NATR - Earnings call transcript Q4 2017 | Nature's Sunshine Products, Inc.

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Operator

Greetings and welcome to the Nature’s Sunshine Products Fourth Quarter 2017 Earnings Conference Call. All participants are in a listen-only mode and this conference is being recorded. [Operator Instructions] I would now like to turn the conference over to your host, Mr. Nate Brower, General Counsel for Nature Sunshine Products. Thank you. Mr. the have now you floor. Brower,

Nate Brower

This based thanks Good risks www.naturessunshine.com was and webcast contain on joining full that are which may forward-looking and believe, or the of certain for in results. These are may, for morning we which within posted website Investors assumptions all conference and morning which year in are company’s call expect, other at be live financial number call similar that and the as and statements a hope, anticipate, release this our quarter to often you fourth subject involve section. other statements, of issued on available press our to known this discuss a and factors, change expressions. by is information to characterized call on not such will control. the XXXX and replay our may unknown uncertainties The terminologies

of date over Products. will as today’s Chairman The therein. and the update Forward-looking factors guarantees and of company’s turn maybe Greg and release These of press but limited information now achievement to the information performance the forward-looking reports performance other Sunshine CEO statements Commission. any expectations provided by are results, Report results, call Securities XX-K with those herein the the filed speak these are of company the this Exchange and from call different Form caption include, implied and Probert, the company materially to I under statements. not or duty the disclosed only or other the Nature’s and the in on factors actual performance Annual to not disclaims future on Risk Factors and

Greg Probert

everyone our morning, for your Good you Baty. Financial and me is Officer, Chief in today today’s Also call. thank joining Nate. Joe participation Thanks,

After selling license growth in in of Nature’s expanding led busy across we sales market. have for Central second Russia, years sales China. important fourth and begun received Sunshine. to our Synergy We and investment, the Eastern this year very net several activities by China the NSP are report a and X.X% in Europe quarter quarter during growth our pleased Worldwide, been It’s direct

we a benefiting had NSP Central sales attrition quarter levels led from renewed Korea. seen Additionally, have the Russia, to Eastern of business ERP in implementation growth year disruption We engagement and distributor and impacted good in that creating higher enhanced Europe finish a new Synergy to began America. and second to negatively North customer the and distributor system our in some in of

believe behind we we these disruptions on trends. are improving now North and us However, America’s are focusing

of As the cost evaluating ago, infrastructure with of our we and we had corporate process our effectives quarters ensuring a indicated structure a improving well long-term the of our to are of appropriately in as profitability. sized goal along couple support now goal efficiently

and structure structure to We cost some During quarter, changes sized. cost, continue initial severance ensure the costs. some in appropriate is operating we our resulted which where to to evaluate make to actions reduce restructuring appropriately corporate plan fourth our took and our

continue Beginning revenue I in let generating to the growth club results, additional business quarter, and to financial to develop, some model business year. discuss update the over is year-over-year provide for our on retail and last million of to Before continues $X see turn Joe introduced growth me the initiatives. our China, including call the the with we which

support for In conference a broadcast manufacturing for plant, our GMP renewed upcoming continue we successful solutions completed OEM increased lay November, where to launches. to quarter, we we license fourth to the Hangzhou products manufacture plan groundwork in locally During manufacturing and the in we Chinese program, tool providing and attendance. approximately and robot development and with enhance customers WeChat distributor compliance a customers. online platform online our service providers for with are training product and of X,XXX launched progressing podcast new support independent Suzhou We education a

We opportunity in new this continued on and long-term China. about focus a profitable our business development to in building the market and encouraged the be

support We have yet our our expected and contributing built not earning. growth an such positively is infrastructure market to as to

As our become anticipate business market through development get the grows the initial will and we we do profitable.

