Natures Sunshine Products Reports Fourth Quarter Net Sales Up 5.2% To $88.3 Million

Natures 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, today reported its financial results for the fourth quarter ended December 31, 2017.

At this time, the Company is providing preliminary ranges for its anticipated net loss for the fourth quarter and fiscal 2017 pending final determination of its provision for income taxes, including the impact of U.S. tax reform, among other factors. The Company expects to file its audited financial statements on form 10-K on March 16, 2018.

Management Commentary

Our fourth quarter results reflect continued year-over-year net sales growth, driven by gains across our Synergy Worldwide markets and strong growth in our NSP business in Russia, Central and Eastern Europe,’ commented Gregory L. Probert, Chairman and Chief Executive Officer.

We believe the disruptions to our North America business as a result of a new ERP system deployed in April 2017 are now behind us, but we have additional work to do to re-energize the market. We posted growth in China and continue to emphasize expanding our direct selling efforts in this market with the goal of building a long-term profitable new market. Consistent with our initiative to evaluate our cost structure through a review of our direct and indirect costs, during the fourth quarter we took some actions to reduce SG&A, which led to some non-recurring restructuring and severance costs during the period. Our focus will continue to be to support and grow our business while matching our organizational structure to our business outlook in order to enhance profitability and shareholder value.’

Fourth Quarter 2017 Financial Highlights

• Net sales of $88.3 million increased 5.2 percent, compared to $84.0 million in the fourth quarter of 2016. On a local currency basis, net sales increased 3.8 percent as compared to the fourth quarter of 2016. NSP China net sales increased 200.3 percent, compared to the same period in 2016. Synergy WorldWide net sales increased 3.6 percent compared to the same period in 2016 (or 0.4 percent in local currencies). NSP Russia, Central and Eastern Europe net sales increased 7.9 percent compared to the same period in 2016. NSP Americas net sales decreased 4.9 percent compared to the same period in 2016 (or 5.1 percent in local currencies). Net sales were impacted by $1.2 million of favorable foreign currency exchange rate fluctuations.The Company began the initial implementation of its Oracle ERP system on April 2, 2017, for the Companys NSP Americas segment as well other corporate operations. The implementation of Oracle ERP negatively impacted net sales and profitability during the nine months ended December 31, 2017, primarily by causing wait times for calls into the Company’s call center to be longer than usual and by causing difficulties within the Company’s on-line product ordering system. While the Company has addressed these issues, customer attrition rates increased.

• The Company currently expects net loss attributable to common shareholders to be between $17.0 and $18.0 million, or $0.90 to $0.95 per common share, compared to a net loss of $6.7 million attributable to common shareholders, or $0.35 per common share, in the fourth quarter of 2016. The anticipated fourth quarter net loss expressed above is preliminary and subject to final determination of the Companys provision for income taxes, including the impact of U.S. tax reform, among other factors. The net loss range includes an estimated $14.0 to $15.0 million, or $0.74 to $0.79 per common share, non-cash re-measurement of deferred tax assets and liabilities related to U.S. tax reform.
• The Company’s net loss in China attributable to common shareholders was approximately $0.05 per share in the fourth quarter of 2017.
• Adjusted EBITDA was $0.1 million, compared to $0.6 million in the fourth quarter of 2016. 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/expense.

Full Year 2017 Financial Highlights

• Net sales of $342.0 million increased 0.3 percent, compared to $341.2 million in 2016. On a local currency basis, net sales decreased 0.2 percent as compared to 2016. NSP China net sales increased approximately 91.4 percent compared to the same period in 2016. NSP Russia, Central and Eastern Europe net sales increased approximately 7.3 percent compared to the same period in 2016. NSP Americas net sales decreased approximately 5.6 percent compared to the same period in 2016 (or 5.7 percent in local currencies). Synergy WorldWide net sales decreased approximately 0.8 percent compared to the same period in 2016 (or 1.7 percent in local currencies). The weakening of the U.S. dollar versus local currencies resulted in an approximate 0.5 percent or $1.6 million increase in net sales during the year.
• The Company currently expects net loss attributable to common shareholders to be between $12.5 and $13.5 million, or $0.66 to $0.71 per common share, compared to net income of $2.1 million, or $0.11 per diluted common share, in 2016. The anticipated 2017 net loss expressed above is preliminary and subject to final determination of the Companys provision for income taxes, including the impact of U.S. tax reform, among other factors. The net loss range includes an estimated $14.0 to $15.0 million, or $0.74 to $0.79 per common share, non-cash re-measurement of deferred tax assets and liabilities related to U.S. tax reform.
• The Company’s net loss in China attributable to common shareholders was approximately $0.18 per share for 2017.
• Adjusted EBITDA was $12.2 million compared to $18.1 million in 2016.

About Natures Sunshine Products

 

 

Natures Sunshine Products, a leading natural health and wellness company, markets and distributes nutritional and personal care products through a global direct sales force of approximately 495,000 independent Managers, Distributors and Customers in more than 40 countries.  Natures 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 NSPs officers and their responsibilities (NSP Americas; NSP Russia, Central and Eastern Europe; Synergy WorldWide; and NSP China). The Company also supports health and wellness for children around the world through its partnership with the Sunshine Heroes Foundation.