Nature's Sunshine Products, Inc. (NASDAQ:NATR) Q4 2022 Earnings Conference Call March 15, 2023 5:00 PM ET Company Participants Nate Brower - General Counsel Terrence Moorehead - Chief Executive Officer Shane Jones - CFO Martin Gonzalez - Executive Vice President, Global Supply Chain Conference Call Participants Linda Bolton Weiser - D.A. Davidson Operator Good afternoon, everyone and thank you for participating in today???s Conference Call to discuss Nature???s Sunshine???s Financial Results for the Fourth ...

| --- | --- | --- | --- | |------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | CONNECT WITH | | | | | | | | | | NATURE Investor Presentation \| December | | | | | | | | | | | | | | 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 subject to the safe harbor provisions of the Private ...

| --- | --- | --- | --- | |------------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | | CONNECT WITH | | | | | | | | | | NATURE | | | | | Q3 2022 Earnings Presentation November 3, 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 subject to the safe har ...

Financial Data and Key Metrics Changes - Third quarter sales were $105 million on a reported basis or $112 million when excluding foreign exchange impact, reflecting a 2% decline year-over-year on a constant dollar basis [8][9] - Year-to-date sales increased by 3% in local currency, indicating underlying business strength despite external challenges [9] - Gross margins contracted due to inflation and foreign exchange, negatively impacting cost of goods by approximately $3 million or roughly 300 basis points compared to Q3 of the prior year [10] - Adjusted EBITDA for the third quarter was $6.8 million, down from $12.9 million in Q3 of the prior year [11][40] Business Line Data and Key Metrics Changes - Sales in North America decreased by 16% in the third quarter, primarily due to average order declines from existing customers [16] - Asia-Pacific led the company’s results with a 12% sales growth in local currency, driven by strong performance in Taiwan, Japan, and South Korea [14] - Sales in Europe were down 6% year-over-year in constant dollars, but showed a 13% sequential growth compared to the second quarter [18] - Latin America experienced a 14% decline in sales in local currency, despite attracting more new customers [19] Market Data and Key Metrics Changes - Sales in China decreased by 31% due to macroeconomic conditions and the effects of the zero COVID policy [14] - Digital sales in North America increased by 22% in the third quarter, contributing to customer growth [15] - Overall, the company expects European sales to decline approximately 15% to 25% for 2022 compared to 2021 [44] Company Strategy and Development Direction - The company is focused on optimizing gross margins and reducing SG&A expenses, with a target of delivering $10 million to $12 million in gross savings [32] - Key strategic investments include field activation, digital activation, and customer growth initiatives [13][15][17] - The company is committed to navigating market volatility and uncertainty while continuing to invest in growth strategies [31][33] Management's Comments on Operating Environment and Future Outlook - Management highlighted that inflation, foreign exchange, and COVID-related disruptions were primary factors negatively impacting performance [30] - Despite challenges, the company maintains a strong balance sheet and believes in the long-term potential of its business [31][48] - The impact of cost-saving initiatives is expected to be reflected in results starting late 2023 to 2024 [46] Other Important Information - The company’s cash and cash equivalents stood at $57 million with only $1.5 million of debt [41] - Share repurchase program remains active, with $24.6 million remaining of the $30 million authorization [42] Q&A Session Summary Question: Why is the company not looking to save costs and reduce expenses until the end of 2023? - Management explained that the comprehensive plan involves complexities that require time to implement, but some savings will begin to materialize before the end of 2023 [55][56] Question: Why is there so much inventory on hand despite declining sales? - Management acknowledged the high inventory levels due to previous growth expectations and is actively working to reduce inventory through targeted buys and cancellations [59] Question: Why was only a small number of shares bought back given the stock price? - Management indicated volume constraints and prioritized investments necessary for driving down costs from gross margins [61][62]

Sales Performance - Consolidated net sales for the three months ended September 30, 2022, were $104.5 million, a decrease of 8.9% compared to $114.7 million for the same period in 2021[111]. - For the nine months ended September 30, 2022, consolidated net sales were $319.2 million, down 2.1% from $326.1 million in the same period in 2021[111]. - Net sales in Asia for the three months ended September 30, 2022, were $47.9 million, a decrease of 1.1%, while for the nine months, sales increased by 10.7% to $141.4 million[112]. - In Europe, net sales for the three months ended September 30, 2022, were $19.3 million, down 11.4%, and for the nine months, sales were $58.2 million, a decrease of 11.1%[118]. - North America reported net sales of $31.5 million for the three months ended September 30, 2022, a decrease of 16.5%, and $101.6 million for the nine months, down 10.0%[119]. - Latin America and Other markets saw net sales of $5.8 million for the three months ended September 30, 2022, a decrease of 14.5%, and $18.0 million for the nine months, down 10.3%[121]. - In the South Korea market, net sales decreased by $1.0 million (6.4%) for the three months ended September 30, 2022, while in Taiwan, net sales increased by $6.1 million (82.9%) for the same period[113][114]. - The company expects continued fluctuations in net sales due to foreign currency exchange rates impacting international operations[109]. Cost and Expenses - Cost of sales as a percentage of net sales increased to 28.4% for the three months ended September 30, 2022, compared to 25.6% for the same period in 2021[123]. - Volume incentives expense as a percent of net sales was 31.6% for the three months ended September 30, 2022, compared to 31.2% for the same period in 2021[124]. - Selling, general and administrative expenses decreased by $2.7 million to $36.8 million for the three months ended September 30, 2022, representing 35.2% of net sales[126]. - Other loss, net, for the three months ended September 30, 2022, was $2.3 million, compared to $0.9 million for the same period in 2021, primarily due to foreign exchange losses[127]. - The provision for income taxes as a percentage of income before income taxes was 92.7% for the three months ended September 30, 2022, compared to 40.2% for the same period in 2021[128]. Cash Flow and Working Capital - Working capital as of September 30, 2022, was $78.9 million, down from $88.0 million as of December 31, 2021[139]. - Operating activities used cash of $2.9 million for the nine months ended September 30, 2022, compared to providing cash of $20.3 million in the same period in 2021[141]. - Investing activities used $4.7 million for the nine months ended September 30, 2022, compared to $4.6 million for the same period in 2021[142]. - Financing activities used $15.3 million for the nine months ended September 30, 2022, compared to $29.5 million in the same period in 2021[143]. Share Repurchase - The company repurchased 834,000 shares of common stock for $12.9 million during the nine months ended September 30, 2022[143]. - As of September 30, 2022, the remaining balance available for share repurchases under the program was $24.6 million[143]. Inventory Valuation - The company incurred incremental valuation charges of $5.0 million related to inventory for the nine months ended September 30, 2022, with $1.7 million attributed to the conflict between Russia and Ukraine[123].

Nature's Sunshine Products, Inc. (NASDAQ:NATR) Q2 2022 Results Conference Call August 9, 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 Results for the Sec ...

[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]