Nature's Sunshine Products, Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Nature's Sunshine's financial results for the second quarter ended June 30th, 2023. Joining us today are Nature's Sunshine's CEO, Terence Moorhead. CFO Shane Jones and General Counsel Nate Brower. Following their remarks, we'll open the call for analyst questions. Before we go further, I would like to turn the call over to Mr. Brower as he reads the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Nate, please go ahead.

Hey, thank you. Good afternoon, and thanks for joining our conference call to discuss our second quarter 2023 financial results. I'd like to remind everyone that this call is available for replay via telephonic dial-in through August 23rd and via a live webcast that will be posted in the investor relations portion of our website at ir.naturesunshine.com. The information on this call contains forward-looking statements These statements are often characterized by terminology such as believe, hope, may, anticipate, expect, will, and other similar expressions. Forward-looking statements are not guarantees of future performance, and the actual results may be materially different from the results implied by forward-looking statements. Factors that could cause results to differ materially from those implied herein include, but are not limited to, Those factors disclosed in the company's annual report on Form 10-K under the caption risk factors and other reports filed with the Securities and Exchange Commission. The information on this call speaks only as of today's date, and the company disclaims any duty to update the information provided herein. Now I would like to turn the call over to our CEO, Terrence Moorhead.

Thank you, Nate, and good afternoon, everyone. I want to thank you for joining today's call to discuss our second quarter results, which represent the second strongest quarterly sales in the company's history. Today, I'll provide some context for our second quarter performance and offer some insights on how we believe the business is progressing. Shane will then take you through the specifics of our financials in more detail. In the second quarter, we continued to gain strength, building on the positive momentum we experienced in the first quarter. With reported second quarter net sales of $117 million or $119 million when excluding the impact of foreign exchange, which is a 14% increase versus the prior year. The growth was led by continued strength in Asia Pacific, followed by further stabilization in Europe, and return to growth in North America and LATAM. Adjusted EBITDA was up 26%, coming in at $11.3 million, due to strong sales growth, as well as gross margin expansion from favorable product mix and price increases. While the external operating environment continues to be challenging, the underlying fundamentals and strength of our business remain firmly intact. And the steps we've taken to create a more powerful, consumer-focused business continue to help build momentum in the quarter. Fueled by increased strategic investment, our global growth strategies, brand power, field energy, and digital first, continued to gain traction, building momentum and strength across our operating business units each of which delivered positive growth in the second quarter in asia pacific we continued to deliver strong results with record-breaking second quarter that delivered a 22 sales increase on a constant currency basis our field energy initiatives were a key driver as investment in field activation that focused on sales incentives and training helped drive order growth similarly Our brand power initiatives that focused on rebranding our websites and consumer-facing imagery helped attract a new, younger group of customers that also contributed to order growth in the second quarter. As a reminder, several of our markets are still recovering from the COVID restrictions that prevented them from conducting normal business activities for an extended period of time. China was hardest hit by the restrictions and has only recently been able to focus on restoring customer growth after the restrictions were lifted. Fortunately, our business in China has responded well to the improved market conditions and we're already seeing greatly improved results with a positive outlook moving forward. Overall, We expect strong growth throughout Asia Pacific in the second half of the year as we continue to invest in field activation to drive customer and order growth and invest in new rebranded packaging and several new product launches. In Europe, sales were up 23% versus prior year on a local currency basis, driven by targeted investments to stabilize Central and Eastern Europe. Specifically, Our investments in field energy that focused on developing more relevant tools and incentives to support and motivate distributors and realign field fundamentals to address the changing situation on the ground have helped drive order growth and activation. Additionally, our investments in a new clean energy warehouse and revised distribution network have also helped stabilize the business and improve efficiency. Finally, Our brand power initiatives focused on strengthening customer appeal with rebranded imagery and packaging. We also took the opportunity to take some strategic price increases across the region. Our European team has done an outstanding job driving sales and attracting new customers despite the challenging macroeconomic and geopolitical environment. As we move forward, We believe continued stability in Central and Eastern Europe, combined with strong execution of our field fundamentals, will create opportunities for us to deliver growth across the region in the second half of the year. In North America, we've reached an important milestone as second quarter sales turned positive, increasing 2% versus the prior year. The shift in momentum was primarily driven by our investment in digital and field activation initiatives that allowed us to overcome the headwinds that have negatively impacted the market for the past year. Our digital initiatives continued to gain momentum, with North America digital sales increasing nearly 40% year-to-date with the expectation of stronger growth through the second half of the year, fueled by a substantial increase in new customer acquisition. Our digital and CRM initiatives appear to be headed in the right direction, but what's equally pleasing is that we also saw a significant improvement in the overall business as our investments helped fuel growth in both orders and average order. In the second half of the year, we look forward to building on this momentum by further expanding our digital footprint and increasing the number of nutrition health practitioners recommending our products. Moving on to our supply chain initiatives, we continued to make progress on our margin-enhancing and cost-saving initiatives and have moved into the execution phase of the plan. As a reminder, the structural changes we're making to our product line and supply chain will provide significant improvements to gross margin, but many of the initiatives involve redesigning processes and revamping sourcing relationships, and this takes time. we remain confident we'll achieve our objectives and add significant value. Looking ahead, we remain positive about the future as this quarter's results are indicative of the strong underlying fundamentals of our business. As we build momentum, we'll continue to invest in our key growth strategies and expand our competitive advantage to improve shareholder value. And with that, I'd like to turn the call over to our Chief Financial Officer, Shane Jones. Shane?