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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
_________________________________________________________________
 
FORM 10-Q 
(Mark One)
 
     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period ended June 30, 2022
 
OR
 
        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the transition period from            to            .
 
Commission File Number: 001-34483
natr-20220630_g1.jpg 
NATURE’S SUNSHINE PRODUCTS, INC.
(Exact name of Registrant as specified in its charter) 
Utah 87-0327982
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
 
2901 Bluegrass Boulevard, Suite 100
Lehi, Utah 84043
(Address of principal executive offices and zip code)
 
(801) 341-7900
(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, no par valueNATR
Nasdaq Capital Market

 
Indicate by check mark whether the registrant; (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý  No  o
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ý  No  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and an “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  o
 
Accelerated filer  ☒
   
Non-accelerated filer  o
 
Smaller reporting company 
  
Emerging growth company  
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o


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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes    No  ý.
 
The number of shares of Common Stock, no par value, outstanding on July 22, 2022, was 19,224,999 shares.



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NATURE’S SUNSHINE PRODUCTS, INC.
FORM 10-Q
 
For the Quarter Ended June 30, 2022
 
Table of Contents
 
    
 
    
  
  
  
  
  
  
    
 
    
 
    
 
    
    
 
    
 
    
 
    
 
    
 
    
 
    
 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
Certain information included or incorporated herein by reference in this report may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies. All statements (other than statements of historical fact) that address activities, events or developments that we intend, expect, project, believe or anticipate 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 in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. For example, information appearing under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are more fully described in this report, including the risks set forth under “Risk Factors” in Item 1A, and in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, but include 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;
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;
adverse effects caused 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.

All forward-looking statements speak only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this report. Except as is required by law, we expressly disclaim any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this report. Throughout this report, we refer to Nature’s Sunshine Products, Inc., together with our subsidiaries, as "we," "us," "our," "our Company" or “the Company.”

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PART I FINANCIAL INFORMATION
 
Item 1. FINANCIAL STATEMENTS
 
NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
 June 30,
2022
December 31,
2021
Assets  
Current assets:  
Cash and cash equivalents$56,344 $86,184 
Accounts receivable, net of allowance for doubtful accounts of $525 and $143, respectively
10,540 8,871 
Inventories70,643 60,852 
Prepaid expenses and other9,618 8,760 
Total current assets147,145 164,667 
Property, plant and equipment, net49,099 50,857 
Operating lease right-of-use assets18,060 18,349 
Investment securities - trading743 964 
Deferred income tax assets7,794 13,590 
Other assets10,218 10,447 
Total assets$233,059 $258,874 
Liabilities and Shareholders’ Equity  
Current liabilities:  
Accounts payable$9,423 $9,702 
Accrued volume incentives and service fees23,199 23,131 
Accrued liabilities26,842 31,600 
Deferred revenue1,829 3,694 
Related party notes payable 302 
Income taxes payable2,227 2,647 
Current portion of operating lease liabilities4,336 4,350 
Current portion of note payable1,263 1,244 
Total current liabilities69,119 76,670 
Long-term portion of operating lease liabilities15,871 15,919 
Long-term note payable537 1,174 
Deferred compensation payable743 964 
Deferred income tax liabilities1,212 1,566 
Other liabilities1,098 1,177 
Total liabilities88,580 97,470 
Shareholders’ equity:  
Common stock, no par value, 50,000 shares authorized, 19,259 and 19,724 shares issued and outstanding, respectively
121,623 133,382 
Retained earnings32,591 35,025 
Noncontrolling interest3,902 3,202 
Accumulated other comprehensive loss(13,637)(10,205)
Total shareholders’ equity144,479 161,404 
Total liabilities and shareholders’ equity$233,059 $258,874 
 
