NATR - Earnings call transcript Q2 2018 | Nature's Sunshine Products, Inc.

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Operator

Greetings and welcome to the Nature's Sunshine Products' Second Quarter 2018 Earnings Conference Call. All participants are in a listen-only mode. And this conference is being recorded. I would now like to turn the conference over to your host, Mr. Nate Brower, General Counsel of Nature's Sunshine Products. Mr. you, Thank Brower.

the have You floor. now

Nathan Brower

may often may, www.naturessunshine.com Investors available Good afternoon expressions. characterized posted other such joining financial on of believe, a is hope, for call our to by expect, conference at thanks results. forward-looking webcast call we call XXXX all our quarter will, statements. to similar you second in information on section. and discuss terminologies that replay for This live website certain The These anticipate, and in this the contain statements are as our

caption of Forward-looking Form include, statements by are performance but XX-K to, those are results on to in only actual not different turn and cause and results Risk Commission. could update Nature's guarantees results reports materially may not over on Exchange of other duty now company's implied any provided limited from differ information this the Greg Probert, that with the annual disclosed report to of call future CEO and be Sunshine Securities to under factors information as herein. materially implied the those the Factors filed the Factors statements. Products. the company forward-looking disclaims and and from I call the today's speaks The Chairman the date

Gregory Probert

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

revenue to over quarter topline years highest a almost in report rate the pleased generated growth our We have are highest in and we four decade.

driven year. and and up were These year-over-year China. NSP Russia, Europe, almost prior Central over EBITDA by sales adjusted Asia-Pacific, XX% was net quarter up Synergy Second strong results were Eastern XX% and

moderated lapping year's declines over year-over-year sales several now disruption. quarters Additionally, in stabilized Americas and business last the are we have NSP the last as

feel about our We business is overall. continue to how performing good

markets. growth rates reported growth the key in last accelerated seeing eight of quarters in and have are several of positive We nine

a in review in with sales begin decline down me about Americas. currency, North Net NSP were of Let X% NSP local America. a X% including

price and the service U.S. During quarter, and metrics we to instituted a our the continue increase customer improve. see in Canada

driven We year. from Central heavy-metal These clinically was launched ready be the Purify to also IN. and America metabolic programs program launch IN. FORM North our will for XX% designed together strategic month. and patent-pending, a taken tested, and X.X to are and detoxify U.S. business. an by Synergy as active momentum the transformation two currency, are Poland local our X.X currency the in Europe, the key This be focus detoxification before evidenced next microbiome to driver driven to Convention acceleration The the growth we quarters, by distributor Eastern Russia, excited Russia of XX% region our In well increased prior distributors driven be growth XX% over quarter. recent customers prior as as X% in our in utilized year-over-year year-over-year during and WorldWide year-over-year growth continued gains XX% product and year in Kit in over engagement sales in active program strong managers. by the Asia-Pacific. growth on FORM Purify program NSP gut Asia-Pacific and Synergy by local next generated China year, currency program. Synergy strong continues the across body local

international Korea, where prior market, momentum over increased to in XX% currency. in local build our Our largest sales continues South year

leaders among distributor We are growing. in of seeing strong our levels all engagement with Korea, of business

the and that We between improved favorably are Korea relationship also and South consumer sentiment. believe recent impacting distributor North both

sales last year were already product the selling continued, contributed Japan, difficult who accelerated with launch sales prior X% new have in Both accomplished against from direct Europe local organizations, have leaders increasing growth have down Purify net clearly currency. growth. Synergy comparisons over year. we Additionally, two and the North recently markets Net America. to attracted large In in

stage we a market In and over Net built We as this cautiously growth activity new China. a second and had quarter independent sales who during growth development leader well the to amongst of customers we important service first local significant very early over increased levels Turning selling improved in our the have direct remain of attracted given our XX% our organization seen currency optimistic prior about quarter. year of XXXX. the potential sequential showing in in providers market China. April, as

far the success opportunity strong thus and have of building. the we believe and his NSP level very We is joining are pleased his business China a been with of validation

in Over expand several engagement the past and levels, to development, we and devoted activity quarters. as over the resources additional look have coming manager leadership consumer distributor market months, engagement we

