Nature's Sunshine(NATR) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Financial Highlights The company achieved strong Q2 2025 results with increased net sales and adjusted EBITDA, driven by robust market performance and digital growth Management Commentary CEO Terrence Moorehead highlighted strong Q2 2025 performance, with net sales and adjusted EBITDA growth driven by key market strength and digital initiatives - CEO Terrence Moorehead noted strong Q2 2025 performance, with net sales and adjusted EBITDA growing 4% and 8% year-over-year, respectively[2] - The company saw strong performance in Japan and Central European markets, sustained growth in digital business and auto-ship programs, and strengthened fundamentals in North America[2] - Despite macroeconomic uncertainties, management is confident in the business's intrinsic health and future sustainable growth[2] Key Financial Highlights In Q2 2025, net sales grew 4% to $114.8 million, GAAP net income significantly increased to $5.3 million, and adjusted EBITDA rose 8% to $11.3 million Key Financial Data for Q2 2025 | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Y-o-Y Change | Y-o-Y Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Net Sales | 114.8 | 110.6 | 4% | 2% | | GAAP Net Income Attributable to Common Shareholders | 5.3 | 1.3 | 308% | - | | Diluted EPS | 0.28 | 0.07 | 300% | - | | Adjusted EBITDA | 11.3 | 10.4 | 8% | - | Detailed Financial Performance (Q2 2025) This section provides an in-depth analysis of the company's Q2 2025 financial results, covering net sales, profitability metrics, and key expense categories Net Sales Analysis Q2 2025 net sales increased 3.8% year-over-year to $114.75 million, growing 2.2% excluding currency impacts, with strong performance in Asia and North America, up 5.4% and 4.2% respectively Net Sales by Operating Segment for Q2 2025 | Operating Segment | Q2 2025 (Thousands USD) | Q2 2024 (Thousands USD) | Percentage Change | FX Impact | Percentage Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | :--- | | Asia | 52,664 | 49,984 | 5.4% | 1,523 | 2.3% | | Europe | 21,741 | 21,602 | 0.6% | 483 | (1.6)% | | North America | 34,977 | 33,563 | 4.2% | (25) | 4.3% | | Latin America & Other | 5,368 | 5,402 | (0.6)% | (184) | 2.8% | | Total | 114,750 | 110,551 | 3.8% | 1,797 | 2.2% | - Total net sales increased 4% to $114.8 million from $110.6 million in the prior year period, with net sales growing 2% excluding the impact of foreign currency exchange rates[3] Profitability Metrics This section details the company's Q2 2025 profitability, including gross profit, volume incentives, SG&A expenses, operating income, and other income/taxes Gross Profit and Volume Incentives Gross profit margin increased due to cost savings, while volume incentives as a percentage of net sales decreased due to promotional timing and product mix Gross Profit Margin and Volume Incentives for Q2 2025 | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Gross Profit Margin | 71.7% | 71.4% | Increase of 0.3 percentage points | | Volume Incentives as % of Net Sales | 29.9% | 31.4% | Decrease of 1.5 percentage points | - The increase in gross profit margin was primarily due to cost savings initiatives, partially offset by unfavorable foreign exchange rates and market mix[4] - Volume incentives as a percentage of net sales decreased, mainly due to the timing of promotional incentives and changes in product pricing and market mix[4] Selling, General and Administrative Expenses (SG&A) SG&A expenses increased primarily due to compensation timing, digital marketing investments, and other non-recurring costs SG&A Expenses for Q2 2025 | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | SG&A Expenses | 43.7 | 38.6 | Increase of 5.1 | | SG&A as % of Net Sales | 38.1% | 34.9% | Increase of 3.2 percentage points | - The increase in SG&A expenses was primarily related to the timing of compensation costs, incremental investments in digital marketing, and other non-recurring