NATR - Earnings call transcript Q4 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 Financial Results for the Fourth Quarter and Full Year ended December 31, 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 call 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

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

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

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

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

Terrence Moorehead

move through in our of From fourth by for you, Shane detail. execution financials insights and as context full I the share is on XXXX. our Thank the some quarter our Today, more today's discuss how there, I'll we believe provide strategies. good want you everyone. some and business to our afternoon, the has also joining take year Nate, continued we which to progressing thank will you specifics been of global call into for I'll performance, results. fueled

We exchange, XXXX backdrop interest the sales you $XXX results. in of of sales high-quality of the approach company's million, foreign demonstrate up uncertainty XXXX of making one in XXXX. of even year $XXX full lagging tremendous activation our This years impact high When that adjust the sales reported geopolitical for financial a strongest X% accomplishment net consumer versus million, elevated and our inflation, field strong social our Europe, periods with Starting history. were drive strong performance and omnichannel unrest and products, given economic unrest. during can confidence. These our results rates is

also to was benefit margin our initiatives. year the first from gross improvement XXXX

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

on pleased to basis progress say that initiatives increased in I'm we've XX.X%. to these margins points gross XXX excellent as XXXX made

plan expect exceed to to seasonal we due forward, savings Moving million our promotions. quarterly meet mix and fluctuations $XX margins with in gross or XXXX throughout

Our $XX.X XXXX versus gross for which million. along growth top EBITDA XX% aided adjusted our our up was line performance, year, XXXX momentum, margin the to with

we dollar $X.X North Asia followed increase growth million. a performance by XX% where was strong on in in of million drive Pacific strong America, XX% excluding in impact our This of by when The year-over-year was led adjusted also X% X% which the a constant our sales results, exchange, to quarter net reported in apparent business was a growth momentum sales in increase. fourth $XXX The helped basis. foreign EBITDA

and were North our investment at A a due health our specialty in up nutritional where with our and breakthrough strategic to closer XX% meaningful sales shows digital America, results look improved quarter practitioners fourth retailers. in activation

that driven XX%, and customer new increased was by XX% growth sales sales. digital up incremental quarter, the For Amazon

Beets orders footprint on retailers. performance build our increasing this the all new of by launch introduction momentum of Power and we customer the products as drive further Meal helped channels. digital activation Greens, expanding will growth specialty products Power and practitioners also and our and new improve helped drive Power Line Power strong of across our The our XXXX, In nutritional health

Japan. X%, In up Asia primarily Pacific, driven sales by were Taiwan and

Our investment driving focus driving in saw the Subscribe execution fundamentals & a continued for to Japan similar quarter. order XX% autoship in growth activation dividends of We field our Thrive field to customers and pay on in solid a story will that field activation Taiwan, plans represents will continued with that to the sales. growth. program team new investments training allow XX% open and to capacity of we facility continued double continue strategic support the make in about support market, to To Japan, in a with

Another local currency to sales a quarter fourth on was the strong that basis. X% China increase an contributor delivered

in Our the short we economic continue to cautious digital be invest are attract continue this strong term China and to customers order will drive long-term the our continued Overall, in powerful new of and we in but and live streaming growth, model positive given digital business conditions. innovative to approach. the prospects on very

In down due and X%, the on toll it's it's markets war and that surrounding the Europe, Eastern -- to area. sales taking European were primarily prolonged and the

the our excellent an improved geographic has markets driving in new to to in products customers and field and tools an team footprint effort continue to we continue these and potential activation, job orders sales our invest a consumer in see commitment Central Europe. markets And our untapped positive attracting response capture to offer. European expand remain in Our in done Central to steadfast

our and results XXXX. our thoughts. to the of In full excited would pleased XXXX business, the following very I plans Once summary, our strong quarter you fourth our with for leave like year we're and fundamentals underlying again, about and demonstrate with performance

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

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

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

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

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

Shane Jones

Thank you, Terrence.

another Pacific, about that momentum excited quarter positive be seeing America resulting in full year. strong and to in continue we're North the and We Asia

X% driven XX% the million in to growth a $XXX.X X% to Asia million the representing in Consolidated Pacific. North in exchange sales growth, million were America $X.X prior quarter previous or growth at This finished $XXX.X by foreign excluding representing net year, ago compared sales rates. X% Net $XXX.X quarter, full fourth from year. versus million compared million the the $XXX.X in was and X% in for year growth year increase XXXX headwind

by our sales from in double-digit retailers. sales and market growth QX. The both result sales XX% core strong last a America versus business our year. growth grew at Looking and North digital North of of was business America practitioners in

in was digital of mentioned, XX%, growth QX, new with business up XX%. customer our Terrence As

digital. to driven For sales full by year in XXXX, XX% $XXX.X increase X% million, North a increased America

