[Part I. Financial Information](index=5&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Nature's Sunshine Products reported a sharp decline in Q2 2022 net income and a H1 2022 net loss, with decreased assets and negative operating cash flow [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $233.1 million by June 30, 2022, primarily due to reduced cash, while inventories increased and shareholders' equity declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $56,344 | $86,184 | | Inventories | $70,643 | $60,852 | | Total current assets | $147,145 | $164,667 | | **Total assets** | **$233,059** | **$258,874** | | **Liabilities & Equity** | | | | Total current liabilities | $69,119 | $76,670 | | **Total liabilities** | **$88,580** | **$97,470** | | **Total shareholders' equity** | **$144,479** | **$161,404** | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2022 net sales decreased 4.4% to $104.2 million, with net income dropping to $0.5 million, and H1 2022 resulted in a $2.4 million net loss Q2 Operating Results (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | | :--- | :--- | :--- | | Net sales | $104,161 | $108,978 | | Gross profit | $74,690 | $80,515 | | Operating income | $5,755 | $9,486 | | Net income attributable to common shareholders | $516 | $6,540 | | Diluted EPS | $0.03 | $0.32 | Six-Month Operating Results (in thousands, except per share data) | Metric | H1 2022 | H1 2021 | | :--- | :--- | :--- | | Net sales | $214,655 | $211,399 | | Gross profit | $150,724 | $155,957 | | Operating income | $7,064 | $17,121 | | Net (loss) attributable to common shareholders | $(2,434) | $10,556 | | Diluted EPS | $(0.12) | $0.52 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2022 saw $9.3 million net cash used in operating activities, a reversal from prior year, primarily due to increased inventories and $14.0 million used in financing for stock repurchases Six-Month Cash Flow Summary (in thousands) | Activity | H1 2022 | H1 2021 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(9,343) | $10,712 | | Net cash used in investing activities | $(3,757) | $(2,898) | | Net cash used in financing activities | $(14,018) | $(23,630) | | **Net decrease in cash and cash equivalents** | **$(29,840)** | **$(17,167)** | - The primary uses of cash in financing activities for H1 2022 were **$12.0 million** for common stock repurchases and **$1.1 million** for tax withholding on equity awards. In contrast, H1 2021 included a **$19.9 million** cash dividend payment[24](index=24&type=chunk)[141](index=141&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes reveal increased inventories, expanded share repurchases, strong sales growth in Asia offset by declines elsewhere, and a significantly higher effective tax rate due to a valuation allowance [Note 6: Capital Transactions](index=13&type=section&id=Note%206%3A%20Capital%20Transactions) The company authorized an additional $30.0 million for share repurchases in March 2022, buying back $12.0 million in H1 2022, with $25.6 million remaining available - On March 8, 2022, the share repurchase program was amended to allow for an additional **$30.0 million** in common share repurchases[45](index=45&type=chunk) - For the six months ended June 30, 2022, the company repurchased **741,000 shares** for **$12.0 million**. The remaining authorized amount for repurchase was **$25.6 million**[45](index=45&type=chunk) [Note 7: Segment Information](index=16&type=section&id=Note%207%3A%20Segment%20Information) Asia was the sole growth segment in Q2 2022, with net sales up 8.8% to $47.4 million, offsetting declines in Europe, North America, and Latin America, while H1 Asia sales grew 17.9% Net Sales by Segment (in thousands) | Segment | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Asia | $47,382 | $43,536 | $93,492 | $79,291 | | Europe | $17,099 | $21,455 | $38,876 | $43,655 | | North America | $34,082 | $37,372 | $70,063 | $75,134 | | Latin America and Other | $5,598 | $6,615 | $12,224 | $13,319 | | **Total net sales** | **$104,161** | **$108,978** | **$214,655** | **$211,399** | Contribution Margin by Segment (in thousands) | Segment | Q2 2022 | Q2 2021 | H1 2022 | H1 2021 | | :--- | :--- | :--- | :--- | :--- | | Asia | $21,432 | $18,463 | $43,371 | $33,782 | | Europe | $6,595 | $6,588 | $10,968 | $13,384 | | North America | $12,300 | $16,259 | $25,019 | $31,699 | | Latin America and Other | $2,294 | $3,762 | $5,195 | $7,394 | | **Total contribution margin** | **$42,621** | **$45,072** | **$84,553** | **$86,259** | [Note 8: Income Taxes](index=19&type=section&id=Note%208%3A%20Income%20Taxes) The effective tax rate for H1 2022 surged to 127.5% from 30.4% in H1 2021, primarily due to a valuation allowance against deferred tax assets - The effective tax rate for H1 2022 was **127.5%** compared to **30.4%** for H1 2021. The increase was primarily attributed to a valuation allowance recorded against deferred tax assets expected to expire before utilization[68](index=68&type=chunk)[69](index=69&type=chunk)[71](index=71&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q2 