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NATURES SUNSHINE PRODUCTS INC (NATR)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered solid top-line growth and margin progress: revenue $113.2M (+2% reported, +5% cc), gross margin 72.1% (+90 bps YoY), and adjusted EBITDA $11.0M (+20% YoY) .
  • Clear beat vs S&P Global consensus: revenue $113.2M vs $109.3M*, EPS $0.25 vs $0.165*, with two estimates on both metrics; adjusted EBITDA outperformed consensus EBITDA $9.75M* though definitions differ (company reports adjusted EBITDA) .
  • Asia and Europe remained growth engines (Asia +10% cc; Europe +9% cc), while North America showed early stabilization; digital sales rose 19% YoY and Subscribe & Thrive represented ~26% of sales (≈45% of DTC) .
  • Guidance maintained: FY25 net sales $445–$470M and adjusted EBITDA $38–$44M, with SG&A targeted at $40–$42M per quarter and gross margin flat-to-modestly higher; management cited tariff uncertainty and FX as key watch items .
  • Capital allocation upsized: Board authorized up to $25M additional share repurchases (on top of $8.3M remaining); balance sheet remains net-cash with $86.5M cash and zero debt, a potential catalyst for buyback acceleration .

What Went Well and What Went Wrong

What Went Well

  • Asia and Europe strength: APAC +10% cc (Taiwan +18% cc, Japan +24% cc), Europe +9% cc; strategic focus on high-velocity “Power Line” products and field activation drove growth .
  • Margin execution: gross margin expanded to 72.1% (+90 bps YoY) on pricing and savings; operating income up to $6.2M (5.4% of sales) .
  • Digital momentum: North America digital sales +19% YoY; Subscribe & Thrive at ~26% of total sales and ~45% of DTC, supporting customer activation and retention .

What Went Wrong

  • North America still down YoY (-4%), reflecting a difficult comp and consumer sentiment; volume incentives rose to 30.8% of sales (mix/promotions), modestly pressuring contribution margin .
  • Tariff and FX headwinds persist; management increased inventories (raw and finished goods) to mitigate risk, raising inventory to $64.9M (+$5.5M vs YE’24), which can weigh on working capital efficiency near term .
  • Macro conservatism embedded in guidance (FX headwind ~$5M; gross margin flat-to-modestly higher); implies cautious trajectory despite Q1 beat momentum .

Financial Results

Consolidated Performance (oldest → newest)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$114.6 $118.2 $113.2
Diluted EPS ($USD)$0.23 $(0.02) $0.25
Gross Margin (%)71.3% 72.0% 72.1%
Operating Income ($USD Millions)$5.3 $4.6 $6.2
Adjusted EBITDA ($USD Millions)$10.7 $10.3 $11.0

Q1 2025 Actual vs S&P Global Consensus

MetricConsensusActualSurprise
Revenue ($USD Millions)$109.3*$113.2 +$3.97M / +3.6%
EPS ($USD)$0.165*$0.25 +$0.085
EBITDA ($USD Millions)$9.75*$11.0 (Adj.) +$1.25 (note)

Notes: Consensus counts: Revenue (2*), EPS (2*). Company reports adjusted EBITDA; S&P Global “EBITDA” consensus may not be directly comparable to Adjusted EBITDA.
Values retrieved from S&P Global*.

Segment Net Sales – Q1 2025 vs Q1 2024

SegmentQ1 2024 ($000)Q1 2025 ($000)YoY (%)FX Impact ($000)YoY ex-FX (%)
Asia$46,220 $48,653 +5.3% $(2,214) +10.1%
Europe$22,296 $24,114 +8.2% $(90) +8.6%
North America$36,525 $35,018 (4.1%) $(166) (3.7%)
Latin America & Other$5,952 $5,463 (8.2%) $(271) (3.7%)
Total$110,993 $113,248 +2.0% $(2,741) +4.5%

KPIs and Balance Sheet

KPIQ4 2024Q1 2025
Digital sales YoY growth (NA)+17% +19%
Subscribe & Thrive share of sales~26% ~26% total; ~45% of DTC
Cash & Cash Equivalents ($USD Millions)$84.7 $86.5
Debt$0 $0
Share repurchases in period540k FY’24 ($8.9M) 38k ($0.5M at $12.47/sh)
Inventory ($USD Millions)$59.4 $64.9

