Nature's Sunshine Products Reports Second Quarter Financial Results, and Declares Special One-Time Cash Dividend, Regular Quarterly Cash Dividend and $10 Million Share Repurchase Program

LEHI, Utah, Aug. 8, 2013 (GLOBE NEWSWIRE) -- Nature's Sunshine Products, Inc. (Nasdaq:NATR), a leading natural health and wellness company engaged in the manufacture and direct selling of nutritional and personal care products, today reported its consolidated financial results for the second quarter, and declared a special one-time cash dividend of $1.50 per share, a regular quarterly cash dividend of $0.10 per share and a $10 million share repurchase program.

"While sales growth was modestly positive for the quarter, significant progress was made in several key areas," commented Gregory L. Probert, Chairman and Chief Executive Officer. "Sales increased year-over-year for the third consecutive quarter in NSP Russia, Central and Eastern Europe and also grew for the second consecutive quarter in the United States. We are particularly pleased that NSP Mexico sales improved year-over year for the first time since 2011. Our substantial investments in sales and marketing personnel, training, new products and sales and incentive programs will negatively impact near-term operating income margin but should generate growth and drive profitability in all of our markets over time. We will continue to evaluate the growth and profitability potential of each of our markets, and allocate our resources and prioritize our investment in order to increase the Company's overall operating income margin."

He continued, "The special one-time cash dividend, in addition to the regular quarterly dividend, and the share repurchase program are due to our strong cash flow, our commitment to return excess capital to shareholders, and our confidence in the Company's long-term growth prospects."

For the Second Quarter of 2013:

• Net sales were $93.7 million, compared with $93.0 million in the same quarter a year ago, an increase of 0.7 percent, and net sales increased 1.4 percent in local currencies.
   
• As of June 30, 2013 and 2012, total active Managers worldwide were 17,100 on each date, while total active Distributors and customers worldwide were 331,000 and 337,600, respectively.
   
• Operating income was $7.8 million, compared with $10.3 million in the same quarter a year ago, a decrease of 24.2 percent. The $2.5 million decrease in operating income was primarily due to a $2.2 million increase in selling, general and administrative expenses attributable to investment in growth initiatives.
   
• Adjusted EBITDA, defined here as net income before taxes, depreciation and amortization, and other income, and adjusted to exclude share-based compensation expense was $9.7 million, compared with $11.9 million in the same quarter a year ago, a decrease of 18.8 percent.
   
• Net income was $6.1 million, compared with $7.3 million in the same quarter a year ago, a decrease of 16.9 percent. 
   
• Basic and diluted net income per share was $0.38, compared to $0.47 and $0.46, respectively, for the same quarter a year ago.
   
• Cash and cash equivalents of $87.3 million were a record high, up from $79.2 million at December 31, 2012.
   
• As of June 30, 2013, shareholders' equity was $122.8 million, compared to $115.6 million as of December 31, 2012, an increase of 6.2 percent. Including dividends paid in the first six months of the year, the increase in shareholder equity was 7.4 percent. 

NSP Americas, Asia Pacific and Europe Results for the Second Quarter:

• Net sales were $53.4 million, compared with $53.5 million in the same quarter a year ago, a decrease of 0.2 percent. In local currencies, net sales increased by 0.7 percent compared to the same quarter a year ago, reflecting higher net sales in the United States, Mexico and Venezuela partially offset by lower net sales in Japan. In the United States, net sales increased year-over-year for the second consecutive quarter. In Mexico, net sales increased year-over-year for the first time since 2011. We are driving growth through investments in sales and marketing personnel, training, new products, and sales and incentive programs.
   
• Active Managers within NSP Americas, Asia Pacific and Europe totaled approximately 9,000 and 9,200 at June 30, 2013 and 2012, respectively. Active Distributors and customers within NSP Americas, Asia Pacific and Europe totaled approximately 155,400 and 164,900 at June 30, 2013 and 2012, respectively. The number of total Distributors and customers decreased due to lower recruiting in several key markets, which we are addressing through the investments described above.
   
• Contribution margin, defined as net sales less cost of sales and volume incentive expense, was $22.3 million, compared with $21.9 million in the same quarter a year ago, an increase of 2.1 percent primarily as a result of sales mix. 