See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share information)
(Unaudited) 
 Three Months Ended
June 30,
 20222021
Net sales$104,161 $108,978 
Cost of sales29,471 28,463 
Gross profit74,690 80,515 
Operating expenses:  
Volume incentives32,069 35,443 
Selling, general and administrative36,866 35,586 
Operating income5,755 9,486 
Other income (loss), net(442)529 
Income before provision for income taxes5,313 10,015 
Provision for income taxes4,361 3,221 
Net income952 6,794 
Net income attributable to noncontrolling interests436 254 
Net income attributable to common shareholders$516 $6,540 
Basic and diluted net income per common share:  
Basic earnings per share attributable to common shareholders$0.03 $0.33 
Diluted earnings per share attributable to common shareholders$0.03 $0.32 
Weighted average basic common shares outstanding19,386 19,999 
Weighted average diluted common shares outstanding19,594 20,503 
 
See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share information)
(Unaudited) 
 Six Months Ended
June 30,
 20222021
Net sales$214,655 $211,399 
Cost of sales63,931 55,442 
Gross profit150,724 155,957 
Operating expenses:  
Volume incentives66,171 69,698 
Selling, general and administrative77,489 69,138 
Operating income7,064 17,121 
Other loss, net(756)(1,404)
Income before provision for income taxes6,308 15,717 
Provision for income taxes8,042 4,771 
Net income (loss)(1,734)10,946 
Net income attributable to noncontrolling interests700 390 
Net income (loss) attributable to common shareholders$(2,434)$10,556 
Basic and diluted net income per common share:  
Basic earnings (loss) per share attributable to common shareholders$(0.12)$0.53 
Diluted earnings (loss) per share attributable to common shareholders$(0.12)$0.52 
Weighted average basic common shares outstanding19,479 19,897 
Weighted average diluted common shares outstanding19,479 20,340 
Dividends declared per common share$ $1.00 

See accompanying notes to condensed consolidated financial statements.
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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Amounts in thousands)
(Unaudited) 
 Three Months Ended
June 30,
 20222021
Net income$952 $6,794 
Foreign currency translation loss (net of tax)(2,457)(45)
Total comprehensive income (loss)$(1,505)$6,749 
 
Six Months Ended
June 30,
 20222021
Net income (loss)$(1,734)$10,946 
Foreign currency translation loss (net of tax)(3,432)(166)
Total comprehensive income (loss)$(5,166)$10,780 
 
See accompanying notes to condensed consolidated financial statements.
 
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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Amounts in thousands)
(Unaudited) 
 Common StockRetained EarningsNoncontrolling
Interest
Accumulated
Other
Comprehensive
Loss
Total
 SharesAmount
Balance at December 31, 202119,724 $133,382 $35,025 $3,202 $(10,205)$161,404 
Share-based compensation expense— 801 — — — 801 
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax218 (795)— — — (795)
Repurchase of common stock(451)(7,971)— — — (7,971)
Net income (loss)— — (2,950)264 — (2,686)
Other comprehensive loss— — — — (975)(975)
Balance at March 31, 202219,491 $125,417 $32,075 $3,466 $(11,180)$149,778 
Share-based compensation expense— 540 — — — 540 
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax58 (334)— — — (334)
Repurchase of common stock(290)(4,000)— — — (4,000)
Net income— — 516 436 — 952 
Other comprehensive loss— — — — (2,457)(2,457)
Balance at June 30, 202219,259 $121,623 $32,591 $3,902 $(13,637)$144,479 

Common StockRetained EarningsNoncontrolling
Interest
Accumulated
Other
Comprehensive
Loss
Total
SharesAmount
Balance at December 31, 202019,697 $139,311 $26,030 $1,848 $(9,955)$157,234 
Share-based compensation expense— 1,005 — — — 1,005 
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax218 (914)— — — (914)
Cash dividends ($1.00 per share)
— — (19,858)— — (19,858)
Net income— — 4,016 136 — 4,152 
Other comprehensive loss— — — — (121)(121)
Balance at March 31, 202119,915 $139,402 $10,188 $1,984 $(10,076)$141,498 
Share-based compensation expense— 1,066 — — — 1,066 
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax152 (660)— — — (660)
Repurchase of common stock(77)(1,500)— — — (1,500)
Net income— — 6,540 254 — 6,794 
Other comprehensive loss— — — — (45)(45)
Balance at June 30, 202119,990 $138,308 $16,728 $2,238 $(10,121)$147,153 