Pacific with or energy, the field driven or on driven growth above-market also along continued year $XXX.X Full local were Taiwan, and This basis. of increasing transactions. X% saw by healthy continued growth sales exchange. Pacific China in growth in Japan local emphasis Asia excluding X% foreign a X%, by was currency and X% Asia on sales X% growth This XX%, XX%, our representing in with and currency was of customers the respectively. of impact million, increases XXXX

consumer spending of Sales currency QX decreased especially the Europe full on $XX.X of basis. challenges local XXXX in well the X% and or sales Europe XX.X Eastern is -- in X% X% the a macroeconomic local to million. increased basis Europe. as continued X% year for in that Net or demand, war are sorry, on as This reflective during pressuring a currency impact

Latin focus field growth activation. tools America, is generating energy, business customer on In sales fundamentals our continued and and

or sales foreign America exchange. X% $XX.X currency-neutral increase remains sales Latin were versus However, impact as year those a in the basis. prior of only muted X% Full a efforts sales the impact million, of on X% excluding year increased X%, or

such The Five, Gross as where the result to than America the market decreased stronger is points higher in and year-over-year was of our basis windows, margin offset to by contribution lower, gross margin due inflationary quarter being decrease fourth modest activity XX targeted margins mix. XX.X%. other market mix are during was but initiatives growth increased promotional cost-saving This Cyber regions. North in pressures impact

by our million year, improved prior or the previously savings our versus for outlined. initiatives driven As year, Terrence mentioned, basis points margins primarily XXX $X.X gross

these by primarily reiterate changes ago mix. year and to to of in incentives encouraged compared The XX.X% net the the as we're are a were to We million due Volume progress commitment seeing reach decrease savings. channel of initiatives percentage in $XX at quarter. sales least against XX.X% that slight was our market the and

million were general compensation, compared costs basis Selling, to to investments was a increase growth slight incentive the year $XX.X ago fourth drive growth. and expenses driven million in variable quarter on during This by $XX.X quarter. related increased administrative sales and dollar to digital the

XX.X% of for percentage fourth SG&A improved a sales, to the quarter XXX of basis points As XXXX. net

the or million net Operating million and credits or the The in as the $X.XX income to to quarter attributable million last of $X.XX in result valuation the allowances of primarily as $X.X $X quarter. to shareholders as year. favorable net strong changes GAAP compared X.X% higher the or of was fourth or to related sales year. $X.X per of income common improvement sales tax increased to income sales foreign well net quarter to quarter diluted share was for diluted in growth share per ago X.X% our million fourth compared the GAAP income operating compared $X net prior in year

our fourth increased million growth was attributable leverage in in our compared to SG&A. growth, $X.X on strong defined $X.X EBITDA quarter XXXX. of sales along the XX% release, to earnings to The million with as EBITDA, Adjusted in

XXXX, XX% margin. growth For prior gross driven sales and EBITDA adjusted million, full year improved was by higher year, $XX.X than

for XXXX with remains free negative Operating $XX.X cash sheet cash less equivalents of XXXX. produced and in flow $XX capital free flow million million strong, expenditures balance outstanding to and $X compared no million debt. flow Our in cash cash of cash

repurchase of plan, during of per XXXX share shares share. utilize or million part continue buying XXX,XXX to $X.X average our we an $XX.XX As allocation our capital authorization, for

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

healthy strategic initiatives. us other digital and positions Looking repurchases, allocation capital well structure beyond transformation our share our continue to

we of the like about our and to both Now I immediate very profitability. long-term remain introduce prospects committed point would estimated guidance net to business million. and excited efficiency Please to outlook. providing includes note, We're full foreign growth to XXX improved the $XXX and to XXXX million headwind driving are XXXX growth basis exchange. due Therefore, year sales of an $XXX this

As of such, our X% to currency constant to X%. equates growth guidance

EBITDA we million range expect the to progress in against initiatives. between excited very focus In adjusted driving key we and our $XX other about to million. are $XX continue execution addition, digital XXXX and strategic Overall, and on strong made

in do confident established so, will shareholder in momentum returns in continue and the we beyond. XXXX we driving As strong we that are outsized XXXX

to turn time back the Now I the operator. will

Operator

[Operator comes from Linda Bolton-Weiser from Davidson. first Instructions] your question And

Linda Bolton-Weiser

Yes.

particular say helpful. -- expected? a color quarter, anything softer than you wondering the fair what And that was was in came than then regions So in be in what little would better the about, you was fourth I any a that Just would there amount expected? quarter,

Terrence Moorehead

want do to Shane, start with you that?