expenses[5] Operating Income Operating income decreased in Q2 2025, reflecting changes in sales, cost of sales, and operating expenses Operating Income for Q2 2025 | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Operating Income | 4.3 | 5.6 | Decrease of 1.3 | | Operating Income as % of Net Sales | 3.7% | 5.1% | Decrease of 1.4 percentage points | Other Income (Loss) and Income Taxes Other income (loss) was positively impacted by foreign exchange gains in Asia and Europe, while income tax provision decreased Other Income (Loss) and Income Taxes for Q2 2025 | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Other Income (Loss), Net | 3.3 | (1.2) | Increase of 4.5 | | Income Tax Provision | 2.0 | 2.9 | Decrease of 0.9 | - Other income (loss), net, primarily included foreign currency gains in Asia and Europe, partially offset by foreign currency losses in Latin America and North America[8] GAAP Net Income and EPS GAAP net income and diluted EPS significantly increased in Q2 2025, reflecting improved overall financial performance GAAP Net Income and EPS for Q2 2025 | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | GAAP Net Income Attributable to Common Shareholders | 5.3 | 1.3 | Increase of 4.0 | | Diluted EPS | 0.28 | 0.07 | Increase of 0.21 | | Net Income Attributable to NSP China | 0.9 | 0.7 | Increase of 0.2 | | Diluted EPS Attributable to NSP China | 0.05 | 0.04 | Increase of 0.01 | Adjusted EBITDA Adjusted EBITDA increased by 8% in Q2 2025, primarily driven by higher net sales and specific non-GAAP adjustments Adjusted EBITDA for Q2 2025 | Metric | Q2 2025 (Millions USD) | Q2 2024 (Millions USD) | Y-o-Y Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | 11.3 | 10.4 | Increase of 0.9 (8%) | - The increase in Adjusted EBITDA was primarily driven by higher net sales[10] - Adjusted EBITDA is a non-GAAP financial measure defined as net income from continuing operations, adjusted for income taxes, depreciation, amortization, other income (loss), share-based compensation expense, and certain other adjustments[10] Financial Position and Cash Flow This section summarizes the company's balance sheet and cash flow performance, highlighting liquidity, capital allocation, and debt position Balance Sheet and Cash Flow Summary As of June 30, 2025, the company saw a significant increase in net cash from operating activities, reduced capital expenditures, and executed substantial share repurchases, maintaining healthy cash reserves with no debt Key Cash Flow and Balance Sheet Data for H1 2025 | Metric | H1 2025 (Millions USD) | H1 2024 (Millions USD) | Change | | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 6.9 | 3.5 | Increase of 3.4 | | Capital Expenditures | 2.5 | 7.0 | Decrease of 4.5 | | Share Repurchase Cost | 12.4 | - | - | | Shares Repurchased | 1,011,000 shares | - | - | | Average Repurchase Price per Share | 12.22 USD | - | - | | Cash and Cash Equivalents as of June 30, 2025 | 81.3 | - | - | | Debt as of June 30, 2025 | 0 | - | - | Business Outlook The company provides its updated full-year 2025 financial guidance, reflecting management's expectations for future net sales and adjusted EBITDA Full Year 2025 Guidance Nature's Sunshine raised its full-year 2025 net sales and adjusted EBITDA guidance, reflecting confidence in future performance Full Year 2025 Performance Guidance | Metric | New Guidance (Millions USD) | Original Guidance (Millions USD) | | :--- | :--- | :--- | | Net Sales | 460 - 475 | 445 - 470 | | Adjusted EBITDA | 41 - 45 | 38 - 44 | Corporate Information This section provides details on the company's Q2 2025 earnings conference call and an overview of Nature's Sunshine Products Conference Call Details The company held a Q2 earnings conference call on July 31, 2025, with replay information provided - The conference call was held on July 31, 2025, at 5:00 p.m. ET, to discuss Q2 2025 results[13] - Toll-free dial-in was 1-800-717-1738 and international dial-in was 1-646-307-1865, with conference ID 