See accompanying notes to condensed consolidated financial statements.
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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited) 
 Six Months Ended
June 30,
 20222021
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net income (loss)$(1,734)$10,946 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:  
Provision for doubtful accounts417  
Depreciation and amortization5,451 5,541 
Non-cash lease expense2,785 2,626 
Share-based compensation expense1,341 2,071 
Loss on sale of property, plant and equipment 12 
Deferred income taxes5,338 1,753 
Purchase of trading investment securities(19)(24)
Proceeds from sale of trading investment securities69 175 
Realized and unrealized gains (losses) on investments170 (67)
Foreign exchange losses803 1,572 
Changes in assets and liabilities:  
Accounts receivable(2,801)(2,755)
Inventories(11,910)(3,777)
Prepaid expenses and other current assets(1,357)(918)
Other assets(33)(108)
Accounts payable(80)1,079 
Accrued volume incentives and service fees1,045 483 
Accrued liabilities(4,001)(5,473)
Deferred revenue(1,718)(111)
Lease liabilities(2,503)(2,487)
Income taxes payable(386)261 
Liability related to unrecognized tax benefits (87)
Deferred compensation payable(220) 
Net cash provided by (used in) operating activities(9,343)10,712 
CASH FLOWS FROM INVESTING ACTIVITIES:  
Purchases of property, plant and equipment(3,757)(2,898)
Net cash used in investing activities(3,757)(2,898)
CASH FLOWS FROM FINANCING ACTIVITIES:  
Payments of cash dividends (19,858)
Principal payments of long-term debt(618)(698)
Proceeds from revolving credit facility15,645  
Principal payments of revolving credit facility(15,645) 
Principal payments of related party borrowing(300) 
Payments related to tax withholding for net-share settled equity awards(1,129)(1,574)
Repurchase of common stock(11,971)(1,500)
Net cash used in financing activities(14,018)(23,630)
Effect of exchange rates on cash and cash equivalents(2,722)(1,351)
Net decrease in cash and cash equivalents(29,840)(17,167)
Cash and cash equivalents at the beginning of the period86,184 92,069 
Cash and cash equivalents at the end of the period$56,344 $74,902 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:  
Cash paid for income taxes, net of refunds$4,173 $2,582 
Cash paid for interest113 111 
 
See accompanying notes to condensed consolidated financial statements.
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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 
(1)    Basis of Presentation
 
We are a natural health and wellness company primarily engaged in the manufacture and sale of nutritional and personal care products. We are a Utah corporation with our principal place of business in Lehi, Utah, and sell our products directly to customers and to a sales force of independent consultants who use the products themselves or resell them to consumers.
 
Principles of Consolidation
 
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation of our financial information as of June 30, 2022, and for the three and six-month periods ended June 30, 2022 and 2021. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2022.
 
These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021.

Use of Estimates

The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities, in these financial statements and accompanying notes. Actual results could differ from these estimates due to the uncertainty around the magnitude and duration of the COVID-19 pandemic, as well as other factors, and those differences could have a material effect on our financial position and results of operations.

The significant accounting estimates inherent in the preparation of our financial statements include estimates associated with our determination of liabilities related to independent consultant incentives, the determination of income tax assets and liabilities, certain other non-income tax and value-added tax contingencies, and legal contingencies. In addition, significant estimates form the basis for allowances with respect to inventory valuations. Various assumptions and other factors enter into the determination of these significant estimates. The process of determining significant estimates takes into account historical experience and current and expected economic conditions.

Noncontrolling Interests

Noncontrolling interests changed as a result of the net income attributable to noncontrolling interests of $0.4 million and $0.7 million for the three and six months ended June 30, 2022, respectively. Net income attributable to the noncontrolling interests was $0.3 million and $0.4 million for the three and six months ended June 30, 2021, respectively. As of June 30, 2022 and December 31, 2021, noncontrolling interests were $3.9 million and $3.2 million, respectively.

