Financial Performance - Consolidated net sales for the three months ended September 30, 2021, were $114.7 million, representing a 14.5% increase compared to $100.3 million for the same period in 2020[112] - For the nine months ended September 30, 2021, consolidated net sales were $326.1 million, an increase of 15.1% from $283.5 million in the same period in 2020[112] - The company experienced notable product sales growth across all operating segments for the three and nine months ended September 30, 2021[112] - The increase in net sales was primarily attributed to product promotions and an increase in demand for nutritional supplements[118] Regional Sales Performance - Net sales in Asia for the three months ended September 30, 2021, were $48.4 million, a 27.1% increase from $38.1 million in 2020[113] - In Europe, net sales for the three months ended September 30, 2021, were $21.8 million, reflecting a 21.1% increase from $18.0 million in 2020[118] - North America net sales for the three months ended September 30, 2021, were $37.7 million, a slight increase of 0.5% from $37.6 million in 2020[119] - Latin America and Other markets reported net sales of $6.8 million for the three months ended September 30, 2021, a 2.9% increase from $6.6 million in 2020[121] Cost and Expenses - Cost of sales as a percentage of net sales decreased to 25.6% for the three months ended September 30, 2021, compared to 27.1% for the same period in 2020[123] - Volume incentives as a percentage of net sales were 31.2% for the three months ended September 30, 2021, down from 34.2% in the same period in 2020[124] - Selling, general and administrative expenses increased by $6.2 million to $39.5 million for the three months ended September 30, 2021, and by $15.8 million to $108.7 million for the nine months ended September 30, 2021, compared to the same periods in 2020[126] - Selling, general and administrative expenses represented 34.4% and 33.3% of net sales for the three and nine months ended September 30, 2021, compared to 33.2% and 32.8% for the same periods in 2020[126] Other Income and Taxes - Other income (loss), net, for the three and nine months ended September 30, 2021, were losses of $0.9 million and $2.3 million, respectively, compared to gains of $0.7 million and losses of $0.2 million during the same periods in 2020[127] - The provision for income taxes as a percentage of income before income taxes was 40.2% for the three months ended September 30, 2021, compared to (16.7)% for the same period in 2020[128] - The effective tax rate difference for the three months ended September 30, 2021, was primarily due to an increase in tax liability associated with transfer pricing adjustments and non-deductible executive compensation[129] Cash Flow and Financing - Operating activities provided cash of $20.3 million for the nine months ended September 30, 2021, compared to $26.8 million in the same period in 2020[141] - Investing activities used $4.6 million for the nine months ended September 30, 2021, compared to $3.5 million for the same period in 2020[142] - Financing activities used $29.5 million for the nine months ended September 30, 2021, compared to providing $5.0 million in cash for the same period in 2020[143] - Cash held as of September 30, 2021, was $75.5 million, with $13.7 million in the U.S. and $61.8 million in foreign markets[139] - The company repurchased 350,000 shares of common stock for $6.0 million during the nine months ended September 30, 2021[144]

Nature's Sunshine Products, Inc. (NASDAQ:NATR) Q2 2021 Earnings Conference Call August 5, 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 Matt Dame ??? Titan Capital Management Steven Martin ??? Slater Operator Good afternoon, everyone, and thank you for part ...

```markdown [General Information](index=1&type=section&id=General%20Information) [Filing Information](index=1&type=section&id=Filing%20Information) This section provides the basic filing details for Nature's Sunshine Products, Inc.'s Form 10-Q for the quarterly period ended June 30, 2021, including company identification, stock information, and compliance with SEC filing requirements. - The registrant is NATURE'S SUNSHINE PRODUCTS, INC., a Utah corporation, filing a Quarterly Report on Form 10-Q for the period ended June 30, 2021[2](index=2&type=chunk) **Common Stock Information** | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | | :------------------ | :---------------- | :-------------------------------------- | | Common Stock, no par value | NATR | Nasdaq Capital Market | - As of July 23, 2021, the number of shares of Common Stock outstanding was **19.936 million shares**[4](index=4&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section serves as a cautionary note regarding forward-looking statements made in the report, outlining their nature, the assumptions they are based on, and the significant risks and uncertainties that could cause actual results to differ materially. - Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, including extensive government regulations, legal challenges to direct selling, product liability claims, and the impact of the ongoing coronavirus pandemic[9](index=9&type=chunk)[10](index=10&type=chunk) - The company disclaims any obligation to publicly release revisions to forward-looking statements, except as required by law[10](index=10&type=chunk) [Part I. Financial Information](index=5&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of income, comprehensive income, changes in shareholders' equity, and cash