UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

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, 2021MARCH 31, 2022

OR

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _____________

Commission File Number: 001-12421

 NU SKIN ENTERPRISES, INC. 
 (Exact name of registrant as specified in its charter) 

Delaware 87-0565309
(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)

 
75 West Center Street
Provo, Utah 84601
 
 (Address of principal executive offices, including zip code) 

 (801) 345-1000 
 (Registrant’s telephone number, including area code) 

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ☑   No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☑   No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   ☑
Accelerated filer   ☐
Non-accelerated filer   ☐
Smaller reporting company   ☐
 
Emerging growth company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐   No  ☑

As of  October 31, 2021, 49,823,307April 30, 2022, 50,208,228 shares of the registrant’s Class A common stock, $.001 par value per share, were outstanding.

Table of Contents
NU SKIN ENTERPRISES, INC.

QUARTERLY REPORT ON FORM 10-Q – THIRDFIRST QUARTER 20212022

TABLE OF CONTENTS


Page
Part I.
Financial Information
 

Item 1.
Financial Statements (Unaudited):
 

 
Consolidated Balance Sheets
1

 
Consolidated Statements of Income
2

 
Consolidated Statements of Comprehensive Income
3

 
Consolidated Statements of Stockholders’ Equity
4

 
Consolidated Statements of Cash Flows
65

 
Notes to Consolidated Financial Statements
76

Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
1817

Item 3.
Quantitative and Qualitative Disclosures about Market Risk
2625

Item 4.
Controls and Procedures
2625

   
Part II.
Other Information
 

Item 1.
Legal Proceedings
2726

Item 1A.
Risk Factors
2726

Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
3126

Item 3.
Defaults Upon Senior Securities
31
26

Item 4.
Mine Safety Disclosures
3126

Item 5.
Other Information
31
26

Item 6.
Exhibits
32
27

   

Signature
3328

In this Quarterly Report on Form 10-Q, references to “dollars” and “$” are to United States (“U.S.”) dollars.

Nu Skin, Pharmanex, and ageLOC are our trademarks. The italicized product names used in this Quarterly Report on Form 10-Q are product names and also, in certain cases, our trademarks.

Table of Contentscontents
PART I.  FINANCIAL INFORMATION

ITEM 1.
ITEM 1.
FINANCIAL STATEMENTS

NU SKIN ENTERPRISES, INC.
Consolidated Balance Sheets (Unaudited)
(U.S. dollars in thousands)

 
September 30,
2021
  
December 31,
2020
  
March 31,
2022
  
December 31,
2021
 
ASSETS            
Current assets:            
Cash and cash equivalents $282,412  $402,683  $302,216  $339,593 
Current investments  19,190   21,216   15,313   15,221 
Accounts receivable, net  52,441   63,370   52,171   41,299 
Inventories, net  415,203   314,366   381,585   399,931 
Prepaid expenses and other  121,626   101,563   97,923   76,906 
Total current assets  890,872   903,198   849,208   872,950 
                
Property and equipment, net  464,049   468,181   448,822   453,674 
Operating lease right-of-use assets  128,887   155,104   132,949   120,973 
Goodwill  215,582   202,979   206,432   206,432 
Other intangible assets, net  88,497   89,532   74,874   76,991 
Other assets  186,522   138,082   179,964   175,460 
Total assets $1,974,409  $1,957,076  $1,892,249  $1,906,480 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable $52,023  $66,174  $40,719  $49,993 
Accrued expenses  378,573   446,682   343,737   372,201 
Current portion of long-term debt  110,000   30,000   110,000   107,500 
Total current liabilities  540,596   542,856   494,456   529,694 
                
Operating lease liabilities  95,741   112,275   100,844   88,759 
Long-term debt  278,563   305,393   258,995   268,781 
Other liabilities  123,032   102,281   103,754   106,474 
Total liabilities  1,037,932   1,062,805   958,049   993,708 
           ��    
Commitments and contingencies (Notes 5 and 11)  0   0   0   0 
                
Stockholders’ equity:                
Class A common stock – 500 million shares authorized, $0.001 par value, 90.6 million shares issued
  91   91   91   91 
Additional paid-in capital  590,678   579,801   599,258   601,703 
Treasury stock, at cost – 40.5 million and 39.7 million shares
  (1,518,535)  (1,461,593)
Treasury stock, at cost – 40.4 million and 40.7 million shares
  (1,526,778)  (1,526,860)
Accumulated other comprehensive loss  (75,658)  (64,768)  (69,528)  (73,896)
Retained earnings  1,939,901   1,840,740   1,931,157   1,911,734 
Total stockholders’ equity  936,477   894,271   934,200   912,772 
Total liabilities and stockholders’ equity
 $1,974,409  $1,957,076  $1,892,249  $1,906,480 

The accompanying notes are an integral part of these consolidated financial statements.

1
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NU SKIN ENTERPRISES, INC.
Consolidated Statements of Income (Unaudited)
(U.S. dollars in thousands, except per share amounts)

 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
  
Three Months Ended
March 31,
 
 2021  2020  2021  2020  2022  2021 
Revenue $641,152  $703,347  $2,022,233  $1,833,741  $604,899  $677,026 
Cost of sales  158,907   183,374   501,448   463,277   161,499   170,566 
Gross profit  482,245   519,973   1,520,785   1,370,464   443,400   506,460 
                        
Operating expenses:                        
Selling expenses  255,719   280,695   807,358   735,365   242,699   275,965 
General and administrative expenses  161,142   165,050   499,754   466,232   148,556   167,582 
Total operating expenses  416,861   445,745   1,307,112   1,201,597   391,255   443,547 
                        
Operating income  65,384   74,228   213,673   168,867   52,145   62,913 
Other income (expense), net  2,781  525   351  (4,068)  (1,453)  1,582 
                        
Income before provision for income taxes  68,165   74,753   214,024   164,799   50,692   64,495 
Provision for income taxes  18,436   18,446   57,527   46,911   11,976   17,065 
                        
Net income $49,729  $56,307  $156,497  $117,888  $38,716  $47,430 
                        
Net income per share (Note 6):                        
Basic $0.99  $1.10  $3.11  $2.24  $0.77  $0.94 
Diluted $0.97  $1.08  $3.03  $2.23  $0.76  $0.91 
                        
Weighted-average common shares outstanding (000s):                        
Basic  50,098   51,308   50,304   52,741   49,991   50,706 
Diluted  51,260   52,243   51,629   52,906   51,066   52,172 

The accompanying notes are an integral part of these consolidated financial statements.

2
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NU SKIN ENTERPRISES, INC.
Consolidated Statements of Comprehensive Income (Unaudited)
(U.S. dollars in thousands)

 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
  
Three Months Ended
March 31,
 
 2021  2020  2021  2020  2022  2021 
Net income $49,729  $56,307  $156,497  $117,888  $38,716  $47,430 
                        
Other comprehensive (loss) income, net of tax:                        
Foreign currency translation adjustment, net of taxes of $(1) and $(8) for the three months ended September 30, 2021 and 2020, respectively, and $1 and $(3) for the nine months ended September 30, 2021 and 2020, respectively
  (7,165)  10,022   (13,431)  1,873 
Net unrealized gains/(losses) on cash flow hedges, net of taxes of $(7) and $(83) for the three months ended September 30, 2021 and 2020, respectively and $(678) and $(83) for the nine months ended September 30, 2021 and 2020, respectively
  25   305   2,455   305 
Reclassification adjustment for realized losses/(gains) in current earnings on cash flow hedges, net of taxes of $(10) and $(2) for the three months ended September 30, 2021 and 2020, respectively and $(24) and $(2) for the nine months ended September 30, 2021 and 2020, respectively
  35   6   86   6 
Foreign currency translation adjustment, net of taxes of $(7) and $(2) for the three months ended March 31, 2022 and 2021, respectively
  (1,960)  (9,919)
Net unrealized gains/(losses) on foreign currency cash flow hedges, net of taxes of $(1,743) and $(839) for the three months ended March 31, 2022 and 2021, respectively
  6,314   3,040 
Reclassification adjustment for realized losses/(gains) in current earnings, net of taxes of $(4) and $(6) for the three months ended March 31, 2022 and 2021, respectively
  14   21 
  (7,105)  10,333   (10,890)  2,184   4,368   (6,858)
Comprehensive income $42,624  $66,640  $145,607  $120,072  $43,084  $40,572 

The accompanying notes are an integral part of these consolidated financial statements.

3
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NU SKIN ENTERPRISES, INC.
Consolidated Statements of Stockholders’ Equity (Unaudited)
(U.S. dollars in thousands)

 For the Three Months Ended September 30, 2021  For the Three Months Ended March 31, 2022 
 
Class A
Common Stock
  
Additional
Paid-in Capital
  
Treasury
Stock
  
Accumulated Other
Comprehensive Loss
  
Retained
Earnings
  Total  
Class A
Common
Stock
  
Additional
Paid-in
Capital
  
Treasury
Stock
  
Accumulated
Other
Comprehensive
Loss
  
Retained
Earnings
  Total 
Balance at July 1, 2021
 $91  $586,976  $(1,509,867) $(68,553) $1,909,179  $917,826 
Balance at January 1, 2022 $91  $601,703  $(1,526,860) $(73,896) $1,911,734  $912,772 
                                                
Net income  0   0   0   0   49,729   49,729   0   0   0   0   38,716   38,716 
Other comprehensive loss, net of tax  0   0   0   (7,105)  0   (7,105)
Other comprehensive income, net of tax  0   0   0   4,368   0   4,368 
Repurchase of Class A common stock (Note 6)  0   0   (10,005)  0   0   (10,005)  0   0   (10,006)  0   0   (10,006)
Exercise of employee stock options (0.1 million shares)/vesting of stock awards
  0   609   1,337   0   0   1,946 
Exercise of employee stock options (0.4 million shares)/vesting of stock awards
  0   (6,572)  10,088   0   0   3,516 
Stock-based compensation  0   3,093   0   0   0   3,093   0   4,127   0   0   0   4,127 
Cash dividends  0   0   0   0   (19,007)  (19,007)  0   0   0   0   (19,293)  (19,293)
Balance at September 30, 2021
 $91  $590,678  $(1,518,535) $(75,658) $1,939,901  $936,477 
Balance at March 31, 2022
 $91  $599,258  $(1,526,778) $(69,528) $1,931,157  $934,200 

 For the Three Months Ended September 30, 2020  For the Three Months Ended March 31, 2021 
 
Class A
Common Stock
  
Additional
Paid-in Capital
  
Treasury
Stock
  
Accumulated Other
Comprehensive Loss
  
Retained
Earnings
  Total  
Class A
Common
Stock
  
Additional
Paid-in
Capital
  
Treasury
Stock
  
Accumulated
Other
Comprehensive
Loss
  
Retained
Earnings
  Total 
Balance at July 1, 2020
 $91  $563,115  $(1,427,064) $(93,441) $1,749,311  $792,012 
Balance at January 1, 2021 $91  $579,801  $(1,461,593) $(64,768) $1,840,740  $894,271 
                                                
Net income  0   0   0   0   56,307   56,307   0   0   0   0   47,430   47,430 
Other comprehensive income, net of tax  0   0   0   10,333   0   10,333 
Other comprehensive loss, net of tax  0   0   0   (6,858)  0   (6,858)
Repurchase of Class A common stock (Note 6)  0   0   (19,994)  0   0   (19,994)  0   0   (50,406)  0   0   (50,406)
Exercise of employee stock options (0 million shares)/vesting of stock awards
  0   261   684   0   0   945 
Exercise of employee stock options (0.3 million shares)/vesting of stock awards
  0   (7,400)  6,923   0   0   (477)
Stock-based compensation  0   7,115   0   0   0   7,115   0   6,803   0   0   0   6,803 
Cash dividends  0   0   0   0   (19,245)  (19,245)  0   0   0   0   (19,289)  (19,289)
Balance at September 30, 2020
 $91  $570,491  $(1,446,374) $(83,108) $1,786,373  $827,473 
Balance at March 31, 2021
 $91  $579,204  $(1,505,076) $(71,626) $1,868,881  $871,474 

The accompanying notes are an integral part of these consolidated financial statements.

4
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NU SKIN ENTERPRISES, INC.
Consolidated Statements of Stockholders’ Equity Cash Flows (Unaudited)
(U.S. dollars in thousands)

 For the Nine Months Ended September 30, 2021 
  
Class A
Common
Stock
  
Additional
Paid-in
Capital
  
Treasury
Stock
  
Accumulated
Other
Comprehensive
Loss
  
Retained
Earnings
  Total 
Balance at January 1, 2021
 $91  $579,801  $(1,461,593) $(64,768) $1,840,740  $894,271 
                         
Net income  0   0   0   0   156,497   156,497 
Other comprehensive loss, net of tax  —   0   0   (10,890)  0   (10,890)
Repurchase of Class A common stock (Note 6)  0   0   (70,415)  0   0   (70,415)
Exercise of employee stock options (0.6 million shares)/vesting of stock awards
  0   (5,599)  13,473   0   0   7,874 
Stock-based compensation  0   16,476   0   0   0   16,476 
Cash dividends  0   0   0   0   (57,336)  (57,336)
Balance at September 30, 2021
 $91  $590,678  $(1,518,535) $(75,658) $1,939,901  $936,477 

 For the Nine Months Ended September 30, 2020 
  
Class A
Common Stock
  
Additional
Paid-in Capital
  
Treasury
Stock
  
Accumulated Other
Comprehensive Loss
  
Retained
Earnings
  Total 
Balance at January 1, 2020
 $91  $557,544  $(1,324,826) $(85,292) $1,727,772  $875,289 
                         
Net income  0   0   0   0   117,888   117,888 
Other comprehensive income, net of tax  0   0   0   2,184  0   2,184
Repurchase of Class A common stock (Note 6)  0   0   (127,361)  0   0   (127,361)
Exercise of employee stock options (0.3 million shares)/vesting of stock awards
  0   (2,492)  5,813   0   0   3,321 
Stock-based compensation  0   15,439   0   0   0   15,439 
Cash dividends  0   0   0   0   (59,287)  (59,287)
Balance at September 30, 2020
 $91  $570,491  $(1,446,374) $(83,108) $1,786,373  $827,473 
 
Three Months Ended
March 31,
 
  2022  2021 
Cash flows from operating activities:      
Net income $38,716  $47,430 
Adjustments to reconcile net income to cash flows from operating activities:        
Depreciation and amortization  17,130   18,344 
Non-cash lease expense  10,581   13,298 
Stock-based compensation  4,127   6,803 
Foreign currency losses  370   970 
Loss on disposal of assets  517   506 
Deferred taxes  3,292   3,363 
Changes in operating assets and liabilities:        
Accounts receivable, net  (12,463)  436 
Inventories, net  17,212   (53,776)
Prepaid expenses and other  (18,110)  (19,241)
Other assets  941   (2,786)
Accounts payable  (5,663)  1,869 
Accrued expenses  (40,270)  (36,779)
Other liabilities  (8,839)  707 
Net cash provided by/(used in) operating activities  7,541   (18,856)
         
Cash flows from investing activities:        
Purchases of property and equipment  (10,279)  (19,373)
Proceeds on investment sales  4,076   7,550 
Purchases of investments  (3,930)  (6,973)
Net cash used in investing activities  (10,133)  (18,796)
         
Cash flows from financing activities:        
Exercise of employee stock options and taxes paid related to the net shares settlement of stock awards  3,516   (477)
Payment of cash dividends  (19,293)  (19,289)
Repurchases of shares of common stock  (10,006)  (50,406)
Finance lease principal payments  (476)  (483)
Payments of debt  (7,500)  (17,500)
Proceeds from debt  0   70,000 
Net cash used in financing activities  (33,759)  (18,155)
         
Effect of exchange rate changes on cash  (1,026)  (7,777)
         
Net increase (decrease) in cash and cash equivalents  (37,377)  (63,584)
         
Cash and cash equivalents, beginning of period  339,593   402,683 
         
Cash and cash equivalents, end of period $302,216  $339,099 

The accompanying notes are an integral part of these consolidated financial statements.

