Nature's Sunshine Products Reports 4.7% Increase in Net Sales

Nature's Sunshine Products, Inc., a leading manufacturer and marketer of nutritional supplements and complementary products, today reported an increase in net sales of 4.7 percent to $87.0 million for the 2010 first quarter, compared with $83.2 million for the same period in 2009. Operating income improved by approximately $2.8 million, to break-even, compared to an operating loss of $2.8 million in the first quarter of 2009. Net income totaled $4.2 million, compared with a net loss of $1.5 million in the first quarter of last year. Basic and diluted net income per share was $0.27, compared to a net loss per share of $0.09 for the same period last year. The increase in operating income was primarily the result of increased sales and reduced cost of goods sold and selling, general, and administrative expenses as a percent of sales. During the quarter, the Company generated cash flow from operations of approximately $3.5 million.

The Company's balance sheet remains strong with cash and cash equivalents of $38.8 million, and shareholders' equity of $62.6 million as of March 31, 2010. The Company has no long-term debt.

During the first quarter of 2010, the Company recorded a $3.7 million, or $0.24 per diluted share, foreign exchange gain in other income related to the implementation of highly-inflationary accounting for Venezuela and devaluation of the Venezuelan bolivar. This change also reduced reported net sales for the Company by approximately 1.7 percent and reduced operating income by approximately $0.4 million, or $0.02 per diluted share, for the first quarter of 2010.

An income tax benefit added approximately $0.08 per diluted share to net income, as compared with $0.01 per diluted share for the same period a year ago. The benefit in 2010 was primarily due to a reduction of our liability for unrecognized tax benefits.

"We are pleased with the continued progress by Nature's Sunshine Products and the improved start for 2010," said Douglas Faggioli, President and CEO. "With improving economies worldwide, most of our markets -- notably the U.S., Europe, the Ukraine, Canada, and Mexico -- demonstrated encouraging growth, aided by selective price increases and more favorable exchange rates. We continue to see increases in sales managers, a key positive indicator, and strengthening cash flow. We remain focused on reducing expenses and improving operating income at Nature's Sunshine."

Segment Analysis
Nature's Sunshine Products U.S., which remains the Company's largest individual segment, increased net sales revenue by 3.6 percent for the quarter, to $37.8 million, compared with $36.5 million in the same quarter a year ago. Operating expenses remained essentially flat at $37.5 million, compared with $37.4 million for the same quarter a year ago. Operating income for the three months ended March 31, 2010 totaled $0.3 million, an improvement of $1.2 million, as compared to an operating loss of $0.9 million for the same period in 2009. The increase in net sales is due to 4.3 percent growth in our active Managers during the quarter, increased attendance at our leadership conference in February 2010, as well as the launch of two new products and the introduction of a new Distributor training program during the 2010 first quarter.

At Nature's Sunshine Products International, net sales revenues for the three month period ended March 31, 2010 totaled $35.3 million, an increase of approximately 5.1 percent, compared to $33.6 million for the same period in the prior year. Net sales results benefited from growth in several key markets, and the effect of a weakening U.S. dollar overall and specifically on consumer demand in many of the markets in which we operate. The improvements, however, were offset by the impact of the aforementioned accounting treatment for Venezuela. With operating expenses up 9.1 percent, operating income for the three months ended March 31, 2010, was $0.4 million, compared to $1.6 million for the same period in the prior year. The increase in operating expenses is a result of increases for VAT accruals in certain markets, the effect of the devaluation of the bolivar and the change to a highly inflationary economy in Venezuela, as well as the effect of increased inter-company transfer prices for some of our products in certain markets.