Restructuring Related Accruals and Expenses

We recorded $0 and $0.3 million of restructuring related expenses during the three and six months ended June 30, 2022, respectively. We recorded $0 and $48,000 of restructuring related expenses during the three and six months ended June 30, 2021, respectively. Accrued severance and restructuring related costs were $5,000 and $0.2 million as of June 30, 2022 and December 31, 2021, respectively.

Recent Accounting Pronouncements
 
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional guidance for a limited period of time to ease the
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potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in this update are elective and subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. This could affect balances of right of use assets, lease liabilities, and notes payables. The amendments in this update are effective as of March 12, 2020 through December 21, 2022. The adoption of this ASU is not expected to have a significant impact on our Consolidated Financial Statements.

(2)    Inventories
 
The composition of inventories is as follows (dollar amounts in thousands):
June 30,
2022
December 31,
2021
Raw materials$27,680 $22,494 
Work in progress1,930 1,746 
Finished goods41,033 36,612 
Total inventories$70,643 $60,852 

(3)    Investment Securities - Trading
 
Our trading securities portfolio totaled $0.7 million at June 30, 2022, and $1.0 million at December 31, 2021, and generated losses of $0.1 million and gains of $0.1 million for the three months ended June 30, 2022 and 2021, respectively, and losses of $0.2 million and gains of $0.1 million for the six months ended June 30, 2022 and 2021, respectively.
 
(4)    Revolving Credit Facility and Other Obligations

On July 11, 2017, we entered into a revolving credit agreement with Bank of America, N.A., with a borrowing limit of $25.0 million (the “Credit Agreement”). On June 23, 2022 the credit agreement was amended to extend the term to mature on July 1, 2027 and allows for additional borrowings of $25.0 million or up to three separate increases of no less than $5.0 million each. The amendment to the credit agreement also modified the calculation of interest. Interest under the amended Credit Agreement is the greater of BSBY Daily Floating Rate or the Index Floor, plus 1.50 percent (3.10 percent as of June 30, 2022), and an annual commitment fee of 0.25 percent on the unused portion of the commitment. At June 30, 2022 and December 31, 2021, there was no outstanding balance under the Credit Agreement.

The Credit Agreement contains customary financial covenants, including financial covenants relating to our solvency and leverage. In addition, the Credit Agreement restricts certain capital expenditures, lease expenditures, other indebtedness, liens on assets, guarantees, loans and advances, dividends, mergers, consolidations and transfers of assets except as permitted in the Credit Agreement. The Credit Agreement is collateralized by our manufacturing facility, accounts receivable, inventories and other assets. As of June 30, 2022, we were in compliance with the debt covenants set forth in the Credit Agreement.

On April 21, 2020, we entered into a credit agreement with Banc of America Leasing and Capital, LLC, with a borrowing limit of $6.0 million (the "Capital Credit Agreement"). On November 19, 2020, we executed on the Capital Credit Agreement and borrowed $3.7 million. We pay interest on any borrowings under the Capital Credit Agreement at a fixed rate of 3.00 percent and are required to settle our borrowings under the Capital Credit Agreement in 36 monthly payments, of $0.1 million. The Capital Credit Agreement is collateralized by any new equipment purchased under the agreement. As of June 30, 2022, there was $1.8 million outstanding balance under the Capital Credit Agreement, of which $1.3 million was classified as current.

(5)    Net Income Per Share
 
Basic net income per common share (“Basic EPS”), is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share (“Diluted EPS”) reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect on net income per common share.

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Following is a reconciliation of the numerator and denominator of Basic EPS to the numerator and denominator of Diluted EPS for the three and six months ended June 30, 2022 and 2021 (dollar and share amounts in thousands, except for per share information):
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Net income (loss) attributable to common shareholders$516 $6,540 $(2,434)$10,556 
Basic weighted average shares outstanding19,386 19,999 19,479 19,897 
Basic earnings (loss) per share attributable to common shareholders$0.03 $0.33 $(0.12)$0.53 
Diluted shares outstanding:    
Basic weighted-average shares outstanding19,386 19,999 19,479 19,897 
Stock-based awards208 504  443 
Diluted weighted-average shares outstanding19,594 20,503 19,479 20,340 
Diluted earnings (loss) per share attributable to common shareholders$0.03 $0.32 $(0.12)$0.52 
Dilutive shares excluded from diluted-per-share amounts:    
Stock options341 563  563 
Anti-dilutive shares excluded from diluted-per-share amounts:    
Stock options25  341 (1) 
_________________________________________

(1)     As a result of the net loss for the six months ended June 30, 2022, no potentially dilutive securities are included in the calculation of diluted loss per share because such effect would be anti-dilutive. Potentially dilutive securities for the six months ended June 30, 2022 include 341 restricted stock units.