5
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NU SKIN ENTERPRISES, INC.
Consolidated Statements of Cash Flows (Unaudited)
(U.S. dollars in thousands)

 
Nine Months Ended
September 30,
 
  2021  2020 
Cash flows from operating activities:      
Net income $156,497  $117,888 
Adjustments to reconcile net income to net cash provided by operating activities:        
Depreciation and amortization  57,858   55,279 
Non-cash lease expense  40,703   34,087 
Stock-based compensation  16,476   15,439 
Foreign currency losses  5,501   1,203 
Loss on disposal of assets  13,210   2,516 
Deferred taxes  3,846   (7,931)
Unrealized (gain)/losses on equity investments  (18,077)
  0 
Changes in operating assets and liabilities:        
Accounts receivable, net  8,377   (9,273)
Inventories, net  (109,371)  4,882 
Prepaid expenses and other  (29,311)  4,180 
Other assets  (18,438)  (76,487)
Accounts payable  (11,182)  15,884 
Accrued expenses  (89,993)  99,438 
Other liabilities  5,977   27,343 
Net cash provided by operating activities  32,073   284,448 
         
Cash flows from investing activities:        
Purchases of property and equipment  (50,384)  (48,810)
Proceeds on investment sales  11,171   7,630 
Purchases of investments  (14,973)  (8,759)
Acquisitions (net of cash acquired)  (18,963)  0 
Net cash used in investing activities  (73,149)  (49,939)
         
Cash flows from financing activities:        
Exercise of employee stock options and taxes paid related to the net shares settlement of stock awards  7,874   3,321 
Payment of cash dividends  (57,336)  (59,287)
Repurchases of shares of common stock  (70,415)  (127,361)
Finance lease principal payments  (1,409)  0 
Payments of debt  (77,500)  (135,000)
Proceeds from debt  130,000   115,000 
Net cash used in financing activities  (68,786)  (203,327)
         
Effect of exchange rate changes on cash  (10,409)  (102)
         
Net increase (decrease) in cash and cash equivalents  (120,271)  31,080 
         
Cash and cash equivalents, beginning of period  402,683   335,630 
         
Cash and cash equivalents, end of period $282,412  $366,710 

The accompanying notes are an integral part of these consolidated financial statements.

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NU SKIN ENTERPRISES, INC.
Notes to Consolidated Financial Statements

1.The Company

Nu Skin Enterprises, Inc. (the “Company”) is a holding company, with Nu Skin, being the primary operating unit.  Nu Skin develops and distributes premium-quality, innovative beauty and wellness products that are sold worldwide under the Nu Skin, Pharmanex and ageLOC brands and a small number of other products and services.  The Company reports revenue from 109 segments, consisting of its 7 geographic Nu Skin segments—segments—Mainland China; Americas, which includes Canada, Latin America and the United States; South Korea; Southeast Asia/Pacific, which includes Australia, Indonesia, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam; Europe, Middle East and Africa (“EMEA”), which includes markets in Europe as well as Israel Russia and South Africa; Japan; Southeast Asia/Pacific, which includes Australia, Indonesia, Malaysia, New Zealand, the Philippines, Singapore, Thailand and Vietnam; and Hong Kong/Taiwan, which also includes Macau—and 32 Rhyz Investments segments—Manufacturing, which includes manufacturing and packaging subsidiaries it has acquired; Grow Tech, which focuses on developing controlled-environment agriculture technologies and Rhyz other, which includes other investments by its Rhyz strategic investment arm (the Company’s subsidiaries operating within each segment are collectively referred to as the “Subsidiaries”).

2.Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. The unaudited consolidated financial statements include the accounts of the Company and its Subsidiaries. All significant intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial information as of September 30, 2021,March 31,2022, and for the three- and nine-monththree-month periods ended September 30, 2021March 31,2022 and 2020.2021. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the fiscal year. The consolidated balance sheet as of December 31, 20202021 has been prepared using information from the audited financial statements at that date. For further information, refer to the consolidated financial statements and accompanying footnotes included in the Company’s Annual Report on Form 10-K10-K for the year ended December 31, 2020.2021.

Reclassifications
Certain prior period amounts have been reclassified to conform to the current presentation. The Company reclassified $2.2 million of events and other miscellaneous selling costs from the general and administration expenses line to the selling expenses line on the consolidated statement of income for the first quarter of 2021. The Company believes these costs are better reflected in selling expenses. The reclassification had no impact on operating income for the first quarter of 2021.


Accounting Pronouncements

In March 2020, the FASB issued, ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for the effects of reference rate reform on financial reporting. The guidance provides optional expedients and exceptions for applying US GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. ASU 2020-04 applies only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform. The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. The amendments in ASU 2020-04 are elective and are effective upon issuance for all entities. The Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

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Inventory

Inventories consist of the following (U.S. dollars in thousands):

 
September 30,
2021
  
December 31,
2020
  
March 31,
2022
  
December 31,
2021
 
Raw materials $182,656  $118,877  $163,746  $179,891 
Finished goods  232,547   195,489   217,839   220,040 
Total Inventory, net $415,203  $314,366  $381,585  $399,931 

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Revenue Recognition

Contract Liabilities – Customer Loyalty Programs

Contract liabilities, recorded as deferred revenue within the accrued expenses line in the consolidated balance sheets, include loyalty point program deferrals with certain customers which are accounted for as a reduction in the transaction price and are generally recognized as points are redeemed for additional products.

The balance of deferred revenue related to contract liabilities as of March September 30, 202131,2022 and December 31, 20202021 was $24.520.8 million million and $18.222.0 million million,, respectively. The contract liabilities impact to revenue for the three-monththree-month periods ended September 30, 2021,March 31,2022, and 20202021 was a decreasean increase of $0.7$1.2 million and a decrease of $1.8$1.6 million, respectively. The impact to revenue for the nine-month periods ended September 30, 2021, and 2020 was a decrease of $6.3 million and a decrease of $5.3 million, respectively.


Equity Investments

The Company holds strategic investments in other companies. These investments are accounted for under the measurement alternative described in ASC 321, Investments - Equity Securities ("ASC 321") for equity investments that do not have readily determinable fair values. These investments are measured at cost, less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. The Company does not exercise significant influence over these companies. These investments are carried on the Consolidated Balance Sheets within Other Assets. Changes in fair value based on impairments or resulting from observable price changes are recorded in Other Income (expense), net on the Consolidated Statement of Comprehensive Operations. See Note 7 – Fair Value and Equity Investments, for further details around the Company’s equity investments.

3.Goodwill

The Company’s reporting units for goodwill are its operating segments, which are also its reportable segments.

The following table presents goodwill allocated to the Company’s reportable segments for the periods ended September 30, 2021March 31, 2022 and December 31, 20202021 (U.S. dollars in thousands):

 
September 30,
2021
  
December 31,
2020
  
March 31,
2022
  
December 31,
2021
 
Nu Skin            
Mainland China $32,179  $32,179  $32,179  $32,179 
Americas  9,449   9,449   9,449   9,449 
Southeast Asia/Pacific  18,537   18,537 
South Korea  29,261   29,261   29,261   29,261 
Southeast Asia/Pacific  18,537   18,537 
Japan
  16,019   16,019 
EMEA
  2,875   2,875   2,875   2,875 
Japan  16,019   16,019 
Hong Kong/Taiwan  6,634   6,634   6,634   6,634 
Rhyz Investments                
Manufacturing  78,875   78,875   78,875   78,875 
Grow Tech  9,150   9,150 
Rhyz Other  12,603   0   12,603   12,603 
Total $215,582  $202,979  $206,432  $206,432 

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4.Debt

Credit Agreement

On April 18, 2018, the Company entered into a Credit Agreement (the “Credit Agreement”) with several financial institutions as lenders and Bank of America, N.A., as administrative agent. The Credit Agreement provides for a $400 million term loan facility and a $350 million revolving credit facility, each with a term of five years. Both facilities bear interest at the LIBOR, plus a margin based on the consolidated leverage ratio. The term loan facility amortizes in quarterly installments in amounts resulting in an annual amortization of 5.0% during the first and second years, 7.5% during the third and fourth years and 10.0% during the fifth year after the closing date of the Credit Agreement, with the remainder payable at final maturity. The Credit Agreement requires the Company to maintain a consolidated leverage ratio not exceeding 2.25 to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00. As of September 30, 2021,March 31, 2022, the Company was in compliance with all covenants under the Credit Agreement.

The following table summarizes the Company’s debt facilities as of September 30, 2021March 31, 2022 and December 31, 2020:2021:

Facility or Arrangement 
Original
Principal Amount
 
Balance as of
September 30, 2021March 31, 2022 (1)(2)
 
Balance as of
December 31, 20202021 (1)(2)
 Interest Rate Repayment Terms
Credit Agreement term loan facility $400.0 million $
315.0300.0 million
 
 $337.5307.5 million 
Variable 30 day: 2.33%2.21%
 
35% of the principal amount is payable in increasing quarterly installments over a five-year period that began on June 30, 2018, with the remainder payable at the end of the five-year term.
              
Credit Agreement revolving credit facility    $75.070.0 million $
070.0 million  
Variable 30 day: 2.33%2.15%
 Revolving line of credit expires April 18, 2023.

(1)As of September 30, 2021March 31, 2022 and December 31, 2020,2021, the current portion of the Company’s debt (i.e. becoming due in the next 12 months) included $35.0$40.0 million and $30.0$37.5 million, respectively, of the balance of its term loan under the Credit Agreement.

(2)
The carrying value of the debt reflects the amounts stated in the above table, less debt issuance costs of $1.4$1.0 million and $2.11.2 million as of September 30, 2021March 31, 2022 and December 31, 2020,2021, respectively, related to the Credit Agreement, which are not reflected in this table.

5.Leases

As of September 30, 2021,March 31, 2022, the weighted average remaining lease term was 6.78.0 and 4.03.5 years for operating and finance leases, respectively. As of September 30, 2021,March 31, 2022, the weighted average discount rate was 4.0%3.7% and 3.8% for operating and finance leases, respectively.

The components of lease expense were as follows (U.S. dollars in thousands):

 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
  
Three Months Ended
March 31,
 
 2021  2020  2021  2020  2022  2021 
Operating lease expense                  
Operating lease cost $12,193  $13,038  $37,408  $39,043  $10,439  $12,815 
Variable lease cost  1,121   678   4,145   2,062   1,157   1,368 
Short-term lease cost  13   118   590   258   30   339 
Sublease income  (1,352)  (1,075)  (5,164)  (3,264)  0  (1,984)
Finance lease expense                        
Amortization of right-of-use assets  594   0   1,811   0   556   611 
Interest on lease liabilities  77   0   248   0   66   88 
Total lease expense
 $12,646  $12,759  $39,038  $38,099  $12,248  $13,237 

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Supplemental cash flow information related to leases was as follows (U.S. dollars in thousands):

 
Nine Months Ended
September 30,
  
Three Months Ended
March 31,
 
 2021  2020  2022  2021 
Operating cash outflow from operating leases $40,072  $40,865  $10,405  $14,149 
Operating cash outflow from finance leases $250  $0  $68  $89 
Financing cash outflow from finance leases $1,409  $0  $476  $483 
Right-of-use assets obtained in exchange for operating lease obligations $19,120  $62,514  $23,730  $10,891 
Right-of-use assets obtained in exchange for finance lease obligations $59  $0  $0  $49 

Maturities of lease liabilities were as follows (U.S. dollars in thousands):

Year Ending December 31 
Operating
Leases
  
Finance
Leases
  
Operating
Leases
  
Finance
Leases
 
2021 $11,911  $535 
2022  35,502   2,150  $28,595  $1,578 
2023  24,955   2,069   28,298   2,032 
2024  19,610   1,958   21,657   1,924 
2025  14,725   1,385   15,507   1,361 
2026  8,559   260 
Thereafter  41,327   262   49,766   0 
Total  148,030   8,359   152,382   7,155 
Less: Finance charges  18,241   622   19,577   473 
Total principal liability $129,789  $7,737  $132,805  $6,682 

The Company has additional lease liabilities of $0.1 million which have not yet commenced as of September 30, 2021March 31, 2022, and as such, have not been recognized on the consolidated balance sheets.

6.Capital Stock

Net income per share

Net income per share is computed based on the weighted-average number of common shares outstanding during the periods presented. Additionally, diluted earnings per share data gives effect to all potentially dilutive common shares that were outstanding during the periods presented. For the three-monththree-month periods ended September 30, 2021March 31, 2022 and 2020,2021, the only dilutive common shares outstanding relate to the Company’s outstanding stock awards and options. For the three-month periods ended March 31, 2022 and 2021, stock options of 0.1 million and 0.2 million, respectively, and for the nine-month periods ended September 30, 2021 and 2020, stock options of 0.1 million and 0.6 million,, respectively, were excluded from the calculation of diluted earnings per share because they were anti-dilutive.