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($USD Millions)FY 2025$445–$470 $445–$470 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$38–$44 $38–$44 Maintained
Gross MarginFY 2025Modestly higher Flat to modestly higher Slightly moderated
SG&A ($USD Millions per quarter)FY 2025“Slightly more than $40M” $40–$42 Clarified range
FX Headwind to SalesFY 2025~$5M ~$5M Maintained
Share Repurchase AuthorizationOngoing$8.8M remaining on $30M (YE’24) +$25M new authorization (total ~$33.3M capacity) Raised
Tax Rate / OI&EFY 2025Not providedNot providedN/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24, Q4’24)Current Period (Q1’25)Trend
Tariffs & macro uncertaintyConservatism added to FY25 outlook; potential $2–$3M tariff impact to GM if enacted Proactive mitigation (inventory build, supplier contracts, finished goods positioning); guidance midpoint assumes persistent instability Heightened vigilance; mitigation active
Supply chain & inventory postureSafety stock building; workflow automation; repatriating production 9–12 months of inventory on high-risk products; inventory up to $64.9M to buffer tariffs Elevated buffers; execution focus
Digital toolkit (AI-enabled)Planned rollout to distributors; mobile-first, AI decisioning described On track for 2H’25 launch; no order disruption expected Execution progressing
Regional growth driversAPAC (Taiwan, Japan, Korea) and Central Europe strong APAC +10% cc; Japan +24% cc, Taiwan +18% cc; Europe +9% cc (Central Europe +16% lc) Strength sustained
North America trajectorySlight decline; digital +17% YoY; toolkit planned Sales down 4%, but sequential order growth; digital +19% YoY; leadership and fundamentals improving Stabilizing; digital gaining share
FX headwindsFY24/25 noted FX still a drag; guidance includes ~$5M headwind Persistent headwind

Management Commentary

  • CEO: “First quarter revenue came in at $113 million, up 5% on a constant currency basis, and adjusted EBITDA came in at $11 million, up 20% versus prior year.”
  • CEO: “Exceptional growth… in Asia and Europe… early signs of stabilization in North America and continued improvements to gross margin.”
  • CFO: “Gross margin increased 90 basis points to 72.1%… SG&A decreased to 35.8%… Adjusted EBITDA… increased 20% to $11 million.”
  • CFO: “We are reiterating our previous guidance… net sales $445–$470M… adjusted EBITDA $38–$44M… quarterly SG&A $40–$42M… gross margin flat to modestly higher.”

Q&A Highlights

  • Guidance philosophy: Midpoint assumes persistent macro/tariff instability; lower bound implies recession-like conditions; upper bound reflects continuation of Q1 strength .
  • Tariff preparedness: Mitigation via inventory, supplier contracts, and finished goods positioning; environment remains fluid; conservative stance reiterated .
  • Digital toolkit rollout: Still on track for 2H’25; incremental toolset for practitioners/retailers with AI-backed CRM and marketing; no disruption expected .
  • Regional outlook: APAC and Europe fundamentals remain robust; APAC comps tough in 2H; growth tied to new customers and orders, viewed as sustainable .

Estimates Context

  • Q1 2025 S&P Global consensus vs actual: revenue $109.3M* vs $113.2M, EPS $0.165* vs $0.25, EBITDA $9.75M* vs $11.0M (company adjusted EBITDA). Two estimates on revenue and EPS.
    Values retrieved from S&P Global*. Actuals per the company’s press release/8-K .

Key Takeaways for Investors

  • Beat and raise potential: Strong Q1 beat on revenue and EPS with margin expansion; guidance maintained but conservative—any tariff relief or FX abatement could drive upside and estimate revisions .
  • Regional mix improves quality: APAC/Europe growth offsets NA softness; mix and cc momentum support gross margin resilience despite incentive mix .
  • Digital flywheel building: 19% NA digital growth and Subscribe & Thrive penetration (~26% total; ~45% DTC) indicate durable customer engagement; AI toolkit in 2H’25 could accelerate activation .
  • Margin/cost discipline: SG&A tightly managed at 35.8% of sales; operating leverage visible with YoY EBIT/EBITDA growth; watch incentive rates and FX for variability .
  • Capital returns: $25M incremental buyback authorization with net-cash balance sheet ($86.5M cash, no debt) positions NATR to buy opportunistically—supportive for shares on weakness .
  • Risk monitor: Tariff trajectory and retaliatory regimes remain the main wildcards; inventory build provides buffer but elevates working capital—track cash conversion in Q2/Q3 .
  • Near-term trading setup: Positive beat, margin trends, and buyback authorization are catalysts; stock likely sensitive to tariff headlines and NA demand stabilization commentary into Q2 .

Additional Press Releases (Q1 2025)

  • 2024 Impact Report: Progress toward 2025 ESG goals (TRUE Zero Waste Gold, emissions and waste reductions, 100% renewable energy in manufacturing) .