Q3 2020 Natures Sunshine Products Inc Earnings Call
[noise] please standby.
Good afternoon, everyone and thank you for participating in today's conference call to discuss natures Sunshine financial results for the third quarter ended September Thirtyth 2020.
Joining us today, our natures Sunshine CEO churns warhead CFO Joseph.
Vice President and General Counsel.
Following their remarks, we'll open up the call for your questions before we go further I would love to turn the call over to Mr. Brad.
Companys Safe Harbor statement within the meaning of.
The Securities Litigation Reform Act of 1995.
Hi, everybody.
It's important cautions regarding forward looking statements.
[noise]. Please go ahead [noise].
[noise]. Good afternoon. Thank you all for joining our conference call to discuss our third quarter 2020 financial Regal I'd like to remind everyone that this call is available for replay will be a telephonic Darwin through November 24th.
And your wife webcast will be posted in the Investor relations portion of our website at natures Sunshine Dotcom, Oh I've mentioned on this call may contain forward looking statements. These statements are often characterized by terminologies such as believe hope may.
Since it they expect will and other similar expressions [noise].
Forward looking statements are not guarantees of future performance.
Yeah, well results may be materially different from the results implied by forward looking thing [noise].
[noise] factors that could cause results to differ materially from those assets like your rent include.
But are not limited to those factors disclosed in the Companys annual report.
<unk> form 10-K under the caption risk factors and.
And other reports filed with the Securities and Exchange Commission [noise]. The information on this on this call speaks only as of today's date [noise].
The company disclaims any duty to update the information provided here is [noise].
Oh, no I'd like to turn the call over to the CEO Nature's Sunshine.
This morning, Karen [noise].
Thank you, Dave and good afternoon, everyone and thank you for joining todays call I hope for a while and staying safe because we continue to deal with the ongoing challenges so called it might change [noise].
I'm very pleased to be here with you today to discuss our record breaking third quarter results.
The progress we've made transforming our business that's an exciting industry that we'll be launching in the coming days model with me today is our chief Financial Officer Joel Beatty.
Who will walk you through our financials in greater detail.
I'm going to kick things off [laughter] overview of the business.
Before I begin my formal remarks, Oh, they come over to <unk>.
Historical third quarter results in perspective.
Since 2020.
Such an extraordinary year.
Well, you folks a little bit like Jane force people to adapt to rethink their priorities Oh Gee that's been changed.
Successfully transformed the business.
In that spirit pause, while staying focused on implementing our strategy was to do our objectives.
Blake.
Oh, they're trying to do here. So many people talking about the Ji hotel chains has worked tirelessly to ensure our transformation initiatives continue to move forward without just watching.
Oh of course already critical positions and retailers that really made a difference, but they continue to partner with us on transforming the business Oh no in the past.
Probably heard me say.
Oh unique network of wearable what's left for pads, we expressed an interest in orbit dealers all the best in the industry [noise].
There's always they continue to step up to meet the challenge at the moment.
Our customers are counting on us now more than ever.
No incredibly talented and dedicated team to put chairs and retailers continue to deliver.
I also want to recognize and thank our stripping manufacturing and quality genes that despite the lingering and also the affects of the bank that will continue to keep our facilities fully operational and on top of the increased demand for crop.
They've shown tremendous resiliency resolve and dedication and their love for our company.
In sports at all [noise] clearly.
Clearly I'm.
I'm very pleased with our progress and incredibly proud of our team for their flexibility determination.
In comparison with the people in our community [noise].
Turning to our performance for the third quarter net sales increased $11.7 million or 13.
13.2% versus prior year.
Sure just over $100 million, making Q3 of 20 point is the largest quarter in the 48 year history of our company.
[noise] cellphones, what's one of them quite strong performance across each of our four operating business units [noise] almost.
It was primarily the result of our ongoing efforts to transform our business combined with improved fundamentals and seasonal sales activity [noise].
Specifically.
We saw increased demand due to our updated branding new product launches the effective use so virtual field events.
Targeted promotional activity in several markets.
Stronger consumer demand drove momentum and that's the U.S. inside of what we saw sales increase by almost 14% and 27% respectively in local currency.
