Q2 2024 Nature's Sunshine Products Inc Earnings Call
Speaker Change: Good afternoon, everyone, and thank you for participating in today's conference call to discuss Natures Sunshine's financial results for the second quarter ended June 30, 2024.
Speaker Change: Joining us today are Nature of Sunshine CEO Terrence Moorhead, CFO Shane Jones, and General Counsel Nate Brower. Following their remarks we'll open the call for analyst questions.
Speaker Change: Before we go further, I would like to turn the call over to Mr. Brower as he reads the company's safe harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. Please go ahead.
Operator: Peace go ahead.
Nathan Brower: Thanks for joining our conference call to discuss our second quarter 2024 financial results. I'd like to remind everyone that this call is available for replay via telephonic dial-ins through August 22nd and via a live webcast that will be posted in the Investor Relations portion of our website at ir.naturesunshine.com. The information on this call contains forward-looking statements.
Nate Brower: Thank you.
Speaker Change: Good afternoon. Thanks for joining our conference call to discuss our second quarter 2024 financial results.
Speaker Change: I'd like to remind everyone that this call is available for replay via telephonic dial-ins through August 22nd and via a live webcast that will be posted in the investor relations portion of our website at ir.naturesunshine.com.
Nathan Brower: These statements are often characterized by terminologies such as believe, hope, and, may anticipate, expect, will, and other similar expressions. Forward-looking statements are not guarantees of future performance, and actual results may be materially different from the results implied by forward-looking statements. Factors that could cause results to differ materially from those implied here and include, but are not limited to, those factors disclosed in the company's annual report on form 10K under the caption risk factors and other reports filed with the Securities and Exchange Commission.
Speaker Change: The information on this call contains forward-looking statements. These statements are often characterized by terminology such as belief, hope, may anticipate, expect, will, and other similar expressions.
Speaker Change: Forward-looking statements are not guarantees of future performance, and the actual results may be materially different from the results implied by forward-looking statements.
Speaker Change: Factors that could cause results to differ materially from those implied herein include but are not limited to. Those factors disclosed in the company's annual report on form 10k under their caption risk factors.
Nathan Brower: The information on this call speaks only as of today's date, and the company disclaims any duty to update the information provided herein. Now, I would like to turn the call over to the CEO of Nature Sunshine, Terrence Moorehead. Thank you, Nate.
Speaker Change: and other reports filed with the Securities and Exchange Commission.
Speaker Change: The information on this call speaks only as of today's date and the company disclaims any duty to update the information provided herein.
Terrence Moorehead: Now, I would like to turn the call over to the CEO of Nature Sunshine Terrence Moorehead. Terrence? Thank you, Nathan. Good afternoon, everyone. I want to thank you for joining today's call to discuss our second quarter results.
Terrence Moorehead: Thank you, Nate, and good afternoon everyone. I want to thank you for joining today's call to discuss our second quarter results. Today, I'll provide some context for our second quarter performance and offer insights into how the business is progressing in the current environment. From there, Shane will take you through our financials in more detail. I'd like to begin by saying that we continue to make progress on our global growth strategies, addressing near-term challenges while driving change and creating new opportunities for the future.
Terrence Moorehead: In the second quarter, net sales were $110.6 million, down 3% on a local currency basis, driven by continued macroeconomic headwinds in Asia Pacific, a temporary disruption to our North American business, and a tough comparison versus last year, which was one of the strongest quarters in the company's 52-year history. Coming into the quarter, We knew we'd be facing some new challenges as macroeconomic headwinds, foreign exchange, and waning consumer confidence in Asia, especially China, continued to intensify. Similarly, in North America, the macroeconomic environment led consumers to be more careful with their spending as persistent inflation slowed consumer demand.
Terrence Moorehead: Today, I'll provide some context into our second quarter performance and offer insights into how the business is progressing in the current environment. From there, Shane will take you through our financials in more detail.
Shane: I'd like to begin by saying that we continue to make progress on our global growth strategies.
Shane: addressing near-term challenges while driving change and creating new opportunities for the future. In the second quarter net sales were $110.6 million dollars down three percent on a local currency basis.
Shane: driven by continued macroeconomic headwinds in Asia-Pacific, a temporary disruption to our North American business, and a tough comparison versus last year, which was one of the strongest quarters in the company's 52-year history.