2022 net sales decline to geopolitical conflict, inflation, and foreign currency impacts, leading to increased costs and negative operating cash flow, despite solid liquidity [Overview](index=23&type=section&id=MD%26A%20Overview) Q2 2022 operations were significantly impacted by a $3.1 million pretax charge from the Russia-Ukraine conflict, inflationary cost increases, and a $5.4 million negative foreign currency effect - The Russia-Ukraine conflict resulted in a pretax charge of **$3.1 million** for the six months ended June 30, 2022, primarily from inventory impairment and accruals for Russian operations[98](index=98&type=chunk) - In Q2 2022, net sales decreased **4.4%**, but increased **0.5%** in local currencies. The strengthening U.S. dollar negatively impacted net sales by approximately **$5.4 million**[102](index=102&type=chunk) - Inflation adversely impacted operations through higher costs for raw materials, labor, production, and transportation[101](index=101&type=chunk) [Results of Operations](index=25&type=section&id=MD%26A%20Results%20of%20Operations) Q2 2022 consolidated net sales decreased 4.4% to $104.2 million due to declines in Europe and North America, despite Asia's growth, leading to a 39.3% drop in operating income Net Sales Change by Segment (Q2 2022 vs Q2 2021) | Segment | % Change (USD) | % Change (Local Currency) | | :--- | :--- | :--- | | Asia | 8.8% | 18.8% | | Europe | (20.3)% | (16.2)% | | North America | (8.8)% | (8.5)% | | Latin America and Other | (15.4)% | (15.0)% | | **Total** | **(4.4)%** | **0.5%** | - Cost of sales as a percentage of net sales increased to **28.3%** in Q2 2022 from **26.1%** in Q2 2021, due to inventory valuation reserves, market mix changes, inflation, and higher material and transport costs[103](index=103&type=chunk)[121](index=121&type=chunk) - SG&A expenses increased by **$1.3 million** in Q2 2022, primarily due to higher service fees from sales growth in China, increased selling costs, and more distributor events[104](index=104&type=chunk)[124](index=124&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=MD%26A%20Liquidity%20and%20Capital%20Resources) As of June 30, 2022, the company held $56.3 million in cash and $78.0 million in working capital, despite H1 2022 operating activities using $9.3 million in cash, primarily for inventory and share repurchases Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2022 | 2021 | | :--- | :--- | :--- | | Operating activities | $(9,343) | $10,712 | | Investing activities | $(3,757) | $(2,898) | | Financing activities | $(14,018) | $(23,630) | - Working capital was **$78.0 million** at June 30, 2022, down from **$88.0 million** at December 31, 2021. Cash holdings were **$56.3 million**, with **$51.4 million** held in foreign markets[137](index=137&type=chunk) - During H1 2022, the company repurchased **741,000 shares** of common stock for **$12.0 million**. As of June 30, 2022, **$25.6 million** remained available for repurchases[141](index=141&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company's primary market risks include currency exchange rate fluctuations, interest rate changes, and geopolitical instability, impacting its international operations and financial results - The company's primary market risks stem from fluctuations in currency exchange rates and interest rates, as well as social, political, and economic conditions inherent in its international operations[155](index=155&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2022, management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[156](index=156&type=chunk) - No changes in internal controls over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[157](index=157&type=chunk) [Part II. Other Information](index=34&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no material legal proceedings during the period - None[160](index=160&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) Significant risks include geopolitical conflicts impacting the Russia market, ongoing COVID-19 disruptions, and high inflation in the U.S. and Europe increasing costs and dampening consumer spending - The Russia-Ukraine war negatively impacts operations in the region, which accounted for **13.8%** of net sales in fiscal 2021. As of June 30, 2022, assets in this market were **$5.2 million**[163](index=163&type=chunk) - The COVID-19 pandemic continues to cause disruptions, including transportation delays, production limitations, and lockdowns, such as those experienced in China during Q1 and Q2 2022[164](index=164&type=chunk)[165](index=165&type=chunk) - High inflation in the U.S. and Europe has resulted in increased input costs and is expected to continue to pressure net sales as consumers may reduce spending on nonessential items[167](index=167&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2022, the company repurchased 290,000 shares for approximately $4.0 million under a board-approved plan, with $25.6 million remaining available for future repurchases Share Repurchases for Quarter Ended June 30, 2022 | Period | Total Shares Purchased (in thousands) | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2022 | 76 | $16.86 | | May 2022 | 130 | $13.21 | | June 2022 | 84 | $11.84 | | **Total** | **290** | **N/A** | - As of the end of the quarter, the maximum dollar value of shares that may yet be purchased under the plan was **$25.6 million**[168](index=168&type=chunk) [Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO and CFO certifications and Inline XBRL documents

