Nature's Sunshine Reports Record First Quarter 2021 Results
Nature’s Sunshine Products reported record net sales of $102.4 million for Q1 2021, a 7% increase from the previous year. GAAP net income rose to $4.2 million or $0.20 per diluted share, compared to $3.0 million or $0.15. Non-GAAP net income per diluted share also increased to $0.21. Adjusted EBITDA surged 20% to $11.6 million. Key markets driving growth included Asia and Latin America, while North America faced challenges due to pandemic stockpiling. Operating income slightly improved to 7.5% of net sales, and the company maintained strong cash reserves of $91.3 million.
- Net sales increased 7% to a record $102.4 million in Q1 2021.
- GAAP net income rose to $4.2 million, or $0.20 per diluted share.
- Non-GAAP net income per diluted share climbed to $0.21 from $0.12 year-over-year.
- Adjusted EBITDA increased 20% to $11.6 million compared to the prior year.
- Strong sales growth in Asia and Latin America contributed positively.
- Gross margin decreased to 73.7% from 74.3% due to increased material costs.
- Selling, general and administrative expenses rose to $33.6 million compared to $31.1 million year-over-year.
Net Sales Increase
LEHI, Utah, May 06, 2021 (GLOBE NEWSWIRE) -- Nature’s Sunshine Products, Inc. (Nasdaq: NATR) (Nature’s Sunshine), a leading natural health and wellness company of high-quality herbal and nutritional products, reported financial results for the first quarter ended March 31, 2021.
First Quarter 2021 Financial Highlights vs. Same Year-Ago Quarter
- Net sales increased
7% to a record$102.4 million compared to$95.9 million . - GAAP net income increased significantly to
$4.2 million , or$0.20 per diluted share, compared to$3.0 million , or$0.15 per diluted share. - Non-GAAP net income per diluted share was
$0.21 , compared to an adjusted net income per share of$0.12 . - Adjusted EBITDA increased
20% to$11.6 million compared to$9.7 million .
Management Commentary
“We are pleased to announce that the first quarter of 2021 delivered the largest sales in the 49-year history of the company,” said Terrence Moorehead, CEO of Nature’s Sunshine. “In fact, this marked the third consecutive quarter of net sales over
“We remained committed to our five global growth strategies, and in the first quarter we continued to make progress on all fronts, with strong customer growth across all markets. In particular, the global response to our new branding has been tremendous with early feedback reinforcing our initial findings that it not only energizes existing customers, but it’s also more attractive to new customers. What’s more, our ‘Subscribe and Thrive’ auto-ship program continues to gain traction among new and existing customers, now accounting for over a quarter of our sales in the U.S.
“For 2021, we are optimistic our momentum will continue as we launch the next phase of our customer-driven strategy. We believe we are well positioned to intensify our efforts and move forward with confidence. As the market remains dynamic, I reaffirm my confidence in the strong operational and financial foundation that our team has built.”
First Quarter 2021 Financial Results
Net Sales by Operating Segment (Amounts in Thousands) | |||||||||||||||||
Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Percent Change | Impact of Currency Exchange | Percent Change Excluding Impact of Currency | |||||||||||||
Asia | $ | 35,755 | $ | 30,958 | 15.5 | % | $ | 1,973 | 9.1 | % | |||||||
Europe | 22,200 | 20,627 | 7.6 | 621 | 4.6 | ||||||||||||
North America | 37,762 | 38,757 | (2.6 | ) | 156 | (3.0 | ) | ||||||||||
Latin America and Other | 6,704 | 5,584 | 20.1 | (57 | ) | 21.1 | |||||||||||
$ | 102,421 | $ | 95,926 | 6.8 | % | $ | 2,693 | 4.0 | % |
Net sales in the first quarter of 2021 increased
Gross margin in the first quarter was
Volume incentives as a percentage of net sales decreased 100 basis points to
Selling, general and administrative expenses in the first quarter of 2021 were
Operating income in the first quarter of 2021 improved to
Other loss, net, in the first quarter of 2021 decreased to
GAAP net income attributable to common shareholders increased to
Non-GAAP net income attributable to common shareholders in the first quarter of 2021 increased to
Adjusted EBITDA in the first quarter of 2021 increased
Balance Sheet and Cash Flow
Net cash provided by operating activities was
Conference Call
The Company will hold a conference call today at 5:00 p.m. Eastern time to discuss its first quarter 2021 results.
