LEHI, Utah, March 17, 2014 (GLOBE NEWSWIRE) -- 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, today reported its consolidated financial results for the fourth quarter and full year ended December 31, 2013, and declared a quarterly cash dividend of $0.10 per share.
"We're pleased with our fourth quarter results which reflect continued progress across both our NSP and Synergy businesses," commented Gregory L. Probert, Chairman and Chief Executive Officer. "In addition to Synergy's record sales quarter and NSP Russia, Central and Eastern Europe's fifth consecutive quarter of year-over-year sales growth, we experienced double digit growth in NSP Mexico and NSP Central America."
"Our performance is the early result of our incremental investments in sales and marketing personnel, R&D and new product development, Distributor training and sales incentive programs. These investments amounted to $2.2 million of additional SG&A expense in the fourth quarter, the majority of which is recurring and will negatively impact our near-term operating income margin. However, these essential investments position us to drive sales growth in all of our markets to a level that will restore our operating income margin to double digits during 2015."
"In addition, we launched a $40 million Oracle ERP project to provide us with a single integrated software solution and greatly enhance our ability to integrate our people, processes and business systems in all of our markets around the world. This capital expenditure will provide us better data and visibility into our business, facilitate delivering products to market faster and more efficiently, as well as to better serve our Managers, Distributors and customers. We will fund this project from internal cash flow and anticipate its completion by mid-2016."
Mr. Probert continued, "The $0.10 quarterly cash dividend and our ongoing share repurchase program reflects the Company's strong cash flow generation, our confidence in its long-term growth prospects and our commitment to return excess capital to shareholders."
For the Fourth Quarter of 2013:
For the Full Year of 2013:
NSP Americas, Asia Pacific and Europe Results for the Fourth Quarter of 2013:
NSP Russia, Central and Eastern Europe Results for the Fourth Quarter of 2013:
Synergy WorldWide Results for the Fourth Quarter of 2013:
Effective Income Tax Rate
The effective income tax rate for the fourth quarter of 2013 was 30.3 percent compared to 39.8 percent in the fourth quarter of 2012. The current quarter's effective tax rate was below the U.S. federal statutory tax rate of 35.0 percent which was primarily attributable to the favorable U.S. tax impact of foreign operations, offset by adjustments to foreign valuation allowances and an increase in tax liabilities associated with uncertain tax positions.
Quarterly Cash Dividend and Ongoing Share Repurchase Program
The Company's Board of Directors approved a quarterly cash dividend of $0.10 per share, payable on March 31, 2014, to shareholders of record as of the close of business on March 21, 2014.
On August 8, 2013, the Board of Directors authorized a $10 million share repurchase program to be implemented over two years. Such purchases may be made in the open market, through block trades, in privately negotiated transactions or otherwise. The timing and amount of any shares repurchased will be determined based on the Company's evaluation of market conditions and other factors and the program may be discontinued or suspended at any time.
During the three months ended December 31, 2013, the Company repurchased 32,609 shares of its common stock under the share repurchase program for $0.6 million. At December 31, 2013, the remaining balance available for repurchases under the program was $7.5 million.
The quarterly dividend, in addition to the special one-time dividend that was announced and paid in August 2013, and the on-going share repurchase program, are enabled by the Company's strong cash flow, healthy cash balance, the Board's commitment to return capital to shareholders and its confidence in the Company's long-term growth prospects.
Non-GAAP Financial Measures
The Company has included information which has not been prepared in accordance with generally accepted accounting principles (GAAP), such as information concerning adjusted EBITDA because management utilizes this information in the evaluation of its operations and believes that these measures are a useful indicator of the Company's ability to fund its 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 the Company's operating performance. Moreover, these non-GAAP financial measures, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. 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. The Company has included a reconciliation of these non-GAAP measures to reported earnings under GAAP in the attached financial tables.
