SEC Form 10-Q filed by Nature's Sunshine Products Inc.

11/7/24 5:15:56 PM ET

$NATR

Biotechnology: Pharmaceutical Preparations

Health Care

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________________

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 001-34483

NATURE’S SUNSHINE PRODUCTS, INC.

(Exact name of Registrant as specified in its charter)


Utah						87-0327982
(State or other jurisdiction of						(IRS Employer
incorporation or organization)						Identification No.)

2901 Bluegrass Boulevard, Suite 100

Lehi, Utah 84043

(Address of principal executive offices and zip code)

(801) 341-7900

(Registrant’s telephone number including area code)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, no par value	NATR	Nasdaq Capital Market

Indicate by check mark whether the registrant; (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and an “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o						Accelerated filer ☒

Non-accelerated filer o						Smaller reporting company ☒

						Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ý.

The number of shares of Common Stock, no par value, outstanding on October 25, 2024, was 18,475,569 shares.

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NATURE’S SUNSHINE PRODUCTS, INC.

FORM 10-Q

For the Quarter Ended September 30, 2024

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Part I. Financial Information			4

	Item 1.	Financial Statements (Unaudited)	4

		Condensed Consolidated Balance Sheets	4
		Condensed Consolidated Statements of Income	5
		Condensed Consolidated Statements of Comprehensive Incom e	7
		Condensed Consolidated Statement s of Changes in Shareholders’ Equity	8
		Condensed Consolidated Statements of Cash Flows	10
		Notes to Condensed Consolidated Financial Statements	11

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	29

	Item 4.	Controls and Procedures	29

Part II. Other Information			30

	Item 1.	Legal Proceedings	30

	Item 1A.	Risk Factors	30

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30

	Item 3.	Defaults Upon Senior Securities	31

	Item 4.	Mine Safety Disclosures	31

	Item 5.	Other Information	31

	Item 6.	Exhibits	32

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information included or incorporated herein by reference in this report may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may include, but are not limited to, statements relating to our objectives, plans, strategies and financial results, including expected improvement in gross profit and gross margin. 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 in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we 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. Important factors that could cause actual results, developments and business decisions to differ materially from forward-looking statements are more fully described in this report, including the risks set forth under “Risk Factors” in Item 1A, and in the Company's Annual Report on Form 10-K for the year ended December 31, 2023, but include the following:

•extensive government regulations to which the Company’s products, business practices and manufacturing activities are subject;

•registration of products for sale in foreign markets, or difficulty or increased cost of importing products into foreign markets;

•legal challenges to the Company’s direct selling program or to the classification of its independent consultants;

•laws and regulations regarding direct selling may prohibit or restrict our ability to sell our products in some markets or require us to make changes to our business model in some markets;

•liabilities and obligations arising from improper activity by the Company’s independent consultants;

•product liability claims;

•impact of anti-bribery laws, including the U.S. Foreign Corrupt Practices Act;

•the Company’s ability to attract and retain independent consultants;

•the loss of one or more key independent consultants who have a significant sales network;

•potential for increased liability and compliance costs relating to the Company’s joint venture for operations in China with Fosun Industrial Co., Ltd.;

•the effect of fluctuating foreign exchange rates;

•failure of the Company’s independent consultants to comply with advertising laws;

•changes to the Company’s independent consultants' compensation plans;

•geopolitical issues and conflicts;

•negative consequences resulting from difficult economic conditions, including the availability of liquidity or the willingness of the Company’s customers to purchase products;

•risks associated with the manufacturing of the Company’s products;

•supply chain disruptions, manufacturing interruptions or delays, or the failure to accurately forecast customer demand;

•failure to timely and effectively obtain shipments of products from our manufacturers and deliver products to our independent consultants and customers;

•world-wide slowdowns and delays related to supply chain, ingredient shortages and logistical challenges;

•uncertainties relating to the application of transfer pricing, duties, value-added taxes, and other tax regulations, and changes thereto;

•changes in tax laws, treaties or regulations, or their interpretation;

•failure to maintain an effective system of internal controls over financial reporting;

•cybersecurity threats and exposure to data loss;

•the storage, processing, and use of data, some of which contain personal information, are subject to complex and evolving privacy and data protection laws and regulations;

•reliance on information technology infrastructure; and

•the sufficiency of trademarks and other intellectual property rights.

All forward-looking statements speak only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this report. 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 report. Throughout this report, we refer to Nature’s Sunshine Products, Inc., together with our subsidiaries, as "we," "us," "our," "our Company" or “the Company.”

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PART I FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)


	September 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	78,704	$	82,373
Accounts receivable, net of allowance for doubtful accounts of $86 and $142, respectively	11,396		8,827


Inventories	62,298		66,895
Prepaid expenses and other	11,131		7,722
Total current assets	163,529		165,817

Property, plant and equipment, net	41,994		45,000
Operating lease right-of-use assets	13,815		13,361
Investment securities - trading	892		747

Deferred income tax assets	14,941		15,064
Other assets	10,162		9,784
Total assets	$	245,333	$	249,773

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	8,875	$	7,910
Accrued volume incentives and service fees	21,958		22,922
Accrued liabilities	24,011		33,162
Deferred revenue	1,747		1,794


Income taxes payable	6,522		6,418
Current portion of operating lease liabilities	4,037		4,547

Total current liabilities	67,150		76,753

Liability related to unrecognized tax benefits	651		312
Long-term portion of operating lease liabilities	11,237		10,376


Deferred compensation payable	892		747
Deferred income tax liabilities	1,346		1,401
Other liabilities	1,440		644
Total liabilities	82,716		90,233

Commitments and contingencies

Shareholders’ equity:
Common stock, no par value, 50,000 shares authorized, 18,498 and 18,875 shares issued and outstanding, respectively	113,946		119,694
Retained earnings	57,728		49,711
Noncontrolling interest	6,089		5,482
Accumulated other comprehensive loss	(15,146)		(15,347)
Total shareholders’ equity	162,617		159,540
Total liabilities and shareholders’ equity	$	245,333	$	249,773

See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share information)

(Unaudited)


	Three Months Ended September 30,
	2024		2023
Net sales	$	114,615	$	111,202
Cost of sales	32,856		29,964
Gross profit	81,759		81,238

Operating expenses:
Volume incentives	35,521		34,118
Selling, general and administrative	40,954		41,288
Operating income	5,284		5,832
Other income (loss), net	2,615		(927)
Income before provision for income taxes	7,899		4,905
Provision for income taxes	3,253		1,763
Net income	4,646		3,142
Net income attributable to noncontrolling interests	299		310
Net income attributable to common shareholders	$	4,347	$	2,832

Basic and diluted net income per common share:




Basic earnings per share attributable to common shareholders	$	0.23	$	0.15




Diluted earnings per share attributable to common shareholders	$	0.23	$	0.15

Weighted average basic common shares outstanding	18,512		19,133
Weighted average diluted common shares outstanding	18,890		19,492

See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Amounts in thousands, except per share information)

(Unaudited)


	Nine Months Ended September 30,
	2024		2023
Net sales	$	336,159	$	336,384
Cost of sales	96,535		93,580
Gross profit	239,624		242,804

Operating expenses:
Volume incentives	103,784		102,560
Selling, general and administrative	120,295		127,203
Operating income	15,545		13,041
Other income (loss), net	1,432		(500)
Income before provision for income taxes	16,977		12,541
Provision for income taxes	8,353		5,469
Net income	8,624		7,072
Net income attributable to noncontrolling interests	607		958
Net income attributable to common shareholders	$	8,017	$	6,114

Basic and diluted net income per common share:




Basic earnings per share attributable to common shareholders	$	0.43	$	0.32




Diluted earnings per share attributable to common shareholders	$	0.42	$	0.31

Weighted average basic common shares outstanding	18,661		19,093
Weighted average diluted common shares outstanding	19,115		19,450

See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Amounts in thousands)

(Unaudited)


	Three Months Ended September 30,
	2024		2023
Net income	$	4,646	$	3,142
Foreign currency translation gain (loss) (net of tax)	1,639		(593)



Total comprehensive income	$	6,285	$	2,549


	Nine Months Ended September 30,
	2024		2023
Net income	$	8,624	$	7,072
Foreign currency translation gain (loss) (net of tax)	201		(3,491)


Total comprehensive income	$	8,825	$	3,581

See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Amounts in thousands)

(Unaudited)


