Post on 18-Jul-2016
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Safe Harbor Statement This presentation 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 the company's 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 the company's performance, opportunities, risks, initiatives,
growth, strategies, product offerings, sales force, consumers and new product development; statements regarding shareholder value and projections regarding our 2015-2016
business cycle, future sales, expenses, earnings per share, sources and uses of cash, foreign currency fluctuations, inventory and other financial items; statements of management's
expectations and beliefs regarding China and other markets; 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," "project," "anticipate," "estimate," "intend," "plan," "targets," "likely," "will," "would," "could," "may," "might," the
negative of these words and other similar words.
The forward-looking statements and related assumptions involve risks and uncertainties that could cause actual results and outcomes to differ materially from any forward-looking
statements or views expressed herein. These risks and uncertainties include, but are not limited to, the following:
• risk that continuing media and regulatory scrutiny and investigations in China, and any actions taken by the company or by regulators, could cause unanticipated complications
or other difficulties, make it more difficult to forecast results for future periods, and could negatively impact the company's revenue, sales force and business in this market,
including the interruption of sales activities, loss of licenses, and the imposition of fines, and any other adverse actions or events;
• risks related to negative publicity regarding recent media allegations and subsequent regulatory investigations and fines;
• risk that direct selling regulations in China may be modified, interpreted or enforced in a manner that results in negative changes to the company's business model or the
imposition of a range of potential penalties;
• any failure of current or planned initiatives or products to generate interest among the company's sales force and customers and generate sponsoring and selling activities on a
sustained basis;
• risks related to accurately predicting, delivering or maintaining sufficient quantities of products to support the company's planned initiatives or launch strategies, and increased
risk of inventory write-offs if the company over-forecasts demand for a product, changes its planned initiatives or launch strategies, or does not achieve expected sales levels;
• risk of foreign currency fluctuations and the currency translation impact on the company's business associated with these fluctuations;
• unpredictable economic conditions and events globally;
• regulatory risks associated with the company's products, which could require the company to modify its claims or inhibit the company's ability to import or continue selling a
product in a market if it is determined to be a medical device or if it is unable to register the product in a timely manner under applicable regulatory requirements;
• adverse publicity related to the company's business, products, industry or any legal actions or complaints by the company's sales force or others;
• any prospective or retrospective increases in duties on the company's products imported into the company's markets outside of the United States and any adverse results of tax
audits or unfavorable changes to tax laws in the company's various markets; and
• continued competitive pressures in the company's markets.
The company's financial performance and the forward-looking statements contained herein are further qualified by a detailed discussion of associated risks set forth in the documents
filed by the company with the Securities and Exchange Commission. The forward-looking statements set forth the company's beliefs as of the date that such information was first
provided and the company assumes no duty to update the forward-looking statements contained herein to reflect any change except as required by law.
2
3
4
5
6
7
8
9
10
11
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
projected
Beat Guidance
Within Range
Missed Guidance
12
2 reasons for 2014
• China business disruption
• Regional TR90 launches
13
14
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
*projected
*
15
2014 2015 2016 2017 2018 2019 2020projected 16
2014 2015 2016 2017 2018 2019 2020projected 17
18
“ANTI-AGING PRODUCTS AND SERVICES: THE GLOBAL MARKET”, BCC RESEARCH, AUGUST 2013 19
“A GLOBAL PERSPECTIVE ON DIRECT SELLING, BEAUTY & PERSONAL CARE AND CONSUMER HEALTH,” EUROMONITOR INTERNATIONAL, MARCH 2014 20
“A GLOBAL PERSPECTIVE ON DIRECT SELLING, BEAUTY & PERSONAL CARE AND CONSUMER HEALTH,” EUROMONITOR INTERNATIONAL, MARCH 2014 21
22
SOURCE: WFDSA Global Direct Selling Statistics 23
