Investor Presentation. March 2016

Transcription

1 Investor Presentation March 2016

2 Safe Harbor Statement Certain information included or incorporated herein by reference in this presentation may be deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 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. For example, information appearing under Management s Discussion and Analysis of Financial Condition and Results of Operations includes forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. any negative consequences resulting from the economy, including the availability of liquidity to the Company, its independent distributors and its suppliers or the willingness of its customers to purchase products; its relationship with, and its inability to influence the actions of, its independent distributors, and other third parties with whom it does business; improper activity by its employees or independent distributors; negative publicity related to its products, ingredients, or direct selling organization and the nutritional supplement industry; changing consumer preferences and demands; its reliance upon, or the loss or departure of any member of, its senior management team which could negatively impact its distributor relations and operating results; increased state and federal regulatory scrutiny of the nutritional supplement industry, including, but not limited to targeting of ingredients, testing methodology and product claims; the competitive nature of its business and the nutritional supplement industry; regulatory matters governing its products, ingredients, the nutritional supplement industry, its direct selling program, or the direct selling market in which it operates; legal challenges to its direct selling program or to the classification of its independent distributors; risks associated with operating internationally and the effect of economic factors, including foreign exchange, inflation, disruptions or conflicts with the its third party importers, governmental sanctions, ongoing Ukraine and Russia political conflict, pricing and currency devaluation risks, especially in countries such as Ukraine, Russia and Belarus; uncertainties relating to the application of transfer pricing, duties, value-added taxes, and other tax regulations, and changes thereto; its dependence on increased penetration of existing markets; cyber security threats and exposure to data loss; its reliance on its information technology infrastructure; the sufficiency of trademarks and other intellectual property rights; changes in tax laws, treaties or regulations, or their interpretation; taxation relating to its independent distributors; product liability claims; the full implementation of its joint venture for operations in China with Fosun Industrial Co., Ltd., as well as the legal complexities, unique regulatory environment and challenges of doing business in China generally; its inability to register products for sale in Mainland China; managing rapid growth in China; and the slowing of the Chinese economy and/or the devaluation of the Chinese Renminbi. All forward-looking statements speak only as of the date of this presentation and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this presentation. Except as is required by law, we expressly disclaim any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this presentation. Throughout this presentation, we refer to Nature s Sunshine Products, Inc., together with its subsidiaries, as we, us, our Company or the Company. 2

3 Overview of Nature s Sunshine Products Global natural health and wellness company that manufactures, markets and distributes 2,700 SKUs through the direct selling and retail channels, utilizing two distinct brands Nature s Sunshine and Synergy Global footprint spanning more than 40 countries with over 576,000 independent Managers, Distributors and customers Strong R&D capabilities provide competitive advantage and enable innovative science-based solutions to address mega-trend health conditions State-of-the-art manufacturing facility supports industry leadership in quality, safety and efficacy Expect to enter China in Q through first and only Chinese-American direct selling JV with Fosun Pharma 3

4 Diversified Revenue Mix Revenue by Business Unit Revenue by Geography Revenue by Product NSP Russia, Central and Eastern Europe 8% China and New Markets 1% Central & South America 7% Weight Management 8% Personal Care 4% Synergy WorldWide 35% NSP Americas 55% Europe 16% Asia Pacific 24% North America 53% Immune 8% Cardiovascular 15% General Health 42% Digestive 23% Note: Percentage breakdown in pie charts for the year ended December 31,

5 Robust Product Portfolio Addressing Leading Health Conditions in the U.S. Share of Top Health Conditions Categories Overall U.S. Health Conditions U.S. Market Sales $mm NSP # of Products In Category NSP US 2015 Sales $000s % of NSP US 2015 Sales Sports/Energy 15% $4, $2,300 1% General Health 15% $4, $31,094 20% Weight Management 14% $4, $8,883 6% Cardiovascular 7% $2, $12,082 8% Immune 7% $2, $19,391 12% Bone Health 6% $1, $4,413 3% Digestive (includes liver/detox) 5% $1, $40,755 26% Joint Health 5% $1, $5,173 3% Cellular Health 4% $1,285 2 $362 0% Blood Sugar Support/Diabetes 4% $1, $2,768 2% Beauty/Skin Care 2% $737 9 $2,017 1% Cognitive Function 2% $631 9 $2,914 2% Sexual Health 2% $571 5 $977 1% Mood 2% $ $12,000 8% Women's Health 1% $ $4,938 3% Vision Health 1% $412 5 $1,613 1% Sleep 1% $407 6 $588 0% 5

