NATURES SUNSHINE PRODUCTS INC Q3 FY2024 earnings call

• Continued executing global growth strategies. - Upgraded North America's digital platform, which led to 17% growth in North America digital sales in Q3. - Placed emphasis on consumer-friendly product packs in Asia Pacific markets, resulting in strong growth in Korea, Taiwan, and Japan. - China was affected by macroeconomic downturn leading to sales decrease. - Implemented $5 million annualized cost savings, with adjusted EBITDA increasing 5% to $10.7 million in Q3.

North America: Third quarter net sales were down about 3%, but digital sales grew 17%. Asia Pacific: Third quarter sales increased 9% on a local currency basis. Korea saw 3% growth, Taiwan 20%, Japan 34%, while China decreased 23%. Europe: Q3 sales increased 5% (3% in local currency), with Central Europe growing 23% (17% in local currency) due to positive response to Power Line products and market expansion.

• Raised full year 2024 net sales range to $443 million to $448 million from prior $436 million to $445 million. - Adjusted EBITDA range increased to $40 million to $42 million from previous $39 million to $42 million. - Q4 expected to be flattish with sales growth between down 2% to up 2%.

• Macro economic environment negatively affecting consumer spending in China. - Foreign currency exchange rates masking savings initiatives' favorable results. - Intermittent supply chain issues with certain ingredients.

Q: Susan Anderson asked about the updated guide and regional performance, with Shane Jones responding that Q4 is expected to be flattish and detailing how APAC regions' strong results in Q3 had some timing effects, China's trend to improve but still down significantly, Central Europe expected similar to Q3, and North America's digital business to perform well but core business having headwinds.

A: Shane Jones: "As you noted, that implies a Q4 of down 2% to up 2%. So a flattish Q4 on the top line. As we look at where that comes from in the APAC region, as you know we had very strong results in Taiwan and Japan. Some of that strength a portion of that is some timing such that it will be a little bit less -- we pulled a little bit of Q4 into Q3. So although we expect to continue to see strong results in those regions, it won't be at the rate that we've seen. It will be lesser in Q4. And then obviously, we'll have strong growth next year as well. As we look at China, China will continue to be -- the trend will get a little bit better than what it's been as far as down. It won't be down as much, but it will still be down significantly. As we look at Central Europe, we expect to see similar results to Q3 there. And then in North America, our digital business will continue to perform well, but in a similar high teens to 20%-ish growth there. And we do expect to see some continued headwinds in the North America core business that will offset that." Q: Linda Bolton-Weiser inquired about new consumer product packs in Asia, Power Line performance, cost savings progress, and supply chain shortages. Terrence Moorehead and Shane Jones responded.

A: Terrence Moorehead: "As it relates to the kind of the rebalancing of the portfolio in APAC and some of the packs we put in place, really what we've done is trying to make a migration... The second piece of your question on the Power Line, great progress in Europe with the Power Line... Shane Jones: "First of all, Linda to give you a little more detail. Last year we realized about $3 million in the previous year in 2023 of those savings as they were just starting to roll on. This year we expect to see about -- year-to-date, we've gotten most of this already another additional $7 million. So by the end of the year we will have achieved that $10 million target... Intermittently, there might be something. Kind of right now I think supplies are actually kind of very good."