Full Press Release Details
NATURE'S SUNSHINE PRODUCTS REPORTS SECOND QUARTER 2016 FINANCIAL RESULTS
LEHI, Utah, August 8, 2016 - Nature's Sunshine Products, Inc. (NASDAQ: NATR), a leading natural health and wellness company engaged in the manufacture and direct selling of nutritional and personal care products, today reported its financial results for the second quarter ended June 30, 2016.
Second Quarter 2016 Financial Highlights
1st Half of 2016 Financial Highlights
Management Commentary
"We are very pleased to report accelerated revenue growth during the second quarter with strength across several regions," commented Gregory L. Probert, Chairman and Chief Executive Officer. "Sustained local currency growth in both NSP United States and NSP Canada continues to reflect the strong foundation within our most mature markets and is a reflection of our high quality products and effective business model. The improvements we have put in place at Synergy WorldWide are delivering strong results across all geographical regions, led by 28.5% local currency growth in Synergy Asia."
Mr. Probert continued, "We are optimistic about our new market opportunity in China and believe we have the management team, the business model and product offering in place to achieve success. We also remain encouraged by the success of our patent-pending IN.FORM program and continue to target geographical expansion of this promising new program offering."
Second Quarter 2016 Regional Sales by Operating Segment
| Net Sales Revenue by Operating Segment | |||||||||||||||||
| Three Months Ended June 30, 2016 | Three Months Ended June 30, 2015 | Percent Change | Impact of Currency Exchange | Percent Change Excluding Impact of Currency | |||||||||||||
| NSP Americas: | |||||||||||||||||
| NSP North America | $ | 37,439 | $ | 36,816 | 1.7 | % | $ | (122 | ) | 2.0 | % | ||||||
| NSP Latin America | 7,286 | 8,234 | (11.5 | ) | (511 | ) | (5.3 | ) | |||||||||
| 44,725 | 45,050 | (0.7 | ) | (633 | ) | 0.7 | |||||||||||
| NSP Russia, Central and Eastern Europe | 6,269 | 6,815 | (8 | ) | (40 | ) | (7.4 | ) | |||||||||
| Synergy WorldWide: | |||||||||||||||||
| Synergy Asia Pacific | 23,397 | 18,765 | 24.7 | (711 | ) | 28.5 | |||||||||||
| Synergy Europe | 6,738 | 6,669 | 1.0 | 138 | (1 | ) | |||||||||||
| Synergy North America | 2,878 | 3,046 | (5.5 | ) | - | (5.5 | ) | ||||||||||
| 33,013 | 28,480 | 15.9 | (573 | ) | 17.9 | ||||||||||||
| China and New Markets | 5,359 | 902 | 494.1 | - | 494.1 | ||||||||||||
| $ | 89,366 | $ | 81,247 | 100 | % | $ | (1,246 | ) | 11.5 | % |
Six Months Ended June 30, 2016 Regional Sales by Operating Segment
| Net Sales Revenue by Operating Segment | |||||||||||||||||||||
| Six Months Ended June 30, 2016 | Six Months Ended June 30, 2015 | Percent Change | Impact of Currency Exchange | Percent Change Excluding Impact of Currency | |||||||||||||||||
| NSP Americas: | |||||||||||||||||||||
| NSP North America | $ | 75,745 | $ | 74,990 | 1.0 | % | $ | (423 | ) | 1.6 | % | ||||||||||
| NSP Latin America | 14,163 | 16,570 | (14.5 | ) | (1,111 | ) | (7.8 | ) | |||||||||||||
| 89,908 | 91,560 | (1.8 | ) | (1,534 | ) | (0.1 | ) | ||||||||||||||
| NSP Russia, Central and Eastern Europe | 12,621 | 14,258 | (11.5 | ) | (93 | ) | (10.8 | ) | |||||||||||||
| Synergy WorldWide: | |||||||||||||||||||||
| Synergy Asia Pacific | 44,213 | 37,463 | 18.0 | (2,137 | ) | 23.7 | |||||||||||||||
| Synergy Europe | 12,994 | 13,398 | (3.0 | ) | (7 | ) | (3.0 | ) | |||||||||||||
| Synergy North America | 5,654 | 6,387 | (11.5 | ) | - | (11.5 | ) | ||||||||||||||
| 62,861 | 57,248 | (9.8 | ) | (2,144 | ) | 13.5 | |||||||||||||||
| China and New Markets | 6,378 | 2,059 | 209.8 | - | 209.8 | ||||||||||||||||
| $ | 171,768 | $ | 165,125 | 4.0 | % | $ | (3,771 | ) | 6.3 | % |
Active Distributors and Customers by Segment (1)
| As of June 30, 2016 | As of December 31, 2015 | ||||||||||||
| Distributors & Customers | Managers | Distributors & Customers | Managers | ||||||||||
| NSP Americas | 129,700 | 7,000 | 131,600 | 6,500 | |||||||||
| NSP Russia, Central and Eastern Europe | 62,600 | 2,400 | 72,000 | 2,800 | |||||||||
| Synergy WorldWide | 56,600 | 3,800 | 60,800 | 3,400 | |||||||||
| China and New Markets | - | - | - | - | |||||||||