Conference Call
Nature's Sunshine Products will host a conference call to discuss its fourth quarter and full year 2013 results on March 17, 2014 at 4:30 PM Eastern Time. The toll-free dial-in number for callers in the U.S. and Canada is 1-877-407-0789, conference ID: 13575478. International callers can dial 1-201-689-8562, conference ID: 13575478. A replay will be available from March 18, 2014 at 2:00 PM Eastern Time through April 1, 2014 at 11:59 PM Eastern Time at 1-877-870-5176 (U.S. and Canada) or 1-858-384-5517 (International), replay PIN: 13575478. The call will also be webcast live and will be available on the Investing section of Nature's Sunshine Products' website at www.naturessunshine.com for 90 days.
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 330,000 active 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 three 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, Asia Pacific and Europe; NSP Russia, Central and Eastern Europe; and Synergy WorldWide). The Company also supports health and wellness for children around the world through its partnership with the Sunshine Heroes Foundation. Additional information about the Company can be obtained at its website, www.naturessunshine.com.
Cautionary Statement Regarding Forward-Looking Statements
Certain information included or incorporated herein by reference in this release may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies. All statements (other than statements of historical fact) that address activities, events or developments that we intend, expect, project, believe or anticipate 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. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are more fully described in this release, but include the following:
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(Amounts in thousands) | ||
(Unaudited) | ||
December 31, | December 31, | |
2013 | 2012 | |
Assets | ||
Current assets: | ||
Cash and cash equivalents | $ 77,247 | $ 79,241 |
Accounts receivable, net of allowance for doubtful accounts of $1,087 and $631, respectively | 10,206 | 9,614 |
Investments available for sale | 2,006 | 2,071 |
Inventories | 41,910 | 43,280 |
Deferred income tax assets | 5,711 | 5,307 |
Prepaid expenses and other | 11,514 | 5,820 |
Total current assets | 148,594 | 145,333 |
Property, plant and equipment, net | 32,022 | 27,950 |
Investment securities | 971 | 1,276 |
Intangible assets, net | 853 | 1,002 |
Deferred income tax assets | 9,928 | 11,516 |
Other assets | 7,244 | 6,842 |
$ 199,612 | $ 193,919 | |
Liabilities and Shareholders' Equity | ||
Current liabilities: | ||
Accounts payable | $ 5,664 | $ 6,226 |
Accrued volume incentives | 19,206 | 18,130 |
Accrued liabilities | 34,893 | 27,302 |
Deferred revenue | 4,173 | 4,311 |
Current installments of long-term debt and revolving credit facility | 2,267 | 3,350 |
Income taxes payable | 2,366 | 2,071 |
Total current liabilities | 68,569 | 61,390 |
Liability related to unrecognized tax benefits | 12,402 | 10,571 |
Long-term debt and revolving credit facility | 10,000 | 2,270 |
Deferred compensation payable | 971 | 1,276 |
Other liabilities | 2,411 | 2,776 |
Total long-term liabilities | 25,784 | 16,893 |
Commitments and Contingencies | ||
Shareholders' equity: | ||
Common stock, no par value, 50,000 shares authorized, 16,179 and 15,810 shares issued and outstanding as of December 31, 2013 and December 31, 2012, respectively | 83,122 | 77,292 |
Retained earnings | 36,100 | 48,910 |
Accumulated other comprehensive loss | (13,963) | (10,566) |
Total shareholders' equity | 105,259 | 115,636 |
$ 199,612 | $ 193,919 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES | ||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
(Amounts in thousands, except per share information) | ||
(Unaudited) | ||
Three Months Ended | ||
December 31, | ||
2013 | 2012 | |
Net sales revenue | $ 95,484 | $ 90,377 |
Cost of sales | (24,084) | (23,841) |
Gross profit | 71,400 | 66,536 |
Operating expenses: | ||
Volume incentives | 35,062 | 32,991 |
Selling, general and administrative | 33,747 | 27,719 |
Operating income | 2,591 | 5,826 |
Other income, net | 53 | 1,639 |
Income before provision for income taxes | 2,644 | 7,465 |
Provision for income taxes | 801 | 2,969 |
Net income | $ 1,843 | $ 4,496 |
Basic and diluted net income per common share | ||
Basic: | ||
Net income | $ 0.11 | $ 0.28 |
Diluted: | ||
Net income | $ 0.11 | $ 0.28 |
Weighted average basic common shares outstanding | 16,196 | 15,781 |
Weighted average diluted common shares outstanding | 16,550 | 16,064 |
Dividends declared per common share | $ 0.10 | $ 0.05 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES | ||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