flows, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items. [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) **Condensed Consolidated Balance Sheets (Amounts in millions)** | Assets/Liabilities/Equity | June 30, 2021 (millions) | December 31, 2020 (millions) | | :------------------------ | :----------------------- | :--------------------------- | | **Assets:** | | | | Cash and cash equivalents | $74.902 | $92.069 | | Total current assets | $143.689 | $154.065 | | Total assets | $233.190 | $249.498 | | **Liabilities:** | | | | Total current liabilities | $64.992 | $69.654 | | Total liabilities | $86.037 | $92.264 | | **Shareholders' Equity:** | | | | Total shareholders' equity | $147.153 | $157.234 | | Total liabilities and shareholders' equity | $233.190 | $249.498 | - Total assets decreased by **$16.308 million** from **$249.498 million** at December 31, 2020, to **$233.190 million** at June 30, 2021[13](index=13&type=chunk) - Cash and cash equivalents decreased by **$17.167 million** from **$92.069 million** at December 31, 2020, to **$74.902 million** at June 30, 2021[13](index=13&type=chunk) [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) **Condensed Consolidated Statements of Income (Amounts in millions, except per share information)** | Metric | Three Months Ended June 30, 2021 (millions) | Three Months Ended June 30, 2020 (millions) | Six Months Ended June 30, 2021 (millions) | Six Months Ended June 30, 2020 (millions) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net sales | $108.978 | $87.286 | $211.399 | $183.212 | | Gross profit | $80.515 | $64.269 | $155.957 | $135.514 | | Operating income | $9.486 | $6.600 | $17.121 | $13.762 | | Net income attributable to common shareholders | $6.540 | $5.754 | $10.556 | $8.716 | | Basic earnings per share | $0.33 | $0.30 | $0.53 | $0.45 | | Diluted earnings per share | $0.32 | $0.29 | $0.52 | $0.44 | | Dividends declared per common share | — | — | $1.00 | — | - Net sales increased by **24.9%** for the three months ended June 30, 2021, and by **15.4%** for the six months ended June 30, 2021, compared to the same periods in 2020[15](index=15&type=chunk)[18](index=18&type=chunk) - Operating income increased by **43.7%** for the three months and **24.4%** for the six months ended June 30, 2021, compared to the same periods in 2020[15](index=15&type=chunk)[18](index=18&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) **Condensed Consolidated Statements of Comprehensive Income (Amounts in millions)** | Metric | Three Months Ended June 30, 2021 (millions) | Three Months Ended June 30, 2020 (millions) | Six Months Ended June 30, 2021 (millions) | Six Months Ended June 30, 2020 (millions) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net income | $6.794 | $6.133 | $10.946 | $9.139 | | Foreign currency translation loss (net of tax) | $(0.045) | $(0.151) | $(0.166) | $(0.260) | | Total comprehensive income | $6.749 | $5.982 | $10.780 | $8.879 | - Total comprehensive income increased by **12.8%** for the three months and **21.4%** for the six months ended June 30, 2021, compared to the same periods in 2020[19](index=19&type=chunk) [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) **Condensed Consolidated Statements of Changes in Shareholders' Equity (Amounts in millions)** | Item | Balance at Dec 31, 2020 (millions) | Share-based comp. expense (millions) | Shares issued (net) (millions) | Cash dividends (millions) | Net income (millions) | Other comp. loss (millions) | Balance at June 30, 2021 (millions) | | :------------------------ | :------------------------- | :--------------------------- | :----------------------- | :------------------------ | :-------------------- | :---------------------- | :-------------------------- | | Common Stock (Amount) | $139.311 | $2.071 | $(1.574) | — | — | — | $138.308 | | Retained Earnings | $26.030 | — | — | $(19.858) | $10.556 | — | $16.728 | | Noncontrolling Interest | $1.848 | — | — | — | $0.390 | — | $2.238 | | Accumulated Other Comprehensive Loss | $(9.955) | — | — | — | — | $(0.166) | $(10.121) | | Total | $157.234 | $2.071 | $(1.574) | $(19.858) | $10.946 | $(0.166) | $147.153 | - Total shareholders' equity decreased from **$157.234 million** at December 31, 2020, to **$147.153 million** at June 30, 2021, primarily due to cash dividends of **$19.858 million** and common stock repurchases[22](index=22&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) **Condensed Consolidated Statements of Cash Flows (Amounts in millions)** | Activity | Six Months Ended June 30, 2021 (millions) | Six Months Ended June 30, 2020 (millions) | | :-------------------------------- | :------------------------------------------ | :------------------------------------------ | | Net cash provided by operating activities | $10.712 | $14.420 | | Net cash used in investing activities | $(2.898) | $(2.210) | | Net cash provided by (used in) financing activities | $(23.630) | $5.164 | | Net increase (decrease) in cash and cash equivalents | $(17.167) | $16.626 | | Cash and cash equivalents at end of period | $74.902 | $70.255 | - Net cash provided by operating activities decreased to **$10.712 million** in H1 2021 from **$14.420 million** in H1 2020[24](index=24&type=chunk) - Financing activities used **$23.630 million** in H1 2021, a significant change from providing **$5.164 million** in H1 2020, primarily due to cash dividends and share repurchases[24](index=24&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [(1) Basis of Presentation](index=12&type=section&id=(1)%20Basis%20of%20Presentation) - Nature's Sunshine