Financial Data and Key Metrics Changes - Revenue increased by 15% to $704.1 million, positively impacted by 6% due to favorable foreign currency [22][24] - Earnings per share improved by 42% to $1.15, benefiting from improved gross margin and overall cost containment [22][24] - Gross margin improved by 80 basis points to 75.6%, driven by product mix, product cost focus, and supply chain efficiencies [23][24] Business Line Data and Key Metrics Changes - Beauty device systems now account for approximately 30% of total revenue, with the launch of ageLOC Boost contributing to this growth [13][14] - Nutricentials Bioadaptives performed well, targeting millennial and Gen Z consumers [13] - The company plans to introduce Beauty Focus Collagen+ and ageLOC Meta in the second half of the year, expanding its product offerings [14][50] Market Data and Key Metrics Changes - The Western segments accounted for approximately 40% of total revenue, with strong growth in the Americas-Pacific region [9][18] - EMEA market showed excitement for ageLOC Boost, with social commerce driving business growth [19] - Southeast Asia faced challenges due to COVID-19, but revenue and sales leader growth were observed in Indonesia [21] Company Strategy and Development Direction - The company aims to become a leading innovative beauty and wellness company through a dynamic affiliate opportunity platform [12][22] - Focus on social commerce and leveraging micro-influencers to build brand awareness and acquire customers [15][16] - Investment in digital tools and connected devices to enhance customer engagement and personalization [10][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the transition to a more customer-obsessed enterprise [6][9] - The company is well-positioned to leverage macro trends and shifts in consumer behavior [6][11] - Management acknowledged challenges in certain markets but remains confident in growth potential [19][21] Other Important Information - The company established aggressive sustainability goals focusing on people, product, and planet [8] - Cash from operations was $20 million, with strategic investments in inventory to meet customer demand [24] - Annual revenue guidance was raised to $2.81 billion to $2.87 billion, with EPS guidance increased by $0.20 to a range of $4.30 to $4.50 [25] Q&A Session Summary Question: What is driving the geographic mix shift out of Asia into Western markets? - Management indicated that social commerce is propelling growth in the West, while adaptation in the East is taking longer [28][29] Question: How should we think about customer numbers and retention? - Management noted that customer numbers were impacted by tough comparisons year-over-year, particularly in Southeast Asia and Argentina [34][36] Question: Can you provide insights on the data captured through the affiliate model? - Management emphasized the importance of data collection for future growth, focusing on personalization and connected devices [37][39] Question: What is driving the improvement in gross margin? - Management attributed gross margin improvements to better product costs, product mix, and supply chain efficiencies [44][46] Question: What are the expectations for ageLOC Meta's launch? - Management expects similar performance to previous product launches, estimating around $70 million in revenue between the two new products [50]

[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited consolidated financial statements as of June 30, 2021, showing growth in revenue, net income, and changes in financial position [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $2.05 billion, driven by inventories, while liabilities and equity also grew Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$2,049,980** | **$1,957,076** | | Cash and cash equivalents | $354,759 | $402,683 | | Inventories, net | $390,977 | $314,366 | | **Total Liabilities** | **$1,132,154** | **$1,062,805** | | Current portion of long-term debt | $152,500 | $30,000 | | **Total Stockholders' Equity** | **$917,826** | **$894,271** | [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Q2 2021 revenue increased 15% to $704.1 million, with net income up 41.8% to $59.3 million Q2 & H1 2021 vs 2020 Performance (in thousands, except per share) | Metric | Q2 2021 | Q2 2020 | % Change | H1 2021 | H1 2020 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$704,055** | **$612,366** | **+15.0%** | **$1,381,081** | **$1,130,394** | **+22.2%** | | **Operating Income** | $85,376 | $58,074 | +47.0% | $148,289 | $94,639 | +56.7% | | **Net Income** | $59,338 | $41,851 | +41.8% | $106,768 | $61,581 | +73.4% | | **Diluted EPS** | $1.15 | $0.81 | +42.0% | $2.06 | $1.15 | +79.1% | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow sharply decreased to $1.9 million due to increased inventories and decreased accrued expenses Six Months Ended June 30 Cash Flow Summary (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,859 | $166,081 | | Net cash used in investing activities | ($55,235) | ($28,489) | | Net cash provided by/(used in) financing activities | $11,233 | ($92,533) | | **Net (decrease) increase in cash** | **($47,924)** | **$39,882** | - The significant decrease in operating cash flow was largely driven by an **$80.2 million** increase in inventories and a **$55.4 million** decrease in accrued expenses[29](index=29&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Details accounting policies, segment performance, debt, capital stock, and the MyFavoriteThings acquisition - The company reports revenue across ten segments: seven geographic Nu Skin segments and three Rhyz Investments segments (Manufacturing, Grow Tech, Rhyz other)[31](index=31&type=chunk)[76](index=76&type=chunk) - As of June 30, 2021, the company had **$322.5 million** outstanding on its term loan and **$120.0 million** on its revolving credit facility[43](index=43&type=chunk) - During the first six months of 2021, the company repurchased **1.2 million shares** for **$60.4 million** $265.4 million remained available for repurchases as of June 30, 2021[52](index=52&type=chunk) - In April 2021, the company acquired MyFavoriteThings, Inc. for **$16.8 million** in cash, with potential for an additional **$24.0 million** in contingent consideration This resulted in **$12.6 million** of goodwill[89](index=89&type=chunk) [Management's Discussion and Analysis (MD&A)](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q2 revenue grew 15% due to digital-first strategy, with EPS up 42%, despite decreased operating cash flow - Q2 2021 revenue increased **15%** to **$704.1 million**, benefiting from a **6%** positive impact from foreign currency fluctuations Sales Leaders grew **15%** while Customers decreased **2%** year-over-year[93](index=93&type=chunk) - The business continues to benefit from a strategic shift to digital and social commerce, which has been more broadly adopted in the Americas/Pacific and EMEA segments, driving their growth[94](index=94&type=chunk) - The company is continuing the launch of ageLOC Boost and is preparing for the launch of Beauty Focus Collagen+ and ageLOC Meta in the second half of 2021 and into 2022[94](index=94&type=chunk) - Cash from operations for H1 2021 was only **$1.9 million**, down from **$166.1 million** in H1 2020, primarily due to an **$80.2 million** increase in inventory and higher commission/incentive payouts[123](index=123&type=chunk) [Segment Results](index=21&type=section&id=Segment%20Results) EMEA led Q2 revenue growth at 64%, with Americas/Pacific also strong, while other regions varied Q2 2021 Revenue Growth by Segment (vs Q2 2020) | Segment | Revenue (USD M) | % Change | Constant Currency % Change | | :--- | :--- | :--- | :--- | | EMEA | $83.1 | +64% | +49% | | Americas/Pacific | $151.7 | +19% | +14% | | South Korea | $88.6 | +15% | +6% | | Southeast Asia | $70.8 | +6% | +2% | | Mainland China | $154.2 | +5% | -4% | | Hong Kong/Taiwan | $38.5 | +4% | 0% | | Japan | $68.0 | 0% | +1% | - The EMEA segment's growth was boosted by the ageLOC Boost launch, which generated **$11.1 million** in sales during the quarter[109](index=109&type=chunk) - The Americas/Pacific segment's performance was negatively impacted by economic instability in Argentina, which saw a **73%** revenue decline in Q2[105](index=105&type=chunk) [Liquidity and Capital Resources](index=25&type=section&id=Liquidity%20and%20Capital%20Resources) Cash and working capital decreased, with significant cash use for operations, capex, and repurchases - Projected capital expenditures for 2021 