Full Press Release Details
NATURE'S SUNSHINE PRODUCTS REPORTS FOURTH QUARTER 2016 FINANCIAL RESULTS
LEHI, Utah, March 7, 2017 - 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 ended December 31, 2016.
Fourth Quarter 2016 Financial Highlights
Full Year 2016 Financial Highlights
Management Commentary
"Fourth quarter financial results were negatively impacted by items related to delay and uncertainty surrounding receipt of a direct selling license in China" commented Gregory L. Probert, Chairman and Chief Executive Officer. "While our 2016 financial results have been constrained by the infrastructure built in anticipation of a future market opportunity, we remain steadfast in our belief that the investments are prudent given the potential opportunity that lies ahead of us should the regulatory process in China be completed."
Mr. Probert continued, "We continued to post modest growth in NSP North America during the fourth quarter and Synergy Worldwide again enjoyed good momentum in Synergy Asia Pacific. During 2016, we introduced the Elite Health program in Synergy Asia Pacific and Synergy Europe, and continued to promote our patent-pending IN.FORM program in NSP North America. We look to leverage these new product initiatives to drive further growth and support our new market investments."
Fourth Quarter 2016 Regional Sales by Operating Segment
| Net Sales by Operating Segment | ||||||||||||||||||||
| Three Months Ended December 31, 2016 | Three Months Ended December 31, 2015 | Percent Change | Impact of Currency Exchange | Percent Change Excluding Impact of Currency | ||||||||||||||||
| NSP Americas: | ||||||||||||||||||||
| NSP North America | $ | 35,824 | $ | 35,656 | 0.5 | % | $ | (8 | ) | 0.5 | % | |||||||||
| NSP Latin America | 6,930 | 7,452 | (7.0 | ) | % | (109 | ) | (5.5 | ) | % | ||||||||||
| 42,754 | 43,108 | (0.8 | ) | % | (117 | ) | (0.5 | ) | % | |||||||||||
| NSP Russia, Central and Eastern Europe | $ | 6,929 | $ | 6,829 | 1.5 | % | $ | (42 | ) | 2.1 | % | |||||||||
| Synergy WorldWide: | ||||||||||||||||||||
| Synergy Asia Pacific | 22,844 | 20,100 | 13.7 | % | 506 | 11.1 | % | |||||||||||||
| Synergy Europe | 5,227 | 6,359 | (17.8 | ) | % | (93 | ) | (16.3 | ) | % | ||||||||||
| Synergy North America | 2,530 | 2,577 | (1.8 | ) | % | - | (1.8 | ) | % | |||||||||||
| 30,601 | 29,036 | 5.4 | % | 413 | 4.0 | % | ||||||||||||||
| China and New Markets | $ | 3,666 | $ | 1,021 | 259.1 | % | $ | - | 259.1 | % | ||||||||||
| $ | 83,950 | $ | 79,994 | 4.9 | % | $ | 254 | 4.6 | % |
Fiscal Year 2016 Regional Sales by Operating Segment
| Net Sales by Operating Segment | ||||||||||||||||||||
| 2016 | 2015 | Percent Change | Impact of Currency Exchange | Percent Change Excluding Impact of Currency | ||||||||||||||||
| NSP Americas: | ||||||||||||||||||||
| NSP North America | $ | 148,048 | $ | 147,017 | 0.7 | % | $ | (404 | ) | ) | 1.0 | % | ||||||||
| NSP Latin America | 27,874 | 32,134 | (13.3 | ) | % | (1,550 | ) | ) | (8.4 | ) | % | |||||||||
| 175,922 | 179,151 | (1.8 | ) | % | (1,954 | ) | ) | (0.7 | ) | % | ||||||||||
| NSP Russia, Central and Eastern Europe | $ | 25,971 | $ | 27,408 | (5.2 | ) | % | $ | (163 | ) | ) | (4.6 | ) | % | ||||||
| Synergy WorldWide: | ||||||||||||||||||||
| Synergy Asia Pacific | 89,694 | 76,479 | 17.3 | % | (229 | ) | ) | 17.6 | % | |||||||||||
| Synergy Europe | 24,328 | 25,829 | (5.8 | ) | % | (68 | ) | ) | (5.5 | ) | % | |||||||||
| Synergy North America | 10,771 | 11,773 | (8.5 | ) | % | - | (8.5 | ) | % | |||||||||||
| 124,793 | 114,081 | 9.4 | % | (297 | ) | ) | 9.7 | % | ||||||||||||
