Nature's Sunshine(US:NATR)2021-05-09 13:47Financial 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]