The easing of coated like gene were literally to this friction, Japan or Korea, and Latin American markets allowed us to unleash our sales teams and more effectively brought steel fundamentals and as a result, we saw sales increased by almost 9% and 20% respectively in local currency.
[noise], we're still in the early stages workplace when they see that as you can see we're making good progress and aggressively moving the business forward.
Operating profit increased 16% in local currency, while adjusted EBITDA came in.
Like what $4 million up 14% versus prior year on a local currency basis [noise].
Oh third quarter demonstrates the continued strength and momentum we're building in the business.
Year to date sales are up 6% versus prior year in local currency.
Operating profit was up 57% and importantly, we've also delivered 21% increase in adjusted EBITDA coming in at almost $29 million [noise].
Again [noise].
We're very pleased with our progress and continue to believe that overtime the implementation of our global strategies.
Now lets to unleash the tremendous potential that lies within nature Sunshine [noise].
As I mentioned earlier we.
Experienced strong performance across all of oral abuse in the third quarter.
To take some time to provide some details on our progress and share a few highlights on what's happening inside our business around the globe.
Starting with North America, we saw revenue increased 10% on a local currency basis.
And for our industry, leading supply continues to be small new customer acquisition.
And an increase in average order size helped broad book.
That's the U.S., we achieved our third consecutive quarter of strong revenue growth delivering a 14% increase all the currency basis.
U.S. business continues to benefit from improved beautiful color, but.
Fundamentals installed refundable fundamentals.
While our loop.
Branding and messaging positively impacted consumer activation and customer engagement.
Importantly sales across all categories improved as consumers place a higher priority on the hill I made the point that.
The momentum were seeing in the U.S. is encouraging.
Still in the early stages of ARX installation and there's plenty of room for improvement.
Oh poor well continue to strengthen our capabilities hardware with off but just not as an retailers and that's what is new growth opportunities as we continue to roll out the business model [noise].
I'll talk a little bit more about the deposits were making a lot of transformation limited business model.
I want to move all starting to Asia.
[noise] easing somewhat related restrictions throughout the region allowed us to operate more effectively and brought feel fundamentals in several key markets. As a result, we saw a 12% increase increase in revenue on a local currency basis.
China continues to lead the region with exceptional growth as revenue increased 27% in local currency versus prior year.
The increase was driven by an intensified focus on recruiting training and motivating the distributors.
As part of that effort, we introduced new field incentives, we focus training all the tough luck Lou.
Hosted our first large scale in person sales event of the year.
The events helped generate energy, but.
But it also served as a platform to reinforce the launch of our exciting new type of thing and rebranding.
And that's the way to generate commitment to several new product launches, which included the launch of an exciting new skincare supplements [noise].
We also saw some early benefits from our phase one digital initiatives that leverage our proprietary.
Along with digital apps like we just kicked off and others to attract and retain new customers.
We will continue to make investments in building our digital platform in this market and they're just getting started.
Overall, we're very pleased with the momentum of our Chinese business.
We continue to be extremely positive on the ongoing potential of the market.
We also saw strong performance in Japan with revenue, increasing 22% in local currency.
Japan's results were largely driven by the restoration of normal business activities and processes and new product promotions.
In Korea revenue increased 9% local currency after several quarters of declines due to cope with my team related restrictions.
As you May remember, our Korean business has historically relied on high touch in person interactions and motivational experiences to drive the sales team.
[noise] global offices and training centers, along with it the station of all large gatherings and travel has obviously impacted our effectiveness.
Fortunately our Korean business is led by an experienced management team that over the past five years has successfully built a strong culture of steel fundamentals. So we're building out a solid foundation to drive growth.
In response to the current environment. The team has adapted to the new reality integrating remote work techniques and reinvestment field incentives.
With exceptionally introduced new products and cast based incentives in lieu of face to face meetings events that experience space travel incentives.
We also benefited from a series of new product launches.
The successful introduction of a new face masks.
That is the first product to be launched in a new line of skin care quality coal Lamar.
The innovative line of luxury skin care products features an updated combination and then any unique combination of natural ingredients from the land and sea to deliver.
Hey, Jim benefits [noise].
Finally, the investments, we made and little orderly allowed us to recapture some of some of our momentum, but we still need to build a more meaningful digital platform to drive customer both in the future.
