Thursday, November 6, 2014

Nu Skin results

Nu Skin produced bad results - with sales declining in pretty well every region. These are the sales from the third quarter.

Greater China$226,744$449,558
North Asia205,488202,390
South Asia/Pacific88,915126,972

Herbalife was punished by the market after a miss which involved positive but falling sales growth rate.

This is far worse.

But that is not what my complaint is about.

The company published its results WITHOUT a cash flow statement.

Call me old-fashioned but I like cash flow statements.

If you try to reconstruct it there is yet another quarter where cash generation does not reconcile with profits.

Also they drew a revolver after quarter end despite having almost $200 million of cash on the balance sheet and not obviously needing any more than the non-revolving part of the credit agreement.

I have no idea why.


Disclaimer: Short Nu Skin, unfortunately (yesterday) long Herbalife.


DXK said...

NUS Rev 3Q14 $638mn vs. 3Q12 $526mn
That's +21%

HLF Rev 3Q14 $1,256mn vs. 3Q12 $1,017mn
That's +23%

On that basis, perhaps you want to consider closing your NUS short or even going long at these levels?

Re CF statement: management stated that CFO was positive during the quarter. If you don't believe them, you could probably work it out for yourself?

David said...

As disclosed in the earnings release, they generated $82.8 million of cash from operations, excluding a tax payment related to 2013 income. This compares to reported net income of $68 million. Far from the cash burn many expected going into the quarter.

You can reconcile this cash generation from the balance sheet, tax payment, and dividend.

Excluding currency and the LTO, which fluctuates by nature, the core business is quite healthy and Q4 guidance implies continued strength. China stabilized in Q3 and will start growing again in the coming quarters.

Just another point of view.

kai xiang said...

did the short nuskin even out the long hbl?

Makrointelligenz said...

i suspect you re right on Nu Skin and wrong on Herbalife. tough to let something go when you have invested a lot of time to it and made public commitments.

Clark said...

Hi John, the management stated operating cash flow was positive for the quarter. it doesn't sound like something that would be easily misread. when the audited report is published and operating cash flow is positive, it would weaken your thesis. Since the market took the result badly, wouldn't now be a good idea to close the position?

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