Date: Thursday, May 6, 2021
Time: 5:00 p.m. Eastern time (3:00 p.m. Mountain time)
Toll-free dial-in number: 1-888-394-8218
International dial-in number: 1-323-701-0225
Conference ID: 8741061
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.
The conference call will be broadcast live and available for replay here and via the Events section of the Nature’s Sunshine website here.
A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through May 20, 2021.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 8741061
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 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. Additional information about the company can be obtained at its website, www.naturessunshine.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements regarding the Company’s future business expectations, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to the Company’s objectives, plans, strategies and financial results. All statements (other than statements of historical fact) that address activities, events or developments that the Company intends, expects, projects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are often characterized by terminology such as “believe,” “hope,” “may,” “anticipate,” “should,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy” and similar expressions, and are based on assumptions and assessments made by management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, including the following:
- laws and regulations regarding direct selling may prohibit or restrict our ability to sell our products in some markets or require us to make changes to our business model in some markets;
- extensive government regulations to which the Company's products, business practices and manufacturing activities are subject;
- registration of products for sale in foreign markets, or difficulty or increased cost of importing products into foreign markets;
- legal challenges to the Company's direct selling program or to the classification of its independent consultants;
- liabilities and obligations arising from improper activity by the Company’s independent consultants;
- product liability claims;
- our cannabidiol (CBD) product line is subject to varying, rapidly changing laws, regulations, and rules;
- actions on trade relations by the U.S. and foreign governments;
- impact of anti-bribery laws, including the U.S. Foreign Corrupt Practices Act;
- the Company’s ability to attract and retain independent consultants;
- the loss of one or more key independent consultants who have a significant sales network;
- the Company’s joint venture for operations in China with Fosun Industrial Co., Ltd.;
- the effect of fluctuating foreign exchange rates;
- failure of the Company’s independent consultants to comply with advertising laws;
- changes to the Company’s independent consultants compensation plans;
- geopolitical issues and conflicts;
- we may be adversely affected by the ongoing coronavirus pandemic;
- negative consequences resulting from difficult economic conditions, including the availability of liquidity or the willingness of the Company’s customers to purchase products;
- risks associated with the manufacturing of the Company's products;
- world-wide slowdowns and delays related to supply chain, ingredient shortages and logistical challenges;
- uncertainties relating to the application of transfer pricing, duties, value-added taxes, and other tax regulations, and changes thereto;
- changes in tax laws, treaties or regulations, or their interpretation;
- cybersecurity threats and exposure to data loss;
- the storage, processing, and use of data, some of which contain personal information, are subject to complex and evolving privacy and data protection laws and regulations;
- reliance on information technology infrastructure; and
- the sufficiency of trademarks and other intellectual property rights.
These and other risks and uncertainties that could cause actual results to differ from predicted results are more fully detailed under the caption “Risk Factors” in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports filed on Form 10-Q.
All forward-looking statements speak only as of the date of this press release and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this press release. Except as is required by law, the Company expressly disclaims any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this press release.
Non-GAAP Financial Measures
We have included information which has not been prepared in accordance with generally accepted accounting principles (GAAP), such as information concerning non-GAAP net income, Adjusted EBITDA and net sales excluding the impact of foreign currency exchange fluctuations.
We utilize the non-GAAP measures of non-GAAP net income and Adjusted EBITDA in the evaluation of our operations and believe that these measures are useful indicators of our ability to fund our business. These non-GAAP financial measures should not be considered as an alternative to, or more meaningful than, U.S. GAAP net income as an indicator of our operating performance.
Other companies may use the same or similarly named measures, but exclude different items, which may not provide investors with a comparable view of Nature’s Sunshine Products’ performance in relation to other companies. We have included a reconciliation of Net Income to Adjusted EBITDA, the most comparable GAAP measure. We have also included a reconciliation of GAAP net income to Non-GAAP net income and Non-GAAP Adjusted EPS, in the financial tables herein.
Net sales in local currency removes, from net sales in U.S. dollars, the impact of changes in exchange rates between the U.S. dollar and the functional currencies of our foreign subsidiaries. This is accomplished by translating the current period net sales into U.S. dollars using the same foreign currency exchange rates that were used to translate the net sales for the previous comparable period.
We believe presenting the impact of foreign currency fluctuations is useful to investors because it allows a more meaningful comparison of net sales of our foreign operations from period to period. Net sales excluding the impact of foreign currency fluctuations should not be considered in isolation or as an alternative to net sales in U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP.