[noise] in Europe, we achieved a 21% increase in revenue in local currency as a result of continued gains in central and eastern Europe, with Poland, and Russia, achieving 64% and 21% respectively on a local currency basis.
Else, except in these markets has been driven by strong field fundamentals.
So its full new product launches like college, then at immune products like vitamin D. Three [noise].
Virtual field events and a stall all lot of the presence in Russia.
He also generated promising gains in western Europe, with 5% revenue growth in local currency [noise].
In Latin America, our performance dramatically improved.
The most challenging walk down the restrictions were lifted across the region.
The easing of restrictions on the energy generated by the transformation strategies drove a 20% increase in revenue in local currency.
We also benefited from the implementation of our revitalized.
Well look for that problem and the introduction of online ordering capabilities throughout the region.
We continue to believe that these changes will drive further improvements in our performance that's the markets continue to recover.
The trends, we're seeing in the momentum we're building a very encouraging and were pleased to see consistent revenue growth across all of our overuse and then all of our key markets [noise].
Certainly well also see install improvement in our bottom line, which means that we're both operationally and financially well positioned to continue our momentum and gain market share as we continue to transform our business.
Having said that.
I'd like to provide an update on our transformation as we've made significant progress since our last update.
As a reminder, all.
Global growth strategies Ram power feel better GE digital first manufacturing Inc. and the right stuff all at the core of our transformation and the relaunch of our company.
Our transformation is designed to address the evolving consumer trends, capturing that got sort of emerging market opportunities and provide exciting new rewards walcott tissues, and what then retailers to drive long term sustainable growth.
As we stated last quarter, our missile transformation plans target, our North American and Latin American overuse.
We've made solid progress on each of our global strategies. This quarter. So I'd like to review some of the highlights with you.
In terms of brand power, we continue to rollout our updated branding packaging and campaign messages.
September we formally kicked off our rebranding efforts with a host of new consumer facing assets updated imagery, our new website.
We will begin testing our force of nature digital campaign in the fourth quarter.
We're also going to launch and new boxing experience to enhance the overall consumer experience.
Equally important we have also reengineered, our new product development process to ensure that we continue to develop and introduce innovative on certain products in a timely manner.
Our ability to leverage the advanced capabilities of the Hughes Research Center and our R&D team is the key point that differentiates nature, some flip side for more than 80% of our competitors that source their products from third party manufacturers, who provide what label solutions.
In total of rent our initiatives are designed to help make the sunshine appeal to a much larger audience by increasing awareness driving activation and reinforcing our position as a leader and pioneer in the industry [noise].
That's the first company to encapsulate herbs Nature's Sunshine has always felt a stall calling to show that he'll tell later with as many people as possible the beauty.
Power and restorative properties of nature have the ability to unlock our potential in new and exciting ways I.
Mmm Blake Hello nature, we can go places physically mentally and emotionally.
We never be able to otherwise [noise].
[laughter] behind on the branding and that's the power of Nature's Sunshine [noise].
So almost 50 years of experience that's helped us create one of the largest most effective collections, a horrible and that'll supplements available today [noise].
About brand power initiatives will continue to expand minable as we take our award winning products to more and more consumers around the world.
[noise] moving to field energy one of our key objectives is to redefine and improve the experience we provide to consumers and distributors.
We want to make sure that both groups have high quality experiences and access to tools and services that are tailored to their specific needs.
In September we launched two exciting new consumer focused programs in North America, and Latin America.
The first is our premium membership program and the second is an initiative that we call subscribe and thoughts.
Its premium members.
Hey, it's small and won't be to gain momentum the game membership status, which Glenn some savings on all of their father purchases exclusive promotions it sounds vessels.
Early access to special sales events.
Free shipping.
It's a plug and play we're able to enhance customer engagement and retention by offering better value more convenience and a better experience [noise] the.
The program is designed to encourage repeat purchases will help consumers experience.
Oh therapeutic benefits of our products.
We know that when consumers incorporate our supplements into their daily regimen.
They get result, and they feel better.
That's why we've made some solid impart the people purchase option on our new website offering the most attractive pricing.
Free shipping.
And free one year premium membership.
To make it even more attractive we make sure that it's easy for customers to cancel pause or change their subscription whenever they like with a simple click of a but [noise].