Shane: Coming into the quarter, we knew we'd be facing some new challenges as macroeconomic headwinds, foreign exchange, and waning consumer confidence in Asia, especially China, continued to intensify.
Shane: Similarly, in North America, the macroeconomic environment led consumers to be more careful with their spending as persistent inflation slowed consumer demand.
Terrence Moorehead: The changing consumer landscape motivated us to further improve our competitiveness, upgrade computer abilities, and find new ways to make doing business with Nature Sunshine easier and more attractive. With that as a backdrop, in the second quarter, we made several changes to the business that we believe will boost our competitiveness and have a significant positive impact on our long-term performance. However, taking the important step to upgrade capabilities and realign our go-to-market approach has short-term implications. We firmly believe the actions we've taken will help build an important foundation for long-term profitable growth. To that end, we've taken three actions to improve our role.
Shane: The changing consumer landscape motivated us to further improve our competitiveness, upgrade capabilities, and find new ways to make doing business with Natures Sunshine easier and more attractive.
Shane: With that as a backdrop, in the second quarter, we made several changes to the business that we believe will boost our competitiveness and have significant positive impact on our long-term performance.
Shane: While taking the important step to upgrade capabilities and realign our go-to-market approach has short-term implications. We firmly believe the actions we've taken will help build an important foundation for long-term profitable growth. To that end, we've taken three actions to improve our outlook.
Terrence Moorehead: First, we upgraded and reimagined our digital platform in North America to strengthen our digital capabilities and mobile-first performance, which led to improved site load speeds, conversion rates, and stability. We also added new digital capabilities, like multiple payment methods and the potential to introduce next-gen capabilities like artificial intelligence and machine learning. This is an exciting and challenging migration.
Shane: First, we upgraded and reimagined our digital platform in North America to strengthen our digital capabilities and mobile-first performance, which led to improved site load speeds, conversion rates and stability.
Shane: We also added new digital capabilities like multiple payment methods and the potential to introduce next-gen capabilities like artificial intelligence and machine learning. This is an exciting and challenging migration.
Terrence Moorehead: We rebalanced our consumer proposition in several key European markets, placing a greater emphasis on consumer-friendly product tax that offers easy and accessible health solutions. Drive Customer Growth, and Support Repeat Purchase. And finally, we took the initiative to streamline overhead and improve productivity by reducing over $5 million of annualized expenses. I'd like to spend a few minutes briefly discussing each one of these actions in more detail.
Shane: Second, we rebalanced our consumer proposition in several key-asapacific markets, placing a greater emphasis on consumer-friendly product packs that offer easy and accessible health solutions to drive customer growth and support repeat purchases.
Shane: And finally, we took the initiative to streamline overhead and improve productivity by reducing over $5 million of annualized expenses in addition to the cost savings that we've previously communicated.
Shane: I'd like to spend a few minutes briefly discussing each one of these actions in more detail.
Terrence Moorehead: A closer look at our first action demonstrates our commitment to building a strong digital ecosystem in North America. As I mentioned earlier, in the second quarter, we upgraded our digital platform to improve performance and expand our capabilities. This change represents an important next step, as we've now introduced a new mobile-first platform. Today, about 65% of our digital transactions occur on mobile devices.
Shane: A closer look at our first action demonstrates our commitment to building a strong digital ecosystem in North America. As I mentioned earlier, in the second quarter, we upgraded our digital platform to improve performance and expand our capabilities.
Shane: The change represents an important next step as we've now introduced a new mobile first platform.
Shane: Today, about 60 percent of our digital transactions occur on mobile devices. So the move to mobile first is an important leap forward and an important component of our strategy to serve our distributors and customers better.
Terrence Moorehead: So the move to mobile first is an important leap forward and an important component of our strategy to serve our distributors and customers better. In the first 45 days on the new site, we've already seen a positive impact. Load speeds are three times faster, conversion rates are up 20 percent, and digital sales increased 22 percent in the quarter, despite moving to the new platform and the new site. Of course, since we introduced an entirely new digital platform, we expected to see some disruption to orders as the new site recalibrates and realigns itself with social media platforms and search algorithms, distributors and customers learn how to navigate the new site, and as we address any service issues associated with the law.
Shane: In the first 45 days on the new site, we've already seen a positive impact.
