Nature's Sunshine Products Reports First Quarter 2016 Financial Results

• Seventh consecutive quarter of net sales growth for NSP United States and NSP Canada
• Net sales revenue of $82.4 million was down 1.8% year-over-year; up 1.3% year-over-year on a local currency basis
• Earnings from continuing operations of $0.11 per diluted common share
• Board of Directors approved a $0.10 per share quarterly cash dividend

LEHI, Utah, May 10, 2016 (GLOBE NEWSWIRE) -- Nature’s Sunshine Products, Inc. (NASDAQ:NATR), a leading natural health and wellness company engaged in the manufacture and direct selling of nutritional and personal care products, today reported its financial results for the first quarter ended March 31, 2016.

First Quarter 2016 Financial Highlights

• Net sales revenue of $82.4 million decreased 1.8% compared to $83.9 million in the first quarter of 2015. On a local currency basis, net sales revenue increased 1.3% compared to the first quarter of 2015. Net sales revenue was negatively impacted by $2.5 million of unfavorable foreign currency exchange rate fluctuations as well as a $1.1 million decline in net sales in the NSP Russia, Central and Eastern Europe segment.
   
• Net income from continuing operations was $1.8 million, or $0.11 per diluted common share, compared to $4.2 million, or $0.23 per diluted common share, in the first quarter of 2015. Earnings per diluted common share for the first quarter of 2016 were impacted by several factors including: the Company’s investment in China of approximately $0.07 per share and unfavorable changes in the effective tax rate of $0.02 per share.
   
• Adjusted EBITDA was $4.2 million compared to $7.7 million in the first quarter of 2015. Adjusted EBITDA, which is a non-GAAP financial measure, is defined here as net income from continuing operations before taxes, depreciation, amortization and other income adjusted to exclude share-based compensation expense.

Management Commentary

“While the overall results for the quarter were depressed by continuing currency headwinds and challenges in Russia, Central and Eastern Europe, I am pleased with our first quarter results, which reflect the progress we have made toward returning Nature’s Sunshine to sustainable, long-term growth,” commented Gregory L. Probert, Chairman and Chief Executive Officer. “We were particularly pleased by the ongoing strong execution in NSP United States and NSP Canada, which both posted their seventh consecutive quarters of year-over-year local currency sales growth. In addition, Synergy WorldWide reported its best first quarter ever, which was driven by a successful business model and process improvements taking hold in Korea, Japan, Indonesia and Thailand. We also continue to make good progress in China and remain on-track to obtain our direct selling license in the third quarter of 2016.”

Mr. Probert continued, “The vast majority of the strength demonstrated in NSP United States and NSP Canada during the quarter was led by our patent-pending IN.FORM program. The new and improved IN.FORM program was clinically studied in the Hughes Center for Research and Innovation and formulated to improve gut health and support healthy metabolic function. IN.FORM has been integral to attracting new Distributors, and increasing engagement among existing Distributors in the United States and Canada. We believe IN.FORM will also be key to igniting growth in our Latin American markets. Furthermore, we made significant progress in streamlining our focus for Synergy WorldWide to a more unified sales and product strategy, the Elite Health System. This system has proven successful in Asia and we intend to expand it into other markets, such as other parts of Asia and Europe, later this year.” 

First Quarter 2016 Regional Sales by Operating Segment

Active Distributors and Customers by Segment ⁽¹⁾

(1)   Active Distributors and customers include Nature’s Sunshine Products’ independent Distributors and customers who have purchased products directly from the Company for resale and/or personal consumption during the previous three months ended as of the date indicated.  Total Manager, Distributors and Customers, which includes those who have made a purchase in the last twelve months, was 573,200 as of March 31, 2016.

Cash Flow and Balance Sheet Highlights

• Net cash provided by operating activities was $2.9 million compared to $0.9 million of cash used in operating activities for the three months ended March 31, 2015.
   
• Cash and cash equivalents at March 31, 2016 were $46.4 million, compared to $41.4 million at December 31, 2015.
   
• The Company’s Board of Directors approved a quarterly cash dividend of $0.10 per share, payable on June 6, 2016, to shareholders of record as of the close of business on May 25, 2016. Dividend payments were $1.9 million during the first quarter of 2016. 

