NU SKIN ENTERPRISES, INC. This Quarterly Report on Form 10-Q (this "Quarterly Report") 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 our 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 our performance, initiatives, strategies, product introductions and offerings, growth, opportunities and risks; statements of projections regarding future sales, expenses, operating results, taxes and duties, capital expenditures, sources and uses of cash, foreign-currency fluctuations or devaluations, repatriation of undistributed earnings, and other financial items; statements of management's expectations and beliefs regarding our markets and global economic conditions; statements regarding the payment of future dividends and stock repurchases; statements regarding the outcome of litigation, audits, investigations or other regulatory actions; statements regarding government policies and regulations relating to our industry, including government policies and regulations in Mainland China; accounting estimates and assumptions; 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," "optimistic," "project," "anticipate," "determine," "estimate," "intend," "plan," "goal," "objective," "targets," "become," "likely," "will," "would," "could," "may," "might," the negative of these words and other similar words. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. We caution and advise readers that these statements are based on assumptions that may not be realized and involve risks and uncertainties that could cause actual results to differ materially from the expectations and beliefs contained herein. For a summary of these risks, see the risk factors included in our Annual Report on Form 10-K for the 2021 fiscal year and in our subsequent quarterly and other reports, including this Quarterly Report. The following Management's Discussion and Analysis should be read in conjunction with our consolidated financial statements and related notes and Management's Discussion and Analysis included in our Annual Report on Form 10-K for the 2021 fiscal year, and our other reports filed with theSecurities and Exchange Commission through the date of this Quarterly Report.
Overview
Revenue for the three-month period endedJune 30, 2022 decreased 20% to$560.6 million , compared to$704.1 million in the prior-year period, and revenue for the six-month period endedJune 30, 2022 decreased 16% to$1.2 billion , compared to$1.4 billion in the prior-year period. Our revenue in the second quarter and first half of 2022 was negatively impacted 5% and 4%, respectively, from foreign-currency fluctuations. Our Customers, Paid Affiliates and Sales Leaders declined 6%, 16% and 24%, respectively, on a year-over-year basis. Our second quarter and first half of 2022 revenue was softer than anticipated primarily driven by COVID-related factors in Mainland China, distractions in EMEA related to the ongoing conflict inRussia andUkraine , and the general global economic downturn. Despite these continuing headwinds, we are optimistic about our EmpowerMe personalized beauty and wellness strategy with the expected launch of the ageLOC LumiSpa iO in the back half of the year. Earnings per share for the second quarter of 2022 decreased 42% to$0.67 , compared to$1.15 in the prior-year period. Earnings per share for the first six months of 2022 decreased 31% to$1.43 , compared to$2.06 in the prior-year period. The decrease in earnings per share for the second quarter and first half of 2022 was primarily driven by the decrease in revenue along with a decline in gross margin from sales promotions. InAugust 2022 , management approved a restructuring plan for the second half of 2022. The charges are expected to be approximately$30 million for the third quarter of 2022 and$35-$45 million for the second half of 2022. These charges will predominantly be recorded in restructuring and impairment, as part of operating income. The plan includes approximately$30-$35 million of cash charges related to severance and lease termination cost and approximately$5-$10 million of non-cash impairment charges of fixed assets related to the footprint optimization. 17
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Segment Results
We report our business in nine segments to reflect our current management approach. These segments consist of our seven geographicNu Skin segments-Americas , Mainland China,Southeast Asia/Pacific ,South Korea ,Japan , EMEA, andHong Kong /Taiwan -and ourRhyz Investment segments-Manufacturing and Rhyz other. TheNu Skin other category includes miscellaneous corporate revenue and related adjustments. The Rhyz other segment includes other investments by our Rhyz strategic investment arm, which were entered into during the second quarter of 2021. The following table sets forth revenue for the three- and six-month periods endedJune 30, 2022 and 2021 for each of our reportable segments (U.S. dollars in thousands): Three Months Ended Constant- Six Months Ended Constant- June 30, Currency June 30, Currency 2022 2021 Change Change(1) 2022 2021 Change Change(1)Nu Skin Americas$ 124,445 $ 138,512 (10 )% (9 )%$ 248,025 $ 272,273 (9 )% (8 )% Mainland China 86,808 154,182 (44 )% (42 )% 211,303 303,775 (30 )% (31 )% Southeast Asia/Pacific 94,067 83,968 12 % 16 % 184,303 167,257 10 % 14 % South Korea 69,308 88,604 (22 )% (12 )% 141,441 169,735 (17 )% (8 )% Japan 55,952 68,020 (18 )% (3 )% 117,743 137,884 (15 )% (3 )% EMEA 50,871 83,115 (39 )% (31 )% 103,839 159,295 (35 )% (28 )% Hong Kong/Taiwan 39,327 38,529 2 % 6 % 77,821 74,874 4 % 6 % Nu Skin other 1,318 947 39 % 39 % 1,938 1,825 6 % 6 % Total Nu Skin 522,096 655,877 (20 )% (15 )% 1,086,413 1,286,918 (16 )% (12 )% Rhyz Investments Manufacturing 38,229 48,140 (21 )% (21 )% 78,570 94,125 (17 )% (17 )% Rhyz other 290 38 663 % 663 % 531 38 1,297 % 1,297 % Total Rhyz Investments 38,519 48,178 (20 )% (20 )% 79,101 94,163 (16 )% (16 )% Total$ 560,615 $ 704,055 (20 )% (15 )%$ 1,165,514 $ 1,381,081 (16 )% (12 )%
(1) Constant-currency revenue change is a non-GAAP financial measure. See
"Non-GAAP Financial Measures," below.
