NATR - Earnings call 3 2023 | Nature's Sunshine Products, Inc.

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Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Nature's Sunshine's financial results for the third quarter ended September 30, 2023.

Joining us today are Nature's Sunshine's CEO, Terrence Moorehead; CFO, Shane Jones; and General Counsel, Nate Brower.

Following their remarks, we'll open the call for analyst questions.

Before we go further, I would like to turn the floor over to Mr. Brower as he reads the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. ahead. go please Nate,

Nathan Brower

for afternoon, will our for ir.naturessunshine.com. results. third everyone Relations a our is to Good November of dial-in call and portion posted XX I'd our in to remind via available call this discuss quarter webcast that at via and you. telephonic joining through that thanks live conference like replay be Thank website XXXX Investor financial the

by terminologies information similar statements characterized The this are anticipate, may, forward-looking call expressions. other as These statements. such expect, on contains and hope, believe, often will

are performance Forward-looking different the statements the are limited by could not disclosed other XX-K not on guarantees Form reports results materially the to factors those results of and company's forward-looking materially future from be Securities the the results report Exchange but caption Factors in Factors implied that under and cause to, Commission. may filed herein Risk implied and statements. actual from differ those annual include, with

The provided and information the information any of today's the disclaims update speaks date call duty to on company as herein. only this

Now Nature's Terrence Terrence? I over the turn Sunshine, Moorehead. CEO the would to to like of call

Terrence Moorehead

today's And I Field and third another and global and continued to strategies, you, afternoon, third Thank increased in for traction discuss by for Power investment Nature's to gain year the Digital deliver strong Brand Energy. quarter our strong growth to everyone. quarter, good you thank joining results. results. Nate, XXXX been First, call our want in has we Sunshine, fueled

Shane believe detail. financials some context the third you through more insights we our how and will some performance take our offer for provide I'll then Today, business is progressing. in on quarter

we the positive on our half strategies on having continue the the the we In year, are experienced we first As the impact can clearly see build in to the business. of foreign impact when continued with million we exchange, third reported to million the of prior $XXX sales versus year. X% a quarter, excluding increase which or of the $XXX growth momentum is drive net

in which coming the strong year. XX% EBITDA million, third was increase at $XX.X in a quarter, also versus the prior was

were strong another sales Pacific, double-digit also some strong benefits from American quarter quarter our business Third sales of gross growth by that unit $XX gross performance million savings North from quarter realize breakout growth margin the delivered starting results we're double-digit plan. our a on to initiatives improvement and from our of Asia cost where driven

basis. third strong sales on to and sales In year Asia as investments increased initiatives on focused were in quarter. results a driver key we a constant the Pacific, Field continue currency quarter solid order training prior growth activation in deliver improved Energy versus the XX% delivering that field incentives, with

bundle, new, Power to new people reach and product in follow-up attract in imagery, consumers. markets. more Brand new websites consumer-friendly effective updated of on Again, helped more a and initiatives our these younger which initiatives consumer-facing focused key investments all allowed us provide

is for quarter third important American business our XX% sales the unit. North America, an which North year, prior In milestone versus increased

to starting have that greater up XX%. also quarter, business. increased was in third by investments strategic And a driven the and growth are sales customer on in activation XX%, digital new impact Our field the digital

with our our was improved retailers. Strong order growth practitioners performance digital driven and and by activation health nutritional

to positive our retailers. expanding of performance New and increasing contributed our forward, build further results. this footprint And to the health practitioners digital products and by sales improved hope momentum moving and on incentives nutritional we specialty the

products see continue steadfast incentives Energy response on invest an Field customer and changing offer ongoing to sales potential and outstanding job and ground. more untapped the developing done also the to consumer a respond us we to markets tools in new situation to remain Europe, maintaining focus that team relationships our customers our while challenges, attracting the the to on to business. to has In Despite continue relevant allow our and European that initiatives in penetrating commitment Central positive

to Moving on margins. gross

on margin-enhancing our cost initiatives. good We continue savings to make progress