| China and New Markets | $ | 14,473 | $ | 4,065 | 256.0 | % | $ | - | 256.0 | % | ||||||||||
| $ | 341,159 | $ | 324,705 | 5.1 | % | $ | (2,414 | ) | ) | 5.8 | % |
Active Distributors and Customers by Segment (1)
| 2016 | 2015 | ||||||||||||||
| Distributors & Customers | Managers | Distributors & Customers | Managers | ||||||||||||
| NSP Americas | 121,200 | 6,400 | 131,600 | 6,500 | |||||||||||
| NSP Russia, Central and Eastern Europe | 66,700 | 2,800 | 72,000 | 2,800 | |||||||||||
| Synergy WorldWide | 53,600 | 3,700 | 60,800 | 3,400 | |||||||||||
| China and New Markets | 2,100 | - | - | - | |||||||||||
| Total | 243,600 | 12,900 | 264,400 | 12,700 |
Cash Flow and Balance Sheet Highlights
Nature's Sunshine Products will host a conference call to discuss its fourth quarter 2016 results on March 7, 2017 at 4:30 PM Eastern Time. The toll-free dial-in number for callers in the U.S. and Canada is 1-877-423-9813, conference ID: 13656293. International callers can dial 1-201-689-8573, conference ID: 13656293. A replay will be available from March 7, 2017 at 7:30 PM Eastern Time through March 21, 2017 at 11:59 PM Eastern Time by dialing 1-844-512-2921 (U.S. and Canada) or 1-412-317-6671 (International), replay PIN: 13656293. 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 approximately 550,000 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,
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 reports filed with the the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports filed on Forms 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
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/loss, 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 December 31, | 2016 | 2015 | ||||||||
| Net sales | $ | 83,950 | $ | 79,994 | ||||||
| Cost of sales | (24,327 | ) | (21,753 | ) | ||||||
| Gross profit | 59,623 | 58,241 | ||||||||
| Operating expenses: | ||||||||||
| Volume incentives | 29,558 | 29,156 | ||||||||
| Selling, general and administrative | 31,452 | 26,865 | ||||||||
| Operating income (loss) | (1,387 | ) | 2,220 | |||||||
| Other expense: | (1,730 | ) | (25 | ) | ||||||
| Income (loss) from continuing operations before provision for income taxes | (3,117 | ) | 2,195 | |||||||
| Provision (benefit) for income taxes | 4,305 | (1,140 | ) | |||||||
| Net income (loss) | (7,422 | ) | 3,335 | |||||||
| Net loss attributable to noncontrolling interests | (769 | ) | (358 | ) | ||||||
| Net income (loss) attributable to common shareholders | $ | (6,653 | ) | $ | 3,693 | |||||
| Basic and diluted net income per common share | ||||||||||
| Basic earnings (loss) per share attributable to common shareholders: | ||||||||||
| Net income (loss) attributable to common shareholders | $ | (0.35 | ) | $ | 0.20 | |||||
| Diluted earnings (loss) per share attributable to common shareholders: | ||||||||||
| Net income (loss) attributable to common shareholders | $ | (0.35 | ) | $ | 0.19 | |||||
| Weighted average basic common shares outstanding | 18,755 | 18,591 | ||||||||
| Weighted average diluted common shares outstanding | 18,755 | 19,023 | ||||||||
| 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, | 2016 | 2015 | ||||||||
| Net sales | $ | 341,159 | $ | 324,705 | ||||||
| Cost of sales | (90,937 | ) | (85,345 | ) | ||||||
| Gross profit | 250,222 | 239,360 | ||||||||
| Operating expenses: | ||||||||||
| Volume incentives | 119,910 | 117,786 | ||||||||
| Selling, general and administrative | 120,273 | 107,702 | ||||||||
| Operating income | 10,039 | 13,872 | ||||||||
| Other expense | (773 | ) | (592 | ) | ||||||
| Income from continuing operations before provision for income taxes | 9,266 | 13,280 | ||||||||