The following table sets forth segment contribution for the three- and six-month periods endedJune 30, 2022 and 2021 for each of our reportable segments (U.S. dollars in thousands). Segment contribution excludes certain intercompany charges, specifically royalties, license fees, transfer pricing and other miscellaneous items. We use segment contribution to measure the portion of profitability that the segment managers have the ability to control for their respective segments. The prior year segment contribution has been recast for the fourth quarter of 2021 exit of the Grow Tech segment and the expense has been recast to Corporate and other. For additional information regarding our segments and the calculation of segment contribution, see Note 10 to the consolidated financial statements contained in this report. Three Months Ended Six Months Ended June 30, June 30, 2022 2021 Change 2022 2021 ChangeNu Skin Americas$ 30,026 $ 28,998 4 %$ 55,149 $ 57,743 (4 )% Mainland China 12,945 51,480 (75 )% 41,940 90,919 (54 )% Southeast Asia/Pacific 24,367 21,213 15 % 47,773 40,861 17 % South Korea 20,578 28,892 (29 )% 43,321 55,417 (22 )% Japan 13,451 16,461 (18 )% 28,764 34,442 (16 )% EMEA 6,162 13,681 (55 )% 9,998 22,577 (56 )% Hong Kong/Taiwan 9,161 8,560 7 % 17,851 15,908 12 % Total Nu Skin 116,690 169,285 (31 )% 244,796 317,867 (23 )% Rhyz Investments Manufacturing 1,188 6,764 (82 )% 4,480 12,590 (64 )% Rhyz other (1,299 ) (519 ) (150 )% (2,345 ) (519 ) (352 )% Total Rhyz Investments$ (111 ) $ 6,245 (102 )%$ 2,135 $ 12,071 82 % 18
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The following tables provide information concerning the number of Customers, Paid Affiliates and Sales Leaders in our coreNu Skin business for the three-month periods endedJune 30, 2022 and 2021. During the first quarter of 2022, in connection with the introduction of the new metric Paid Affiliates, we reviewed how we currently present Sales Leaders and adjusted that metric's definition to what we believe provides a better insight into the trends of our business. The definition of our Customer metric remained unchanged. We have recast the 2021 Sales Leaders to the new definition.
? "Customers" are persons who have purchased directly from the Company during the
three months ended as of the date indicated. Our Customer numbers include
members of our sales force who made such a purchase, including Paid Affiliates
and those who qualify as Sales Leaders, but they do not include consumers who
purchase products directly from members of our sales force.
? "Paid Affiliates" are any Brand Affiliates, as well as sales employees and
independent marketers in Mainland China, who earned sales compensation during
the three-month period. In all of our markets besides Mainland China, we refer
to members of our independent sales force as "Brand Affiliates" because their
primary role is to promote our brand and products through their personal social
networks.
? "Sales Leaders" are the three-month average of our monthly Brand Affiliates, as
well as sales employees and independent marketers in Mainland China, who had
achieved certain qualification requirements as of the end of each month of the
quarter.