Dividends

In February 2022, May and August 2021, the Company’s board of directors declared quarterly cash dividends of $0.38 per share. These quarterly cash dividends of $19.3 million $19.0 million and $19.0 million were paid on March 10, 2021, June 9, 2021 and September 8, 2021 to stockholders of record on February 26, 2021,  May 28, 2021 and August 27, 2021. In November 2021, the Company’s board of directors declared a quarterly cash dividend of $0.38$0.385 per share. This quarterly cash dividend of $19.3 million was paid on March 9, 2022 to stockholders of record on February 28, 2022. In May 2022, the board of directors declared a quarterly cash dividend of $0.385 per share to be paid on DecemberJune 8, 20212022 to stockholders of record on November 26, 2021.May 27, 2022.


Repurchase of common stock

During the three-monththree-month periods ended March September 30, 202131,2022 and 2020,2021, the Company repurchased 0.20.2 millionmillion and 0.4 million shares of its Class A common stock under its stock repurchase plan for $10.0 million and $20.0 million, respectively. During the nine-month periods ended September 30, 2021 and 2020, the Company repurchased 1.4 million shares and 4.81.0 million million shares of its Class A common stock under its stock repurchase planplans for $70.410.0 million million and $127.450.4 million million,, respectively.  As of March September 30, 2021, $255.431, 2022,$235.4 million was available for repurchases under the Company’s stock repurchase plan.

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7.Fair Value and Equity Investments

Fair Value

The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximates fair values due to the short-term nature of these instruments. The carrying value of debt approximates fair value due to the variable 30-day interest rate. Fair value estimates are made at a specific point in time, based on relevant market information.

The FASB Codification defines fair value as the price that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. On a quarterly basis, the Company measures at fair value certain financial assets, including cash equivalents. Accounting standards specify a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. These two types of inputs have created the following fair-value hierarchy:

◾Level 1 – quoted prices in active markets for identical assets or liabilities;
◾Level 2 – inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
◾Level 3 – unobservable inputs based on the Company’s own assumptions.

Accounting standards permit companies, at their option, to measure certain financial instruments and other eligible items at fair value. The Company has elected not to apply the fair value option to existing eligible items beyond what is required by US GAAP.

The following tables present the fair value hierarchy for those assets and liabilities measured at fair value on a recurring basis (U.S. dollars in thousands):

 Fair Value at September 30, 2021  Fair Value at March 31, 2022 
 Level 1  Level 2  Level 3  Total  Level 1  Level 2  Level 3  Total 
Financial assets (liabilities):                        
Cash equivalents and current investments $74,360  $0  $0  $74,360  $57,647  $0  $0  $57,647 
Derivative financial instruments asset  0   4,395   0   4,395   0   14,664   0   14,664 
Life insurance contracts  0   0   48,625   48,625   0   0   46,450   46,450 
Derivative financial instruments liability  0   (112)  0   (112)
Contingent consideration  0   0   (12,132)  (12,132)  0   0   (10,226)  (10,226)
Total $74,360  $4,283  $36,493  $115,136  $57,647  $14,664  $36,224  $108,535 

 Fair Value at December 31, 2020  Fair Value at December 31, 2021 
 Level 1  Level 2  Level 3  Total  Level 1  Level 2  Level 3  Total 
Financial assets (liabilities):                        
Cash equivalents and current investments $56,628  $0  $0  $56,628  $66,477  $0  $0  $66,477 
Derivative financial instruments asset  0   1,145   0   1,145   0   6,590   0   6,590 
Life insurance contracts  0   0   45,453   45,453   0   0   49,851   49,851 
Derivative financial instruments liability  0   (105)  0   (105)
Contingent consideration  0   0   (3,125)  (3,125)  0   0   (10,341)  (10,341)
Total $56,628  $1,040  $42,328  $99,996  $66,477  $6,590  $39,510  $112,577 

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The following table provides a summary of changes in fair value of the Company’s Level 3 life insurance contracts (U.S. dollars in thousands):

Beginning balance at January 1, 2021
 $45,453 
 2022
 2021
 
Beginning balance at January 1 $49,851  $45,453 
Actual return on plan assets  3,172   (3,401)  1,153 
Purchase and issuances  7,016   0   7,016 
Sales and settlements  (7,016)  0   (7,016)
Transfers into Level 3  0   0   0 
Ending balance at September 30, 2021
 $48,625 
Ending balance at March 31
 $46,450  $46,606 

Life insurance contracts: ASC 820 preserves practicability exceptions to fair value measurements provided by other applicable provisions of U.S. GAAP. The guidance in ASC 715-30-35-60 allows a reporting entity, as a practical expedient, to use cash surrender value or conversion value as an expedient for fair value when it is present. Accordingly, the Company determines the fair value of its life insurance contracts as the cash-surrender value of life insurance policies held in its Rabbi Trust.
 
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The following table provides a summary of changes in fair value of the Company’s Level 3 contingent consideration (U.S. dollars in thousands):

Beginning balance at January 1, 2021
 $(3,125)
 2022
 2021
 
Beginning balance at January 1 $(10,341) $(3,125)
Additions from acquisitions  (8,702)  0   0 
Changes in fair value of contingent consideration  (305)  115   (139)
Ending balance at September 30, 2021
 $(12,132)
Ending balance at March 31
 $(10,226) $(3,264)

Contingent consideration: Contingent consideration represents the obligations incurred in connection with acquisitions. The estimate of fair value of the contingent consideration obligations requires subjective assumptions to be made regarding the future business results, discount rates, discount periods and probabilities assigned to various potential business result scenarios and was determined using probability assessments with respect to the likelihood of reaching various targets or of achieving certain milestones. The fair value measurement is based on significant inputs unobservable in the market and thus represents a levelLevel 3 measurement. Changes in current expectations of progress could change the probability of achieving the targets within the measurement periods and result in an increase or decrease in the fair value of the contingent consideration obligation.

Equity Investments

The Company maintains equity investments in companies which are accounted for under the measurement alternative described in ASC 321-10-35-2321-10-35-2 for equity securities that lack readily determinable fair values. The carrying amount of equity securities held by the Company without readily determinable fair values was $28.1$28.1 million as at each of September 30, 2021March 31,2022 and $5.0 million as of December 31,2021. During the three months ended September 30,2021, the Company made an additional investment of $5.0 million. During the three months and nine months ended September 30, 2021 the Company recognized $18.1$18.1 million upward fair value adjustments, based on the valuation of additional equity issued by the investee which was deemed to be an observable transaction of a similar investment under ASC 321. The third quarter 2021 gain was recorded within Other income (expense), net on the Consolidated Statement of Comprehensive Operations. The upward fair value adjustment represents a nonrecurriingnonrecurring fair value measurement based on observable price changes and is classified as a level 2Level 3 fair value measurement.

8.Income Taxes

Provision for income taxes for the three- and nine-month periodsfirst quarter of 20212022 was $18.4 million and $57.5$12.0 million, compared to $18.4 million and $46.9$17.1 million for the prior-year periods.period. The effective tax rates for the three- and nine-month periods were 27.0% and 26.9%first quarter 2022 was 23.6% of pre-tax income compared to 24.7% and 28.5%26.5% in the prior-year periods.period.

The Company accounts for income taxes in accordance with ASC Topic 740 “Income Taxes.” These standards establish financial accounting and reporting standards for the effects of income taxes that result from an enterprise’s activities during the current and preceding years. The Company takes an asset and liability approach for financial accounting and reporting of income taxes. The Company pays income taxes in many foreign jurisdictions based on the profits realized in those jurisdictions, which can be significantly impacted by terms of intercompany transactions between the Company and its foreign affiliates. Deferred tax assets and liabilities are created in this process. The Company has netted these deferred tax assets and deferred tax liabilities by jurisdiction. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be ultimately realized. The Company had net deferred tax assets of $25.5$22.0 million and $34.8$24.1 million as of September 30, 2021March 31, 2022 and December 31, 2020,2021, respectively.

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The Company evaluates its indefinite reinvestment assertions with respect to foreign earnings for each quarter. For all foreign earnings, the Company accrues the applicable foreign income taxes. For the earnings that have been indefinitely reinvested, the Company does not accrue foreign withholding taxes. Undistributed earnings that the Company has indefinitely reinvested, for which no foreign withholding taxes have been provided, aggregate to $60.0 million as of December 31, 2020.2021. If the amount designated as indefinitely reinvested as of December 31, 20202021 was repatriated to the United States, the amount of incremental taxes would be approximately $6.0 million.  The Company intends to utilize the indefinitely reinvested offshore earnings to fund foreign investments, specifically capital expenditures.

The Company files income tax returns in the U.S. federal jurisdiction, and in various state and foreign jurisdictions. The Company is no longer subject to tax examinations from the IRS for all years for which tax returns have been filed before 2020. With a few exceptions, the Company is no longer subject to state and local income tax examination by tax authorities for the years before 2017. In 2009, the Company entered into a voluntary program with the IRS called Compliance Assurance Process (“CAP”). The objective of CAP is to contemporaneously work with the IRS to achieve federal tax compliance and resolve all or most of the issues prior to filing of the tax return. As of December 31, 2021, tax years through 2020 have been audited and are effectively closed to further examination. For tax years 2021 and 2022, the Company is in the Bridge phase of the CAP program, pursuant to which the IRS will not accept disclosures, will not conduct reviews and will not provide letters of assurance for the Bridge years. There are limited circumstances that tax years in the Bridge phase will be opened for examination. The Company has elected to participate in CAP for 2021 and may elect to continue participating in CAP for future tax years; the Company may withdraw from the program at any time. With a few exceptions, the Company is no longer subject to state and local income tax examination by tax authorities for the years before 2018. In major foreign jurisdictions, the Company is generally no longer subject to income tax examinations for years before 2015.2016. However, statutes of limitations in certain countries may be as long as ten years.years. The Company is currently under examination in certain foreign jurisdictions; however, the outcomes of those reviews are not yet determinable.  The Company’s unrecognized tax benefits relate to multiple jurisdictions. Due to potential increases in unrecognized tax benefits from the multiple jurisdictions in which the Company operates, as well as the expiration of various statutes of limitations, it is reasonably possible that the Company’s gross unrecognized tax benefits, net of foreign currency adjustments, may decreaseincrease in the next 12 months by approximately $3.0$1.0 to $4.0$2.0 million.

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9.Derivatives and Hedging Activities

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments.  Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash receipts and its known or expected cash payments principally related to the Company’s borrowings.

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.  During 2021,2022, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt.

For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense/income in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense/income as interest payments are made/received on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $112 thousand$3.2 million will be reclassified as an increasea reduction to interest expense.

As of September 30, 2021March 31, 2022 and December 31, 2020,2021, the Company had 4 outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk with a total notional amount of $200 million.

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Fair Values of Derivative Instruments on the Balance Sheet

The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the Balance Sheet:

   Fair Values of Derivative Instruments    
Fair Values of
Derivative Instruments
Derivatives in Cash flow
Hedging Relationships:
 
Balance Sheet
Location
 
September 30,
2021
  
December 31,
2020
  
Balance Sheet
Location
 
March 31,
2022
 
December 31,
2021
Interest Rate Swap - Asset Other Assets $4,395  $1,145  
Prepaid expenses and other
 $3,207 $557
Interest Rate Swap - Liability Accrued Expenses $112  $105 
Interest Rate Swap - Asset
 Other assets
 $11,457 $6,033

Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income

The tables below present the effect of cash flow hedge accounting on Accumulated Other Comprehensive Income.

 Amount of Gain (Loss) Recognized in OCI on Derivative  
Amount of Gain (Loss)
Recognized in OCI on Derivatives
 Three Months Ended  Nine Months Ended  Three Months Ended
Derivatives in Cash flow September 30,  September 30,  March 31,
Hedging Relationships: 2021  2020  2021  2020  2022 2021
Interest Rate Swaps $32  $388  $3,133  $388  $8,057 $3,879

   
Amount of Gain (Loss) Reclassified from
Accumulated Other Comprehensive Loss into Income
    
Amount of Gain (Loss)
Reclassified from Accumulated
Other Comprehensive Loss into Income
     Three Months Ended  Nine Months Ended    Three Months Ended
Derivatives in Cash flow Income Statement September 30,  September 30,  Income Statement March 31,
Hedging Relationships: Location 2021  2020  2021  2020  Location 2022 2021
Interest Rate Swaps Other Income (Expense), Net
 $(45) $(8) $(110) $(8) Other income (expense), net
 $(18) $(27)

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10.Segment Information

The Company reports revenue from 109 segments, consisting of its 7 geographic Nu Skin segments—Mainland China, Americas, South Korea, Southeast Asia/Pacific, Japan, EMEA, and Hong Kong/Taiwan—and 32 Rhyz Investments segments—Manufacturing Grow Tech and Rhyz other. The Nu Skin other category includes miscellaneous corporate revenue and related adjustments. The Rhyz other segment includes other investments by our Rhyz strategic investment arm. These segments reflect the way the chief operating decision maker evaluates the Company’s business performance and allocates resources. Reported revenue includes only the revenue generated by sales to external customers.

Profitability by segment as determined under US GAAP is driven primarily by the Company’s transfer pricing policies. Segment contribution, which is the Company’s segment profitability metric presented in the table below, excludes certain intercompany charges, specifically royalties, license fees, transfer pricing, discrete charges and other miscellaneous items. These charges have been included in Corporate and other expenses. Corporate and other expenses also include costs related to the Company’s executive and administrative offices, information technology, research and development, and marketing and supply chain functions not recorded at the segment level.

In the first quarter of 2021, as a result of a change in the Company’s transfer pricing policies in the Americas, thePrior year segment contribution calculation has been adjusted. The prior year Americas and Corporate and other has been recast to conform with the new policy.

Beginning in July 2021, the Company has changed how the chief operating decision maker manages and reports the Pacific market. The Pacific market will be now be reported with the Southeast Asia segment and no longer with the Americas segment. Segment information has been recast to reflect the move of the Pacific components from the "America/Pacific"“America/Pacific” operating segment to the "Southeast“Southeast Asia/Pacific"Pacific” operating segment. Consolidatedsegment to comply with current segment presentation. Prior year segment information has also been recast to reflect the fourth quarter 2021 exit of the Grow Tech segment, which has been recast to Corporate and other expenses.Consolidated financial information is not affected.

The accounting policies of the segments are the same as those described in Note 2 – Summary of Significant Accounting Policies. The Company evaluates the performance of its segments based on revenue and segment contribution. Each segment records direct expenses related to its employees and its operations.

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Table of contents
Summarized financial information for the Company’s reportable segments is shown in the following tables. Asset information is not reviewed or included with the Company’s internal management reporting. Therefore, the Company has not disclosed asset information for each reportable segment.