	Common Stock			Retained Earnings		Noncontrolling Interest		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance at December 31, 2023	18,875	$	119,694	$	49,711	$	5,482	$	(15,347)	$	159,540
Share-based compensation expense	—	1,369		—		—		—		1,369
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax	16	(152)		—		—		—		(152)
Repurchase of common stock	(105)	(1,848)		—		—		—		(1,848)
Net income	—	—		2,321		169		—		2,490
Other comprehensive loss	—	—		—		—		(1,692)		(1,692)
Balance at March 31, 2024	18,786	$	119,063	$	52,032	$	5,651	$	(17,039)	$	159,707
Share-based compensation expense	—	1,261		—		—		—		1,261
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax	70	(434)		—		—		—		(434)
Repurchase of common stock	(348)	(5,876)		—		—		—		(5,876)
Net income	—	—		1,349		139		—		1,488
Other comprehensive income	—	—		—		—		254		254
Balance at June 30, 2024	18,508	$	114,014	$	53,381	$	5,790	$	(16,785)	$	156,400
Share-based compensation expense	—	950		—		—		—		950
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax	46	(307)		—		—		—		(307)
Repurchase of common stock	(56)	(711)		—		—		—		(711)
Net income	—	—		4,347		299		—		4,646
Other comprehensive income	—	—		—		—		1,639		1,639
Balance at September 30, 2024	18,498	$	113,946	$	57,728	$	6,089	$	(15,146)	$	162,617

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	Common Stock			Retained Earnings		Noncontrolling Interest		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance at December 31, 2022	19,093	$	121,583	$	34,635	$	4,142	$	(13,313)	$	147,047
Share-based compensation expense	—	1,058		—		—		—		1,058
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax	42	(165)		—		—		—		(165)
Repurchase of common stock	(90)	(823)		—		—		—		(823)
Net income	—	—		860		393		—		1,253
Other comprehensive loss	—	—		—		—		(1,653)		(1,653)
Balance at March 31, 2023	19,045	$	121,653	$	35,495	$	4,535	$	(14,966)	$	146,717
Share-based compensation expense	—	1,437		—		—		—		1,437
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax	62	(91)		—		—		—		(91)
Repurchase of common stock	(9)	(97)		—		—		—		(97)
Net income	—	—		2,422		255		—		2,677
Other comprehensive loss	—	—		—		—		(1,245)		(1,245)
Balance at June 30, 2023	19,098	$	122,902	$	37,917	$	4,790	$	(16,211)	$	149,398
Share-based compensation expense	—	1,295		—		—		—		1,295
Shares issued from the exercise of stock options and vesting of restricted stock units, net of shares exchanged for withholding tax	80	77		—		—		—		77
Repurchase of common stock	(81)	(1,308)		—		—		—		(1,308)
Net income	—	—		2,832		310		—		3,142
Other comprehensive loss	—	—		—		—		(593)		(593)
Balance at September 30, 2023	19,097	$	122,966	$	40,749	$	5,100	$	(16,804)	$	152,011

See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2024		2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	8,624	$	7,072
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for doubtful accounts	—		45
Depreciation and amortization	10,195		8,763
Non-cash lease expense	4,386		3,290
Share-based compensation expense	3,580		3,790
Loss on sale of property, plant and equipment	1,330		—
Deferred income taxes	26		(2,986)
Purchase of trading investment securities	(126)		—
Proceeds from sale of trading investment securities	95		76
Realized and unrealized gains on investments	(113)		(66)
Foreign exchange losses (gains)	(1,111)		687
Changes in assets and liabilities:
Accounts receivable	(2,563)		3,955
Inventories	4,392		423
Prepaid expenses and other current assets	(3,588)		(1,091)
Other assets	(444)		733
Accounts payable	838		917
Accrued volume incentives and service fees	(876)		2,102
Accrued liabilities	(7,759)		7,416
Deferred revenue	(46)		(877)
Lease liabilities	(4,492)		(3,414)
Income taxes payable	180		803
Liability related to unrecognized tax benefits	442		—
Deferred compensation payable	144		(10)
Net cash provided by operating activities	13,114		31,628
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(8,776)		(9,230)



Net cash used in investing activities	(8,776)		(9,230)
CASH FLOWS FROM FINANCING ACTIVITIES:

Principal payments of long-term debt	—		(958)
Proceeds from revolving credit facility	40,172		13,503
Principal payments of revolving credit facility	(40,172)		(13,503)



Payments related to tax withholding for net-share settled equity awards	(893)		(179)

Repurchase of common stock	(8,436)		(2,228)
Net cash used in financing activities	(9,329)		(3,365)
Effect of exchange rates on cash and cash equivalents	1,322		(3,029)
Net increase (decrease) in cash and cash equivalents	(3,669)		16,004
Cash and cash equivalents at the beginning of the period	82,373		60,032
Cash and cash equivalents at the end of the period	$	78,704	$	76,036
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes, net of refunds	$	9,782	$	7,460
Cash paid for interest	141		124

See accompanying notes to condensed consolidated financial statements.

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NATURE’S SUNSHINE PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) Basis of Presentation

We are a natural health and wellness company primarily engaged in the manufacture and sale of nutritional and personal care products. We are a Utah corporation with our principal place of business in Lehi, Utah, and sell our products directly to customers and to a sales force of independent consultants who use the products themselves or resell them to consumers.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of normal recurring accruals), considered necessary for a fair presentation of our financial information as of September 30, 2024, and for the three and nine-month periods ended September 30, 2024 and 2023. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the year ending December 31, 2024.

These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2023.

Use of Estimates

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities, in these financial statements and accompanying notes. Actual results could differ from these estimates and those differences could have a material effect on our financial position and results of operations.

The significant accounting estimates inherent in the preparation of our financial statements include estimates associated with our determination of liabilities related to independent consultant incentives, the determination of income tax assets and liabilities, certain other non-income tax and value-added tax contingencies, and legal contingencies. In addition, significant estimates form the basis for allowances with respect to inventory valuations. Various assumptions and other factors enter into the determination of these significant estimates. The process of determining significant estimates takes into account historical experience and current and expected economic conditions.

Noncontrolling Interests

Noncontrolling interests changed as a result of the net income attributable to noncontrolling interests of $0.3 million and $0.6 million for the three and nine months ended September 30, 2024, respectively. Net income attributable to the noncontrolling interests was $0.3 million and $1.0 million for the three and nine months ended September 30, 2023, respectively. As of September 30, 2024 and December 31, 2023, noncontrolling interests were $6.1 million and $5.5 million, respectively.

Recent Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This ASU provides additional guidance on the improved reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. In addition, the amendments improve interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements. The amendments in this update were effective as of December 15, 2023. The adoption of this ASU did not have a significant impact on our Consolidated Financial Statements.

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In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU provides additional guidance on the disclosure of income taxes on an annual basis and requires all public business entities to disclose specific categories in the rate reconciliation, provide additional information on reconciling items, additional information about income taxes paid, and additional information about income tax expense from continuing operation. The amendments in this update are effective as of December 15, 2024. The adoption of this ASU is not expected to have a significant impact on our Consolidated Financial Statements.

(2) Inventories

The composition of inventories is as follows (dollar amounts in thousands):


	September 30, 2024		December 31, 2023
Raw materials	$	17,635	$	18,301
Work in progress	1,187		1,218
Finished goods	43,476		47,376
Total inventories	$	62,298	$	66,895

(3) Investment Securities - Trading

Our trading securities portfolio totaled $0.9 million at September 30, 2024, and $0.7 million at December 31, 2023, and generated gains of $41,000 and losses of $26,000 for the three months ended September 30, 2024 and 2023, respectively, and gains of $0.1 million and $0.1 million for the nine months ended September 30, 2024 and 2023, respectively.

(4) Revolving Credit Facility and Other Obligations

On July 11, 2017, we entered into a revolving credit agreement with Bank of America, N.A., with a borrowing limit of $25.0 million (the “Credit Agreement”). On June 23, 2022, the Credit Agreement was amended to extend the term to mature on July 1, 2027. On September 11, 2024, the Credit Agreement was amended to modify the calculation of interest. Interest under the amended Credit Agreement is the greater of SOFR Daily Floating Rate or the Index Floor, plus 1.50 percent (6.45 percent as of September 30, 2024), and an annual commitment fee of 0.25 percent on the unused portion of the commitment. At September 30, 2024 and December 31, 2023, there was no outstanding balance under the Credit Agreement.

The Credit Agreement contains customary financial covenants, including financial covenants relating to our solvency and leverage. In addition, the Credit Agreement restricts certain capital expenditures, lease expenditures, other indebtedness, liens on assets, guarantees, loans and advances, dividends, mergers, consolidations and transfers of assets except as permitted in the Credit Agreement. The Credit Agreement is collateralized by our manufacturing facility, accounts receivable, inventories and other assets. As of September 30, 2024, we were in compliance with the debt covenants set forth in the Credit Agreement.

(5) Net Income Per Share

Basic net income per common share (“Basic EPS”), is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted net income per common share (“Diluted EPS”) reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock. The computation of Diluted EPS does not assume exercise or conversion of securities that would have an anti-dilutive effect on net income per common share.

