Nature’s Sunshine Q4 Sales Up 5% To $84 Million

 

Nature's Sunshine Products, Inc. (NASDAQ: NATR), a leading natural health and wellness company engaged in the manufacture and direct selling of nutritional and personal care products, recently reported its financial results for the fourth quarter ended December 31, 2016.

Fourth Quarter 2016 Financial Highlights:

• Net sales of $84.0 million increased 4.9% compared to $80.0 million in the fourth quarter of 2015. On a local currency basis, net sales increased 4.6% as compared to the fourth quarter of 2015. Synergy Asia Pacific delivered 13.7% growth (11.1% in local currency) in net sales as compared to the fourth quarter of 2015.

• The quarter included incremental net sales of $2.3 million related to China pre-opening product sales through Hong Kong. Net sales were positively impacted by $0.3 million of favorable foreign currency exchange rate fluctuations, offset by a $0.4 million decline in net sales in the NSP Americas segment from Latin America.

• Net loss from continuing operations attributable to common shareholders was $6.7 million, or $0.35 per common share, compared to net income from continuing operations of $3.7 million, or $0.19 per diluted common share, in the fourth quarter of 2015. The net loss was primarily driven by activities and items related to China. These included incremental infrastructure related expenses that contributed $1.9 million to the operating loss and the recognition of $1.7 million in inventory obsolescence reserves associated with delay and uncertainty surrounding a direct selling launch in China. Primarily related to unfavorable financial results and uncertainty in China, the Company also recorded $3.4

  million in non-cash deferred tax asset valuation allowances during the quarter. Additionally, the Company recorded a $1.8 million foreign exchange loss during the quarter.

• The Company's net loss in China attributable to common shareholders, including expenses associated with infrastructure and inventory obsolescence reserves during the fourth quarter, was approximately $0.15 per share. The impact of the non-cash deferred tax valuation allowance contributed an additional $0.18 per share loss during the quarter.

• Adjusted EBITDA was $0.6 million, compared to $4.6 million in the fourth quarter of 2015. Adjusted EBITDA, which is a non-GAAP financial measure, is defined here as net income/loss from continuing operations before income taxes, depreciation, amortization, share-based compensation expense and other income/loss.

Full Year 2016 Financial Highlights:

• Net sales of $341.2 million increased 5.1%, compared to $324.7 million in 2015. On a local currency basis, net sales increased 5.8% compared to 2015. Net sales growth, adjusted for foreign currency fluctuations, was largely driven by a $13.4 million, or 17.6% increase in the Synergy Asia Pacific region and an incremental net sales increase of $10.4 million related to China pre-opening sales through Hong Kong, when compared to 2015. Net sales were negatively impacted by a $2.7 million decline in NSP America sales from Latin America and a $1.3 million decline in net sales in the NSP Russia, Central and Eastern Europe segment. Additionally, net sales were negatively impacted by

  $2.4 million of unfavorable foreign currency exchange rate fluctuations.

• Net income from continuing operations attributable to common shareholders was $2.1 million, or $0.11 per diluted common share, compared to $14.7 million, or $0.66 per diluted common share, in 2015. Earnings per diluted common share for 2016 were impacted by several factors primarily relating to China. These included net infrastructure related expenses of $5.2 million and recognition of $1.7 million in inventory obsolescence reserves associated with delay and uncertainty surrounding a direct selling launch in China. Primarily related to unfavorable financial results and uncertainty in China, the Company also recorded $3.4 million in non-cash deferred tax asset valuation allowances during the year. Additionally, the Company recorded a $1.3 million foreign exchange loss during the year.

• The Company's net loss in China attributable to common shareholders, including expenses associated with infrastructure and inventory obsolescence reserves during the

  year, was approximately $0.29 per diluted share. The impact of the non-cash deferred tax valuation allowance contributed an additional $0.18 per diluted share loss during the year.

• Adjusted EBITDA was $18.1 million compared to $22.9 million in 2015.

Management Commentary:

Fourth quarter financial results were negatively impacted by items related to delay and uncertainty surrounding receipt of a direct selling license in China commented Gregory L. Probert, Chairman and Chief Executive Officer. While our 2016 financial results have been constrained by the infrastructure built in anticipation of a future market opportunity, we remain steadfast in our belief that the investments are prudent given the potential opportunity that lies ahead of us should the regulatory process in China be completed.

Mr. Probert continued, We continued to post modest growth in NSP North America during the fourth quarter and Synergy Worldwide again enjoyed good momentum in Synergy Asia Pacific. During 2016, we introduced the Elite Health program in Synergy Asia Pacific and Synergy Europe, and continued to promote our patent-pending IN.FORM program in NSP North America. We look to leverage these new product initiatives to drive further growth and support our new market investments.

About Nature's Sunshine Products

Nature's Sunshine Products (NASDAQ: NATR), a leading natural health and wellness company, markets and distributes nutritional and personal care products through a global direct sales force of over 573,000 independent Managers, Distributors and customers in more than 40 countries.

Nature's Sunshine manufactures most of its products through its own state-of-the-art facilities to ensure its products continue to set the standard for the highest quality, safety and efficacy on the market today. The Company has four reportable business segments that are divided based on the characteristics of their Distributor base, similarities in compensation plans, as well as the internal organization of NSP's officers and their responsibilities (NSP Americas; NSP Russia, Central and Eastern Europe; Synergy WorldWide; and China and New Markets). The Company also supports health and wellness for children around the world through its partnership with the Sunshine Heroes Foundation.