Well our distributors, we've introduced a new enhanced business opportunity that aims to provide more flexibility more options and immediate rewards for driving customer growth [noise].
Under the new plan all of our markets in North America, and Latin America operate under a single unified plan. It is simpler easier to understand and creates new earnings opportunity [noise].
Distributor now.
Four ways [noise].
First they can earn by selling our products and serving customers.
Second they can identify other qualified health practitioners of experts who are interested in selling our products and serving customers.
Third.
You can identify qualified but just as an expert in geography outside of their own culture, who are interested in selling our products and certain customers before they can benefit from customers that use our lucerne tools as well as a new affiliate program to share our products with friends family and other people in there.
Personal or professional networks.
With one click customers can share products from our web site to their social media that must be benefits from doing so.
These options make it easier for our distributors to share expand their influence and build their customer base.
[noise] another unique benefit for our distributors and affiliates.
As that they can get paid within about 30 minutes, although customer transaction.
Is there going to wait for a payment until the end of the month Nature's Sunshine offers immediate reward [noise].
Looking ahead, we will continue to partner with our practitioners and retailers as they make this transition with us and as a reminder, we created a 12 month bricks program for qualified but well.
Well to provide qualified distributors ample time to learn and integrate the new tools and programs into their business.
The implementation of our new business model is a tremendous undertaking we are extremely proud of our distributors.
And our entire organization is incredibly grateful for their passion and dedication to our vision of sharing the healing power nature with everyone.
Moving on the.
The web site combines all of the features of our new business model.
With a host of new tools that improve functionality as part of our third strategy digital first.
Oh, absolutely our goal is to create an improved user experience moving from transactional relationships to more personal lifecycle relationships that offer lasting value.
Our new website customers to make use of our contextual search features.
It's allowed them to browse product by health topic product category, a body system, making it easier to find and purchase the supplements they need.
Individuals who share a passion for wellness as you walk us fall.
Presence on the web.
Also take advantage of our innovative new affiliate marketing program, which allows influencers to use our new web tools to share our products with their social or professional networks that will see monetary rewards for doing so.
For the first time.
The changes we've made will allow our distributors that have their own fully replicated nature's Sunshine website, combined with new email and social media functionality. It gives them the opportunity to build and grow their own digital business [noise].
The new tools allow for greater connectedness with existing and new customers and over time. They will also give distributors access to much richer data and better insight into purchase behaviors.
Silver preferences.
As we move forward, we will continue to expand our digital tool kit and build our virtual community of professionals and advocate who are passionate about sharing the healing power adult clubs with others.
[noise] definitely inc., we continue to strengthen our industry, leading manufacturing by making further enhancements to our product quality and testing capabilities.
In the third quarter alone.
We upgraded our poster certification to the highest level up.
Updated our TJ certification, which is comparable to pharmaceutical grade quality standards and received though I also 170 to five certification, which is reserved for those offering the highest level of quality testing.
[noise] these ars round out our industry, leading list of manufacturing certifications that include.
G B, which is good manufacturing practices and Epsa Gee that I've, just mentioned culture, Hello, U.S.D.A. organic ISO 9001, and ISO 170 to pause.
[noise] I mentioned these certifications because they're an important distinguishing characteristic of nature's Sunshine and one of the many reasons why our products are more reliable and more effective than the competition over 80% of home source their goods from less accredited third party.
Manufacturers.
We're already starting from an advantaged position with almost 50 years of experience in R&D sourcing testing quality and manufacturing.
We continue to extend our lead having already built some of the most coveted capabilities in the industry and we'll continue to do so.
Opportunities present themselves.
As we move forward, we will strengthen our focus and commitment to sustainability delivering clean products in a sustainable sustainable manner. We've.
I already made the move to 100% recyclable past packaging for our new redesign bottles.
We'll continue to make similar size in the future.
Finally, our rice spoke strategy has allowed us to improve productivity and saved an organizational effectiveness I assume for continued success delivering savings and overhead efficiency [noise] year.
Year to date, all actions have delivered 230 basis points of operating margin growth and it's helped.
Increased EBITDA margins 140 basis points.
Course, what you can't see.
The efforts, we've taken to build a high performance organization.