Revenue by Segment


 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
  
Three Months Ended
March 31,
 
(U.S. dollars in thousands)
 2021  2020  2021  2020  2022  2021 

      
Nu Skin                  
Mainland China $134,291  $169,068  $438,066  $453,096  $124,495  $149,593 
Americas  131,482   133,618   403,755   312,436   123,580   133,761 
Southeast Asia/Pacific  90,236   83,289 
South Korea  91,989   83,460   261,724   236,094   72,133   81,131 
Southeast Asia/Pacific  79,081   101,949   246,338   262,038 
Japan
  61,791
   69,864
 
EMEA
  55,839   61,411   215,134   147,590   52,968
   76,180
 
Japan  65,117   70,958   203,001   200,549 
Hong Kong/Taiwan  39,921   42,265   114,795   115,253   38,494   36,345 
Nu Skin other  889   (314)  2,350   374 
Other  620   878 
Total Nu Skin
  598,609   662,415   1,885,163   1,727,430   564,317   631,041 
Rhyz Investments
                        
Manufacturing (1)  41,635   40,910   135,760   105,975   40,341   45,985 
Grow Tech  783   22   1,147   336 
Rhyz other  125   0   163   0   241
   0
 
Total Rhyz Investments
  42,543   40,932   137,070   106,311   40,582
   45,985
 
Total $641,152  $703,347  $2,022,233  $1,833,741  $604,899  $677,026 

(1)
The Rhyz Investments Manufacturing segment had $27.4$14.6 million and $10.9$17.4 million of intersegment revenue for the three monthsthree-month period ended September 30,March 31, 2022 and 2021, and 2020, respectively, and $68.0 million and $24.2 million for the nine months ended September 30, 2021 and 2020, respectively. Intersegment revenue is eliminated in the consolidated financial statements, as well as the reported segment revenue in the table above.

Segment Contribution

 
Three Months Ended
March 31,
 
(U.S. dollars in thousands) 2022  2021 
       
Nu Skin      
Mainland China $28,995  $39,439 
Americas  25,123   28,745 
Southeast Asia/Pacific  23,406   19,648 
South Korea  22,743   26,525 
Japan  15,313   17,981 
EMEA
  3,836   8,896 
Hong Kong/Taiwan  8,690   7,348 
Nu Skin contribution  128,106   148,582 
Rhyz Investments        
Manufacturing  3,292   5,826 
Rhyz other  (1,046)  0 
Total Rhyz Investments
  2,246   5,826 
Total segment contribution  130,352   154,408 
Corporate and other  (78,207)  (91,495)
Operating income  52,145   62,913 
Other income (expense)  (1,453)  1,582 
Income before provision for income taxes $50,692  $64,495 

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Segment Contribution

 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
(U.S. dollars in thousands) 2021  2020  2021  2020 
Nu Skin            
Mainland China $30,677  $54,522  $121,596  $135,577 
Americas  25,752   20,618   83,495   48,730 
South Korea  28,984   25,232   84,401   73,421 
Southeast Asia/Pacific  19,020   23,892   59,881   62,263 
EMEA
  6,693   7,111   29,270   11,084 
Japan  16,267   18,245   50,709   49,292 
Hong Kong/Taiwan  8,940   9,048   24,848   22,825 
Nu Skin contribution  136,333   158,668   454,200   403,192 
Rhyz Investments                
Manufacturing  3,059   6,749   15,649   15,000 
Grow Tech  (6,798)  (5,322)  (19,869)  (17,659)
Rhyz other  (659)  0   (1,178)  0 
Rhyz Investments contribution  (4,398)  1,427   (5,398)  (2,659)
Total segment contribution  131,935   160,095   448,802   400,533 
Corporate and other  (66,551)  (85,867)  (235,129)  (231,666)
Operating income  65,384   74,228   213,673   168,867 
Other income (expense)  2,781   525   351   (4,068)
Income before provision for income taxes $68,165  $74,753  $214,024  $164,799 

Depreciation and Amortization

 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
  
Three Months Ended
March 31,
 
(U.S. dollars in thousands) 2021  2020  2021  2020  2022  2021 
      
Nu Skin                  
Mainland China $3,253  $2,649  $9,868  $7,631  $2,884  $3,339 
Americas  190   251   656   714   199   231 
Southeast Asia/Pacific  381   354 
South Korea  805   756   2,768   2,731   388   990 
Southeast Asia/Pacific  359   334   1,096   1,300 
Japan
  277   253 
EMEA
  281   231   850   731   230   286 
Japan  220   296   699   1,602 
Hong Kong/Taiwan  1,004   691   2,794   1,948   691   885 
Total Nu Skin  6,112   5,208   18,731   16,657   5,050   6,338 
Rhyz Investments                        
Manufacturing  3,069   2,077   8,644   5,954   3,330   2,688 
Grow Tech  1,303   1,302   4,002   3,775 
Rhyz other  592   0   987   0   592   0 
Total Rhyz Investments  4,964   3,379   13,633   9,729   3,922   2,688 
Corporate and other  8,857   9,333   25,494   28,893   8,158   9,318 
Total $19,933  $17,920  $57,858  $55,279  $17,130  $18,344 

Capital Expenditures

 
Three Months Ended
March 31,
 
(U.S. dollars in thousands) 2022  2021 
       
Nu Skin      
Mainland China $4,068  $8,517 
Americas  42   112 
Southeast Asia/Pacific  68   565 
South Korea  362   490 
Japan
  0   91 
EMEA
  393   172 
Hong Kong/Taiwan  263   0 
Total Nu Skin  5,196   9,947 
Rhyz Investments        
Manufacturing  1,208   3,338 
Rhyz other
  0   0 
Total Rhyz Investments  1,208   3,338 
Corporate and other  3,875   6,088 
Total $10,279  $19,373 

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Capital Expenditures

 
Three Months Ended
September 30,
  
Nine Months Ended
September 30,
 
(U.S. dollars in thousands) 2021  2020  2021  2020 
Nu Skin            
Mainland China $3,237  $9,000  $15,170  $12,577 
Americas  95   123   294   885 
South Korea  0   173   508   537 
Southeast Asia/Pacific  92   1,256   1,015   1,899 
EMEA
  391   718   821   1,378 
Japan  3   1,484   94   3,132 
Hong Kong/Taiwan  110   7   222   23 
Total Nu Skin  3,928   12,761   18,124   20,431 
Rhyz Investments                
Manufacturing  2,604   2,113   11,604   13,221 
Grow Tech  212   343   1,215   760 
Rhyz other  0   0   0   0 
Total Rhyz Investments  2,816   2,456   12,819   13,981 
Corporate and other  6,791   4,901   19,441   14,398 
Total $13,535  $20,118  $50,384  $48,810 

11.Commitments and Contingencies

The Company is subject to government regulations pertaining to product formulation, labeling and packaging, product claims and advertising, and the Company’s direct selling system.  The Company is also subject to the jurisdiction of numerous foreign tax and customs authorities. Any assertions or determination that either the Company or the Company’s sales force is not in compliance with existing statutes, laws, rules or regulations could have a material adverse effect on the Company’s operations. In addition, in any country or jurisdiction, the adoption of new statutes, laws, rules or regulations or changes in the interpretation of existing statutes, laws, rules or regulations could have a material adverse effect on the Company and its operations. No assurance can be given that the Company’s compliance with applicable statutes, laws, rules and regulations will not be challenged by foreign authorities or that such challenges will not have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company and its Subsidiaries are defendants in litigation, investigations and other proceedings involving various matters. Management believes that the ultimate liability arising from such claims and contingencies, if any, is not likely to have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows.

The Company is subject to regular audits by federal, state and foreign tax authorities. These audits may result in additional tax liabilities. The Company believes it has appropriately provided for income taxes for all years. Several factors drive the calculation of its tax reserves. Some of these factors include: (i) the expiration of various statutes of limitations; (ii) changes in tax law and regulations; (iii) issuance of tax rulings; and (iv) settlements with tax authorities. Changes in any of these factors may result in adjustments to the Company’s reserves, which would impact its reported financial results.

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Table of Contents
12.Acquisitions

In December 2020, the Company acquired 100% of the outstanding equity interest of Ingredient Innovations International Company (“3i”). The purchase price for 3i was $15.7 million, net of cash acquired of $2.1 million and $0.8 million to be paid within six months, all payable in cash. In addition, there is potential for an incremental $7.0 million in contingent consideration, which becomes payable if certain performance targets are reached in 2021 and 2022. The fair value of the contingent consideration recorded on the acquisition date was $3.1 million. The Company allocated the gross purchase price of $24.5 million to the assets acquired and liabilities assumed at estimated fair values. The estimated fair value of assets acquired included $14.4 million of intangible assets, $0.3 million of property and equipment, $2.1 million of cash, $0.8 million of accounts receivable and less than $0.3 million of inventory, and the acquisition also included approximately $0.3 million of current liabilities and resulted in a deferred tax liability of $3.1 million. The excess purchase price over the aggregate fair value of assets acquired less liabilities assumed of $6.4 million was recorded as goodwill. The intangible assets acquired were comprised of $3.7 million for Customer relationships, $10.0 million for technology and $0.7 million for other intangibles, all with an assigned estimated useful life of approximately 8 years. All the goodwill was assigned to our Manufacturing segment. The allocation of the fair value of assets acquired and liabilities assumed for the acquisition was finalized during the three months ended March 31, 2021.

In April 2021, the Company acquired 100% ownership in MyFavoriteThings, Inc. (“Mavely”), making Mavely a wholly owned subsidiary of the Company. The acquisition enables the Company to continue to expand its digital tools. The purchase price for Mavely was $16.8 million, net of cash acquired of $0.4 million and $0.9 million to be paid within six months, all payable in cash. In addition, there is potential for an incremental $24.0 million in contingent consideration, which becomes payable if certain revenue and profitability targets are reached in 2021, 2022 and 2023. The fair value of the contingent consideration recorded on the acquisition date was $8.7 million. The Company allocated the gross purchase price of $29.4 million to the assets acquired and liabilities assumed at estimated fair values. The estimated fair value of assets acquired included $16.4 million of intangible assets, $0.4 million of cash, $0.1 million of accounts receivable, and also resulted in a deferred tax liability of $3.5 million. The excess purchase price over the aggregate fair value of assets acquired less liabilities assumed of $12.6 million was recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies. None of the goodwill is expected to be deductible for income tax purposes. The intangible assets acquired were comprised of $2.0 million for customer relationships, $11.3 million for technology, $2.8 million for trademarks and $0.3 million for other intangibles. The intangibles were assigned useful lives of 8 years for the technology and tradename, approximately 4 years for the customer relationships and 3 years for the other intangibles. All the goodwill was assigned to our Rhyz other segment. The allocation of the fair value of assets acquired and liabilities assumed for the acquisition was finalized during the three months ended September 30, 2021.

13.Restructuring

In the fourth quarter 2021, the Company determined to exit the Grow Tech segment, to better align its resources on key strategic initiatives to achieve the future growth objectives and priorities of the core Nu Skin business. The Grow Tech segment was pursuing the commercialization of controlled-environment agriculture for use in the agriculture feed industry. This segment has been operating as part of the Company’s Rhyz strategic investment arm. As a result of the restructuring program, the Company recorded a non-cash charge of $38.5 million in 2021, including $9.2 million for impairment of goodwill, $9.0 million for impairment of intangibles, $13.7 million of fixed asset impairments and $6.6 million for inventory write-off, and $20.0 million of cash charges, including $6.5 million for employee severance and $13.5 million for other related cash charges with our restructuring. As of December 31, 2021, the $20.0 million liability related to the cash charges was recorded within Accrued expenses. During the first quarter of 2022, the Company made cash payments of $11.6 million, leaving an ending restructuring accrual of $8.3 million as of March 31, 2022. The Company expects to pay out the remaining liability in the first half of 2022. The restructuring charges were recorded in the previous Grow Tech segment, which in the current year has been recast to Corporate and Other.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) 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 our current expectations and beliefs.  All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws and include, but are not limited to, statements of management’s expectations regarding our performance, initiatives, strategies, product introductions and offerings, growth, opportunities and risks; statements of projections regarding future sales, expenses, operating results, taxes and duties, capital expenditures, sources and uses of cash, foreign-currency fluctuations or devaluations, repatriation of undistributed earnings, and other financial items; statements of management’s expectations and beliefs regarding our markets and global economic conditions; statements regarding the payment of future dividends and stock repurchases; statements regarding the outcome of litigation, audits, investigations or other regulatory actions; statements regarding government policies and regulations relating to our industry, including government policies and regulations in Mainland China; accounting estimates and assumptions; statements of belief; and statements of assumptions underlying any of the foregoing. In some cases, you can identify these statements by forward-looking words such as “believe,” “expect,” “optimistic,” “project,” “anticipate,” “determine,” “estimate,” “intend,” “plan,” “goal,” “objective,” “targets,” “become,” “likely,” “will,” “would,” “could,” “may,” “might,” the negative of these words and other similar words. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law.  We caution and advise readers that these statements are based on assumptions that may not be realized and involve risks and uncertainties that could cause actual results to differ materially from the expectations and beliefs contained herein. For a summary of these risks, see the risk factors included in our Annual Report on Form 10-K for the 20202021 fiscal year and in our subsequent quarterly and other reports, including this Quarterly Report.

The following Management’s Discussion and Analysis should be read in conjunction with our consolidated financial statements and related notes and Management’s Discussion and Analysis included in our Annual Report on Form 10-K for the 20202021 fiscal year, and our other reports filed with the Securities and Exchange Commission through the date of this Quarterly Report.

Overview

Revenue for the three-month period ended September 30, 2021March 31, 2022 decreased 9%11% to $641.2$604.9 million, compared to $703.3$677.0 million in the prior-year period, andperiod.  Our revenue for the nine-month period ended September 30, 2021 increased 10% to $2.0 billion, compared to $1.8 billion in the prior-year period.first quarter of 2022 was negatively impacted 3% from foreign-currency fluctuations. Our Customers, Paid Affiliates and Sales Leaders decreased 15%declined 13%, 14% and Customers decreased 9%22%, respectively, on a year-over-year basis. Our reported revenue benefited 2% and 4% from foreign-currency fluctuations

The declines for the three-three-month period ended March 31, 2022 were largely driven by COVID-related lockdowns and nine-month periods ended September 30, 2021, respectively.

Our third quarter revenue was softer than anticipated as the COVID-19 delta variant created unexpected disruptionsother factors in many of our markets. The unanticipated government restrictions impacted our ability to sell and distribute products,eastern markets along with the largest impactcontinued softening in EMEA. We are looking forward to our Mainland China and Southeast Asia/Pacific markets, and also disrupted our promotional activities such asproduct launches, specifically the incentive trips andexpected launch of the performance of local exposageLOC LumiSpa iO in several markets.  The revenue growth for the first nine months of 2021 benefited from a strong firstback half of 2021 where we benefitted from social commerce. We are continuing the launch of our two new products Beauty Focus Collagen+ and ageLOC Meta, with both being generally available for purchase in 2022.year.

