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 third quarter ended September 30th, 2023. Joining us today are Nature's Sunshine CEO Terence Morehead, BFO 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 floor 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.

Thank you. Good afternoon, and thanks for joining our conference call to discuss our third quarter 2023 financial results. I'd like to remind everyone that this call is available for replay via telephonic dial-ins through November 21st 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 terminologies 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 the CEO of Nature Sunshine, Terrence Moorhead. Terrence?

Thank you, Nate, and good afternoon, everyone. I want to thank you for joining today's call to discuss our third quarter results. 2023 has been another strong year for Nature Sunshine, fueled by increased investment in our global growth strategies, Digital First, Brand Power, and Field Energy. And in the third quarter, we continued to gain traction and deliver strong results. Today, I'll provide some context for our third quarter performance, and offer some insights on how we believe the business is progressing. Shane will then take you through our financials in more detail. As we continue to build on the momentum we experienced in the first half of the year, we can clearly see the positive impact our strategies are having on the business. In the third quarter, we continued to drive growth with reported net sales of $111 million or $112 million when excluding the impact of foreign exchange, which is a 7% increase versus the prior year. EBITDA was also strong in the third quarter, coming in at $10.3 million, which was a 50% increase versus the prior year. Third quarter results were driven by another strong quarter of double-digit sales growth from Asia Pacific, a breakout quarter from our North American business unit that also delivered double-digit sales growth, and strong performance on our gross margin improvement initiatives, where we're starting to realize some of the benefits from our $10 million gross cost savings plan. In Asia Pacific, we continued to deliver strong results as third quarter sales increased 12% versus the prior year on a constant currency basis. Field energy initiatives were a key driver with investments in field activation that focused on improved training and sales incentives, delivering solid order growth in the quarter. Brand Power initiatives focused on investments in new consumer-facing imagery, updated websites, and a new consumer-friendly product bundle, all of which helped attract new, younger consumers. Again, these initiatives allowed us to reach more people and provide more effective follow-up in our key markets. In North America, third quarter sales increased 11% versus the prior year, which is an important milestone for our North American business unit. Our strategic investments in digital and field activation are starting to have a greater impact on the business. And in the third quarter, digital sales increased 68%, driven by new customer growth that was also up 68%. Strong order growth was driven by our digital performance and improved activation with our nutritional health practitioners and retailers. New products and improved sales incentives contributed to the positive results, and moving forward, we hope to build on this momentum by further expanding our digital footprint and increasing the performance of our nutritional health practitioners and specialty retailers. In Europe, our team has done an outstanding job maintaining customer relationships while also attracting new customers to the business. Despite the ongoing challenges, we continue to see a positive consumer response to our products and remain steadfast in our commitment to invest in field energy initiatives that focus on developing more relevant sales tools and incentives and penetrating central European markets that continue to offer untapped potential and allow us to respond to the changing situation on the ground. Moving on to gross margins, we continue to make good progress on our margin-enhancing cost savings initiatives. You'll remember that we've committed to delivering $10 million of gross savings by focusing on several areas. First, driving out costs from ingredients, packaging, and formulations while maintaining quality and performance. Second, improving efficiency and driving out waste from our manufacturing process. And third, reducing costs related to logistics and transportation. We've also taken strategic pricing to offset the ongoing inflationary pressure on our cost of goods. In the third quarter, we started to see the effectiveness of our cost savings initiatives as gross margins increased 141 basis points to 73.1%, driven by our gross margin initiatives, market mix, and the price actions taken earlier this year. We look forward to realizing additional savings as the plan evolves, but right now we're on track and aggressively moving forward. In summary, our third quarter results exemplify the strong underlying fundamentals of our business and we're very pleased with our performance. I'd like to leave you with the following thoughts. First, our business continues to outperform the market with sales growth driven by strategic investments focused on digital, field activation, and brand building. Working in combination, these investments have allowed us to attract and retain more new customers, drive order growth, and build momentum in the market. Second, our gross margin savings initiatives are on track to deliver the $10 million of gross savings we discussed. The team has verified the savings, and we've already started to see the early benefits of our plans as gross margins surged in the third quarter. Over the coming months, we expect to see continued progress. And finally, third, we've built a strong financial position with a solid balance sheet and strong positive cash flow that will allow us to continue to invest in our growth strategies as we move forward. We're still operating in a challenging external environment, but our team is focused, they're executing our strategies well, and we expect to take this positive momentum through the fourth quarter and beyond. With that, I'd like to turn the call over to our Chief Financial Officer, Shane Jones. Shane?