Full Press Release Details
NATURE'S SUNSHINE PRODUCTS REPORTS FOURTH QUARTER AND FULL YEAR 2015 FINANCIAL RESULTS
LEHI, Utah, February 25, 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 fourth quarter and full year ended December 31, 2015.
Fourth Quarter 2015 Financial Highlights
Full Year 2015 Financial Highlights
investment in China of approximately $0.27 per share; foreign currency translation expenses of approximately $0.14 per share; and the net sales decline in the Russia, Central and Eastern Europe segment of approximately $0.15 per share, offset by a $0.18 per share difference due to favorable changes in the effective tax rate.
Management Commentary
"Overall, our 2015 financial results were muted on the whole as a result of macroeconomic factors including the strength of the U.S. dollar and the ongoing conflict in Russia and Ukraine, in addition to the investments we have been making in China," commented Gregory L. Probert, Chairman and Chief Executive Officer. "However, we continued to make progress against our strategy to deliver science-based products and programs to help drive enhanced Distributor adoption and engagement. We were particularly excited about the opening of our multi-million dollar research center in early 2015, the Hughes Center for Research and Innovation, which enables us to lead the development of effective herbal and nutritional products for consumers worldwide by studying supplement interactions at a molecular level. During 2015, we released 43 new products, two of which are patent-pending. Further, we were encouraged to see fourth quarter growth in four of our top five markets (representing 67% of worldwide revenue), including NSP United States and NSP Canada which posted their sixth consecutive quarters of year-over-year local currency sales growth. This growth was primarily due to increased traction from our IN.FORM program, improved retail sales and the success of key product launches and promotions."
Mr. Probert continued, "We were particularly encouraged by the strong year-over-year, fourth quarter growth experienced by Synergy Asia. The region has been gaining momentum as a result of well-received product introductions and Summits in Korea, Japan and Indonesia. In an effort to spur Synergy's growth in Europe and North America, we are working towards implementing a consistent product strategy across all regions with a more cohesive sales method focused on detox, weight management and a daily habit of health."
"Fourth quarter total revenues and operating income continued to be adversely impacted on a year-over-year basis primarily as a result of the ongoing challenges in NSP Russia, Central and Eastern Europe associated with political unrest and local currency devaluations. That said, revenues in the NSP Russia, Central and Eastern Europe segment increased slightly over the prior quarter despite very strong currency headwinds as a testament to both targeted pricing promotions and product kits which have been introduced and priced to help strengthen and support the advancement of our Distributor base in the region. Despite the uncertainty, we will continue to act strategically and work with our local partner to stimulate growth in the region as the situation steadies," added Mr. Probert.
Mr. Probert concluded, "We have been very focused on building a strong foundation in China and are proud to report that all aspects of our operating plan are on track. We are optimistic that we will be able to secure a license in China to conduct direct selling activities in the second half of 2016. We made significant traction towards this goal over the past year with the grand opening of our new Shanghai office, which will serve as the Nature's Sunshine Products' headquarters in China, in addition to several key new hires to help support our successful launch in the region. Additionally, we designed new product packaging to achieve a refreshed, premium look and continued the process for general food importation and blue cap registration for select products. We are very excited to enter China and look forward to providing updates on our progress in the coming quarters."
