NATURES SUNSHINE PRODUCTS INC Q1 FY2025 earnings call

• The company is operating in an uncertain macroeconomic environment, but underlying demand for products remains strong. - Took aggressive steps to minimize tariff exposure, like increasing raw ingredient inventory and moving finished goods. - First quarter results beat analyst expectations with revenue at $113 million (5% increase vs prior year constant currency) and adjusted EBITDA at $11 million (20% increase vs prior year). - Asia Pacific benefited from marketing mix strategies, with Japan and Taiwan as standout performers. - Europe's performance strengthened, driven by Central Europe and expansion in the Baltics. - North America saw digital growth and stabilization in core business, with Subscribe & Thrive program showing potential. - Launched 2024 impact report outlining sustainability goals, with progress made on reducing emissions and waste.

Asia Pacific: First quarter revenue increased 10% versus prior year in local currency. Japan and Taiwan saw sales grow 24% and 18% respectively in local currency. Revenue was $48.7 million, a 5% increase on a reported basis and 10% excluding foreign exchange impact. Europe: Sales increased 8% on a reported basis and 9% on a local currency basis. Strong performance in Central Europe with a 15% local currency increase. North America: Sales declined 4% on both reported and local currency bases. Digital sales grew 19%, and the Subscribe & Thrive autoship program represents approximately 26% of total sales and ~45% of DTC sales.

• Reiterates full year 2025 net sales to range between $445 million and $470 million, inclusive of an estimated $5 million headwind from foreign exchange, implying year-over-year growth net of foreign exchange between negative 1% and 5%. - Adjusted EBITDA expected to range between $38 million and $44 million, assuming gross margin flat to modestly higher and quarterly SG&A at $40 million to $42 million.

• Macroeconomic uncertainty, including international trade, tariffs, and consumer sentiment volatility. - Potential impact of tariffs on raw materials, supply chain disruptions, and consumer behavior changes.

Q: To start with guidance. To clarify this, how did 1Q come in vis-a-vis internal expectations, were they ahead...

A: We were slightly ahead of our internal expectations for the quarter.

Q: If you can talk a little bit about Europe and Asia, obviously, seeing very strong performance there...

A: The market opportunities continue to be there for us. The businesses in both regions are driven by strong fundamentals across sales and marketing. We feel good about the opportunities in both regions, though APAC will face strong comps in the back half of the year.

Q: If you could just talk about North America. And I guess, what do you think needs to -- the digital sales are great, obviously. In terms of the practitioners and the retailers, like how are you thinking about kind of getting that channel back on track in North America...

A: A couple of things: focus and building out fundamentals, new leadership team in place, getting the right tools in place for practitioners, and strengthening marketing proposition. It's a combination of building field fundamentals, tools, and marketing to get North America back on track.