NATR - Earnings call transcript Q1 2019 | Nature's Sunshine Products, Inc.

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Operator

Greetings, and welcome to the Nature's Sunshine First Quarter 2019 Conference Call. [Operator Instructions] And this call 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. Thank you, Mr. Brower.

floor. the have now You

Nate Brower

Risk results a Good afternoon, our XXXX you joining at The that replay today's all results. of posted our will on our to, to thanks and call I filed to reports only to website and over for conference this on the date, any differ this available www.naturessunshine.com, the call quarter different actual those to Annual in and are materially call of by call Securities limited will of in information not with and Commission. implied webcast call disclosed are discuss contain in future that This duty caption speaks be the for disclaims The company's herein. from not results forward-looking certain XX-K Terrence could Factors performance, this Investors on is Moorehead. provided section. the cause and may turn update guarantees materially factors be statements. company Form as live our Report financial the the other information and include, Factors statements. information results may on now CEO, Exchange first but the These the forward-looking to under statements

Terrence Moorehead

Baty, of first greater with me a you across pleased to fivefold Clearly, in Joe Financial Thank we'll upcoming revenue on begin, months. and initiatives, and the business. a you, results that am impact with our in currency for today who of kick improving be the while to financials our to through Nate. the adjusted the another very will business. basis, discuss committed our quarter is local net But Chief I brief see Hi, increase To of summary we're everybody, call. X% here our and today strong thank growth implementing productivity going us you starting for With we're walk delivering share to and Officer, cost today's in generating quarter, reduction detail. income. joining be I'm a initiatives things you compounded we had our some off efficiency to

Our restructuring example good profitability. that still believe than deliver and are million the expected to are savings. our strengthen first and continue quarter in during improve opportunities initiatives a analysis, significant revenue growth more are annualized to Based on $X we there to

profitable dynamics to into consumer internal nature The in reimagine and flexible As reviewing our that with we more discussed multiyear is the to make is vision effort last future. traditions of an that last the to the more we designed to unleash accessible to a do. bring the road To strategy external modern, the vision take brands and our in more strategic redefine map focused healing to market us everyone. of will build power potential resulting our business, become research herbal consumer months more and we've assessing of X everything becoming quarter, objective conducting spent life, capabilities, our

priorities Our you walk strategies to move each focuses in focus global I'd in plan through forward. will five strategy to minutes briefly a investment as on turn. our few drive spend that like we

new edge new messaging that is more Capturing we relevant, today's emphasize need we consumers consumers with that and Our first and high-growth a our on of step. updated savvy brand create minds hearts innovative also a expand our portfolio, strategy to capturing way our an focuses think branding. of our first is goal power, Updating people the the the of our important is – new our to revitalize into something and aspirational performance launch requires inspires and empowering level an proposition. transforms But excites, imagination call about categories. brand company. feel imageries to products and message And and which branding

to Our brand brand market. designed power in is of Nature's authentic and status Sunshine harness strategy the the nature character elevate the and

energy powerful, is reimagining more and focuses an starting the by experience field present. to point the on second will systematic more include Our on of basic The creating to personalization and mastery a flexible and is fundamentals, be business. a NSP fields strategy ultimately called effort the approach but deliver more

needed details more our customers integrated and a As engaging attractive field experience distributors. a about managing energy approach and fully is to to success, the for create

XX% shopping marketing Our over and a next-gen digital relevant is and success digital approach. developing more a consumers of digital-first third today's strategy called digital global digital capabilities, in Being powerful requires more is demands online, all toolkit. platform. about engaging all next-gen With first marketplace

to goal more from to improving relationships Our is relationships and transactional life move creating managing sustainable a the personal by experience. consumer cycle

groundbreaking designed to and to is from strategy effort a bring digital-first community Our life. drive the NSP affinity loyalty

we manufacturing our Process upgrades on fourth our manufacturing focuses a key and capabilities. strategy, time will the and and inc., service as of award-winning chain with goal business both distinctive to quality, it and creating our supply over excellence. efficiency strategy effectiveness and capabilities improve at puts the forefront The that one on of call equipment production redefining Moving feature.