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Following is a reconciliation of the numerator and denominator of Basic EPS to the numerator and denominator of Diluted EPS for the three and nine months ended September 30, 2024 and 2023 (dollar and share amounts in thousands, except for per share information):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023



Net income attributable to common shareholders	$	4,347	$	2,832	$	8,017	$	6,114

Basic weighted average shares outstanding	18,512		19,133		18,661		19,093




Basic earnings per share attributable to common shareholders	$	0.23	$	0.15	$	0.43	$	0.32

Diluted shares outstanding:
Basic weighted-average shares outstanding	18,512		19,133		18,661		19,093
Stock-based awards	378		359		454		357
Diluted weighted-average shares outstanding	18,890		19,492		19,115		19,450




Diluted earnings per share attributable to common shareholders	$	0.23	$	0.15	$	0.42	$	0.31

Dilutive shares excluded from diluted-per-share amounts:
Share-based awards	754		735		754		735

Anti-dilutive shares excluded from diluted-per-share amounts:
Share-based awards	—		25		—		50

Potentially dilutive shares excluded from diluted-per-share amounts include performance-based restricted stock units, for which certain metrics have not been achieved. Potentially anti-dilutive shares excluded from diluted-per-share amounts include both non-qualified stock options and unearned performance-based options to purchase shares of common stock with exercise prices greater than the weighted-average share price during the period and shares that would be anti-dilutive to the computation of diluted net income per share for each of the periods presented.

(6) Capital Transactions

Dividends

The declaration of future dividends is subject to the discretion of our Board of Directors and will depend upon numerous factors, including earnings, financial condition, restrictions imposed by any indebtedness that may be outstanding, cash requirements, future prospects and other factors deemed relevant by our Board of Directors.

Share Repurchase Program

On March 10, 2021, we announced a $15.0 million common share repurchase program. On March 8, 2022, we announced an amendment to the share repurchase program allowing the repurchase of an additional $30.0 million in common shares. The repurchases may be made from time to time as market conditions warrant and are subject to regulatory considerations. For the nine months ended September 30, 2024 and 2023, we repurchased 509,000 and 180,000 shares of our common stock for $8.4 million and $2.2 million, respectively. At September 30, 2024, the remaining balance available for repurchases under the program was $9.2 million.

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Share-Based Compensation

On August 1, 2012, our shareholders adopted and approved the Nature’s Sunshine Products, Inc. 2012 Stock Incentive Plan ("2012 Incentive Plan"). The 2012 Incentive Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, performance awards, stock awards and other stock-based awards. The Compensation Committee of the Board of Directors has authority and discretion to determine the type of award, as well as the amount, terms and conditions of each award under the 2012 Incentive Plan, subject to the limitations of the 2012 Incentive Plan. A total of 1,500,000 shares of our common stock were originally authorized for the granting of awards under the 2012 Incentive Plan. In 2015, our shareholders approved an amendment to the 2012 Incentive Plan, to increase the number of shares of common stock reserved for issuance by 1,500,000 shares. On May 5, 2021, our shareholders approved the Amended and Restated 2012 Stock Incentive Plan, which among other amendments, increased the number of shares of common stock reserved for issuance by 2,000,000 shares and extended the term of the 2012 Incentive Plan to March 3, 2026. The number of shares available for awards, as well as the terms of outstanding awards, are subject to adjustment as provided in the Amended and Restated 2012 Incentive Plan for stock splits, stock dividends, recapitalizations and other similar events.

Stock Options

Our outstanding stock options include time-based stock options, which vest over differing periods of time ranging from the date of issuance to up to 48 months from the option grant date, and performance-based stock options, which have already vested upon achieving operating income margins of six, eight and ten percent as reported in four of five consecutive quarters over the term of the options.

Stock option activity for the nine-month period ended September 30, 2024, is as follows (amounts in thousands, except per share information):


	Number of Shares	Weighted Average Exercise Price Per Share		Weighted Average Grant Date Fair Value
Options outstanding at December 31, 2023	75	$	11.25	$	3.85
Granted	—	—		—
Forfeited or canceled	—	—		—
Exercised	—	—		—
Options outstanding at September 30, 2024	75	$	11.25	$	3.85

There was no share-based compensation expense for the three- and nine-month periods ended September 30, 2024 and 2023. As of September 30, 2024 and December 31, 2023, there was no unrecognized share-based compensation expense related to the grants described above.

At September 30, 2024, the aggregate intrinsic value of outstanding and exercisable stock options to purchase 75,000 shares of common stock was $0.2 million. At December 31, 2023, the aggregate intrinsic value of outstanding and exercisable options to purchase 75,000 shares of common stock was $0.5 million.

For the nine months ended September 30, 2024, no shares of common stock were issued upon the exercise of stock options. For the nine months ended September 30, 2023, we issued 27,000 shares of common stock upon the exercise of stock options at an average exercise price of $13.88 per share. The aggregate intrinsic value of options exercised during the nine months ended September 30, 2023, was $0.1 million and the Company recognized $0.1 million of tax benefits from the exercise of stock options.

As of September 30, 2024 and December 31, 2023, we did not have any unvested stock options outstanding.

Restricted Stock Units

Our outstanding restricted stock units (“RSUs”), include time-based RSUs, which vest over differing periods of time ranging from 12 months to up to 36 months from the RSU grant date, as well as performance-based RSUs, which vest upon achieving targets relating to adjusted EBITDA growth, and/or stock price levels. RSUs granted to members of the Board of Directors contain a restriction period in which the shares are not issued until two years after vesting. At September 30, 2024 and December 31, 2023, there were 110,000 and 100,000 vested RSUs, respectively, granted to the Board of Directors with an accompanying restriction period.

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Restricted stock unit activity for the nine-month period ended September 30, 2024, is as follows (amounts in thousands, except per share information):


	Number of Shares	Weighted Average Grant Date Fair Value
Restricted Stock Units outstanding at December 31, 2023	1,342	$	11.21
Granted	390	17.09
Forfeited	(197)	14.19
Issued	(196)	12.42
Restricted Stock Units outstanding at September 30, 2024	1,339	12.31

During the nine-month period ended September 30, 2024, we granted 390,000 RSUs under the 2012 Incentive Plan to the Board of Directors, executive officers and other employees, which were comprised of time-based RSUs, and adjusted EBITDA performance-based RSUs. The time-based RSUs were issued with a weighted-average grant date fair value of $16.96 per share and vest in 12 monthly installments over a one-year period from the grant date or in annual installments over a three-year period from the grant date. The adjusted EBITDA performance-based RSUs were issued with a weighted-average grant date fair value of $17.25 per share and vest upon achieving adjusted EBITDA targets and maintaining those targets over a four-quarter period from the grant date.

Share-based compensation expense related to time-based RSUs for the three-month periods ended September 30, 2024 and 2023, was approximately $0.7 million and $1.0 million, respectively. Share-based compensation expense related to time-based RSUs for the nine-month periods ended September 30, 2024 and 2023, was approximately $2.6 million and $2.9 million, respectively. As of September 30, 2024 and December 31, 2023, the unrecognized share-based compensation expense related to the grants described above, excluding incentive awards discussed below, was $3.2 million and $3.5 million, respectively. The remaining compensation expense is expected to be recognized over the weighted average period of approximately 0.8 years.

Share-based compensation expense related to performance-based RSUs for the three-month periods ended September 30, 2024 and 2023, was $0.3 million and $0.3 million, respectively. Share-based compensation expense related to performance-based RSUs for the nine-month periods ended September 30, 2024 and 2023, was $0.9 million and $0.9 million, respectively. Should we attain all the metrics related to performance-based RSU grants, we would recognize up to $7.5 million of potential share-based compensation expense. We currently expect to recognize an additional $2.7 million of that potential share-based compensation expense.

The number of shares issued upon vesting of RSUs granted pursuant to our share-based compensation plans is net of the minimum statutory withholding requirements that we pay on behalf of our employees, which was 63,000 and 48,000 shares for the nine-month periods ended September 30, 2024 and 2023, respectively. Although shares withheld are not issued, they are treated as common share repurchases for accounting purposes, as they reduce the number of shares that would have been issued upon vesting. These shares do not count against the authorized capacity under the repurchase program described above.

(7) Segment Information

We have four business segments (Asia, Europe, North America, and Latin America and Other) based primarily upon the geographic region where each segment operates, as well as the internal organization of our officers and their responsibilities. The geographic segments operate under the Nature’s Sunshine Products and Synergy WorldWide® brands. The Latin America and Other segment includes our wholesale business in which we sell products to various locally-managed entities independent of the Company that we have granted distribution rights for in the relevant market.