Shane Jones

we'll with all, America. absolutely. Yes, of start first North Linda,

by as count strong as very addition, then our very increase really North there, double-digit well. have increase a Amazon in driven we core business reflected, well XX% growth And there. growth customer see, We strong, was healthy and growth, very you that's our from America, our digital performed as And in -- business. very, both there

and the momentum A good So there. seeing things of very happening what with lot we're there. pleased

as good areas as far have not where as we're would we hoped. quite As

as at our Europe, and the struggles well a to Europe, look you they to those that of on issues continue to that in are through grow there there. in as a lot area there. nonetheless, with cap issues But are If ability short term both continue be putting other work economic

Linda Bolton-Weiser

how the Europe, is in break down versus a to to any regard quarter? Eastern bit? with way performance Western tell And us the little was there Europe Roughly Europe

Terrence Moorehead

Yes, just a on hold second.

Shane Jones

Yes.

look basis, in So XX%; it Europe, just a was X%. European we and as Europe at currency down at Europe, know Europe, total we Central -- down then you XX%; business, If up down look Eastern slightly. that the -- local as is talk I'll and Western Eastern on

Linda Bolton-Weiser

Okay.

does... it So

Terrence Moorehead

seeing fair of we're to the seeing ability related amount that fair impact of Europe now. people's exchange just there in is we're amount value a of in and negatively pressure pressure impacting Again, the to right the dollar -- Eastern buy rates

stability some right get markets to start for move we once in again, there, us expect So we to and direction. the stabilize those

Linda Bolton-Weiser

any you X pretty Or much And revenue in or this at is this are that point? Ukraine? booking point, at Russia

Terrence Moorehead

ahead. go Yes,

Shane Jones

to continue in locations We in point have those time. revenue this both at

Terrence Moorehead

So order...

Linda Bolton-Weiser

is there And there any -- quantify that? any is to way

Shane Jones

at -- We tell It's and But you Ukraine yes, point. this is aren't business is will significantly. actually the disclosing that growing business slightly. Ukraine up those has I the specifics of Russian that's really the stabilized

Terrence Moorehead

versus double up It double was prior year. up was Actually, Ukraine digits. digits

Ukrainian customer the team. still on orders. servicing So our we They're growth, business to through building continue ground drive

a stability there. some We've So actually doing they're nice quite got good job.

So further markets. and would be most ruble kind European driven the Eastern pressure the by downward of of

Linda Bolton-Weiser

the Okay. North product performance you was that based going be is Or And had maybe you you've pretty could it encouraging. then on little a that lumpier launches new just color. to American growth? Would say -- more sustainable? drove that little was a your it give bit Or it's

Terrence Moorehead

we I and for Power new clicking. product was our our within in the one with then kind that bit was was us. specialty the activation launches of digital And think of the strongest response tremendous certainly practitioners also. retailers a saw Again, of The Line launches decade. strong, good all and very last were of it kind

continued have in we'll believe we strength So digital.

on Our launch-them-and-leave-them strategy. the our our of forward. brands. one sales the want a Power stabilize and to of build the business to going is type practitioners goal core Line continue master We to kind have of key retailers don't with and That's and

building footprint going the that to be Line around we're one and So supporting -- Power going our that forward.

see strength North in So America. continued we do to expect

myself has necessarily back. and expect to don't especially expect talk and look really heard see corner, You've new growth strength, quarter the North we and Shane order our we but every to from digital driven America, continues turned I do to drive see North America continued customer about business, don't growth want by to activation. how But double-digit which

Linda Bolton-Weiser

percentage And what North America now? of is sales digital

Terrence Moorehead

Shane, about XX%?

Shane Jones

That's XX%, yes.

Linda Bolton-Weiser

color in couple variability maybe that some maybe year? gross I in by Is XXXX, a any guess, help depending in how things, through one. you mentioned you to on then margin cadence quarter is could And Okay. of the modeling give promotional there will go

Terrence Moorehead

Shane, do you want that to take one?