Investor Relations:
Gateway Investor Relations
Cody Slach
1-949-574-3860
NATR@gatewayir.com
NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except per share information)
(Unaudited)
Three Months Ended March 31, | |||||||
2021 | 2020 | ||||||
Net sales | $ | 102,421 | $ | 95,926 | |||
Cost of sales | 26,979 | 24,681 | |||||
Gross profit | 75,442 | 71,245 | |||||
Operating expenses: | |||||||
Volume incentives | 34,255 | 33,018 | |||||
Selling, general and administrative | 33,552 | 31,065 | |||||
Operating income | 7,635 | 7,162 | |||||
Other loss, net | (1,933 | ) | (2,410 | ) | |||
Income before provision for income taxes | 5,702 | 4,752 | |||||
Provision for income taxes | 1,550 | 1,746 | |||||
Net income | 4,152 | 3,006 | |||||
Net income attributable to noncontrolling interests | 136 | 44 | |||||
Net income attributable to common shareholders | $ | 4,016 | $ | 2,962 | |||
Basic and diluted net income per common share: | |||||||
Basic earnings per share attributable to common shareholders | $ | 0.20 | $ | 0.15 | |||
Diluted earnings per share attributable to common shareholders | $ | 0.20 | $ | 0.15 | |||
Weighted average basic common shares outstanding | 19,794 | 19,453 | |||||
Weighted average diluted common shares outstanding | 20,236 | 19,589 | |||||
Dividends declared per common share | $ | 1.00 | $ | — |
NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited) | March 31, 2021 | December 31, 2020 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 91,253 | $ | 92,069 | |||
Accounts receivable, net of allowance for doubtful accounts of | 9,858 | 7,375 | |||||
Inventories | 46,510 | 47,683 | |||||
Prepaid expenses and other | 7,178 | 6,938 | |||||
Total current assets | 154,799 | 154,065 | |||||
Property, plant and equipment, net | 52,552 | 54,355 | |||||
Operating lease right-of-use assets | 18,884 | 20,210 | |||||
Investment securities - trading | 971 | 989 | |||||
Deferred income tax assets | 7,915 | 8,693 | |||||
Other assets | 10,710 | 11,186 | |||||
Total assets | $ | 245,831 | $ | 249,498 | |||
Liabilities and Shareholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 6,939 | $ | 6,486 | |||
Accrued volume incentives and service fees | 20,808 | 19,481 | |||||
Accrued liabilities | 25,104 | 31,710 | |||||
Accrued dividends payable | 19,858 | — | |||||
Deferred revenue | 1,673 | 2,092 | |||||
Related party notes payable | 1,221 | 1,200 | |||||
Income taxes payable | 1,678 | 2,387 | |||||
Current portion of operating lease liabilities | 4,629 | 4,992 | |||||
Current portion of note payable | 1,216 | 1,306 | |||||
Total current liabilities | 83,126 | 69,654 | |||||
Liability related to unrecognized tax benefits | 82 | 92 | |||||
Long-term portion of operating lease liabilities | 15,577 | 16,412 | |||||
Long-term note payable | 2,110 | 2,418 | |||||
Deferred compensation payable | 971 | 989 | |||||
Deferred income tax liabilities | 1,241 | 1,391 | |||||
Other liabilities | 1,226 | 1,308 | |||||
Total liabilities | 104,333 | 92,264 | |||||
Shareholders’ equity: | |||||||
Common stock, no par value, 50,000 shares authorized, 19,915 and 19,697 shares issued and outstanding, respectively | 139,402 | 139,311 | |||||
Retained earnings | 10,188 | 26,030 | |||||
Noncontrolling interest | 1,984 | 1,848 | |||||
Accumulated other comprehensive loss | (10,076 | ) | (9,955 | ) | |||
Total shareholders’ equity | 141,498 | 157,234 | |||||
Total liabilities and shareholders’ equity | $ | 245,831 | $ | 249,498 |
NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three Months Ended March 31, | |||||||
2021 | 2020 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 4,152 | $ | 3,006 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Provision for doubtful accounts | — | 17 | |||||
Depreciation and amortization | 2,736 | 2,602 | |||||
Non-cash lease expense | 1,053 | 1,270 | |||||
Share-based compensation expense | 1,005 | 394 | |||||
Tax benefit from the exercise of stock awards | — | 159 | |||||
Loss on sale of property, plant and equipment | — | 6 | |||||
Deferred income taxes | 561 | 249 | |||||