Net sales for each segment have been reduced by intercompany sales as they are not included in the measure of segment profit or loss reviewed by the chief executive officer. We evaluate performance based on contribution margin by segment before consideration of certain inter-segment transfers and expenses.

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Reportable business segment information is as follows (dollar amounts in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net sales:
Asia	$	55,293	$	52,218	$	151,497	$	153,438
Europe	19,615		18,769		63,513		61,410
North America	33,631		34,792		103,719		104,098
Latin America and Other	6,076		5,423		17,430		17,438
Total net sales	114,615		111,202		336,159		336,384

Contribution margin (1):
Asia	25,103		24,861		70,316		73,711
Europe	6,286		5,993		20,786		18,659
North America	12,203		14,222		38,103		40,985
Latin America and Other	2,646		2,044		6,635		6,889
Total contribution margin	46,238		47,120		135,840		140,244

Selling, general and administrative expenses (2)	40,954		41,288		120,295		127,203
Operating income	5,284		5,832		15,545		13,041

Other income (loss), net	2,615		(927)		1,432		(500)
Income before provision for income taxes	$	7,899	$	4,905	$	16,977	$	12,541

_________________________________________

(1) Contribution margin consists of net sales less cost of sales and volume incentives expense.

(2) Service fees in China totaled $3.5 million and $10.4 million for the three and nine-month periods ended September 30, 2024, respectively, compared to $4.0 million and $12.9 million for the three and nine-month periods ended September 30, 2023. These service fees are included in selling, general and administrative expenses.

From an individual country/region perspective, the United States, Taiwan and South Korea comprise 10 percent or more of consolidated net sales for the three and nine-month periods ended September 30, 2024 and 2023, as follows (dollar amounts in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net sales:
United States	$	30,973	$	32,240	$	95,609	$	96,314
Taiwan	18,389		15,598		50,489		45,814
South Korea	13,894		13,921		38,964		38,993
Other	51,359		49,443		151,097		155,263
	$	114,615	$	111,202	$	336,159	$	336,384

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Net sales generated by each of our product lines is set forth below (dollar amounts in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Asia
General health	$	22,572	$	16,937	$	57,697	$	48,859
Immune	2,504		1,964		6,437		3,738
Cardiovascular	14,556		14,963		42,155		44,698
Digestive	10,905		9,186		27,201		30,172
Personal care	1,175		1,376		3,511		4,159
Weight management	3,581		7,792		14,496		21,812
	55,293		52,218		151,497		153,438
Europe
General health	$	9,194	$	8,034	$	28,530	$	25,823
Immune	1,685		1,563		6,223		5,988
Cardiovascular	2,997		2,264		7,712		7,085
Digestive	3,675		5,087		15,535		17,156
Personal care	765		1,348		3,178		3,779
Weight management	1,299		473		2,335		1,579
	19,615		18,769		63,513		61,410
North America
General health	$	15,259	$	16,334	$	46,698	$	47,725
Immune	3,690		3,641		11,675		11,693
Cardiovascular	3,630		3,634		11,371		10,983
Digestive	8,583		8,577		26,306		26,069
Personal care	1,512		1,720		4,665		4,818
Weight management	957		886		3,004		2,810
	33,631		34,792		103,719		104,098
Latin America and Other
General health	$	1,753	$	1,480	$	4,887	$	4,717
Immune	589		611		1,906		2,023
Cardiovascular	448		392		1,331		1,291
Digestive	2,846		2,560		8,083		8,030
Personal care	309		284		854		976
Weight management	131		96		369		401
	6,076		5,423		17,430		17,438
	$	114,615	$	111,202	$	336,159	$	336,384

From an individual country perspective, only the United States comprised 10 percent or more of consolidated property, plant and equipment as follows (dollar amounts in thousands):


	September 30, 2024		December 31, 2023
Property, plant and equipment:
United States	$	36,723	$	41,239
Other	5,271		3,761
Total property, plant and equipment, net	$	41,994	$	45,000

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Total assets per segment is set forth below (dollar amounts in thousands):


	September 30, 2024		December 31, 2023
Assets:
Asia	$	110,881	$	105,636
Europe	19,790		20,920
North America	108,298		116,052
Latin America and Other	6,364		7,165
Total assets	$	245,333	$	249,773

(8) Income Taxes

For the three months ended September 30, 2024 and 2023, our provision for income taxes, as a percentage of income before income taxes was 41.2 percent and 35.9 percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent. For the nine months ended September 30, 2024 and 2023, our provision for income taxes, as a percentage of income before income taxes was 49.2 percent and 43.6 percent, respectively, compared with a U.S. federal statutory rate of 21.0 percent.

The difference between the effective tax rate and the U.S. federal statutory tax rate for the three and nine months ended September 30, 2024, was primarily attributed to operations in foreign countries which are treated as a branch for US tax purposes and current year foreign losses that presently do not provide future tax benefit, partially offset by foreign tax credits.

The difference between the effective tax rate and the U.S. federal statutory tax rate for the three and nine months ended September 30, 2023, was primarily attributed to adjustments relating to operations in foreign countries which are treated as a

branch for US tax purposes as well as recording a valuation allowance against deferred tax assets which are expected to expire

before utilization.

The difference between the effective tax rate for the three and nine months ended September 30, 2024, compared to September 30, 2023, was primarily caused by a decrease in the utilization of foreign tax credits in the current period.

Our U.S. federal income tax returns for 2020 through 2022 are open to examination for federal tax purposes. We have several foreign tax jurisdictions with open tax years from 2018 through 2023.

As of September 30, 2024 and December 31, 2023, we had accrued $0.7 million and $0.3 million, respectively, related to unrecognized tax positions net of offsetting tax attributes.

Interim income taxes are based on an estimated annualized effective tax rate applied to the respective quarterly periods, adjusted for discrete tax items in the period in which they occur. Although we believe our tax estimates are reasonable, we can make no assurance that the final tax outcome of these matters will not be different from that which we have reflected in our historical income tax provisions and accruals. Such differences could have a material impact on our income tax provision and operating results in the period in which we make such a determination.

(9) Commitments and Contingencies

Legal Proceedings

We are a party to various legal proceedings and disputes in the United States and foreign jurisdictions. As of September 30, 2024 and December 31, 2023, accrued liabilities were $0.6 million and $0.5 million, respectively, related to the estimated outcome of these proceedings. In addition, we are a party to other litigation where there is a reasonable possibility that a loss may be incurred, but either the losses are not considered to be probable or we cannot at this time estimate the loss, if any; therefore, no provision for losses has been provided. We believe future payments related to these matters could range from $0 to approximately $0.3 million.

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Management cannot predict the ultimate outcome of these matters, individually or in the aggregate, or their resulting effect on our business, financial position, results of operations or cash flows as litigation and related matters are subject to inherent uncertainties, and unfavorable rulings could occur. Were an unfavorable outcome to occur, there exists the possibility of a material adverse impact on our business, financial position, results of operations, or cash flows for the period in which the ruling occurs and/or future periods. We maintain product liability, general liability and excess liability insurance coverage. However, insurance may not continue to be available at an acceptable cost to us, such coverage may not be sufficient to cover one or more large claims, or the insurers may successfully disclaim coverage as to a pending or future claim.

Non-Income Tax Contingencies

We have reserved for certain state sales and use tax and foreign non-income tax contingencies based on the likelihood of an obligation in accordance with accounting guidance for probable loss contingencies. Loss contingency provisions are recorded for probable losses at management’s best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount is recorded. We provide provisions for potential payments of tax to various tax authorities for contingencies related to non-income tax matters, including value-added taxes and sales tax. We provide provisions for U.S. state sales taxes in each of the states where we have nexus. As of September 30, 2024 and December 31, 2023, accrued liabilities were $0.2 million and $0.2 million, respectively, related to non-income tax contingencies. While we believe that the assumptions and estimates used to determine contingent liabilities are reasonable, the ultimate outcome of these matters cannot presently be determined. We believe future payments related to these matters could range from $0 to approximately $3.4 million.

(10) Fair Value Measurements

The fair value of a financial instrument is the amount that could be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Financial assets are marked to bid prices and financial liabilities are marked to offer prices. Fair value measurements do not include transaction costs. A fair value hierarchy is used to prioritize the quality and reliability of the information used to determine fair values of each financial instrument. Categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The fair value hierarchy is defined into the following three categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The following table presents our hierarchy for our assets, measured at fair value on a recurring basis, as of September 30, 2024 (dollar amounts in thousands):


	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total
Investment securities - trading	$	892	$	—	$	—	$	892
Total assets measured at fair value on a recurring basis	$	892	$	—	$	—	$	892

The following table presents our hierarchy for our assets, measured at fair value on a recurring basis, as of December 31, 2023 (dollar amounts in thousands):


	Level 1		Level 2		Level 3
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total


Investment securities - trading	$	747	$	—	$	—	$	747
Total assets measured at fair value on a recurring basis	$	747	$	—	$	—	$	747

Investment securities - trading — Our trading portfolio consists of various marketable securities that are valued using quoted prices in active markets.