Terrence Moorehead: load speeds are three times faster, conversion rates are up 20%, and digital sales increased 22% in the quarter, despite moving to the new platform and the new site.
Terrence Moorehead: Of course, since we introduced an entirely new digital platform, we expected to see some disruption to orders as the new site recalibrates and relines with social media platforms and search algorithms, distributors and customers learn how to navigate the new site.
Terrence Moorehead: In the second quarter, North America sales were down 3% due to slower consumer spend from persistent macroeconomic pressure and from the expected temporary disruption to business associated with the digital transformation. While the transformation offers better tools, better support, and a more powerful platform that will make it easier to do business with us, it will take some time for our nutritional health practitioners and specialty retailers to fully adapt to the new system.
Terrence Moorehead: and as we address any service issues associated with the launch. In the second quarter, North America sales were down 3% due to slower consumer spend from persistent macroeconomic pressure, and from the expected temporary disruption to the business associated with the digital transformation.
Terrence Moorehead: While the transformation offers better tools, better support, and more powerful, and a more powerful platform that will make it easier to do business with us. It will take some time for our nutritional health practitioners and specialty retailers to fully adapt to the new system.
Terrence Moorehead: Based on our experience, our distributors will certainly want to ensure that their customers have an easy, seamless shopping experience and that they're getting the appropriate and accurate credit for their sales that they've generated before they fully commit. With respect to our second act, focused on rebalancing the consumer proposition in Asia-Pacific, we added more consumer-friendly product packs to help drive customer growth in an increasingly challenging macroeconomic environment. When combined with our subscribe and thrive watershed program, the strategy is expected to produce strong, sustainable growth. In the second quarter, we saw exactly what we expected in our top Asian markets like Taiwan and Japan, which recently introduced the strategy.
Terrence Moorehead: Based on our experience, our distributors will certainly want to ensure that their customers have an easy, seamless shopping experience and that they're getting the appropriate and accurate credit for their sales that they've generated before they fully commit.
Terrence Moorehead: With respect to our second action focused on rebalancing the consumer proposition in Asia Pacific, we added more consumer-friendly product packs to help drive customer growth in an increasingly challenging macroeconomic environment.
Terrence Moorehead: When combined with our subscribe and thrive audorship program, the strategy is expected to produce strong, sustainable growth.
Terrence Moorehead: In the second quarter, we saw exactly what we expected in our top Asian markets like Taiwan and Japan that recently introduced the strategy. Strong growth in new customers and orders, offset by a temporary decrease in average order size, which led to slightly lower sales growth in the short term.
Terrence Moorehead: Strong Growth in New Customers and Orders, offset by a temporary decrease in average order size, which led to slightly lower sales growth in the short term. As a result, let's give me as the team continues to build customers, drive participation, and thrive, we expect to see strong growth in the future. China is a different situation.
Terrence Moorehead: As a result, as you may as the team continues to build customers and drive participation in subscribing thrice, we expect to see strong growth in the future.
Terrence Moorehead: The widely publicized economic slowdown continued to negatively impact our business as second quarter sales decreased 26% versus the prior year on a local currency basis. The current economic environment has put more pressure on Chinese consumers, who are still willing to try new products but are more demanding and more hesitant to place repeat orders. We continue to believe that our digital live streaming model is a powerful tool that's proven to be effective at driving customer acquisition and activation, but in the current economic environment, our consumer proposition faces new challenges.
Terrence Moorehead: China is a different situation. The widely publicized economic slowdown continued to negatively impact our business as second quarter sales decreased 26% versus prior year on a local currency basis.
Terrence Moorehead: The current economic environment has put more pressure on Chinese consumers who are still willing to try new products but are more demanding and more hesitant to place repeat orders.
Terrence Moorehead: We continue to believe that our digital live-streaming model is a powerful tool that's proven to be effective at driving customer acquisition and activation, but in the current economic environment, our consumer proposition faces new challenges.
Terrence Moorehead: As we continue to move forward, we'll tackle the challenge head-on by strengthening sales tools and expanding our live streaming training. Most importantly, we'll also focus on honing and refining our consumer proposition to increase consumer appeal, which will help us expand frequency and reach and restore velocity to our digital live streaming model. This will take some time to fully implement. Overall, Asia Pacific saw second quarter sales decrease 3% in local income concurrency, primarily driven by China.