are estimated at **$80-95 million**, including **$25-30 million** for a new manufacturing plant in Mainland China[124](index=124&type=chunk) - The company plans to refinance its Credit Agreement, which includes a term loan and revolving credit facility, within the next twelve months[124](index=124&type=chunk) - As of June 30, 2021, the company held **$321.2 million** of its cash outside the U.S The company plans to repatriate most non-U.S. earnings, except for **$60.0 million** designated as indefinitely reinvested in Mainland China[128](index=128&type=chunk)[129](index=129&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Primary market risk is foreign currency fluctuations, managed with swaps, impacting revenue and earnings - A majority of revenue is generated outside the U.S., making reported results sensitive to U.S. dollar exchange rate fluctuations[140](index=140&type=chunk) - The company uses interest rate swaps to hedge against interest rate movements on its variable-rate debt and may use foreign currency exchange contracts to reduce exposure to currency fluctuations[71](index=71&type=chunk)[142](index=142&type=chunk) - Highly inflationary accounting is used for the Argentina subsidiary, with the U.S. dollar as the functional currency[141](index=141&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective, with no material changes to internal controls - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2021[143](index=143&type=chunk) - No material changes were made to the internal control over financial reporting during the second quarter of 2021[144](index=144&type=chunk) [Part II. Other Information](index=29&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) No material developments in legal proceedings, with no expected adverse financial impact - No material developments have occurred concerning legal proceedings discussed in the 2020 Annual Report on Form 10-K[146](index=146&type=chunk) [Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) Supplements risk factors including direct selling regulations, COVID-19, economic conditions, and ESG matters - The U.S. Federal Trade Commission (FTC) is reviewing its Business Opportunity Rule If the exemption for multi-level marketing companies is removed, it could negatively impact the business[149](index=149&type=chunk) - The COVID-19 pandemic and its variants continue to pose risks by interrupting supply chains, impacting sales force activities, and potentially affecting the company's ability to comply with debt covenants[151](index=151&type=chunk)[152](index=152&type=chunk) - Difficult economic conditions, including potential inflation, could reduce consumer demand for the company's products[154](index=154&type=chunk) - Increased stakeholder focus on corporate citizenship and sustainability (ESG) matters presents a risk if the company fails to meet expectations or achieve its stated goals[155](index=155&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Repurchased 184,723 shares at $54.16 average price in Q2 2021, with $265.4 million remaining Issuer Purchases of Equity Securities (Q2 2021) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining (in millions) | | :--- | :--- | :--- | :--- | | April 1 - 30, 2021 | 115,209 | $52.44 | $269.4 | | May 1 - 31, 2021 | 66,299 | $56.83 | $265.6 | | June 1 - 30, 2021 | 3,215 | $60.45 | $265.4 | | **Total** | **184,723** | **$54.16** | **$265.4** | [Other Information](index=31&type=section&id=Item%205.%20Other%20Information) CFO Mark H. Lawrence's compensation adjusted, with salary increased to $575,000 and higher equity award - CFO Mark H. Lawrence's salary was increased to **$575,000**, and his 2022 annual equity award is anticipated to be approximately **$1,300,000**[160](index=160&type=chunk)

Nu Skin Enterprises, Inc. (NYSE:NUS) Q1 2021 Earnings Conference Call May 5, 2021 5:00 PM ET Company Participants Scott Pond - Vice President, Investor Relations Ritch Wood - Chief Executive Officer Ryan Napierski - President and CEO-elect Mark Lawrence - Chief Financial Officer Conference Call Participants Faiza Alwy - Deutsche Bank Doug Lane - Lane Research Steph Wissink - Jefferies Mark Astrachan - Stifel Operator Good day and thank you for standing by. Welcome to the Q1 2021 Nu Skin Enterprises Earnings ...