Potentially dilutive shares excluded from diluted-per-share amounts include performance-based options to purchase shares of common stock for which certain earnings metrics have not been achieved. Potentially anti-dilutive shares excluded from diluted-per-share amounts include both non-qualified stock options and unearned performance-based options to purchase shares of common stock with exercise prices greater than the weighted- average share price during the period and shares that would be anti-dilutive to the computation of diluted net income per share for each of the periods presented.
 
(6)    Capital Transactions
 
Dividends

On March 10, 2021, we announced a special non-recurring cash dividend of $1.00 per common share in an aggregate amount of $19.9 million that was paid on April 5, 2021, to shareholders of record on March 29, 2021. In accordance with the provisions of our 2012 Stock Incentive Plan (the "2012 Incentive Plan"), as a result of the special dividend we are required to make the participant's original grant whole by preventing either dilution or enlargement of the benefits or potential benefits intended by the original grant. The 2012 Incentive Plan provides our Compensation Committee with the discretion to meet this requirement. See further discussion in the Share-Based Compensation section of this Note.

The declaration of future dividends is subject to the discretion of our Board of Directors and will depend upon various factors, including our earnings, financial condition, restrictions imposed by any indebtedness that may be outstanding, cash requirements, future prospects and other factors deemed relevant by our Board of Directors.

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Share Repurchase Program

On March 10, 2021, we announced a $15.0 million common share repurchase program. On March 8, 2022 we announced an amendment to the share repurchase program allowing the repurchase of an additional $30.0 million in common shares. The repurchases may be made from time to time as market conditions warrant and are subject to regulatory considerations. For the six months ended June 30, 2022 and 2021, we repurchased 741,000 and 77,000 shares of our common stock for $12.0 million and $1.5 million, respectively. At June 30, 2022, the remaining balance available for repurchases under the program was $25.6 million.

Share-Based Compensation
 
During the year ended December 31, 2012, our shareholders adopted and approved the Nature’s Sunshine Products, Inc. 2012 Stock Incentive Plan. The 2012 Incentive Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance awards, stock awards and other stock-based awards. The Compensation Committee of the Board of Directors has authority and discretion to determine the type of award, as well as the amount, terms and conditions of each award under the 2012 Incentive Plan, subject to the limitations of the 2012 Incentive Plan. A total of 1,500,000 shares of our common stock were originally authorized for the granting of awards under the 2012 Incentive Plan. In 2015, our shareholders approved an amendment to the 2012 Incentive Plan, to increase the number of shares of common stock reserved for issuance by 1,500,000 shares. On May 5, 2021, our shareholders approved the Amended and Restated 2012 Stock Incentive Plan, which among other amendments, increased the number of shares of common stock reserved for issuance by 2,000,000 shares. The number of shares available for awards, as well as the terms of outstanding awards, are subject to adjustment as provided in the Amended and Restated 2012 Incentive Plan for stock splits, stock dividends, recapitalizations and other similar events.
 
Stock Options
 
Our outstanding stock options include time-based stock options, which vest over differing periods of time ranging from the date of issuance to up to 48 months from the option grant date, and performance-based stock options, which have already vested upon achieving operating income margins of six, eight and ten percent as reported in four of five consecutive quarters over the term of the options.
 
Stock option activity for the six-month period ended June 30, 2022, is as follows (amounts in thousands, except per share information):
 Number of
Shares
Weighted Average
Exercise
Price Per Share
Weighted Average
Grant Date
Fair Value
Options outstanding at December 31, 2021172 $12.13 $5.05 
Granted   
Forfeited or canceled   
Exercised(29)9.17 3.92 
Options outstanding at June 30, 2022143 $12.72 $5.28 

There was no share-based compensation expense for the three- and six-month periods ended June 30, 2022 and 2021. As of June 30, 2022 and December 31, 2021, there was no unrecognized share-based compensation expense related to the grants described above.