Fourth Quarter 2015 Regional Sales by Operating Segment
| Net Sales Revenue by Operating Segment | |||||||||||||||||||
| Three Months Ended December 31, 2015 | Three Months Ended December 31, 2014 | Percent Change | Impact of Currency Exchange | Percent Change Excluding Impact of Currency | |||||||||||||||
| NSP Americas: | |||||||||||||||||||
| NSP North America | $ | 35,656 | $ | 35,679 | (0.1 | )% | $ | (498 | ) | 1.3 | % | ||||||||
| NSP Latin America | 7,452 | 8,269 | (9.9 | ) | (811 | ) | (0.1 | ) | |||||||||||
| 43,108 | 43,948 | (1.9 | ) | (1,309 | ) | 1.1 | |||||||||||||
| NSP Russia, Central and Eastern Europe | 6,829 | 10,647 | (35.9 | ) | (120 | ) | (34.7 | ) | |||||||||||
| Synergy WorldWide: | |||||||||||||||||||
| Synergy Asia Pacific | 20,100 | 18,598 | 8.1 | (1,486 | ) | 16.1 | |||||||||||||
| Synergy Europe | 6,359 | 8,939 | (28.9 | ) | (989 | ) | (17.8 | ) | |||||||||||
| Synergy North America | 2,577 | 3,302 | (22.0 | ) | - | (22.0 | ) | ||||||||||||
| 29,036 | 30,839 | (5.8 | ) | (2,475 | ) | 2.2 | |||||||||||||
| China and New Markets | 1,021 | 1,229 | (16.9 | ) | - | (16.9 | ) | ||||||||||||
| $ | 79,994 | $ | 86,663 | (7.7 | )% | $ | (3,905 | ) | (3.2 | )% |
Fiscal Year 2015 Regional Sales by Operating Segment
| Net Sales Revenue by Operating Segment | |||||||||||||||||||
| Year Ended December 31, 2015 | Year Ended December 31, 2014 | Percent Change | Impact of Currency Exchange | Percent Change Excluding Impact of Currency | |||||||||||||||
| NSP Americas: | |||||||||||||||||||
| NSP North America | $ | 147,017 | $ | 145,650 | 0.9 | % | $ | (1,753 | ) | 2.1 | % | ||||||||
| NSP Latin America | 32,134 | 36,745 | (12.5 | ) | (3,292 | ) | (3.6 | ) | |||||||||||
| 179,151 | 182,395 | (1.8 | ) | (5,045 | ) | 1.0 | |||||||||||||
| NSP Russia, Central and Eastern Europe | 27,408 | 50,274 | (45.5 | ) | (463 | ) | (44.6 | ) | |||||||||||
| Synergy WorldWide: | |||||||||||||||||||
| Synergy Asia Pacific | 76,479 | 81,199 | (5.8 | ) | (6,592 | ) | 2.3 | ||||||||||||
| Synergy Europe | 25,829 | 31,732 | (18.6 | ) | (5,091 | ) | (2.6 | ) | |||||||||||
| Synergy North America | 11,773 | 15,170 | (22.4 | ) | - | (22.4 | ) | ||||||||||||
| 114,081 | 128,101 | (10.9 | ) | (11,683 | ) | (1.8 | ) | ||||||||||||
| China and New Markets | 4,065 | 5,597 | (27.4 | ) | - | (27.4 | ) | ||||||||||||
| $ | 324,705 | $ | 366,367 | (11.4 | )% | $ | (17,191 | ) | (6.7 | )% |
Active Distributors and Customers by Segment (1)
| As of December 31, 2015 | As of September 30, 2015 | |||||||||||
| Distributors & Customers | Managers | Distributors & Customers | Managers | |||||||||
| NSP Americas | 131,600 | 6,500 | 136,900 | 6,800 | ||||||||
| NSP Russia, Central and Eastern Europe | 72,000 | 2,800 | 66,500 | 2,700 | ||||||||
| Synergy WorldWide | 60,800 | 3,400 | 53,400 | 3,500 | ||||||||
| China and New Markets | - | - | - | - | ||||||||
| 264,400 | 12,700 | 256,800 | 13,000 |
Cash Flow and Balance Sheet Highlights
Nature's Sunshine Products will host a conference call to discuss its fourth quarter and full year 2015 results on February 25, 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: 13628088. International callers can dial 1-201-689-8562, conference ID: 13628088. A replay will be available from February 25, 2016 at 7:30 PM Eastern Time through March 10, 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: 13628088. 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 576,000 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
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 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. 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.