growth we unleash and Our process opportunities. to the strategy already manufacturing inc. new unlock is intended potential

can the believe organization. enhance a we're and right and business shareholder but Once and creating final goal is about and are detail call The we ongoing benefits seeing place build the team to over part We're again, as transform is performance to increased stuff rollout of and fully on focus strategies, efficient to implementation strategies and that mention value. be empowering attention business drive important a time high these to all multiyear already to streamlining from focused take and processes business from build more will fifth the focused a X is and aligned drive coming Our forward productive our future. winning. our and to winning By that action, employees on that growth. strategy and something we we is take it's efforts the

seeing Now driven Central rate first China, to NSP a Synergy and Eastern momentum let where fourth to NSP declining back by and Europe Russia, highlights, sales in continue we're Americas strong operating quarter NSP and while with consistent growth struggle, continues at last me be turn the to quarter of year.

South few in me key Sales on with quarter, field points to quarter, few the Let very on largest strong and net that XX% for by generate in Korea, during the sales players look of in and companies growth lower strong the driven growth. touch activities. and supportive driving are continue impacted engagement reflecting talk regulators government's by a very to other advertising ongoing among the There greatest welcome illegitimate of we some we China international Despite action, XXX-day first and/or local continued proud has distributors a the increasing growth, for that false increased a distributor We during say quality traded our key action I'm the of government's continue good in undoubtedly review were industry with represent been NSP first are to activity publicly local were this opportunities. to leadership. to currency our activation able positive field of year-over-year market, review currency. actions. growth and year-over-year with XX% generate direct-to-consumer against and and In customers nutrition this strong had companies China, participants. in markets be rationalized considerable we

opportunities. long-term in We remain growth continue China of optimistic to proud see our and potential have built quality about are the tremendous and business we

As last long-term to I noted quarter, growth China's continue invest to potential. ahead we of support NSP

X% Europe, Eastern innovation are quarter. and in of we including the local net strong Central our first kits and XX% local in our currency sales to continued the and reflects market product during currency growth product Russia continued to Poland. quarter, a saw The for Turning NSP this particularly Americas strategies, market. that specific trends local generated decline

brings International, at decades noted Vice has Vice growth. last and the two I our long driving leading extensive to quarter, will tenure Eddie as Sales goal fine most growth. he Avon. Living to strategy organization sales Eddie leadership, America. most market have President over our organizations with April, returning to and And experience, tune basic Officer career Perfectly we Chief Posh restructuring strategies North begun as of As the Executive improve And his appointed experience with the In with mature of Silcock of Sales to position at Global a serving North at we largest introduce Young Executive American and of in President beginning Eddie's of some recently and early President region. performance sales we

market As growing, the appropriately and I quarter, our industry fair participate growth. of and the wellness is emphasize our objective to is and share the nutrition and get last in dynamic

walk to Joe to over financial call the Joe? through turn results. me let Now you our

Joe Baty

the rate. local or Latin Sales million in also Pacific; $X.X million Europe; Russia, in quarter a unfavorable $X.X and X.X% increase as to a XX.X% NSP of NSP million Asia the in or sales was Americas NSP Eastern offset in Synergy Thank million in negatively currency North NSP million everyone. in a increase in and in America $X.X decline decline was X.X% On driven and quarter X.X% sales in by million to a year-over-year Net in currencies. afternoon, million $X.X year-over-year million million local a X.X% year-over-year America, foreign increased quarter a currency decline sales first reported. by decline by XXXX Net $XX.X million in America declined exchange $XX.X increase local net Synergy were The which a currencies. primarily $X.X million impacted a first good Central China; net sales the declined sales increase in XX.X% increase or and $X.X during last same a North compared were year. $X.X to basis, you, Terrence, Synergy partially the $XX.X $X.X Europe. NSP