Nature???s Sunshine Products, Inc. (NASDAQ:NATR) Q1 2022 Earnings Conference Call May 5, 2022 5:00 PM ET Company Participants Nathan Brower ??? Executive Vice President and General Counsel Terrence Moorehead ??? Chief Executive Officer Joseph Baty ??? Chief Financial Officer Conference Call Participants Linda Bolton-Weiser ??? D.A. Davidson Steven Martin ??? Slater Operator Good afternoon, everyone, and thank you for participating in today???s conference call to discuss Nature???s Sunshine???s Financial Res ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________________________________ FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF For the quarterly period ended March 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 001-34483 NATURE'S SUNSHINE PRODUCTS, INC. (Exact ...

Company Overview - Nature's Sunshine changed the world ~50 years ago as the first company to put herbs into easy-to-take capsules[9] - The company sells 700+ products across six different categories around the world[9] - The company manufactures most of its products, ensuring optimal quality and safety[9] Market Analysis - The global supplement industry sales were $173.9 billion in 2022E[22] - North America accounts for 37% of global supplement sales in 2020[25] - U S supplement industry sales were $58.7 billion in 2021E[28] - E-commerce accounts for 15% of U S supplement sales in 2020E[31] Financial Performance - The company's FY21 Adjusted EBITDA was $49.4 million, an increase of 37% compared to $36.2 million in 2020[73] - The company's FY21 net income was up 33% to $1.42 per share[73] - The company's total revenue was $444.1 million in FY 2021[92]

Nature's Sunshine Products, Inc. (NASDAQ:NATR) Q4 2021 Earnings Conference Call March 8, 2022 5:00 PM ET Company Participants Nathan Brower - Executive Vice President, General Counsel and Secretary Terrence Moorehead - President and Chief Executive Officer Joseph Baty - Executive Vice President, Chief Financial Officer and Treasurer Conference Call Participants Linda Bolton-Weiser - D.A. Davidson & Co. Steven Martin - Slater Capital Management, LLC Operator Good afternoon, everyone, and thank you for partic ...

Part I [Business](index=5&type=section&id=Item%201.%20Business) Nature's Sunshine Products manufactures and sells nutritional and personal care products globally via direct selling - The company is a direct seller of nutritional and personal care products, operating through four main geographic segments: Asia, Europe, North America, and Latin America and Other[20](index=20&type=chunk)[21](index=21&type=chunk) - Most products are manufactured at the company's facility in Spanish Fork, Utah, with stringent quality control procedures applied to both in-house and contract manufacturing[22](index=22&type=chunk) Product Line Categories | Category | Description | | :--- | :--- | | General health | Products related to blood sugar support, bone health, cognitive function, joint health, mood, sexual health, sleep, sports and energy, and vision | | Immune | Products designed to support and strengthen the human immune system | | Cardiovascular | Products that combine ingredients to give the cardiovascular system optimum support | | Digestive | Products designed to regulate intestinal and digestive functions | | Personal care | Products for external use, including oils, lotions, shampoo, toothpaste, and skin cleansers | | Weight management | Products designed to simplify weight management, including meal replacements and items that increase caloric burn rate | - As of December 31, 2021, the company employed **850 individuals**, with the global workforce being **55.4% female** and comprising **40.2% Caucasian**, **31.4% Asian**, **25.3% Hispanic**, **1.6% Black**, and **1.5% Other**[61](index=61&type=chunk) - The company has established several sustainability goals, including achieving **100% renewable energy** at its manufacturing facility by **2023** and a **50% reduction of GHG emissions** for Scope 1 & 2 by **2025**[67](index=67&type=chunk) [Risk Factors](index=11&type=page&id=Item%201A.