At June 30, 2022, the aggregate intrinsic value of outstanding and exercisable stock options to purchase 143,000 shares of common stock was $41,000. At December 31, 2021, the aggregate intrinsic value of outstanding and exercisable options to purchase 172,000 shares of common stock was $1.1 million.

For the six-month periods ended June 30, 2022 and 2021, we issued 29,000 and 50,000 shares of common stock upon the exercise of stock options at an average exercise price of $9.17 and $12.00 per share, respectively. The aggregate intrinsic value of options exercised during the six-month periods ended June 30, 2022 and 2021, was $0.3 million and $0.4 million, respectively. For the six-month periods ended June 30, 2022 and 2021, the Company recognized $0.1 million and $0.2 million of tax benefits from the exercise of stock options, respectively.

As of June 30, 2022 and December 31, 2021, we did not have any unvested performance-based stock options outstanding.
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Restricted Stock Units
 
Our outstanding restricted stock units (“RSUs”), include time-based RSUs, which vest over differing periods of time ranging from 12 months to up to 36 months from the RSU grant date, as well as performance-based RSUs, which vest upon achieving targets relating to revenue and earnings growth, earnings-per-share, and/or stock price levels. RSUs granted to members of the Board of Directors contain a restriction period in which the shares are not issued until two years after vesting. At June 30, 2022 and December 31, 2021, there were 68,000 and 88,000 vested RSUs, respectively, granted to the Board of Directors with an accompanying restriction period.

Restricted stock unit activity for the six-month period ended June 30, 2022, is as follows (amounts in thousands, except per share information):
 Number of
Shares
Weighted Average
Grant Date
Fair Value
Restricted Stock Units outstanding at December 31, 2021830 $9.46 
Granted164 8.87 
Forfeited(68)5.39 
Issued(329)7.50 
Restricted Stock Units outstanding at June 30, 2022597 10.84 
 
During the six-month period ended June 30, 2022, we granted 164,000 RSUs under the 2012 Incentive Plan to the Board of Directors, executive officers and other employees, which were comprised of both time-based RSUs and share-priced performance-based RSUs. The time-based RSUs were issued with a weighted-average grant date fair value of $13.87 per share and vest in annual installments over a three-year period from the grant date. The share-priced performance-based RSUs were issued with a weighted-average grant date fair value of $6.01 per share and vest upon achieving share-priced targets over a three-year period from the grant date.

Except for share-priced performance RSUs, RSUs are valued at market value on the date of grant, which is the grant date share price discounted for expected dividend payments during the vesting period. For RSUs with post-vesting restrictions, a Finnerty Model was utilized to calculate a valuation discount from the market value of common shares reflecting the restriction embedded in the RSUs preventing the sale of the underlying shares over a certain period of time. Using assumptions previously determined for the application of the option pricing model at the valuation date, the Finnerty Model discount for lack of marketability is approximately 12.9 percent for a common share.

Share-price performance-based RSUs were estimated using the Monte Carlo simulation model. The Monte Carlo simulation model utilizes multiple input variables to estimate the probability that market conditions will be achieved. Our assumptions include a performance period of three years, expected volatility of 50.1 percent, and a risk-free rate of 3.3 percent.

Share-based compensation expense related to time-based RSUs for the three-month periods ended June 30, 2022 and 2021, was approximately $0.3 million and $0.6 million, respectively. Share-based compensation expense related to time-based RSUs for the six-month periods ended June 30, 2022 and 2021, was approximately $0.9 million and $1.0 million, respectively. As of June 30, 2022 and December 31, 2021, the unrecognized share-based compensation expense related to the grants described above, excluding incentive awards discussed below, was $1.4 million and $1.6 million, respectively. The remaining compensation expense is expected to be recognized over the weighted average period of approximately 0.3 years.
 