You already know about the organizational changes we've made to create these little over use as well as some of the new talent that we've recruited to help strengthen our leadership capabilities in.
In 2020. However, we've also launched a unique new management training program to help ensure our team has the necessary leadership skills to transform our business.
Try both strategies like copper and capture the opportunities that lie ahead.
We're also committed to helping build the next generation of leadership from underrepresented groups at our community by providing a new college scholarship, an intern program so minorities [noise].
So far we're very pleased with the progress we've made on our five global growth strategy.
Clearly they felt makes a southernsun build strong operational and financial momentum as we move forward to 2021.
The unprecedented risks uncertainty brought on by Copel get nice do we.
We made maintaining a strong balance sheet acute priority to protect the business at the parent Devon continues to escalate.
Of course, as we continue to build momentum and strengthen our financial position. The board will continue to evaluate the whole range of capital allocation opportunities like Mel investing in our business and protecting our position.
He priorities.
We're committed now more than ever to using our expertise the breadth and quality of our products and our new branding and business model to take our fair share of the growing supplements market as such you may see us begin to invest ahead of float to advance our strategies and improve our bill.
I'd to capture our fair share of the market.
Again, we all incredibly grateful to our distributors associates and shareholders for their continued support throughout our transition.
Look forward to making continued progress on our transformation over the coming months with that I'd like to turn the call over to Joe Baty.
Chief Financial Officer, who will walk you through our financial results for the third quarter in more detail.
[noise], Thanks, Terence and good afternoon, everyone.
Net sales in the third quarter include [noise] James.
James are so good.
Company record of 123 million [noise].
Third at 88.5 million in the same quarter last year.
This increase was primarily driven by new product development [noise].
Easing up probably restrict changed across several key markets and continued execution on our business transformation plans.
Net sales in Asia increased 12% on a local currency basis to 58.1 million [noise].
Compared to 33.7 million in the year ago quarter [noise].
The increase was primarily attributable to his brand and product launches its was a real thing and work through your market [noise].
On a local currency basis net sales in China increased 27%.
Sales increased 22% and in South Korea sales increased 9% as these markets continue to benefit from lifted lock down a strict change in our recalibrated incentive structures [noise].
Net sales in Europe increased 21% year over year in local terms sheets 18 band.
Care to 14.6 million in the year ago quarter.
The increase reflects strong growth in central and eastern Europe, including the continued strong performance in Russia and Poland.
[noise] North American net sales increase Chester share.
On a local currency basis to 37.6 million [noise].
Compared to 34.2 million in the year ago quarter.
The very strategic and ecommerce enhancements, we have implemented positioned us well as we continued to capitalize on the strong man we showed inch within the U.S. market [noise].
Our growth in this region is also supported by increased new customer acquisition [noise].
Net sales in Latin America, and other increased 14% in local currency to 6.6 million.
6 million a year ago quarter increase primarily due to new product launches and the easing of credit related restructuring [noise].
[noise] kills margin goes.
Gross margin was 72.7% compared to 74.3% in the prior year.
The decline was primarily due to certain isolated inventory charges higher material costs and a delay in the timing of price increases for North America [noise].
Volume incentives as a percentage of net sales increased 50 basis points to 34.2% compared to 33.7% in the same period last year [noise].
Selling general and administrative expenses were 32.3 million compared to 31.2 million in the prior year.
The increase is primarily attributable to our expenses related to our business model the lunch.
As a percentage of net sales history any expansions the 33.2% compared to 35.2 per share in the same period in 2019.
Excluding the impact of 24 million of restructuring expenses in the prior year end 0.1 man. This year <unk> expenses were 33.17 net sales compared to 34.8% in the prior year period.
[noise] operating income was 5.5 million or 5.5% of net sales compared to operating income of 4.7 name or 5.3% of net sales in the prior year period.
Excluding the restructuring and related expenses.
We generated 5.6 million of operating income or 5.6% of net sales for the current quarter compared to 4.1 man or 5.8% of sales in the prior year period [noise].
Adjusted EBITDA as defined in our press release as net income from continuing operations.
For income taxes, depreciation amortization and other income or loss.
Adjusted to exclude share based compensation and certain noted adjustments increased 13% to 9.4 million in the third quarter of 2020 sprint.
