Investor Presentation - Nature's Sunshine Products · In addition to historical information, this presentation may contain certain forward-looking statements within the meaning of

Investor Presentation

May 2014

1

Safe Harbor Statement

In addition to historical information, this presentation may contain certain forward-looking

statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such statements include, but are not limited to, Nature’s Sunshine’s beliefs, expectations,

hopes, or intentions regarding future events. Words such as “expects,” “intends,”

“believes,” “anticipates,” “should,” “likely,” and similar expressions identify forward-looking

statements. All forward-looking statements included in this presentation are made as of

today and are based on information available to me and the Company as of such date.

Nature’s Sunshine assumes no obligation to update any forward-looking statement.

Actual results will vary, and may vary materially, from those anticipated, estimated,

projected or expected for a number of reasons, including, among others: further reviews

of the Company’s financial statements by the Company and its Audit Committee;

modification of the Company’s accounting practices; foreign business risks; industry

cyclicality; fluctuations in customer demand and order pattern; changes in pricing and

general economic conditions; as well as other risks detailed in the Company’s previous

filings with the SEC. I invite you to review the Company’s previous filings and financial

reports for additional information.

2

• Two distinct brands – Nature’s Sunshine Products (NSP) and Synergy

• Manufacture and market, through a direct selling channel, a broad line of nutritional

and personal care products

• Global footprint spanning more than 45 countries with over 700,000 independent

Managers, Distributors and customers

• Leverage science-based intellectual property to solve mega-trend health problems

• Committed to growth and to become the premier global, health, wellness and

lifestyle company

3

Nature’s Sunshine Products, Inc. (Nasdaq: NATR)

Company Overview

Diversified Revenue Mix

4

Note: Percentage breakdown in pie charts as of March 31, 2014

Revenue by Business Unit Revenue by Geography Revenue by Product

FY 2013 Net Sales Revenues of $378 million

North America

44%

Russia & Europe

24%

Asia19%

Latin America

13%

NSP Americas,

Asia Pacific and Europe,

53%NSP Russia, Central and

Eastern Europe, 16%

Synergy WorldWide,

31% General Health39%

Digestive25%

Cardiovascular16%

Immune9%

Weight Management

6%

Personal Care5%

Created the Foundation for Growth

• Focused on right-sizing operating expenses to provide capital to support growth initiatives

– Focused investment on highest growth opportunities and rationalized unprofitable operations

– Renegotiated certain contractual obligations

• Strengthened a world class management team

– Key additions: Chairman and CEO; President and COO; Chief Scientific Officer; Chief Information

Officer; General Counsel; VP of Global Marketing; EVP of Worldwide Operations; President of NSP

AAPE; General Manager of Synergy Asia; General Manager of NSP RCEE; VP of Corporate

Development

• Aligned 3 year product calendar with global megatrends

– Strengthened core product categories

– Entered new product categories, for example, weight management

– Refocused on science-based innovation

• Re-defined and re-energized the brand

– Ensuring clarity of common purpose among Distributors and employees

– Strong and relevant message to customers

• Invested in infrastructure

– Invested in local sales and marketing personnel to better support Distributors & customers

– Upgraded manufacturing facility

– Initiated a 2.5 year Oracle ERP/PLM implementation

5

Source: Euromonitor, updated Jan 2014

NSP Is Well-Positioned for Growth

6

Favorable Industry Trends

• Segment Product Category Growth by Global Region (2012-2013):

Vitamins and Dietary Supplements

Market % Growth Size

World 5.7% $84.4 Billion

Asia Pacific 5.1% $35.9 Billion

Australasia 17.1% $2.0 Billion

Eastern Europe 10.1% $4.2 Billion

Latin America 13.1% $4.5 Billion

Middle East and Africa 9.8% $1.6 Billion

North America 5.5% $25.9 Billion

Western Europe 1.3% $9.9 Billion

Herbal/Traditional Products




Australasia 1.5% $401 Million

Eastern Europe 11.9% $560 Million

Latin America 2.7% $401 Million

Middle East and Africa 2.5% $100 Million



Weight Management (Consumer Health)