Three Months Ended
June 30,
Customers 2022 2021 Change
Americas 302,849 368,052 (18 )%
Mainland China 392,268 328,526 19 %
Southeast Asia/Pacific 152,775 165,221 (8 )%
South Korea 135,290 153,282 (12 )%
Japan 122,643 125,734 (2 )%
EMEA 205,379 261,881 (22 )%
Hong Kong/Taiwan 69,411 64,861 7 %
Total 1,380,615 1,467,557 (6 )%
Three Months Ended
June 30,
Paid Affiliates 2022 2021 Change
Americas 44,523 53,492 (17 )%
Mainland China 19,257 39,889 (52 )%
Southeast Asia/Pacific 41,512 44,734 (7 )%
South Korea 48,605 52,680 (8 )%
Japan 38,269 38,623 (1 )%
EMEA 32,323 42,682 (24 )%
Hong Kong/Taiwan 17,644 17,815 (1 )%
Total 242,133 289,915 (16 )%
Three Months Ended
June 30,
Sales Leaders 2022 2021 Change
Americas 9,320 11,752 (21 )%
Mainland China 11,458 20,946 (45 )%
Southeast Asia/Pacific 8,407 8,190 3 %
South Korea 6,557 7,701 (15 )%
Japan 6,097 6,057 1 %
EMEA 5,192 8,002 (35 )%
Hong Kong/Taiwan 3,054 3,446 (11 )%
Total 50,085 66,094 (24 )%
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Following is a narrative discussion of our results in each segment, which supplements the tables above.
Americas . The decline in revenue, Customers, Paid Affiliates and Sales Leaders in ourAmericas segment is predominantly attributable to the continued macro economic challenges in ourLatin America markets. Our U.S. market's revenue increased 6% for the second quarter of 2022 and 10% for the first half of 2022 from continued momentum, specifically from the launch of Beauty Focus Collagen+ during the second half of 2021; the recent launch of Nu Biome, our latest wellness product aimed at aiding digestion to help maintain your overall gut health; and continued social adoption. The year-over-year increase in segment contribution for the second quarter of 2022 is partially attributable to the increase in revenue in our U.S. market, which has more favorable margins than our Latin American markets. In addition, our selling expenses as a percentage of revenue decreased 4.5 percentage points, primarily from a product mix shift to products with a lower commission percentage. In addition, with the decline in revenue and Sales Leaders, the expense associated with incentive trips decreased as well. The decline in segment contribution for the first half of 2022 is primarily attributable to the decline in revenue and higher sales promotions in the first quarter of 2022, partially offset by the increase in revenue in our U.S market. Mainland China. Our Mainland China market continued to be challenged during the second quarter and first half of 2022, with COVID-related lockdowns and other factors negatively impacting our selling and promotional activities. Due to increasing COVID-19 cases, the government implemented more significant lockdowns that precluded gatherings and meetings for the general population inShanghai and other areas. As previously disclosed, we anticipate that COVID-related challenges will persist throughout 2022. During the second quarter, our Customers increased 19% primarily from customer promotions and launch of digital tools. DuringJuly 2022 , we resumed allowing Sales Leader meetings in this market on a limited basis, so long as they are in compliance with government regulations and related controls that we have implemented. In our Quarterly Report on Form 10-Q for the 2022 first quarter, we referenced government inquiries related to a meeting in a hotel inWuhan ,Hubei Province organized by an independent marketer ofNu Skin China . The work on these inquiries was affected by the lockdowns in Mainland China, which delayed the inquiries from being closed during the second quarter; however, we continue to believe we are in the final stages of the process to close these matters. We believe the regulatory environment in Mainland China is becoming increasingly challenging and will continue to be so over the medium and long terms. The year-over-year decrease in segment contribution for the second quarter and first half of 2022 primarily reflects lower revenue. The decrease also reflects the following: (a) a 5.5 and 3.9 percentage point decrease in gross margin for the second quarter and first half of 2022, respectively, primarily from increased product promotions and discounts during the second quarter of 2022, along with a shift in product mix, where a higher proportion of devices were sold in the period and increased freight charges; (b) an increase in general and administrative expenses as a percentage of revenue, due to the fixed nature of these expenses; and (c) an increase in selling expense as a percentage of revenue. The salaries and service fees of our Sales Leaders in Mainland China are fixed until they are adjusted in a quarterly evaluation process. As a result, we have variations in our selling expenses as a percentage of revenue, particularly when there is a sequential change in revenue.Southeast Asia/Pacific . OurSoutheast Asia/Pacific segment revenue increased 12% and 10% for the second quarter and first half of 2022, respectively, including a 4% negative impact from unfavorable foreign-currency fluctuations for both periods presented. The increase in revenue was partially driven by strong product launches of ageLOC Meta (locally referred to as ageLOC Reset in theSoutheast Asia markets), which generated approximately$18.2 million in revenue for the second quarter and$31.4 million in revenue for the first half of 2022, along with loosening of COVID restrictions in the markets. Our product launches and promotions during the quarter were focused on re-energizing our existing Sales Leaders, which led to a decline in our Customers and Paid Affiliates.