(Amounts in thousands, except per share information) | ||
(Unaudited) | ||
Year Ended | ||
December 31, | ||
2013 | 2012 | |
Net sales revenue | $ 378,096 | $ 367,468 |
Cost of sales | (94,814) | (93,324) |
Gross profit | 283,282 | 274,144 |
Operating expenses: | ||
Volume incentives | 138,482 | 133,267 |
Selling, general and administrative | 120,743 | 106,861 |
Operating income | 24,057 | 34,016 |
Other income, net | 1,596 | 1,480 |
Income before provision for income taxes | 25,653 | 35,496 |
Provision for income taxes | 8,044 | 10,116 |
Net income | 17,609 | 25,380 |
Basic and diluted net income per common share | ||
Basic: | ||
Net income | $ 1.10 | $ 1.62 |
Diluted: | ||
Net income | $ 1.07 | $ 1.59 |
Weighted average basic common shares outstanding | 15,997 | 15,648 |
Weighted average diluted common shares outstanding | 16,390 | 15,987 |
Dividends declared per common share | $ 1.90 | $ 0.15 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES | ||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(Amounts in thousands) | ||
(Unaudited) | ||
2013 | 2012 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 17,609 | $ 25,380 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for doubtful accounts | 535 | 45 |
Depreciation and amortization | 4,466 | 4,078 |
Tax benefit from stock option exercise | (653) | (378) |
Share-based compensation expense | 3,389 | 2,878 |
(Gain) loss on sale of property and equipment | (128) | 85 |
Deferred income taxes | 1,092 | 4,270 |
Amortization of bond discount | 1 | 9 |
Purchase of trading investment securities | (88) | (92) |
Proceeds from sale of trading investment securities | 510 | 354 |
Realized and unrealized gains on investments | (122) | (90) |
Foreign exchange gains | (1,254) | (290) |
Changes in assets and liabilities: | ||
Accounts receivable | (1,358) | 266 |
Inventories | 838 | (1,466) |
Prepaid expenses and other current assets | (5,728) | (1,155) |
Other assets | (303) | (193) |
Accounts payable | (552) | 77 |
Accrued volume incentives | 1,286 | (1,279) |
Accrued liabilities | 7,379 | (1,289) |
Deferred revenue | (138) | 1,708 |
Income taxes payable | 1,071 | (6,259) |
Liability related to unrecognized tax benefits | 1,831 | 145 |
Deferred compensation payable | (305) | (153) |
Net cash provided by operating activities | 29,378 | 26,651 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (8,570) | (6,629) |
Purchase of investments available for sale | (442) | (174) |
Proceeds from maturity and sale of investments available for sale | 200 | 3,789 |
Proceeds from sale of property, plant and equipment | 248 | 25 |
Net cash used in investing activities | (8,564) | (2,989) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Dividends paid | (30,419) | (2,349) |
Borrowings on long-term debt and revolving credit facility | 10,000 | — |
Principal payments of long-term debt and revolving credit facility | (3,353) | (3,570) |
Tax benefit from stock option exercise | 653 | 378 |
Proceeds from the exercise of stock options | 4,334 | 2,408 |
Repurchase of common stock | (2,546) | — |
Net cash used in financing activities | (21,331) | (3,133) |
Effect of exchange rates on cash and cash equivalents | (1,477) | (257) |
Net increase (decrease) in cash and cash equivalents | (1,994) | 20,272 |
Cash and cash equivalents at the beginning of the period | 79,241 | 58,969 |
Cash and cash equivalents at the end of the period | $ 77,247 | $ 79,241 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid for income taxes | $ 10,278 | $ 12,960 |
Cash paid for interest | 128 | 128 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES | ||
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA | ||
(Amounts in thousands) | ||
(Unaudited) | ||
Three Months Ended | ||
December 31, | ||
2013 | 2012 | |
Net income | $ 1,843 | $ 4,496 |
Adjustments: | ||
Depreciation and amortization | 1,187 | 1,050 |
Share-based compensation expense | 790 | 877 |
Other income, net* | (53) | (1,639) |
Taxes | 801 | 2,969 |
Adjusted EBITDA | $ 4,568 | $ 7,753 |
Year Ended | ||
December 31, | ||
2013 | 2012 | |
Net income | $ 17,609 | $ 25,380 |
Adjustments: | ||
Depreciation and amortization | 4,466 | 4,078 |
Share-based compensation expense | 3,389 | 2,878 |
Other income, net* | (1,596) | (1,480) |
Taxes | 8,044 | 10,116 |
Adjusted EBITDA | $ 31,912 | $ 40,972 |
* Other income, net is primarily comprised of foreign exchange gains (losses), interest income, and interest expense. |
Distributor Information
Our revenue is highly dependent upon the number and productivity of our Managers, Distributors and customers. Growth in sales volume requires an increase in the productivity and/or growth in the total number of Managers, Distributors and customers.