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, we expressly disclaim any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this press release. Throughout this press release, we refer to Nature's Sunshine Products, Inc., together with its subsidiaries, as "we," "us," "our Company" or "the Company."
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 because management utilizes this information in the evaluation of its operations and believes that these measures are a useful indicator of the Company's ability to fund its business. These non-GAAP financial measures 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, these non-GAAP financial measures, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. 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 these non-GAAP measures to reported earnings under GAAP 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 December 31, | |||||||||
| 2015 | 2014 | ||||||||
| Net sales revenue | $ | 79,994 | $ | 86,663 | |||||
| Cost of sales | (21,753 | ) | (23,468 | ) | |||||
| Gross profit | 58,241 | 63,195 | |||||||
| Operating expenses: | |||||||||
| Volume incentives | 29,156 | 31,727 | |||||||
| Selling, general and administrative | 26,865 | 30,634 | |||||||
| Operating income | 2,220 | 834 | |||||||
| Other (loss) income, net | (25 | ) | 349 | ||||||
| Income from continuing operations before provision for income taxes | 2,195 | 1,183 | |||||||
| Provision (benefit) for income taxes | (1,140 | ) | 309 | ||||||
| Net income from continuing operations | 3,335 | 874 | |||||||
| Loss from discontinued operations | - | (4,964 | ) | ||||||
| Net income (loss) | 3,335 | (4,090 | ) | ||||||
| Net loss attributable to non-controlling interests | (358 | ) | (193 | ) | |||||
| Net income (loss) attributable to common shareholders | $ | 3,693 | $ | (3,897 | ) | ||||
| Earnings per common share: | |||||||||
| Basic earnings per share attributable to common shareholders: | |||||||||
| Net income from continuing operations | $ | 0.20 | $ | 0.05 | |||||
| Loss from discontinued operations | $ | - | $ | (0.26 | ) | ||||
| Net income (loss) | $ | 0.20 | $ | (0.21 | ) | ||||
| Diluted earnings per share attributable to common shareholders: | |||||||||
| Net income from continuing operations | $ | 0.19 | $ | 0.05 | |||||
| Loss from discontinued operations | $ | - | $ | (0.25 | ) | ||||
| Net income (loss) | $ | 0.19 | $ | (0.2 | ) | ||||
| Weighted average basic common shares outstanding | 18,591 | 18,728 | |||||||
| Weighted average diluted common shares outstanding | 19,023 | 19,229 | |||||||
| 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)
| Year Ended December 31, | |||||||||
| 2015 | 2014 | ||||||||
| Net sales revenue | $ | 324,705 | $ | 366,367 | |||||
| Cost of sales | (85,345 | ) | (91,584 | ) | |||||
| Gross profit | 239,360 | 274,783 | |||||||
| Operating expenses: | |||||||||
| Volume incentives | 117,786 | 135,808 | |||||||
| Selling, general and administrative | 107,702 | 119,927 | |||||||
| Operating income | 13,872 | 19,048 | |||||||
| Other loss, net | (592 | ) | (34 | ) | |||||
| Income from continuing operations before provision for income taxes | 13,280 | 19,014 | |||||||
| Provision (benefit) for income taxes | 1,740 | (743 | ) | ||||||
| Net income from continuing operations | 11,540 | 19,757 | |||||||
| Income (loss) from discontinued operations | 2,116 | (9,957 | ) | ||||||
| Net income | 13,656 | 9,800 | |||||||
| Net loss attributable to non-controlling interests | (1,031 | ) | (216 | ) | |||||
| Net income attributable to common shareholders | $ | 14,687 | $ | 10,019 | |||||
| Earnings per common share: | |||||||||