The year-over-year increase in segment contribution is primarily attributable to higher revenue, along with the fixed nature of general and administrative expenses on increased revenue.
South Korea . The second quarter and first half of 2022 decline in revenue was predominantly driven by a 10% and 9% negative impact from unfavorable foreign-currency fluctuations. OurSouth Korea segment remained challenged from the ongoing COVID-related issues, leading to declines in revenue, Customers, Paid Affiliates and Sales Leaders.
The year-over-year decrease in segment contribution is primarily from a decline in revenue, along with a 2.0 and 1.5 percentage point increase in selling expenses as a percent of revenue for the second quarter and first half of 2022.
The year-over-year decline in segment contribution is primarily from the decline in revenue.
EMEA. The continued softening of momentum in our EMEA segment, further driven by the current geopolitical Russian/Ukraine conflict which has caused distraction to our sales force in the segment, led to a decline in revenue, Customers, Paid Affiliates and Sales Leaders. Our reported revenue was also negatively impacted from foreign-currency fluctuations. We have suspended business operations inUkraine , and are closing our market inRussia . TheRussia andUkraine markets have historically accounted for less than 1% of our consolidated revenue. We look forward to our upcoming product introductions in the region but remain cautious in the near term given the macro environment.
The year-over-year decline in segment contribution reflects the decline in revenue along with a lower gross margin from unfavorable product mix and increased promotions, and the fixed nature of general and administrative expenses with a decline in revenue.
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Hong Kong /Taiwan . OurHong Kong /Taiwan segment revenue increased 2% for the second quarter and 4% for the first half of 2022. The increase in revenue is primarily from revenue growth in ourTaiwan market from social selling. Our Customers also increased 7%, from the social selling growth in ourTaiwan market. OurHong Kong market continues to be challenged from the ongoing pressures from COVID-19, which led to a decline in Sales Leaders and Paid Affiliates. The increase in segment contribution for both periods presented, is primarily from the increase in revenue along with decreases in general and administrative expenses, from effective cost saving measures. Manufacturing. Our Manufacturing segment revenue declined 21% for the second quarter and 17% for the first half of 2022, primarily due to our customers rebalancing their inventory from higher levels in 2021, reducing demand for the first half of 2022.
The decline in segment contribution is attributable to the lower revenue on fixed costs, along with the revenue mix between our manufacturing entities with different profitability.
Consolidated Results Revenue Revenue for the three-month period endedJune 30, 2022 decreased 20% to$560.6 million , compared to$704.1 million in the prior-year period. Revenue for the six-month period endedJune 30, 2022 decreased 16% to$1.2 billion compared to$1.4 billion . Our reported revenue was negatively impacted 5% and 4% from foreign-currency fluctuations for the three- and six-month periods endedJune 30, 2022 , respectively. For a discussion and analysis of these decreases in revenue, see "Overview" and "Segment Results," above.
Gross profit
Gross profit as a percentage of revenue was 73.6% for the second quarter of 2022, compared to 75.6% for the prior-year period, and 73.4% for the first six months of 2022, compared to 75.2% for the prior-year period. Gross profit as a percentage of revenue for coreNu Skin decreased 1.3 percentage points to 77.0% for the second quarter of 2022 and decreased 1.4 percentage points to 76.7% for the first six months of 2022. The decline in ourNu Skin gross margin is predominantly attributable to an increase in sales promotions, specifically of our ageLOC LumiSpa devices in preparation of the launch of the ageLOC LumiSpa iO, which begins in the third quarter of 2022.