Australasia -2.6% $412 Million

Eastern Europe 16.1% $713 Million

Latin America 6.3% $1.8 Billion

Middle East and Africa -1.6% $147 Million



NSP Is Well-Positioned for Growth

– The $167 billion global direct selling business, with 90 million distributors (75% female),

grew by 5.4% in 2012

– The wellness segment (VMS, weight management, sports nutrition) of the global direct

selling business is $39 billion. Consumer health “mega-trends” are providing strong

tailwinds for this segment.

– Geographically diversified business

• Asia Pacific: $73 billion

• North America: $33.8 billion

• Latin America: $32.5 billion

• Europe, Middle East, Africa: $27 billion

– Advanced markets represent 15% of world’s population and 56% of direct selling

business.

– Emerging markets represent 85% of world’s population but were responsible for 44% of

global direct sales, a gain of 9% in just two years. Enormous potential exists in meeting

the health and business opportunity needs of this segment.

– “It’s a fragmented industry with gigantic room for growth…. The top 15 players only

account for about half the market.” - Jim Cramer, host of CNBC’s Mad Money

7

Favorable Industry Trends

• Direct-selling distribution model:

Global Growth Strategies

• Market Penetration and Expansion

– Expanding distribution in existing markets

– Entering new markets and channels with high potential

– Leveraging our strong product line and R&D capabilities to expand market coverage

– Building brand affinity and awareness

• Product & Program

– Focusing on key global health mega-trends to develop programs that:

• Capture incremental share in existing categories

• Leverage R&D innovation to enter new categories

– Positioning programs within holistic approach to daily wellness to build daily consumption

• Infrastructure

– Investing in science, R&D and manufacturing to strengthen our competitive advantage in the development and speed to market of innovative product programs

– Investing to develop best-in-class processes and systems that enhance efficiency, improve service, drive out costs internally and enable and empower distributors externally

• Team

– Developing a deep talent bench and continuing to build strength in depth throughout the organization

8

Focusing Resource Allocation on Key Growth Initiatives

Market Penetration and Expansion

9

Existing

Existing but

Small Presence

New Growth

Opportunity

Existing Market,

Different Channel

Transforming to global organization with multiple brands and

distribution channels

Our mission is to enhance the physical, material and mental well-being of our field

sales force and customers worldwide by providing health and lifestyle-oriented

products and service of uncompromising quality and integrity.

NSP U.S. Program Evolution

10

Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014

• Focus on

Execution

• Full Launch of

IN.FORM & Retail

Productivity Tools

• Launch AnxiousLess

science

• Launch Equolibrium

• Introduce Dr. Pacheco

Train 25

IN.FORM

coaches

• Soft launch of Retail

Productivity Tools & Training

• Launched AnxiousLess

• Hire CSO

• Begin Business

Method

Development

• Transformational

Habit of Health

• Launch Weight

Management

• Hire Retail, Practitioner,

Networking expertise

• Establish Leadership

Advisory Council

• Re-initiated

investment in

NSP US

Robust Product Portfolio Addressing Leading Health

Conditions in the U.S.

11

Top Health Conditions

Categories

Share of

Overall U.S.