| Basic earnings per share attributable to common shareholders: | |||||||||
| Net income from continuing operations | $ | 0.67 | $ | 1.15 | |||||
| Income (loss) from discontinued operations | $ | 0.11 | $ | (0.57 | ) | ||||
| Net income | $ | 0.79 | $ | 0.58 | |||||
| Diluted earnings per share attributable to common shareholders: | |||||||||
| Net income from continuing operations | $ | 0.66 | $ | 1.12 | |||||
| Income (loss) from discontinued operations | $ | 0.11 | $ | (0.56 | ) | ||||
| Net income | $ | 0.77 | $ | 0.56 | |||||
| Weighted average basic common shares outstanding | 18,656 | 17,108 | |||||||
| Weighted average diluted common shares outstanding | 19,177 | 17,641 | |||||||
| Dividends declared per common share | $ | 0.40 | $ | 1.90 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
| December 31, 2015 | December 31, 2014 | ||||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 41,420 | $ | 58,699 | |||||||
| Accounts receivable, net of allowance for doubtful accounts of $190 and $849, respectively | 7,700 | 6,732 | |||||||||
| Investments available for sale | 1,772 | 2,546 | |||||||||
| Inventories | 38,495 | 40,438 | |||||||||
| Deferred income tax assets | 5,021 | 4,950 | |||||||||
| Prepaid expenses and other | 7,110 | 7,884 | |||||||||
| Total current assets | 101,518 | 121,249 | |||||||||
| Property, plant and equipment, net | 68,728 | 51,343 | |||||||||
| Investment securities - trading | 1,044 | 1,038 | |||||||||
| Intangible assets, net | 559 | 704 | |||||||||
| Deferred income tax assets | 17,339 | 14,495 | |||||||||
| Other assets | 11,332 | 7,970 | |||||||||
| $ | 200,520 | $ | 196,799 | ||||||||
| Liabilities and Shareholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 6,341 | $ | 5,237 | |||||||
| Accrued volume incentives | 14,913 | 16,867 | |||||||||
| Accrued liabilities | 23,726 | 28,957 | |||||||||
| Deferred revenue | 4,160 | 4,717 | |||||||||
| Revolving credit facility payable | 2,696 | 2,131 | |||||||||
| Income taxes payable | 1,300 | - | |||||||||
| Total current liabilities | 53,136 | 57,909 | |||||||||
| Liability related to unrecognized tax benefits | 7,809 | 6,598 | |||||||||
| Deferred compensation payable | 1,044 | 1,038 | |||||||||
| Other liabilities | 2,266 | 2,297 | |||||||||
| Total liabilities | 64,255 | 67,842 | |||||||||
| Shareholders' equity: | |||||||||||
| Common stock, no par value, 50,000 shares authorized, 18,596 and 18,662 shares issued and outstanding as of December 31, 2015, and December 31, 2014, respectively | 126,670 | 125,489 | |||||||||
| Retained earnings | 18,088 | 10,891 | |||||||||
| Noncontrolling interests | 2,750 | 3,781 | |||||||||
| Accumulated other comprehensive loss | (11,243 | ) | (11,204 | ) | |||||||
| Total shareholders' equity | 136,265 | 128,957 | |||||||||
| $ | 200,520 | $ | 196,799 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
| Year Ended December 31, | |||||||||
| 2015 | 2014 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
| Net income | $ | 13,656 | $ | 9,800 | |||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
| Write-off of cumulative translation adjustment | - | 4,135 | |||||||
| Impairment of Venezuela property, plant and equipment, net | - | 2,947 | |||||||
| Provision for doubtful accounts | 21 | (121 | ) | ||||||
| Depreciation and amortization | 4,525 | 4,409 | |||||||
| Share-based compensation expense | 4,485 | 3,948 | |||||||
| Tax benefit from stock option exercise | - | (307 | ) | ||||||
| (Gain) loss on sale of property and equipment | (2,703 | ) | 132 | ||||||
| Deferred income taxes | (3,373 | ) | (3,927 | ) | |||||
| Amortization of bond discount | - | 3 | |||||||