to growth. our dependent As China. I ago last number business the ranks still about limited our a on from trends XX discussed optimistic is build China for long-term developing foundation broadening I in Joe just a days leaders. quarter, remain returned growth We consistent, leadership need and to continue local and and of

will took earnings. initial structure evaluation in year margins our corporate you fourth last recall, we steps impacted which and the partly As reduce initiated and of cost has SG&A, quarter our to

over adjusted an QX Specifically, our almost XX% we saw year. EBITDA in prior increase in

physical quarters. initiatives forward structure profitability cost improve these identify We the further optimizing including on additional on value. few next that updating shareholder initiatives, as to our and they are continue will internationally you implemented We to footprint and evaluate strategic our look

Before new transition The continue announced as retirement over successor quality the at the we received following successful pleased Board CEO of and Committee Board of my has transition interest announced a have for of with to I the turn have and level CEO. of that months is my the work Chairman few to Search and hard identified. we to me let me Joe, Recall to identifying ago. a our been candidates the as we quick planned on call provide a CEO update with the plan progress

turn plan. to me Joe let to detail. are the that, We to over the call according discuss results in financial progressing With

Joseph Baty

$XX.X XXXX $XX.X were million second you, or Net X.X% a currency compared increased everyone. year-over-year the Thank XX.X% in of good quarter Greg to sales million and same On reported. as sales afternoon year. net last basis, local in quarter the

$X.X America compared driven in an by of to Central, XX.X% few China, China on to XX.X% increase currencies. Greg year-over-year the XX.X% year-over-year last increase decline local and basis. XX.X% year-over-year Synergy NSP NSP Eastern increased year-over-year in sales a growth a currency second the noted, in quarters. in Net currency In grew rose Synergy quarter Synergy net net currencies. to XX.X% X.X% sales of a a net $X NSP for both XX.X%, in or million million local NSP decline basis. Eastern during Americas the declined $X.X Russia, local improved currency in net Americas by in primarily in decline a $XX.X to or was Latin on and XX.X% decline million $XX.X local declined offset a Asia-Pacific, currency As WorldWide X.X% which an North last Central million basis increase sales local XX.X% sales sales, basis, million second a Asia-Pacific Europe, XX.X% and sales Sales a in while year-over-year sales Europe, basis. rate and declined when quarter to second year-over-year $X.X local increased currency NSP reflects North on or on local on XX.X% XX.X% sales million year-over-year to or year-over-year quarter the the Russia, America a year. declined Europe over NSP

company As its Greg on late received we the a in direct growth that year. selling license mentioned, the quarter saw last second basis. also Recall of strong sequential

back accrued employee-related are certain inventory margin sales decreased a incentives decrease XX.X% XX.X% market million year. XX.X% of XXXX. on net to the in mix, for an reflected in relating announced with compared XX year-over-year of of timing percentage million the benefits, quarter costs. the and in the where accounted in service offset difficult Mexico. the more office general, compared of in expenses changes ago growth compared decrease SG&A sales same the million by of as than year including of fees period to The higher million comparisons As associated $XX.X SG&A benefit the such, a in volume and building volume to partially employee is to administrative quarter-over-quarter gross a $X.X driven of growth, incentives. the The independent a China $X.X basis $XX.X in ago. points we was transition, Gross in fees China and mix, Selling, second changes in rather for impact as a for in incentives provisions in China decreased $X.X period market to primarily million $X.X sales in same charge service up net are our percentage Volume were million increase to given by of CEO facing related gain sale obsolescence, The year million, growth $X.X margin previously period. half the to last

million statutory sales net the future nil second other shareholders share of taxes, in the second net XX.X% or rate Adjusted compared XX%. income reported compensation, primarily as net continuing as driven EBITDA, is losses, depreciation, well and during general loss, $X.X the in year of per a second provide quarter XXXX the prior in loss well effectively the net to compared as common benefit compared foreign common was were sales, of unfavorable to operating the in million as period. in period. $X.XX as $X.X income or percentage China, second items. or tax-related essentially million a $X.X above X.X% for press diluted of quarter $X.X net release at of quarter do before selling, attributable not quarter defined quarter stock-based or loss income expenses income The As our in of operating in administrative the tax in tax by income from to year per and income compared ago the to present, of million was XX.X% prior Net as or XXXX. operations amortization, rate to We the year. other million XXX.X%, foreign a $X.X of that was share disparity the Note $X.XX which,

liquidity. to Turning

and and We the cash We benefits long-term cash on was are down $XX.X including our million of pleased position. the XXth pay net of inventory efforts, an equivalents $X.X in debt. were improved of levels balance second debt Cash ended the with June long-term quarter management reduction sheet and the million.