Terrence Moorehead: As we continue to move forward, we'll tackle the challenge head-on by strengthening sales tools and expanding our live streaming training.
Terrence Moorehead: Most importantly, we'll also focus on honing and refining our consumer proposition to increase consumer appeal, which will help us expand frequency and reach and restore velocity to our digital life-faming model. This will take some time to fully implement.
Terrence Moorehead: Overall, Asia-Pacific saw second-quarter sales decrease 3% in local and constant currency, primarily driven by China. Excluding China, Asia-Pacific's second-quarter sales were up 4% in local currency.
Terrence Moorehead: Excluding China, these are Pacific's second quarter sales were up 4% in local currencies. Looking forward, we believe we're taking the appropriate actions needed to deliver strong sustainable long-term growth and have a high degree of confidence in the team's ability to execute the strategy. Finally, our third action focused on leveraging the business more effectively, and in the second quarter, we took the initiative to reduce $5 million of annualized expenses. The cost savings are comprehensive and include everything from streamlining fixed overhead to eliminating unproductive expenses.
Terrence Moorehead: Looking forward, we believe we're taking the appropriate actions needed to deliver strong, sustainable, long-term growth and have a high degree of confidence in the team's ability to execute the strategy.
Terrence Moorehead: Finally, our third action focused on leveraging the business more effectively and in the second quarter we took the initiative to reduce $5 million of annualized expenses.
Terrence Moorehead: The cost savings are comprehensive and include everything from streamlining fixed overhead to eliminating unproductive expenses. As we move forward, we will continue to leverage SG&A to drive additional efficiencies.
Terrence Moorehead: As we move forward, we will continue to leverage STNA to drive additional efficiency. In closing, we're pleased with the direction we're taking and continue to be excited about the long-term potential of our Omni Channel business. We believe the recent changes we've made will give our consumers a better shopping experience and give our distributors a more powerful set of tools to build their business. Ultimately, that will allow us to attract and retain more customers, drive order growth, and build sustainable profitable growth to create shareholder value. With that, I'd like to turn the call over to our Chief Financial Officer, Shane Jones. Okay, Shane? Thank you, Terrence. Moving on to a...
Terrence Moorehead: In closing, we're pleased with the direction we're taking and continue to be excited about the long-term potential of our Omni-Channel business.
Terrence Moorehead: We believe the recent changes we've made will give our consumers a better shopping experience and give our distributors a more powerful set of tools to build their business.
Terrence Moorehead: Ultimately...
Terrence Moorehead: That will allow us to attract and retain more customers, drive-ordered growth, and build sustainable, profitable growth to create shareholder value. With that, I'd like to turn the call over to our Chief Financial Officer, Shane Jones. Thank you, Terrence. Moving on to our second quarter results.
Shane Jones: Moving on to our second quarter results, consolidated net sales in the second quarter were $110.6 million, compared to $116.5 million in the year-ago quarter, a 5% decrease versus the prior year, or a 3% decrease, excluding the impact of foreign exchange rates. As Terrence discussed, this deep decrease was driven by some temporary impacts due to upgrading our digital platform in North America and adjustments to our customer proposition in Asia Pacific combined with more cautious consumer sentiment in most markets and deteriorating macroeconomic conditions in China.
Shane Jones: Looking at sales by market in the second quarter, Asia-Pacific sales were down 9% to $50.0 million and down 3% on a local currency basis, driven primarily by a decline in our China business. Our China business accounted for most of the decline, with sales down 29% or 26% on a local currency basis due to deteriorating economic conditions that continue to pressure consumer demand. We're sharpening our field fundamentals and improving our consumer proposition, but believe it will take some time to get back on a growth trajectory in China.
Shane Jones: Consolidated net sales in the second quarter were $110.6 million dollars compared to $116.5 million dollars in the year-ago quarter. A 5% decrease versus the prior year or 3% decrease excluding the impact from foreign exchange rates.
Speaker Change: As Terrence discussed
Shane Jones: This deep decrease was driven by some temporary impacts due to upgrading our digital platform in North America and adjustments to our customer proposition in Asia Pacific. Combined with more cautious consumer sentiment in most markets and deteriorating macroeconomic conditions in China.