| Purchase of trading investment securities | (252 | ) | (162 | ) | |||||
| Proceeds from sale of trading investment securities | 239 | 151 | |||||||
| Realized and unrealized gains on investments | (470 | ) | (56 | ) | |||||
| Foreign exchange losses (gains) | 1,948 | (225 | ) | ||||||
| Changes in assets and liabilities: | |||||||||
| Accounts receivable | (1,091 | ) | 3,457 | ||||||
| Inventories | 933 | 748 | |||||||
| Prepaid expenses and other current assets | 636 | 3,411 | |||||||
| Other assets | (4,010 | ) | (1,235 | ) | |||||
| Accounts payable | 593 | (359 | ) | ||||||
| Accrued volume incentives | (1,427 | ) | (1,905 | ) | |||||
| Accrued liabilities | (3,451 | ) | (5,360 | ) | |||||
| Deferred revenue | (557 | ) | 544 | ||||||
| Income taxes payable | (914 | ) | 25 | ||||||
| Liability related to unrecognized tax benefits | 1,368 | (5,804 | ) | ||||||
| Deferred compensation payable | 6 | (67 | ) | ||||||
| Net cash provided by operating activities | 10,162 | 14,182 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
| Purchases of property, plant and equipment | (22,527 | ) | (26,285 | ) | |||||
| Proceeds from sale of property, plant and equipment | 3,128 | 85 | |||||||
| Purchase of investments available for sale | (3 | ) | (721 | ) | |||||
| Proceeds from the sale of investments available for sale | 810 | 247 | |||||||
| Net cash used in investing activities | (18,592 | ) | (26,674 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
| Payments of cash dividends | (7,490 | ) | (35,228 | ) | |||||
| Net borrowings on revolving credit facility | 2,696 | - | |||||||
| Principal payments of long-term debt and revolving credit facility | - | (12,267 | ) | ||||||
| Net proceeds from the issuance of shares to noncontrolling interest | - | 44,795 | |||||||
| Investment by noncontrolling interest | - | 4,000 | |||||||
| Proceeds from the exercise of stock options | 3,861 | 772 | |||||||
| Tax benefit from stock option exercise | - | 307 | |||||||
| Repurchase of common stock | (6,645 | ) | (7,455 | ) | |||||
| Net cash used in financing activities | (7,578 | ) | (5,076 | ) | |||||
| Effect of exchange rates on cash and cash equivalents | (1,271 | ) | (980 | ) | |||||
| Net decrease in cash and cash equivalents | (17,279 | ) | (18,548 | ) |
| Cash and cash equivalents at the beginning of the period | 58,699 | 77,247 | |||||||
| Cash and cash equivalents at the end of the period | $ | 41,420 | $ | 58,699 | |||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||
| Cash paid for income taxes | $ | 9,782 | $ | 6,450 | |||||
| Cash paid for interest | 56 | 171 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(Amounts in thousands)
| Three Months Ended December 31, | |||||||||
| 2015 | 2014 | ||||||||
| Net income from continuing operations | $ | 3,335 | $ | 874 | |||||
| Adjustments: | |||||||||
| Depreciation and amortization | 1,120 | 899 | |||||||
| Share-based compensation expense | 1,241 | 914 | |||||||
| Other (income) loss, net* | 25 | (349 | ) | ||||||
| Provision (benefit) for income taxes | (1,140 | ) | 309 | ||||||
| Adjusted EBITDA | $ | 4,581 | $ | 2,647 |
| Year Ended December 31, | |||||||||
| 2015 | 2014 | ||||||||
| Net income from continuing operations | $ | 11,540 | $ | 19,757 | |||||
| Adjustments: | |||||||||
| Depreciation and amortization | 4,525 | 4,409 | |||||||
| Share-based compensation expense | 4,485 | 3,948 | |||||||
| Other (income) loss, net* | 592 | 34 | |||||||
| Provision (benefit) for income taxes | 1,740 | (743 | ) | ||||||
| Adjusted EBITDA | $ | 22,882 | $ | 27,405 |
* 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.