Nu Skin(NUS) - 2022 Q2 - Quarterly Report

Revenue Performance - Revenue for Q2 2022 decreased 20% to $560.6 million, compared to$704.1 million in Q2 2021, and for the first half of 2022, revenue decreased 16% to $1.2 billion from$1.4 billion in the prior-year period [90]. - The total revenue for Rhyz Investments decreased 20% to $38.5 million in Q2 2022 compared to$48.2 million in Q2 2021 [94]. - U.S. market revenue increased 6% in Q2 2022 and 10% in the first half of 2022, driven by product launches including Beauty Focus Collagen+ and Nu Biome [103]. - Southeast Asia/Pacific segment revenue increased 12% in Q2 2022, with ageLOC Meta generating approximately $18.2 million in revenue for the quarter [108]. Earnings and Profitability - Earnings per share for Q2 2022 decreased 42$0.67, compared to $1.15 in Q2 2021, and for the first six months of 2022, earnings per share decreased 31$1.43 from $2.06 in the prior-year period [91]. - The company reported a decline in gross margin due to sales promotions, contributing to the decrease in earnings per share [91]. - Gross profit margin decreased to 73.6$34.2 million, down from $59.3 million in Q2 2021, and for the first half of 2022 was$73.0 million compared to $106.8 million in the prior year [122]. Customer and Affiliate Metrics - The number of Customers declined by 6$141.6 million in Q2 2022 from $166.1 million in Q2 2021, with a notable reduction in labor expenses [118]. - The company anticipates restructuring charges of approximately$30 million for Q3 2022 and $35–$45 million for the second half of 2022 [91]. Cash and Capital Management - Working capital increased to $498.8 million as of June 30, 2022, compared to$343.3 million at the end of 2021, primarily due to debt modification [124]. - Capital expenditures for the first half of 2022 were $19.8 million, with an estimated total of$70-90 million expected for the year, including a new manufacturing plant in Mainland China [125]. - The company held $381.8 million in cash and cash equivalents as of June 30, 2022, including$257.2 million held outside the U.S. [130]. - The company plans to repatriate undistributed earnings from non-U.S. operations as necessary, considering cash needs for dividends, stock repurchases, and strategic transactions [131]. Debt and Financial Instruments - As of June 30, 2022, the company had $30.0 million in outstanding borrowings under its revolving credit facility and$400.0 million on its term loan facility [126]. - The company had a consolidated leverage ratio not exceeding 2.25 to 1.00 and an interest coverage ratio of no less than 3.00 to 1.00 as of June 30, 2022 [126]. - The company entered into four interest rate swaps with a total notional principal amount of $200 million to hedge variable cash flows associated with its variable-rate debt [127]. - The company does not use derivative financial instruments for trading or speculative purposes and regularly monitors foreign currency risks [142]. Future Outlook - The EmpowerMe personalized beauty and wellness strategy is expected to launch the ageLOC LumiSpa iO in the second half of 2022 [90]. - The company anticipates that existing cash balances and future cash flows will be adequate to fund cash needs on both a short- and long-term basis [132].