6 Strong Science Capabilities Systems Phytochemicals Discovery Delivery Clinical Provides strong competitive advantage that can be leveraged to enter new channels Filed two patent applications in 2015: ProArgi-9+ and CardioxLDL Dr. Matt Tripp, Chief Scientific Officer, leads highly skilled team of scientists, that includes 8 PhDs and 3 medical doctors (also 4 MS degreed scientists) who work with top researchers at universities to study and test our products Established Global Medical and Scientific Advisory Board focused on the science underlying health mega-trends (currently 6 member board including Dr. Tripp) Opened the Hughes Center for Research and Innovation, a Molecular Biology and Phytochemistry clinic and laboratory, in February

7 The Hughes Center for Research & Innovation 5,400 square foot, multi-million dollar R&D center and medical clinic opened in February 2015 at our corporate headquarters in Lehi, UT Serves as home base for researchers to conduct scientific research and product development Facility houses state-of-the-art equipment and medical clinic to perform in-house clinical studies Provides capability to monitor and control entire product lifecycle 7

8 State-of-the-Art Manufacturing Capabilities 270,000 sq. ft. manufacturing facility built to pharmaceutical standards Currently operating at 60% capacity In-house manufacture of tablets, capsules, liquids, powders and stick pack products Operational Excellence initiatives resulted in >$1M in the last 12 months Investing in science, R&D and manufacturing to strengthen our competitive advantage in: Development and speed to market of innovative product programs Development of best-in-class processes that enhance efficiency, improve service, reduce internal costs and empower distributors In-house labs enable the development of specifications and test methods that ensure the highest quality in the industry Regulated by the FDA (Food & Drug Association), USDA (United States Department of Agriculture) and TGA (Therapeutic Goods Administration in Australia) 8

9 Global Direct Selling Market ($ in Billions) 180 The Direct Selling market is growing, fueled by China 160 $147 $ $ $ $8 $13 $20 $ Rest of World China Source: World Federation of Direct Selling Associations 9

10 China is a Key Component of our Growth Strategy Haerbing China is the 2 nd largest Direct Selling Market and the 2 nd largest VMS Market Shenyang Changchun Beijing Amway China revenues of $4 B & 29% of the China direct selling market Shijiazhuang Jinan Qingdao NuSkin China revenues were $772 M in 2015 East China North China Northeast China Chengdu Xian Chongqing Zhenzhou Wuhan Changsha Nanjing Wuxi Suzhou Shanghai Hefei Hangzhou Ningbo Nanchang Herbalife received Chinese direct selling license in 2007; Grew its Chinese business to $846 M in 2015 Mid China Northwest China Southwest China Kuming Nanning Guangzhou Shenzhen Fuzhou USANA grew its China business to over $440 M in 2015 South China Source: SFDA State Food and Drug Administration ( China)Southern Research Institute 10

11 Entering China Through Alliance with Fosun Pharma Expect to launch operations in China in Q through direct selling channel First and only Chinese-American direct selling partnership in China Working towards obtaining direct selling license; combines NATR s 40+ years of experience with Fosun s brand recognition Products ready to be in market Management team in place under the leadership of Paul Noack, President of China and New Markets, to ensure successful launch Strong NATR team has significant direct selling experience in China Fosun Pharma provides significant local presence with strong Chinese government relations Eases navigation of Chinese regulatory environment to help mitigate risks Blue cap product registration and general food importation process is underway Opened Shanghai office headquarters 11

12 NSP Americas (55% (1) of Business) Six consecutive quarters (1) of net sales growth for NSP United States & Canada The IN.FORM program, which is focused on weight management and building a daily habit of health, continues to fuel growth Launched several new products in 2015 including patent-pending CardioxLDL for cholesterol metabolism support Re-launched an updated and extended line of authentic essential oils Continuing to gain traction with Distributor retail sales tools in North America Continuing to expand the IN.FORM program in both North America and Latin America Protecting the legacy business in Latin America amidst regulatory challenges while rolling out new IN.FORM business model (1) As of the fourth quarter ended December 31,

13 The IN.FORM Business Method Science-based, clinically studied, patent-pending program that supports metabolic function and lowers metabolic age Conducted IRB-approved, 2 arm healthy weight management clinical study on healthy individuals: Compared a novel, high phytonutrient, high protein diet and lifestyle program with identical program that included five Nature s Sunshine supplements Demonstrated statistically significant improvement in weight loss, fat loss, healthy blood pressure already within the healthy range, healthy insulin and lipids (triglycerides, LDL and total cholesterol) levels already within the healthy range 56% improvement in weight loss vs. diet alone 65% improvement in fat loss vs. diet alone 40% improvement in metabolic age vs. diet alone Demonstrated superiority over competitive programs (weight, fat, cardiovascular biomarkers) Filed program provisional patent application 13 13