14947[13] - A replay of the conference call was available after 8:00 p.m. ET on the same day until August 14, 2025, with replay ID 1114947[15] About Nature's Sunshine Products Nature's Sunshine Products is a leading natural health and wellness company that sells and distributes nutritional and personal care products in over 40 countries, utilizing its own advanced manufacturing facilities to ensure product quality - Nature's Sunshine Products (Nasdaq: NATR) is a leading natural health and wellness company[15] - The company sells and distributes nutritional and personal care products in over 40 countries worldwide[15] - The company manufactures most of its products in its own advanced facilities to ensure the highest standards of quality, safety, and efficacy[15] Disclosures and Non-GAAP Measures This section includes cautionary notes regarding forward-looking statements and explanations of non-GAAP financial measures used in the report Cautionary Note Regarding Forward-Looking Statements This section outlines forward-looking statements, subject to various risks and uncertainties, and clarifies the company's non-obligation to update them - This press release contains forward-looking statements regarding the company's future business expectations, plans, strategies, and financial results, protected by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995[16] - Forward-looking statements are not guarantees of future performance and are subject to various risks and uncertainties, including government regulations, product registration, legal challenges, currency fluctuations, supply chain disruptions, and cybersecurity threats[16][24] - The company undertakes no obligation to publicly revise any forward-looking statements to reflect events after the date of this press release, except as required by law[18] Explanation of Non-GAAP Financial Measures The company utilizes non-GAAP financial measures like adjusted EBITDA to assess operations, providing reconciliations to comparable GAAP metrics - The company uses non-GAAP measures, including non-GAAP net income, adjusted EBITDA, and net sales excluding foreign currency impacts, to evaluate operations and as useful indicators of its ability to fund the business[19][20] - These non-GAAP financial measures should not be considered substitutes for or superior to GAAP net income (loss) and may not be comparable to similarly titled measures used by other companies[20][21] - The company provides reconciliations of net income to adjusted EBITDA, and GAAP net income to non-GAAP net income and non-GAAP adjusted EPS[21] Condensed Consolidated Financial Statements This section presents the company's unaudited condensed consolidated financial statements, including statements of income, balance sheets, and cash flows Condensed Consolidated Statements of Income This section presents the unaudited condensed consolidated statements of income for Nature's Sunshine Products and its subsidiaries, covering financial performance for the three and six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Income (Unaudited, Amounts in Thousands USD, Except Per Share Data) | | Three Months Ended June 30 | | | Six Months Ended June 30 | | | :--- | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Net Sales | $ 114,750 | $ 110,551 | $ 227,998 | $ 221,544 | | Cost of Sales | 32,451 | 31,664 | 64,102 | 63,679 | | Gross Profit | 82,299 | 78,887 | 163,896 | 157,865 | | Operating Expenses: | | | | | | Volume incentives | 34,360 | 34,693 | 69,204 | 68,263 | | Selling, general and administrative | 43,665 | 38,557 | 84,246 | 79,341 | | Operating income | 4,274 | 5,637 | 10,446 | 10,261 | | Other income (loss): | | | | | | Interest and other income, net | 268 | 412 | 473 | 475 | | Interest expense | (24) | (103) | (45) | (115) | | Foreign currency gain (loss), net | 3,026 | (1,523) | 3,779 | (1,543) | | | 3,270 | (1,214) | 4,207 | (1,183) | | Income before income taxes | 7,544 | 4,423 | 14,653 | 9,078 | | Income tax provision | 2,025 | 