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For the nine months ended September 30, 2024 and for the year ended December 31, 2023, there were no fair value measurements using significant other observable inputs (Level 2) or significant unobservable inputs (Level 3).

The carrying amounts reflected on the condensed consolidated balance sheets for cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to their short-term nature. The carrying value of our debt approximates fair value due to its recent acquisition and short maturity. During the nine months ended September 30, 2024 and 2023, we did not have any re-measurements of non-financial assets at fair value on a nonrecurring basis subsequent to their initial recognition.

(11) Revenue Recognition

Revenue Recognition

Net sales include sales of products and shipping and handling charges, net of estimates for product returns and any related sales incentives or rebates based upon historical information and current trends. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. We recognize revenue by transferring the promised products to the customer, with revenue recognized at shipping point, the point in time the customer obtains control of the products. The majority of our contracts have a single performance obligation and are short term in nature. Contracts with multiple performance obligations are insignificant. Sales taxes and value-added taxes in the United States and foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Amounts received for unshipped merchandise are recorded as deferred revenue. Amounts for membership fees are deferred and amortized as revenue over the life of the membership, primarily one year.

A reserve for product returns is recorded based upon historical experience and current trends. We allow independent consultants to return the unused portion of products within ninety days of purchase if they are not satisfied with the product. In some of our markets, the requirements to return products are more restrictive.

Amounts billed to customers for shipping and handling are reported as a component of net sales.

Volume incentives and other sales incentives or rebates are a significant part of our direct sales marketing program and represent commission payments made to independent consultants. These payments are designed to provide incentives for reaching higher sales levels. The amount of volume incentive expense recognized is determined based upon the amount of qualifying purchases in a given month and recorded as volume incentive expense. Payments to independent consultants for sales incentives or rebates related to their own purchases are recorded as a reduction of revenue. Some payments for sales incentives are processed daily; while others, including rebates, are calculated monthly based upon qualifying sales.

Disaggregation of Revenue

Our products are grouped into six principal categories: general health, immune, cardiovascular, digestive, personal care and weight management. We have four business segments that are based primarily upon the geographic region where each segment operates. Each of the geographic segments operate under the Nature’s Sunshine Products and Synergy WorldWide® brands. See Note 7, Segment Information, for further information on our reportable segments and presentation of disaggregated revenue by reportable segment and product category.

Practical Expedients and Exemptions

We have made the accounting policy election to treat shipping and handling as a fulfillment activity rather than a promised service under Topic 606.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in this report, as well as the consolidated financial statements, the notes thereto, and management’s discussion and analysis included in our Annual Report on Form 10-K for the year ended December 31, 2023, and our other reports filed since the date of such Form 10-K.

OVERVIEW

Our independent consultants market and sell our products to customers and sponsor other independent consultants who also market our products to customers. Because a significant amount of revenue is generated through the sales of our independent consultants, our revenue can be impacted by the number and productivity of our independent consultants. We seek to motivate and provide incentives to our independent consultants by offering high quality products, product support, training seminars, and financial incentives, among other considerations.

Eastern Europe

On February 24, 2022, Russian forces launched significant military action against Ukraine. There continues to be sustained conflict and disruption in the region, which is expected to endure for the foreseeable future. Our consultants in our Russia and Other market, a market within our Europe business segment that includes Russia, Ukraine, Belarus and other Common Independent States in the region, continue to operate their independent businesses, albeit at a reduced level than prior to the start of the conflict. We expect that this will continue to impact our business for the foreseeable future. We will continue monitoring the social, political, regulatory and economic environment in Ukraine and Russia, and will consider further actions as appropriate.

Net sales related to Eastern Europe for the three and nine months ended September 30, 2024 were $12.2 million and $41.1 million, respectively, compared to $12.1 million and $41.3 million for the same periods in 2023. Operating income related to Eastern Europe for the three and nine months ended September 30, 2024 was $0.5 million and $2.8 million, respectively, compared to $0.8 million and $1.6 million for the same periods in 2023. As of September 30, 2024, Eastern Europe had assets of $8.4 million net of working capital reserves related to inventories.

More broadly, there could be additional negative impacts to our net sales, earnings and cash flows should the situation escalate beyond its current scope, including, among other potential impacts, economic recessions in certain neighboring countries or globally due to inflationary pressures and supply chain cost increases or the geographic proximity of the war relative to the rest of Europe.

Inflation

Like many other companies, we are facing significant inflationary pressures in the global economy. Our operations have been, and may continue to be, adversely impacted by inflation, primarily from higher costs of raw materials, labor, production, distribution and transportation costs.

Third Quarter Performance

In the third quarter of 2024, we experienced an increase in our consolidated net sales of 3.1 percent (or 4.2 percent in local currencies) compared to the same period in 2023. Asia net sales increased approximately 5.9 percent (or 8.6 percent in local currencies) compared to the same period in 2023. Europe net sales increased approximately 4.5 percent (or 2.9 percent in local currencies) compared to the same period in 2023. North America net sales decreased approximately 3.3 percent (or 3.2 percent in local currencies) compared to the same period in 2023. Latin America and Other net sales increased approximately 12.0 percent (or 14.5 percent in local currencies) compared to the same period in 2023. The strengthening of the U.S. dollar versus the local currencies, primarily in our Asian markets, resulted in an approximate 1.1 percent, or $1.3 million, decrease of our net sales during the quarter.

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Cost of sales increased $2.9 million during the three months ended September 30, 2024, compared to the same period in 2023, and as a percentage of net sales were 28.7 percent and 26.9 percent for the three months ended September 30, 2024 and 2023, respectively. The increase in cost of sales percentage is primarily due to higher inflation and unfavorable foreign exchange which offset our savings initiatives.

In absolute terms, selling, general and administrative expenses decreased $0.3 million during the three months ended September 30, 2024, compared to the same period in 2023, and as a percentage of net sales were 35.7 percent and 37.1 percent for the three months ended September 30, 2024 and 2023, respectively. The decrease was primarily related to the streamlining of our global overhead expenses and reduced service fees due to China's lower net sales.

As an international business, we have significant sales and costs denominated in currencies other than the U.S. Dollar. We expect foreign markets with functional currencies other than the U.S. Dollar will continue to represent a substantial portion of our overall sales and related operating expenses. Accordingly, changes in foreign currency exchange rates could materially affect sales and costs or the comparability of sales and costs from period to period as a result of translating foreign markets' financial statements into our reporting currency.

RESULTS OF OPERATIONS

The following table summarizes our unaudited consolidated operating results from continuing operations in U.S. dollars and as a percentage of net sales for the three months ended September 30, 2024 and 2023 (dollar amounts in thousands):


	Three Months Ended September 30, 2024				Three Months Ended September 30, 2023				Change
	Total dollars		Percent of net sales		Total dollars		Percent of net sales		Total dollars		Percentage
Net sales	$	114,615	100.0	%	$	111,202	100.0	%	$	3,413	3.1	%
Cost of sales	32,856		28.7		29,964		26.9		2,892		9.7
Gross profit	81,759		71.3		81,238		73.1		521		0.6
Volume incentives	35,521		31.0		34,118		30.7		1,403		4.1
SG&A expenses	40,954		35.7		41,288		37.1		(334)		(0.8)
Operating income	5,284		4.6		5,832		5.2		(548)		(9.4)
Other income (loss), net	2,615		2.3		(927)		(0.8)		3,542		382.1
Income before income taxes	7,899		6.9		4,905		4.4		2,994		61.0
Provision for income taxes	3,253		2.8		1,763		1.6		1,490		84.5
Net income	$	4,646	4.1	%	$	3,142	2.8	%	$	1,504	47.9	%

The following table summarizes our unaudited consolidated operating results from continuing operations in U.S. dollars and as a percentage of net sales for the nine months ended September 30, 2024 and 2023 (dollar amounts in thousands):


	Nine Months Ended September 30, 2024				Nine Months Ended September 30, 2023				Change
	Total dollars		Percent of net sales		Total dollars		Percent of net sales		Total dollars		Percentage
Net sales	$	336,159	100.0	%	$	336,384	100.0	%	$	(225)	(0.1)	%
Cost of sales	96,535		28.7		93,580		27.8		2,955		3.2
Gross profit	239,624		71.3		242,804		72.2		(3,180)		(1.3)
Volume incentives	103,784		30.9		102,560		30.5		1,224		1.2
SG&A expenses	120,295		35.8		127,203		37.8		(6,908)		(5.4)
Operating income	15,545		4.6		13,041		3.9		2,504		19.2
Other income (loss), net	1,432		0.4		(500)		(0.1)		1,932		386.4
Income before income taxes	16,977		5.1		12,541		3.7		4,436		35.4
Provision for income taxes	8,353		2.5		5,469		1.6		2,884		52.7
Net income	$	8,624	2.6	%	$	7,072	2.1	%	$	1,552	21.9	%