The following table provides information concerning the number of total Managers, Distributors and customers by segment, as of the dates indicated.
Total Managers, Distributors and Customers by Segment as of December 31, | ||||||
2013 | 2012 | 2011 | ||||
Distributors & Customers | Managers | Distributors & Customers | Managers | Distributors & Customers | Managers | |
NSP Americas, Asia Pacific & Europe | 328,200 | 7,900 | 350,400 | 8,100 | 388,400 | 8,700 |
NSP Russia, Central and Eastern Europe | 260,200 | 6,000 | 252,700 | 5,600 | 266,200 | 5,400 |
Synergy WorldWide | 118,500 | 3,000 | 118,200 | 2,900 | 112,300 | 2,700 |
Total | 706,900 | 16,900 | 721,300 | 16,600 | 766,900 | 16,800 |
"Total Managers" includes independent Managers under our various compensation plans that have achieved and maintained specified and personal groups sale volumes as of the date indicated. To maintain Manager status, an individual must continue to meet certain product sales volume levels. As such, all Managers are considered to be active Managers.
"Total Distributors and customers" includes our independent Distributors and customers who have purchased products directly from the Company for resale and/or personal consumption during the previous twelve months ended as of the date indicated. This includes Manager, Distributor and customer accounts that may have become inactive since such respective dates.
The following table provides information concerning the number of active Distributors and customers by segment, as of the dates indicated.
Active Distributors and Customers by Segment as of December 31, | |||
2013 | 2012 | 2011 | |
Distributors & Customers | Distributors & Customers | Distributors & Customers | |
NSP Americas, Asia Pacific & Europe | 150,600 | 153,000 | 165,600 |
NSP Russia, Central and Eastern Europe | 131,800 | 125,800 | 122,800 |
Synergy WorldWide | 51,800 | 54,600 | 51,700 |
Total | 334,200 | 333,400 | 340,100 |
"Active Distributors and customers" includes our independent Distributors and customers who have purchased products directly from the Company for resale and/or personal consumption during the previous three months ended as of the date indicated. All of our Managers are active.
The following tables provide information concerning the number of new Managers, Distributors and customers by segment, as of the dates indicated.
New Managers, Distributors and Customers by Segment for the year ended December 31, | ||||||
2013 | 2012 | 2011 | ||||
Distributors & Customers | Managers | Distributors & Customers | Managers | Distributors & Customers | Managers | |
NSP Americas, Asia Pacific & Europe | 148,400 | 3,800 | 166,400 | 4,200 | 185,600 | 4,800 |
NSP Russia, Central and Eastern Europe | 89,300 | 1,600 | 78,000 | 1,500 | 74,700 | 1,700 |
Synergy WorldWide | 71,800 | 1,900 | 73,700 | 1,700 | 72,000 | 1,600 |
Total | 309,500 | 7,300 | 318,100 | 7,400 | 332,300 | 8,100 |
"New Managers" includes independent Managers under our various compensation plans that first achieved the rank of Manager during the previous twelve months ended as of the date indicated.
"New Distributors and Customers" include our independent Distributors and customers who have made their initial product purchase directly from us for resale and/or personal consumption during the previous twelve months ended as of the date indicated.