%20Risk%20Factors) The company faces regulatory, business, and technological risks, including compliance, consultant retention, and cybersecurity [Regulatory and Litigation Risks](index=11&type=section&id=Regulatory%20and%20Litigation%20Risks) The company faces regulatory and litigation risks from direct selling, product regulations, and anti-bribery laws - The company is subject to laws and regulations intended to prevent fraudulent or deceptive practices in direct selling, where failure to comply could result in significant penalties and business model changes[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk) - The CBD product line is subject to rapidly changing federal, state, and local laws, with the FDA currently holding that CBD is not lawful in food and dietary supplements, creating regulatory uncertainty and risk[77](index=77&type=chunk) - The company is subject to anti-bribery laws, including the FCPA, where violations could result in criminal or civil sanctions and reputational damage[80](index=80&type=chunk)[81](index=81&type=chunk) [Risks Related to Our Business](index=14&type=section&id=Risks%20Related%20to%20Our%20Business) Key business risks include consultant retention, currency fluctuations, geopolitical events, and supply chain issues - The company's revenue is highly dependent on its ability to attract and retain independent consultants, and it experiences high turnover, with a significant portion of net sales in some markets depending on a few key consultants[82](index=82&type=chunk)[84](index=84&type=chunk) - In 2021, approximately **68.9% of net sales** were recognized in markets outside the United States, exposing the company to significant foreign currency exchange rate fluctuations[86](index=86&type=chunk) - The conflict arising from the invasion of Russia into Ukraine could adversely impact the Russia, Central and Eastern Europe business segment through sanctions, currency devaluation, and business interruptions[89](index=89&type=chunk) - The company is dependent on the uninterrupted operation of its primary manufacturing facility in Spanish Fork, Utah, and is subject to risks of catastrophic loss, equipment failures, and supply chain disruptions[93](index=93&type=chunk)[96](index=96&type=chunk) [Risks Related to Our Use of Technology and Intellectual Property](index=18&type=section&id=Risks%20Related%20to%20Our%20Use%20of%20Technology%20and%20Intellectual%20Property) The company faces technology and IP risks from cybersecurity, data privacy, IT reliance, and limited patent protection - The company collects and retains large volumes of sensitive data, making it a target for cyber-attacks, where a data breach could result in significant costs, litigation, and reputational harm[106](index=106&type=chunk)[109](index=109&type=chunk) - Compliance with evolving data protection laws, such as the EU's GDPR and California's CCPA, is complex and costly, with non-compliance potentially resulting in substantial fines (up to **4% of annual revenue** under GDPR)[110](index=110&type=chunk)[111](index=111&type=chunk) - Most of the company's products are not protected by patents, making it reliant on trademarks (like Nature's Sunshine® and Synergy®) and other intellectual property, which may be insufficient to prevent competition[114](index=114&type=chunk) [Unresolved Staff Comments](index=20&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[115](index=115&type=chunk) [Properties](index=20&type=section&id=Item%202.%20Properties) The company's principal properties include a leased corporate office and an owned manufacturing facility in Utah - The company owns its principal manufacturing and warehousing facility, a **270,000 square foot** building in Spanish Fork, Utah[116](index=116&type=chunk) - Corporate offices are located in a leased **61,000 square foot** facility in Lehi, Utah, with the lease expiring in **2029**[116](index=116&type=chunk) [Legal Proceedings](index=20&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings, accruing **$0.5 million** for estimated outcomes - The company has accrued **$0.5 million** related to the estimated outcome of various legal proceedings as of December 31, 2021[337](index=337&type=chunk) - The company has reserved for certain state sales and use tax and foreign non-income tax contingencies, with accrued liabilities of **$0.2 million** for these matters at year-end 2021[336](index=336&type=chunk) [Mine Safety Disclosures](index=20&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[120](index=120&type=chunk) Part II [Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=21&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NASDAQ, returning capital in 2021 through a special dividend and share repurchases - On March 10, 2021, the company announced a special non-recurring cash dividend of **$1.00 per common share**, paid on April 5, 2021, for an aggregate amount of **$19.9 million**[125](index=125&type=chunk) 2021 Share Repurchase Activity | Metric | Value | | :--- | :--- | | Program Authorization | $15.0 million | | Shares Repurchased in 2021 | 439,000 | | Cost of Shares Repurchased | $7.4 million | | Remaining Authorization (at Dec 31, 2021) | $7.6 million | [Reserved](index=22&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2021, consolidated net sales increased **15.3%** to **$444.1 million**, with operating income reaching **$34.7 million** [Results of Operations (2021 vs. 