| Provision for income taxes | 8,591 | 1,740 | ||||||||
| Net income from continuing operations | 675 | 11,540 | ||||||||
| Income from discontinued operations | - | 2,116 | ||||||||
| Net income | 675 | 13,656 | ||||||||
| Net loss attributable to noncontrolling interests | (1,464 | ) | (1,031 | ) | ||||||
| Net income attributable to common shareholders | $ | 2,139 | $ | 14,687 | ||||||
| Basic and diluted net income per common share | ||||||||||
| Basic earnings per share attributable to common shareholders: | ||||||||||
| Net income from continuing operations | $ | 0.11 | $ | 0.67 | ||||||
| Income from discontinued operations | $ | - | $ | 0.11 | ||||||
| Net income attributable to common shareholders | $ | 0.11 | $ | 0.79 | ||||||
| Diluted earnings per share attributable to common shareholders: | ||||||||||
| Net income from continuing operations | $ | 0.11 | $ | 0.66 | ||||||
| Income from discontinued operations | $ | - | $ | 0.11 | ||||||
| Net income attributable to common shareholders | $ | 0.11 | $ | 0.77 | ||||||
| Weighted average basic common shares outstanding | 18,731 | 18,656 | ||||||||
| Weighted average diluted common shares outstanding | 19,056 | 19,177 | ||||||||
| Dividends declared per common share | $ | 0.40 | $ | 0.40 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
| As of December 31, | 2016 | 2015 | ||||||||
| Assets | ||||||||||
| Current assets: | ||||||||||
| Cash and cash equivalents | $ | 32,284 | $ | 41,420 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $205 and $190, respectively | 7,738 | 7,700 | ||||||||
| Investments available for sale | 1,776 | 1,772 | ||||||||
| Assets held for sale | 521 | - | ||||||||
| Inventories | 47,597 | 38,495 | ||||||||
| Deferred income tax assets | 5,620 | 5,021 | ||||||||
| Prepaid expenses and other | 4,585 | 7,110 | ||||||||
| Total current assets | 100,121 | 101,518 | ||||||||
| Property, plant and equipment, net | 73,272 | 68,728 | ||||||||
| Investment securities - trading | 1,391 | 1,044 | ||||||||
| Intangible assets, net | 976 | 559 | ||||||||
| Deferred income tax assets | 15,970 | 17,339 | ||||||||
| Other assets | 13,840 | 11,332 | ||||||||
| $ | 205,570 | $ | 200,520 | |||||||
| Liabilities and Shareholders' Equity | ||||||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 5,305 | $ | 6,341 | ||||||
| Accrued volume incentives and service fees | 16,264 | 14,913 | ||||||||
| Accrued liabilities | 24,400 | 23,726 | ||||||||
| Deferred revenue | 3,672 | 4,160 | ||||||||
| Revolving credit facility | 9,919 | 2,696 | ||||||||
| Income taxes payable | 3,475 | 1,300 | ||||||||
| Total current liabilities | 63,035 | 53,136 | ||||||||
| Liability related to unrecognized tax benefits | 6,755 | 7,809 | ||||||||
| Deferred compensation payable | 1,391 | 1,044 | ||||||||
| Other liabilities | 1,991 | 2,266 | ||||||||
| Total liabilities | 73,172 | 64,255 | ||||||||
| Shareholders' equity: | ||||||||||
| Common stock, no par value; 50,000 shares authorized, 18,757 and 18,588 shares issued and outstanding as of December 31, 2016, and 2015, respectively | 129,654 | 126,670 | ||||||||
| Retained earnings | 12,718 | 18,088 | ||||||||
| Noncontrolling interests | 1,286 | 2,750 | ||||||||
| Accumulated other comprehensive loss | (11,260 | ) | (11,243 | ) | ||||||
| Total shareholders' equity | 132,398 | 136,265 | ||||||||
| $ | 205,570 | $ | 200,520 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
| Year Ended December 31, | 2016 | 2015 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
| Net income | $ | 675 | $ | 13,656 | ||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