| 248,900 | 13,200 | 264,400 | 12,700 |
Cash Flow and Balance Sheet Highlights
Nature's Sunshine Products will host a conference call to discuss its second quarter 2016 results on August 8, 2016 at 4:30 PM Eastern Time. The toll-free dial-in number for callers in the U.S. and Canada is 1-877-407-0789, conference ID: 13642367. International callers can dial 1-201-689-8562, conference ID: 13642367. A replay will be available from August 8, 2016 at 7:30 PM Eastern Time through August 22, 2016 at 11:59 PM Eastern Time by dialing 1-877-870-5176 (U.S. and Canada) or 1-858-384-5517 (International), replay PIN: 13642367. The call will also be webcast live and will be available on the Investors section of Nature's Sunshine Products' website at www.naturessunshine.com for 90 days.
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 through a global direct sales force of over 554,000 independent Managers, Distributors and customers 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. The Company has four reportable business segments that are divided based on the characteristics of their Distributor base, similarities in compensation plans, as well as the internal organization of NSP's officers and their responsibilities (NSP Americas; NSP Russia, Central and Eastern Europe; Synergy WorldWide; and China and New Markets). The Company also supports health and wellness for children around the world through its partnership with the Sunshine Heroes Foundation. Additional information about the Company can be obtained at its website, www.naturessunshine.com.
Cautionary Statement 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 and strategies. 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.
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 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2016.
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
The Company has included information which has not been prepared in accordance with generally accepted accounting principles (GAAP), such as information concerning Adjusted EBITDA and net sales excluding the impact of foreign currency exchange fluctuations. Management utilizes the non-GAAP measure Adjusted EBITDA in the evaluation of its operations and believes that this measure is a useful indicator of the Company's ability to fund its business. This non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, U.S. GAAP net income as an indicator of the Company's operating performance. Moreover, Adjusted EBITDA, as presented by the Company, may not be comparable to similarly titled measures reported by other companies.
In addition, the Company believes presenting the impact of foreign currency fluctuations is useful to investors because it allows a more meaningful comparison of net sales of its 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.
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. The Company has included a reconciliation of Adjusted EBITDA to net income, the most comparable GAAP measure, in the attached financial tables.
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share information)
| Three Months Ended June 30, | |||||||||
| 2016 | 2015 | ||||||||
| Net sales revenue | $ | 89,366 | $ | 81,247 | |||||
| Cost of sales | (23,078 | ) | (21,068 | ) | |||||
| Gross profit | 66,288 | 60,179 | |||||||
| Operating expenses: | |||||||||
| Volume incentives | 30,791 | 29,603 | |||||||
| Selling, general and administrative | 31,249 | 27,392 | |||||||
| Operating income | 4,248 | 3,184 | |||||||
| Other income (loss), net | (622 | ) | (2 | ) | |||||
| Income before provision for income taxes | 3,626 | 3,182 | |||||||
| Provision for income taxes | 1,260 | 787 | |||||||
| Net income from continuing operations | 2,366 | 2,395 | |||||||
| Income from discontinued operations | - | - | |||||||
| Net income | 2,366 | 2,395 | |||||||
| Net loss attributable to non-controlling interests | (202 | ) | (166 | ) | |||||
| Net income attributable to common shareholders | $ | 2,568 | $ | 2,561 | |||||
| Earnings per common share: | |||||||||
| Basic earnings per share attributable to common shareholders: | |||||||||
| Net income from continuing operations | $ | 0.14 | $ | 0.13 | |||||