2020)](index=26&type=section&id=Results%20of%20Operations) In 2021, net sales increased **15.3%** to **$444.1 million**, with operating income rising to **$34.7 million** due to broad-based growth Net Sales by Operating Segment (in thousands) | Segment | 2021 | 2020 | % Change | % Change (Local Currency) | | :--- | :--- | :--- | :--- | :--- | | Asia | $176,860 | $138,717 | 27.5% | 24.4% | | Europe | $91,539 | $77,688 | 17.8% | 16.2% | | North America | $149,746 | $145,481 | 2.9% | 2.4% | | Latin America and Other | $25,939 | $23,319 | 11.2% | 10.1% | | **Total** | **$444,084** | **$385,205** | **15.3%** | **13.6%** | - Growth in Asia was driven by strong performance in China (net sales **+39.3%**) and Japan (net sales **+32.8%**)[164](index=164&type=chunk)[165](index=165&type=chunk) - Volume incentives as a percentage of net sales decreased from **34.0% in 2020** to **31.5% in 2021**, primarily due to sales mix changes and cost savings from a new compensation plan[172](index=172&type=chunk) - Selling, general and administrative (SG&A) expenses increased by **$22.8 million**, primarily due to higher service fees from sales growth in China and increased selling costs for growth initiatives[174](index=174&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2021, the company maintained strong liquidity with **$86.2 million** in cash and **$34.6 million** in operating cash flow Consolidated Cash Flows (in thousands) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Operating Activities | $34,608 | $37,659 | | Investing Activities | $(6,612) | $(4,905) | | Financing Activities | $(31,721) | $3,878 | - At year-end 2021, cash and cash equivalents totaled **$86.2 million**, of which **$67.7 million** was held in foreign markets[184](index=184&type=chunk) - The company had no outstanding balance under its **$25.0 million** revolving credit agreement as of December 31, 2021[190](index=190&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is foreign currency exchange rate fluctuation, with **68.9%** of 2021 net sales from outside the U.S - Approximately **68.9% of net sales** and **60.5% of operating expenses** in 2021 were realized outside of the United States, creating significant exposure to foreign currency risk[201](index=201&type=chunk) Foreign Currency Risk Sensitivity Analysis (2021) | Strengthening of U.S. Dollar | Impact on Operating Income ($) | Impact on Operating Income (%) | | :--- | :--- | :--- | | 10% | $(3,030,000) | (8.7)% | | 15% | $(4,347,000) | (12.5)% | | 25% | $(6,665,000) | (19.2)% | - As of December 31, 2021, significant foreign cash holdings included **$19.5 million** in Chinese Yuan, **$11.3 million** in South Korean Won, and **$10.0 million** in Japanese Yen[207](index=207&type=chunk) [Financial Statements and Supplementary Data](index=37&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents audited consolidated financial statements and the auditor's unqualified opinion, detailing financial position, results, and cash flows [Report of Independent Registered Public Accounting Firm](index=38&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Deloitte & Touche LLP issued unqualified opinions on financial statements and internal controls, identifying deferred tax asset valuation as a critical audit matter - The auditor, Deloitte & Touche LLP, issued an unqualified (clean) opinion, stating the financial statements are presented fairly in all material respects[218](index=218&type=chunk) - The valuation of deferred tax assets was identified as a Critical Audit Matter, highlighting the significant auditor judgment required to evaluate management's estimates of future taxable income[222](index=222&type=chunk)[224](index=224&type=chunk) [Consolidated Financial Statements](index=40&type=section&id=Consolidated%20Financial%20Statements) The 2021 consolidated financial statements show net sales of **$444.1 million**, net income of **$28.9 million**, and operating cash flow of **$34.6 million** Key Financial Highlights (in thousands, except per share data) | Metric | 2021 | 2020 | | :--- | :--- | :--- | | **Income Statement** | | | | Net Sales | $444,084 | $385,205 | | Operating Income | $34,670 | $21,482 | | Net Income (to shareholders) | $28,853 | $21,337 | | Diluted EPS | $1.42 | $1.07 | | **Balance Sheet (Year-End)** | | | | Total Assets | $258,874 | $249,498 | | Total Liabilities | $97,470 | $92,264 | | Total Shareholders' Equity | $161,404 | $157,234 | | **Cash Flow** | | | | Net Cash from Operations | $34,608 | $37,659 | [Notes to Consolidated Financial Statements](index=46&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail revenue by segment, capital transactions, tax rate, and the Russia-Ukraine conflict's impact - Subsequent Event (Note 18): The military conflict in Ukraine, which began in February 2022, poses a significant risk to the Russia and Other market, which generated **$61.4 million in net sales** and **$5.8 million in operating income** in 2021[358](index=358&type=chunk) - Capital Transactions (Note 11): A special dividend of **$1.00 