Products, Inc. is a natural health and wellness company manufacturing and selling nutritional and personal care products through independent consultants[26](index=26&type=chunk) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP for interim financial information and include all adjustments considered necessary for fair presentation[27](index=27&type=chunk) - Significant accounting estimates include independent consultant incentives, income tax assets and liabilities, non-income tax and value-added tax contingencies, and legal contingencies, with potential material impact from COVID-19 uncertainty[29](index=29&type=chunk)[30](index=30&type=chunk) [Recent Accounting Pronouncements](index=13&type=section&id=Recent%20Accounting%20Pronouncements) - The adoption of ASU No. 2019-12 (Income Taxes) did not have a significant impact on the Consolidated Financial Statements[33](index=33&type=chunk) - The adoption of ASU No. 2020-04 (Reference Rate Reform) is not expected to have a significant impact on the Consolidated Financial Statements[34](index=34&type=chunk) [(2) Inventories](index=13&type=section&id=(2)%20Inventories) **Composition of Inventories (Amounts in millions)** | Category | June 30, 2021 (millions) | December 31, 2020 (millions) | | :--------------- | :----------------------- | :--------------------------- | | Raw materials | $16.360 | $13.956 | | Work in progress | $1.736 | $1.351 | | Finished goods | $32.861 | $32.376 | | Total inventories | $50.957 | $47.683 | - Total inventories increased by **$3.274 million** from **$47.683 million** at December 31, 2020, to **$50.957 million** at June 30, 2021[35](index=35&type=chunk) [(3) Investment Securities - Trading](index=13&type=section&id=(3)%20Investment%20Securities%20-%20Trading) - The trading securities portfolio totaled **$1.0 million** at June 30, 2021, and **$1.0 million** at December 31, 2020[36](index=36&type=chunk) **Investment Securities - Trading Gains (Amounts in millions)** | Period | 2021 (millions) | 2020 (millions) | | :----------------------- | :-------------- | :-------------- | | Three months ended June 30 | $0.050 | $0.093 | | Six months ended June 30 | $0.067 | $(0.004) | [(4) Revolving Credit Facility and Other Obligations](index=13&type=section&id=(4)%20Revolving%20Credit%20Facility%20and%20Other%20Obligations) - The company has a revolving credit agreement with Bank of America, N.A., with a borrowing limit of **$25.0 million**, maturing on July 1, 2023. As of June 30, 2021, there was no outstanding balance[37](index=37&type=chunk)[38](index=38&type=chunk) - A Capital Credit Agreement with Banc of America Leasing and Capital, LLC, has a borrowing limit of **$6.0 million**. As of June 30, 2021, **$3.0 million** was outstanding, with **$1.2 million** classified as current[39](index=39&type=chunk)[40](index=40&type=chunk) [(5) Net Income Per Share](index=14&type=section&id=(5)%20Net%20Income%20Per%20Share) **Net Income Per Common Share (Amounts in millions, except per share information)** | Metric | Three Months Ended June 30, 2021 (millions) | Three Months Ended June 30, 2020 (millions) | Six Months Ended June 30, 2021 (millions) | Six Months Ended June 30, 2020 (millions) | | :----------------------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Net income attributable to common shareholders | $6.540 | $5.754 | $10.556 | $8.716 | | Basic earnings per share | $0.33 | $0.30 | $0.53 | $0.45 | | Diluted earnings per share | $0.32 | $0.29 | $0.52 | $0.44 | | Weighted average basic common shares outstanding | 19.999 | 19.491 | 19.897 | 19.472 | | Weighted average diluted common shares outstanding | 20.503 | 19.783 | 20.340 | 19.725 | - Dilutive shares excluded from diluted EPS include **0.563 million** stock options for both three and six months ended June 30, 2021, and **0.844 million** for the same periods in 2020[42](index=42&type=chunk) [(6) Capital Transactions](index=14&type=section&id=(6)%20Capital%20Transactions) - A special non-recurring cash dividend of **$1.00** per common share, totaling **$19.9 million**, was paid on April 5, 2021[43](index=43&type=chunk) - The company announced a **$15.0 million** common share repurchase program on March 10, 2021, with **$13.5 million** remaining available at June 30, 2021[45](index=45&type=chunk) - Share-based compensation expense for RSUs was approximately **$0.6 million** for Q2 2021 (vs **$0.5 million** in Q2 2020) and **$1.0 million** for H1 2021 (vs **$0.8 million** in H1 2020)[58](index=58&type=chunk) [(7) Segment Information](index=17&type=section&id=(7)%20Segment%20Information) **Net Sales by Operating Segment (Amounts in millions)** | Segment | Three Months Ended June 30, 2021 (millions) | Three Months Ended June 30, 2020 (millions) | Six Months Ended June 30, 2021 (millions) | Six Months Ended June 30, 2020 (millions) | | :---------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Asia | $43.536 | $32.757 | $79.291 | $63.715 | | Europe | $21.455 | $15.465 | $43.655 | $36.092 | | North America | $37.372 | $34.471 | $75.134 | $73.228 | | Latin America and Other | $6.615 | $4.593 | $13.319 | $10.177 | | Total net sales | $108.978 | $87.286 | $211.399 | $183.212 | **Contribution Margin by Operating Segment (Amounts in millions)** | Segment | Three Months Ended June 30, 2021 (millions) | Three Months Ended June 30, 2020 (millions) | Six Months Ended June 30, 2021 (millions) | Six Months Ended June 30, 2020 (millions) | | :---------------------- | :------------------------------------------ | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | | Asia | $18.463 | $16.052 | $33.782 | $30.579 | | Europe | $6.588 | $5.202 | $13.384 | $12.033 | | North America | $16.259 | $11.904 | $31.699 | $26.323 | | Latin America and Other | $3.762 | $1.946 | $7.394 | $4.396 | | Total contribution margin | $45.072 | $35.104 | $86.259 | $73.331 | **Net Sales by Product Line (Amounts in millions) - Six Months Ended June 30, 2021** | Product Line | Asia (millions) | Europe (millions) | North America (millions) | Latin America and Other (millions) | Total (millions) | | :--------------- | :-------------- | :-------------- | :----------------------- | :--------------------------------- | :--------------- | | General health | $23.990 | $19.139 | $32.619 | $3.848 | $79.596 | | Immune | $0.585 | $3.834 | $8.975 | $1.508 | $14.902 | | Cardiovascular | $22.163 | $5.828 | $8.235 | $0.903 | $37.129 | | Digestive | $14.618 | $11.107 | $19.479 | $5.872 | $51.076 | | Personal care | $7.814 | $2.425 | $3.653 | $0.743 | $14.635 | | Weight management | $10.121 | $1.322 | $2.173 | $0.445 | $14.061 | | Total | $79.291 | $43.655 | $75.134 | $13.319 | $211.399 | [(8) Income Taxes](index=20&type=section&id=(8)%20Income%20Taxes) **Provision for Income Taxes as % of Income Before Income Taxes** | Period | 2021 | 2020 | U.S. Federal Statutory Rate | | :----------------------- | :--- | :--- | :------------------------ | | Three months ended June 30 | 32.2% | 24.4% | 21.0% | | Six months ended June 30 | 30.4% | 28.9% | 21.0% | - The higher effective tax rate in 2021 was primarily due to increased tax liability from transfer pricing adjustments, non-deductible executive compensation, and net unfavorable foreign tax items, partially offset by stock compensation deductions[72](index=72&type=chunk)[74](index=74&type=chunk) [(9) Commitments and Contingencies](index=20&type=section&id=(9)%20Commitments%20and%20Contingencies) - Accrued liabilities for non-income tax contingencies were **$0.2 million** at both June 30, 2021, and December 31, 2020, with potential future payments ranging from **$0** to **$2.8 million**[80](index=80&type=chunk) - Accrued liabilities for other litigation were **$0.5 million** at both June 30, 2021, and December 31, 2020, with potential future payments ranging from **$0** to **$0.3 million**[81](index=81&type=chunk) [(10) Related Party Transactions](index=21&type=section&id=(10)%20Related%20Party%20Transactions) **Outstanding Borrowings by NSP China (Amounts in millions)** | Source | June 30, 2021 (millions) | December 31, 2020 (millions) | | :-------------------- | :----------------------- | :--------------------------- | | From the Company | $3.700 | $4.800 | | From joint venture partner | $0.900 | $1.200 | - The China joint venture (**80%** owned by the company) did not borrow new amounts from the company or its partner during the three and six months ended June 30, 2021 and 2020[82](index=82&type=chunk) [(11) Fair Value Measurements](index=21&type=section&id=(11)%20Fair%20Value%20Measurements) **Assets Measured at Fair Value on a Recurring Basis (Amounts in millions)** | Asset | June 30, 2021 (Level 1) (millions) | December 31, 2020 (Level 1) (millions) | | :-------------------------- | :--------------------------------- | :------------------------------------- | | Investment securities - trading | $0.984 | $0.989 | | Total | $0.984 | $0.989 | - The company's trading portfolio consists of marketable securities valued using quoted prices in active markets (Level 1)[86](index=86&type=chunk) [(12) Revenue Recognition](index=22&type=section&id=(12)%20Revenue%20Recognition) - Revenue is recognized when promised products are transferred to the customer, typically at the shipping point[89](index=89&type=chunk) - A reserve for product returns is recorded based on historical experience, allowing independent consultants to return unused products within ninety days[90](index=90&type=chunk) - Volume incentives and other sales incentives are commission payments to independent consultants, recorded as a reduction of revenue for personal purchases and as expense for qualifying sales[92](index=92&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, discussing key performance drivers, segment performance, and critical accounting policies. It highlights the impact of COVID-19, sales growth across segments, and changes in expenses and cash flows. [Overview](index=24&type=section&id=OVERVIEW) - The company is a natural health and wellness company, manufacturing and selling nutritional and personal care products through a sales force of independent consultants[99](index=99&type=chunk) - Sales are highly dependent on the number and productivity of independent consultants, motivated by high-quality products, training, and financial incentives[100](index=100&type=chunk) - Despite COVID-19 restrictions, the company experienced increased sales in Q2 2021 due to higher demand for nutritional supplements, though the pandemic's full impact remains uncertain[101](index=101&type=chunk) [Results of Operations](index=25&type=section&id=RESULTS%20OF%20OPERATIONS) [Consolidated Operating Results](index=25&type=section&id=Consolidated%20Operating%20Results) **Consolidated Operating Results (Amounts in millions, as a percentage of net sales)** | Metric | Q2 2021 Total (millions) | Q2 2021 % of Sales | Q2 2020 Total (millions) | Q2 2020 % of Sales | Change Total (millions) | Change % | | :------------------------ | :----------------------- | :----------------- | :----------------------- | :----------------- | :---------------------- | :------- | | Net sales | $108.978 | **100.0%** | $87.286 | **100.0%** | $21.692 | **24.9%** | | Gross profit | $80.515 | **73.9%** | $64.269 | **73.6%** | $16.246 | **25.3%** | | Operating income | $9.486 | **8.7%** | $6.600 | **7.6%** | $2.886 | **43.7%** | | Net income | $6.794 | **6.2%** | $6.133 | **7.0%** | $0.661 | **10.8%** | | Metric | H1 2021 Total (millions) | H1 2021 % of Sales | H1 2020 Total (millions) | H1 2020 % of Sales | Change Total (millions) | Change % | | :------------------------ | :----------------------- | :----------------- | :----------------------- | :----------------- | :---------------------- | :------- | | Net sales | $211.399 | **100.0%** | $183.212 | **100.0%** | $28.187 | **15.4%** | | Gross profit | $155.957 | **73.8%** | $135.514 | **74.0%** | $20.443 | **15.1%** | | Operating income | $17.121 | **8.1%** | $13.762 | **7.5%** | $3.359 | **24.4%** | | Net income | $10.946 | **5.2%** | $9.139 | **5.0%** | $1.807 | **19.8%** | - Consolidated net sales increased by **24.9%** (**20.7%** in local currencies) for Q2 2021 and **15.4%** (**12.0%** in local currencies) for H1 2021, driven by product sales growth across all operating segments[102](index=102&type=chunk)[107](index=107&type=chunk) [Net Sales by Operating Segment](index=25&type=section&id=Net%20Sales%20by%20Operating%20Segment) **Net Sales by Operating Segment (Amounts in millions, % Change)** | Segment | Q2 2021 Net Sales (millions) | Q2 2020 Net Sales (millions) | Q2 % Change | Q2 % Change (Excl. Currency) | | :---------------------- | :--------------------------- | :--------------------------- | :---------- | :--------------------------- | | Asia | $43.536 | $32.757 | **32.9%** | **26.0%** | | Europe | $21.455 | $15.465 | **38.7%** | **33.9%** | | North America | $37.372 | $34.471 | **8.4%** | **7.4%** | | Latin America and Other | $6.615 | $4.593 | **44.0%** | **39.1%** | | Total | $108.978 | $87.286 | **24.9%** | **20.7%** | | Segment | H1 2021 Net Sales (millions) | H1 2020 Net Sales (millions) | H1 % Change | H1 % Change (Excl. Currency) | | :---------------------- | :--------------------------- | :--------------------------- | :---------- | :--------------------------- | | Asia | $79.291 | $63.715 | **24.4%** | **17.8%** | | Europe | $43.655 | $36.092 | **21.0%** | **17.1%** | | North America | $75.134 | $73.228 | **2.6%** | **1.9%** | | Latin America and Other | $13.319 | $10.177 | **30.9%** | **29.2%** | | Total | $211.399 | $183.212 | **15.4%** | **12.0%** | - Asia's net sales increased by **32.9%** (**26.0%** in local currency) in Q2 2021, driven by strong growth in Japan (**37.5%** in local currency) due to product promotions and increased demand for nutritional supplements[108](index=108&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) - Europe's net sales increased by **38.7%** (**33.9%** in local currency) in Q2 2021, attributed to the stabilization of the Russian ruble, product promotions, and increased demand for nutritional supplements[113](index=113&type=chunk) [Cost of Sales](index=27&type=section&id=Cost%20of%20Sales) - Cost of sales as a percentage of net sales was **26.1%** for Q2 2021 (down from **26.4%** in Q2 2020) and **26.2%** for H1 2021 (up from **26.0%** in H1 2020)[118](index=118&type=chunk) - The decrease in Q2 percentage was due to market mix changes and prior year reserves, while the increase in H1 percentage was primarily due to increased transportation costs and market mix changes[118](index=118&type=chunk) [Volume Incentives](index=28&type=section&id=Volume%20Incentives) - Volume incentives expense as a percentage of net sales decreased to **32.5%** for Q2 2021 (from **33.4%** in Q2 2020) and **33.0%** for H1 2021 (from **33.9%** in H1 2020)[119](index=119&type=chunk) - The decrease is primarily due to changes in market mix, reflecting growth in markets with lower volume incentives as a percentage of net sales, and growth in NSP China where service fees are paid instead[119](index=119&type=chunk) [Selling, General and Administrative](index=28&type=section&id=Selling,%20General%20and%20Administrative) - SG&A expenses increased by **$7.1 million** to **$35.6 million** in Q2 2021 and by **$9.6 million** to **$69.1 million** in H1 2021 compared to the same periods in 2020[121](index=121&type=chunk) - As a percentage of net sales, SG&A remained consistent at **32.7%** for Q2 2021 and increased slightly to **32.7%** for H1 2021 (from **32.5%** in H1 2020)[121](index=121&type=chunk) - The dollar increase was primarily due to increased selling costs aimed at driving growth, including a new compensation plan, virtual events, and growth in markets with higher variable costs[103](index=103&type=chunk)[121](index=121&type=chunk) [Other Income (Loss), Net](index=28&type=section&id=Other%20Income%20(Loss),%20Net) - Other income (loss), net, was a gain of **$0.5 million** in Q2 2021 (vs **$1.5 million** gain in Q2 2020) and a loss of **$1.4 million** in H1 2021 (vs **$0.9 million** loss in H1 2020)[122](index=122&type=chunk) - These fluctuations primarily resulted from foreign exchange gains and losses in Asia, Europe, and Latin America[122](index=122&type=chunk) [Income Taxes](index=28&type=section&id=Income%20Taxes) - The provision for income taxes as a percentage of income before income taxes was **32.2%** for Q2 2021 (vs **24.4%** in Q2 2020) and **30.4%** for H1 2021 (vs **28.9%** in H1 2020)[123](index=123&type=chunk) - The increase in the effective tax rate for 2021 was mainly due to higher tax liability from transfer pricing adjustments and non-deductible executive compensation, partially offset by stock compensation