Shane Jones: Looking at sales by market in the second quarter, Asia Pacific sales were down 9% to $50.0 million and down 3% on a local currency basis.
Shane Jones: driven primarily by a decline in our China business. Our China business accounted for most of the decline with sales down 29 percent or 26 percent on a local currency basis due to deteriorating economic conditions that continue to pressure consumer demand.
Shane Jones: We're sharpening our field fundamentals and improving our consumer proposition, but believe it will take some time to get back on a growth trajectory in China.
Shane Jones: In Japan, sales for the quarter were down 12%, but they were essentially flat in local currency. While we are seeing a double-digit increase in orders and customers in Japan, the transition to product bundles with slightly lower prices has resulted in a short-term offset in Average Order Value, or AOV. As we move forward, we expect the AOV headwind to subside, and growth to reaccelerate. Taiwan business continued its momentum as it reported 2% sales growth or 7% growth on a local currency basis, which is driven by a strong, yo-vier increase in customers and orders.
Shane Jones: In Japan, sales for the quarter were down 12%, but were essentially flat on a local currency basis.
Shane Jones: While we are seeing a double-digit increase in orders and customers in Japan, the transition to product bundles with slightly lower prices has resulted in a short-term offset in Average Order Value, or AOV.
Shane Jones: As we move forward, we expect the ALV headwind to subside and growth to re-excellent.
Shane Jones: Our Taiwan business continued its momentum as they reported 2% sales growth or 7% growth on a local currency basis.
Shane Jones: which is driven by a strong year-over-year increase in customers and orders combined with increased adoption of our subscription offering partially offset by a lower AOV.
Shane Jones: In Korea, sales were down 3%, or up 1% on a low currency basis.
Shane Jones: as they continue to build out their sales capabilities and fundamentals by increasing the number of touch points with potential customers and increasing the frequency of promotions.
Shane Jones: We believe Korea is heading in the right direction and we expect continued measured improvement.
Shane Jones: North America sales in the quarter declined 3% versus last year. This decline was a function of a more cautious consumer combined with a temporary decline in distributor orders associated with the transition to our new digital platform with enhanced capabilities. North America digital growth was also somewhat impacted by economic conditions and the website transition, with Q2 year-over-year sales growth dipping slightly on a sequential basis to 22%. However, this growth was bolstered by an increase in repeat orders and average order value.
Shane Jones: North America sales in the quarter declined 3% versus last year.
Shane Jones: This decline was a function of more cautious consumer combined with the temporary decline in distributor orders associated with the transition to our new digital platform with enhanced capabilities.
Shane Jones: North America digital growth was also somewhat impacted by economic conditions and the website transition, with Q2 year-over-year sales growth dipping slightly on a sequential basis to 22%.
Shane Jones: This growth was bolstered by an increase in repeat orders and average order value. As Terrence noted, we are already seeing an improvement in key performance indicators such as conversion and are confident that the new platform positions as well to provide an enhanced shopping experience.
Shane Jones: As Terrence noted, we are already seeing an improvement in key performance indicators, such as conversion, and are confident that the new platform positions us well to provide an enhanced shopping experience for both customers and distributors. Looking at our European business, we continue to grow in the second quarter, as sales increased 2% or 1% in local currency. Central Europe continues to perform exceptionally, growing sales by 22% or 17% in local currency, largely driven by the strong performance of our powerline products, as well as a growing number of customers and good field execution. We expect the challenges in this business to continue through the remainder of the year. Now Shifting to March.
Shane Jones: for both customers and distributors.
Shane Jones: Looking at our Europe business, we continue to grow in the second quarter as sales increased 2% or 1% in local currency.
Shane Jones: Central Europe continued to perform exceptionally well.
Shane Jones: growing sales by 22% or 17% in local currency, largely driven by the strong performance of our Powerline products, as well as a growing number of customers and good field execution.
Shane Jones: We expect the challenge in this business to continue through the remainder of the year.
Shane Jones: Gross margin in the second quarter decreased by 125 basis points to 71.4% compared to 72.6% a year ago. The decrease was primarily driven by the impact of inflation and unfavorable foreign exchange as well as the timing of our price increase. Inflation and foreign exchange headwinds have been larger than originally planned, and we are taking a cautious and measured approach to additional price increases.
Shane Jones: Now, shifting to margins.