per share** (**$19.9 million total**) was paid in April 2021, and **$7.4 million** was spent repurchasing **439,000 shares** under a new program[312](index=312&type=chunk)[314](index=314&type=chunk) - Income Taxes (Note 10): The company's effective tax rate for 2021 was **5.1%**, significantly impacted by a **19.7% rate decrease** from changes in the valuation allowance, primarily from releasing the allowance on foreign tax credits[180](index=180&type=chunk)[302](index=302&type=chunk) [Controls and Procedures](index=67&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and auditors concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021 - Based on their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of December 31, 2021[364](index=364&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2021, an assessment audited and affirmed by Deloitte & Touche LLP[365](index=365&type=chunk)[367](index=367&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=69&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the definitive proxy statement - Information is incorporated by reference to the definitive proxy statement[377](index=377&type=chunk) [Executive Compensation](index=69&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the definitive proxy statement - Information is incorporated by reference to the definitive proxy statement[378](index=378&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=69&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) This section details securities authorized for issuance under equity compensation plans, with **1.0 million** outstanding and **2.4 million** available Equity Compensation Plan Information as of December 31, 2021 | Plan Category | Securities to be Issued (a) | Weighted-Average Exercise Price (b) | Securities Available for Future Issuance (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 1,003,250 | $12.13 | 2,454,218 | [Certain Relationships and Related Transactions and Director Independence](index=69&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the definitive proxy statement - Information is incorporated by reference to the definitive proxy statement[381](index=381&type=chunk) [Principal Accountant Fees and Services](index=70&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the definitive proxy statement - Information is incorporated by reference to the definitive proxy statement[382](index=382&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=71&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements, Schedule II (Valuation and Qualifying Accounts), and all exhibits filed with the annual report - Lists the financial statements, Schedule II (Valuation and Qualifying Accounts), and all exhibits filed with the 10-K[384](index=384&type=chunk)[385](index=385&type=chunk)[386](index=386&type=chunk) Schedule II - Tax Valuation Allowance (in thousands) | Year | Beginning Balance | Provisions | Ending Balance | | :--- | :--- | :--- | :--- | | 2021 | $15,262 | $(6,510) | $8,650 | | 2020 | $21,388 | $(6,120) | $15,262 | [Form 10-K Summary](index=73&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no Form 10-K summary - None[392](index=392&type=chunk)

| --- | --- | --- | --- | |---------------------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | CONNECT WITH | | | | | | | | | | NATURE | | | | | Q4 & Full Year 2021 Earnings Presentation March 8, 2022 | | | | | | | | | | | | | | S A F E H A R B O R S T A T E M E N T S Cautionary Note Regarding Forward-Looking Statements This presentation contains forward-looking statements regarding the Company's future business expectations, which are subje ...

| --- | --- | --- | --- | |-----------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CONNECT WITH | | | | | | | | | | | | | | | NATURE Investor Presentation \| December 2021 | | | | | | | | | | | | | | S A F E H A R B O R S TAT E M E N T S Cautionary Note Regarding Forward-Looking Statements This presentation contains forward-looking statements regarding the Company's future business expectations, which are subject to the safe harb ...

| --- | --- | --- | --- | |-----------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | CONNECT WITH | | | | | | | | | | | | | | | NATURE Investor Presentation \| December 2021 | | | | | | | | | | | | | | S A F E H A R B O R S TAT E M E N T S Cautionary Note Regarding Forward-Looking Statements This presentation contains forward-looking statements regarding the Company's future business expectations, which are subject to the safe harb ...

Nature's Sunshine Products, Inc. (NASDAQ:NATR) Q3 2021 Earnings Conference Call November 4, 2021 5:00 PM ET Company Participants Nathan Brower - Executive Vice President, Secretary, and General Counsel Terrence Moorehead - President, Chief Executive Officer and Director Joseph Baty - Executive Vice President, Finance, Chief Financial Officer and Treasurer Conference Call Participants Linda Bolton-Weiser - D.A. Davidson Bill Dezellem - Tieton Capital Steven Martin - Slater Operator Good everyone, afternoon, ...