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Net Sales

International operations have provided, and are expected to continue to provide, a significant portion of our total net sales. As a result, total net sales will continue to be affected by fluctuations in the U.S. dollar against foreign currencies. In order to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency fluctuations, in addition to comparing the percent change in net sales from one period to another in U.S. dollars, we present net sales excluding the impact of foreign exchange fluctuations. We compare the percentage change in net sales from one period to another period by excluding the effects of foreign currency exchange as shown below. Net sales excluding the impact of foreign exchange fluctuations is not a U.S. GAAP financial measure and removes from net sales in U.S. dollars the impact of changes in exchange rates between the U.S. dollar and the functional currencies of our foreign subsidiaries, by translating the current period net sales into U.S. dollars using the same foreign currency exchange rates that were used to translate the net sales for the previous comparable period. We believe presenting the impact of foreign currency fluctuations is useful to investors because it allows a more meaningful comparison of net sales of our foreign operations from period to period. However, net sales excluding the impact of foreign currency fluctuations should not be considered in isolation or as an alternative to net sales in U.S. dollar measures that reflect current period exchange rates, or to other financial measures calculated and presented in accordance with U.S. GAAP. Throughout the last five years, foreign currency exchange rates have fluctuated significantly. See Item 3. Quantitative and Qualitative Disclosures about Market Risk.

The following table summarizes the changes in net sales by operating segment with a reconciliation to net sales excluding the impact of currency fluctuations for the three months ended September 30, 2024 and 2023 (dollar amounts in thousands):


	Net Sales by Operating Segment
	Three Months Ended September 30, 2024		Three Months Ended September 30, 2023		Percent Change		Impact of Currency Exchange		Percent Change Excluding Impact of Currency
Asia	$	55,293	$	52,218	5.9	%	$	(1,418)	8.6	%
Europe	19,615		18,769		4.5		302		2.9
North America	33,631		34,792		(3.3)		(46)		(3.2)
Latin America and Other	6,076		5,423		12.0		(136)		14.5
	$	114,615	$	111,202	3.1	%	$	(1,298)	4.2	%

The following table summarizes the changes in net sales by operating segment with a reconciliation to net sales excluding the impact of currency fluctuations for the nine months ended September 30, 2024 and 2023 (dollar amounts in thousands):


	Net Sales by Operating Segment
	Nine Months Ended September 30, 2024		Nine Months Ended September 30, 2023		Percent Change		Impact of Currency Exchange		Percent Change Excluding Impact of Currency
Asia	$	151,497	$	153,438	(1.3)	%	$	(7,079)	3.3	%
Europe	63,513		61,410		3.4		978		1.8
North America	103,719		104,098		(0.4)		(87)		(0.3)
Latin America and Other	17,430		17,438		—		140		(0.8)
	$	336,159	$	336,384	(0.1)	%	$	(6,048)	1.7	%

Consolidated net sales for the three and nine months ended September 30, 2024 were $114.6 million and $336.2 million, respectively, compared to $111.2 million and $336.4 million for the same period in 2023, which represents an increase of 3.1 percent and a decrease of 0.1 percent, respectively. The increase for the three months ended September 30, 2024 was primarily related to product sales increases in our Asia and Europe operating segments. Excluding the impact of foreign currency exchange rate fluctuations, consolidated net sales for the three and nine months ended September 30, 2024 increased 4.2 percent and 1.7 percent, respectively, from the same periods in 2023.

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Asia

Net sales related to Asia for the three and nine months ended September 30, 2024 were $55.3 million and $151.5 million, respectively, compared to $52.2 million and $153.4 million for the same periods in 2023, or an increase of 5.9 percent and a decrease of 1.3 percent, respectively. In local currency, net sales for the three and nine months ended September 30, 2024 increased 8.6 percent and 3.3 percent, respectively, compared to the same periods in 2023.

Notable activity in the following markets contributed to the results of Asia:

In our Taiwan market, net sales increased $2.8 million and $4.7 million, or 17.9 percent and 10.2 percent, for the three and nine months ended September 30, 2024, compared to the same periods in 2023. In local currencies, net sales for the three and nine months ended September 30, 2024 increased 20.4 percent and 14.1 percent, compared to the same periods in 2023. We attribute the growth in net sales primarily to effective execution of fundamentals to improve consultant activity.

In our South Korea market, net sales decreased $27,000 and $29,000, or 0.2 percent and 0.1 percent, for the three and nine months ended September 30, 2024, compared to the same periods in 2023. In local currency, net sales for the three and nine months ended September 30, 2024 increased 3.1 percent and 3.8 percent, respectively, compared to the same periods in 2023. Net sales continued to show a modest improvement in local currency due to improved customer acquisition.

In our Japan market, net sales increased $2.9 million and $0.7 million, or 28.1 percent and 2.3 percent, for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. In local currencies, net sales for the three and nine months ended September 30, 2024 increased 34.4 percent and 12.1 percent, respectively, compared to the same periods in 2023. The increase in net sales was primarily the result of strong customer acquisition that was bolstered by higher average order values.

In our China market, net sales decreased $2.4 million and $7.2 million, or 22.3 percent and 21.9 percent, for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. In local currencies, net sales for the three and nine months ended September 30, 2024 decreased 23.0 percent and 20.4 percent, respectively, compared to the same periods in 2023. The decrease in net sales was primarily the result of challenging macroeconomic factors.

Europe

Net sales related to Europe for the three and nine months ended September 30, 2024 were $19.6 million and $63.5 million, respectively, compared to $18.8 million and $61.4 million for the same periods in 2023, or increases of 4.5 percent and 3.4 percent, respectively. In local currency, net sales for the three and nine months ended September 30, 2024 increased 2.9 percent and 1.8 percent, respectively, compared to the same periods in 2023. The functional currency for many of these markets is the U.S. Dollar which reduces the effect from foreign currency fluctuations. Fluctuations in foreign currency exchange rates had favorable impacts on net sales of $0.3 million and $1.0 million for the three and nine months ended September 30, 2024, respectively. We attribute the increase in net sales in local currency primarily due to the increased focus on our field activation initiatives.

North America

Net sales related to North America for the three and nine months ended September 30, 2024 were $33.6 million and $103.7 million, respectively, compared to $34.8 million and $104.1 million for the same periods in 2023, or decreases of 3.3 percent and 0.4 percent, respectively. In local currency, net sales for the three and nine months ended September 30, 2024 decreased 3.2 percent and 0.3 percent, respectively, compared to the same periods in 2023.

In the United States, net sales for the three and nine months ended September 30, 2024 decreased $0.9 million and $0.4 million, or 2.8 percent and 0.4 percent, respectively, compared to the same periods in 2023. The decrease was primarily due to lower customer acquisition resulting from the near-term impact of the launch of our new digital platform.

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Latin America and Other

Net sales related to Latin America and Other markets for the three months ended September 30, 2024 was $6.1 million compared to $5.4 million for the same period in 2023, an increase of 12.0 percent. For the nine months ended September 30, 2024 net sales remained flat, compared to the same period in 2023, at $17.4 million. In local currency, net sales for the three and nine months ended September 30, 2024 increased 14.5 percent and decreased 0.8 percent, respectively, compared to the same periods in 2023. Fluctuations in foreign currency had unfavorable impacts on net sales of $0.1 million and favorable impacts of $0.1 million for the three and nine months ended September 30, 2024, respectively.

Further information related to our Asia, Europe, North America, and Latin America and Other business segments is set forth in Note 7 to the Unaudited Condensed Consolidated Financial Statements in Part 1, Item 1 of this report.

Cost of Sales

Cost of sales as a percent of net sales was 28.7 percent and 28.7 percent for the three and nine months ended September 30, 2024, compared to 26.9 percent and 27.8 percent for the same periods in 2023. The increase in cost of sales percentage is primarily due to higher inflation and unfavorable foreign exchange which more than offset our savings initiatives.

Volume Incentives

Volume incentives expense as a percent of net sales was 31.0 percent and 30.9 percent for the three and nine months ended September 30, 2024, respectively, compared to 30.7 percent and 30.5 percent for the same periods in 2023. The increase was primarily due to the timing of promotional incentives and changes in market mix. These payments are designed to provide incentives for reaching certain sales levels. Volume incentives vary slightly, on a percentage basis, by product due to pricing policies and commission plans in place in our various geographies. We do not pay volume incentives in China, instead we pay independent service fees which are included in selling, general and administrative expenses.