Q1 2021 Performance - Revenue increased by 31% year-over-year, with a 5.7% positive impact from foreign exchange[5] - Earnings per share (EPS) increased by 153% year-over-year to $0.91[5] - The number of sales leaders increased by 22% year-over-year[5] - The number of customers increased by 34% year-over-year[5] Customer and Sales Leader Metrics - Total customers reached 1,517,260 in Q1 2021[7] - Total sales leaders reached 60,619 in Q1 2021[7] - EMEA region saw a 111% increase in customers and an 88% increase in sales leaders[7] - Americas/Pacific region saw a 90% increase in customers and a 78% increase in sales leaders[7] Operational Performance - Gross margin was 74.8% in Q1 2021[12] - Selling expenses were 40.4% of revenue in Q1 2021[12] - General & Administrative (G&A) expenses were 25.1% of revenue in Q1 2021[12] - Operating margin was 9.3% in Q1 2021[12] 2021 Projections - The company projects 2021 EPS to be between $4.05 and $4.30, representing a 12% to 18% increase[17] - The company projects Q2 2021 revenue to be between $680 million and $705 million, representing an 11% to 15% increase, with approximately a 5% positive foreign exchange impact[17] - The company projects Q2 2021 EPS to be between $0.97 and $1.07, representing a 20% to 32% increase[17] - The company projects 2021 revenue to be between $2.80 billion and $2.87 billion, representing a 9% to 11% increase, with approximately a 3% to 4% positive foreign exchange impact[17]

Nu Skin Enterprises, Inc. 2021 Investor Day Summary Company Overview - **Company**: Nu Skin Enterprises, Inc. (NYSE: NUS) - **Event**: 2021 Investor Day held on February 11, 2021 Key Points and Arguments Business Resilience and Response to COVID-19 - Nu Skin faced unprecedented challenges due to the COVID-19 pandemic but demonstrated resilience and adaptability in maintaining business operations and supporting employees and sales leaders [6][11] - The management team expressed gratitude for the dedication and efforts of global employees and sales leaders during the pandemic [6][12] Leadership Transition - Ritch Wood, the current CEO, will transition the CEO role to Ryan Napierski on September 1, 2021, after 30 years with the company [8][12] - Ryan Napierski has over 25 years of experience with Nu Skin and has been prepared for this leadership role [9][12] Growth Strategy - The company aims to expand its growth strategy through innovative products, digital platforms, and a balanced geographic profile [7][21] - Nu Skin reported a 60% increase in active customer base from 980,000 in Q1 2017 to 1,560,000 in Q4 2020 [15] - The average age of customers has decreased by 5 years, attracting a younger demographic [16] Financial Performance - In Q4 2020, Nu Skin achieved its largest quarterly revenue in 7 years, with earnings per share (EPS) of $1.40, representing a 94% growth [18] - For the full year 2020, revenue grew by 7% and EPS grew by 17%, despite the pandemic [20] - The company anticipates revenue growth of 5% to 9% for 2021, equating to approximately $200 million [22] Product Innovation and Sustainability - Nu Skin introduced new products, including the ageLOC Boost device, which generated approximately $100 million in revenue in the second half of 2020 [19][41] - The company is committed to sustainability, with goals to ensure all packaging is recycled, recyclable, reusable, reduced, or renewable by 2030 [27] - Nu Skin secured 9 sustainability awards in 2020 for its waste and packaging reductions [29] Digital Transformation and Social Commerce - The company is transitioning to a digital-first affiliate marketing model, leveraging social commerce to connect with consumers [52][56] - Over 90% of revenue transactions now occur online, with approximately half coming from personal product subscriptions and loyalty programs [38] - The introduction of Vera, an AI-powered personal product recommendation tool, aims to enhance customer engagement and personalization [64] Geographic Performance - The West region, including North America and Latin America, reported record revenue growth of 53% year-over-year [67] - Mainland China showed a return to growth in Q4 2020, with active customers up 30% year-over-year [68] - Southeast Asia is beginning to adopt social commerce, with encouraging potential in markets like Indonesia and the Philippines [69] Additional Important Content - Nu Skin's commitment to corporate social responsibility (CSR) includes various initiatives, such as providing meals to children and supporting local charities [25][26] - The company emphasizes the importance of diversity, equity, and inclusion (DEI) in its workplace and community efforts [26] - Nu Skin's Empower Me strategy focuses on personalized beauty and wellness solutions, leveraging technology to enhance customer experiences [45][64] This summary encapsulates the key insights and strategic directions discussed during the Nu Skin 2021 Investor Day, highlighting the company's resilience, growth strategies, and commitment to innovation and sustainability.