to first, $XX You'll third, costs our that while and out focusing performance; transportation. process; by maintaining logistics committed gross to million from and costs efficiency of formulations we've out reducing ingredients, several on driving quality and improving related savings second, delivering remember waste packaging manufacturing and from areas: and driving

of cost strategic We've the also pressure on ongoing pricing taken inflationary to goods. offset our

market evolves. to price We as But initiatives, In savings as margins our see the of we're moving earlier plan our to right savings forward cost and the gross look driven started on increased by track and gross the effectiveness taken basis the actions now, to XX.X%, third quarter, initiatives year. realizing mix forward. XXX margin we points this aggressively additional

our our pleased with third strong summary, the exemplify business, results very In performance. of fundamentals our and quarter underlying we're

to like the I'd leave thoughts. you with following

strategic by order field First, on us new build momentum Working combination, our to digital, investments and the more business building. with the growth brand and attract investments sales these have market allowed in continues drive activation, customers, to growth in retain focused driven and outperform market.

started savings margin benefits plans million our as in surged are the see on initiatives to track of deliver gross gross has the The the savings quarter. early and third we've discussed. $XX savings, margin gross our verified to team of the already we Second,

expect we months, to see coming continued progress. the Over

us and strong financial to forward. positive beyond. we've in to fourth quarter We're a the invest and positive strategies this growth expect strong a our external through third, our environment, momentum as flow strategies still team move allow position They're focused. challenging operating take we is well, our will but in executing we cash finally, with And balance a to solid and continue that built sheet

over like to our the Shane? Chief With call that, to Officer, Jones. I'd Financial Shane turn

Shane Jones

Terrence. you, Thank

strong As our segments, quarter. Terrence mentioned, we're another seeing positive momentum largest resulting in across

foreign driven Pacific sales and the Net in America. rates. quarter compared the a double-digit growth, in from exchange prior both million the increase X% $XXX.X million ago Asia impact sales versus was North quarter, X% $XXX.X third or growth year in to were This increase year excluding by

sales Looking the at market by third in quarter.

continued key our growth, initiatives. continued our as on basis, XX% respond local see a China, driven on digital increased with robust model currency by Pacific Asia live sales to stream In well basis. sales a to currency increasing XX% local

long-term approach outlook as as continues market remains to gain China Our we invest our the and and expect evolve. continue momentum our for toolkit consumer-focused to we positive, in digital to

local Japan, customers distributors, Our growth resulting and product currency drive Likewise, growth, continue Taiwan also investments focused in in to X%. offerings both well and local sales in growth of order increased our QX. to field of order and continued acquisition producing leaders customer sales in with and energy XX% currency resonate counts

to turnaround QX of or versus as Recent growth investments North America, with America digital accelerated grew XX% were last this basis. a North business In currency-neutral sales initiatives our year XX% XX% key digital the during on QX. in

prior In addition, the uptick in XX% digital increased we compared a QX. increase customers XX% ordering versus to year, directly sequential our from website reported

during the Europe reflective reducing and in demand region. QX is impact war or broader of basis. prolonged macroeconomic that Sales X% X% decreased challenges of on the currency-neutral a This consumer in

Latin increased or be currency in while seeing decline to continue X% business focus work. In XX% due basis. fundamentals year and lumpy, prior on energy, of to activation and a sales tools field Results local this continue engagement sales versus signs we to are an to leading decline America, a we on

increased year XX.X% to the in to margin margins. reflective have the year. XXX a quarter is XX.X% gross made increase strong significant This past basis points to compared of margin progress third Moving on over our ago. the gross we Gross year-over-year initiatives

of that financial impact are to further beginning see to continue work next the year. see throughout We expect to and improvements

net of in ago to our of percentage XX.X% due as digital were quarter. decrease a the in sales, a as changes to compared business. was growth incentives, Volume mix XX.X% channel The primarily result in year

in primarily to and third as This Selling, in to investments by year $XX.X growth, the administrative million fees drive $XX.X compensation. growth compared general increased quarter was initiatives to the continues and our variable expenses digital increased and increase costs service recover, quarter. during the performance ago strategic market related sales were China to million driven