| Income from discontinued operations | $ | - | $ | - | |||||
| Net income attributable to common shareholders | $ | 0.014 | $ | 0.14 | |||||
| Diluted earnings per share attributable to common shareholders: | |||||||||
| Net income from continuing operations | $ | 0.14 | $ | 0.12 | |||||
| Income from discontinued operations | $ | - | $ | - | |||||
| Net income attributable to common shareholders | $ | 0.14 | $ | 0.13 | |||||
| Weighted average basic common shares outstanding | 18,723 | 18,720 | |||||||
| Weighted average diluted common shares outstanding | 18,940 | 19,244 | |||||||
| Dividends declared per common share | $ | 0.10 | $ | 0.10 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share information)
| Six Months Ended June 30, | |||||||||
| 2016 | 2015 | ||||||||
| Net sales revenue | $ | 171,768 | $ | 165,125 | |||||
| Cost of sales | (45,098 | ) | (42,949 | ) | |||||
| Gross profit | 126,670 | 122,176 | |||||||
| Operating expenses: | |||||||||
| Volume incentives | 60,668 | 59,940 | |||||||
| Selling, general and administrative | 59,634 | 53,722 | |||||||
| Operating income | 6,368 | 8,514 | |||||||
| Other income (loss), net | 937 | (320 | ) | ||||||
| Income before provision for income taxes | 7,305 | 8,194 | |||||||
| Provision for income taxes | 3,150 | 1,596 | |||||||
| Net income from continuing operations | 4,155 | 6,598 | |||||||
| Income from discontinued operations | - | 1,312 | |||||||
| Net income | 4,155 | 7,910 | |||||||
| Net loss attributable to non-controlling interests | (482 | ) | (318 | ) | |||||
| Net income attributable to common shareholders | $ | 4,637 | $ | 8,228 | |||||
| Earnings per common share: | |||||||||
| Basic earnings per share attributable to common shareholders: | |||||||||
| Net income from continuing operations | $ | 0.25 | $ | 0.35 | |||||
| Income from discontinued operations | $ | - | $ | 0.07 | |||||
| Net income attributable to common shareholders | $ | 0.25 | $ | 0.44 | |||||
| Diluted earnings per share attributable to common shareholders: | |||||||||
| Net income from continuing operations | $ | 0.24 | $ | 0.34 | |||||
| Income from discontinued operations | $ | - | $ | 0.07 | |||||
| Net income attributable to common shareholders | $ | 0.24 | $ | 0.43 | |||||
| Weighted average basic common shares outstanding | 18,708 | 18,671 | |||||||
| Weighted average diluted common shares outstanding | 18,946 | 19,157 | |||||||
| Dividends declared per common share | $ | 0.20 | $ | 0.20 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
| June 30, 2016 | December 31, 2015 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 41,428 | $ | 41,420 | |||||||
| Accounts receivable, net of allowance for doubtful accounts of $232 and $190, respectively | 7,968 | 7,700 | |||||||||
| Investments available for sale | 1,797 | 1,772 | |||||||||
| Inventories | 45,002 | 38,495 | |||||||||
| Deferred income tax assets | 4,795 | 5,021 | |||||||||
| Prepaid expenses and other | 8,039 | 7,110 | |||||||||
| Total current assets | 109,029 | 101,518 | |||||||||
| Property, plant and equipment, net | 70,423 | 68,728 | |||||||||
| Investment securities - trading | 1,275 | 1,044 | |||||||||
| Intangible assets, net | 513 | 559 | |||||||||
| Deferred income tax assets | 17,385 | 17,339 | |||||||||
| Other assets | 12,410 | 11,332 | |||||||||
| $ | 211,035 | $ | 200,520 | ||||||||
| Liabilities and Shareholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 8,971 | $ | 6,341 | |||||||
| Accrued volume incentives | 17,860 | 14,913 | |||||||||
| Accrued liabilities | 23,995 | 23,726 | |||||||||
| Deferred revenue | 4,895 | 4,160 | |||||||||
| Revolving credit facility payable | 3,920 | 2,696 | |||||||||
| Income taxes payable | 1,322 | 1,300 | |||||||||
| Total current liabilities | 60,963 | 53,136 | |||||||||
| Liability related to unrecognized tax benefits | 7,811 | 7,809 | |||||||||
| Deferred compensation payable | 1,275 | 1,044 | |||||||||
| Other liabilities | 2,368 | 2,266 | |||||||||
| Total liabilities | 72,417 | 64,255 | |||||||||
| Shareholders' equity: | |||||||||||
| Common stock, no par value, 50,000 shares authorized, 18,747 and 18,588 shares issued and outstanding, respectively | 128,146 | 126,670 | |||||||||
| Retained earnings | 18,969 | 18,088 | |||||||||