| Impairment of property, plant and equipment, net | 221 | - | ||||||||
| Provision for doubtful accounts | 305 | 21 | ||||||||
| Depreciation and amortization | 4,808 | 4,525 | ||||||||
| Share-based compensation expense | 3,217 | 4,485 | ||||||||
| (Gain) loss on sale of property and equipment | 149 | (2,703 | ) | |||||||
| Deferred income taxes | 766 | (3,373 | ) | |||||||
| Purchase of trading investment securities | (429 | ) | (252 | ) | ||||||
| Proceeds from sale of trading investment securities | 147 | 239 | ||||||||
| Realized and unrealized gains on investments | (63 | ) | (470 | ) | ||||||
| Foreign exchange losses | 1,348 | 1,948 | ||||||||
| Changes in assets and liabilities: | ||||||||||
| Accounts receivable | (343 | ) | (1,091 | ) | ||||||
| Inventories | (9,569 | ) | 933 | |||||||
| Prepaid expenses and other | 2,442 | 636 | ||||||||
| Other assets | (3,025 | ) | (4,010 | ) | ||||||
| Accounts payable | (935 | ) | 593 | |||||||
| Accrued volume incentives and service fees | 1,477 | (1,427 | ) | |||||||
| Accrued liabilities | 1,519 | (3,451 | ) | |||||||
| Deferred revenue | (488 | ) | (557 | ) | ||||||
| Income taxes payable | 1,924 | (914 | ) | |||||||
| Liability related to unrecognized tax positions | (1,076 | ) | 1,368 | |||||||
| Deferred compensation payable | 347 | 6 | ||||||||
| Net cash provided by operating activities | 3,417 | 10,162 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
| Purchases of property, plant and equipment | (11,028 | ) | (22,527 | ) | ||||||
| Proceeds from sale of property, plant and equipment | - | 3,128 | ||||||||
| Purchases of investments available for sale | - | (3 | ) | |||||||
| Proceeds from sale/maturities of investments available for sale | 5 | 810 | ||||||||
| Purchase of intangible assets | (509 | ) | - | |||||||
| Net cash used in investing activities | (11,532 | ) | (18,592 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
| Payments of cash dividends | (7,509 | ) | (7,490 | ) | ||||||
| Net borrowings on revolving credit facility | 7,223 | 2,696 | ||||||||
| Proceeds from exercise of stock options | - | 3,861 | ||||||||
| Repurchase of common stock | - | (6,645 | ) | |||||||
| Net cash used in financing activities | (286 | ) | (7,578 | ) | ||||||
| Effect of exchange rates on cash and cash equivalents | (735 | ) | (1,271 | ) | ||||||
| Net decrease in cash and cash equivalents | (9,136 | ) | (17,279 | ) | ||||||
| Cash and cash equivalents at beginning of the year | 41,420 | 58,699 | ||||||||
| Cash and cash equivalents at end of the year | $ | 32,284 | $ | 41,420 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(Amounts in thousands)
| Three Months Ended December 31, | 2016 | 2015 | ||||||||
| Net income (loss) from continuing operations | $ | (7,422 | ) | $ | 3,335 | |||||
| Adjustments: | ||||||||||
| Depreciation and amortization | 1,198 | 1,200 | ||||||||
| Share-based compensation expense | 805 | 1,209 | ||||||||
| Other loss, net* | 1,730 | 25 | ||||||||
| Provision (benefit) for income taxes | 4,305 | (1,140 | ) | |||||||
| Adjusted EBITDA | $ | 616 | $ | 4,629 |
| Year Ended December 31, | 2016 | 2015 | ||||||||
| Net income from continuing operations | $ | 675 | $ | 11,540 | ||||||
| Adjustments: | ||||||||||
| Depreciation and amortization | 4,808 | 4,525 | ||||||||
| Share-based compensation expense | 3,217 | 4,485 | ||||||||
| Other loss, net* | 773 | 592 | ||||||||
| Provision for income taxes | 8,591 | 1,740 | ||||||||
| Adjusted EBITDA | $ | 18,064 | $ | 22,882 |
* Other income (loss), net is primarily comprised of foreign exchange gains (losses), interest income, and interest expense.