deductions[124](index=124&type=chunk)[126](index=126&type=chunk) [Product Categories](index=29&type=section&id=Product%20Categories) - The company offers over **700** products across categories including general health, immune, cardiovascular, digestive, personal care, and weight management[128](index=128&type=chunk) - Most products are manufactured at the Spanish Fork, Utah facility, with some produced by contract manufacturers under strict quality control[128](index=128&type=chunk) [Distribution and Marketing](index=29&type=section&id=Distribution%20and%20Marketing) - Products are marketed primarily through a network of independent consultants using direct selling techniques[130](index=130&type=chunk) - Independent consultants are incentivized through high-quality products, training, sales conventions, travel programs, and financial incentives (volume incentives)[130](index=130&type=chunk)[133](index=133&type=chunk) - In NSP China, independent service fees are paid instead of volume incentives, and these are included in selling, general and administrative expenses[133](index=133&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) - Working capital was **$78.7 million** at June 30, 2021, down from **$84.4 million** at December 31, 2020[134](index=134&type=chunk) - Cash and cash equivalents totaled **$74.9 million** at June 30, 2021, with **$15.3 million** in the U.S. and **$59.6 million** in foreign markets[134](index=134&type=chunk) **Net Consolidated Cash Inflows (Outflows) (Amounts in millions)** | Activity | Six Months Ended June 30, 2021 (millions) | Six Months Ended June 30, 2020 (millions) | | :----------------------- | :------------------------------------------ | :------------------------------------------ | | Operating activities | $10.712 | $14.420 | | Investing activities | $(2.898) | $(2.210) | | Financing activities | $(23.630) | $5.164 | [Off-Balance Sheet Arrangements](index=30&type=section&id=OFF-BALANCE%20SHEET%20ARRANGEMENTS) - The company has no off-balance sheet arrangements[142](index=142&type=chunk) [Critical Accounting Policies and Estimates](index=30&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES%20AND%20ESTIMATES) - The preparation of financial statements requires significant estimates and assumptions, including those for revenue recognition, inventory valuation, incentive trip accruals, contingencies, and income taxes[143](index=143&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk) - Actual results could differ materially from these estimates, potentially affecting financial position and results of operations[143](index=143&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=32&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section addresses the company's exposure to market risks, primarily focusing on fluctuations in currency exchange rates, interest rates, and other uncertainties inherent in international business operations. - The company's net sales, operating income, and net income are affected by fluctuations in currency exchange rates and interest rates due to international operations[154](index=154&type=chunk) - Operations are also exposed to risks from changes in social, political, and economic conditions in international markets, including laws and policies governing international investment[154](index=154&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the effectiveness of the company's disclosure controls and procedures and confirms no material changes to internal control over financial reporting during the quarter. - Management, under the supervision of the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2021, at a reasonable assurance level[155](index=155&type=chunk) - There were no material changes in internal controls over financial reporting during the quarter ended June 30, 2021[156](index=156&type=chunk) [Part II. Other Information](index=33&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=33&type=section&id=Item%201.%20Legal%20Proceedings) This section states that there are no legal proceedings to report for the period. - No legal proceedings are reported for the period[159](index=159&type=chunk) [Item 1A. Risk Factors](index=33&type=section&id=Item%201A.%20Risk%20Factors) This section refers readers to the risk factors discussed in the company's Annual Report on Form 10-K and confirms no material changes since that filing. - No material changes to the company's risk factors have occurred since the filing of the Annual Report on Form 10-K for the year ended December 31, 2020[160](index=160&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's common stock repurchase activities during the fiscal quarter ended June 30, 2021, under its board-approved program. **Common Stock Repurchases (Amounts in millions)** | Period | Total Number of Shares Purchased (millions) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (millions) | Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (millions) | | :-------------------------- | :------------------------------------------ | :--------------------------- | :---------------------------------------------------------------------------------------- | :---------------------------------------------------------------------------------------------- | | April 1, 2021 to April 30, 2021 | — | $— | — | | | May 1, 2021 to May 31, 2021 | — | — | — | | | June 1, 2021 to June 30, 2021 | 0.077 | $19.43 | 0.077 | | | Total | 0.077 | | 0.077 | $13.500 | - The company repurchased **0.077 million** shares of common stock for **$1.5 million** during the quarter ended June 30, 2021, under a **$15.0 million** share repurchase program announced on March 10, 2021[139](index=139&type=chunk)[161](index=161&type=chunk) [Item 3. Defaults Upon Senior Securities](index=33&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities during the reporting period. - No defaults upon senior securities are reported[163](index=163&type=chunk) [Item 4. Mine Safety Disclosures](index=33&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the company. - Mine safety disclosures are not applicable to the company[164](index=164&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) This section indicates that there is no other information to report. - No other information is reported[165](index=165&type=chunk) [Item 6. Exhibits](index=34&type=section&id=Item%206.