compared third net the XX.X% quarter of of percentage XXXX quarter. a XX.X% was ago for sales, in SG&A the to As year

increased lower in GAAP $X.XX the or diluted year strong sales $X.X provision for million year. or $X.X sales as income as to shareholders quarter. was tax common million per to quarter sales GAAP quarter was net million to $X.XX compared primarily margin the well last as share the share higher year. income attributable of per of quarter in net a diluted million or ago $X.X of result income compared income the Operating third for third X.X% to net or $X.X the improvement gross in net growth The the the prior of to X.X% and compared

to compared our Adjusted release, with sales EBITDA, was defined The growth the XXXX. $X.X in quarter by in to million of third earnings increase margin gross XX% million increased improvement. driven $XX.X coupled as

clean cash QX. end QX. to and essentially with equivalents at Our and $XX we flat was balance That's cash the sheet of debt. $X.X million year of and compared million $X.X only than million of $XX.X Inventory prior less where remains ended million

of or $XX.XX continue to price allocation buying As our capital an utilize XXX,XXX our part plan, average $X.X share we per for of million share. year-to-date shares repurchase optimization

of As program. $XX.X million of September our XX, remains $XX million XXXX, repurchase share

repurchases. share beyond Looking

digital well other Our and healthy strategic positions us initiatives. capital allocation to transformation our continue structure

Now turning to our updated XXXX outlook.

X%. $XXX growing million, full expecting is guidance a growth in representing our which inclusive This the of million Pacific. narrowing X% year guidance, especially year-over-year impact $XXX revenue foreign headwind, between be are to and continues We exchange, Asia between and of sales

respect gross With margins. to

to beyond. and make and supply our in continue meaningful good initiatives chain We improvement progress XXXX on expect

we early improvement offset pricing by inflation initiatives the and partially expect For XXXX, from exchange versus as and headwinds. foreign of are our remainder continued XXXX benefits

be our charges with year the We investment timing due of growth during Japan, to of related strategic the the sequentially events. to excluding expect SG&A, in to also higher fourth initiatives, quarter onetime along

adjusted of to $XX along our meaningful to call. quarter, gross of strong result are our EBITDA a third $XX we to last increasing progress for million guidance margin year provided compared million our $XX million As on $XX initiatives, the guidance in full million to with the

excited to and long-term very we're Overall, immediate before opportunities perform our business continues the us. well, and both about very

Continued on beyond. year, improvement currency coupled yield in a with XXXX this in basis value and to on initiatives mid- should single-digit shareholder significant high local growth execution our cost strong

the Now I will operator. to the turn back time

Operator

D.A. from comes [Operator Bolton-Weiser Davidson. first Linda from today Instructions] question Our

Linda Bolton-Weiser

a Congratulations quarter. on great

So in in of e-commerce wondering, sales represent you now? talked growth North curious what about North sales driving of e-commerce America some was America. does I I was your percentage the

Terrence Moorehead

XX%. over just It's

Linda Bolton-Weiser

guess, correct? I non-e-commerce sounds having it seems you're like, -- I well, So it channels as mean, like growth in

Terrence Moorehead

correct, yes. That's

on expanding it's an expanding So base.

Linda Bolton-Weiser

own well as And other XX%, your what website then I'm would like -- that that curious, just as include Amazon?

Terrence Moorehead

all Yes, digital. it does. That's

Linda Bolton-Weiser

in of digital like working kind well. is it strategy the sounds And well China as

but that? expand, this to for not I'm just why are appropriate of Are I'm strategy the of digital markets, kind struggling sure -- a of you working not to trying wondering, approach? Or little just more to the that mean, accelerate why markets of take e-commerce for So not you some more markets necessarily are I are some growth? the kind

Terrence Moorehead

Yes.

of We now. a digital markets necessarily do kind globally. right to the plan it expand need have of Some don't rollout

lot also So globally of this the a of capabilities have as kind we to build is well.

