Increases Quarterly Cash Dividend to $0.10 per Share
Michael D. Dean to resign as CEO
Gregory L. Probert, Executive Chairman, to become interim CEO
LEHI, Utah, March 6, 2013 (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 fiscal year ended December 31, 2012, and increased its quarterly cash dividend to $0.10 per share.
The Company also announced that Michael D. Dean has resigned as Chief Executive Officer and as a member of the Board of Directors, effective March 31, 2013. Gregory L. Probert, Executive Chairman of the Board, has been appointed to serve as interim Chief Executive Officer until such time as the Board of Directors names a new CEO. Mr. Dean will enter into a one-year consulting agreement with the Company, and work with Mr. Probert to ensure a smooth transition. Mr. Probert has worked with the Company in a consulting and executive capacity since September 2010. He is the former President and Chief Operating Officer of Herbalife International of America.
Mr.Dean said: "Now that the Company has made significant progress and is well positioned for future growth, this is an appropriate time for me to exit. I am pleased to leave the Company stronger than ever and in capable hands with an outstanding team and talented, loyal sales managers and independent distributors. I will miss working with every one of them."
Mr. Probert stated: "In 2010, when Michael was a Board member, the Board asked him to step in as CEO to stabilize the Company's business, return it to profitability, build a world-class management team and set a strategy for future growth. Michael has successfully accomplished all these goals. We thank him for all of his contributions and wish him all the best in his future endeavors. I am looking forward to working with the Company's outstanding senior management team, talented employees and our loyal distributors to implement an ambitious growth plan."
For the Fourth Quarter of 2012:
For the Full Year of 2012:
Declaration of Quarterly Cash Dividend
The Company's Board of Directors declared a regular quarterly cash dividend of $0.10 per share payable on March 28, 2013 to shareholders of record as of the close of business on March 18, 2013. The quarterly dividend was doubled from $0.05 to $0.10 per share due to the Company's strong cash flow, its record high year-end cash balance of $79.2 million and the Board's commitment to return excess capital to shareholders.
NSP Americas, Asia Pacific and Europe Segment Results for the Fourth Quarter:
NSP Russia, Central and Eastern Europe Segment Results for the Fourth Quarter:
Synergy WorldWide Segment Results for the Fourth Quarter:
Selling, General and Administrative Expenses for the Fourth Quarter:
Effective Income Tax Rate
The effective income tax rate was 39.8 percent, compared with 26.7 percent in the same quarter a year ago. The current quarter's effective income tax rate was above the U.S. federal statutory tax rate of 35.0 percent, which was primarily attributed to a decrease in blended state income tax rate, which causes a permanent difference relating to state deferred tax assets and an increase in liabilities associated with uncertain tax positions. The effective income tax rate of 26.7 percent for the same quarter a year ago was below the U.S. federal statutory tax rate of 35.0 percent, which was primarily attributed to increased foreign tax credit utilization, foreign deductible items, lower tax rates in foreign jurisdictions than the rates in the U.S., and a decrease in the recognition of previous expense related to unremitted earnings.
Non-GAAP Financial Measures
The Company has included information concerning adjusted EBITDA, non-GAAP operating income and non-GAAP net income 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. Adjusted EBITDA has not been prepared in accordance with generally accepted accounting principles (GAAP). These non-GAAP financial measure 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, this non-GAAP financial measure, 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 our 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.
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 340,000 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 Little Heroes Foundation. Additional information about the Company can be obtained at its website, http://www.natr.com/">www.natr.com.
Cautionary Statement Regarding Forward-Looking Statements
In addition to historical information, this release contains certain forward-looking statements, including statements regarding Distributors and Managers and payment of dividends. Nature's Sunshine may, from time to time, make written or oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, Nature's Sunshine's beliefs, expectations, hopes, or intentions regarding future events. Words such as "expects," "intends," "believes," "anticipates," "should," "likely," and similar expressions identify forward-looking statements. All forward-looking statements included in this release are made as of the date hereof and are based on information available to the Company as of such date. Nature's Sunshine assumes no obligation to update any forward-looking statement. Actual results will vary, and may vary materially, from those anticipated, estimated, projected or expected for a number of reasons, including, among others: further reviews of the Company's financial statements by the Company and its Audit Committee; modification of the Company's accounting practices; 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 previous filings with the SEC.
