Segment Information

3 Months Ended

Mar. 31, 2020

9.	Segment Information

The Company reports revenue from nine segments, consisting of its seven geographic Nu Skin segments—Mainland China, South Korea, Southeast Asia, Americas/Pacific, Japan, Hong Kong/Taiwan, and EMEA—and its Manufacturing and Grow Tech segments. The Other category includes miscellaneous corporate revenue and related adjustments. 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.

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.

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 March 31,
(U.S. dollars in thousands)	2020		2019
Nu Skin
Mainland China	$	137,696	$	208,488
South Korea		75,719		83,853
Americas/Pacific		74,573		86,456
Southeast Asia		69,586		72,495
Japan		61,300		62,109
Hong Kong/Taiwan		35,827		40,558
EMEA		35,403		41,818
Other		773		(1,426	)
Total Nu Skin		490,877		594,351
Manufacturing ⁽¹⁾		27,147		29,272
Grow Tech		4		—
Total	$	518,028	$	623,623

(1)	The Manufacturing segment had $6.4 million and $5.9 million of intersegment revenue for the three-month period ended March 31, 2020 and 2019, 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)	2020			2019
Nu Skin
Mainland China	$	37,387		$	59,167
South Korea		24,099			25,668
Americas/Pacific		10,585			12,019
Southeast Asia		16,718			17,992
Japan		14,592			14,106
Hong Kong/Taiwan		6,938			7,474
EMEA		631			1,351
Nu Skin contribution		110,950			137,777
Manufacturing		2,849			3,646
Grow Tech		(6,850	)		(3,629	)
Total segment contribution		106,949			137,794
Corporate and other		(70,384	)		(69,141	)
Operating income		36,565			68,653
Other income (expense)		(6,174	)		(2,848	)
Income before provision for income taxes	$	30,391		$	65,805

Depreciation and Amortization

	Three Months Ended March 31,
(U.S. dollars in thousands)	2020		2019
Nu Skin
Mainland China	$	2,424	$	3,116
South Korea		1,057		1,524
Americas/Pacific		245		214
Southeast Asia		487		477
Japan		472		1,048
Hong Kong/Taiwan		639		516
EMEA		258		440
Total Nu Skin		5,582		7,335
Manufacturing		1,815		1,574
Grow Tech		1,225		875
Corporate and other		10,473		9,823
Total	$	19,095	$	19,607

Capital Expenditures

	Three Months Ended March 31,
(U.S. dollars in thousands)	2020		2019
Nu Skin
Mainland China	$	2,861	$	1,681
South Korea		169		49
Americas/Pacific		694		274
Southeast Asia		633		94
Japan		157		172
Hong Kong/Taiwan		4		463
EMEA		27		34
Total Nu Skin		4,545		2,767
Manufacturing		10,505		1,602
Grow Tech		178		2,985
Corporate and other		4,159		6,411
Total	$	19,387	$	13,765