| Noncontrolling interests | 2,268 | 2,750 | |||||||||
| Accumulated other comprehensive loss | (10,765 | ) | (11,243 | ) | |||||||
| Total shareholders' equity | 138,618 | 136,265 | |||||||||
| $ | 211,035 | $ | 200,520 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
| Six Months Ended June 30, | |||||||||
| 2016 | 2015 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
| Net income | $ | 4,155 | $ | 7,910 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
| Provision for doubtful accounts | 62 | 33 | |||||||
| Depreciation and amortization | 2,396 | 2,152 | |||||||
| Share-based compensation expense | 1,586 | 2,085 | |||||||
| Loss (gain) on sale of property and equipment | 78 | (1,251 | ) | ||||||
| Deferred income taxes | 311 | (46 | ) | ||||||
| Purchase of trading investment securities | (252 | ) | (156 | ) | |||||
| Proceeds from sale of trading investment securities | 56 | 82 | |||||||
| Realized and unrealized gains on investments | (60 | ) | (493 | ) | |||||
| Foreign exchange (gains) losses | (546 | ) | 764 | ||||||
| Changes in assets and liabilities: | |||||||||
| Accounts receivable | (164 | ) | (271 | ) | |||||
| Inventories | (6,177 | ) | (659 | ) | |||||
| Prepaid expenses and other current assets | (912 | ) | (4,057 | ) | |||||
| Other assets | (1,027 | ) | 16 | ||||||
| Accounts payable | 2,402 | 1,124 | |||||||
| Accrued volume incentives | 2,798 | (146 | ) | ||||||
| Accrued liabilities | 950 | (2,102 | ) | ||||||
| Deferred revenue | 735 | (727 | ) | ||||||
| Income taxes payable | (150 | ) | (1,452 | ) | |||||
| Liability related to unrecognized tax benefits | 231 | 230 | |||||||
| Deferred compensation payable | (9 | ) | 93 | ||||||
| Net cash provided by operating activities | 6,463 | 3,129 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
| Purchases of property, plant and equipment | (4,592 | ) | (13,071 | ) | |||||
| Proceeds from sale of property, plant and equipment | - | 1,373 | |||||||
| Proceeds from the sale of investments available for sale | - | 810 | |||||||
| Net cash used in investing activities | (4,592 | ) | (10,888 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
| Payments of cash dividends | (3,756 | ) | (3,740 | ) | |||||
| Net borrowings on revolving credit facility | 1,224 | - | |||||||
| Net proceeds from the exercise of stock options and issuance of stock units | 59 | 3,476 | |||||||
| Payment of withholding taxes related to the vesting of restricted stock units | (169 | ) | - | ||||||
| Repurchase of common stock | - | (3,783 | ) | ||||||
| Net cash used in financing activities | (2,642 | ) | (4,047 | ) | |||||
| Effect of exchange rates on cash and cash equivalents | 779 | (676 | ) | ||||||
| Net increase (decrease) in cash and cash equivalents | 8 | (12,482 | ) | ||||||
| Cash and cash equivalents at the beginning of the period | 41,420 | 58,699 | |||||||
| Cash and cash equivalents at the end of the period | $ | 41,428 | $ | 46,217 | |||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||
| Cash paid for income taxes | $ | 3,036 | $ | 6,185 | |||||
| Cash paid for interest | 122 | 59 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(Amounts in thousands)
| Three Months Ended June 30, | |||||||
| 2016 | 2015 | ||||||
| Net income from continuing operations | $ | 2,366 | $ | 2,395 | |||
| Adjustments: | |||||||
| Depreciation and amortization | 1,226 | 1,156 | |||||
| Share-based compensation expense | 704 | 746 | |||||
| Other (income) loss, net* | 622 | 2 | |||||
| Provision (benefit) for income taxes | 1,260 | 787 | |||||
| Adjusted EBITDA | $ | 6,178 | $ | 5,086 |
| Six Months Ended June 30, | |||||||
| 2016 | 2015 | ||||||
| Net income from continuing operations | $ | 4,155 | $ | 6,598 | |||
| Adjustments: | |||||||
| Depreciation and amortization | 2,396 | 2,152 | |||||
| Share-based compensation expense | 1,586 | 2,085 | |||||
| Other (income) loss, net* | (937) | 320 | |||||
| Provision (benefit) for income taxes | 3,150 | 1,596 | |||||
| Adjusted EBITDA | $ | 10,350 | $ | 12,751 |
* Other income (loss), net is primarily comprised of foreign exchange gains (losses), interest income, and interest expense.
Chief Financial Officer
Nature's Sunshine Products, Inc.