Earnings per share for the thirdfirst quarter of 20212022 decreased 10%16% to $0.97,$0.76, compared to $1.08 in the prior-year period. Earnings per share for the first nine months of 2021 increased 36% to $3.03, compared to $2.23$0.91 in the prior-year period. The decrease in earnings per share for the third quarter wasis primarily driven by the decrease in revenue. The increase in earnings per share for the first nine-months of 2021 was driven by the increasedecline in revenue and fixed nature of general and administrative expenses on the increased revenue.along with decline in gross margin from sales promotions.

1817
Segment Results

We report our business in tennine segments to reflect our current management approach. These segments consist of our seven geographic Nu Skin segments—Mainland China, Americas, South Korea, Southeast Asia/Pacific, South Korea, Japan, EMEA and Hong Kong/Taiwan and EMEA—and—and our three Rhyz Investment segments—Manufacturing Grow Tech and Rhyz other. The Nu Skin otherOther category includes miscellaneous corporate revenue and related adjustments. The Rhyz other segment includes other investments by our Rhyz strategic investment arm, which were entered into during the second quarter of 2021.

The following table sets forth revenue for the three- and nine-monththree-month periods ended September 30,March 31, 2022 and 2021 and 2020 for each of our reportable segments (U.S. dollars in thousands):

 
Three Months Ended
September 30,
   
Constant-
Currency
  
Nine Months Ended
September 30,
   
Constant-
Currency
 
 2021 2020 Change  
Change(1)
 2021 2020 Change  
Change(1)
  
Three Months Ended
March 31,
   Constant-Currency 
                  2022 2021 Change  
Change(1)
 
Nu Skin                                    
Mainland China 
$
134,291
  
$
169,068
  
(21
)%
 
(26
)%
 
$
438,066
  
$
453,096
  
(3
)%
 
(11
)%
 
$
124,495
  
$
149,593
  
(17
)%
 
(18
)%
Americas 
131,482
  
133,618
  
(2
)%
 
(2
)%
 
403,755
  
312,436
  
29
%
 
28
%
 
123,580
  
133,761
  
(8
)%
 
(6
)%
Southeast Asia/Pacific 
90,236
  
83,289
  
8
%
 
11
%
South Korea 
91,989
  
83,460
  
10
%
 
8
%
 
261,724
  
236,094
  
11
%
 
5
%
 
72,133
  
81,131
  
(11
)%
 
(4
)%
Southeast Asia/Pacific 
79,081
  
101,949
  
(22
)%
 
(23
)%
 
246,338
  
262,038
  
(6
)%
 
(9
)%
Japan 
61,791
  
69,864
  
(12
)%
 
(3
)%
EMEA 
55,839
  
61,411
  
(9
)%
 
(11
)%
 
215,134
  
147,590
  
46
%
 
36
%
 
52,968
  
76,180
  
(30
)%
 
(25
)%
Japan 
65,117
  
70,958
  
(8
)%
 
(5
)%
 
203,001
  
200,549
  
1
%
 
2
%
Hong Kong/Taiwan 
39,921
  
42,265
  
(6
)%
 
(8
)%
 
114,795
  
115,253
  
—
  
(4
)%
 
38,494
  
36,345
  
6
%
 
6
%
Nu Skin other  
889
   
(314
)
 
383
%
 
382
%
  
2,350
   
374
  
528
%
 
530
%
Other  
620
   
878
  
(29
)%
 
(29
)%
Total Nu Skin 
598,609
  
662,415
  
(10
)%
 
(11
)%
 
1,885,163
  
1,727,430
  
9
%
 
5
%
 
564,317
  
631,041
  
(11
)%
 
(8
)%
Rhyz Investments                                    
Manufacturing 
41,635
  
40,910
  
2
%
 
2
%
 
135,760
  
105,975
  
28
%
 
28
%
 
40,341
  
45,985
  
(12
)%
 
(12
)%
Grow Tech 
783
  
22
  
3,459
%
 
3,459
%
 
1,147
  
336
  
241
%
 
241
%
Rhyz other  
125
   
—
         
163
   
—
         
241
   
—
       
Total Rhyz Investments  
42,543
   
40,932
  
4
%
 
4
%
  
137,070
   
106,311
  
29
%
 
29
%
  
40,582
   
45,985
  
(12
)%
 
(12
)%
Total 
$
641,152
  
$
703,347
  
(9
)%
 
(11
)%
 
$
2,022,233
  
$
1,833,741
  
10
%
 
6
%
 
$
604,899
  
$
677,026
  
(11
)%
 
(8
)%

(1)
Constant-currency revenue change is a non-GAAP financial measure. See “Non-GAAP Financial Measures,” below.

The following table sets forth segment contribution for the three- and nine-monththree-month periods ended September 30,March 31, 2022 and 2021 and 2020 for each of our reportable segments (U.S. dollars in thousands). Segment contribution excludes certain intercompany charges, specifically royalties, license fees, transfer pricing and other miscellaneous items. We use segment contribution to measure the portion of profitability that the segment managers have the ability to managecontrol for their respective segments. Prior year segment contribution has been recast for the fourth quarter of 2021 exit of the Grow Tech segment, the $6.1 million of expense has been recast to Corporate and other. For additional information regarding our segments and the calculation of segment contribution, see Note 10 to the consolidated financial statements contained in this report.

 
Three Months Ended
September 30,
     
Nine Months Ended
September 30,
    
 2021 2020 Change 2021 2020 Change  
Three Months Ended
March 31,
    
              2022 2021 Change 
Nu Skin                           
Mainland China 
$
30,677
  
$
54,522
  
(44
)%
 
$
121,596
  
$
135,577
  
(10
)%
 
$
28,995
  
$
39,439
  
(26
)%
Americas 
25,752
  
20,618
  
25
%
 
83,495
  
48,730
  
71
%
 
25,123
  
28,745
  
(13
)%
Southeast Asia/Pacific 
23,406
  
19,648
  
19
%
South Korea 
28,984
  
25,232
  
15
%
 
84,401
  
73,421
  
15
%
 
22,743
  
26,525
  
(14
)%
Southeast Asia/Pacific 
19,020
  
23,892
  
(20
)%
 
59,881
  
62,263
  
(4
)%
Japan 
15,313
  
17,981
  
(15
)%
EMEA 
6,693
  
7,111
  
(6
)%
 
29,270
  
11,084
  
164
%
 
3,836
  
8,896
  
(57
)%
Japan 
16,267
  
18,245
  
(11
)%
 
50,709
  
49,292
  
3
%
Hong Kong/Taiwan  
8,940
   
9,048
  
(1
)%
  
24,848
   
22,825
  
9
%
  
8,690
   
7,348
  
18
%
Total Nu Skin 
136,333
  
158,668
  
(14
)%
 
454,200
  
403,192
  
13
%
 
128,106
  
148,582
  
(14
)%
Rhyz Investments                           
Manufacturing 
3,059
  
6,749
  
(55
)%
 
15,649
  
15,000
  
4
%
 
3,292
  
5,826
  
(43
)%
Grow Tech 
(6,798
)
 
(5,322
)
 
(28
)%
 
(19,869
)
 
(17,659
)
 
(13
)%
Rhyz other  
(659
)
  
—
      
(1,178
)
  
—
      
(1,046
)
  
—
    
Total Rhyz Investments 
(4,398
)
 
1,427
  
(408
)%
 
(5,398
)
 
(2,659
)
 
(103
)%
 
2,246
  
5,826
  
(61
)%

1918
The following table provides information concerning the number of Customers, Paid Affiliates and Sales Leaders asin our core Nu Skin business for the three-month periods ended March 31, 2022 and 2021. As we continue to focus on customer acquisition, our Paid Affiliates, who primarily share products, are a bridge to attracting new customers and nurturing relationships and community. Paid Affiliates power our social commerce model and this is an important indicator of September 30, 2021 and 2020.  “Customers” are persons who have purchased products directly fromconsumer purchasing activity in our business. During the Company duringfirst quarter of 2022, in connection with the three months ended asintroduction of the date indicated. Our Customer numbers do not include consumers who purchase products directly from membersnew metric Paid Affiliates, we reviewed how we currently present Sales Leaders and adjusted that metric’s definition to what we believe provides a better insight into the trends of our sales force. “Sales Leaders” are independent distributors, and sales employees and independent marketers in Mainland China, who achieve certain qualification requirements.business. The definition of our Customer metric remained unchanged. We have recast the 2021 Sales Leaders to the new definition. Except as discussed below regarding our Southeast Asia/Pacific segment, the trends under the new definition were materially consistent with those under the previous definition.

  
As of
September 30, 2021
  
As of
September 30, 2020
  % Increase (Decrease) 
  Customers  Sales Leaders  Customers  Sales Leaders  Customers  Sales Leaders 
                   
Mainland China  
355,256
   
13,838
   
341,386
   
20,970
   
4
%
  
(34
)%
Americas  
324,880
   
12,127
   
397,936
   
12,798
   
(18
)%
  
(5
)%
South Korea  
156,439
   
9,448
   
164,256
   
7,973
   
(5
)%
  
18
%
Southeast Asia/Pacific  
162,048
   
7,607
   
204,489
   
9,959
   
(21
)%
  
(24
)%
EMEA  
210,705
   
5,726
   
235,202
   
6,226
   
(10
)%
  
(8
)%
Japan  
123,453
   
6,029
   
126,896
   
6,523
   
(3
)%
  
(8
)%
Hong Kong/Taiwan  
62,490
   
3,790
   
69,346
   
4,067
   
(10
)%
  
(7
)%
Total  
1,395,271
   
58,565
   
1,539,511
   
68,516
   
(9
)%
  
(15
)%

●
 “Customers” are persons who have purchased directly from the Company during the three months ended as of the date indicated. Our Customer numbers include members of our sales force who made such a purchase, including Paid Affiliates and those who qualify as Sales Leaders, but they do not include consumers who purchase products directly from members of our sales force.


●
“Paid Affiliates” are any Brand Affiliates, as well as sales employees and independent marketers in Mainland China, who earned sales compensation during the three-month period. In all of our markets besides Mainland China, we refer to members of our independent sales force as “Brand Affiliates” because their primary role is to promote our brand and products through their personal social networks.


●
“Sales Leaders” are the three-month average of our monthly Brand Affiliates, as well as sales employees and independent marketers in Mainland China, who had achieved certain qualification requirements as of the end of each month of the quarter.

Following
  
Three Months Ended
March 31,
    
 Customers 2022  2021  Change 
Mainland China 
289,060   316,000   (9)%
Americas  318,458   374,867   (15)%
Southeast Asia/Pacific  165,657   185,435   (11)%
South Korea  140,648   152,390   (8)%
Japan  122,616   126,525   (3)%
EMEA  216,037   296,001   (27)%
Hong Kong/Taiwan  68,975   66,042   4%
Total  1,321,451   1,517,260   (13)%

  
Three Months Ended
March 31,
    
 Paid Affiliates 2022  2021  Change 
Mainland China 

22,762
   
41,944
   
(46
)%
Americas  
46,281
   
52,767
   
(12
)%
Southeast Asia/Pacific  
43,262
   
45,871
   
(6
)%
South Korea  
49,328
   
51,006
   
(3
)%
Japan  
38,059
   
38,283
   
(1
)%
EMEA  
33,834
   
43,696
   
(23
)%
Hong Kong/Taiwan  
17,910
   
17,885
   
—
 
Total  
251,436
   
291,452
   
(14
)%

  
Three Months Ended
March 31,
    
 Sales Leaders 2022  2021  Change 
Mainland China 

14,146
   
23,013
   
(39
)%
Americas  
9,547
   
11,394
   
(16
)%
Southeast Asia/Pacific  
8,012
   
8,446
   
(5
)%
South Korea  
6,072
   
6,682
   
(9
)%
Japan  
5,977
   
6,135
   
(3
)%
EMEA  
5,455
   
7,479
   
(27
)%
Hong Kong/Taiwan  
3,253
   
3,755
   
(13
)%
Total  
52,462
   
66,904
   
(22
)%

19
The following is a narrative discussion of our results in each segment, which supplements the tables above.

Mainland China.  Our Mainland China market continued to be challenged during the thirdfirst quarter of 2021, as the COVID-19 delta variant2022, with COVID-related lockdowns and corresponding government restrictionsother factors negatively impactedimpacting our selling and promotional activities. Our revenue benefitted 5%Due to increasing COVID-19 cases, the government implemented more significant lockdowns that precluded gatherings and 8% from favorable foreign-currency fluctuationsmeetings for the thirdgeneral population in Shanghai and other areas. Revenue in this market benefited from our recently launched products, which generated approximately $18.0 million in revenue during the quarter, and first nine monthsfrom utilizing discounted product promotions. As previously disclosed, we anticipate that COVID-related challenges will persist throughout 2022.

In addition, in February 2022, we learned of 2021, respectively. Our Customers benefitedreports in the Chinese media of COVID-19 cases that were reportedly traced back to a meeting in a hotel in Wuhan, Hubei Province organized by an independent marketer of Nu Skin China. The meeting was not authorized by Nu Skin China and was not registered with the applicable government authorities. After learning of the incident, we suspended all Sales Leader meetings in the Hubei Province, ceased operations in our Hubei Province branch office and conducted PCR tests on employees in that branch office. After the Wuhan meeting incident, various offices of Mainland China’s Administration for Market Regulation (the “AMRs”) began inquiries into our Nu Skin China business activities since early 2020. We were also later asked to provide information to Mainland China’s Ministry of Commerce, which we did. We cooperated with the government, and we believe these matters are nearly resolved.

Upon receiving the inquiries from the rolloutAMRs, we proactively suspended all Sales Leader meetings throughout the Mainland China market. Shortly thereafter, as noted above, the government instituted more significant lockdowns in Shanghai and other areas in Mainland China due to rising COVID-19 cases. We believe the meeting restrictions negatively impacted our business momentum in this market. While we currently anticipate resuming Sales Leader meetings when the government-imposed lockdowns are lifted, we believe the loss of momentum will impact this market’s performance through the rest of this year. As we continue to invest in new social commerce technologies in this market, our Tencent digital tools, which launched in September of 2021.focus is to decrease dependence on in-person meetings.