seen Synergy year the have Worldwide Korea, market. we largest noted as I Synergy our primarily in As improvements progressed, in

into among In foray attend market. Convention particularly Lift, are National over enhanced Vita November, drink engagement had energy We we first are the pleased leadership. our we we X,XXX launched Synergy’s with distributor in our distributors the seeing field where Seoul,

launched the we we America we decline products XXXX, strength and anticipate partner enhancing experience as quarter, as modest to in Pacific region we the that April the build to have driven with disruptions began customers through initiative. business new largely NSP We service Asia report In continue result. customer and and to pace distributor During a in the ordering the of products also enrollment. further of launch declines In ERP website planned the fourth and a our global new distributing our fourth tools. been on the have moderation during customer quarter, refocus last seen streamline

and customers win-back During through quarter NSP the was campaign. the reactivating and successful Americas team fourth re-engage in managers

business we a quarter, that year’s disruption, difficult face before are to signs stabilizing. in year-over-year first continued comparison we anniversaried the the is seeing last we Although

well have to we terms quarter which Russia, Moving both during evaluate was the our fourth beauty over Central was fourth quarter the plus new for care pricing our opportunities the kit initial NSP success of last sales. providing strong launches the and that including of the our year, strongest in full growth adjustments, regional one launch initiatives Europe, and business year positioned. and believe The markets product of Eastern product

launched and For customers reinstate business distributor on an in XXXX, the to kits XXXX, supporting efforts we success. including re-promote anticipate to effort focusing to

to sellers detailed discussion to Our our business. Joe direct along over experienced the product fourth market growth quarter turn and me a stability our let attracting our portfolio With for strong in financial of results. that the call with is

Joe Baty

increase in Thank to the everyone. $XX Net On the America Asia compared basis over fourth fourth were million local continued the by rose primarily in to declined basis, year-over-year. local Pacific NSP In Europe currency good increase in $XX.X increase million. partially Synergy and year-over-year same sales Net currency local a morning year. Synergy NSP Oracle X% basis. currencies relating headwinds on by decline increased implementation that million local the in Worldwide of sales but Greg the in was a you, down as Synergy a to Central to driven Russia, and due quarter $XX.X of local quarter sales sales year. focus versus the sales last a and net X.X% implementation Central Europe this $XX.X X.X% growth customer a the the product sales Eastern XXX% last quarter the first continued growth currencies. a building X.X% reflecting over of $X.X the primarily anticipate X.X% net million NSP quarter, was quarter Eastern a in last China Worldwide, currency China, in In in currency as decline new increased level offset earlier fourth grew X.X% million X.X% China. fourth net North quarter and This currency local declined America. Europe, well last a a not $X.X XXXX sales the Asia in growth year. in a North in increased on increased NSP net extent long-term of sales Russia, the to sustainable X.X% as or X.X% and We Latin The basis. Americas. opportunity America million in On primarily increased to do net were America in Oracle while on interruptions lesser were due to in $X year. to Pacific result a in to on U.S. during down Sales or registration Sales basis, market X.X%. X.X% million Synergy affected in local sales year. sales NSP to sales sales have service local currency

this impact tax As the have we items, of taxes reform other remeasurement among earlier income our press for liabilities. release provision a assets tax our morning, and deferred our U.S. including noted includes we finalized of which in not

to primarily due such, increase press margin quick The to expenses of operations stock-based of of Nonetheless, our periods. Primary to cost depreciation investment non-recurring prior taxes, severance increased driver $X.X fourth today’s As in net million of the net depreciation, quarter prior in we operating of $X.X loss defined increase million our compared $X.X was related year Oracle but in quarter an compared compensation associated release, loss from associated the improved, statements to million generated $X.X ERP release of have fees the was higher operating continuing the classified in income service financial of of respected some while income incentive million fourth or not $X.X in loss other loss before million full provided an a impact loss impact XXXX amortization, evaluate SG&A. set in of provide to period. in press rather as range with and was year. the also of SG&A as for you in our the in being in expense highlights. compared independent and China, Gross increased structure. income increased We to the the cost China preliminary XXXX. implementation the is SG&A included with infrastructure let decision Adjusted volume operating loss corporate me EBITDA

of deferred and during cash reform, $XX non result of to cash fourth we the quarter. recent million million a approximately $XX a liabilities tax assets As the of anticipate U.S. re-measurement

I not tax. finalized provision income for As our have we stated,

providing loss a quarter. fourth we As our are for for expected a range result, the net

period. to to attributable $XX $X.X shareholders million $X.XX in loss liabilities over of the $X.XX tax to assets net $X.XX common share a We expect deferred common the to per million to per which for share, $X.XX or compared and the $XX quarter ago diluted share loss of per common that We re-measurement and loss. anticipate million $X.XX fourth year between is account or net be

the file set statements. would I to now XX, including financial to to Friday, of call take back full to a XX-K like audited the turn expect Q&A. We our on operator March

Operator

Lane first with Our from question of Instructions] proceed Research. [Operator you. your question. Doug the Lane comes line with Thank Please

Doug Lane

Yes, good everybody. morning

sales good in or $X Just – a mean on start you China with quarter approximation give quarterly to growth in $X.XX Can for an is you want where I you $X think breakeven in had sales run-rate us a about China? million and lost million share.