first cash now operations the during six year of compared in of million from to period. we comparable XXXX, the of $X.X would XXXX of million generated and months I debt operator call net cash a cash $X the operations prior like months the in used capital Q&A. uses turn of long-term $X.X million the For six to expenditures to facilitate of Primary first to include $X.X of back down pay million.

Operator

this At your a is be Please Martin question you. Instructions] time, proceed [Operator first conducting session. question-and-answer Our with Thank we with from Slater. will Steven question.

Steven Martin

a Thanks and lot quarter. good

Gregory Probert

you. Thank

Steven Martin

And some you had idea can those, I costs. like going gross quarter. margin talk rest have about will year? see out and margin? you you was transition you SG&A, about the If -- SG&A some secondarily, give how Can exclude good do It of talked you you forward? the of looked a trends in would like what us for gross look And playing if

Joseph Baty

this. Yes, to but extent, as don't thank And guidance, you provide you what is formal for know, the we would I the say questions.

forth while regards gross negative through believe there indicative of margin that in trend, in a to as trend things, margin the we any downtick, off, actually And a of look that long-term long-term. efficiencies of the certain scheme First at was wouldn't gross so our I improve. will and bit

or the look for I SG&A three So, unfavorable quarter of quarter two, the question in at indicative to anything your In SG&A, trend. regarding arguably includes regards given as unusual wouldn't items. yes, near-term some this figure

me to speak Let first the two.

in the the is does in Mexico, of the sale million of million transition. costs benefit on the in quarter a with includes it previously First building $X.X announced million also reflect CEO $XX.X gain which the $X.X but a associated of

we I little what than was, percentage. worse still is Just number on clearly say at on but would see that basis gets you'd year bit quarter XXXX, that to a go from of anywhere the to basis, near on in did a the materialize that which employee-related level are in second quarter-over-quarter same costs the benefit second certain of not quarter XXXX. point, favorable the the a it percentage prior there accrued

we will meaningful reflects formal XXXX increase today say, So, results over is, XXXX overall as be the that we giving guidance, results we degree without clearly expect what larger in I XXXX. in employee-related for benefit XXXX. meaningful costs, employee-related a a expect And -- sit materialize XXXX short, will in XXXX the which overall as versus financial such, certain a will improvement do to costs versus as to here there reflect

Steven Martin

on the what debt Okay. you alternatives is goal Thanks sheet very balance of feel much. about the improvement, the cash? your do down And how to and are? And there balance then consider pay

Joseph Baty

say organization, big I the of Well, would CFO fan as this that I'm debt. a not of long-term

an So, that to and minimize that's with debt. minimize to costs objective that always any associated

So, that's clearly to this objective, and forward into year as continue an objective be XXXX. an plays

regards that's -- obviously, just facility the here in there's has to credit may you the balance, in the only As cash we're and so clear U.S. company one

various There's as on being clearly for the a does where the to that on And markets very so we forward, hand, cash the plays of the our can so portion still that sense the most require the operate pleased whatever shareholders. an a improve. needs But position. sitting we what situation continue cash make cash are in. uses that in operating for of we'll on future And with objective the still to net of improvement appreciate evaluate our we're meet we're foreign sizable various cash markets

Steven Martin

All right. Thank you very much.

Operator

for have reached gentlemen, and turn the Greg call we to question-and-answer Ladies I'd closing session. to the Probert end the back remarks. of like

Gregory Probert

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

Operator

you. your conference. for concludes Thank today's you Thank participation. This

time. You your may lines disconnect at this

Nature's Sunshine Products (NATR) 11 Aug 182018 Q2 Earnings call transcript