Nu Pores and skin Enterprises : Letter to Shareholders, excerpted from the Nu Pores and skin Enterprises, Inc. 2021 Annual Report back to Shareholders – Type 8-Ok


DEAR SHAREHOLDER,

2021 was one other 12 months stuffed with world uncertainty as a consequence of COVID-related challenges, financial uncertainty, and world provide chain constraints. Nevertheless, we at Nu Pores and skin Enterprises delivered income and adjusted earnings development, expanded our main product portfolio and initiated our strategic transformation plan, Nu Imaginative and prescient 2025. Our dedicated and gifted administration workforce and world gross sales drive as soon as once more enabled us to beat these challenges within the evolving world surroundings by executing on our core priorities and leveraging the strengths of our enterprise mannequin. I am honored to guide this unimaginable group and happy with the onerous work and dedication of all our staff and associates world wide.

Nu Imaginative and prescient 2025 is rooted in our deep understanding of built-in magnificence and wellness and our world’s main magnificence machine programs model positioning. In at present’s world, nearly each main client model is trying to leverage the ability of influencers and direct-to-consumer enterprise fashions to advertise their manufacturers and join immediately with shoppers. At Nu Pores and skin, we’ve at all times been on the forefront of this direct-to-consumer motion and genuine affiliate model promotion with our distinctive enterprise mannequin. We imagine we’re completely positioned to benefit from present and future market alternatives, accelerating our development and producing higher worth for our stakeholders.

I am inspired with our 2021 outcomes contemplating the continuing challenges associated to COVID-19 and its affect on authorities coverage, the economic system, and world provide chains. Complete income elevated modestly up 4 % on prime of a 7 % enhance the prior 12 months, and we achieved double-digit development in adjusted earnings per share. Our continued emphasis on geographic diversification helped stability the affect of regional variation. Robust development within the U.S. and EMEA mirrored the continuing adoption of our rising social commerce enterprise mannequin, in addition to the introduction of latest merchandise in each our private care and wellness product classes.

2021 HIGHLIGHTS:

Complete income elevated 4 %.

Adjusted earnings per share elevated 14 % (reported earnings per share decreased 21%).

Nu Pores and skin U.S. enterprise elevated 32 %, reflecting acceleration in our social commerce enterprise mannequin.

Profitable Magnificence Focus™ Collagen+ and ageLOC® Meta product introductions

NU VISION 2025

Nu Imaginative and prescient 2025, which we launched throughout our Investor Day occasion in February, is our transformational roadmap to turning into the world’s main built-in magnificence and wellness firm powered by our dynamic affiliate alternative platform. The framework builds on our wealthy heritage as an built-in magnificence and wellness firm that serves the wants of tens of millions of shoppers world wide by our go-to-market affiliate gross sales channel. Our associates at the moment are leveraging the ability of social media to construct model consciousness and engagement. Social commerce, which has to this point taken root predominantly in our western markets, is among the key drivers of our future enterprise success, however nonetheless represents a comparatively small portion of our world enterprise at present. By 2025, our purpose is for affiliate-powered social commerce to signify greater than 50 % of our world enterprise, which we imagine will speed up general top-line development to charges within the excessive single digits or low double digits. This must also enhance bottom-line efficiency as we digitally scale our world operations, underscoring our dedication towards reaching our acknowledged mid-term working margin goal of 13 %.

To attain our Nu Imaginative and prescient 2025, we’ve established three strategic imperatives that allow us to leverage the highly effective macro-environmental forces of digital connectivity, social media, and the gig economic system.

1. EmpowerMe™ is our personalised magnificence and wellness technique to ship sensible and linked IoT units for higher client outcomes. We’re prioritizing buyer wants and engagement and constructing stronger loyalty and subscription applications whereas eliminating friction, all of which ends up in larger buyer lifetime worth. We’ll leverage the ability of applied sciences like synthetic intelligence (AI) to realize higher insights throughout our world buyer base to supply personalised assist that elevates their magnificence and wellness experiences. EmpowerMe is extremely complementary and additive to our conventional focus round scientifically superior merchandise and innovation, leveraging the power of our world model.

2. We’ll proceed to leverage our person-to-person advertising mannequin as we supercharge it with the ability, scale and attain of social media to develop model consciousness and engagement by our genuine world affiliate channel. With the broader market adoption of influencer and affiliate marketing online, Nu Pores and skin has continued to be a frontrunner in evolving the ability of word-of-mouth with the size and attain of social media by our personal micro- and nano-influencers, who share our merchandise with shoppers in search of genuine product suggestions from individuals they belief. We’ll proceed to boost our enterprise mannequin to allow higher flexibility and achievement for our model associates world wide.