Conference Call

Nature’s Sunshine Products will host a conference call to discuss its first quarter 2016 results on May 10, 2016 at 4:30 PM Eastern Time.  The toll-free dial-in number for callers in the U.S. and Canada is 1-877-407-0789, conference ID: 13634141.  International callers can dial 1-201-689-8562, conference ID: 13634141.  A replay will be available from May 10, 2016 at 7:30 PM Eastern Time through May 24, 2016 at 11:59 PM Eastern Time by dialing 1-877-870-5176 (U.S. and Canada) or 1-858-384-5517 (International), replay PIN: 13634141.  The call will also be webcast live and will be available on the Investors section of Nature’s Sunshine Products’ website at www.naturessunshine.com for 90 days.

About Nature’s Sunshine Products

Nature’s Sunshine Products (NASDAQ:NATR), a leading natural health and wellness company, markets and distributes nutritional and personal care products through a global direct sales force of over 573,000 independent Managers, Distributors and customers in more than 40 countries.  Nature’s Sunshine manufactures most of its products through its own state-of-the-art facilities to ensure its products continue to set the standard for the highest quality, safety and efficacy on the market today. The Company has four reportable business segments that are divided based on the characteristics of their Distributor base, similarities in compensation plans, as well as the internal organization of NSP’s officers and their responsibilities (NSP Americas; NSP Russia, Central and Eastern Europe; Synergy WorldWide; and China and New Markets). The Company also supports health and wellness for children around the world through its partnership with the Sunshine Heroes Foundation.  Additional information about the Company can be obtained at its website, www.naturessunshine.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding the Company’s future business expectations, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to the Company’s objectives, plans and strategies. All statements (other than statements of historical fact) that address activities, events or developments that the Company intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are often characterized by terminology such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions, and are based on assumptions and assessments made by management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, including the following.

• any negative consequences resulting from the economy, including the availability of liquidity to the Company, its independent distributors and its suppliers or the willingness of its customers to purchase products;
• its relationship with, and its inability to influence the actions of, its independent distributors, and other third parties with whom it does business;
• improper activity by its employees or independent distributors;
• negative publicity related to its products, ingredients, or direct selling organization and the nutritional supplement industry;
• changing consumer preferences and demands;
• its reliance upon, or the loss or departure of any member of, its senior management team, which could negatively impact its distributor relations and operating results;
• increased state and federal regulatory scrutiny of the nutritional supplement industry, including, but not limited to targeting of ingredients, testing methodology and product claims;
• the competitive nature of its business and the nutritional supplement industry;
• regulatory matters governing its products, ingredients, the nutritional supplement industry, its direct selling program, or the direct selling market in which it operates;
• legal challenges to its direct selling program or to the classification of its independent distributors;
• risks associated with operating internationally and the effect of economic factors, including foreign exchange, inflation, disruptions or conflicts with the its third party importers, governmental sanctions, ongoing Ukraine and Russia political conflict, pricing and currency devaluation risks, especially in countries such as Ukraine, Russia and Belarus;
• uncertainties relating to the application of transfer pricing, duties, value-added taxes, and other tax regulations, and changes thereto;
• its dependence on increased penetration of existing markets;
• cyber security threats and exposure to data loss;
• its reliance on its information technology infrastructure;
• the sufficiency of trademarks and other intellectual property rights;
• changes in tax laws, treaties or regulations, or their interpretation;
• taxation relating to its independent distributors;
• product liability claims;
• the full implementation of its joint venture for operations in China with Fosun Industrial Co., Ltd., as well as the legal complexities, unique regulatory environment and challenges of doing business in China generally;
• its inability to register products for sale in Mainland China and difficulty or increased cost of importing products into Mainland China;
• managing rapid growth in China; and
• the slowing of the Chinese economy and/or the devaluation of the Chinese Renminbi.

These and other risks and uncertainties that could cause actual results to differ from predicted results are more fully detailed under the caption “Risk Factors” in  our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 14, 2016.

All forward-looking statements speak only as of the date of this press release and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this press release. Except as is required by law, the Company expressly disclaims any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this press release. 

Non-GAAP Financial Measures

The Company has included information which has not been prepared in accordance with generally accepted accounting principles (GAAP), such as information concerning Adjusted EBITDA because management utilizes this information in the evaluation of its operations and believes that this measure is a useful indicator of the Company’s ability to fund its business. This non-GAAP financial measure should not be considered as an alternative to, or more meaningful than, U.S. GAAP net income as an indicator of the Company’s operating performance.  Moreover, Adjusted EBITDA, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of Nature’s Sunshine Products’ performance in relation to other companies. The Company has included a reconciliation of Adjusted EBITDA to net income, the most comparable GAAP measure, in the attached financial tables.            

* Other income (loss), net is primarily comprised of foreign exchange gains (losses), interest income, and interest expense.