Nature’s Sunshine Products ((NATR)) has held its Q4 earnings call. Read on for the main highlights of the call.
Nature’s Sunshine Products’ recent earnings call revealed a balanced sentiment, highlighting both significant achievements and notable challenges. The company reported strong revenue growth, particularly in the Asia-Pacific region and digital sales, but faced hurdles such as declining sales in North America, increased SG&A expenses, and potential tariff impacts. While the positive aspects were substantial, they were tempered by these ongoing challenges.
Record-Breaking Revenue
The fourth quarter of 2024 was a milestone for Nature’s Sunshine Products, with the company reporting a record-breaking revenue of $118 million, or $120 million on a constant currency basis. This achievement marks the largest single quarter in the company’s 52-year history, reflecting a 10% increase compared to the previous year.
Strong Performance in Asia-Pacific
The Asia-Pacific region was a standout performer, reporting an 18% growth to $56.3 million, or 21% excluding foreign exchange impacts. This growth was driven by impressive local currency sales increases in Taiwan, Japan, and Korea, with percentages of 29%, 27%, and 21%, respectively.
Digital Sales Growth
Digital sales saw a significant boost, increasing by 17% in the fourth quarter and 22% for the full year 2024. This growth rate is more than double the supplement industry’s average digital growth rate, underscoring the company’s successful digital strategy.
European Market Success
Sales in Europe also showed positive momentum, with an 8% increase in Q4 on both a reported and local currency basis. Central Europe, in particular, experienced a 17% increase, driven by the popularity of Power Line products and effective field initiatives.
North America Sales Decline
In contrast, North America faced challenges, with sales declining by 2% in the fourth quarter and 1% for the full year 2024. This decline was attributed to weaker-than-expected customer activation in the core business.
Operating Income Decrease
Operating income saw a decrease, dropping to $4.6 million or 3.8% of net sales in Q4, compared to $5.7 million or 5.2% of net sales in the previous year. This decline reflects the financial pressures the company is facing.
Impact of Tariffs
The potential impact of tariffs remains a concern, with a possible $2 million to $3 million hit to gross margins if proposed tariffs, including retaliatory ones, are enacted for the entire year.
Increased SG&A Expenses
Selling, general, and administrative expenses rose to $43.7 million in Q4 from $39.9 million in the previous year. This increase was due to variable costs and one-time costs related to initiatives in Asia.
Forward-Looking Guidance
Looking ahead, Nature’s Sunshine provided guidance for the fiscal year 2025, projecting net sales to range between $445 million and $470 million. This forecast accounts for an estimated $5 million negative impact due to foreign exchange, implying growth between negative 1% and 5% excluding this impact. The company anticipates adjusted EBITDA to be between $38 million and $44 million, with a modest increase in gross margin and quarterly SG&A expenses slightly above $40 million. The guidance reflects a cautious outlook due to macroeconomic uncertainties, including potential tariff impacts and geopolitical factors, particularly in Eastern Europe and China.
In conclusion, Nature’s Sunshine Products’ earnings call painted a picture of both triumph and challenge. While the company celebrated record-breaking revenue and strong growth in digital and Asia-Pacific sales, it also acknowledged the hurdles of declining North American sales and increased expenses. The forward-looking guidance suggests a cautious optimism, with strategic initiatives aimed at navigating the uncertain economic landscape.