Among NSP International's markets:
-- Canada net sales increased $0.8 million, or 25.8 percent, compared to the same period a year ago. Net sales were positively affected by foreign currency fluctuations of $0.6 million. Excluding the effect of foreign currency fluctuations, net sales increased $0.2 million, or 6.5 percent, compared to the same period in 2009 as a result of continued distributor growth.
-- Ukraine net sales increased $0.8 million, or 15.4 percent, to $6.0 million, compared to $5.2 million during the same period in 2009. This increase was aided by improvement in the local economy, as well as a slight weakening of the U.S. dollar in relation to the Ukrainian hryvnia, which has reduced the price of our products in that country.
-- Mexico net sales increased $0.6 million, or 20.0 percent, compared to the same period a year ago. Net sales were positively affected by foreign currency fluctuations of $0.4 million. Excluding the effect of foreign currency fluctuations, net sales increased $0.2 million, or 6.7 percent, compared to the same period in 2009.
-- In Venezuela our net sales decreased $1.7 million, or 53.1 percent, to net sales of $1.5 million, compared to $3.2 million for the same period a year ago, primarily as a result of the devaluation of the bolivar. In January of this year, the exchange rate for bolivars changed from 2.15 bolivars per U.S. dollar to 4.3 bolivars per U.S. dollar.
-- As a group, net sales for the remaining Nature's Sunshine Products International markets improved $1.2 million, or 6.3 percent, to net sales of $20.3 million, compared to sales of $19.1 million for the same period in 2009, with approximately 50 percent of the $1.2 million increase stemming from currency exchange rate fluctuations.

For the first quarter of 2010, Synergy Worldwide net sales were $13.9 million, compared to $13.1 million for the same period in 2009, an increase of 6.1 percent. Net sales revenues more than doubled in its European and U.S. markets, to $2.5 million and $2.6 million, respectively, compared to $1.1 million and $1.3 million, respectively, for each of these markets during the same period in the prior year. The growth in the Synergy European markets was primarily due to expansion in the markets in which we operate, as well as positive currency fluctuations of $0.1 million. The increase in net sales in the U.S. was the result of growth in our Distributor base, as well expansion of its personal import program. These improvements were offset by decreases in our sales in Japan and Indonesia. Net sales in Japan decreased $1.2 million, or 23.1 percent, to net sales of $4.0 million, compared to net sales of $5.2 million for the same period a year ago. The decrease in Japan net sales is primarily due to continued strong competition and a weak economy in Japan, which has resulted in a decrease in active Managers and Distributors. The decrease in Japan net sales were offset by positive currency fluctuations of $0.1 million. Net sales in Indonesia decreased $1.8 million, or 54.5 percent, to net sales of $1.5 million compared to net sales of $3.3 million for the same period a year ago. The decrease in Indonesia net sales were offset by positive currency fluctuations of $0.3 million. Of the remaining net sales increase of $1.1 million in Synergy Worldwide's remaining markets compared to the same period a year ago, approximately 55 percent was related to positive foreign currency fluctuations. Along with increased net sales revenue, Synergy Worldwide operating expenses overall were 11.4 percent lower than a year ago, resulting in a reduction in the operating loss by $2.8 million, to an operating loss of $0.7 million, compared to an operating loss of $3.5 million for the same period in 2009.

As of March 31, 2010, active Managers totaled 29,900, compared to 28,700 at December 31, 2009. Active Distributors totaled 693,200, compared to 697,200 at December 31, 2009.

About Nature's Sunshine Products
Nature's Sunshine Products manufactures and markets, through direct sales, encapsulated and tableted herbal products, high quality natural vitamins, and other complementary products. In addition to the United States, the Company has operations in Japan, Mexico, Central America, South Korea, Canada, the Dominican Republic, Venezuela, Ecuador, Peru, the United Kingdom, Columbia, Brazil, Thailand, Israel, Singapore, Malaysia, Indonesia, the Philippines, Australia, Hong Kong, Taiwan, Russia, Ukraine, Latvia, Lithuania, Kazakhstan, Mongolia, Belarus, China, Poland, Germany, Austria, Norway, Sweden, the Czech Republic and the Netherlands. The Company also has exclusive distribution agreements with selected companies in Argentina, Australia, Chile, New Zealand, and Norway. Additional information can be obtained at the Company's website, www.natr.com.

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