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES | ||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
(Amounts in thousands) | ||
December 31, 2012 |
December 31, 2011 |
|
Assets | ||
Current Assets: | ||
Cash and cash equivalents | $ 79,241 | $ 58,969 |
Accounts receivable, net of allowance for doubtful accounts of $631 and $647, respectively | 9,614 | 9,868 |
Investments available for sale | 2,071 | 5,677 |
Inventories | 43,280 | 41,611 |
Deferred income tax assets | 5,307 | 4,395 |
Prepaid expenses and other | 5,820 | 4,583 |
Total current assets | 145,333 | 125,103 |
Property, plant and equipment, net | 27,950 | 25,137 |
Investment securities | 1,276 | 1,429 |
Intangible assets | 1,002 | 1,151 |
Deferred income tax assets | 11,516 | 16,576 |
Other assets | 6,842 | 6,415 |
$ 193,919 | $ 175,811 | |
Liabilities and Shareholders' Equity | ||
Current Liabilities: | ||
Accounts payable | $ 6,226 | $ 5,980 |
Accrued volume incentives | 18,130 | 19,326 |
Accrued liabilities | 27,302 | 27,938 |
Deferred revenue | 4,311 | 2,603 |
Current installments of long-term debt | 3,350 | 3,296 |
Income taxes payable | 2,071 | 8,655 |
Total current liabilities | 61,390 | 67,798 |
Liability related to unrecognized tax benefits | 10,571 | 10,426 |
Long-term debt | 2,270 | 5,894 |
Deferred compensation payable | 1,276 | 1,429 |
Other liabilities | 2,776 | 2,826 |
Total long-term liabilities | 16,893 | 20,575 |
Shareholders' Equity: | ||
Common stock, no par value; 50,000 shares authorized, 15,810 and 15,569 issued and outstanding as of December 31, 2012 and December 31, 2011 | 77,292 | 71,628 |
Retained earnings | 48,910 | 25,879 |
Accumulated other comprehensive loss | (10,566) | (10,069) |
Total shareholders' equity | 115,636 | 87,438 |
$ 193,919 | $ 175,811 |
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, |
||
2012 | 2011 | |
Net sales revenue (net of the rebate portion of volume incentives of $10,375 and $10,813, respectively) | $ 90,377 | $ 92,056 |
Cost of sales | (23,841) | (21,911) |
Gross profit | 66,536 | 70,145 |
Operating expenses: | ||
Volume incentives | 32,991 | 33,462 |
Selling, general and administrative | 27,719 | 27,086 |
61,204 | 60,548 | |
Operating income | 5,826 | 9,597 |
Other income, net | 1,639 | 798 |
Income before provision for income taxes | 7,465 | 10,395 |
Provision for income taxes | 2,969 | 2,774 |
Net income | $ 4,496 | $ 7,621 |
Basic and diluted net income per common share | ||
Basic: | ||
Net income per common share | $ 0.28 | $ 0.49 |
Diluted: | ||
Net income per common share | $ 0.28 | $ 0.48 |
Weighted average basic common shares outstanding | 15,781 | 15,567 |
Weighted average diluted common shares outstanding |
16,064 | 15,568 |
Dividends declared per common share |
$ 0.05 | $ — |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES | ||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
(Amounts in thousands, except per share information) | ||
Year Ended December 31, |
||
2012 | 2011 | |
Net sales revenue (net of the rebate portion of volume incentives of $43,121 and $44,628, respectively) | $ 367,468 | $ 367,813 |
Cost of sales | (93,324) | (89,409) |
Gross profit | 274,144 | 278,404 |
Cost and expenses: | ||
Volume incentives | 133,267 | 133,883 |
Selling, general and administrative | 106,861 | 109,606 |
Contract termination costs | — | 14,750 |
240,128 | 258,239 | |
Operating income | 34,016 | 20,165 |
Other income, net | 1,480 | 1,847 |
Income before provision for income taxes | 35,496 | 22,012 |
Provision for income taxes | 10,116 | 4,411 |
Net income | $ 25,380 | $ 17,601 |
Basic and diluted net income per common share | ||
Basic: | ||
Net income per common share | $ 1.62 | $ 1.13 |
Diluted: | ||
Net income per common share | $ 1.59 | $ 1.12 |
Weighted average basic common shares outstanding | 15,648 | 15,550 |
Weighted average diluted common shares outstanding |
15,987 | 15,695 |
Dividends declared per common share |
$ 0.15 | $ — |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES | ||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
(Amounts in thousands) | ||
Year Ended December 31, | 2012 | 2011 |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $25,380 | $17,601 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Provision for doubtful accounts | 45 | (133) |
Depreciation and amortization | 4,078 | 4,362 |
Tax benefit from stock option exercise | (378) | — |
