to int'l dist. in 2011)Latin America estimated 75% revenue growth in 2012Modeling 12-15% revenue growth in 2013 9.5% CAGR 2003 - 2012 USD REVENUE TREND * AMERICAS
Slide 31: South Asia / Pacific
Expansion into Vietnam in Q3 2012Estimated 2012 revenue = $330 million Modeling 5-10% revenue growth in 2013 4 2012SALES 17.7% CAGR SOUTH ASIA / PACIFIC *
Slide 32: EMEA
Estimated 25% local currency growth in 2012Body Galvanic Spa LTO - Q1 2012 R2 LTO - Q4 2012Modeling 12-15% revenue growthin 2013 20.4% CAGR EMEA *
Slide 33: Greater China and Mainland China
Mainland China rapidly growing direct selling marketGreater China HQ to be completed in 2013Estimated 60% revenue growth in 2012Modeling 15-18% revenue growth in 2013 * REVENUE TREND IN MAINLAND CHINA 17.3% CAGR GREATER CHINA 55% CAGR
Slide 34: Nu Skin Will Continue to Demonstrate Strength Through Solid Results
Nu Skin will continue to demonstrate the STRENGTH of its business through SOLID RESULTS *
Slide 35: Key Investments
Latin America development 4 Channel innovation and infrastructure 3 2 Product discovery and development KEY INVESTMENTS * Global sales force incentives 1
Slide 36: 2007–2013 Operating Margin
*Excludes restructuring and impairment of assets and other. Estimated Projected ** Excludes impact of Japan customs case. 2007 – 2013 OPERATING MARGIN * Improvement in operating margin back-half weighted
Slide 37: 2013 Cash Flow Modeling
2013 CASH FLOW MODELING * 2012 2013 D&A $34 MM $38 - $42 MM Stock option expense $22 MM $23 - $26 MM Capital expense $100 MM $130 - $150 MM Debt payments $26 MM $40 MM Dividends $50 MM $75 MM
Slide 38: Increasing Dividend History
16.1% CAGR INCREASING DIVIDEND HISTORY * Projected
Slide 39: Stock Repurchase Activity
$200 MM (4.5 MM shares or 7% of outstanding shares)Weighted average purchase price of <$44. Outstanding shares repurchased per year ~2% Average share purchase price $21.43 Average shares purchased per year 2.3 MM * 2004 - 2011 2012 STOCK REPURCHASE ACTIVITY
Slide 40: Sustaining Growth Summary
Nu Skin leverages the direct selling channel to build a STRONG CONSUMER BASE and ACTIVE SALES NETWORKAGELOC: a compelling product platform with a ROBUST PRODUCT PIPELINEPRODUCT LAUNCH PROCESS delivers solid resultsInvesting in CHANNEL INNOVATIONExperienced MANAGEMENT and SALES LEADERS driving GROWTH
Slide 41: GAAP Reconciliation
2007 2008 2009 2010 2011 Gross Margin 81.9% 81.7% 81.7% 82.3% 81.5% Percentage impact of Japan customs ruling 0.0% 0.0% 0.0% 0.0% 1.9% Gross Margin excluding Japan customs ruling 81.9% 81.7% 81.7% 82.3% 83.4% Operating Margin 6.1% 10.1% 11.1% 14.1% 13.4% Percentage impact of restructuring 1.7% 0.0%