Compared to 8.3 million in the third quarter of 2019 [noise].
Oh, the increase maybe it's driven by the aforementioned working net sales this quarter falling through the bottom line [noise].
Net income attributable to common shareholders for the quarter was 6.9 million or 34 cents per diluted share as compared to 1.3 million or 17 cents per diluted share in the year ago period.
Turning to liquidity.
Cash and cash equivalents on September Thirtyth of 82.3 man.
With 5.4 million of debt.
For the first Lady luck 2020, we generated 26.8 million of cash from operations as compared to using cash of 5.5 man in the comparable prior year period [noise].
The increase is primarily due to the significant improvement in net income and the timing of both working capital related to just lunch and certain capital expenditures.
Well, we expect to continue or just trying to think of the fourth quarter.
In addition to the next stage of our business transformation maybe.
May increase your costs and talk to the ability really relative to this quarter.
Further we are closely monitoring any resurgence.
<unk> 19 kids shoes across your geographies.
Circa operations, especially in certain international markets, where we open instead of shoes have fluctuated [noise].
Despite these uncertainties we are confident in our ability to continue executing on our global growth strategy and believe we will continue to drive shoulder results through the remainder of 2020 in the beginning of 2021.
[noise] before opening the call to course change I wanted to reiterate or clarity in our teams strong performance and in the momentum built throughout the year.
No fair enough time dark over to the operator for Q in a [noise].
Operator.
Thank you if you would like to ask a question on the phone lines. Today, you can press star one on your telephone keypad.
On a speaker phone. Please make sure your mute options turned off to allow your signal to reach our equipment [noise].
Once again, everyone that is star one on your telephone.
For a moment.
[noise] well take our first question from Steven Martin with Slater. Please go ahead.
Hi, guys.
Hi, how are you doing.
Good good Guy I hope, everyone phase out there [noise] yeah.
Yeah, Yeah, absolutely you too good to hear from you.
You've been great over the last couple of years on the margins and the cost. This was the first quarter were.
Okay, Yeah, the gross margin in the volume in turn could slip a little.
Should we expect that these are new levels of gross margin and volume incentives on where do we expect them to go in the future.
Yeah, we saw some pressure on gross margins from.
They'll kind of cost going up as a result of just sourcing with NV Colgate environment, but Jay you want to talk about some additional factors as well as what to expect going forward.
Yeah, I mean look.
To look at it more as a near term situation city were here well, we expect long term.
And you know one I mean.
In an individual quarter, we can certainly see a little bit of a.
Sensitivity or fluctuation on both the gross margin or volume incentive basis, you referenced both in your question, but from a longer term perspective, I would say there's tea.
The nine month year to date margins and expectations are more in line with what we expect and I would say that even from a longer term schantz, one would expect girls margin to actually to improve yeah [noise].
Right I would have expected wood volume increases you know with having the first no double digit up quarter that you might see some of that into the gross margin.
[noise].
[noise] Doron go ahead [noise].
[noise] No I think you said you captured it Joe it's it's a I can't.
Temporary flux to the short term.
But we do have pretty aggressive long term plans and expectations to improve those margins.
Okay.
And a question I ask you guys every quarter what inning are we in in the [noise].
Turning around that the top line and the cost containment.
[noise] I'd say I'll pick the top line.
[laughter] I'll take the top line.
In terms of top line. We're still early on you know, we've just lost as I mentioned its a.
Remember, we just launched the bulk of our sort of <unk>.
Business model components and I'll, then we'll continue to refine and fine tune those.
In an effort to make sure that they work for all the various constituents out there.
And we still have a number of things that we haven't even really lost yet that are up on back to just stick with our baseball analogy here.
So we're we're still early innings with respect to your revenue growth and then on an operating growth Joe you want to add some comments, yes. We noted last time, Steve I. Appreciate the question. Please continue to asking because it's something that we monitor and I believe we're very much on top of.
But we do believe we're in the back half of the ball game.
I'm not going to say, we're in the necessarily the seventh inning stretch at least long term, but as far as some or near term initiatives on what we're looking to accomplish.
On some of the the organization restructuring from.
She where oh, well under the law and we still got a little bit of work to do but.
You know clearly.