Selling expenses
Selling expenses as a percentage of revenue decreased to 39.1% for the second quarter of 2022, compared to 39.9% for the prior year period, and decreased to 39.6% for the first six months of 2022, compared to 40.3% for the prior-year period. CoreNu Skin selling expenses as a percentage of revenue decreased 0.8 percentage points to 42.0% for the second quarter of 2022 and decreased 0.8 percentage points to 42.5% for the first six months of 2022. Selling expenses for our coreNu Skin business are driven by the specific performance of our individual Sales Leaders. Given the size of our sales force and the various components of our compensation and incentive programs, selling expenses as a percentage of revenue typically fluctuate plus or minus approximately 100 basis points from period to period.
General and administrative expenses
General and administrative expenses decreased to$141.6 million in the second quarter of 2022, compared to$166.1 million in the prior-year period and decreased to$290.1 million in the first six months of 2022, compared to$333.7 million in the prior-year period. The$24.5 million decrease for the second quarter of 2022 was primarily from a$15.8 million contraction in labor expenses from lower employee performance incentive compensation, along with our fourth quarter of 2021 exit of the Grow Tech segment, which led to$7.0 million less expense for the second quarter of 2022. The$43.6 million decrease for the first six months of 2022, was primarily from a$27.4 million contraction in labor expenses from lower employee performance incentive compensation, along with our fourth quarter of 2021 exit of the Grow Tech segment, which led to$13.1 million less expense for the first half of 2022. General and administrative expenses as a percentage of revenue increased to 25.3% for the second quarter of 2022, from 23.6% for the prior-year period, and decreased to 24.9% for the first six months of 2022, from 24.2% for the prior-year period. 21
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Other income (expense), net
Other income (expense), net was$(8.6) million for the second quarter of 2022 compared to$(4.0) million for the prior-year period, and$(10.1) million for the first six months of 2022 compared to$(2.4) million for the prior-year period. The decrease in other income for the second quarter is predominately from a$5.7 million unrealized investment loss related to a controlled environment agriculture company we invested in as part of our previous Grow Tech segment. Following our fourth quarter of 2021 exit from the Grow Tech segment, we are in the process of exiting our investment. In addition, we recorded a$3.0 million increase in foreign currency losses during the second quarter of 2022 compared to the prior-year period, partially offset by a$1.6 million decline in the contingent consideration associated with our previous acquisition, due to current period changes in our assumptions and forecast.
Provision for income taxes
Provision for income taxes for the three- and six-month periods endedJune 30, 2022 was$8.7 million and$20.6 million , respectively, compared to$22.0 million and$39.1 million for the prior-year periods. The effective tax rates for the three- and six-month periods endedJune 30, 2022 were 20.2% and 22.0% of pre-tax income compared, respectively, to 27.1% and 26.8% in the prior-year periods. The decrease in effective tax rate for the second quarter and first half of 2022 primarily reflects the strong growth in the U.S. market, which enabled us to utilize additional foreign tax credits to offsetU.S. income taxes.
Net income
As a result of the foregoing factors, net income for the second quarter of 2022 was$34.2 million , compared to$59.3 million in the prior-year period. Net income for the first six months of 2022 was$73.0 million , compared to$106.8 million for the first six months of 2021.
Liquidity and Capital Resources
Historically, our principal uses of cash have included operating expenses (particularly selling expenses) and working capital (principally inventory purchases), as well as capital expenditures, stock repurchases, dividends, and debt repayment. We have at times incurred long-term debt, or drawn on our revolving line of credit, to fund strategic transactions, stock repurchases, capital investments and short-term operating needs. We typically generate positive cash flow from operations due to favorable margins and have generally relied on cash from operations to fund operating activities. In the first six months of 2022, we generated$54.1 million in cash from operations, compared to$1.9 million during the prior-year period. The increase in cash flow from operations primarily reflects an approximate$32.2 million decline in inventory during the period, compared to an inventory increase of$80.2 million in the prior year period, partially offset by the lower revenue and a decrease in accrued expenses from the first half of 2022 payout of our fourth quarter of 2021 restructuring cost. Cash and cash equivalents, including current investments, as ofJune 30, 2022 andDecember 31, 2021 were$381.8 million and$354.8 million , respectively, with the increase being driven by cash from operations, increased debt following our debt modification during the second quarter of 2022, and cash received from the exercise of employee stock options, partially offset by capital expenditures, as discussed below, our quarterly dividend payments, stock repurchases and payment on liabilities associated with our fourth quarter 2021 restructuring. Working capital. As ofJune 30, 2022 , working capital was$498.8 million , compared to$343.3 million as ofDecember 31, 2021 . The increase in working capital is primarily attributable to our second quarter debt modification, which resulted in a net$52.5 million of incremental borrowings, while our short-term debt decreased$67.5 million . Our working capital also benefited from a$83.1 million reduction in accrued expenses, primarily from the first half of 2022 pay-out of restructuring cost and employee incentive accruals, partially offset by a$45.7 million decrease in inventory. Capital expenditures. Capital expenditures for the six months endedJune 30, 2022 were$19.8 million . We expect that our capital expenditures in 2022 will be primarily related to:
? purchases and expenditures for computer systems and equipment, software, and
application development;
? the expansion and upgrade of facilities in our various markets; and
? a new manufacturing plant in Mainland China.