Shane Jones: Gross margin in the second quarter decreased 125 basis points to 71.4% compared to 72.6% a year ago.
Shane Jones: The decrease was primarily driven by the impact of inflation and unfavorable foreign exchange, as well as the timing of our price increases.
Shane Jones: Inflation in foreign exchange headwinds have been larger than originally planned, and we are taking a cautious and measured approach to additional price increases.
Shane Jones: As a result, we are still expecting to achieve our $10 million gross profit savings goal this year, although the impact of those savings on our consolidated financials may be somewhat masked in the short term. Volume incentives as a percentage of net sales were 31.4% compared to 30.3% in the year-ago quarter. The increase was primarily due to the timing of promotional incentives and changes in market mix.
Shane Jones: As a result, we are still expecting to achieve our $10 million gross profit savings goal this year. The impact of those savings on our consolidated financials may be somewhat masked in the short term.
Shane Jones: Volume incentives as a percentage of net sales were 31.4% compared to 30.3% in the year-ago quarter.
Shane Jones: The increase was primarily due to the timing of promotional incentives and changes in market mix.
Shane Jones: Selling, general, and administrative expenses during the second quarter were $38.6 million compared to $42.3 million in the prior year. The decrease was driven by cost-saving actions taken to streamline our business as well as lower service fees in China. As a percentage of net sales, SG&A expenses were 34.9% in the second quarter, compared to 36.3% in the year-ago quarter.
Shane Jones: Selling, general, and administrative expenses during the second quarter were $38.6 million compared to $42.3 million in the prior year.
Shane Jones: The decrease was driven by the cost-saving actions taken to streamline our business as well as lower service fees in China.
Shane Jones: As a percentage of net sales, SG&A expenses were 34.9% in the second quarter, compared to 36.3% in the year-ago quarter.
Shane Jones: As Terrence mentioned in his remarks, the actions that we took in Q2 to eliminate unnecessary costs throughout the organization amount to over $5 million of annualized savings. Therefore, we are well positioned for the future and will continue to see the benefit of those actions the remainder of this year and going forward. Operating income decreased to $5.6 million or 5.1% of net sales, compared to $7.0 million or 6% of net sales in Q2 last year.
Shane Jones: As Terrence mentioned in his remarks, the actions that we've taken in Q2 to eliminate a necessary cost-relp organization, amount to over $5 million of annualized savings.
Shane Jones: Therefore, we are well positioned for the future and will continue to see the benefit of those actions through a main of this year and going forward.
Shane Jones: Operating income decreased to 5.6 million dollars or 5.1 percent of net sales compared to 7.0 million dollars or 6 percent of net sales.
Shane Jones: Gap net income attributable to common shareholders for the second quarter was $1.3 million, or $0.07 per diluted common share, compared to $2.4 million, or $0.12 per diluted share in the year-ago quarter. Adjusted EBITDA, as to find in our earnings room, decreased to $10.4 million compared to $11.3 million in the year-ago quarter. Our balance sheet remains clean, with cash and cash equivalence of Inventory was $62.3 million at the end of the second quarter, which is $4.6 million less than we ended in 2023.
Shane Jones: and Q2 last year.
Shane Jones: Gap net income attributable to common shareholders for the second quarter was $1.3 million, or $0.07 per diluted common share, compared to $2.4 million, or $0.12 per diluted share in the year-ago quarter.
Shane Jones: Adjusted EBITDA, as defined in our earnings release, decreased to $10.4 million, compared to $11.3 million in the year ago quarter.
Shane Jones: Our balance sheet remains clean with cash and cash equivalents of $68.7 million and zero debt. Inventory was $62.3 million at the end of the second quarter, which is $4.6 million less than we ended in 2023.
Shane Jones: Net cash provided by operating activities was 3.5 million dollars, compared to $17.3 million in the prior year period, which was primarily driven by the timing of accrued liabilities as part of our capital allocation plan. During the second quarter, we repurchased $348,000 for $5.9 million, or an average price of $16.89 per share. As of June 30th, 9.9 million remain, then 0.9 million dollars remain of our $30 million share with purchase program.
Shane Jones: Net cash provided by operating activities was 3.5 million dollars.
Shane Jones: compared to $17.3 million in the prior year period, which was primarily driven by the timing of accrued liabilities.
Shane Jones: has part of our capital allocation plan.