Later in <unk>.
So what does that translate to a lot of the U.S. DNA [noise].
Costs, we see going forward will be will in part D. A function of the leverage if the top line grows double digit.
[noise], yes, it will certainly come into play there you know one of the things. It internally you know we need to to evaluate is especially given the spend every situation that we've been going through and which I'm.
I'm not sure anyone as a a clear line of sight on one it's going to end, but one of the things we'll have to stick a pretty hard look at it is post pandemic whenever that maybe to what extent do we.
Make certain other.
Ah investments in the business whether its a.
And expansion of.
Since conventions, so you know travel related costs and so forth because for the time being earned 2020 weeks.
We can't deny that we benefited to some degree from a from the reduction of some of those types of activities on the U.S.J. side [noise].
Well all I can say is a 13% topline growth [noise].
With.
A reduction in events and conventions is pretty impressive.
Yes, yes it is.
Workplace, Yeah, James <unk> right.
What about your hence CBD product line, what can you tell us.
[noise] Yeah. So of course, we have just launched a we'll be lucky I should say a couple of new products.
And we won't be kind of much more aggressively marketing that so the the product line and be kind of months to come.
I know some stuff that I apologize.
Can't talk about it yet because we havent implemented it but if you bought online you'll see that we've completely reengineered redesigned and reimagine the web site and will that continue to aggressively.
Promote the dialogue, there's some work still to be done to make sure that our pricing is competitive and to make sure that the kind of the awareness and all the marketing programs as powerful as necessary, but again, we've got the best CBD in the marketplace, we offer our products offer better performance.
Better quality and better transparency, all which is a.
Very powerful yeah, hey, sales message and so now I think that again that we've got the website in a better position will tighten up our pricing and promotional activity.
And then we're seeing follow up with a much more aggressive digital activation to help dealt into.
Improve awareness and build traction, but we're still really and they are in the early days of Kim.
I will say this the increased focus on didn't mean products in the marketplace overall has.
Kind of shifted People's short term take this into a intermune and somewhat away from CBD you might have seen that and we're seeing that in the overall market results, but we're still talking about 30 40, 50% growth. So the opportunity is there and we're still very very.
Very bullish on the Kent [noise].
All right.
Now I'm going to.
This is also a comment or we go through every quarter and I'm going to address this to your board of directors.
Very good.
It's time to do your job.
Okay, and you've got $80 million or cash you got 20 million shares your stock has gone nowhere for a couple of years. Despite the good work of the current management.
And if youre boards not prepared to do the right thing and maybe somebody asked me from the outside [noise].
[noise] so as I mentioned, you know the board looking at the full range of opportunities right. Now we are being really focused on investing in the business and protecting our position.
Position as you know, we've got one manufacturing location that that.
Services.
80% of our production around the world. So yeah kind of cash on hand is a is really important to us right now, but the message is heard and the board the board of directors is there.
Very focused on on the issue. So that is how all I can say is you know given the improvement in EBITDA with the cash on hand, you're trading at about three and a half times EBITDA.
There's probably no investment you can make.
[noise] that has that kind of rate of return.
I'm really going to be disappointed and I'm not going to be quite as peaceful if we go to another quarter and I hear the same.
Language about the board explores everything all the time [noise].
Sure sure.
Our focus right now is just on keeping the business moving forward and keeping continuing to make.
Tremendous strides on the top and bottom line well.
Well I understand but that's why I address these comments too easy to your board of directors, who may or may not be on this call. Because I think you guys have done the job you were brought in to do.
And they have not done the job of a board that understands its fiduciary responsibility to its shareholders.
Sure Okay.
Thanks, Steve Yeah appreciate the call take care they take.
As a reminder, everyone that is star one.
Our next question from Jerry.
[noise] Hi, good day, thanks for taking the call.
The questions answered.
Congratulations on a very good quarter of course, Oh, Yeah first just expanding on that.
Yeah, that's right allocation question, especially if you're just thinking about a potential like area. So we finished mentioned so you snake.
In addition, well make an additional factory in <unk>.
I remember one of the considerations there.
We actually do have a a relatively small facility in China right now that's providing some.
Simply okay. Good production and are making good progress we will be making some.
Most to expand that.
As well as expanding some of our R&D capabilities in the region.