NSP Russia, Central and Eastern Europe Results for the Second Quarter:

• Net sales were $15.0 million, compared with $13.2 million in the same quarter a year ago, an increase of 13.4 percent. Net sales increased year-over-year for the third consecutive quarter as a result of improved recruiting, Distributor leadership engagement, Distributor recognition, promotion and training, and the enhanced focus afforded by the corporate organizational realignment during 2012.
   
• Active Managers within NSP Russia, Central and Eastern Europe totaled approximately 5,000 and 4,700 at June 30, 2013 and 2012, respectively. Active Distributors and customers within NSP Russia, Central and Eastern Europe totaled approximately 120,900 and 117,800 at June 30, 2013 and 2012, respectively.
   
• Contribution margin was $5.5 million, compared with $5.0 million in the same quarter a year ago, an increase of 10.0 percent primarily as a result of higher net sales.
   

Synergy WorldWide Results for the Second Quarter:

• Net sales were $25.3 million, compared with $26.2 million in the same quarter a year ago, a decrease of 3.7 percent. In local currencies, net sales decreased by 3.2 percent compared to the same quarter a year ago driven by lower net sales in Japan, North America and South Korea partially offset by higher net sales in Europe. The decrease in local currency net sales is primarily a result of decreased recruiting activity and a change in product focus. In addition, key Distributor leaders had diluted their focus on the South Korean market as they expanded their businesses in our other Asian markets. Programs have been implemented with the aim of restoring recruiting activity.
   
• Active Managers within Synergy WorldWide totaled approximately 3,100 and 3,200 at June 30, 2013 and 2012, respectively. Active Distributors and customers within Synergy WorldWide totaled approximately 54,700 and 54,900 at June 30, 2013 and 2012, respectively.
   
• Contribution margin was $8.7 million, compared to $10.0 million in the same quarter a year ago, a decrease of 12.8 percent primarily as a result of lower net sales.

Selling, General and Administrative Expenses for the Second Quarter:

• Selling, general and administrative expenses were $28.7 million, compared with $26.5 million in the same quarter a year ago, an increase of 8.2 percent which was primarily related to the Company's incremental investment in sales, marketing, science and product development personnel and programs to stimulate sales growth and drive profitability.

Effective Income Tax Rate

The effective income tax rate was 34.9 percent compared with 30.5 percent in the same quarter a year ago.  The current quarter's effective tax rate was below the U.S. federal statutory tax rate of 35.0 percent, which was primarily attributed to an increase in tax liabilities associated with uncertain tax positions, offset by net favorable foreign items. The effective income tax rate of 30.5 percent for the same quarter a year ago was attributed to a valuation allowance release related to the utilization of foreign tax credits in addition to net favorable foreign items.

Non-GAAP Financial Measures

The Company has included information which has not been prepared in accordance with generally accepted accounting principles (GAAP), such as information concerning adjusted EBITDA, non-GAAP operating income and non-GAAP net income because management utilizes this information in the evaluation of its operations and believes that these measures are a useful indicator of the Company's ability to fund its business. These non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, U.S. GAAP net income as an indicator of the Company's operating performance. Moreover, these non-GAAP financial measures, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of our performance in relation to other companies. The Company has included a reconciliation of these non-GAAP measures to reported earnings under GAAP in the attached financial tables.

Declaration of Special One-Time Cash Dividend and Regular Quarterly Cash Dividend and $10 Million Share Repurchase Program:

The Company's Board of Directors declared a special one-time cash dividend of $1.50 per share in addition to its recurring quarterly cash dividend of $0.10 per share payable on August 29, 2013 to shareholders of record as of the close of business on August 19, 2013. The amount of the cash dividends is expected to be approximately $25.6 million. In addition, the Board of Directors authorized a $10 million share repurchase program to be implemented over two years. Such purchases may be made in the open market, through block trades, in privately negotiated transactions or otherwise. The timing and amount of any share repurchased will be determined based on the Company's evaluation of market conditions and other factors and the program may be discontinued or suspended at any time.

The special one-time cash dividend and share repurchase program is due to the Company's strong cash flow and its record high quarter-end cash balance of $87.3 million, and the Board's commitment to return capital to shareholders and its confidence in the long-term growth prospects of the Company's business.

The Company will fund the one-time special dividend and share repurchase program through available cash on hand, future cash flows from operations and borrowings under its revolving credit facility. The Company retains ample capital capacity to continue making long-term investments in its sales, marketing, science and product development initiatives and overall operations, as well as to pursue strategic opportunities as they may arise.