Part I [Business](index=5&type=section&id=Item%201.%20Business) Nu Skin is a global direct selling company developing and distributing beauty and wellness solutions across approximately 50 markets, primarily through direct selling - In 2020, the company's revenue was **$2.6 billion**, with **84%** generated from outside the United States[9](index=9&type=chunk)[11](index=11&type=chunk) - Mainland China is the largest market, accounting for approximately **24%** of 2020 revenue[11](index=11&type=chunk) - The strategic investment arm, Rhyz Inc., generated **$150.2 million** (**6%** of total revenue) in 2020 from external sales, primarily from its manufacturing companies[10](index=10&type=chunk) [Products](index=5&type=section&id=PRODUCTS) The company offers personal care and wellness products under Nu Skin, Pharmanex, and ageLOC brands, emphasizing innovation and intellectual property protection Revenue by Product Category (2018-2020) | Product Category | 2020 Revenue (Millions) | 2020 % | 2019 Revenue (Millions) | 2019 % | 2018 Revenue (Millions) | 2018 % | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Personal Care | $1,491.8 | 57.8% | $1,423.5 | 58.8% | $1,659.7 | 62.0% | | Wellness | $922.6 | 35.7% | $863.1 | 35.7% | $921.3 | 34.4% | | Other (Rhyz) | $167.5 | 6.5% | $133.8 | 5.5% | $98.0 | 3.6% | | **Total** | **$2,581.9** | **100.0%** | **$2,420.4** | **100.0%** | **$2,679.0** | **100.0%** | - ageLOC personal care products accounted for **50%** of the personal care category revenue and **29%** of total revenue in 2020[17](index=17&type=chunk) - ageLOC nutritional products accounted for **42%** of the wellness category revenue and **15%** of total revenue in 2020[18](index=18&type=chunk) - The company is launching a new beauty device system, ageLOC Boost, in the second half of 2020 and into 2021[12](index=12&type=chunk) [Distribution Channel](index=8&type=section&id=DISTRIBUTION%20CHANNEL) Nu Skin employs a direct selling channel, increasingly leveraging social commerce, with distinct models for customer and sales leader engagement, especially in Mainland China Total Customers and Sales Leaders by Region (as of year-end) | Region | Customers 2020 | Sales Leaders 2020 | Customers 2019 | Sales Leaders 2019 | Customers 2018 | Sales Leaders 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Mainland China | 381,460 | 21,990 | 292,812 | 17,987 | 303,789 | 33,129 | | Americas/Pacific | 404,955 | 14,439 | 220,216 | 7,607 | 248,609 | 8,354 | | South Korea | 158,953 | 7,059 | 168,972 | 7,251 | 182,026 | 7,565 | | Southeast Asia | 154,355 | 8,903 | 136,349 | 7,480 | 153,465 | 8,933 | | Japan | 128,400 | 6,318 | 125,557 | 5,916 | 130,181 | 5,916 | | EMEA | 258,587 | 7,063 | 153,330 | 4,619 | 149,085 | 4,791 | | Hong Kong/Taiwan | 70,592 | 4,663 | 65,669 | 3,900 | 76,891 | 4,767 | | **Total** | **1,557,302** | **70,435** | **1,162,905** | **54,760** | **1,244,046** | **73,455** | - The business model in Mainland China is different from other markets due to local regulations, utilizing retail stores, sales employees, independent direct sellers, and independent marketers[29](index=29&type=chunk)[42](index=42&type=chunk) - Outside Mainland China, Brand Affiliates earn money through retail markups and sales compensation from their network's product sales (multi-level compensation)[39](index=39&type=chunk)[40](index=40&type=chunk) [Geographic Regions](index=12&type=section&id=GEOGRAPHIC%20REGIONS) Operating in approximately 50 markets, the company's revenue is segmented geographically, with Mainland China being the largest contributor in 2020 Revenue by Segment (2018-2020) | Segment | 2020 Revenue (Millions) | 2020 % | 2019 Revenue (Millions) | 2019 % | 2018 Revenue (Millions) | 2018 % | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Mainland China | $625.5 | 24% | $722.5 | 30% | $886.5 | 33% | | Americas/Pacific | $511.9 | 20% | $349.1 | 14% | $385.0 | 14% | | South Korea | $326.5 | 13% | $330.0 | 14% | $373.4 | 14% | | Southeast Asia | $302.7 | 12% | $301.6 | 12% | $316.9 | 12% | | Japan | $273.7 | 10% | $260.0 | 11% | $254.9 | 10% | | EMEA | $230.2 | 9% | $167.2 | 7% | $182.4 | 7% | | Hong Kong/Taiwan | $161.1 | 6% | $166.3 | 7% | $185.9 | 7% | | Manufacturing | $149.3 | 6% | $121.9 | 5% | $90.6 | 3% | | **Total** | **$2,581.9** | **100%** | **$2,420.4** | **100%** | **$2,679.0** | **100%** | [Regulation](index=12&type=section&id=REGULATION) The company's direct selling model and products are subject to extensive global regulations, with