Shane Jones: During the second quarter, we repurchased 348,000 shares for $5.9 million, or an average price of $16.89 per share.
Shane Jones: As of June 30th
Shane Jones: 9.9 million remains, 9.9 million dollars remains of our 30 million dollar share repurchase program.
Shane Jones: Looking beyond share repurchases, our healthy capital allocation structure positions us well to continue our digital transformation and other strategic initiatives. Now turning to our 2024 outlook, given our second quarter of results and the short-term impacts of the changes discussed. We are lowering our guidance ranges for net sales and adjusted EBITDA. We now expect full year 2024 net sales to range between $436 million and $445 million. This includes an estimated 200 basis point headwind to growth due to foreign exchange.
Shane Jones: Looking beyond share repurchases, our healthy capital allocation structure positions us well to continue our digital transformation and other strategic initiatives.
Shane Jones: Now turning to our 2024 outlook.
Shane Jones: Given our second quarter results and the short-term impacts from the changes discussed, we are lowering our guidance ranges for net sales and adjusted EBITDA.
Shane Jones: We now expect full year 2024 net sales to range between 436 million dollars and 445 million dollars.
Shane Jones: This includes an estimated 200 basis point headwind to growth due to foreign exchange. As such, our guidance equates to constant currency growth of 0-2% for the year.
Shane Jones: As such, our guidance equates to constant currency growth of 0 to 2% for the year. For adjusted EBITDA, we now expect it to range between $39 million and $42 million. In summary, we have taken the necessary measures to ensure that we are well positioned to provide the highest quality products and best-in-class experience for both our customers and distributors. We are confident that those actions will drive sustainable and profitable growth as we move into 2025 and beyond.
Shane Jones: For adjusted EBITDA, we now expect to range between $39 million and $42 million.
Shane Jones: In summary, we have taken the necessary measures to ensure that we are well positioned to provide the highest quality products and best-in-class experience for both our customers and distributors.
Shane Jones: We are confident that those actions will drive sustainable and profitable growth as we move into 2025 and beyond. Now, I will turn the time back to the operator.
Operator: Now I will turn the time back to the opera. Thank you. Thank you, sir, ladies and gentlemen. We will now begin.
Operator: Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star, followed by the number on your touchstone phone. You will then hear a poem indicating that your hand has been raised. Should you wish to decline from the polling process, please press the star, followed by the two. If you are using a sticker phone, please lift the handgrip before pressing any key.
Speaker Change: Good morning, everyone.
Operator: Thank you.
Operator: Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session.
Operator: Should you have a question, please press the star followed by the 1 on your touch-tone phone. You will then hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys.
Operator: One moment, please for your first question. Our first question comes from the line of Linda Bolton-Weiser from D.A. Davidson. Please cover us. Hi, this is Christina.
Operator: One moment please for your first.
Operator: Christian?
Operator: [inaudible]
Operator: www.NatureSunshine.com
Operator: Our first question comes from the line of Linda Bolton-Weiser from D. A. Davidson.
Christina Xu: Hi, this is Christina Xu for Lynda. I was wondering if you guys can quantify the dollar sells for the temporary disruption that's in the North America segment?
Speaker Change: Please go ahead.
Christina Xu: Hi, this is Christina Xu on for Lynda. I was wondering, can you guys like quantify the
Christina Xu: the dollar sells for the temporary disruption that's in the North America segment.
Christina Xu: www.NatureSunshine.com
Operator: I'm sorry, but we couldn't hear the question.
Speaker Change: Thanks for watching, and don't forget to like, share, and subscribe to our channel.
Christina Xu: Sorry, can you hear me now?
Operator: Yeah, yeah. It was just a little fuzzy on our end.
Speaker Change: I'm sorry, we couldn't hear the question.
Operator: Sorry, can you hear me now?
Christina Xu: Oh, I was wondering if you guys could quantify the temporary disruption in the North America segment for the quarter, that Dollar Self-Impact, if that's...
Christina Xu: Yeah, yeah. It was just a little fuzzy on our end.
Christina Xu: Oh, I was looking like if you guys could like quantify the temporary disruption in the North America segment
Speaker Change: and for the quarter.
Speaker Change: The dollar sells unpacked, if that's possible.