Conference Call

Nature's Sunshine Products will host a conference call to discuss its second quarter 2013 results on Friday, August 9, 2013 at 11:00 AM Eastern Time.  The toll-free dial-in number for callers in the U.S. and Canada is 1-877-407-0789, conference ID: 418625.  International callers can dial 1-201-689-8562, conference ID: 418625.  A replay will be available from August 8, 2013 at 2:00 PM Eastern Time through August 22, 2013 at 11:59 PM Eastern Time at 1-877-870-5176 or 1-858-384-5517, replay PIN: 418625.  The call will also be webcast live and will be available on the Investing section of Nature's Sunshine website at www.naturessunshine.com for 90 days.

About Nature's Sunshine Products

Nature's Sunshine Products (Nasdaq:NATR), a leading natural health and wellness company, markets and distributes nutritional and personal care products through a global direct sales force of over 340,000 active independent Managers, Distributors and customers in more than 40 countries. Nature's Sunshine manufactures most of its products through its own state-of-the-art facilities to ensure its products continue to set the standard for the highest quality, safety and efficacy on the market today. The Company has three reportable business segments that are divided based on the characteristics of their Distributor base, similarities in compensation plans, as well as the internal organization of NSP's officers and their responsibilities (NSP Americas, Asia Pacific and Europe; NSP Russia, Central and Eastern Europe; and Synergy WorldWide). The Company also supports health and wellness for children around the world through its partnership with the Little Heroes Foundation. Additional information about the Company can be obtained at its website, www.natr.com.

Cautionary Statement Regarding Forward-Looking Statements

In addition to historical information, this release contains certain forward-looking statements, including statements regarding Distributors and Managers and payment of dividends. Nature's Sunshine may, from time to time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, Nature's Sunshine's beliefs, expectations, hopes, or intentions regarding future events. Words such as "expects," "intends," "believes," "anticipates," "should," "likely," and similar expressions identify forward-looking statements. All forward-looking statements included in this release are made as of the date hereof and are based on information available to the Company as of such date. Nature's Sunshine assumes no obligation to update any forward-looking statement. Actual results will vary, and may vary materially, from those anticipated, estimated, projected or expected for a number of reasons, including, among others: further reviews of the Company's financial statements by the Company and its Audit Committee; modification of the Company's accounting practices; foreign business risks; industry cyclicality; fluctuations in customer demand and order pattern; changes in pricing and general economic conditions; as well as other risks detailed in the Company's previous filings with the SEC.

Distributor Information

Our revenue is highly dependent upon the number and productivity of our Managers, Distributors and customers.  Growth in sales volume requires an increase in the productivity and/or growth in the total number of Managers, Distributors and customers.  

The following table provides information concerning the number of total Managers, Distributors and customers by segment, as of the dates indicated. 

"Total Managers" includes independent Managers under our various compensation plans that have achieved and maintained specified and personal groups sale volumes as of the date indicated. To maintain Manager status, an individual must continue to meet certain product sales volume levels. As such, all Managers are considered to be active Managers.

"Total Distributors and Customers" includes our independent Distributors and customers who have purchased products directly from the Company for resale and/or personal consumption during the previous twelve months ended as of the date indicated. This includes Manager, Distributor and customer accounts that may have become inactive since such respective dates.

The following table provides information concerning the number of active Distributors and customers by segment, as of the dates indicated.

"Active Distributors and Customers" includes our independent Distributors and customers who have purchased products directly from the Company for resale and/or personal consumption during the previous three months ended as of the date indicated. All of our Managers are active.

The following tables provide information concerning the number of new Managers, Distributors and customers by segment, as of the dates indicated.

"New Managers" includes independent Managers under our various compensation plans that first achieved the rank of Manager during the previous three months ended as of the date indicated.

"New Distributors and customers" include our independent Distributors and customers who have made their initial product purchase directly from us for resale and/or personal consumption during the previous three months ended as of the date indicated.

"New Managers" includes independent Managers under our various compensation plans that first achieved the rank of Manager during the previous twelve months ended as of the date indicated.

"New Distributors and Customers" include our independent Distributors and Customers who have made their initial product purchase directly from us for resale and/or personal consumption during the previous twelve months ended as of the date indicated.

CONTACT: Steve M. Bunker
         Chief Financial Officer
         Nature's Sunshine Products, Inc.
         Lehi, Utah 84043
         (801) 341-7303

Released August 8, 2013