We estimate that capital expenditures for the uses listed above will total approximately$70-90 million for 2022. We are currently expecting to complete construction of the new manufacturing plant in Mainland China in the back half of 2022. As ofJune 30, 2022 , we have spent approximately$40.5 million on this project, with$3.2 million in the first half of 2022 and expect that our expenditures for this project will total approximately$52-57 million , including approximately$15-20 million during 2022. 22
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Credit Agreement. OnJune 14, 2022 , we entered into an Amended and Restated Credit Agreement (the "Credit Agreement") with various financial institutions as lenders andBank of America, N.A ., as administrative agent. The Credit Agreement provides for a$400.0 million term loan facility and a$500.0 million revolving credit facility, each with a term of five years. We used the proceeds of the term loan and the draw on the revolving facility to pay off the previous credit agreement. The interest rate applicable to the facilities is subject to adjustments based on our consolidated leverage ratio. The term loan facility amortizes in quarterly installments in amounts resulting in an annual amortization of 2.5% during the first year and 5.0% during the subsequent years after the closing date of the Credit Agreement, with the remainder payable at final maturity. As ofJune 30, 2022 , we had$30.0 million of outstanding borrowings under our revolving credit facility, and$400.0 million on our term loan facility. The carrying value of the debt also reflects debt issuance costs of$(2.8) million as ofJune 30, 2022 , related to the Credit Agreement. The Credit Agreement requires us to maintain a consolidated leverage ratio not exceeding 2.25 to 1.00 and a consolidated interest coverage ratio of no less than 3.00 to 1.00. As ofJune 30, 2022 , we were in compliance with all debt covenants under the Credit Agreement. Modification of previous credit agreement. OnJune 14, 2022 , we repaid our outstanding debt under our credit agreement, dated as ofApril 18, 2018 , with several financial institutions as lenders andBank of America, N.A ., as administrative agent. We had indebtedness of$70.0 million on our revolver as ofDecember 31, 2021 , and$307.5 million on our term loan as ofDecember 31, 2021 . Derivative Instruments. As ofJune 30, 2022 , we had four interest rate swaps, with a total notional principal amount of$200 million and a maturity date ofJuly 31, 2025 . We entered into these interest rate swap arrangements during the third quarter of 2020 to hedge the variable cash flows associated with our variable-rate debt under the Credit Agreement. Stock repurchase plan. In 2018, our board of directors approved a stock repurchase plan authorizing us to repurchase up to$500.0 million of our outstanding shares of Class A common stock on the open market or in private transactions. During the second quarter of 2022, we repurchased approximately 0.2 million shares of our Class A common stock under the plan for$10.0 million . As ofJune 30, 2022 ,$225.4 million was available for repurchases under the plan. Our stock repurchases are used primarily to offset dilution from our equity incentive plans and for strategic initiatives. Dividends. In February andMay 2022 , our board of directors declared quarterly cash dividends of$0.385 per share. These quarterly cash dividends of$19.3 million and$19.4 million were paid onMarch 9, 2022 andJune 8, 2022 to stockholders of record onFebruary 28, 2022 andMay 27, 2022 . InAugust 2022 , our board of directors declared a quarterly cash dividend of$0.385 per share to be paid onSeptember 7, 2022 to stockholders of record onAugust 26, 2022 . Currently, we anticipate that our board of directors will continue to declare quarterly cash dividends and that the cash flows from operations will be sufficient to fund our future dividend payments. However, the continued declaration of dividends is subject to the discretion of our board of directors and will depend upon various factors, including our net earnings, financial condition, cash requirements, future prospects and other relevant factors. Cash from foreign subsidiaries. As ofJune 30, 2022 andDecember 31, 2021 , we held$381.8 million and$354.8 million , respectively, in cash and cash equivalents, including current investments. These amounts include$257.2 million and$274.9 million as ofJune 30, 2022 andDecember 31, 2021 , respectively, held in our operations outside of theU.S. Substantially all of our non-U.S. cash and cash equivalents are readily convertible intoU.S. dollars or other currencies, subject to procedural or other requirements in certain markets, as well as an indefinite-reinvestment designation, as described below. We typically fund the cash requirements of our operations in theU.S. through intercompany dividends, intercompany loans and intercompany charges for products, use of intangible property, and corporate services. However, some markets impose government-approval or other requirements for the repatriation of dividends. For example, in