Nature's Sunshine Reports Record Second Quarter 2021 Results

– Net Sales Increased 25% to $109.0 Million, Marking Fourth Consecutive Quarter of Record Net Sales –
– GAAP Net Income Increased 11% to $6.8 Million with a 38% Increase in Adjusted EBITDA to a Record $13.4 Million –

LEHI, Utah, Aug. 05, 2021 (GLOBE NEWSWIRE) -- Nature’s Sunshine Products, Inc. (Nasdaq: NATR) (Nature’s Sunshine), a leading natural health and wellness company engaged in the manufacture and sale of nutritional and personal care products, reported financial results for the second quarter ended June 30, 2021.

Second Quarter 2021 Financial Highlights vs. Same Year-Ago Quarter

• Net sales increased 25% to a record $109.0 million compared to $87.3 million.
• GAAP net income increased 11% to $6.8 million, or $0.32 per diluted share, compared to $6.1 million, or $0.29 per diluted share.
• Adjusted net income per diluted share was $0.32, compared to an adjusted net income per diluted share of $0.28.
• Adjusted EBITDA increased 38% to a record $13.4 million compared to $9.7 million.

Management Commentary
“For the fourth consecutive quarter, we achieved the largest sales in the company’s history,” said Terrence Moorehead, CEO of Nature’s Sunshine. “These tremendous results were driven by growth across our operating business units as we remain committed to our business transformation and our five global growth strategies.

“Across Asia, Europe, and Latin America we had double-digit growth driven by product launches and strong execution of our strategies. In the U.S., we also saw initiatives like our ‘Subscribe and Thrive’ auto-ship program and affiliate program continue to gain traction. Our direct-to-consumer business performed better than expected and we are working to further accelerate this channel by building out our digital capabilities. With the momentum we’re seeing, we are excited to be working towards launching our Personalization Program later in the year. It is another program we designed to improve the customer experience and it will represent the next phase of our digital-first transformation.

“Looking forward to the second half of 2021, we expect our distributors and customers to continue responding positively to our transformed business model and new branding. Our customers are enjoying the revitalized packaging and labels as well as our new unboxing experience, which we will now start rolling out within our Synergy brand as well. We’re on a multi-year journey right now and while there’s supply chain headwinds and continued challenges from COVID-19, we remain operationally and financially sound, and we are optimistic in our ability to continue to create value for our shareholders.”

Second Quarter 2021 Financial Results

Net sales in the second quarter increased 25% to a company record of $109.0 million compared to $87.3 million in the same year-ago quarter. The increase was due to the continued execution of business transformation initiatives, new product development, and the easing of COVID-19-related restrictions in certain key markets. Excluding foreign exchange rates, net sales in the second quarter of 2021 increased 21% compared to the year-ago quarter.

Gross margin in the second quarter improved 30 basis points to 73.9% compared to 73.6% in the year-ago quarter. The increase in gross margin is primarily due to changes in market mix.

Volume incentives as a percentage of net sales were 32.5% compared to 33.4% in the year-ago quarter. The decrease in volume incentives is due to changes in market mix and growth in NSP China. The decrease also reflects expected cost savings from the September 2020 launch of our new consultant sales and compensation plan in North America and LATAM.

Selling, general and administrative expenses in the second quarter were $35.6 million compared to $28.5 million in the year‐ago quarter. The increase was primarily attributable to higher costs associated with the implementation of business transformation initiatives and growth in markets with higher variable costs. As a percentage of net sales, SG&A expenses were flat at 32.7% in the second quarter of 2021 and 2020, respectively. Excluding the impact of the prior year refunds, SG&A expenses as a percentage of net sales improved to 32.7% in the second quarter of 2021 compared to 32.8% in the year-ago quarter.

Operating income in the second quarter of 2021 increased 44% to $9.5 million, or 8.7% of net sales, compared to $6.6 million, or 7.6% of net sales, in the second quarter of 2020.

Other income, net, in the second quarter of 2021 decreased to $0.5 million compared to $1.5 million in the second quarter of 2020. Other income, net, primarily consisted of foreign exchange gains as a result of net changes in foreign currencies primarily in Asia, Europe and Latin America. The provision for income taxes was $3.2 million in the second quarter of 2021 compared to $2.0 million for the year-ago quarter.

GAAP net income attributable to common shareholders increased to $6.5 million, or $0.32 per diluted common share, compared to $5.8 million, or $0.29 per diluted common share, in the second quarter of 2020. Net income attributable to NSP China decreased to $1.3 million, or $0.06 per diluted common share, for the second quarter of 2021, compared to $1.9 million, or $0.10 per diluted common share, for the second quarter of 2020.

Adjusted net income attributable to common shareholders increased to $6.5 million, or $0.32 per diluted common share, compared to $5.6 million, or $0.28 per diluted common share in the prior year period. Adjusted net income, which is a non-GAAP financial measure, is defined here as net income from continuing operations before less-frequent items including, among other things, large tax refunds. A reconciliation of adjusted net income to GAAP net income is provided in the attached financial tables.