skis them ahead this So we'll where opportunities Clearly, you're there, pursuing -- our it of be we don't sense. makes want are right. The to and get we're one. on

Linda Bolton-Weiser

the just the was of this America. direct North at any corporate you And through that all all digital organic strong sort really in paid from Are about curious growth for that force? sales so Or in it's I coming driving the just is sense marketing? digital

Terrence Moorehead

a marketing digital program. corporate No, it's

a So marketing. e-commerce traditional leveraged plan fully kind of it's

Linda Bolton-Weiser

margin, then along And it coming really well. are gross like the mean, I very sounds the initiatives

but in on guidance, So thinking the math worked margin versus that's be the I your fourth good that are further to sequentially will quarter? gross see. up haven't you

Terrence Moorehead

you talk Shane, to that? do want about

Shane Jones

will but we be QX. sequential improvement a improvement in not In expect a QX, sequential Yes. Definitely improvement. year-over-year don't a

As there will into year, we move sequential next improvement. be

Linda Bolton-Weiser

direct has What you easy. been hasn't I Can terms impacting gross sellers, have you've your it And of pricing your you of -- that remind difficult, somewhat initiatives been pricing did pricing. you been demand and magnitude your us And your success this then some of what helped companies the year? margin, root saying in like by been? of the it's has of mean, other taken think was do sort say

Terrence Moorehead

and -- to the plus increases it it over your answer around I'll first minus, then first X%. question I'll were and a do just flat to Shane. Price X%, around pass wasn't or Well,

were some higher, Some markets and some were lower. products

we where So to very terms try could be take we we in of strategic price. thought

success relates it comments? And again, of across so seeing, not we're of And the straight some add as it's the want to to Shane, as kind you board. do

Shane Jones

about successful we've been this. thoughtful Yes. No, it has out, points very Terrence been as because

to where where looking places product most the and our also only to do really price region, by we type at impact be in so opportunity can of to have that So understanding can right time and places able without not the we demand, an the take but take at impact in we demand. price looking elasticity right by the that

to any in or we demand. X% substantial -- yet, we meaningful along and continue of about pullback without as So any passed

Linda Bolton-Weiser

And can are now, really especially helping -- where the new introductions you're particular you talk things, product in America, any are North best about there right getting in growth? drive Asia that

Terrence Moorehead

ongoing selling version good a easier their more and the pack new program. increased I a pack product and that really Historically, bundle detox This one what one is they They -- simplified pack the past, were it's focused it's a In new and Asia, has on one call daily referenced team the sold of they've that on. encourage does use complex repeat into in an basis. for larger, usage. adoption a

use on ongoing basis. you it So an can

an every With necessarily single day on not use the detox, ongoing going you're basis. to that

that, getting really encouraging. and they're quite velocity some So from that's

other our Greens, line. synergistically And about form in And a consume in That's Meal North Power the excited of every every Power new each of Power work in Power especially line. extremely of together of literally Beets be are those a products, America, launched have We're can parts world, then just And markets. X category respective that to one been They've category nutrition and product. single basically to they launched, we the killers. that foundation killers their one day. consumer each Power designed

effective deliver results that you highly tasting, products Great feel. can will

starting of So our a it, We're It's still into we're excited best had see couple and of of product kind on that launches just uptake introduction about already some months to date. those, year the some good to kind Power new. partial we've line. but of

So throughout XXXX. that, go we really globally be that about excited as we're then and launching we'll world the into

Operator

ladies And for be session. to that, today's over closing floor and turn concluding gentlemen, remarks. any to I'd question-and-answer the back with we'll management like

Terrence Moorehead

thanks today's like much. Thank with we'd to in care. look everyone for joining very Okay. to to next again, Take again, you again And thank And you us. speaking for We soon call. forward our listening call.

Operator

teleconference. gentlemen, Ladies conclude this does and today's

time. participation. at this may Thank You your disconnect your lines you for

Nature's Sunshine Products (NATR) 7 Nov 232023 Q3 Earnings call transcript