Purchase of trading investment securities | (16 | ) | (11 | ) | |||
Proceeds from sale of trading investment securities | 175 | 73 | |||||
Realized and unrealized gains on investments | (16 | ) | 96 | ||||
Foreign exchange losses | 1,529 | 2,400 | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | (2,689 | ) | 1,318 | ||||
Inventories | 536 | 234 | |||||
Prepaid expenses and other current assets | (272 | ) | 165 | ||||
Other assets | 24 | 31 | |||||
Accounts payable | 598 | 704 | |||||
Accrued volume incentives and service fees | 1,644 | 4,356 | |||||
Accrued liabilities | (6,248 | ) | (2,206 | ) | |||
Deferred revenue | (394 | ) | 406 | ||||
Lease liabilities | (912 | ) | (1,187 | ) | |||
Income taxes payable | (699 | ) | (335 | ) | |||
Liability related to unrecognized tax positions | (10 | ) | (73 | ) | |||
Deferred compensation payable | (22 | ) | (158 | ) | |||
Net cash provided by operating activities | 2,735 | 13,516 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property, plant and equipment | (983 | ) | (1,209 | ) | |||
Net cash used in investing activities | (983 | ) | (1,209 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Principal payments on long-term debt | (397 | ) | — | ||||
Payments related to tax withholding for net-share settled equity awards | (914 | ) | — | ||||
Tax benefit from exercise of stock options | — | (159 | ) | ||||
Net cash provided by (used in) financing activities | (1,311 | ) | (159 | ) | |||
Effect of exchange rates on cash and cash equivalents | (1,257 | ) | (1,632 | ) | |||
Net increase (decrease) in cash and cash equivalents | (816 | ) | 10,516 | ||||
Cash and cash equivalents at the beginning of the period | 92,069 | 53,629 | |||||
Cash and cash equivalents at the end of the period | $ | 91,253 | $ | 64,145 | |||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||
Cash paid for income taxes, net of refunds | $ | 2,026 | $ | 1,224 | |||
Cash paid for interest | 50 | 3 |
NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(Amounts in thousands)
(Unaudited)
Three Months Ended March 31, | |||||||
2021 | 2020 | ||||||
Net income | $ | 4,152 | $ | 3,006 | |||
Adjustments: | |||||||
Depreciation and amortization | 2,736 | 2,602 | |||||
Share-based compensation expense | 1,005 | 394 | |||||
Other loss, net* | 1,933 | 2,410 | |||||
Provision for income taxes | 1,550 | 1,746 | |||||
Other adjustments (1) | 175 | (500 | ) | ||||
Adjusted EBITDA | $ | 11,551 | $ | 9,658 | |||
(1) Other adjustments | |||||||
Capital allocation and other expenses | $ | 175 | $ | — | |||
VAT refund | — | (500 | ) | ||||
Total adjustments | $ | 175 | $ | (500 | ) |
* Other loss, net is primarily comprised of foreign exchange (gains) losses, interest income, and interest expense.
NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP NET INCOME TO
NON-GAAP NET INCOME and NON-GAAP ADJUSTED EPS
(Amounts in thousands)
(Unaudited)
Three Months Ended March 31, | |||||||
2021 | 2020 | ||||||
Net income | $ | 4,152 | $ | 3,006 | |||
Adjustments: | |||||||
Capital Allocation and other unusual expense | 175 | — | |||||
VAT refund | — | (500 | ) | ||||
Tax impact of adjustments | (52 | ) | — | ||||
Total adjustments | 123 | (500 | ) | ||||
Non-GAAP net income | $ | 4,275 | $ | 2,506 | |||
Reported income attributable to common shareholders | $ | 4,016 | $ | 2,962 | |||
Total adjustments | 123 | (500 | ) | ||||
Non-GAAP net income attributable to common shareholders | $ | 4,139 | $ | 2,462 | |||
Basic income per share, as reported | $ | 0.20 | $ | 0.15 | |||
Total adjustments, net of tax | 0.01 | (0.03 | ) | ||||
Basic income per share, as adjusted | $ | 0.21 | $ | 0.12 | |||
Diluted income per share, as reported | $ | 0.20 | $ | 0.15 | |||
Total adjustments, net of tax | 0.01 | (0.03 | ) | ||||
Diluted income per share, as adjusted | $ | 0.21 | $ | 0.12 |
FAQ
What were Nature’s Sunshine Products' net sales for Q1 2021?
How much did the GAAP net income increase in Q1 2021 for NATR?
What was the percentage increase in adjusted EBITDA for Nature’s Sunshine in Q1 2021?
What were the main factors contributing to the sales growth of NATR in Q1 2021?