Mainland China, we are unable to repatriate cash from current operations in the form of dividends until we file the necessary statutory financial statements for the relevant period. As ofJune 30, 2022 , we had$56.6 million in cash denominated in Chinese RMB. We also have experienced delays in repatriating cash fromArgentina . As ofJune 30, 2022 andDecember 31, 2021 , we had$12.6 million and$11.3 million , respectively, in intercompany receivables with ourArgentina subsidiary. We also have intercompany loan arrangements in some of our markets, including Mainland China, that allow us to access available cash, subject to certain limits in Mainland China and other jurisdictions. We also have drawn on our revolving line of credit to address cash needs until we can repatriate cash from Mainland China or other markets, and we may continue to do so. Except for$60.0 million of earnings in Mainland China that we designated as indefinitely reinvested during the second quarter of 2018, we currently plan to repatriate undistributed earnings from our non-U.S. operations as necessary, considering the cash needs of our non-U.S. operations and the cash needs of ourU.S. operations for dividends, stock repurchases, capital investments, debt repayment and strategic transactions. Repatriation of non-U.S. earnings is subject to withholding taxes in certain foreign jurisdictions. Accordingly, we have accrued the necessary withholding taxes related to the non-U.S. earnings. We currently believe that existing cash balances, future cash flows from operations and existing lines of credit will be adequate to fund our cash needs on both a short- and long-term basis. The majority of our historical expenses have been variable in nature, and as such, a potential reduction in the level of revenue would reduce our cash flow needs. In the event that our current cash balances, future cash flow from operations and current lines of credit are not sufficient to meet our obligations or strategic needs, we would consider raising additional funds in the debt or equity markets or restructuring our current debt obligations. Additionally, we would consider realigning our strategic plans, including a reduction in capital spending, stock repurchases or dividend payments. 23
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Contingent Liabilities
Please refer to Note 11 to the consolidated financial statements contained in this Quarterly Report for information regarding our contingent liabilities.
Critical Accounting Policies and Estimates
There were no significant changes in our critical accounting policies or estimates during the second quarter of 2022.
Seasonality and Cyclicality
In addition to general economic factors, we are impacted by seasonal factors and trends such as major cultural events and vacation patterns. For example, most Asian markets celebrate their respective local New Year in the first quarter, which generally has a negative impact on that quarter. We believe that direct selling is also generally negatively impacted during the third quarter, when many individuals, including our sales force, traditionally take vacations. Prior to making a key product generally available for purchase, we may do one or more introductory offerings of the product, such as a preview of the product to our Sales Leaders, a limited-time offer, or other product introduction or promotion. These offerings may generate significant activity and a high level of purchasing, which can result in a higher-than-normal increase in revenue, Sales Leaders and/or Customers during the quarter and can skew year-over-year and sequential comparisons.
Non-GAAP Financial Measures
Constant-currency revenue change is a non-GAAP financial measure that removes the impact of fluctuations in foreign-currency exchange rates, thereby facilitating period-to-period comparisons of the Company's performance. It is calculated by translating the current period's revenue at the same average exchange rates in effect during the applicable prior-year period and then comparing that amount to the prior-year period's revenue. We believe that constant-currency revenue change is useful to investors, lenders and analysts because such information enables them to gauge the impact of foreign-currency fluctuations on our revenue from period to period.
Available Information
Our website address is www.nuskin.com. We make available, free of charge on our Investor Relations website, ir.nuskin.com, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 as soon as reasonably practicable after we electronically file such material with, or furnish it to, theSecurities and Exchange Commission . We also use our Investor Relations website, ir.nuskin.com, as a channel of distribution of additional Company information that may be deemed material. Accordingly, investors should monitor this channel, in addition to following our press releases,Securities and Exchange Commission filings and public conference calls and webcasts. The contents of our website shall not be deemed to be incorporated herein by reference. 24
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