Adjusted EBITDA increased 38% to a company record of $13.4 million in the second quarter compared to $9.7 million the second quarter of 2020. This increase was driven primarily by the aforementioned increase in net sales. Adjusted EBITDA, which is a non-GAAP financial measure, is defined here as net income from continuing operations before taxes, depreciation, amortization and other income/loss adjusted to exclude share-based compensation expense and certain noted adjustments. A reconciliation of Net Income to Adjusted EBITDA is provided in the financial tables below.

Balance Sheet and Cash Flow

Net cash provided by operating activities decreased to $10.7 million for the six months ended June 30, 2021, compared to $14.4 million provided in the prior year period. Capital expenditures during the six months ended June 30, 2021 totaled $2.9 million compared to $2.2 million in the comparable period of 2020. As of June 30, 2021, the Company had cash and cash equivalents of $74.9 million and $3.0 million of debt.

Conference Call

The Company will hold a conference call today at 5:00 p.m. Eastern time to discuss its second quarter 2021 results.

Date: Thursday, August 5, 2021
Time: 5:00 p.m. Eastern time (3:00 p.m. Mountain time)
Toll-free dial-in number: 1-800-239-9838
International dial-in number: 1-323-794-2551
Conference ID: 8000027

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and via the Events section of the Nature’s Sunshine website here.

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through August 19, 2021.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 8000027

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 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. Additional information about the company can be obtained at its website, www.naturessunshine.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This press release contains forward-looking statements regarding the Company’s future business expectations, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to the Company’s objectives, plans, strategies and financial results. All statements (other than statements of historical fact) that address activities, events or developments that the Company intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are often characterized by terminology such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions, and are based on assumptions and assessments made by management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, including the following:

• laws and regulations regarding direct selling may prohibit or restrict our ability to sell our products in some markets or require us to make changes to our business model in some markets;
• extensive government regulations to which the Company's products, business practices and manufacturing activities are subject;
• registration of products for sale in foreign markets, or difficulty or increased cost of importing products into foreign markets;
• legal challenges to the Company's direct selling program or to the classification of its independent consultants;
• liabilities and obligations arising from improper activity by the Company’s independent consultants;
• product liability claims;
• our cannabidiol (CBD) product line is subject to varying, rapidly changing laws, regulations, and rules;
• actions on trade relations by the U.S. and foreign governments;
• impact of anti-bribery laws, including the U.S. Foreign Corrupt Practices Act;
• the Company’s ability to attract and retain independent consultants;
• the loss of one or more key independent consultants who have a significant sales network;
• the Company’s joint venture for operations in China with Fosun Industrial Co., Ltd.;
• the effect of fluctuating foreign exchange rates;
• failure of the Company’s independent consultants to comply with advertising laws;
• changes to the Company’s independent consultants compensation plans;
• geopolitical issues and conflicts;
• we may be adversely affected by the ongoing coronavirus pandemic;
• negative consequences resulting from difficult economic conditions, including the availability of liquidity or the willingness of the Company’s customers to purchase products;
• risks associated with the manufacturing of the Company's products;
• world-wide slowdowns and delays related to supply chain, ingredient shortages and logistical challenges;
• uncertainties relating to the application of transfer pricing, duties, value-added taxes, and other tax regulations, and changes thereto;
• changes in tax laws, treaties or regulations, or their interpretation;
• cybersecurity threats and exposure to data loss;
• the storage, processing, and use of data, some of which contain personal information, are subject to complex and evolving privacy and data protection laws and regulations;
• reliance on information technology infrastructure; and
• the sufficiency of trademarks and other intellectual property rights.

These and other risks and uncertainties that could cause actual results to differ from predicted results are more fully detailed under the caption “Risk Factors” in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports filed on Form 10-Q

All forward-looking statements speak only as of the date of this press release and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this press release. Except as is required by law, the Company expressly disclaims any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this press release.

Non-GAAP Financial Measures

We have included information which has not been prepared in accordance with generally accepted accounting principles (GAAP), such as information concerning non-GAAP net income, Adjusted EBITDA and net sales excluding the impact of foreign currency exchange fluctuations.

We utilize the non-GAAP measures of non-GAAP net income and Adjusted EBITDA in the evaluation of our operations and believe that these measures are useful indicators of our ability to fund our business. These non-GAAP financial measures should not be considered as an alternative to, or more meaningful than, U.S. GAAP net income (loss) as an indicator of our operating performance.

Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of Nature’s Sunshine Products’ performance in relation to other companies. We have included a reconciliation of Net Income to Adjusted EBITDA, the most comparable GAAP measure. We have also included a reconciliation of GAAP net income to Non-GAAP net income and Non-GAAP Adjusted EPS, in the attached financial tables.

Net sales in local currency removes, from net sales in U.S. dollars, the impact of changes in exchange rates between the U.S. dollar and the functional currencies of our foreign subsidiaries. This is accomplished by translating the current period net sales into U.S. dollars using the same foreign currency exchange rates that were used to translate the net sales for the previous comparable period.

We believe presenting the impact of foreign currency fluctuations is useful to investors because it allows a more meaningful comparison of net sales of our foreign operations from period to period. Net sales excluding the impact of foreign currency fluctuations should not be considered in isolation or as an alternative to net sales in U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP.

Investor Relations:

Gateway Investor Relations
Cody Slach
1-949-574-3860
NATR@gatewayir.com 

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

Released August 5, 2021