Quarterly report pursuant to Section 13 or 15(d)

Segment Information

v3.20.1
Segment Information
 3 Months Ended
Mar. 31, 2020
Segment Reporting [Abstract]  
Segment Information 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.
Historically, our operating segments were based on brand, customer base, geographical operations with three operating business segments under the Nature’s Sunshine Products brand (NSP Americas; NSP Russia, Central and Eastern Europe; and NSP China), and one operating business segment under the Synergy® WorldWide brand.

During the second quarter of 2019, we realigned into geographic focused operating business segments across brands to further align regional strategies and drive synergies in product, organizational and go-to-market strategies in local markets. Our internal reporting structure was reorganized to support the new reporting segments and the chief operating decision maker now reviews the operating results of the four segments utilizing a geographic focused format. The presentation of the comparative information has been recast to conform to the 2020 presentation.

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
March 31,
  2020 2019
Net sales:    
Asia $ 30,958    $ 33,596   
Europe 20,627    15,597   
North America 38,757    36,523   
Latin America and Other 5,584    5,556   
Total net sales 95,926    91,272   
Contribution margin (1):    
Asia 14,527    15,725   
Europe 6,831    4,941   
North America 14,419    13,793   
Latin America and Other 2,450    2,371   
Total contribution margin 38,227    36,830   
Selling, general and administrative expenses (2) 31,065    33,852   
Operating income 7,162    2,978   
Other loss, net (2,410)   (48)  
Income before provision for income taxes $ 4,752    $ 2,930   
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(1)   Contribution margin consists of net sales less cost of sales and volume incentives expense.

(2)  Service fees in China totaled $1.9 million and $2.2 million for the three-month periods ended March 31, 2020 and 2019, respectively. These service fees are included in selling, general and administrative expenses.
From an individual country perspective, the United States and South Korea comprise 10 percent or more of consolidated net sales for the three-month periods ended March 31, 2020 and 2019, as follows (dollar amounts in thousands):
 
  Three Months Ended
March 31,
  2020 2019
Net sales:    
United States $ 35,839    $ 33,961   
South Korea 16,389    18,528   
Other 43,698    38,783   
  $ 95,926    $ 91,272   

Net sales generated by each of our product lines is set forth below (dollar amounts in thousands):
 
  Three Months Ended
March 31,
  2020 2019
Asia    
General health $ 9,046    $ 8,084   
Immune 201    158   
Cardiovascular 9,339    11,833   
Digestive 6,156    4,775   
Personal care 3,005    4,267   
Weight management 3,211    4,479   
  30,958    33,596   
Europe    
General health $ 7,961    $ 5,748   
Immune 2,444    1,273   
Cardiovascular 2,897    2,851   
Digestive 4,931    3,631   
Personal care 1,751    1,499   
Weight management 643    595   
  20,627    15,597   
North America    
General health $ 15,464    $ 15,748   
Immune 7,798    4,218   
Cardiovascular 4,167    5,076   
Digestive 8,241    8,721   
Personal care 1,929    1,348   
Weight management 1,158    1,412   
  38,757    36,523   
Latin America and Other    
General health $ 1,614    $ 1,612   
Immune 809    608   
Cardiovascular 378    339   
Digestive 2,362    2,536   
Personal care 252    257   
Weight management 169    204   
  5,584    5,556   
  $ 95,926    $ 91,272   
From an individual country perspective, only the United States comprised 10 percent or more of consolidated property, plant and equipment as follows (dollar amounts in thousands):
 
  March 31,
2020		 December 31,
2019
Property, plant and equipment:    
United States $ 53,450    $ 54,470   
Other 4,638    5,042   
Total property, plant and equipment, net $ 58,088    $ 59,512   

Total assets per segment is set forth below (dollar amounts in thousands):

March 31,
2020		 December 31,
2019
Assets:    
Asia $ 65,199    $ 65,959   
Europe 15,171    15,187   
North America 127,178    124,337   
Latin America and Other 7,894    7,585   
Total assets $ 215,442    $ 213,068