Nature's Sunshine Products Reports First Quarter Financial Results

PROVO, Utah, May 6, 2011 (GLOBE NEWSWIRE) -- Nature's Sunshine Products, Inc. (Nasdaq:NATR), a leading natural health and wellness company, today reported consolidated financial results for the first quarter ended March 31, 2011.

For the First Quarter of 2011:

 
  Net sales were $92.8 million, compared with $86.8 million in the same quarter a year ago, an increase of 7.0 percent.
 
  Operating income from continuing operations was $7.6 million, compared with $0.6 million in the same quarter a year ago, an increase of 1,237.0%. 
 
  EBITDA, defined here as net income before taxes, depreciation and amortization, other income and adjusted to include share-based compensation expense, was $8.8 million, compared with $1.8 million in the same quarter a year ago, an increase of 398.7 percent.
 
  Net income from continuing operations was $6.6 million, compared with net income of $4.8 million in the same quarter a year ago, an increase of 38.8 percent. 
 
  Basic and diluted net income per share from continuing operations was $0.43, compared with earnings per share of $0.31 for the same quarter a year ago.
 
  As of March 31, 2011, shareholders' equity was $75.6 million, compared to $68.4 million on December 31, 2010, an increase of 10.6 percent.
 
  As of March 31, 2011, active Managers worldwide were 30,300, an increase of 7.1 percent from the end of the prior quarter, while active Distributors worldwide were 696,400, an increase of 1.7 percent from the end of the prior quarter.

Additional Financial Information:

Certain events affected the comparability of 2011 versus 2010 quarterly results, as outlined below. For a more detailed comparison of 2011 versus 2010 results, refer to Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 2011.

 
  Other income in the prior year quarter benefited from a $3.7 million foreign exchange gain related to the implementation of highly-inflationary accounting for Venezuela and the devaluation of the Venezuelan bolivar.
 
  The effective income tax rate was 16.0% compared with a tax benefit of 37.0% in the same quarter a year ago. The change in the effective tax rate was primarily due to the Company's increase in operating income for the current quarter compared to the same quarter a year ago. The effective tax rates for both periods were reduced by decreases in tax liabilities associated with uncertain tax positions due to the expiration of the statue of limitations of $1.2 million and $1.4 million, respectively.

NSP United States Segment Results for the First Quarter:

 
  Net sales were $35.6 million, compared with $36.7 million in the same quarter a year ago, a decrease of 2.8 percent. Shifting the timing of our national convention from the fall of 2010 to the spring of 2011 negatively affected Manager retention and Distributor recruiting efforts during the prior year and the current quarter. The prior year quarter also included heavy Manager and Distributor purchases in advance of price increases the following quarter. Net sales revenue also decreased compared to the same period in the prior year due to changes to some of our promotional programs.
 
  Operating income was $3.8 million, compared with $0.5 million in the same quarter a year ago, an increase of 717.0 percent. The increase in operating income is primarily the result of significant cost reductions in our selling, general and administrative expenses.

NSP International Segment Results for the First Quarter:

 
  Net sales were $36.5 million, compared with $36.2 million in the same quarter a year ago, an increase of 1.0 percent. In local currencies, net sales decreased by 0.3 percent compared to the same quarter a year ago. The decrease in local currency sales is due to lower sales in our Dominican Republic, Japan and Mexico markets, mostly offset by higher sales in our Russian markets and positive currency fluctuations.
 
  Operating income was $2.1 million, compared with $0.8 million in the same quarter a year ago, an increase of 149.0 percent. This increase was the result of cost reductions, as well as the impact of prior year value-added tax reserve charges in our Mexico business. 

Synergy Worldwide Results for the First Quarter:

 
  Net sales were $20.7 million, compared with $13.9 million in the same quarter a year ago, an increase of 48.1 percent. In local currencies, net sales increased 42.8 percent compared to the same quarter a year ago. The increase in net sales was primarily due to growth in our United States, Korean and European markets, and the opening of our Vietnam market.
 
  Operating income was $1.8 million, compared with an operating loss of $0.7 million for the same quarter in the prior year, an increase of 353.0 percent. This increase was primarily due to improvements in sales within its European, U.S, and Korean subsidiaries as well as cost reductions.

Non-GAAP Financial Measures

The Company has included information concerning EBITDA because management utilizes this information in the evaluation of its operations and believes that this measure is a useful indicator of the Company's ability to fund its business. EBITDA has not been prepared in accordance with generally accepted accounting principles (GAAP). This non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, net income as an indicator of the Company's operating performance. Further, this non-GAAP financial measure, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. The Company has included a reconciliation of EBITDA to reported earnings under GAAP in the attached financial tables.

About Nature's Sunshine Products

Nature's Sunshine Products (Nasdaq:NATR), a leading natural health and wellness company, markets and distributes nutritional, herbal, weight management, energy, and other complementary products through a global direct sales force of over 600,000 independent distributors in more than 40 countries. Nature's Sunshine manufactures 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 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 forward-looking statements. 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 encompass 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.