Selling, General and Administrative

Selling, general and administrative expenses represent operating expenses, components of which include labor and benefits, sales events, professional fees, travel and entertainment, marketing, occupancy costs, communications costs, bank fees, depreciation and amortization, independent services fees paid in China, and other miscellaneous operating expenses.

Selling, general and administrative expenses decreased $0.3 million and $6.9 million, respectively, to $41.0 million and $120.3 million for the three and nine months ended September 30, 2024, respectively, compared to the same periods in 2023. Selling, general and administrative expenses were 35.7 percent and 35.8 percent of net sales for the three and nine months ended September 30, 2024, compared to 37.1 percent and 37.8 percent for the same periods in 2023. The decrease was primarily related to the streamlining of our global overhead expenses and reduced service fees due to China's lower net sales.

Other Income (Loss), Net

Other income (loss), net, for the three and nine months ended September 30, 2024, was income of $2.6 million and $1.4 million, respectively, compared to losses of $0.9 million and $0.5 million during the same periods in 2023, respectively. Other income (loss), net for the three and nine months ended September 30, 2024 primarily consisted of foreign exchange gains in Asia, partially offset by foreign exchange losses in Latin America, that resulted from net changes in foreign currencies.

Income Taxes

The difference between the effective tax rate and the U.S. federal statutory tax rate for the three and nine months ended September 30, 2024, was primarily attributed to operations in certain foreign countries which are treated as a branch for US tax purposes and current year foreign losses that presently do not provide future tax benefit, partially offset by foreign tax credits.

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branch for US tax purposes as well as recording a valuation allowance against deferred tax assets which are expected to expire

before utilization.

The difference between the effective tax rate for the three and nine months ended September 30, 2024, compared to September 30, 2023, is primarily caused by a decrease in the utilization of foreign tax credits in the current period.

Our U.S. federal income tax returns for 2020 through 2022 are open to examination for federal tax purposes. We have several foreign tax jurisdictions that have open tax years from 2018 through 2023.

As of September 30, 2024 and December 31, 2023, we had accrued $0.7 million and $0.3 million, respectively, related to unrecognized tax positions.

Product Categories

Our line of over 800 products includes several different product classifications, such as immune, cardiovascular, digestive, personal care, weight management and other general health products. We purchase herbs and other raw materials in bulk, and after quality control testing, we formulate, encapsulate, tablet or concentrate them, label and package them for shipment. Most of our products are manufactured at our facility in Spanish Fork, Utah. Contract manufacturers produce some of our products in accordance with our specifications and standards. We have implemented quality control procedures to verify that our contract manufacturers have complied with our specifications and standards.

See Note 7, Segment Information, for a summary of the U.S. dollar amounts from the sale of general health, immune, cardiovascular, digestive, personal care and weight management products for the three and nine months ended September 30, 2024 and 2023, by business segment.

Distribution and Marketing

We market our products primarily through our network of independent consultants, who market our products to customers through direct selling techniques. We seek to motivate and provide incentives to our independent consultants by offering high quality products and providing independent consultants with product support, training seminars, sales conventions, travel programs and financial incentives.

Our products sold in the United States are shipped directly from our manufacturing and warehouse facilities located in Spanish Fork, Utah, as well as from our regional warehouses located in Georgia, Ohio, and Texas. Many of our international operations maintain warehouse facilities and inventory to supply their independent consultants. However, in foreign markets where we do not maintain warehouse facilities, we have contracted with third parties to distribute our products and provide support services to our force of independent consultants.

In the United States, we generally sell our products on a cash or credit card basis. From time to time, our U.S. operations extend short-term credit associated with product promotions. For certain of our international operations, we use independent distribution centers and offer credit terms that are generally consistent with industry standards within each respective country.

We pay sales commissions, or “volume incentives” to our independent consultants based upon their own product sales and the product sales of their sales organization. As an exception, in China, we do not pay volume incentives; rather, we pay independent service fees, which are included in selling, general and administrative expenses. These volume incentives are recorded as an expense in the year earned. The amounts of volume incentives that we expensed during the quarters ended September 30, 2024 and 2023, are set forth in the Condensed Consolidated Financial Statements in Item 1 of this report. In addition to the opportunity to receive volume incentives, independent consultants who attain certain levels of monthly product sales are eligible for additional incentive programs including automobile allowances, sales convention privileges and travel awards.

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LIQUIDITY AND CAPITAL RESOURCES

Our principal use of cash is to pay for operating expenses, including volume incentives, inventory and raw material purchases, capital assets and funding of international expansion. As of September 30, 2024, working capital was $96.4 million, compared to $89.1 million as of December 31, 2023. At September 30, 2024, we had $78.7 million in cash, of which $5.7 million was held in the U.S. and $73.0 million was held in foreign markets and may be subject to various withholding taxes and other restrictions related to repatriation before becoming available to be used along with the normal cash flows from operations to fund any unanticipated shortfalls in future cash flows.

Our net consolidated cash inflows (outflows) are as follows (in thousands):


	Nine Months Ended September 30,
	2024		2023
Operating activities	$	13,114	$	31,628
Investing activities	(8,776)		(9,230)
Financing activities	(9,329)		(3,365)

Operating Activities

For the nine months ended September 30, 2024, operating activities provided cash of $13.1 million, compared to $31.6 million in the same period in 2023. Operating cash flows decreased primarily due to the timing of payments for accrued liabilities, lease liabilities, prepaid expenses, and timing of receipts of accounts receivable, partially offset by a reduction in inventories.

Investing Activities

For the nine months ended September 30, 2024, investing activities used $8.8 million, compared to $9.2 million for the same period in 2023, which consisted of capital expenditures related to the purchase of equipment, computer systems and software.

Financing Activities

For the nine months ended September 30, 2024, financing activities used $9.3 million, compared to $3.4 million for the same period in 2023.

During the nine months ended September 30, 2024, we used cash to repurchase 509,000 shares of our common stock under the share repurchase program for $8.4 million. At September 30, 2024, the remaining balance available for repurchases under the program was $9.2 million.

We maintain a revolving credit agreement with Bank of America, N.A (the “Credit Agreement”), as well as a credit agreement with Banc of America Leasing and Capital, LLC (the "Capital Credit Agreement"). At September 30, 2024, there were no outstanding balances under the Credit Agreement or the Capital Credit Agreement. Our debt obligations are discussed in greater detail in Note 4, “Revolving Credit Facility and Other Obligations,” to our Condensed Consolidated Financial Statements in Item 1, Part 1 of this report.

We believe that cash generated from operations, along with available cash and cash equivalents, will be sufficient to fund our normal operating needs, including capital expenditures, on both a short- and long-term basis.

In addition, other things such as a prolonged economic downturn, a decrease in demand for our products, an unfavorable settlement of our unrecognized tax positions or non-income tax contingencies could adversely affect our long-term liquidity.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements have been prepared in accordance with U.S. GAAP and form the basis for the following discussion and analysis on critical accounting policies and estimates. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the

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circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates and those differences could have a material effect on our financial position and results of operations. We have discussed the development, selection and disclosure of these estimates with the Board of Directors and our Audit Committee.

A summary of our significant accounting policies is provided in Note 1 of the Notes to Consolidated Financial Statements in Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2023. We believe the critical accounting policies and estimates described below reflect our more significant estimates and assumptions used in the preparation of the consolidated financial statements. The impact and any associated risks on our business that are related to these policies are also discussed throughout this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” where such policies affect reported and expected financial results.

Revenue Recognition

Our revenue recognition practices are discussed in Note 11, “Revenue Recognition,” to our Condensed Consolidated Financial Statements in Item 1, Part 1 of this report.

Inventories

Inventories are adjusted to the lower of cost and net realizable value, using the first-in, first-out method. The components of inventory cost include raw materials, labor and overhead. To estimate any necessary adjustments, various assumptions are made regarding excess or slow-moving inventories, non-conforming inventories, expiration dates, current and future product demand, production planning and market conditions. If future demand and market conditions are less favorable than our assumptions, additional inventory adjustments could be required.

Incentive Trip Accrual

We accrue for expenses associated with our direct sales program, which rewards independent consultants with paid attendance for incentive trips, including our conventions and meetings. Expenses associated with incentive trips are accrued over qualification periods as they are earned. We specifically analyze incentive trip accruals based on historical and current sales trends as well as contractual obligations when evaluating the adequacy of the incentive trip accrual. Actual results could generate liabilities more or less than the amounts recorded.

Contingencies

We are involved in certain legal proceedings and disputes. When a loss is considered probable in connection with litigation or non-income tax contingencies and when such loss can be reasonably estimated with a range, we record our best estimate within the range related to the contingency. If there is no best estimate, we record the minimum of the range. As additional information becomes available, we assess the potential liability related to the contingency and revise the estimates. Revision in estimates of the potential liabilities could materially affect our results of operations in the period of adjustment. Our contingencies are discussed in further detail in Note 9, “Commitments and Contingencies”, to the Notes of our Condensed Consolidated Financial Statements, of Item 1, Part 1 of this report.