particularly complex and restrictive frameworks in Mainland China - Direct selling regulations are intended to prevent pyramid schemes and generally require compensation to be based on product sales, not recruitment[54](index=54&type=chunk) - The regulatory environment in Mainland China is complex, prohibiting multi-level compensation and requiring a different business model, with no new direct selling licenses issued since early 2019[55](index=55&type=chunk) - Several markets, including Mainland China and South Korea, impose limits on the amount of sales compensation that can be paid (e.g., **30%** of revenue in China, **35%** of total value in South Korea)[58](index=58&type=chunk) - Products are regulated by agencies like the FDA, with cosmetics regulated for safety and labeling, and wellness products (dietary supplements) under DSHEA with specific rules for claims and new ingredients[61](index=61&type=chunk)[71](index=71&type=chunk) - The FTC exercises jurisdiction over advertising in the U.S. and has taken action against companies for deceptive advertising and lack of substantiation for claims, with the company having a consent decree from the early 1990s regarding product and earnings claims[84](index=84&type=chunk)[86](index=86&type=chunk) [Competition](index=19&type=section&id=COMPETITION) Nu Skin faces intense competition in direct selling and product markets from established global companies with greater financial resources and brand recognition - Competes with other direct selling organizations such as Amway, Avon Products, and Herbalife to attract and retain its sales force and consumers[92](index=92&type=chunk) - Product competitors include a broad array of marketers of personal care and nutritional products like L'Oréal, Clinique, Estée Lauder, and Mary Kay[93](index=93&type=chunk) [Human Capital Resources](index=19&type=section&id=HUMAN%20CAPITAL%20RESOURCES) As of year-end 2020, Nu Skin employed approximately 5,000 globally and 21,000 in Mainland China, with a human capital strategy focused on business transformation and diversity - As of year-end 2020, the company had approximately **5,000** full- and part-time employees globally, and an additional **21,000** sales employees in Mainland China[94](index=94&type=chunk) - The human capital strategy focuses on three objectives: supporting business transformation, leveraging diversity and inclusion, and simplifying the employee experience[95](index=95&type=chunk) - Recognized by Direct Selling News as one of the best places to work in direct selling for the fifth consecutive year in 2020[98](index=98&type=chunk) [Available Information](index=20&type=section&id=AVAILABLE%20INFORMATION) The company provides free access to its SEC filings and other material information on its Investor Relations website - SEC filings are available free of charge on the company's Investor Relations website, ir.nuskin.com[100](index=100&type=chunk) [Information About Our Executive Officers](index=21&type=section&id=INFORMATION%20ABOUT%20OUR%20EXECUTIVE%20OFFICERS) This section details executive officers as of January 2021, including a planned CEO transition for September 2021 - A CEO transition is planned for September 1, 2021, with current President Ryan S. Napierski set to succeed Ritch N. Wood as Chief Executive Officer[108](index=108&type=chunk) [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) The company faces substantial risks from direct selling model challenges, intense Mainland China scrutiny, competition, and cybersecurity threats - Challenges to the network marketing system, particularly from the FTC regarding pyramid schemes and improper earnings claims, pose a significant risk[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Operations in Mainland China are subject to intense government scrutiny and complex regulations that prohibit multi-level compensation, creating significant business risk[138](index=138&type=chunk)[143](index=143&type=chunk) - The business is dependent on its ability to recruit and retain its independent sales force, which is subject to high turnover[174](index=174&type=chunk) - The COVID-19 pandemic has negatively impacted the business by limiting in-person meetings, disrupting supply chains, and increasing regulatory scrutiny of health-related claims[161](index=161&type=chunk)[163](index=163&type=chunk) - Cybersecurity risks and failure to protect customer and sales force data could lead to litigation, liability, and reputational harm, especially with evolving data privacy laws like GDPR[236](index=236&type=chunk)[237](index=237&type=chunk) [Unresolved Staff Comments](index=44&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[242](index=242&type=chunk) [Properties](index=45&type=section&id=Item%202.