3. Investing in highly effective applied sciences and capabilities will stay a key space of focus to assist us effectively scale our enterprise, together with our built-in product and social commerce methods. Our investments in manufacturing enabled us to have higher affect over our full worth chain, additional strengthening our world competitiveness. We have invested in new applied sciences, like Mavely, to assist empower our associates to construct their social companies extra successfully. Moreover, we’re launching two new apps-Vera® and Stela-that assist our EmpowerMe™ technique. Our Vera app will present clients with higher insights into their private magnificence and wellness journey and can connect with our Bluetooth-enabled units, whereas our Stela app will higher allow our associates to attach with and nurture their groups.

PURPOSE-DRIVEN BUSINESS

On the coronary heart of our enterprise is our mission to be a worldwide drive for good by empowering individuals to enhance lives by our merchandise and alternative, which creates objective. Our drive for good efforts are centered on constructing a greater place for youngsters world wide by applications that present life-saving coronary heart surgical procedures, imaginative and prescient screenings, entry to schooling and rather more. Our Nourish the Youngsters initiative, a for-profit social entrepreneurship enterprise that encourages our associates, clients and staff to buy and donate meals for malnourished youngsters, feeds roughly 120,000 youngsters each single day-and has served greater than 750 million meals globally.

We’re equally dedicated to being a frontrunner in advancing practices round sustainability. Final 12 months, packaging updates to our prime 20 merchandise, together with different ongoing environmental initiatives, helped save roughly 131 tons of plastic and greater than 34 tons of paper. This consists of being the primary magnificence firm to launch merchandise with Eco-Pac packaging, an modern bio-plastic that makes use of sugar cane. By 2030, we plan to have all of our product packaging be recycled, recyclable, reusable, diminished or renewable.

In my practically 27 years at Nu Pores and skin, I’ve by no means been extra assured in our future. Guided by our Nu Imaginative and prescient 2025, we’re charting a course to guide the sweetness and wellness trade ahead right into a linked and personalised future. Whereas there could also be bumps within the highway as we proceed to remodel our enterprise, the end result will likely be a extra genuine, accessible, and attainable future. We now have what the world wants, and along with our military of brand name ambassadors in near 50 markets across the globe, we’re uniquely positioned to assist individuals world wide look, really feel and stay their finest.

I am grateful in your assist. Thanks for partnering with us on this thrilling journey forward in 2022 and past!

/s/ Ryan Napierski

RYAN NAPIERSKI

President and Chief Govt Officer

NU SKIN ENTERPRISES, INC.

Reconciliation of Earnings per Share Excluding Impression of Restructuring and

Impairment to GAAP Earnings per Share

(in 1000’s, besides per share quantities)

Yr Ended 2021

2020

EPS

2021 Annual

Progress Fee

Web revenue

$

147,266

Impression of restructuring and impairment:

Restructuring and impairment

51,870

Stock write-off

6,656

Revenue tax affect

6,933

Adjusted internet revenue

$

212,725

Diluted earnings per share

$

2.86

$

3.63

(21

%)

Diluted earnings per share, excluding restructuring and impairment affect

$

4.14

$

3.63

14

%

Weighted-average widespread shares excellent (000s):

51,427

FORWARD-LOOKING STATEMENTS: This annual report comprises forward-looking statements throughout the which means of Part 27A of the Securities Act of 1933, as amended, and Part 21E of the Securities Alternate Act of 1934, as amended, that signify the corporate’s present expectations and beliefs. All statements apart from statements of historic reality are “forward-looking statements” for functions of federal and state securities legal guidelines and embody, however aren’t restricted to, statements of administration’s expectations relating to the corporate’s transformation, methods and initiatives, and outcomes (together with top-line, bottom-line and working margin development); administration’s expectations relating to the corporate’s efficiency, worth, future success and market place, gross sales drive and buyer base, digital instruments, social commerce enterprise, operational enhancements, future merchandise and product introductions; statements of perception; and statements of assumptions underlying any of the foregoing. In some instances, you may establish these statements by forward-looking phrases comparable to “imagine,” “anticipate,” “anticipate,” “turn out to be,” “future,” “focus,” “commit,” “results in,” “proceed,” “alternative,” “allow,” “will,” “ought to,” “would,” “may,” “could,” “would possibly,” the detrimental of those phrases and different comparable phrases. We undertake no obligation to publicly replace or revise any forward-looking assertion, whether or not on account of new data, future occasions or in any other case, besides as required by regulation. We warning and advise readers that these statements are based mostly on assumptions that is probably not realized and contain dangers and uncertainties that would trigger precise outcomes to vary materially from the expectations and beliefs contained herein. For a abstract of sure dangers associated to our enterprise, see the corporate’s Annual Report on Type 10-Ok, filed on February 16, 2022, and different paperwork filed by the corporate with the Securities and Alternate Fee.



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