 
                                                                                                                                      NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
                                                                                                                                                   CONDENSED CONSOLIDATED BALANCE SHEETS
                                                                                                                                                                  (Amounts in thousands)
                                                                                                                                                                             (Unaudited)
                                                                                                                                                                                       
                                                                                                                                        March 31, 
    2011     December 31,
     2010
                                                                                                                              Assets                                                  
                                                                                                                     Current Assets:                                                  
                                                                                                           Cash and cash equivalents                $ 55,418                    $ 47,604
                                          Accounts receivable, net of allowance for doubtful accounts of $714 and $918, respectively                  10,671                       5,947
                                                                                                      Investments available for sale                   5,788                       6,470
                                                                                                                         Inventories                  35,665                      36,235
                                                                                                          Deferred income tax assets                   4,564                       4,582
                                                                                                          Prepaid expenses and other                   6,467                       5,700
                                                                                                                Total current assets                 118,573                     106,538
                                                                                                                                                                                     
                                                                                                  Property, plant and equipment, net                  26,636                      27,391
                                                                                                               Investment securities                   1,770                       1,778
                                                                                                                   Intangible assets                   1,266                       1,303
                                                                                                          Deferred income tax assets                  12,945                      12,916
                                                                                                                        Other assets                   9,710                       9,489
                                                                                                                                                  $ 170,900                   $ 159,415
                                                                                                                                                                                     
                                                                                                Liabilities and Shareholders' Equity                                                  
                                                                                                                Current Liabilities:                                                  
                                                                                                                    Accounts payable                 $ 4,485                     $ 4,855
                                                                                                           Accrued volume incentives                  22,065                      18,619
                                                                                                                 Accrued liabilities                  35,240                      34,601
                                                                                                                    Deferred revenue                   3,140                       3,385
                                                                                                                Income taxes payable                   4,902                       3,708
                                                                                                           Total current liabilities                  69,832                      65,168
                                                                                                                                                                                     
                                                                                      Liability related to unrecognized tax benefits                  20,573                      21,366
                                                                                                       Deferred compensation payable                   1,770                       1,778
                                                                                                                   Other liabilities                   3,124                       2,721
                                                                                                         Total long-term liabilities                  25,467                      25,865
                                                                                                               Shareholders' Equity:                                                  
     Common stock, no par value; 50,000 shares authorized, 15,533 issued and outstanding as of March 31, 2011 and December 31, 2010                  67,840                      67,752
                                                                                                                   Retained earnings                  14,900                       8,278
                                                                                                Accumulated other comprehensive loss                 (7,139)                     (7,648)
                                                                                                          Total shareholders' equity                  75,601                      68,382
                                                                                                                                                  $ 170,900                   $ 159,415
 
                                                                                                                                            
                                                                                           NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
                                                                                              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                                                         (Amounts in thousands, except per share information)
                                                                                                                                  (Unaudited)
                                                                                                                                            
                                                                                                            Three Months Ended
    March 31,
                                                                                                                        2011            2010
                                                                                                                                          
     Net sales revenue (net of the rebate portion of volume incentives of $11,582 and $11,176, respectively)        $ 92,844        $ 86,790
                                                                                           Cost and expenses:                              
                                                                                           Cost of goods sold          18,552          17,917
                                                                                            Volume incentives          34,298          32,551
                                                                          Selling, general and administrative          32,373          35,752
                                                                                                                      85,223          86,220
                                                                                             Operating income           7,621             570
                                                                                            Other income, net             265           2,901
                                                                                                                                          
                                                           Income before provision (benefit) for income taxes           7,886           3,471
                                                                         Provision (benefit) for income taxes           1,264         (1,300)
                                                                        Net income from continuing operations           6,622           4,771
                                                                            Loss from discontinued operations             —           (618)
                                                                                                   Net income         $ 6,622         $ 4,153
                                                                                                                                          
                                                                Basic and diluted net income per common share                              
                                                                                                                                          
                                                                                                       Basic:                              
                                                                        Net income from continuing operations           $0.43          $ 0.31
                                                                            Loss from discontinued operations            $—        $ (0.04)
                                                                                                   Net income           $0.43          $ 0.27
                                                                                                                                          
                                                                                                     Diluted:                              
                                                                        Net income from continuing operations           $0.43          $ 0.31
                                                                            Loss from discontinued operations            $—        $ (0.04)
                                                                                                   Net income           $0.43          $ 0.27
                                                                                                                                          
                                                             Weighted average basic common shares outstanding          15,533          15,510
                                                           Weighted average diluted common shares outstanding          15,561          15,534
 
                                                                   
                  NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
                       RECONCILIATION OF NET INCOME (LOSS) to EBITDA
                                              (Amounts in thousands)
                                                         (Unaudited)
                                                                   
                                     Three Months Ended
    March 31,
                                                2011           2010
                                                                 
                            Net income        $ 6,622        $ 4,153
                   EBITDA adjustments:                            
     Loss from discontinued operations            —            618
         Depreciation and amortization          1,054          1,118
      Share-based compensation expense             88             69
                    Other income, net*          (265)        (2,901)
                                 Taxes          1,264        (1,300)
                                EBITDA        $ 8,763        $ 1,757

* Other income, net is primarily comprised of foreign exchange gains (losses), interest income, and interest expense.  

CONTACT: Stephen M. Bunker
         Chief Financial Officer
         Nature's Sunshine Products, Inc.
         Provo, Utah 84606
         (801) 342-4370
Source: Nature's Sunshine Products, Inc.