Shane Jones

Yes.

coming there's we're not savings is because that we're as as of mentioned, single there. a is stair-step Terrence every of up as amounts. that So in just old other it's a doing be Part line. just working to promotionality. some that cost the ratably that through inventory, and words, In be things quarter, going Part of -- in are different we're straight through to variability going going

that got that, of top well. as you've on you're the over then And going year-over-year amounts

So are that will to mean to you year about. whole, that through as get to getting we've very won't the the committed would That what that. we exactly numbers a say talked necessarily look be as quarter by is, it to we

Terrence Moorehead

that Does you? help

Linda Bolton-Weiser

XXXX? Sorry, be but up in -- you did gross for year But -- full that the yes. should margin say you

Shane Jones

seasonality $XX get million, well. Absolutely. we'll realize, as definitely good to last other Clearly, about promotionality, again Absolutely. the points very this year that. year year. think Linda, our you basis a our up to is to We thing to were if XXX need there's And

That's the the instance, Five Cyber first more actually obviously, for us, started that's for hadn't period, the we time. something We way. first before Cyber successful we this done that in the were Five QX, Very period. that involved the year. where in a time For period by promotional for

bit there likewise, QX, has so. QX a in some impact there more a little not less but on much is that But then more And gross QX, necessarily little as and -- then promotionality And margin. well. is there QX, as bit as

Linda Bolton-Weiser

particular, was of you color you think very then that like give I could you're in new you in do terms center Maybe a what That's helpful. And in helping there? to drive think said, what And little training Asia. on in Okay. Japan? performance seeing maybe a it, what more will

Terrence Moorehead

Yes.

Japan, I has job into into them business, team the getting & with So a there, if start Thrive. great people the done driving Subscribe

of So sales. of roughly go now, XX% That & into Thrive out to, about nets right kind the people right join of that a XX% us Subscribe autoship.

a got driving of think great So engine customer growth. I we've

will just It The new double system. to train of train their the allow to people kind staff, new more us It's going facility that's of people. through put just training center, kind to capacity. to a

think Korean it, Korea upfront, field to that track. somewhat I our I itself. of activation doing kind on building speaks We're and be more, get its on in So back for business feet continues will powerhouse. to a team the call back Taiwan

continued in So we expect to Taiwan. see strength

And said, on of as keeping eye China. kind we're our just China, I

a run China I XXXX. uncertainty fair think in forward. of amount great the had we There's economy a in around going

So to in that performance but business basis. you? still very lumpy ongoing I overall outlook expect think for help on good there see should some Does an maybe we China, the

Linda Bolton-Weiser

yes. Yes,

Terrence Moorehead

Good.

Linda Bolton-Weiser

wanted to And long then term. finally, was last ask thing the about the I

some EBITDA about? your of on to you Is objectives. margin numbers something talking And of kind multiyear You of sort thinking longer-term target profile? eventually type getting you that to like used are margin about have are what still

Terrence Moorehead

that? provide that Yes. some do to I changed. color has you more outlook don't around on think Shane, want our

Shane Jones

Absolutely.

As help to we've our that to several talked enhance us margins, margins. gross continue our things about, there will are

we EBITDA margins. our or sorry, -- So

we're million that more out that longer initiatives even we've lot be than able and that. the doing, our $XX As probably we there's over to more the to drive get term, or gross improved margins to a of committed

that as profitable. the more as we And perspective, have. enhance well mix mix just that from as even that as So we just channels SG&A will we a leverage X that are

things, help or time, that we us have closer digits should today at to double from to and probably All those over digits. go mid-double mid-single of least EBITDA margins the high

Terrence Moorehead

exactly. Yes,

Linda Bolton-Weiser

for it That's me. Okay.

Terrence Moorehead

Linda. Thanks, Great.

Operator

this call this time, the Moorehead closing session. At concludes Mr. would to question-and-answer for I to turn over remarks. back our like now

Terrence Moorehead

thank look And we you. call. first speaking listening to like with when you forward of we'd XXXX. report May our today's to to results Thank We XXXX in quarter Okay. for everybody

us, joining great So and thanks Have a take care. for again evening.

Operator

Ladies and gentlemen, concludes today's this conference.

now for you may disconnect. your You participation. Thank

Nature's Sunshine Products (NATR) 12 Mar 242023 Q4 Earnings call transcript