Joe Baty

we full can in low then breakeven has got or current for plus base, standpoint with Let’s income range operating sales be to to be should an based breakeven China, if take million, get I range on to mid XX from in profitability give year start in our structure. mean, $X so our million $X the we

Doug Lane

in posting was probably mentioned strong on went as fourth you is What here, growth? first in close. quarter, China the – such really Okay, quarter quarter the what fast understandable you will as to China given rates generate the growth which but be are fourth in

Greg Probert

Well, hey, Doug, it’s Greg.

think several said We I like almost big obviously that our drives convention of a I always had and service direct sellers XXXX and we providers things. there. and had independent engagement distributor

will but always in because and happening, one it in and this of year, do earlier in was one of key September. conventions XXXX, do year two the a So, and do in one we timing one we that’s that we in we QX, March a Congress was do generally QX

was I think one reason. that So,

attracting we and the as momentum leaders a momentum think business service continue think terms which I I retail I in spotty convention think independent so as opening think strong just obviously we clubs our up lot interest are is clubs. a I providers, we And combination quarter, of well general to to every well doing doesn’t so to and That’s as month. two, start see as of it we general clubs. happen and month retail one little of in of the open continue that build opening

Doug Lane

implementation with NSP it it’s you think second sounds positive stabilizing, America America? in again how we trending, numbers for the lastly, are to then like anniversary we I business is once look you quarter Okay. and so And the North ERP happy North to have the should for said start what

Greg Probert

Yes.

Joe Baty

short answer is The Yes. yes.

Doug Lane

and take to I that good. can just to with direct want just sounds strategy remind is And mean confirm, like, versus sounds you selling so regards in No, back minute China I to the what Greg, the okay model? step clubs it a me

Greg Probert

Right.

a of direct seeing business more and for opportunity are the than clubs in in China of or So becoming you model, is focus. I as are product focus I it’s selling past think that very the the – sort decade evolution more customer think

So direct really built these on sort growth a the we balance think sustainable business upon traditional and that base. the sustainable focusing consumption a modeling building us in and opening up give product a of selling of really mix between model to customer is a large the good strong clubs

so So look do in small retail are displays customer – call these locations they prices fixed strong, little and and bricks we training, from standpoint. are helps for us are standpoint actually to not science, store but terms think us are they so a that our a it customer but from them mortar open balance sophisticated. they do for product, they a believe sense of the a and our acquisition, the Starbucks, they also stability where walk of government I facilities in good in having clubs, people us fairly up it’s willing of it’s are with stores, and we growth there do And

Doug Lane

Okay, thank you.

Operator

[Operator question with from now your Instructions] the Mark the there question. Steven line further queue in with questions appears Please no Gentlemen, have [indiscernible]. – do are proceed we a of it

Unidentified Analyst

late, Yes. a going forward was did I The reduction save little it got to cost program, on you money quantify much going a how on thought you basis?

Joe Baty

reduction cost plan? The

Unidentified Analyst

Yes.

Joe Baty

in The give we so initiative have we of I have that savings based we take annual on expect $X what million… far or done place, mean

Unidentified Analyst

cash that’s And savings?

Joe Baty

savings. That is cash

overall front the that to to future of foreseeable cost That here initiative. the as efficiencies look in noted Greg will the within continued initiative – in continue as comments, the out are more end organization. cost we in However, and for we his for savings

Unidentified Analyst

on Is some ERP of you system allowing reduce the based to expenses? that

Joe Baty

Very that’s so business how modestly taking system, forth, the just very headcount related ERP. we can modestly efficiencies at so a streamline deal more look with the to the and to and ERP

Unidentified Analyst

Alright. Thank you very much.

Operator

would in queue like call closing this at back There I time. the are for to the no hand management questions further comments. to

Greg Probert

Have Thank for call. a great support and you for again your today’s on day. participating

Operator

gentlemen, you participation. this and Ladies does today’s Thank your teleconference. for conclude

You And may disconnect time. at a this day. wonderful have your lines

Nature's Sunshine Products (NATR) 14 Mar 182017 Q4 Earnings call transcript