Central than year-over-year in on as of XX.X% until general inventory million on points or reserves XX.X% recruiting are in XX in Russia, market million a margin market material in in were this is expenses where may $X.X year-ago in margin the a Net Synergy sales We both incentives net Volume in net continue the sales restructuring the in on and a local South the Sales percentage basis, increase basis sales to our are Korea, local to compared a increase in percentage in NSP sales markets XX.X% driven in year-over-year to fees Americas, sales the gain million Europe traction. by and changes as quarter for in SG&A to expenses XX% currency same period first attrition to as on rates increased $XX.X quarter a service net for service an increase currency pricing. XX.X% a more incentives. than net grew currency raw basis. in In selling, local or administrative in year The Gross while NSP the local fees $XX.X a growth year. independent over China XX% $X.X America the basis compared XX.X%, declined to of XX.X% a momentum currency basis. recorded WorldWide sales growth first million, net Asia lower due The XX% gross local NSP and or And in the Terrence last see initiatives $XX including incentives a sales increase driven China sales year-over-year, SG&A trend consolidated strong XX.X% where North obsolete favorable by as than are charges. prior term average. mix, Eastern a currency primarily decrease increased continued X.X% year-over-year not changes up sales rather year-over-year million grew to lower increased and Europe, China volume in strategies to reflects reflected mentioned. primarily year-over-year. volume XX.X% in as percentage incentives in in rose The and basis. first to was volume of Pacific Synergy year. of accounted on decreased sales the net continue of near mix, and NSP offsetting quarter net new period. last that increase

consistent with period As a percentage in XX.X%, same of expenses XXXX. net sales, were the SG&A

X% We year charges, Excluding were prior $X.X or expenses of net X.X% of of sales of XX.X%. the or period. in operating million of income SG&A impact compared to operating income sales restructuring-related sales net quarter percentage a $X net as of million reported first the

period. XXXX. taxes, million share net adjustments, $X.XX $X.X operating press or of X% Adjusted the the loss $X.XX today's GAAP first Excluding per $X for income the $X.X EBITDA, prior and or net or as the of restructuring to Net period. release shareholders compared compared the in amortization and we compared million net adjusted income as prior generated to mentioned is sales year income share $X.X of in of common $X.X net other million in million shareholders or million was previously net ago in $X.X X% per release. charges, $X.XX to other share $X.X our million million $X.X quarter compared share from income share-based Adjusted the to common or of depreciation, to per quarter per period. to certain quarter to income net provided attributable income compensation or year the as income exclude A in year was adjusted diluted net press sales or as continuing common income XXXX of before adjusted to operations common common in million attributable $X.XX in first was of defined reconciliation income

to we efforts. pleased cash standard million long-term Cash assets impact lease future that present the new benefits with Note lease lessees the XXXX. the Turning and were effective of There adopted minimal the liquidity. requires management on sheet January liabilities on of XX We no is of at right-of-use March X, measured recognize $XX.X equivalents our This remain balance standard income. debt. accounting to statements value payments. with and

like basis, primarily of million to in call XXXX, comparable to operations specifically a in a For turn quarter prior in on in the to reduction to back cash from period. we first the reflected in compared capital, year changes million $X.X cash liabilities Q&A. now the year-over-year the $X.X change of operator the generating I activities during operating The used working first quarter of accrued would XXXX. facilitate

Operator

from [Operator Instructions] question [indiscernible]. We will take our first

Unidentified Analyst

adjusted Jones the on service. the earnings on discrepancy Dow The news

correct? Your press appears release to Is be that $X.XX.

Joe Baty

Yes.

Unidentified Analyst

sure was the they correct you it $X.XX of making service, Right, make up $X.XX, a posted that I want followed was, that, they Jones so indication the Dow without because did. and correction think, of it what to then

to in The is to versus seems terms in the sales, because goes this quarter? there your other quarter other any be in business I on quarters know than of what say of is, and quarters this question terms lower that don't seasonality so previous anything

Joe Baty

are strong be. seasonality? minds, in Obviously, there Well, quarter things. of the that. pleased I about with is mean, broad quarter can to of very 'XX. sense, referenced XXXX the fourth from Yes, certain a come in there Terrence we XXXX, the fourth follow-up of can quarter quarter it, Seasonality our the first is

of markets a Those For year. in of can be because advance, one example, beyond, U.S. the seasonality, above sales whether have also in there impact forth. that's don't course Europe may over we in we that that timing we may sell the that versus impact and China right, given I quarter that some mean or may the of more or pleased and the on QX 'XX so quarter events you in at New is the have I products the the clearly the mean, terms geared when we're of you Chinese if at more impacted we've historically XXXX Year. a in Obviously, basis, versus seen business, sequentially seasons QX are it's certain others. China very quarter-over-quarter China mean, look for by though versus year business, of the what even to I specifically NSP think of

just period In the time. of fact, there for is business down a

Unidentified Analyst

All right.