Share-based compensation expense related to performance-based RSUs for the three-month periods ended June 30, 2022 and 2021, was $0.2 million and $0.5 million, respectively. Share-based compensation expense related to performance-based RSUs for the six-month periods ended June 30, 2022 and 2021, was $0.5 million and $0.9 million, respectively. Should we attain all of the metrics related to performance-based RSU grants, we would, and expect to, recognize up to $2.4 million of potential share-based compensation expense.

The number of shares issued upon vesting of RSUs granted pursuant to our share-based compensation plans is net of the minimum statutory withholding requirements that we pay on behalf of our employees, which was 80,000 and 121,000 shares for the six-month periods ended June 30, 2022 and 2021, respectively. Although shares withheld are not issued, they are treated as common share repurchases for accounting purposes, as they reduce the number of shares that would have been issued upon vesting. These shares do not count against the authorized capacity under the repurchase program described above. 

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(7)    Segment Information
 
We have four business segments (Asia, Europe, North America, and Latin America and Other) based primarily upon the geographic region where each segment operates, as well as the internal organization of our officers and their responsibilities. Each of the geographic segments operate under the Nature’s Sunshine Products and Synergy WorldWide® brands. The Latin America and Other segment includes our wholesale business in which we sell products to various locally-managed entities independent of the Company that we have granted distribution rights for the relevant market.

Net sales for each segment have been reduced by intercompany sales as they are not included in the measure of segment profit or loss reviewed by the chief executive officer. We evaluate performance based on contribution margin by segment before consideration of certain inter-segment transfers and expenses.

Reportable business segment information is as follows (dollar amounts in thousands):

 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Net sales:    
Asia$47,382 $43,536 $93,492 $79,291 
Europe17,099 21,455 38,876 43,655 
North America34,082 37,372 70,063 75,134 
Latin America and Other5,598 6,615 12,224 13,319 
Total net sales104,161 108,978 214,655 211,399 
Contribution margin (1):    
Asia21,432 18,463 43,371 33,782 
Europe6,595 6,588 10,968 13,384 
North America12,300 16,259 25,019 31,699 
Latin America and Other2,294 3,762 5,195 7,394 
Total contribution margin42,621 45,072 84,553 86,259 
Selling, general and administrative expenses (2)36,866 35,586 77,489 69,138 
Operating income5,755 9,486 7,064 17,121 
Other income (loss), net(442)529 (756)(1,404)
Income before provision for income taxes$5,313 $10,015 $6,308 $15,717 
_________________________________________

(1)    Contribution margin consists of net sales less cost of sales and volume incentives expense.

(2)    Service fees in China totaled $3.9 million and $8.8 million for the three and six-month periods ended June 30, 2022, respectively, compared to $3.7 million and $6.5 million for the three and six-month periods ended June 30, 2021. These service fees are included in selling, general and administrative expenses.

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From an individual country/region perspective, the United States, South Korea and Taiwan comprise 10 percent or more of consolidated net sales for the three and six-month periods ended June 30, 2022 and 2021, as follows (dollar amounts in thousands):
 
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Net sales:    
United States$31,483 $34,378 $64,712 $69,298 
South Korea14,465 17,546 28,118 32,355 
Taiwan11,933 4,730 21,683 7,499 
Other46,280 52,324 100,142 102,247 
 $104,161 $108,978 $214,655 $211,399 

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Net sales generated by each of our product lines is set forth below (dollar amounts in thousands):
 
 Three Months Ended
June 30,
Six Months Ended
June 30,
 2022202120222021
Asia    
General health$12,319 $12,698 $25,305 $23,990 
Immune781 382 2,125 585 
Cardiovascular13,242 12,260 26,872 22,163 
Digestive10,990 7,747 20,026 14,618 
Personal care2,083 5,290 4,626 7,814 
Weight management7,967 5,159 14,538 10,121 
 47,382 43,536 93,492 79,291 
Europe    
General health$7,328 $9,667 $16,524 $19,139 
Immune1,443 1,818 4,074 3,834 
Cardiovascular2,150 2,836 4,783 5,828 
Digestive4,481 5,567 10,072 11,107 
Personal care1,209