Nu Skin(US:NUS)2023-11-01 16:00Revenue Performance - Revenue for Q3 2023 decreased 7% to $498.8 million, compared to $537.8 million in Q3 2022, and for the first nine months of 2023, revenue decreased 13% to $1.5 billion from $1.7 billion in the prior-year period[99]. - The decline in revenue was primarily driven by macroeconomic pressures affecting consumer spending and customer acquisition, with Customers, Paid Affiliates, and Sales Leaders declining 21%, 23%, and 6% year-over-year, respectively[99][100]. - Revenue from the Americas segment decreased 30% in Q3 2023 to $91.7 million, while the Asia/Pacific segment saw an 18% decline to $68.7 million[104]. - Total Nu Skin revenue for Q3 2023 was $498.8 million, a 7% decrease, while total revenue for the first nine months was $1.48 billion, down 13%[104]. - Mainland China revenue was negatively impacted by 6% due to unfavorable foreign currency fluctuations, despite a year-over-year increase in sales leaders and paid affiliates[114]. - Southeast Asia/Pacific reported a significant decline in revenue, with ageLOC Meta generating $17.1 million in the first nine months of 2023, down from $40.3 million in the same period of 2022[116]. Earnings and Profitability - Earnings per share for Q3 2023 decreased 45% to $(0.74), compared to $(0.51) in Q3 2022, and for the first nine months, it decreased 97% to $0.03 from $0.94[101]. - The third quarter of 2023 included an inventory write-off charge of $65.7 million, contributing to the decline in earnings per share[101]. - Gross profit as a percentage of revenue fell to 58.6% for the third quarter of 2023, down from 67.7% in the prior-year period[127]. - In Q3 2023, the company reported a net loss of $37.0 million, compared to a net loss of $25.4 million in Q3 2022[135]. - For the first nine months of 2023, net income was $1.3 million, a significant decrease from $47.6 million in the same period of 2022[135]. - The effective tax rate for Q3 2023 was (7.3)%, compared to 12.3% in Q3 2022, reflecting a decline in profitability[134]. Customer Metrics - Total customers decreased by 21% year-over-year to 978,907 in September 2023, down from 1,239,384 in September 2022[110]. - The number of Customers, Paid Affiliates, and Sales Leaders declined significantly, impacting overall business performance[108][109]. - The Americas segment experienced a decline in revenue, customers, paid affiliates, and sales leaders due to macroeconomic challenges, with a 27% decrease in customers[112]. - South Korea's paid affiliates decreased by approximately 17,000 due to changes in eligibility requirements for rewards[117]. Product Performance - The new product ageLOC TRMe generated approximately $30.2 million in revenue for Q3 2023 and $66.3 million for the first nine months, while ageLOC WellSpa iO generated $35.6 million in Q3 2023[100]. - The Manufacturing segment under Rhyz Investments reported a 20% increase in revenue for Q3 2023 to $49.7 million, while Rhyz other segment revenue surged 1,910% to $10.8 million[104]. - The Manufacturing segment revenue increased by 20% for the third quarter of 2023, driven by new customer onboarding and automation efforts[123]. Cash Flow and Expenditures - The company generated $64.5 million in cash from operations in the first nine months of 2023, down from $82.5 million in the prior-year period[136]. - As of September 30, 2023, cash and cash equivalents were $250.0 million, a decrease from $278.5 million as of December 31, 2022[136]. - Capital expenditures for the nine months ended September 30, 2023, were $38.1 million, with an estimated total of $50–60 million for the year[138]. - The new manufacturing plant in Mainland China is expected to begin production in Q4 2023, with total expenditures for the project projected at approximately $60 million[138]. Strategic Initiatives - The company plans to continue launching new products in Q4 2023, with previews in Mainland China for ageLOC TRMe and ageLOC WellSpa iO[100]. - The company expects total charges of approximately $15–$25 million in severance costs for the fourth quarter of 2023 as part of its strategic plan[131]. Foreign Currency and Market Risks - A significant portion of the company's revenue and expenses are recognized outside of the United States, with local currencies considered the functional currency for most subsidiaries[154]. - The subsidiary in Argentina adopted highly inflationary accounting as of July 1, 2018, with net sales from Argentina being less than 2% of consolidated net sales for the three- and nine-month periods ended September 30, 2023 and 2022[155]. - The company does not use derivative financial instruments for trading or speculative purposes and regularly monitors foreign currency risks[156]. - The company continues to evaluate its foreign currency hedging policy to reduce exposure to fluctuations in foreign currency exchange rates[156]. - A weakening of the U.S. dollar positively impacts reported revenue and earnings, while a strengthening negatively impacts them[154]. - The uncertainty of exchange rate fluctuations makes it difficult to predict their effect on future business and financial condition[154].