Source: Direct Selling News 24
25
26
27
28
29
30
31
32
ING
RE
DIE
NT
LIB
RA
RY
PR
OD
UC
T F
OR
MU
LA
TIO
N
33
34
35
36
37
38
39
40
41
42
®
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
INTRODUCTION OF AGELOC IN EXISTING CATEGORIES
68
INTRODUCTION OF AGELOC INTO FIRST PHARMANEX PRODUCT
AND FURTHER DEVELOPMENT OF AGELOC GALVANIC IN
SKINCARE
69
EXPANSION INTO WEIGHT MANAGEMENT AND BODY SHAPING
CATEGORY—AGELOC TR90
70
71
72
73
74
75
76
77
78
79
80
81
82
83
87
88
89
90
Estimates based on company releases and statements in the media
91
Millio
ns U
SD
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
Millio
ns U
SD
5 Yr. CAGR = 14%
3 Yr. CAGR = 14%
107
Millio
ns U
SD
5 Yr. CAGR = 13%
3 Yr. CAGR = 13%
108
108
Millio
ns U
SD
5 Yr. CAGR = 15.0%
3 Yr. CAGR = 19.1%
109
109
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
2009 2010 2011 2012 2013 2014
5 Yr. CAGR = 61%
3 Yr. CAGR = 67%
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
2009 2010 2011 2012 2013 2014
5 Yr. CAGR = 36%
3 Yr. CAGR = 41%
Th
ou
sa
nd
s U
SD
Th
ou
sa
nd
s U
SD
110
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
50,000,000
2009 2010 2011 2012 2013 2014T
ho
usan
ds Y
en
5 Yr. CAGR = -5%
3 Yr. CAGR = -3%
0
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
2009 2010 2011 2012 2013 2014
Th
ou
sa
nd
s W
on
5 Yr. CAGR = 22%
3 Yr. CAGR = 17%
111
$0
$50
$100
$150
$200
$250
$300
$350
$400
2009 2010 2011 2012 2013 2014
5 Yr. CAGR = 22%
3 Yr. CAGR = 10% 16%
27%
21%
8%
19%
9%
Singapore MalaysiaThailand Australia/New ZealandIndonesia Philippines & Other
Millio
ns U
SD
112
$0
$50
$100
$150
$200
$250
$300
$350
2009 2010 2011 2012 2013 2014$0
$10
$20
$30
$40
$50
$60
$70
2009 2010 2011 2012 2013 2014
5 Yr. CAGR = 3%
3 Yr. CAGR = 6%
5 Yr. CAGR = 24%
3 Yr. CAGR = 43%
Millio
ns U
SD
Millio
ns U
SD
113
40%
30%
18%
12%
West Europe North Europe
East Europe Russia/Other$0
$50
$100
$150
$200
$250
2009 2010 2011 2012 2013 2014
5 Yr. CAGR = 6%
3 Yr. CAGR = 4%
projected
Millio
ns U
SD
114
AMERICAS
+7 - 10%
EMEA
(3 – 5)%
GREATER
CHINA
+2 - 5%
NORTH
ASIA
+5 - 8%
SOUTH ASIA /
PACIFIC
+8 - 10%
Global Local-Currency Growth Expected Currency Impact
4 - 6% -6% 115
₩
116
117
118 *Excludes certain items- see GAAP reconciliation table.
119 *Excludes certain items- see GAAP reconciliation table.
120
121
122
EARNINGS PER SHARE
123 *Excludes certain items- see GAAP reconciliation table.
124
125
126
127
128
129
$0.20 $0.24
$0.28 $0.32
$0.36 $0.40 $0.42 $0.44 $0.46
$0.50
$0.59
$0.80
$1.20
$1.38
130
131
132
133
For simplicity, graphs and growth calculations related to 2014 reflect the mid-point 2014 projections that
we provided in our last earnings call.
For years 2009 and later, revenue and selling expense have been adjusted to reflect the correct
classification of certain selling rebates. Revenue and selling expense for years prior to 2009 have not
been similarly adjusted, as we do not believe the adjustments are material.
This presentation contains non-GAAP financial information. Management believes these non-GAAP
financial measures assist management and investors in evaluating, and comparing from period to period,
results from ongoing operations in a more meaningful and consistent manner while also highlighting more
meaningful trends in the results of operations. A reconciliation of non-GAAP measures presented in this
presentation is provided on the GAAP reconciliation slide that follows.
134
Financial Information in this Presentation
Projected
2007 2009 2011 2014
Gross Margin 81.9% 81.5% 81.2% 81.4%
Percentage impact of Japan customs ruling 0.0% 0.0% 1.9% 0.0%
Percentage impact of inventory reserve 0.0% 0.0% 0.0% 2.0%
Gross Margin excluding Japan customs ruling and inventory
reserve 81.9% 81.5% 83.1% 83.4%
Operating Margin 6.1% 11.2% 13.6% 13.4%
Percentage impact of restructuring 1.7% 0.8% 0.0% 0.0%
Percentage impact of Japan customs ruling 0.0% 0.0% 1.9% 0.0%
Percentage impact of inventory reserve 2.0%
Operating Margin excluding restructuring, Japan customs ruling and
inventory reserve 7.8% 12.0% 15.5% 15.4%
Earnings per share $ 0.67 $ 1.40 $ 2.38 $ 3.06 - 3.11
Impact of restructuring 0.17 0.11 - -
Impact of Japan customs ruling - - 0.31 -
Impact of inventory reserve - - - 0.52
Impact of Venezuela Highly Inflationary accounting - - - 0.48
Earnings per share excluding restructuring, Japan customs ruling,
inventory reserve and Venezuela highly inflationary accounting. $ 0.84 $ 1.51 $ 2.69 $ 4.06 - 4.11
Projected
2009 2010 2011 2012 2013 2014
Revenue - Less LTO 1,297 1,463 1,610 1,832 2,627 2,350
LTO Revenue 17 55 110 300 550 210
Revenue 1,314 1,518 1,720 2,132 3,177 2,560
FX Impact - (69) (155) (154) (127) 81
Local-Currency
Revenue using 2009
FX Rates
1,314 1,449 1,565 1,978 3,050 2,641
Projected 2015 Range
Revenue
Growth -2.0% to 0.0%
FX Impact -6.0%
Local-Currency
Revenue
Growth
4.0% to 6.0%
GAAP Reconciliation