NATURES SUNSHINE PRODUCTS INC Q2 FY2025 earnings call

• Second quarter continued strong performance with momentum from Q1. • Focus on digital execution, Subscribe & Thrive Autoship program, and innovation. • North America showed strength in digital and core business. • Asia Pacific had growth in Japan but challenges in Taiwan and South Korea. • Europe had growth in Central Europe but decline in Eastern Europe. • Strategies like sharpening digital execution and targeted field activation are working.

In the second quarter, revenue was $115 million, up 4% vs prior year or 2% in constant currency. Adjusted EBITDA was $11 million, up 8% vs prior year. North America: Sales increased 4% vs prior year, driven by 34% growth in digital business and Subscribe & Thrive Autoship program representing over 50% of DTC sales. Asia Pacific: Sales increased 5% or 2% ex-FX. Japan saw 27% growth, China sales stabilized but still impacted by macroeconomic environment, Taiwan and South Korea faced challenges. Europe: Sales up 1% but down 2% ex-FX. Central Europe had robust growth, Eastern Europe had a decline.

• Raised full-year revenue guidance to $460 million to $475 million (1%-5% Y/Y growth). • Raised adjusted EBITDA guidance to $41 million to $45 million (1%-11% Y/Y growth). • Assumes modestly higher gross margin in Q3 and Q4 and quarterly SG&A of $41M-$42M.

• Macroeconomic uncertainty. • Trade and tariff issues impacting certain markets. • Challenges in Taiwan, South Korea, and China due to macroeconomic environment and trade policy.

Q: Congratulations on the strong results this quarter. Just picking up where Shane left off on the guidance. Plus 1% to plus 11% on year-over-year EBITDA still seems to imply like a pretty wide range. So just curious what you're thinking about on both ends of that range? What's being contemplated that you would end up at plus 1%? And what would have to happen for you to get to plus 11%?

A: Shane Jones mentioned good momentum in the business, especially in North America, and digital business acceleration would impact the range. The difference would be in digital business growth. If digital acceleration continues, near top end; if not, lower in the range. Also, Asia's Taiwan has tough comps.

Q: Nice job on the quarter, you guys. I guess maybe just going back to North America, obviously, great result in the digital business. It sounded like the core business with the practitioners and the retail partners also improved. I guess I'm curious, did you see a return to growth there? And then I think you mind just kind of some better engagement, better field activation. Maybe if you could expand a little bit on kind of what's driving that improvement and then your expectation there for the rest of the year?

A: Terrence Moorehead said on the core, they saw vast improvement in activation and sales. Driving factors include improved touch management in the field, changed staffing, new talent, and built out sales support team. Expect momentum to continue.

Q: Just looking out to the back half by region, you mentioned some tough compares in Asia coming. I guess how should we think about the puts and takes in terms of growth and the drivers there as we look out in the back half? Should we expect maybe North America to kind of start to be more of the driver of growth there versus the international markets we've seen over the last few quarters?

A: Terrence Moorehead and Shane Jones said continued acceleration in North America, with core and digital business. Asia Pacific expected low single-digit to mid-single-digit growth with tough comps. Europe expected growth in Central Europe and low single-digit in Eastern Europe.