%20Properties) The company's principal properties include corporate headquarters, R&D centers, and manufacturing facilities primarily in Utah and Mainland China - Principal administrative offices are in Provo, Utah and Shanghai, China[244](index=244&type=chunk) - The company operates its own manufacturing facilities in Mainland China and, through its Rhyz arm, in Utah[246](index=246&type=chunk) [Legal Proceedings](index=45&type=section&id=Item%203.%20Legal%20Proceedings) The company is in ongoing litigation with Don Roberts over a claimed **50%** ownership in its indoor-growing business, seeking over **$250 million** - The company is in litigation with Don Roberts, who claims a **50%** ownership interest in the indoor-growing business and is seeking damages exceeding **$250 million**[247](index=247&type=chunk) [Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[248](index=248&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=46&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A common stock trades on the NYSE under 'NUS', with **325,479** shares repurchased for approximately **$17 million** in Q4 2020 Issuer Purchases of Equity Securities (Q4 2020) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Dollar Value Remaining Under Plan (millions) | | :--- | :--- | :--- | :--- | | Oct 1 – 31, 2020 | 60,985 | $54.12 | $339.5 | | Nov 1 – 30, 2020 | 142,954 | $51.36 | $332.2 | | Dec 1 – 31, 2020 | 121,540 | $52.09 | $325.8 | | **Total** | **325,479** | **$52.15** | **$325.8** | - The company's Class A common stock is listed on the NYSE under the symbol 'NUS'[250](index=250&type=chunk) [Reserved](index=47&type=section&id=Item%206.%20Reserved) This item is not applicable [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2020, revenue grew **7%** to **$2.58 billion**, driven by digital commerce and customer growth, despite a decline in Mainland China [Results of Operations](index=52&type=section&id=Results%20of%20Operations) For 2020, revenue increased **7%** to **$2.58 billion**, driven by Americas/Pacific and EMEA growth, offsetting a Mainland China decline, while gross margin decreased 2020 vs. 2019 Revenue Change by Segment | Segment | 2020 Revenue (millions) | 2019 Revenue (millions) | % Change | Constant Currency % Change | | :--- | :--- | :--- | :--- | :--- | | Mainland China | $625.5 | $722.5 | (13)% | (14)% | | Americas/Pacific | $511.9 | $349.1 | 47% | 53% | | South Korea | $326.5 | $330.0 | (1)% | — | | Southeast Asia | $302.7 | $301.6 | — | 1% | | Japan | $273.7 | $260.0 | 5% | 3% | | EMEA | $230.2 | $167.2 | 38% | 35% | | Hong Kong/Taiwan | $161.1 | $166.3 | (3)% | (6)% | | **Total Nu Skin** | **$2,431.7** | **$2,298.4** | **6%** | **6%** | - Overall revenue increased **7%** to **$2.58 billion** in 2020 from **$2.42 billion** in 2019[286](index=286&type=chunk) - Diluted earnings per share increased **17%** to **$3.63** in 2020 from **$3.10** in 2019, driven by higher revenue, a lower tax rate, and stock repurchases[288](index=288&type=chunk) - Gross profit as a percentage of revenue decreased to **74.5%** in 2020 from **76.0%** in 2019, primarily due to higher freight costs and shifts in product and geographic mix[307](index=307&type=chunk) [Liquidity and Capital Resources](index=57&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity remains strong, with cash from operations increasing to **$379.1 million** in 2020, supporting dividends, repurchases, and capital expenditures - Generated **$379.1 million** in cash from operations in 2020, a significant increase from **$177.9 million** in 2019[315](index=315&type=chunk) - Ended 2020 with **$423.9 million** in cash and cash equivalents, up from **$344.0 million** in 2019[316](index=316&type=chunk) - In 2020, the company repurchased **5.1 million** shares for **$144.3 million** and paid **$78.4 million** in dividends[322](index=322&type=chunk)[323](index=323&type=chunk) - As of Dec 31, 2020, the company had **$337.5 million** outstanding on its term loan and no borrowings under its **$350 million** revolving credit facility[321](index=321&type=chunk) [Critical Accounting Policies and Estimates](index=51&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management identifies Income Taxes and