Share-based compensation expense | 2,878 | 3,478 |
Loss on sale of property and equipment | 85 | 224 |
Deferred income taxes | 4,270 | (5,073) |
Amortization of bond discount | 9 | 9 |
Purchase of trading investment securities | (92) | (102) |
Proceeds from sale of trading investment securities | 354 | 438 |
Realized and unrealized gains | (90) | (44) |
Foreign exchange gains | (290) | (466) |
Changes in assets and liabilities: | ||
Accounts receivable | 266 | (3,742) |
Inventories | (1,466) | (5,566) |
Prepaid expenses and other | (1,155) | 1,032 |
Other assets | (193) | 2,986 |
Accounts payable | 77 | 1,316 |
Accrued volume incentives | (1,279) | 805 |
Accrued current and other long-term liabilities | (1,289) | (6,152) |
Deferred revenue | 1,708 | (782) |
Income taxes payable | (6,259) | 5,009 |
Liability related to unrecognized tax positions | 145 | (10,943) |
Deferred compensation payable | (153) | (349) |
Net cash provided by operating activities | 26,651 | 3,908 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (6,629) | (2,419) |
Purchases of investments available for sale | (174) | (6,968) |
Proceeds from sale/maturities of investments available for sale | 3,789 | 7,697 |
Proceeds from sale of property, plant and equipment | 25 | 11 |
Net cash used in investing activities | (2,989) | (1,679) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payments of cash dividends | (2,349) | — |
Proceeds from issuance of long-term debt | — | 10,000 |
Principal payments of long-term debt | (3,570) | (810) |
Tax benefit from stock option exercise | 378 | — |
Proceeds from exercise of stock options | 2,408 | 398 |
Net cash provided by (used in) financing activities | (3,133) | 9,588 |
Effect of exchange rates on cash and cash equivalents | (257) | (452) |
Net increase in cash and cash equivalents | 20,272 | 11,365 |
Cash and cash equivalents at beginning of the year | 58,969 | 47,604 |
Cash and cash equivalents at end of the year | $79,241 | $58,969 |
NATURE'S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES | ||
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA | ||
(Amounts in thousands) | ||
(Unaudited) | ||
Three Months Ended December 31, |
||
2012 | 2011 | |
Net income | $4,496 | $7,621 |
Adjustments: | ||
Depreciation and amortization | 1,050 | 1,158 |
Share-based compensation expense | 877 | 1,561 |
Other (income) expense, net* | (1,639) | (798) |
Taxes | 2,969 | 2,774 |
Adjusted EBITDA | $7,753 | $12,316 |
Year Ended December 31, |
||
2012 | 2011 | |
Net income | $25,380 | $17,601 |
Adjustments: | ||
Depreciation and amortization | 4,078 | 4,362 |
Share-based compensation expense | 2,878 | 3,478 |
Contract termination costs | — | 14,750 |
Other (income) expense, net* | (1,480) | (1,847) |
Taxes | 10,116 | 4,411 |
Adjusted EBITDA | $40,972 | $42,755 |
* Other income (expense), 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, | ||||||
2012 | 2011 | 2010 | ||||
Distributors & Customers |
Managers |
Distributors & Customers |
Managers |
Distributors & Customers |
Managers |
|
NSP Americas, Asia Pacific & Europe | 350,400 | 8,100 | 388,400 | 8,700 | 431,300 | 9,300 |
NSP Russia, Central and Eastern Europe | 252,700 | 5,600 | 266,200 | 5,400 | 236,600 | 5,400 |
Synergy WorldWide | 118,200 | 2,900 | 112,300 | 2,700 | 95,600 | 2,300 |
Total | 721,300 | 16,600 | 766,900 | 16,800 | 763,500 | 17,000 |
"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 purchase 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, | |||
2012 | 2011 | 2010 | |
Distributors & Customers |
Distributors & Customers |
Distributors & Customers |
|
NSP Americas, Asia Pacific & Europe | 153,000 | 165,600 | 181,600 |
NSP Russia, Central and Eastern Europe | 125,800 | 122,800 | 123,400 |
Synergy WorldWide | 54,600 | 51,700 | 45,100 |
Total | 333,400 | 340,100 | 350,100 |
"Active Customers and Distributors" 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, | ||||||
2012 | 2011 | 2010 | ||||
Distributors & Customers |
Managers |
Distributors & Customers |
Managers |
Distributors & Customers |
Managers |
|
NSP Americas, Asia Pacific & Europe | 166,400 | 4,200 | 185,600 | 4,800 | 218,100 | 6,900 |
NSP Russia, Central and Eastern Europe | 78,000 | 1,500 | 74,700 | 1,700 | 74,800 | 2,000 |
Synergy WorldWide | 73,700 | 1,700 | 72,000 | 1,600 | n/a | n/a |
Total | 318,100 | 7,400 | 322,300 | 8,100 | 292,900 | 8,900 |
"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.