2,935 | 4,250 | 5,100 | | Net income | 5,519 | 1,488 | 10,403 | 3,978 | | Net income attributable to noncontrolling interests | 186 | 139 | 323 | 308 | | Net income attributable to common shareholders | $ 5,333 | $ 1,349 | $ 10,080 | $ 3,670 | | Net income per share - basic and diluted: | | | | | | Basic net income per common share | $ 0.29 | $ 0.07 | $ 0.55 | $ 0.20 | | Diluted net income per common share | $ 0.28 | $ 0.07 | $ 0.54 | $ 0.19 | | Weighted-average basic common shares outstanding | 18,406 | 18,647 | 18,446 | 18,737 | | Weighted-average diluted common shares outstanding | 18,966 | 19,119 | 18,832 | 19,184 | Condensed Consolidated Balance Sheets This section presents the unaudited condensed consolidated balance sheets for Nature's Sunshine Products and its subsidiaries, detailing assets, liabilities, and stockholders' equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (Unaudited, Amounts in Thousands USD) | | As of June 30 | As of December 31 | | :--- | :--- | :--- | | | 2025 | 2024 | | Assets | | | | Current Assets: | | | | Cash and cash equivalents | $ 81,345 | $ 84,700 | | Accounts receivable, net of allowance for doubtful accounts | 13,029 | 9,477 | | Inventories | 69,320 | 59,443 | | Prepaid expenses and other | 8,144 | 6,959 | | Total current assets | 171,838 | 160,579 | | Property, plant and equipment, net | 35,930 | 39,585 | | Operating lease right-of-use assets | 14,218 | 12,799 | | Restricted investment securities - trading | 1,041 | 915 | | Deferred income tax assets | 21,410 | 17,644 | | Other assets | 10,438 | 9,333 | | Total assets | $ 254,875 | $ 240,855 | | Liabilities and Stockholders' Equity | | | | Current Liabilities: | | | | Accounts payable | $ 9,924 | $ 8,912 | | Accrued volume incentives and service fees | 22,583 | 20,563 | | Accrued liabilities | 27,456 | 25,399 | | Deferred revenue | 5,501 | 2,774 | | Income taxes payable | 5,765 | 4,117 | | Operating lease liabilities - current portion | 4,625 | 3,927 | | Total current liabilities | 75,854 | 65,692 | | Liabilities for unrecognized tax benefits | 638 | 628 | | Operating lease liabilities - long-term portion | 11,005 | 10,277 | | Deferred compensation payable | 1,041 | 915 | | Deferred income tax liabilities | 1,009 | 1,007 | | Other liabilities | 1,646 | 1,345 | | Total liabilities | 91,193 | 79,864 | | Commitments and contingencies | | | | Stockholders' Equity: | | | | Common stock, no par value, 50,000 shares authorized, 17,635 and 18,483 shares issued and outstanding | 104,662 | 114,577 | | Retained earnings | 67,487 | 57,407 | | Noncontrolling interests | 6,001 | 5,678 | | Accumulated other comprehensive loss | (14,468) | (16,671) | | Total stockholders' equity | 163,682 | 160,991 | | Total liabilities and stockholders' equity | $ 254,875 | $ 240,855 | Condensed Consolidated Statements of Cash Flows This section presents the unaudited condensed consolidated statements of cash flows for Nature's Sunshine Products and its subsidiaries, detailing cash flows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 Condensed Consolidated Statements of Cash Flows (Unaudited, Amounts in Thousands USD) | | Six Months Ended June 30 | | :--- | :--- | | | 2025 | 2024 | | Cash flows from operating activities: | | | | Net income | $ 10,403 | $ 3,978 | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | Depreciation and amortization | 6,999 | 6,659 | | Non-cash lease expense | 2,675 | 3,298 | | Share-based compensation expense | 2,938 | 2,630 | | Deferred income taxes | (3,179) | (14) | | Purchases of trading investment securities | (78) | (110) | | Proceeds from sales of trading investment securities | 11 | 40 | | Realized and unrealized gains on investments | (59) | (72) | | Foreign currency loss (gain) | (3,779) | 1,543 | | Changes in assets and liabilities: | | | | Accounts receivable | (2,963) | (2,960) | | Inventories | (7,901) | 3,112 | | Prepaid expenses and other current assets | (1,349) | (2,162) | | Other assets | (355) | (598) | | Accounts payable | 790 | 409 | | Accrued volume incentives and service fees | 1,193 | (144) | | Accrued liabilities | 325 | (7,993) | | Deferred revenue | 2,583 | 477 | | Lease liabilities | (2,684) | (3,215) | | Income taxes payable | 824 | (2,251) | | Liabilities for unrecognized tax benefits | 429 | 726 | | Deferred compensation payable | 126 | 142 | | Net cash provided by operating activities | 6,949 | 3,495 | | Cash flows from investing activities: | | | | Purchases of property, plant and equipment | (2,460) | (7,040) | | Net cash used in investing activities | (2,460) | (7,040) | | Cash flows from financing activities: | | | | Proceeds from revolving credit facility | 1,823 | 34,216 | | Principal payments on revolving credit facility | (1,823) | (34,216) | | Payment of withholding taxes on net share settlement of equity awards | (499) | (586) | | Repurchases of common stock | (12,354) | (7,725) | | Net cash used in financing activities | (12,853) | (8,311) | | Effect of exchange rate on cash and cash equivalents | 5,009 | (1,822) | | Net decrease in cash and cash equivalents | (3,355) | (13,678) | | Cash and cash equivalents at beginning of period | 84,700 | 82,373 | | Cash and cash equivalents at end of period | $ 81,345 | $ 68,695 | | Supplemental cash flow information: | | | | Income taxes paid, net | $ 6,211 | $ 8,144 | | Interest paid | 45 | 115 | Reconciliation of Net Income to Adjusted EBITDA This section provides the unaudited reconciliation of net income to adjusted EBITDA for Nature's Sunshine Products and its subsidiaries, illustrating the calculation from GAAP net income to non-GAAP adjusted EBITDA Reconciliation of Net Income to Adjusted EBITDA (Unaudited, Amounts in Thousands USD) | | Three Months Ended June 30 | | | Six Months Ended June 30 | | | :--- | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Net income | $ 5,519 | $ 1,488 | $ 10,403 | $ 3,978 | | Adjustments: | | | | | | Depreciation and amortization | 3,500 | 3,499 | 6,999 | 6,659 | | Share-based compensation expense | 1,638 | 1,261 | 2,938 | 2,630 | | Other (income) loss, net* | (3,270) | 1,214 | (4,207) | 1,183 | | Income tax provision | 2,025 | 2,935 | 4,250 | 5,100 | | Other adjustments (1) | 1,853 | — | 1,853 | — | | Adjusted EBITDA | $ 11,265 | $ 10,397 | $ 22,236 | $ 19,550 | | (1) Other adjustments | | | | | | Other non-recurring expenses | $ 1,853 | $ — | $ 1,853 | $ — | | Total adjustments | $ 1,853 | $ — | $ 1,853 | $ — | | * Other (income) loss, net primarily includes foreign currency (gain) loss, interest income, and interest expense. | | | | | Reconciliation of GAAP Net Income to Non-GAAP Net Income and Adjusted EPS This section provides the unaudited reconciliation of GAAP net income to non-GAAP net income and adjusted EPS for Nature's Sunshine Products and its subsidiaries, detailing the adjustments used to calculate non-GAAP metrics Reconciliation of GAAP Net Income to Non-GAAP Net Income and Adjusted EPS (Unaudited, Amounts in Thousands USD) | | Three Months Ended June 30 | | | Six Months Ended June 30 | | | :--- | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Net income | $ 5,519 | $ 1,488 | $ 10,403 | $ 3,978 | | Adjustments: | | | | | | Other non-recurring expenses | 1,853 | — | 1,853 | — | | Tax impact of adjustments | (463) | — | (463) | — | | Total adjustments | 1,390 | — | 1,390 | — | | Non-GAAP Net Income | $ 6,909 | $ 1,488 | $ 11,793 | $ 3,978 | | Reported net income attributable to common shareholders | $ 5,333 | $ 1,349 | $ 10,080 | $ 3,670 | | Total adjustments | 1,390 | — | 1,390 | — | | Non-GAAP Net Income Attributable to Common Shareholders | $ 6,723 | $ 1,349 | $ 11,470 | $ 3,670 | | Reported basic EPS | $ 0.29 | $ 0.07 | $ 0.55 | $ 0.20 | | Total adjustments, net of tax | 0.08 | — | 0.08 | — | | Adjusted Basic EPS | $ 0.37 | $ 0.07 | $ 0.63 | $ 0.20 | | Reported diluted EPS | $ 0.28 | $ 0.07 | $ 0.54 | $ 0.19 | | Total adjustments, net of tax | 0.07 | — | 0.07 | — | | Adjusted Diluted EPS | $ 0.35 | $ 0.07 | $ 0.61 | $ 0.19 |