Health

Conditions

U.S. Market

Sales $mm

NSP # of

Products In

Category

NSP US 2013

Sales $000s

% of NSP US

2013 Sales

Digestive 4.9% $1,361 99 $40,130 26.4%

General Health 14.4% $4,555 104 $30,405 20.0%

Immune 6.8% $2,114 65 $20,076 13.2%

Cardiovascular 7.0% $2,133 26 $11,510 7.6%

Mood 1.6% $479 30 $10,249 6.7%

Weight Loss 13.6% $22,156 22 $7,944 5.2%

Women's Health 1.4% $444 29 $5,133 3.4%

Joint Health 5.0% $1,604 11 $4,558 3.0%

Bone Health 5.7% $1,785 13 $4,295 2.8%

Cellular Health 3.9% $1,265 10 $3,845 2.5%

Cognitive Function 1.9% $580 11 $3,088 2.0%

Sports/Energy 14.9% $3,579 13 $2,531 1.7%

Beauty/Skin Care 2.3% $659 11 $2,030 1.3%

Blood Sugar Support/Diabetes 3.6% $1,096 7 $1,611 1.1%

Vision Health 1.3% $390 5 $1,535 1.0%

Sexual Health 1.8% $517 5 $937 0.6%

Sleep 1.2% $333 6 $867 0.6%

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Scientific Approach to New Product Development

Systems Phytochemicals Discovery Delivery Clinical

• Highly skilled team of scientists, lead by 7 PhDs, who work with top researchers at universities to study

and test our product (Auburn University, Brigham Young University, University of Washington)

• Recently hired scientist, Dr. Matt Tripp, as Chief Scientific Officer

• Created a Global Medical and Scientific Advisory Board consisting of both medical doctors and PhDs

– Recently announced addition of Emmy Award winning family physician, Dr. Luis N. Pacheco

• Building Molecular Biology and Phytochemistry laboratories with state-of-the-art equipment as well as a

medical clinic to perform in-house clinical studies

Innovative, Science-based Products & Programs

13

EQUOLIBRIUM

Product Introductions

US Retail Productivity & Distributor Training

• Launched IN.FORM weight management system at U.S.

Annual Convention, March 2014

– Certified 300+ life coaches with an additional 400

certifications slated for Q2’14

– Powerful recruiting tool with positive duplication

efforts

• Launched retail productivity tools in October 2013

• Continue to release promotions that support product

programs (AnxiousLess, Equolibrium, Weight

Management)

• Continue working with key retail distributors to help them

build their business

ANXIOUSLESS

Filed provisional patent on

formula

#1 recruiting product

80% repurchase rates

90%+ of sales leaders

purchased product

State-of-the-Art Manufacturing Capabilities

14

• 270,000 sq. ft. manufacturing facility built to pharmaceutical standards

– Designed to support increasing sales; currently operating at 60% capacity

– Capable of producing all primary dosage forms of products offered by NATR (capsules, tablets, powders,

liquids, stick-pack, pack-a-day forms)

– Utilizes state-of-the-art equipment that runs 24-hours a day, five days a week

– 93 full-time employees; 7+ average years of service

– Operational Excellence team’s objectives have saved approximately $450,000 in Q1 2014

• Nature’s Sunshine is regulated by the FDA (Food & Drug Association), USDA (United

States Department of Agriculture), and TGA (Therapeutic Goods Administration in

Australia)

• Received NSF International certification and can produce Kosher and Halal certified

products

• Our in-house vitamin, herb, mineral, microbiological, research & development and

methods labs allow for the development of specifications and test methods that

ensure the highest quality in the industry

Experienced Management Team

15

Nature’s Sunshine has assembled a deep bench of industry veterans and

best-in-class management

Name Position Previous Experience

Greg Probert Chairman & Chief Executive Officer• Penta Water, Herbalife, DMX Music, Disney

• Served as Chief Operating Officer of Herbalife from 2003 – 2008

Wynne Roberts President & Chief Operating Officer• LifeCare, Herbalife, DMX Music, NCR, Xerox

• Served as Senior Vice President, EMEA, at Herbalife from 2005 – 2009

Steve BunkerExecutive Vice President, Chief

Financial Officer & Treasurer• Geneva Steel Holdings, Arthur Andersen LLP

Richard StrulsonEVP, General Counsel & Chief

Compliance Officer

• Herbalife, Disney, Latham & Watkins

• Served as Senior Vice President, Chief Privacy Officer and Counsel of

Herbalife from 1998 – 2004

Matthew Tripp, Ph.D. Chief Scientific Officer • Metagenics, KinDex Therapeutics, Kellogg Company