this anomaly? question would very continue? I expectation quarter there that And Something an was earnings Or out, trying is also an this but make accomplished be is trend good. you've guess, to for I to the the this

Joe Baty

No, clearly to consider in future that We're the a obviously, and initiatives do the give we the formal incremental been of of profitability. growth anomaly. of this an benefits but while have of don't to a control we that comments, And some don't pleased, as be chop, to Terrence cost wood guidance, seeing now. we've we mentioned implementing cost we lot his lot some work and holds initiatives, we're believe from

Unidentified Analyst

your any with China, potentially there negotiations is is there? It effect the on business

Terrence Moorehead

Let me have say that. reputation What take good the in would is, very a we marketplace. I

a confident very in plans very We we ground. strong feel that there have in We the and our on the have team place. business there

there, want the on to environment still. it is I market So don't speculate market but of a kind growing

We continue business. to penetration current see by again, the that's an underlying within and strong strong very strong of year-over-year fundamentals growth market our and and, driven

our good and my within on the would reputation. good that be in very marketplace But China a so at And there had time. and this we've relationship thinking perspective a point

Unidentified Analyst

question. another Just

feel undervalued? you potential based any overvalued, Looking to that? at stock there is share on price, do any you're valued, that your neutrally And buybacks

Terrence Moorehead

handle Joe, that one.

Joe Baty

itself. Yes, second truly near not here that to a discretion would Board stock scheme stock of as if say, improvement for types profitability, We're twofold. the of regards decisions long-term price drive In things, obviously, speculate your term anticipate question as we stock part going don't I while of of to we is believe, the speak at price. perceptions far will the and can of your in growth, buyback question, Directors. of the the those are we

Operator

And from our we'll with question Slater. next Martin Steve take

SteveMartin

directionally you know year? the of to sort about generalities the qualitatively the how segments give trend over but in or business I of of don't you about how talking and balance guidance, expect And the them

Terrence Moorehead

maybe you comment start then in off on Once Joe general. Yes. just, and I'll

our growth. this single in I commented market, operating share fair our we're alluded on and in growing. it that every Let it growing start last to get during goal is and me And during that operating call, is and market a by saying, call I to of our we're

our we've driving in again, where do a operate, the work already America, big particular, you they aggressively got ones which to to markets in several we're growth to our where are, in But in growth, lot turn market. position one and then And key means, there we all market so America working but we're be we've are even of of that to where strengthen going that's know and around. one a North got that North markets

our in to share So want that. growing expectation and marketplace, participate our get be that a to of again, in fair we is, able

So maybe it over for let comments. to Joe turn some me other

Joe Baty

where fair as and getting said. Americas business provide this the over see, in that potential we term, in a see guidance. for with near on Yes, in our business if back the the unit, I long-term just I go that course concur share year, of XXXX, NSP – substantial growth units still got we well. you to see the incremental as comments, the X some business unit those could we my of Obviously, units. business we're X regarding Terrence of unit, mean can what business lot noted In we're scheme growth things just quarter units of implementing. the as and, again, And see you're in we're initiatives seeing we haven't some that confident seen we've looking I X messily that that of don't long business in frankly, this at we fourth actions to quarter see start we'll a decline, term like formal and the we we but X what that And announced well.

Steve Martin

shine would if sort of in little at growth the rest declines, strong? a with least business could then units through that the arrest you respect the the business unit, to just And of

Terrence Moorehead

is Yes. That correct.

Joe Baty

No. one. This that depends on

Terrence Moorehead

better U.S. some us, to why strategies position to but perhaps. also and made particularly North organization, but changes Yes, around only And the America. our world, the not help market, in are in we've designed the that's aggressive

Steve Martin

now. expenses we we year, adjusted EBITDA this and I there – and guidance. and Okay. of don't kind EBITDA, when you continue? place? a guys these Should good profitability something out where dollars It sort a give you using of With is recognize that And to the look in unusual? expect Was the a of percentage. quarter, am will things trend and EBITDA over balance very from are again, I was respect Or

