Nature's Sunshine(NATR)2023-05-09 21:11Financial Performance - Consolidated net sales for Q1 2023 were $108.6 million, a decrease of 1.7% compared to $110.5 million in Q1 2022, primarily due to declines in North America [99]. - Excluding the impact of foreign currency fluctuations, consolidated net sales increased by 2.4% in Q1 2023 compared to the same period in 2022 [100]. - In Asia, net sales increased by 0.5% to $46.3 million in Q1 2023, with a local currency increase of 9.1% [101]. - North America net sales decreased by 3.7% to $34.6 million in Q1 2023, attributed to reduced average order sizes due to inflationary pressures [106]. - Other income for Q1 2023 was $1.5 million, compared to a loss of $0.3 million in Q1 2022, mainly due to foreign exchange gains [114]. - The effective tax rate for Q1 2023 was 25.7%, significantly lower than 369.9% in Q1 2022, due to changes in foreign operations tax liabilities [115]. Expenses and Costs - Selling, general and administrative expenses rose to $43.6 million in Q1 2023, representing 40.2% of net sales, up from 36.8% in Q1 2022 [113]. - Cost of sales as a percentage of net sales improved to 29.2% in Q1 2023 from 31.2% in Q1 2022, primarily due to prior-year inventory valuation reserves [110]. - Volume incentives as a percentage of net sales were 30.5% in Q1 2023, slightly down from 30.9% in Q1 2022 [111]. Cash Flow and Working Capital - As of March 31, 2023, working capital was $82.8 million, a slight decrease from $83.9 million as of December 31, 2022 [126]. - Operating activities generated cash of $9.3 million for the three months ended March 31, 2023, compared to a cash outflow of $7.9 million in the same period in 2022 [128]. - Investing activities used $2.3 million for capital expenditures related to equipment and software for the three months ended March 31, 2023, up from $1.5 million in the same period in 2022 [129]. - Financing activities used $1.2 million in cash for the three months ended March 31, 2023, a significant decrease from $9.4 million in the same period in 2022 [130]. - As of March 31, 2023, the company had $65.7 million in cash, with $61.0 million held in foreign markets subject to repatriation restrictions [126]. - The company believes that cash generated from operations will be sufficient to fund normal operating needs, including capital expenditures [132]. Shareholder Activities - The company repurchased 90,000 shares of common stock for $0.8 million during the three months ended March 31, 2023, with a remaining balance of $23.2 million available for future repurchases [130]. Business Operations - The company’s product categories include over 800 products across various health segments, with manufacturing primarily in Spanish Fork, Utah [120]. - The company markets its products through a network of independent consultants, providing incentives and support to drive sales [122].