Sue ArmstrongExecutive Vice President –

Operations • Metagenics, Carl Zeiss Vision

Staci GlovskyVice President – Worldwide

Marketing• Health & Wellness Products, Herbalife

Yale PeeblesVice President – Corporate

Development• Lear Corporation, Bain & Company, Tyson Foods, United Technologies

Patrick J. O’Hara Vice President – Human Resources • Danaher, Fluke Corporation, Los Alamos National Laboratory, IBM

FINANCIAL OVERVIEW

16

$17 $16

$43 $41$32

$0

$10

$20

$30

$40

$50

2009 2010 2011 2012 2013

$0.39 $0.54

$1.12

$1.59

$1.07

$0.00

$0.50

$1.00

$1.50

$2.00

2009 2010 2011 2012 2013

$234 $225 $217 $209 $207

$52$56

$57$58 $63

$56 $69 $94 $101$108

$0

$50

$100

$150

$200

$250

$300

$350

$400

2009 2010 2011 2012 2013

NSP AAPE NSP RCEE Synergy

Significant Margin Improvement on Modest Sales Growth

17

$ in Millions $ in Millions

$1.13

$1.62

$368$368

$350$342

(1) Adjusted to exclude losses from discontinued operations, one-time contract termination costs, share-based compensation and other income.

Adjusted EBITDA for Q1 2014 was $9.5 million

Net Sales Adjusted EBITDA (1)

EPS

$378

$14 $13

$40$34

$23

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

2009 2010 2011 2012 2013

$11$20 $15

$29$14

$33$25

$28$44

$50

$63$39

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

2009 2010 2011 2012 2013 Q1 2014

U.S. International

Strong Free Cash Flow, Balance Sheet and Liquidity

18

$ in Millions $ in Millions

• $71.5 million in cash and cash equivalents, as of March 31, 2014

• Low debt levels

• Availability of $15.0 million on revolving credit facility

• Generated $29.4 million in cash flow from operations in 2013

Free Cash Flow (1) Cash (2)

$36

$48

$59

$79 $77$71

(3)

(1) Defined as Adjusted EBITDA less CAPEX

(2) Includes payment of special dividend of $1.50 per share paid in 3Q13

(3) Reflects repatriation of $21.5 million of foreign cash in the first quarter of 2014 through intercompany dividends

Recent Financial Results

19

Q1 2014 Q1 2013 Notes

Net Sales $95.8 M $96.5 M +0.3% in local

currencies

Operating Income $7.2 M $6.9 M

Adjusted EBITDA $9.5 M $9.2 M

Net Income $9.7 M $4.9 M Reflects one-time tax

benefit related to

intercompany

dividends

Diluted EPS $0.58 $0.30

• Reinstated and increased dividend to $0.40 (annual run-rate) or 2.8% yield, in-line with peer

group

• Special one-time cash dividend of $1.50 per share paid on 8/29/13 (8.5% yield)

• $10 million share repurchase program in place – $2.5 million purchased through Q1 2014

• Business and tax strategy implemented – efficiently repatriated $21.5 million through

intercompany dividends in Q1 2014

20

Capital Allocation

Regular Quarterly Dividends

$0.00

$0.02

$0.04

$0.06

$0.08

$0.10

$0.12

$0.14

$0.16

$0.18

$0.20

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4

Investment Highlights

• Favorable industry trends offering significant growth opportunities

• Best-in-class product lines with reputation for highest quality

• Well positioned to move into new, larger consumer categories with daily consumption

model

• Two distinct brands with strong distributor organizations and loyal customer base

• Highly scalable business model with strong cash flow dynamics and balance sheet

• World class management team with experience in direct selling, consumer goods and

international operations

• Significant geographic expansion opportunities

• State-of-the-art manufacturing facility with strong R&D capabilities

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Documents

Investor Presentation - Nature's Sunshine Products · In addition to historical information, this presentation may contain certain forward-looking statements within the meaning of