Income Taxes

Our provision for income taxes, deferred tax assets and liabilities and contingent reserves reflect management’s best assessment of estimated future taxes to be paid. We are subject to income taxes in both the United States and numerous foreign jurisdictions. Significant judgments and estimates are required in determining our consolidated provision for income taxes.

Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating our ability to recover our deferred tax assets, management considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, we develop assumptions including the amount of future state, federal and foreign pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates that we are using to manage the underlying businesses. Valuation allowances are recorded as reserves against net deferred tax assets by us when it is determined that net deferred tax assets are not likely to be realized in the foreseeable future.

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Changes in tax laws and rates could also affect recorded deferred tax assets and liabilities in the future. Management is not aware of any such changes that would have a material effect on our results of operations, cash flows or financial position.

The calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations in a multitude of jurisdictions across our global operations. Income tax positions must meet a more-likely-than-not recognition threshold to be recognized.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We conduct business in several countries and intend to grow our international operations. Net sales, operating income and net income are affected by fluctuations in currency exchange rates, interest rates and other uncertainties inherent in doing business and selling products in more than one currency. In addition, our operations are exposed to risks associated with changes in social, political and economic conditions inherent in international operations, including changes in the laws and policies that govern international investment in countries where we have operations, as well as, to a lesser extent, changes in U.S. laws and regulations relating to international trade and investment. For further information, see Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2023.

Item 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to provide reasonable assurance that the information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.

Our management, under the supervision and with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2024. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2024.

Management’s Report on Internal Control over Financial Reporting

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in “Internal Control—Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on management’s assessment under this framework, management has concluded that our internal controls over financial reporting were effective as of September 30, 2024.

Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the quarter ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

None.

Item 1A. RISK FACTORS

In addition to the information set forth in this report, you should carefully consider the risks discussed under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, which could have a material adverse effect on our business or consolidated financial statements, results of operations, and cash flows. Additional risks not currently known, or risks that are currently believed to be not material, may also impair business operations. There have been no material changes to our risk factors since the filing of our Annual Report on Form 10-K for the year ended December 31, 2023, except as set forth below.

System failures or issues with integrating new technology could adversely affect our results of operations and financial condition.

Like many companies, our business is highly dependent upon our information technology infrastructure (websites, accounting and manufacturing applications, and product and customer information databases) to manage effectively and efficiently our operations, including order entry, customer billing, accurate tracking of purchases and volume incentives, execution of digital sales, and managing accounting, finance and manufacturing operations. The occurrence of a natural disaster, security breach or other unanticipated problem could result in interruptions in our day-to-day operations that could adversely affect our business. In addition, the integration of new technology or systems, including the redesign of our digital sales platform expected to commence in the fourth quarter of 2024, could adversely affect our business, including our sales, our results of operations and our ability to reach customers, as we and our customers and online marketing systems adapt to such new technology and design. A long-term failure or impairment of any of our information systems could have a material adverse effect on our results of operations and financial condition. Furthermore, there can be no assurances that we will realize expected benefits as a result of our implementing new technology or systems into our operations, even though investment in such technologies or systems may be significant.

We conduct business outside of the U.S., which exposes the Company to additional risks not typically associated with companies that operate solely within the U.S.

A significant part of our operations is in foreign countries. These operations have additional risks, including currency exchange, foreign exchange controls, difficulties and limitations on the repatriation of cash, less developed or efficient financial markets than in the U.S., absence of uniform accounting, auditing and financial reporting standards, differences in the legal and regulatory environment and additional compliance burdens, different publicly available information in respect of companies in non-U.S. markets and different or lesser protection of our intellectual property and possible imposition of non-U.S. taxes. Certain geopolitical factors may also affect our business, including uncertainty regarding the imposition of and changes in the United States’ and other governments’ trade regulations, trade wars, tariffs, other restrictions or other geopolitical events, including the evolving relations between the United States and China. Any of these factors could negatively impact our business and results of operations.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

The following table summarizes the purchases of our common stock during the fiscal quarter ended September 30, 2024:


Periods	Total Number of Shares Purchased (in thousands)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (in thousands)	Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(1) (in thousands)
July 1, 2024 to July 31, 2024	—	$	—	—
August 1, 2024 to August 31, 2024	56	12.61		56
September 1, 2024 to September 30, 2024	—	$	—	—
Total	56			56	$	9,172

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(1) On March 10, 2021, we announced a $15.0 million common share repurchase program. On March 8, 2022 we announced an amendment to the share repurchase program allowing the repurchase of an additional $30.0 million shares. The repurchases may be made from time to time as market conditions warrant and are subject to regulatory considerations. We purchased 56,000 shares of our common stock during the quarter ended September 30, 2024, under the terms of this Board approved plan.

The actual timing, number, and value of common shares repurchased under our board-approved plan will be determined at our discretion and will depend on a number of factors, including, among others, general market and business conditions, the trading price of common shares, and applicable legal requirements. We have no obligation to repurchase any common shares under the authorization, and the repurchase plan may be suspended, discontinued, or modified at any time for any reason.

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

Item 5. OTHER INFORMATION

None.

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Item 6. EXHIBITS

a) Index to Exhibits


Item No.						Exhibit
10.1(1)						Amendment No. 5 to Loan Agreement dated September 11, 2024, between Bank of America, N.A. and Nature’s Sunshine Products, Inc.
31.1(1)						Certification of Chief Executive Officer under SEC Rule 13a-14(a)/15d-14(a) promulgated under the Securities Exchange Act of 1934
31.2(1)						Certification of Chief Financial Officer under SEC Rule 13a-14(a)/15d-14(a) promulgated under the Securities Exchange Act of 1934
31.3(1)						Certification of Chief Accounting Officer under SEC Rule 13a-14(a)/15d-14(a) promulgated under the Securities Exchange Act of 1934
32.1(1)						Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 Chief Executive Officer pursuant to 18 U.S.C. Section 1350
32.2(1)						Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 Financial Officer pursuant to 18 U.S.C. Section 1350
32.3(1)						Certification of Chief Accounting Officer pursuant to 18 U.S.C. Section 1350 Financial Officer pursuant to 18 U.S.C. Section 1350
101.INS						Inline XBRL Instance Document
101.SCH						Inline XBRL Taxonomy Extension Schema Document
101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document
104						Cover page Interactive Data File (the cover page XBRL tags are embedded within iXBRL (Inline Extensible Business Reporting Language) document)

_________________________________________

(1) Filed currently herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Nature’s Sunshine Products, Inc.

Date:	November 7, 2024	/s/ Terrence O. Moorehead
		Terrence O. Moorehead,
		President and Chief Executive Officer
		(Principal Executive Officer)


Date:	November 7, 2024	/s/ L. Shane Jones
		L. Shane Jones,
		Executive Vice President, Chief Financial Officer and Treasurer
		(Principal Financial Officer)


Date:	November 7, 2024	/s/ Jonathan D. Lanoy
		Jonathan D. Lanoy,
		Senior Vice President, Chief Accounting Officer
		(Principal Accounting Officer)

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$NATR Large Ownership Changes

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Canaccord Genuity initiated coverage on Nature's Sunshine with a new price target

DA Davidson reiterated coverage on Natures Sunshine Products with a new price target

DA Davidson reiterated coverage on Natures Sunshine Products with a new price target

Nature's Sunshine shares are trading lower after the company reported worse-than-expected Q1 financial results.

Natures Sunshine Products Sees FY24 Net Sales $455M-$480M Vs $467.900M Est.

Natures Sunshine Products Q1 2024 Adj EPS $0.12 Misses $0.17 Estimate, Sales $110.993M Miss $111.200M Estimate

Director Fasching Steven J. was granted 2,869 shares (SEC Form 4)

SEC Form 3 filed by new insider Fasching Steven J.

Large owner Shanghai Fosun Pharmaceutical (Group) Co., Ltd. sold $29,946 worth of shares (2,300 units at $13.02) (SEC Form 4)

SEC Form SC 13G/A filed by Nature's Sunshine Products Inc. (Amendment)

SEC Form SC 13G/A filed by Nature's Sunshine Products Inc. (Amendment)

SEC Form SC 13G/A filed by Nature's Sunshine Products Inc. (Amendment)

$NATR Leadership Updates

Live Leadership Updates

Nature's Sunshine Appoints Steven Fasching to Board of Directors

Nature's Sunshine Names Kevin Fuller Global Chief Marketing Officer

Nature's Sunshine Announces Retirement of CFO Joseph Baty

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Leadership Updates