The year-over-year decrease in segment contribution for the thirdfirst quarter and first nine months of 2021 is attributable to decreased reported2022 primarily reflects lower revenue, and a 5.2 percentage point and 2.7 percentage point, respectively, increase in selling expense as a percentage of revenue. The salaries and service fees of our Sales Leaders in Mainland China are fixed until they are adjusted in a quarterly evaluation process. As a result, we have variations in our selling expenses as a percentage of revenue, particularly when there is a sequential change in revenue. The third quarter decline is also attributable to the fixed nature of general and administrative expenses on lowerand a 2.7 percentage point decrease in gross margin attributable to increased product promotions and an unfavorable sales mix, which was partially offset by a 1.7 percentage point improvement in selling expenses as a percentage of revenue.

Americas. Our Americas segment continued to benefit from greater adoption of innovative products shared increasingly via the social commerce business model supported by our digital tools, which drove increased revenue in the first nine months of 2021. The decline in revenue, Customers, Paid Affiliates and Sales Leaders and Customersin our Americas segment is predominately attributable to continued economic challenges in our Latin America markets.  Our U.S. market’s revenue increased 15% for the thirdfirst quarter of 2021 is predominately due to2022 from continued momentum, specifically from the continued economic instability in the Latin America markets, Argentina in particular, which is experiencing hyperinflation.  Our U.S. market experienced 14% revenue growth for the third quarter, which is primarily attributable to a strong product launch of Beauty Focus Collagen+, with approximately $19 million in revenue for during the quarter.second half of 2021 and continued social adoption.

The year-over-year increase in segment contribution for the third quarter of 2021 primarily reflects the increase in revenue in our U.S. market, which carries a more favorable gross margin than our Latin America markets; this was partially offset by an increase in selling expenses as a percent of revenue from the increased cost of incentive trips. The increasedecline in segment contribution for the first nine monthsquarter of 20212022 primarily reflects the decrease in revenue, a 1.8 percentage point decrease in gross margin, primarily attributable to higher sales promotions and an unfavorable product mix in the first quarter.  Our Americas segment contribution was also negatively impacted by the fixed nature of general and administrative expenses.

Southeast Asia/Pacific. Our Southeast Asia/Pacific segment revenue increased 8% for the first quarter of 2022, with a 3% negative impact from unfavorable foreign-currency fluctuations. The increase in revenue was partially driven by a strong product launch of ageLOC Meta (locally referred to as ageLOC Reset in the Southeast Asia markets), which generated approximately $13.2 million in revenue along with 2.6 percentage point increasethe loosening of COVID restrictions in gross margin, and improvements in general and administrative expenses due to the fixed nature on increased revenue, all partially offset by a slight increase in selling expenses as a percent of revenue, from increased cost of incentive trips.

South Korea. Our South Korea market continues to improve and benefited from successful product promotions and Sales Leader initiatives which contributed to a 10% and 11% increase in revenue for the third quarter and first nine months of 2021, respectively and an 18% increase in Sales Leaders.markets.  Our product launches and promotions during the quarter drovewere focused on re-energizing our existing Sales Leaders, which led to a 58%decline in our Customers and Paid Affiliates. Under our previous Sales Leaders definition, Sales Leaders increased 10% for the first quarter of 2022, this was driven by an increase of Sales Leaders in March from the launch of ageLOC Meta, while with the new definition being calculated as the average Sales Leaders for the three-months in the quarter, the March increase from the ageLOC Meta launch does not fully offset the decline in Sales Leaders for January and February. In addition, the March launch of ageLOC Meta in Maylasia and Indonesia was a preview sale, which is only available to members of our sales force who achieve certain qualifications.  This typically leads to an increase in sales of our TR90 product line. Our reported revenue reflects a 2% benefit and a 6% benefit from favorable foreign-currency fluctuations forSales Leaders during the third quarter and first nine months of 2021, respectively.preview period.

The year-over-year increase in segment contribution is primarily attributable to higher revenue, along with a decline in general and administrative expenses.

South Korea. Our first quarter of 2022 constant-currency revenue was a decline of 4% compared to 2021; our reported revenue reflects a 7% negative impact from foreign-currency fluctuations.  Our South Korea segment remained challenged from the ongoing COVID-19 spikes in cases during the first quarter of 2022, leading to declines in revenue and Customers, Paid Affiliates, and Sales Leaders.

The year-over-year decline in segment contribution primarily reflects the increaseddecreased revenue, and improvements in gross margin, due to thealong with a 1.0 percentage point increase in selling expenses as a percentage of revenue, from growth in the number of Sales Leaders qualifying for increased sales compensation.

Japan. The decline in revenue is primarily attributable to a 9% negative impact from unfavorable foreign-currency fluctuations.  In addition, our revenue, Customers, Paid Affiliates, and Sales Leaders were negatively impacted by the continued COVID restrictions in the beginning of TR90,the quarter, which has a more favorable margin, along withloosened as the fixed nature of general and administrative expenses on increasedquarter progressed.

The year-over-year decline in segment contribution reflects the decreased revenue.

20
Southeast Asia/PacificEMEA. Our Southeast Asia/Pacific market continues to be challengedThe continued softening of momentum in our EMEA segment, further driven by the COVID-19 outbreak and the associated government restrictions from the delta variant. In addition, the associated restrictions have impactedcurrent geopolitical Russian/Ukraine conflict which has caused disruption to our supply chainsales force, especially in the region, as we have been unableEastern Europe, led to fulfill orders in some markets. The aforementioned issues have contributed to a 30% decline in revenue along with Customers and Sales Leaders for the third quarterquarter. Our reported revenue was negatively impacted 5% from foreign-currency fluctuations. We have suspended business operations in Russia and the first nine monthsUkraine. The Russia and Ukraine markets have historically accounted for less than 1% of 2021.our consolidated revenue.

The year-over-year decline in segment contribution for the third quarter and first nine months of 2021 primarily reflects the decline in revenue.

EMEA. The decline in revenue, Customers and Sales Leaders for the third quarter of 2021 is primarily attributable to loosening of COVID-19 restrictions in the segment, which resulted in a longer summer vacation period, paired with a tough comparison against the strong growth in the third quarter of 2020. The increase in revenue for the first nine months of 2021 is primarily attributable to strong adoption of the social sharing business model supported by our digital tools, along with a strong Sales Leaders introduction of the ageLOC Boost in the second quarter, which became generally available at the end of the third quarter.

The decline in segment contribution for the third quarter is primarily attributable to the decline in revenue along with a 1.71.8 percentage point increase in selling expense as a percent of revenue from increased cost of incentive trips.  The increase in segment contribution for the first nine months of 2021 is primarily attributable to the increase in revenue, improvements in gross margin from a favorable product mix from the Boost launch and the fixed nature of general and administrative expenses.

Japan. The decline in revenue, Customers and Sales Leaders for the third quarter of 2021 is attributed to the ongoing COVID-19 outbreak and the related supply chain disruptions in the market, which impacted product availability.

The year-over-year increase in segment contribution for the first nine months of 2021 primarily reflects a slight decline in selling expense as a percent of revenue from normal fluctuations. The decline in segment contribution for the third quarter of 2021 is primarily attributed to the decline in revenue and the fixed nature of general and administrative expenses.

Hong Kong/Taiwan. Our Hong Kong /Taiwan segment was negatively impacted by the continued pressure from COVID-19 and the delta variant for the third quarter, which contributed to the decline in revenue, Customers and Sales Leaders.

The decline in segment contribution for the third quarter reflects the decline in reported revenue, partially offset by a decline in selling expenses as a percentage of revenue. The increase in segment contribution for the first nine months of 2021 is primarily driven by a 1.0 percentage point decline in selling expenses as a percentage of revenue from product mix.higher cost associated with the incentive trips, and the fixed nature of general and administrative expenses with a decline in revenue.

ManufacturingHong Kong/Taiwan. Our ManufacturingHong Kong/Taiwan segment generated a 2% year-over-year increase in revenue increased 6% for the third quarter, primarily from revenue growth in our  Taiwan market. Revenue from our ageLOC Meta and a 28% increase for the nine-month period ended September 30, 2021.Beauty Focus Collagen + product launches was approximately $4.9 million.  Our continued investments in additional capacity have allowed our manufacturing companies to increase revenue as the demand for nutrition and personal care productsHong Kong market continues to expand.be challenged from the ongoing pressures from COVID-19, which led to decline in Sales Leaders.

The 55% decline and 4% increase in segment contribution for the three- and nine-month periods ended September 30, 2021, respectively, reflectwas primarily driven by revenue growth, offset by approximately a  $4.8 million increase in inventory reserves.

Grow Tech. Our Grow Tech segment continues to invest in controlled-environment agriculture technologies. We have found this technology has broader applications in agriculture,with general and we are investing to pursue this potential opportunity. We are expecting continued losses in 2021 from this segment as we continue to research and refine the technology. We are currently evaluating strategic alternatives with respect to this business.administrative expenses remaining flat on slightly improved revenue.

21Manufacturing
. TableOur Manufacturing segment revenue declined 12% for the first quarter of Contents2022, primarily from a majority of their customers increasing their inventory levels during 2021, which reduced demand for the first quarter of 2022.

The 43% decline in segment contribution is attributed to the lower revenue on fixed costs, along with the revenue mix between our manufacturing entities with different profitability.

Consolidated Results

Revenue

Revenue for the three-month period ended September 30, 2021March 31, 2022 decreased 9%11% to $641.2$604.9 million, compared to $703.3$677.0 million in the prior-year period. Revenue for the nine-month period ended September 30, 2021 increased 10% to $2.0 billion compared to $1.8 billion. Our reported revenue benefited 2% and 4% from foreign-currency fluctuations for the three- and nine-month periods ended September 30, 2021, respectively. For a discussion and analysis of these changesthis decrease in revenue, see “Overview” and “Segment Results,” above.

Gross profit

Gross profit as a percentage of revenue was 75.2% for the third quarter of 2021, compared to 73.9% for the prior-year period, and 75.2%73.3% for the first nine monthsquarter of 2021,2022 compared to 74.7%74.8% for the prior-year period.  Gross profit as a percentageThe gross margin of revenue forour core Nu Skin increased 2.3business declined 1.3 percentage points to 78.6% for76.5%.  The decline in our gross margin is predominately attributed to an increase in sales promotions during the third quarter of 2021 and increased 1.0 percentage points to 78.2% for the first nine months of 2021. Our Nu Skin gross profit benefitted from a favorable product mix, along with lower freight as a percentage of revenue, as during 2020 in order to meet high demand we utilized more costly express shipments.period.

Selling expenses

Selling expenses as a percentage of revenue remained consistent at 39.9% for the third quarter, and decreased to 39.9%was 40.1% for the first nine monthsquarter of 2021,2022, compared to 40.1%40.8% for the prior-year period.  CoreSelling expenses for our core Nu Skin selling expensesbusiness as a percentage of revenue increased 0.3decreased 0.7 percentage points to 42.7% for the third quarter of 2021 and increased 0.2 percentage points to 42.8%43.0% for the first nine monthsquarter of 2021. 2022. Selling expenses for our core Nu Skin business are driven by the specific performance of our individual Sales Leaders. Given the size of our sales force and the various components of our compensation and incentive programs, selling expenses as a percentage of revenue typically fluctuatefluctuates plus or minus approximately 100 basis points from period to period.

General and administrative expenses

General and administrative expenses decreased to $161.1 million in the third quarter of 2021, compared to $165.1 million in the prior-year period and increased to $499.8$148.6 million in the first nine monthsquarter of 2021,2022, compared to $466.2$167.6 million in the prior-year period. The $33.6$19.0 million increase for the first nine months of 2021 was partially attributable to approximately $11.3decline is primarily from a $12.4 million contraction in increased IT expenses, associated with our cloud transition and ongoing development of digital tools, approximately $5.0 million in higher depreciation which is partially attributable to manufacturing capacity expansions, $3.1 million associated with market distributor events held during the year, and miscellaneous increases due to increased revenue. The $4.0 million decrease for the third quarter is mainly driven by lower labor expenses due tofrom lower employee performance incentive compensation, partially offset byalong with our fourth quarter 2021 exit of the increase in IT expenses and depreciation, as discussed above.Grow Tech segment, which led to $6.1 million less expense for the first quarter of 2022. General and administrative expenses as a percentage of revenue increaseddeclined to 25.1% for the third quarter of 2021, from 23.5% for the prior-year period, and decreased to 24.7%24.6% for the first nine monthsquarter of 2021,2022 from 25.4%24.8% for the prior-year period.

21
Other income (expense), net

Other income (expense), net was $2.8 million for the third quarter of 2021 compared to $0.5 million for the prior-year period, and $0.4 million for the first nine monthsquarter of 20212022, was $1.5 million in expense compared to $(4.1)$1.6 million of income for the prior-year period.same period in 2021.  The increase in other expense is largely attributable to unrealized investment income for the thirdfirst quarter and first nine months of 2021, is predominately from $18.1 million of unrealized equity investments income, partially offset by $10.7 million loss on disposal of assets, primarily attributable to our current initiative to right-size our physical footprint and optimize our physical occupancy. See Note 7 to the consolidated financial statements contained in this report for more information on the unrealized equity investments income. In addition, we incurred $3.1 million and $5.5 million in losses from unfavorable foreign currency fluctuations for the three- and nine-month periods ending September 30, 2021, compared to a gain of $0.2 million and a loss of $1.2 million, for the comparable periods.2021.

Provision for income taxes

Provision for income taxes for the three- and nine-month periodsfirst quarter of 20212022 was $18.4 million and $57.5$12.0 million, compared to $18.4 million and $46.9$17.1 million for the prior-year periods.period. The effective tax rates for the three- and nine-month periods were 27.0% and 26.9%rate was 23.6% of pre-tax book income during the first quarter of 2022 compared to 24.7% and 28.5%26.5% in the prior-year periods. The increase in the effective tax rate for the third quarter is primarily due to the prior year statute limitations expiration for an uncertain tax position.period. The decrease in the effective tax rate for the first nine monthsquarter of 20212022 primarily reflects the strong growth in the U.S. market, and Manufacturing segment, which enabled us to utilize additional foreign tax credits to offset the U.S. income taxes.

Net income

As a result of the foregoing factors, net income for the thirdfirst quarter of 20212022 was $49.7$38.7 million compared to $56.3$47.4 million in the prior-year period. Net income for the first nine months of 2021 was $156.5 million, compared to $117.9 million for the first nine months of 2020.

