Nature's Sunshine Products Reports Strong Gains in Operating Results

PROVO, Utah, Oct 20, 2004 (BUSINESS WIRE) -- Nature's Sunshine Products, Inc. (NATR), a leading manufacturer and marketer of encapsulated herbs and vitamins, today reported record net sales revenue for the three and nine month periods ended September 30, 2004.

"Our results for the third quarter reflected continued sales revenue gains in our Synergy and international operations, improvements in the United States operations, as well as the benefits of recent product introductions and more intensive marketing efforts. We are also beginning to see the benefits from our stated long-range program to materially reduce selling, general and administrative expenses," said Douglas Faggioli, President and CEO.

For the third quarter, net sales revenue totaled $83.6 million, compared with $63.5 million in the same period of the prior year, a gain of 31.7 percent, while operating income totaled $6.8 million, compared to an operating loss in the same period of the prior year of $1.0 million, a $7.8 million improvement. As a percent of net sales revenue, cost of goods sold equaled 18.3 percent, compared to 20.8 percent in the same period of the prior year, and selling, general and administrative ("SG&A") costs improved to 33.7 percent, compared with 38.3 percent in the second quarter of 2004 and 43.8 percent in the third quarter of 2003. Net income totaled $4.6 million, or $0.29 per diluted share, compared with a loss in the same period of the prior year of $0.6 million, or ($0.04) per diluted share. Results of the same period of the prior year included $2.2 million in pre-tax expenses related to costs associated with a realignment program.

Net sales revenue for the nine months ended September 30, 2004 increased to $240.1 million, compared with $189.7 million in the same period of the prior year, an increase of 26.6 percent. SG&A stood at 36.3 percent of net sales revenue, compared to 41.0 percent in the same period of the prior year. Operating income more than tripled, to $15.2 million, compared with $3.9 million the previous year. Net income amounted to $12.4 million, compared with $2.2 million in the same period of the prior year, an increase of 473.5 percent. Per diluted share net income for the nine months equaled $0.81, compared with $0.15 in the same period of the prior year.

Synergy Worldwide, operating principally in Asia, continued to experience rapid growth. Third quarter net sales revenue advanced 271.0 percent, to $24.3 million, compared with $6.6 million in the same period of the prior year, and for the nine months amounted to $60.1 million, compared with $16.4 million in the same period of the prior year, a gain of 265.7 percent. During the third quarter Synergy began operations in Australia and converted Nature's Sunshine South Korea and Nature's Sunshine Singapore to Synergy operations.

Third quarter United States net sales revenue, excluding the Dominican Republic, was flat, compared to the same period of the prior year. United States net sales revenues including sales from the Dominican Republic, were down slightly year to year, to $32.9 million, compared with $34.0 million, a decrease of 3.2 percent. For the nine months ended September 30, 2004 net sales revenue totaled $103.3 million compared to $107.8 million, a decrease of 4.1 percent. The improvement in United States operations is directly related to new products, including Thai-Go, now Nature's Sunshine top selling product, and positive reaction to the Habit-of-Health 90-Day Challenge program. This program provides incentives for consumers to utilize a package of proprietary products for at least 90 days. The core package contains six of Nature's best and most popular supplements designed to supplement normal diets and provide extra nutritional support.

The international division posted third quarter net sales revenue of $26.4 million, compared with $22.9 million in the same period of the prior year, and for the nine months, net sales revenue totaled $76.6 million, compared with $65.5 million in the same period of the prior year, an increase of 15.0 percent and 17.0 percent, respectively. The strongest third quarter net sales revenue gains internationally were recorded in the Russian Federation, the United Kingdom, Colombia, Central America and Canada.

All current and prior segment information has been restated to reflect the realignment of our South Korea and Singapore operations to Synergy Worldwide.

As of September 30, 2004, working capital totaled $45.1 million, and cash and cash equivalents totaled $39.5 million. Shareholders equity amounted to $94.1 million. The Company has no debt.

Nature's Sunshine had approximately 652,000 Distributors worldwide at September 30, 2004, compared to approximately 562,000 at December 31, 2003. The numbers of Managers worldwide on the same dates were approximately 18,100 and 15,150, respectively.

About Nature's Sunshine

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, Dominican Republic, Venezuela, Ecuador, Peru, the United Kingdom and Ireland, Colombia, Brazil, Thailand, Israel, Singapore, Australia and Taiwan. The Company also has exclusive distribution agreements with selected companies in Argentina, Australia, Chile, New Zealand, Norway, and the Russian Federation.

Statements in this press release concerning the Company's business outlook or future economic performance, anticipated profitability, revenues, expenses or other financial items, and product line growth, together with other statements that are not historical facts, are "forward-looking statements" as that term is defined under Federal Securities Laws. "Forward-looking statements" are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those set forth in such statements. Such risks, uncertainties, and factors include, but are not limited to, foreign business risks, industry cyclicality, fluctuations in customer demand and order pattern, changes in pricing and general economic conditions, as well as other risks detailed in the Company's filings with the Securities and Exchange Commission.

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