Intangible Assets as critical accounting policies, requiring significant judgment in valuation and impairment testing - The company's critical accounting policies are identified as Accounting for Income Taxes and Accounting for Intangible Assets[275](index=275&type=chunk) - As of December 31, 2020, the company had net deferred tax assets of **$34.8 million** and unrecognized tax benefits of **$17.6 million**[276](index=276&type=chunk)[280](index=280&type=chunk) - Goodwill and indefinite-lived intangible assets are tested for impairment annually; no impairment charges were recognized in 2020, 2019, or 2018[283](index=283&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to foreign currency and interest rate risks, managing the latter with interest rate swaps and monitoring the LIBOR transition - A majority of revenue is from outside the U.S., exposing the company to foreign currency risk, where a strengthening U.S. dollar negatively impacts reported revenue and earnings[331](index=331&type=chunk) - The company is exposed to interest rate risk on its variable-rate debt; as of Dec 31, 2020, a hypothetical **1%** increase in rates would increase annual interest expense by about **$1.4 million**[336](index=336&type=chunk) - The company uses interest rate swaps to hedge variable cash flows associated with its variable-rate debt, with a total notional amount of **$200 million** as of year-end 2020[322](index=322&type=chunk)[336](index=336&type=chunk) - The company is monitoring the planned phase-out of LIBOR, which is the reference rate for its credit facility and interest rate swaps[338](index=338&type=chunk) [Financial Statements and Supplementary Data](index=61&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal year 2020, including balance sheets, income statements, and cash flow statements Consolidated Balance Sheet Data (as of Dec 31) | (in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | **Total Assets** | **$1,957,076** | **$1,769,006** | | Total Current Assets | $903,198 | $740,166 | | **Total Liabilities** | **$1,062,805** | **$893,717** | | Total Current Liabilities | $542,856 | $356,760 | | Long-term Debt | $305,393 | $334,461 | | **Total Stockholders' Equity** | **$894,271** | **$875,289** | Consolidated Income Statement Data (Year Ended Dec 31) | (in thousands, except per share) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Revenue | $2,581,934 | $2,420,416 | $2,679,008 | | Gross Profit | $1,923,906 | $1,838,996 | $2,044,868 | | Operating Income | $257,564 | $267,426 | $240,860 | | **Net Income** | **$191,355** | **$173,553** | **$121,887** | | Diluted EPS | $3.63 | $3.10 | $2.16 | Consolidated Cash Flow Data (Year Ended Dec 31) | (in thousands) | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $379,141 | $177,931 | $202,738 | | Net cash used in investing activities | ($79,428) | ($71,412) | ($108,761) | | Net cash used in financing activities | ($245,166) | ($154,794) | ($116,714) | | **Net increase (decrease) in cash** | **$67,053** | **($51,281)** | **($39,488)** | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=103&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[532](index=532&type=chunk) [Controls and Procedures](index=103&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2020 - Management concluded that disclosure controls and procedures were effective as of December 31, 2020[533](index=533&type=chunk) - Management concluded that internal control over financial reporting was effective as of December 31, 2020[535](index=535&type=chunk) [Other Information](index=103&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[536](index=536&type=chunk) Part III [Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Certain Relationships](index=104&type=section&id=ITEMS%2010-14) Information for these items will be incorporated by reference from the forthcoming 2021 Definitive Proxy Statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the forthcoming 2021 Definitive Proxy Statement[538](index=538&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=104&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists documents filed as part of the Form 10-K, including financial statements and various corporate exhibits [Form 10-K Summary](index=106&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - None[545](index=545&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Class A Common Stock, $.001 par value NUS New York Stock Exchange FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO ____ ...