Terrence Moorehead: Yeah, let me turn that over to Shane, I think, you know, because there were several things. There's a lot of stuff going on with consumer spending, and so Shane, you want to take credit and not follow up. No, no, absolutely not, so if you look at us being down about 3% of that 3%, roughly half of that is really attributable to consumer sentiment and other headwinds that we're seeing, and then half of it is related to the temporary disruption.
Terrence Moorehead: Yeah, let me turn that over to Shane. I think, you know, because there were several things, you know, there's a lot of stuff going on with the consumer spending.
Terrence Moorehead: And so, Shane, you want to take a crack at it and I'll follow up? No, absolutely. So if you look at, we were down about 3%. Of that 3%, roughly half of that is really attributable to consumer sentiment and other headwinds that we're seeing, and then half of it is related to the temporary disruptions that we had.
Christina Xu: That's helpful, and I have a follow-up. So it looks like in the South, despite the revised South guidance, there could still be like a South-world in the second half of the year. So I was wondering if you could talk about how and where the potential growth can come from.
Christina Xu: That's helpful. And I have a follow-up. So it looks like in the revised sales guidance there could still be like a sales growth in the second half of the year. So I was wondering if you could talk about where the potential growth can come from.
Terrence Moorehead: Yeah, and we tried to be somewhat conservative, obviously, with the kind of go-forward outlook. Do you want to talk, Shane, about where we think there could be some upside? Yeah. No, absolutely not.
Shane Jones: Yeah, and we'd try to be somewhat conservative, obviously, with the kind of go forward outlook. We want to talk to you about kind of where we think there could be some...
Shane Jones: As we look at it, we're still very confident in our digital business in North America. And so, as you saw, that grew 22 percent, which was actually a sequential decline from 30-plus percent in previous quarters. As Terrence alluded to, with the changeover to the new platform, we're seeing some good things in a lot of the metrics that we're looking at that encourage us about the future as far as conversion rate, retention, and other metrics.
Shane Jones: I have absolutely, as we look at it, we're still very confident in our digital business in North America's business, and so as you saw, that grew 22%.
Shane Jones: which was actually a sequential decline from, you know, 30-plus percent in previous quarters.
Shane Jones: As Terrence alluded to, with the changeover to the new platform, we're seeing some good things in a lot of the metrics that we're looking at that encourage us about.
Shane Jones: So that's really where we would expect growth to accelerate throughout the rest of this year. And I think we expect to see continued performance in Europe as well. Yeah, yeah. Europe, very strong results that are likely to continue, especially in central. Thank you. I'll pass it on.
Shane Jones: the future, as far as conversion rate, retention, and other metrics. So that's really where we would expect growth to accelerate throughout the rest of the season.
Shane Jones: And I think we expect to see continued performance in Europe as well. Yeah, yeah. Europe , very strong results that are likely to continue, especially Central Europe .
Christina Xu: Dada, thank you. You all pass it on.
Speaker Change: Got it. Thank you. I'll pass it on.
Operator: Thank you, Ms. Glendale. At this time, this concludes our question and answer session. I would now like to turn the call back over to Mr. Moorehead for his comments.
Mr. Moorehead: Okay, thank you.
Mr. Lindell: Thank you, Mr. Lindell
Speaker Change: At this time, this concludes your question and answer session. I would not like to turn the call back over to Mr. Moorehead for folking with us.
Terrence Moorehead: Okay, thank you very much. We'd like to thank everybody for listening to today's call, and we look forward to speaking with you when we report our third quarter of 2024 results in November of this year. Thanks again for joining us, and we'll talk to you soon, take care.
Terrence Moorehead: Okay, thank you very much. We'd like to thank everybody for listening to today's call and we look forward to speaking with you when we report our third quarter 2024 results in November of this year. Thanks again for joining us and we'll talk to you soon. Take care.
Operator: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation. Have a great day.
Operator: Ladies and gentlemen, this does conclude today's teleconference. You may just go to your lines at this time. Thank you for your participation. Have a great day.
Shane Jones: Combined with increased adoption of our subscription offering, partially offset by a lower AOV. In Korea, sales were down 3%, or up 1% on a local currency basis, as they continue to build out their sales capabilities and fundamentals by increasing the number of touch points with potential customers and increasing the frequency of promotion. We believe Korea is heading in the right direction, and we expect continued, measured improvement.