Nature's Sunshine Reports Record Third Quarter 2021 Results

– Net Sales Increased 14% to $114.7 Million, Marking Fifth Consecutive Quarter of Record Net Sales –

LEHI, Utah, Nov. 04, 2021 (GLOBE NEWSWIRE) -- Nature’s Sunshine Products, Inc. (Nasdaq: NATR) (Nature’s Sunshine), a leading natural health and wellness company, reported financial results for the third quarter ended September 30, 2021.

Third Quarter 2021 Financial Summary vs. Same Year-Ago Quarter

• Net sales increased 14% to $114.7 million compared to $100.3 million.
• Net income was $5.5 million, or $0.24 per diluted share, compared to $7.2 million, or $0.34 per diluted share.
• Adjusted EBITDA increased 38% to $12.9 million compared to $9.4 million.
  

Management Commentary

“Once again, we delivered the largest sales quarter in the 49-year history of the company,” said Terrence Moorehead, CEO of Nature’s Sunshine. “Every market we operate in is growing and we see ample runway for continued expansion. We have witnessed a dramatic, fundamental change in Nature’s Sunshine’s business as our powerful global growth strategies take effect. In fact, the investments we’ve made to re-brand, sharpen our sales fundamentals, and revamp our website contributed to broad customer and sales growth during the quarter.

“From a supply chain perspective, we used our strong balance sheet to increase product availability and leveraged our in-house production capabilities to be more agile to our customers’ needs. We are confident this strategy will better position us to satisfy demand in a timely manner.

“As we look to the final quarter of the year, I’m proud of our team’s execution of our transformation initiatives. While external challenges remain across the globe, our brand momentum, our investments in growth initiatives and our strong balance sheet position us well to continue to drive shareholder value.”

Third Quarter 2021 Financial Results

Net sales in the third quarter increased 14.5% to a company record of $114.7 million compared to $100.3 million in the year-ago quarter. The increase was due to the continued execution of business transformation initiatives, launch of new products, and the easing of COVID-19-related restrictions in certain key markets. Excluding foreign exchange rates, net sales in the third quarter of 2021 increased 12.9% compared to the prior year period.

Gross margin in the third quarter improved 147 basis points to 74.4% compared to 72.9% in the year-ago quarter. The increase in gross margin is primarily a result of changes in market mix and inventory obsolescence reserves recorded in the prior year.

Volume incentives as a percentage of net sales were 31.2% compared to 34.2% in the third quarter of 2020. The decrease in volume incentives is due to changes in market mix and growth in NSP China. The decrease also reflects expected overall 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 third quarter were $39.5 million compared to $33.3 million in the year‐ago quarter. The increase was primarily attributable to higher costs associated with incremental variable service fees in China from net sales growth, and the implementation of business transformation and sales growth initiatives in other markets. As a percentage of net sales, SG&A expenses were 34.4% in the third quarter of 2021 compared to 33.2% the year-ago quarter

Operating income in the third quarter of 2021 increased 83% to $10.0 million, or 8.7% of net sales, compared to $5.5 million, or 5.5% of net sales, in the year-ago quarter.

Other income (loss), net, in the third quarter of 2021 was a loss of $0.9 million compared to income of $0.7 million in the third quarter of 2020. Other income (loss), net, primarily consisted of foreign exchange gains (losses) as a result of net changes in foreign currencies primarily in Asia, Europe and Latin America. The provision for income taxes was $3.7 million in the third quarter of 2021 compared to a benefit of $1.0 million for the year-ago quarter.

GAAP net income attributable to common shareholders decreased to $4.9 million, or $0.24 per diluted common share, compared to $6.8 million, or $0.34 per diluted common share, in the third quarter of 2020. Net income attributable to NSP China increased to $3.0 million, or $0.15 per diluted common share, for the third quarter of 2021, compared to $2.1 million, or $0.10 per diluted common share, for the third quarter of 2020.

Non-GAAP net income attributable to common shareholders decreased to $4.1 million, or $0.21 per diluted common share, compared to $6.9 million, or $0.34 per diluted common share in the year-ago quarter. Non-GAAP 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, value-added-tax (VAT) refunds. A reconciliation of Non-GAAP net income to GAAP net income is provided in the attached financial tables.

Adjusted EBITDA increased 38% to $12.9 million in the third quarter compared to $9.4 million in the third 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.

Balance Sheet and Cash Flow

Net cash provided by operating activities was $20.3 million for the nine months ended September 30, 2021, compared to $26.8 million provided in the prior year period. Capital expenditures during the nine months ended September 30, 2021 totaled $4.6 million compared to $3.5 million in the comparable period of 2020.   During the nine months ended September 30, 2021, the Company repurchased 350,000 shares at a total cost of $6.0 million. As of September 30, 2021, the Company had cash and cash equivalents of $75.5 million and $2.7 million of debt.

Conference Call

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

Date: Thursday, November 4, 2021
Time: 5:00 p.m. Eastern time (3:00 p.m. Mountain time)
Toll-free dial-in number: 1-800-289-0438
International dial-in number: 1-323-794-2423
Conference ID: 9556803

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 November 18, 2021.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 9556803

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:

• 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;
• 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;
• 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;
• supply chain disruptions, manufacturing interruptions or delays, or the failure to accurately forecast customer demand;
• failure to timely and effectively obtain shipments of products from our manufacturers and deliver products to our independent consultants and customers;
• 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 

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share information)
(Unaudited)

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(Amounts in thousands)
(Unaudited)

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

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP NET INCOME and NON-GAAP ADJUSTED EPS
(Amounts in thousands)
(Unaudited)

Released November 4, 2021