22
Liquidity and Capital Resources

Historically, our principal uses of cash have included operating expenses (particularly selling expenses) and working capital (principally inventory purchases), as well as capital expenditures, stock repurchases, dividends, and debt repayment and the development of operations in new markets.repayment. We have at times incurred long-term debt, or drawn on our revolving line of credit, to fund strategic transactions, stock repurchases, capital investments and short-term operating needs. We typically generate positive cash flow from operations due to favorable margins and have generally relied on cash from operations to fund operating activities. In the first ninethree months of 2021,2022, we generated $32.1$7.5 million in cash from operations, compared to $284.4$18.9 million inof cash fromused in operations during the prior-year period. The decreaseincrease in cash flow from operations primarily reflects an approximate $144.9$17.2 million decline in inventory during the period, compared to an inventory increase of $53.8 million in the prior year period, partially offset by the lower revenue and an increase in inventory partially attributable to our strategic decision to carry more inventory to meet customer demand for our new products and build some protectionaccounts receivable from potential supply chain disruptions, along withhigher sales during the first quarter of 2021 payoutbackend of the accrued commission and accrued employee incentive payments attributable to our fourth-quarter growth.quarter.  Cash and cash equivalents, including current investments, as of September 30, 2021March 31, 2022 and December 31, 20202021 were $301.6$317.5 million and $423.9$354.8 million, respectively, with the decrease being driven by purchases of property and equipment, as discussed below, our quarterly dividend payments, stock repurchases and acquisitions, partially offset by increased net borrowings underpayment on liabilities associated with our revolving credit facility.fourth quarter restructuring.

Working capital. As of September 30, 2021,March 31, 2022, working capital was $350.3$354.8 million, compared to $360.3$343.3 million as of December 31, 2020.2021. The declineincrease in working capital is primarily attributable to a net $52.5$21.0 million increase in borrowings under our revolving credit facility duringprepaid expenses and other, primarily from an increase in prepaid income tax, and a $28.5 million decrease in accrued expenses from the first halfquarter pay-out of the year to fund our acquisitionsrestructuring cost and stock repurchases and other expenses for operations,employee incentive accruals, partially offset by increased inventorydeclines in cash and higher prepaid assets primarily attributable to prepaid income tax.cash equivalents and inventory.

Capital expenditures. Capital expenditures for the ninethree months ended September 30, 2021March 31, 2022 were $50.4$10.3 million. We expect that our capital expenditures in 20212022 will be primarily related to:


●the expansion and upgrade of facilities in our various markets;

●purchases and expenditures for computer systems and equipment, software, and application development;

●the expansion and upgrade of facilities in our various markets; and

●a new manufacturing plant in Mainland ChinaChina.

We estimate that capital expenditures for the uses listed above will total approximately $80–95$85–105 million for 2021.2022. We are currently in the building phaseexpecting to complete construction of the new manufacturing plant in Mainland China. To dateChina in the back half of 2022.  As of March 31, 2022, we have spent approximately $30.5$40.3 million on this project, with $3.0 million in the first quarter of 2022, and expect that our expenditures for this project will total approximately $55$52-57 million, over the next year, including approximately $25-30$15-20 million during 2021.2022.

22
Credit Agreement. In April 2018, we entered into a Credit Agreement (the “Credit Agreement”) with various financial institutions as lenders and Bank of America, N.A., as administrative agent. The Credit Agreement provides for a $400.0 million term loan facility and a $350.0 million revolving credit facility, each with a term of five years. We used the proceeds of the term loan and the draw on the revolving facility to pay off the previous credit agreement, and the outstanding balance on the convertible notes. The interest rate applicable to the facilities is subject to adjustments based on our consolidated leverage ratio. The term loan facility amortizes in quarterly installments in amounts resulting in an annual amortization of 5.0% during the first and second years, 7.5% during the third and fourth years and 10.0% during the fifth year after the closing date of the Credit Agreement, with the remainder payable at final maturity. As of September 30, 2021March 31, 2022 and December 31, 2020,2021, we had $75.0$70.0 million and no$70.0 million outstanding borrowings under our revolving credit facility, and $315.0$300.0 million and $337.5$307.5 million remaining balance on our term loan facility. The carrying value of the debt also reflects debt issuance costs of $(1.4)$(1.0) million and $(2.1)$(1.2) million as of September 30, 2021March 31, 2022 and December 31, 2020,2021, respectively, related to the Credit Agreement.  The Credit Agreement requires us to maintain a consolidated leverage ratio not exceeding 2.25 to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00. We are currentlyAs of March 31, 2022, we were in compliance with all debt covenants under the Credit Agreement. We are planningIn addition, as previously disclosed, we currently plan to refinance our Credit Agreement within the next twelve months.credit facility during 2022.

Derivative Instruments. As of September 30, 2021,March 31, 2022, we had four interest rate swaps, with a total notional principal amount of $200 million and a maturity date of July 31, 2025. We entered into these interest rate swap arrangements during the third quarter of 2020 to hedge the variable cash flows associated with our variable-rate debt under the Credit Agreement.

Stock repurchase plan. In 2018, our board of directors approved a stock repurchase plan authorizing us to repurchase up to $500.0 million of our outstanding shares of Class A common stock on the open market or in private transactions.  During the first ninethree months of 2021,2022, we repurchased approximately 1.40.2 million shares of our Class A common stock under the plan for $70.4$10.0 million. As of September 30, 2021, $255.4March 31, 2022, $235.4 million was available for repurchases under the plan. Our stock repurchases are used primarily to offset dilution from our equity incentive plans and for strategic initiatives.

23
Dividends. In February May and August 2021,2022, our board of directors declared quarterly cash dividends of $0.38$0.385 per share. TheseThis quarterly cash dividendsdividend of $19.3 million $19.0 million and $19.0 million werewas paid on March 10, 2021, June 9, 2021 and September 8, 20212022 to stockholders of record on February 26, 2021,28, 2022. In May 28, 2021 and August 27, 2021. In November 2021,2022, our board of directors declared a quarterly cash dividend of $0.38$0.385 per share to be paid on DecemberJune 8, 20212022 to stockholders of record on November 26, 2021.May 27, 2022. Currently, we anticipate that our board of directors will continue to declare quarterly cash dividends and that the cash flows from operations will be sufficient to fund our future dividend payments. However, the continued declaration of dividends is subject to the discretion of our board of directors and will depend upon various factors, including our net earnings, financial condition, cash requirements, future prospects and other relevant factors.

Cash from foreign subsidiaries. As of September 30, 2021March 31, 2022 and December 31, 2020,2021, we held $301.6$317.5 million and $423.9$354.8 million, respectively, in cash and cash equivalents, including current investments. These amounts include $241.8$263.2 million and $374.7$274.9 million as of September 30, 2021March 31, 2022 and December 31, 2020,2021, respectively, held in our operations outside of the U.S. Substantially all of our non-U.S. cash and cash equivalents are readily convertible into U.S. dollars or other currencies, subject to procedural or other requirements in certain markets, as well as an indefinite-reinvestment designation, as described below.

We typically fund the cash requirements of our operations in the U.S. through intercompany dividends, intercompany loans and intercompany charges for products, use of intangible property, and corporate services. However, some markets impose government-approval or other requirements for the repatriation of dividends. For example, in Mainland China, we are unable to repatriate cash from current operations in the form of dividends until we file the necessary statutory financial statements for the relevant period. As of September 30, 2021,March 31, 2022, we had $32.1$62.7 million in cash denominated in Chinese RMB. We also have experienced delays in repatriating cash from Argentina. As of September 30, 2021March 31, 2022 and December 31, 2020,2021, we had $10.9$12.1 million and $10.6$11.3 million, respectively, in intercompany receivablereceivables with our Argentina subsidiary. We also have intercompany loan arrangements within some of our markets, including Mainland China, that allow us to access available cash, subject to certain limits in Mainland China and other jurisdictions. We also have drawn on our revolving line of credit to address cash needs until we can repatriate cash from Mainland China or other markets, and we may continue to do so. Except for $60.0 million of earnings in Mainland China that we designated as indefinitely reinvested during the second quarter of 2018, we currently plan to repatriate undistributed earnings from our non-U.S. operations as necessary, considering the cash needs of our non-U.S. operations and the cash needs of our U.S. operations for dividends, stock repurchases, capital investments, debt repayment and strategic transactions. Repatriation of non-U.S. earnings is subject to withholding taxes in certain foreign jurisdictions. Accordingly, we have accrued the necessary withholding taxes related to the non-U.S. earnings.

We currently believe that existing cash balances, future cash flows from operations and existing lines of credit will be adequate to fund our cash needs on both a short- and long-term basis. The majority of our historical expenses have been variable in nature, and as such, a potential reduction in the level of revenue would reduce our cash flow needs. In the event that our current cash balances, future cash flow from operations and current lines of credit are not sufficient to meet our obligations or strategic needs, we would consider raising additional funds in the debt or equity markets or restructuring our current debt obligations. Additionally, we would consider realigning our strategic plans, including a reduction in capital spending, stock repurchases or dividend payments.

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Contingent Liabilities

Please refer to Note 11 to the consolidated financial statements contained in this Quarterly Report for information regarding our contingent liabilities.

Critical Accounting Policies and Estimates

There were no significant changes in our critical accounting policies or estimates during the thirdfirst quarter of 2021.2022.

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Seasonality and Cyclicality

In addition to general economic factors, we are impacted by seasonal factors and trends such as major cultural events and vacation patterns.  For example, most Asian markets celebrate their respective local New Year in the first quarter, which generally has a negative impact on that quarter.  We believe that direct selling is also generally negatively impacted during the third quarter, when many individuals, including our sales force, traditionally take vacations.

Prior to making a key product generally available for purchase, we may do one or more introductory offerings of the product, such as a preview of the product to our Sales Leaders, a limited-time offer, or other product introduction or promotion. These offerings may generate significant activity and a high level of purchasing, which can result in a higher-than-normal increase in revenue, Sales Leaders and/or Customers during the quarter and can skew year-over-year and sequential comparisons.

Non-GAAP Financial Measures

Constant-currency revenue change is a non-GAAP financial measure that removes the impact of fluctuations in foreign-currency exchange rates, thereby facilitating period-to-period comparisons of the Company’s performance. It is calculated by translating the current period’s revenue at the same average exchange rates in effect during the applicable prior-year period and then comparing that amount to the prior-year period’s revenue. We believe that constant-currency revenue change is useful to investors, lenders and analysts because such information enables them to gauge the impact of foreign-currency fluctuations on our revenue from period to period.

Available Information

Our website address is www.nuskin.com. We make available, free of charge on our Investor Relations website, ir.nuskin.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.

We also use our Investor Relations website, ir.nuskin.com, as a channel of distribution of additional Company information that may be deemed material. Accordingly, investors should monitor this channel, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts. The contents of our website shall not be deemed to be incorporated herein by reference.

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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Currency Risk and Exchange Rate Information

A majority of our revenue and many of our expenses are recognized outside of the United States, except for inventory purchases, a significant portion of which are primarily transacted in U.S. dollars from vendors in the United States. The local currency of each of our Subsidiaries’ primary markets is considered the functional currency with the exception of our Asia product-distribution subsidiary in Singapore and, as discussed below, our subsidiary in Argentina. All revenue and expenses are translated at weighted-average exchange rates for the periods reported. Therefore, our reported revenue and earnings will be positively impacted by a weakening of the U.S. dollar and will be negatively impacted by a strengthening of the U.S. dollar. These impacts may be significant because a large portion of our business is derived from outside of the United States. Given the uncertainty of exchange rate fluctuations, it is difficult to predict the effect of these fluctuations on our future business, product pricing and results of operations or financial condition.

In the second quarter of 2018, published inflation indices indicated that the three-year cumulative inflation in Argentina exceeded 100 percent, and as of July 1, 2018, we elected to adopt highly inflationary accounting for our subsidiary in Argentina. Under highly inflationary accounting, the functional currency for our subsidiary in Argentina became the U.S. dollar, and the income statement and balance sheet for this subsidiary have been measured in U.S. dollars using both current and historical rates of exchange. The effect of changes in exchange rates on peso-denominated monetary assets and liabilities has been reflected in earnings in Other income (expense), net and was not material. As of September 30, 2021,March 31, 2022, our subsidiary in Argentina had a small net peso monetary position. Net sales of our subsidiary in Argentina were less than 2% of our consolidated net sales for the three- and nine-monththree-month periods ended September 30, 2021March 31, 2022 and 2020.2021.

We may seek to reduce our exposure to fluctuations in foreign currency exchange rates through the use of foreign currency exchange contracts and through intercompany loans of foreign currency. We do not use derivative financial instruments for trading or speculative purposes. We regularly monitor our foreign currency risks and periodically take measures to reduce the impact of foreign exchange fluctuations on our operating results. As of September 30,March 31, 2022 and 2021, and 2020, we did not hold material non-designated mark-to-market forward derivative contracts to hedge foreign denominated intercompany positions or third party foreign debt. As of September 30,March 31, 2022, and 2021 and 2020 we did not hold any forward contracts designated as foreign currency cash flow hedges. We continue to evaluate our foreign currency hedging policy.

For additional information about our market risk see Note 9 to the consolidated financial statements contained in this Quarterly Report.

ITEM 4.CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).  Based on that evaluation, our CEO and our CFO concluded that our disclosure controls and procedures were effective as of September 30, 2021.March 31, 2022.

Changes in Internal Controls Over Financial Reporting.

We made no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the fiscal quarter ended September 30, 2021March 31, 2022 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

There have been no material developments concerning the matters discussed in the “Legal Proceedings” section of our Annual Report on Form 10-K for the 20202021 fiscal year. Please refer to Note 11 to the consolidated financial statements contained in this report for certain information regarding our legal proceedings.

ITEM 1A.RISK FACTORS

The information presented below supplements and should be readThere have been no material changes from the risk factors previously disclosed in conjunction with the detailed discussion of risks associated with our business in our recent SEC filings, including our Annual Report on Form 10-K for the 20202021 fiscal year and subsequent reports.

year.
Challenges to the form of our network marketing system could harm our business.

We may be subject to challenges by government regulators regarding the form of our network marketing system. Legal and regulatory requirements concerning the direct selling industry generally do not include “bright line” rules and are inherently fact-based and subject to interpretation. As a result, regulators and courts have discretion in their application of these laws and regulations, and the enforcement or interpretation of these laws and regulations by government agencies or courts can change.

Recent settlements between the U.S. Federal Trade Commission (“FTC”) and other direct selling companies and guidance from the FTC have addressed inappropriate earnings and lifestyle claims, problematic compensation structures and the importance of focusing on consumers. These developments have created ambiguity as to the proper interpretation of the law and related court decisions. The FTC has been active in its enforcement activities, and any adverse rulings or legal actions could impact our business if direct selling laws or anti-pyramid laws are interpreted more narrowly or in a manner that results in additional burdens or restrictions on direct selling companies. For example:


•
In 2015, the FTC took aggressive actions against a multi-level marketing company, alleging an illegal business model and inappropriate earnings claims.