%20Exhibits) This section provides an index to the exhibits filed as part of the Form 10-Q, including various certifications and XBRL documents. - Exhibits include certifications from the CEO and CFO (31.1, 31.2, 32.1, 32.2) and Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.LAB, 101.PRE, 101.DEF, 104)[167](index=167&type=chunk) [Signatures](index=35&type=section&id=SIGNATURES) This section contains the official signatures of the company's President and Chief Executive Officer, and Executive Vice President, Chief Financial Officer and Treasurer, certifying the report. - The report is signed by Terrence O. Moorehead, President and Chief Executive Officer, and Joseph W. Baty, Executive Vice President, Chief Financial Officer and Treasurer, on August 5, 2021[172](index=172&type=chunk) ```

Financial Data and Key Metrics Changes - Consolidated first quarter net sales reached $102.4 million, a 7% increase compared to $95.9 million in Q1 2020, marking the third consecutive quarter of net sales over $100 million [52][60] - Adjusted net income attributable to common shareholders increased 68% to $4.1 million, while adjusted EBITDA rose 20% to $11.6 million, the highest first quarter EBITDA in the company's history [12][48][60] - Gross margin decreased to 73.7% from 74.3% in the prior year, attributed to inventory reserves and supply chain challenges [57][60] Business Line Data and Key Metrics Changes - North America reported a 3% decrease in sales, with NSP US sales down 1%, following strong growth in previous quarters [13][55] - Asia saw a 16% increase in net sales to $35.8 million, with China and Japan growing 38% and 44% respectively [53][54] - Europe experienced an 8% increase in net sales to $22.2 million, with Poland showing a remarkable 40% growth in local currency [54][23] - Latin America reported a 21% increase in local currency sales to $6.7 million, driven by successful transformation initiatives [56][26] Market Data and Key Metrics Changes - North America sales were impacted by tough comparisons from Q1 2020 due to stockpiling during the pandemic [55] - In Asia, Taiwan's sales surged 285% in local currency, while Korea faced a 16% decline due to ongoing pandemic restrictions [18][19] - Europe saw a modest 2% sales decrease in Western Europe due to COVID restrictions, but Poland's strong performance offset some of these challenges [23][54] Company Strategy and Development Direction - The company is focused on five global growth strategies: brand power, field energy, digital-first, Manufacturing, Inc., and the right stuff, which are driving record-breaking performance [11][31] - A relaunch in Western Europe is planned for the second half of 2021, including new branding and enhanced field support [25] - The introduction of a personalization program aims to improve customer compliance and increase sales through tailored health packs [42][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's operational and financial foundation despite supply chain pressures and ongoing pandemic challenges [30][28] - The company anticipates continued growth and strong results, with a focus on strategic investments to support customer acquisition and activation [49][62] - Management is cautious about providing full guidance due to ongoing transformation and COVID-related uncertainties, but remains optimistic about momentum [88] Other Important Information - The company received six Stevie awards from the American Business Awards, recognizing achievements in various categories [6] - The company has a cash reserve of $91.3 million and plans to allocate funds for strategic investments and shareholder returns [61][50] Q&A Session Summary Question: Update on CapEx guidance - The company expects CapEx to be around 2 times the spending of 2020, with an increase anticipated in subsequent quarters [67][68] Question: Metrics for Subscribe and Thrive and affiliate program - Management confirmed that they are tracking metrics for both programs and expect to see significant movement in the future [69][70][74] Question: Impact of gross margin changes - The gross margin decline was approximately 60 basis points, with some impact attributed to pandemic-related costs [75] Question: Timing for Korea market recovery - Management expects some relief in the Korean market soon, but full potential will not be realized until restrictions ease [85][86] Question: Guidance on future performance - Management is not ready to provide solid guidance yet but is confident in the business's momentum and transformation initiatives [88] Question: Share buyback targets - The company has set aside $15 million for share repurchase and intends to use it wisely, with no specific targets disclosed yet [91][93]

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, 2021 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 ...