[noise] okay.
Our inorganic investments.
Playing into your considerations are though as well.
I'm sorry could you could you repeat your question I couldn't hear you.
[noise] inorganic.
Investments are are they part of the consideration Sue.
You know I would say that the board is considering it kind of really the full range of options that you know certainly we don't yes.
I kind of talked about with everything that's that's [noise].
Outside of the normal sort of all of our business right now most of our focus is on saving our internal capabilities building, our digital capabilities in particular as well as helping to migrate up business from being solely shadow it gets to be much more consumer focused and check.
Lifecycle focus, which really means you know, we gotta getting much better and much stronger at things like personalization. So there's a lot of the investments that we that we want to make there that we believe will dramatically improve the competitiveness and also dramatically.
Transform the complexion of our business and from what we're able to do.
And distance ourselves from Beacon the competition, creating new competitive advantage. So right now that things are a couple of the areas. There that we're looking at internally or anything else that does the board of directors might be can be considering all would be the other balance related to talk about that in this form and at this time.
No and yeah Mary I finally, just one what is your baby in your experience I think you had you said you had to fierce there in person feels offense again in Asia. So this one large I know you're younger audience, there and I may maybe attendance levels apheresis now what you are used to a pre go.
It's.
[noise], yeah, they actually split be backed up so I think all they did they just kind of focused on on one particular group in the Shanghai area and it does I think attendance was a little bit higher than in the past. We also had people from feeding into just a view of remotely so you get fixed.
Mix of folks who are there on the ground and people being again, but a lot of tremendous energy I think people felt great being together and Ah and they didn't catch it safely and everybody's, okay, which is which is which is equally as important.
Okay, great to hear thanks very much.
Absolutely. Thank you. Thank you.
[noise] capital.
We haven't got that from quarter.
Quick question for you.
You mentioned Oh customers in North America with the.
The media advertising you have any comments on the cost of acquisition, the assessments and here or non than buying more products.
Hey, Nick could you could you speak up just a little bit wrapping up a little problem hearing you Hello Ryan.
Yeah, sorry, So you mentioned a new customers in North America.
Talk about the cost of acquisition for those customers, if that's increasing or decreasing as a percentage basis and then their attention if they're coming back in and buying more than one order.
Yeah, absolutely so right now the customer growth that we're seeing is really through organic on the ground activity. So it was not through any of our digital activation or digital investment that has not started yet and so it really is simply through.
Repositioning the business I'm talking about things differently, a changing our messaging changing the website.
And so.
Thats standpoint, you know they obviously customers our free but yeah, we went out making incremental investments at this point in time to drive those customers into the businesses are really being driven by.
Our practitioners and retailers and again kind of partnering with us and whatever work, we were doing on the rebranding and adding product launches et cetera.
So I think that answers your question in the future.
Nick we will have some you.
Yeah, we will have more specific kind of investments that they were looking to do as we build out our our digital kind of campaigns that the force of nature campaign that is designed to acquire new customers and with respect to retention.
You know, we're still just in the big data first month or so all of the process, obviously as we build out our subscribe implies.
Capabilities, our expectation is that we'll be building more people, who are staying with us on an ongoing basis and by the way that's the only way they're going to get the therapeutic results from some of our products or any products. It's as if they continue to take them that it's like going to stick signing up for gym membership. Yeah. You can't just say that first week in June.
Or you got to keep going and so do I get the benefit subside and drive is the way to go and we tried to make it as as easy and as attractive as possible. So I can't give up some some time on that one.
It's just it's going to take time for people to understand it fall in love with it and for us to get enough critical mass because it's not necessarily something we expect everybody to click on that.
The first time through.
Okay.
Great. Thanks, guys.
Thanks, Eric.
[noise] that question.
I would now like to turn the call last cycle.
[noise] Okay. Thank you.
Again, I want to thank everybody for listening to todays call Oh, we have a lot going on we really do look forward to speaking to you again next quarter and to continue on the path to transform our business and build momentum. So again. Thank you for your participation. Thanks for your support and we look forward to talking to you. So.
Take care. Thank you.
[noise], ladies and gentlemen that.
Today's teleconference. You may disconnect your lines at this time and thank you for your participation.
[noise].