"Following a record year, we continued to generate great momentum in the first quarter as a result of the positive response to our ageLOC product launches and healthy trends in each of our regions," said Truman Hunt, president and chief executive officer. "New product roll outs helped boost revenue trends in the Americas, North Asia and Europe, as reflected by strong executive distributor growth of 11 percent during the quarter.
"Emerging markets also performed well in the first quarter. The Greater China region posted a 35 percent year-over-year increase, and the South Asia/Pacific region continued to build momentum in anticipation of the launch of new ageLOC products in the second quarter," said Hunt.
Regional Results
North Asia. First-quarter revenue in North Asia was $182.2 million, compared to $179.4 million for the same period in 2011. Regional results benefited approximately 2 percent from foreign currency fluctuations. South Korea experienced a local-currency revenue improvement of 8 percent offset by Japan's local-currency revenue decline of 5 percent. The number of executive distributors in the region was down 3 percent while the number of active distributors improved 3 percent.
Greater China. First-quarter revenue in Greater China increased 35 percent to $92.6 million, compared to $68.6 million in the prior-year period. Foreign currency fluctuations positively impacted revenue 3 percent. The executive distributor count in the region improved 31 percent, while the number of active distributors increased 25 percent compared to the prior year.
South Asia/Pacific. Revenue in South Asia/Pacific was $77.3 million, a 55 percent improvement compared to the prior year. Sales in the quarter included approximately $15 million of products sold during the prior-year pre-launch that were shipped in the first quarter, and were positively impacted less than 1 percent by foreign currency fluctuations. The region's first-quarter executive count improved 23 percent while the active distributor count increased 8 percent compared to the same period in 2011.
Americas. Revenue in the Americas improved 19 percent to $66.3 million, compared to $55.9 million in the prior-year period, including a 14 percent revenue increase in the United States. The number of executive distributors grew 15 percent while the number of active distributors increased 7 percent during the quarter.
Europe. Revenue in Europe was $43.5 million, a 4 percent improvement over the prior-year period. Results in the region were negatively impacted approximately 5 percent by foreign currency fluctuations. Both executive and active distributor counts in Europe increased 4 percent compared to the prior year.
Operational Performance
The company's operating margin was 15.5 percent for the quarter, compared to 6.3 percent for the prior-year period, or 14.6 percent when excluding charges related to the Japan customs ruling. Gross margin during the quarter was 83.6 percent, compared to 74.6 percent, or 82.8 percent when excluding the Japan customs expenses. The improvement in gross margin was due primarily to supply chain efficiencies. Selling expenses, as a percent of revenue, were 43.8 percent in the first quarter, representing a 110 basis-point increase, which is primarily attributable to a higher number of distributors qualifying for promotional sales incentives. General and administrative expenses, as a percent of revenue, were 24.3 percent, improving 130 basis-points over the prior year. Other income/expense reported a gain of $3.6 million compared to a loss of $0.4 million in the prior year. The increase is due primarily to foreign currency gains recognized during the quarter.
The company's income tax rate for the quarter was 36.5 percent compared to 37.5 percent in the prior-year period. The company had cash and current investments of $290 million at the end of the quarter. Dividend payments during the quarter were $12.5 million, and the company repurchased $5.4 million of its outstanding shares.
The company's management will host a webcast with the investment community on April 26, at noon (EDT). Those wishing to access the webcast, as well as the financial information presented during the call, can visit the Investor Relations page on Nu Skin Enterprises' website, http://ir.nuskin.com . An archive of the webcast will be available at this same URL through May 11, 2012.