Joe Baty

like we're benefits we cost of comments, initiatives at certain our as at noted quarter that announced to of we where our business. we pretty noted – and another overall versus we're anomaly, that seeing Playing in not always and that cause this the may play on a that needed one what the take it that. – prior quarter. vis-à-vis starting going an some take the into And confident cost works front. to seen with be our are, look an some we've to impact a knows confident first reference we've come as with to we from first that structure But to there's and pleased that standpoint, the respective obviously, there this feel work the quarter is from what pleased quarter, in different calls way to see so things pretty associated expenses look going process quarter going process longer-term forward, timing we event earlier, And of we're we Well, one organization back of things with that and efficiency a my quarter we're in versus in I feel are continue. some go-forward trends that

Terrence Moorehead

that call really is – organization, we on the the comments, structure. right our having strategy But right right Steve, does stuff to organizational the Joe's just build on focus

and more seeing into strategy hard look more is seeing SG&A cost our overhead a the of changes we're become manage you're as They're so – taking a built plans. to, up organization a our conservative are sustainable aggressively, basis. an effort order again, profitable and part overall very sustainable. So and structure our on you're so And to what in at the

Steve Martin

I you've you to first the the mentioned events basis, two quarter? less, for event because mean on it? wasn't comparable respect less, an of you EBITDA it apples-to-apples one with times? a – events were anything couple extra Was Were were there was events, in

Joe Baty

no. events, first the the part No. question, I there is that difference of a answer in look, was mean,

timing There earlier didn't comments, much bottom about and believe like the line to one that where what But we're growth. incremental to costs we an have to back what going or just again next. that one top event. spending may have situations Terrence what do you EBITDA we are like So versus with other impact quarter of It's the mentioned incremental and the quarter, but we very we're see are going we and seeing, both seeing. much line my –

Steve Martin

Let myself. guidance, again there give going I we many keep I you ask With can, it questions to seeing or are can the me done – to so don't going respect do are to I'm so as as restructuring expenses, you are those? –

Joe Baty

question, and comments, or could. lend a bit answer organize will reference look so yes, That's bit right whether need the The certain initiative unusual differently way and short little I at and differently costs? incremental other we in the a the Terrence's we good or to a see forth think and itself stuff again, approach or to that. continue we Is restructuring to little is differently to have think units it we associated we business with that markets possible could organization,

Terrence Moorehead

I now, the single going we're mean, of right process stone uncovered. leaving every kind at process and looking of to no

do profitability And look organization, our – this to through drive things another going but the, point, and place. so say, objectives, because money certainly differently any process, our to we're to we at trying the now, to at the going to we're we overhead to right still take and savings aggressively cost to look at I'd analytical are not how spend commit

Steve Martin

liabilities the used sheet, a mean, the of with year you Was respect last a an said Okay. balance expenses. $X accrued the in that that that for XX? something balance, that accrued I lot were was because to down December timing issue And like as cash million? or anomaly Was of

Joe Baty

primary in timing, the of on right? liabilities, again, of We it's fourth accounts quarter certain that very ratio, we're on December. difference as overall, I a with didn't mean measure payable, accounts the seeing that were primarily of of as and we the timing added liquidity, as bit the in far a we're receiving quick necessarily timing XXXX, collection pleased it. receivable, paying overall certain were But, have improvement sheet balance expenses It's so there XXXX little calendar accrued everyone that. of accrued

Steve Martin

Can is trading? investment this what I other question? ask asked and one investment should securities have but I before, What is

Joe Baty

are have We aside that funds investment for the invested in And securities in that compensation put deferred plan. some securities. we compensation regards have to people supply plan obviously, for

Steve Martin

thank Okay, very you much. all right,

Joe Baty

Thank you Steve.

Operator

question-and-answer I'd that like conclude remarks. this you, And and does back our closing turn Mr. for time, the additional At call session. to Moorehead, to

Terrence Moorehead

appreciate interest again, you, for a Thank Okay. and much, company. our joining and today you support us very to again, and want belief ongoing Nature's We your thank And in day. I have and everybody, support. thank for always your great in Sunshine your and

Joe Baty

you. Thank

Operator

We again, do today's conference. everyone your And does for that thank conclude participation.

at disconnect may You this time.

Nature's Sunshine Products (NATR) 10 May 192019 Q1 Earnings call transcript