14 Synergy WorldWide (35% (1) of Business) Q was the 2 nd highest quarter for net sales in the Company s history Geographic diversity creates opportunity for growth Growth driven by key markets in Synergy Asia namely Korea, Japan and Indonesia Working to reignite growth in Europe and North America through the launch of new business and product systems and sales and marketing initiatives that have proven successful in Asia Hired new European General Manager Developing a new Elite Health, first time brand will have a single global business and product system Taking steps to streamline focus from multiple product strategies to a more cohesive sales method across all regions Goal to achieve a unified, science-based product offering geared towards detox, weight management (SLMsmart) and building a daily habit of health Patent-pending ProArgi-9+ formula continues to be a top selling product in all major Synergy markets (1) As of the fourth quarter ended December 31,

15 NSP Russia, Central and Eastern Europe (8% (1) of Business) Strong reputation for reliability, longevity and quality in region Net sales continue to be impacted by political unrest in Ukraine and Russia and the devaluation of local currencies against the U.S. dollar since Q Recently experienced first sequential revenue growth quarter in two years (1) Strong relationship with local general dealer to maintain service levels and retain stability until unrest subsides Focusing efforts on retention and engagement of distributors and customers in the region by: Targeted price promotions, events and training to maintain leaders and customers Introduction of value-priced product kits and programs that align with major health category trends and building a daily habit of health Refreshing and strengthening existing products Keeping leaders Highly variable cost structure allows us to maintain profitability through adverse market conditions (1) As of the fourth quarter ended December 31,

16 Financial Highlights Net Sales Revenue Adjusted EBITDA (1) $ in Millions $ in Millions $400 $350 $300 $362 $361 $10 $8 $57 $58 $370 $366 $8 $6 $63 $50 $325 $27 $4 $40 $30 $20 $10 $43 $41 $32 $27 $23 $250 $94 $101 $108 $128 $114 $ $200 EPS From Continuing Operations $150 $1.60 $100 $50 $201 $194 $191 $182 $179 $1.20 $0.80 $0.40 $1.12 $1.59 $1.07 $0.56 $0.77 $ $ NSP Americas Synergy WorldWide NSP RCEE China & New Markets (1) Adjusted to exclude losses from discontinued operations, one-time contract termination costs, share-based compensation and other income. 16

17 Strong Balance Sheet $41.4 million in cash and cash equivalents, as of December 31, 2015 Very little debt of $2.7 million as of December 31, 2015 Availability of $22.3 million on revolving credit facility Generated $10.2 million in cash flow from operations in 2015 $ in Millions $90 Cash (1) $80 $70 $60 $50 $40 $30 $20 $10 $0 $79 $77 $59 $59 $50 $63 $41 $44 $48 $38 $29 $15 $14 $11 $ U.S. International (1) Includes payment of special dividend of $1.50 per share in Q of ~$24 million and Q of ~$28 million. 17

18 11/88 05/89 11/89 05/90 11/90 05/91 11/91 05/92 11/92 05/93 11/93 05/94 11/94 05/95 11/95 05/96 11/96 05/97 11/97 05/98 11/98 05/99 11/99 05/00 11/00 05/01 11/01 05/02 11/02 05/03 11/03 05/04 11/04 05/05 11/05 05/06 11/06 05/07 11/07 05/08 12/08 05/09 11/09 05/10 11/10 05/11 11/11 03/12 08/12 03/13 08/13 03/14 08/14 11/14 05/15 11/15 03/16 Stewards of Capital Annual dividend of $0.40 (4.3% yield) (1) Special dividends of $1.50 per share paid on August 29, 2013 and September 19, 2014 Completed share repurchases of $6.6 million in 2015 under $20 million share repurchase program Regular Quarterly Dividends $0.20 $1.60 $0.18 $1.50 $0.16 $0.14 $0.12 $0.10 $0.08 $0.06 $0.04 $0.02 $- (1) Dividend yield as of March 28,

19 Investment Highlights Well-positioned globally within high growth Vitamin, Mineral and Supplement category Entry into China provides opportunity for sustainable long-term growth Highly scalable business model with strong balance sheet Science-based product and program development provides strong competitive advantage In-house manufacturing through state-of-the-art facility with strong R&D capabilities World class management team with experience in direct selling, consumer goods and international operations 19