In 2016, the FTC entered into a settlement with a multi-level marketing company, requiring the company to modify its business model, including basing sales compensation and qualification only on sales to retail and preferred customers and on purchases by a distributor for personal consumption within allowable limits. Although this settlement does not represent judicial precedent or a new FTC rule, the FTC has indicated that the industry should look at this settlement, and the principles underlying its specific measures, for guidance.

In 2019, the FTC entered into a settlement with a multi-level marketing company, alleging an illegal business model and compensation structure and inappropriate earnings claims. The company agreed to a prohibition from engaging in multi-level marketing. The FTC and another multi-level company are currently in litigation, and that company has indicated the FTC is seeking to limit the levels of payment in its compensation structure as a condition to settlement.

During 2020, the FTC issued letters that warned several direct-selling companies to remove and address claims that they or members of their sales force were making about their products’ ability to treat or prevent COVID-19 and/or about the earnings that people who have recently lost income could make.

In October 2021, the FTC sent a notice to more than 1,100 companies, including us, that outlined several practices that the FTC determined to be unfair or deceptive in prior administrative cases. These practices relate to earnings claims, other money-making opportunity claims, and endorsements and testimonials. Pursuant to the FTC’s “penalty offense authority,” companies that received the notice are expected to comply with the standards set in the prior administrative cases and could incur significant civil penalties if they or their representatives fail to do so. The penalties could be up to $43,792 per violation, and there is some ambiguity in how a “violation” would be defined for these purposes.

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Although we take steps to educate our Brand Affiliates on proper claims, if our Brand Affiliates make improper claims, or if regulators determine we are making any improper claims, this could lead to an FTC investigation and could harm our business. In addition, if the requirements related to compensation structures in the actions listed above lead to new industry standards or new rules, or if they limit the levels in the network for which payments can be made, our business could be impacted and we may need to amend our global sales compensation plan. With a majority of our revenue in the United States coming from sales to retail customers, preferred customers, and Brand Affiliates who have never sponsored other Brand Affiliates, we believe that we can demonstrate consumer demand for our products, but we continue to monitor developments to assess whether we should make any changes to our business or global sales compensation plan. If we are required to make changes or if the FTC seeks to enforce similar measures in the industry, either through rulemaking or an enforcement action against our company, our business could be harmed.

We could also be subject to challenges by private parties in civil actions. We are aware of civil actions against other direct-selling companies in the United States, that have, and may in the future, resulted in significant settlements. Allegations directed at us and our competitors regarding the legality of multi-level marketing in various markets and adverse media reports have also created intense public scrutiny of us and our industry. Our business has also been subject to formal and informal inquiries from various government regulatory authorities in the past regarding our business and our compliance with local laws and regulations. All of these actions and any future scrutiny of us or our industry could generate negative publicity or further regulatory actions that could result in fines, restrict our ability to conduct our business in our various markets, enter into new markets, motivate our sales force and attract consumers.

Laws and regulations may prohibit or severely restrict direct selling and cause our revenue and profitability to decline, and regulators could adopt new regulations that harm our business.

Various government agencies throughout the world regulate direct sales practices. Laws and regulations in the United States, Japan, South Korea and Mainland China are particularly stringent and subject to broad discretion in enforcement by regulators. These laws and regulations are generally intended to prevent fraudulent or deceptive schemes, often referred to as “pyramid schemes,” that compensate participants primarily for recruiting additional participants without significant emphasis on product sales to consumers. The laws and regulations in our current markets often:

impose requirements related to sign-up, order cancellations, product returns, inventory buy-backs and cooling-off periods for our sales force and consumers;
require us, or our sales force, to register with government agencies;
impose limits on the amount of sales compensation we can pay;
impose reporting requirements; and
require that our sales force is compensated primarily for selling products and not for recruiting others.

Complying with these widely varying and sometimes inconsistent rules and regulations can be difficult, time-consuming and expensive, and requires significant resources. The laws and regulations governing direct selling are modified from time to time, and like other direct selling companies, we are subject from time to time to government inquiries and investigations in our various markets related to our direct selling activities. This can require us to make changes to our business model and aspects of our sales compensation plan in the markets impacted by such changes and investigations. In June 2021, the U.S. Federal Trade Commission (“FTC”) announced that it is initiating a review of its Business Opportunity Rule, which imposes certain obligations on business opportunity sellers in their dealings with prospective buyers. Currently, multi-level marketing companies are exempted from this rule. If this exemption is eliminated or if new regulations are adopted for multi-level marketing companies, it could negatively impact the growth of our sales force and our revenue. In addition, markets where we currently do business could change their laws or regulations to prohibit direct selling. If we are unable to obtain necessary licenses and certifications within required deadlines or continue business in existing markets or commence operations in new markets because of these laws, our revenue and profitability may decline. Any delay could negatively impact our revenue.

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Improper sales force actions could harm our business.

Sales force activities that violate applicable laws, regulations or policies, or that are alleged to do so, have, and could in the future, harmed our business and reputation and resulted in government or third-party actions against us.

For example, in 2014, allegations were made by various media outlets that certain of our sales representatives in Mainland China failed to adequately follow and enforce our policies and regulations. This adverse publicity, as well as a government review and actions that we voluntarily took to address the situation, resulted in a significant negative impact on our revenue and the number of Sales Leaders and Customers in the region. Similar or more extreme actions by government agencies in Mainland China or other markets in the future could have a significant adverse impact on our business and results of operations.

The direct selling industry in Japan continues to experience regulatory and media scrutiny, and other direct selling companies have been suspended from sponsoring activities. Japan imposes strict requirements regarding how Brand Affiliates approach prospective customers. From time to time, we receive information from consumer centers in certain prefectures about the number of general inquiries and complaints about us and our Brand Affiliates. Based on this information, we continually evaluate and enhance our Brand Affiliate compliance, education and training efforts in Japan. However, we cannot be certain that our efforts will successfully prevent regulatory actions against us, including fines, suspensions or other sanctions, or that the company and the direct selling industry will not receive further negative media attention, all of which could harm our business.

Except in Mainland China, members of our sales force are not employees and act independently of us. The most significant area of risk for such activities relates to improper product claims and claims regarding the business opportunity of joining our sales force. For example:

During 2020 the FTC issued letters that warned several direct-selling companies to remove and address claims that they or members of their sales force were making about their products’ ability to treat or prevent COVID-19 and/or about the earnings that people who have recently lost income could make.


•
In October 2021, the FTC sent a notice to more than 1,100 companies, including us, that outlined several practices that the FTC determined to be unfair or deceptive in prior administrative cases. These practices relate to earnings claims, other money-making opportunity claims, and endorsements and testimonials. Pursuant to the FTC’s “penalty offense authority,” companies that received the notice are expected to comply with the standards set in the prior administrative cases and could incur significant civil penalties if they or their representatives fail to do so. The penalties could be up to $43,792 per violation, and there is some ambiguity in how a “violation” would be defined for these purposes.

We implement strict policies and procedures to ensure our sales force complies with legal requirements. However, given the size of our sales force, we experience problems from time to time. For example, product claims made by some of our sales force in 1990 and 1991 led to a FTC investigation that resulted in our entering into a consent agreement with the FTC and various agreements with state regulatory agencies. In addition, rulings by the South Korean Fair Trade Commission and by judicial authorities against us and other companies in South Korea indicate that, if our sales force engages in criminal activity, we may be held liable or penalized for failure to supervise them adequately. Our sales force may attempt to anticipate which markets we will open in the future and begin marketing and sponsoring activities in markets where we are not qualified to conduct business. We could face fines, suspensions or other legal action if our sales force violates applicable laws and regulations, and our reputation and brand could be negatively impacted.

In addition, as our sales force increasingly uses social media to promote our business opportunity and products, this increases the burden on us to monitor compliance of such activities and increases the risk that such social media content could contain problematic claims in violation of our policies and applicable regulations.

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Epidemics, including COVID-19, and other crises have and may continue to negatively impact our business.

Due to the person-to-person nature of direct selling, our results of operations have been, and will likely continue to be, harmed if the fear of a communicable and rapidly spreading disease or other crises such as natural disasters result in travel restrictions or cause people to avoid group meetings or gatherings or interaction with other people. It is difficult to predict the impact on our business, if any, of the emergence of new epidemics or other crises. The outbreak of COVID-19 in 2020 and resulting pandemic resulted in significant contraction of economies around the world and interrupted global supply chains as many governments issued stay-at-home orders to combat COVID-19. Government-imposed restrictions and public hesitance regarding in-person gatherings, travel and visiting public places have reduced our sales force’s ability to hold sales meetings, resulted in cancellations of key sales leader events and incentive trips, and required us to temporarily close our walk-in and fulfillment locations in some markets where we have such properties. The outbreak has also impacted our ability to obtain some ingredients and packaging as well as ship products in some markets. Our supply chain and logistics have incurred some interruptions and cost impacts to date, and we could experience more significant interruptions and cost impacts or face more significant closures in the future. These factors and other events related to COVID-19 have negatively impacted our sales and operations and will likely continue to negatively affect our business and our financial results. Although some of the negative impacts of COVID-19 have recently improved, this situation continues to be fluid and there is uncertainty regarding its duration and future impacts. For example, the delta variant or other variants have caused some of the pandemic’s negative impacts to worsen or return. In addition, the productivity of our sales force has been, and could continue to be, negatively impacted as restrictions are lifted and our sales force is able to more freely travel and take vacations.

Any significant decline in our operating results in the future could also adversely affect our financial position and liquidity. Under the terms of our existing credit facility, we are required to maintain certain interest coverage and leverage ratios. In addition, our outstanding borrowings under our credit facility and related term loan impose debt service and amortization requirements. A significant deterioration in our results of operations in the future as a result of the COVID-19 pandemic could impact our ability to comply with our financial covenants and debt service and amortization obligations, which could result in an event of default under the terms of our credit facility. An event of default under our credit facility could result in an inability to access funding under the agreement and the acceleration of our obligations, which would have a material adverse effect on our financial condition and liquidity.

In addition, regulatory authorities closely scrutinize the product- and earnings-related claims made by direct-selling companies and their sales force, including claims related to the COVID-19 pandemic. For example, during 2020 and 2021, the FTC has issued letters warning several direct-selling companies to remove and address claims that they or members of their sales force were making about their products’ ability to treat or prevent COVID-19 and/or about the earnings that people who have recently lost income could make. Although we take steps to educate our Brand Affiliates on proper claims, if our Brand Affiliates make improper claims, or if regulators determine we are making any improper claims, this could lead to an FTC investigation and could harm our business and reputation.

Difficult economic conditions could harm our business.

Difficult economic conditions, such as high unemployment levels, inflation, or recession, could adversely affect our business by causing a decline in demand for our products, particularly if the economic conditions are prolonged or worsen. For example, an increase in oil prices would likely cause our shipping expenses to increase, which would negatively affect our profitability. In addition, economic conditions may adversely impact access to capital for us and our suppliers, may decrease the ability of our sales force and consumers to obtain or maintain credit cards, and may otherwise adversely impact our operations and overall financial condition. There also appears to be increased concerns about potential inflationary pressures, which could have a negative impact on our business if it impacts the discretionary spending of our consumers.

Our business could be negatively impacted by corporate citizenship and sustainability matters.

There are increased expectations and focus from certain investors, Brand Affiliates, consumers, employees and other stakeholders concerning corporate citizenship and sustainability matters, including environmental, social and governance matters; packaging; responsible sourcing; and diversity, equity and inclusion matters. From time to time, we announce certain initiatives and goals in these areas. We could fail, or be perceived to fail, in our achievement of such initiatives or goals or in stakeholders’ expectations, or we could fail in accurately reporting our progress on such initiatives, goals and expectations. Moreover, the standards by which corporate citizenship and sustainability efforts and related matters are measured are developing and evolving, and certain areas are subject to assumptions. The standards or assumptions could change over time. In addition, we could be criticized for the scope of our initiatives or goals or perceived as not acting responsibly in connection with these matters, such as with our carbon footprint, recyclability of our packaging, ingredients used in our products or the sourcing of such ingredients. Any such matters, or related corporate citizenship and sustainability matters, could have a material adverse effect on our business.

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ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer

  (a)  (b)  (c)  (d) 
Period 
Total
Number
of Shares
Purchased
  
Average
Price Paid
per Share
  
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
  
Approximate Dollar
Value of Shares that May
Yet Be Purchased Under
the Plans or Programs
(in millions)(1)
 
             
July 1 - 31, 2021  
56,955
  
$
54.73
   
56,955
  
$
262.3
 
August 1 - 31, 2021  
132,308
   
52.06
   
132,308
  
$
255.4
 
September 1 - 30, 2021  
—
   
—
   
—
  
$
255.4
 
Total  
189,263
  
$
52.87
   
189,263
     
  (a)  (b)  (c)  (d) 
Period 
Total
Number
of Shares
Purchased
  
Average
Price Paid
per Share
  
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
  
Approximate Dollar
Value of Shares that May
Yet Be Purchased Under
the Plans or Programs
(in millions)(1)
 
             
January 1 - 31, 2022  
68,636
  
$
52.14
   
68,636
  
$
241.8
 
February 1 - 28, 2022  
74,732
   
50.88
   
74,732
  
$
238.0
 
March 1 - 31, 2022  
57,120
   
45.97
   
57,120
  
$
235.4
 
Total  
200,488
  
$
49.91
   
200,488
     

(1)
In August 2018, we announced that our board of directors approved a stock repurchase plan. Under this plan, our board of directors authorized the repurchase of up to $500 million of our outstanding Class A common stock on the open market or in privately negotiated transactions.

ITEM 3.DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5.OTHER INFORMATION

None.

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ITEM 6.EXHIBITS

Exhibits
Regulation S-K
Number
 Description
 Certification by Ryan S. Napierski, Chief Executive Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 Certification by Mark H. Lawrence, Chief Financial Officer, pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 Certification by Ryan S. Napierski, Chief Executive Officer, pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 Certification by Mark H. Lawrence, Chief Financial Officer, pursuant to Section 1350, Chapter 63 of Title 18, United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS
 
Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH
 
Inline XBRL Taxonomy Extension Schema Document
101.CAL
 
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
 
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
 
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
 
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
 
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

3227
SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

November 3, 2021May 4, 2022

NU SKIN ENTERPRISES, INC.
  
By:
/s/ Mark H. Lawrence
 
 
Mark H. Lawrence
 
 
Chief Financial Officer
 
 
(Duly Authorized Officer and Principal Financial Officer)
 


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