Nature's Sunshine Products, Inc. (NASDAQ:NATR) Q4 2020 Earnings Conference Call March 10, 2021 5:00 PM ET Company Participants Nate Brower - EVP & General Counsel Terrence Moorehead - CEO Joseph Baty - CFO Conference Call Participants Steven Martin - Slater John Hollander - CAG Advisors 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, 2020. Joining us today are ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________ FORM 10-K ☒ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2020 OR ☐ Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to . NATURE'S SUNSHINE PRODUCTS, INC. (Exact name of Registrant as specified in its charter) (State or other jurisdiction of (IRS Employer ...

Nature's Sunshine Products, Inc. (NASDAQ:NATR) Q3 2020 Earnings Conference Call November 9, 2020 5:00 PM ET Company Participants Terrence Moorehead - Chief Executive Officer Joe Baty - Chief Financial Officer Nathan Brower - Executive Vice President & General Counsel Conference Call Participants Steven Martin - Slater Nick Monroe - PRSPCTV Capital Operator Good afternoon everyone and thank you for participating in today's conference call to discuss Nature's Sunshine Financial Results for the Third Quarter E ...

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 1934 For the quarterly period ended September 30, 2020 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 ...

Financial Data and Key Metrics Changes - Net sales in Q2 2020 were $87.3 million, a decrease from $90.7 million in the same quarter last year, reflecting a 2% decline on a local currency basis [41] - Adjusted EBITDA increased by 21% to $9.7 million compared to $8 million in Q2 2019, driven by cost savings from reduced travel and restructuring activities [46] - Net income attributable to common shareholders increased to $5.8 million or $0.29 per diluted share, compared to $2.7 million or $0.14 per diluted share in the prior year [46] Business Line Data and Key Metrics Changes - NSP U.S. revenues increased by 3% in local currency for the second consecutive quarter, while overall North America sales were flat at $34.5 million [10][43] - In Asia, net sales were $32.8 million, with China showing a significant increase of 39% in local currency, while South Korea saw a decline of nearly 20% [42][18] - Europe experienced a 3% increase in net sales year-over-year, driven by strong performance in Central and Eastern Europe, particularly in Russia and Poland [42][21] Market Data and Key Metrics Changes - Central Asia and Europe saw a 14% increase in local currency, while China experienced a 39% increase in local currency [10] - Latin America faced a 16% decline in revenue due to COVID-19 impacts, but future performance is expected to improve with new product development and online ordering capabilities [22][23] Company Strategy and Development Direction - The company is focusing on five strategic areas: brand power, field energy, digital first, manufacturing excellence, and organizational effectiveness [25] - A new Premium Membership program and a subscription model called "Subscribe and Thrive" are being introduced to enhance customer engagement and retention [29][30] - The company plans to launch a digital campaign to improve consumer awareness and drive activation, emphasizing its brand as an industry pioneer [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the strategies in place and the performance in key markets, despite ongoing uncertainties due to the pandemic [54] - The company is committed to maintaining liquidity and cautious cash management in light of the uncertain environment [66][68] Other Important Information - The company reported a 45% increase in operating income to $6.6 million, reflecting effective cost management and restructuring efforts [45] - Cash and cash equivalents stood at $70.3 million with $5.4 million of debt, indicating a strong liquidity position [47][48] Q&A Session Summary Question: Expectations for the back half of the year - Management is excited about the strategies in place but acknowledges ongoing uncertainty in the markets, particularly in Asia and LATAM [54][55] Question: SG&A guidance for upcoming quarters - Management does not provide specific guidance but indicates a focus on reducing SG&A as a percentage of sales [58][59] Question: Cash management and potential shareholder returns - Management is cautious about cash usage in the current environment but acknowledges ongoing discussions at the Board level regarding potential shareholder returns [66][67]