Gregory L. Probert
Analyst
Thanks, Rich. Good afternoon everyone and thank you for your participation in today's call. Joining me today is Steve Bunker our Executive Vice President CFO and treasurer. While our overall results continue to be depressed by currency headwinds and challenges in Russia, Central and Eastern Europe. I am pleased with our first quarter results. Net sales of $82.4 million were up 1.3% on a local currency basis which reflected the strong progress we have made towards returning Nature's Sunshine to sustainable long-term growth. Nobel developments included, ongoing strong execution in our NSP United States and NSP Canadian businesses, which both close to their seventh consecutive quarters of year-over-year local currency sales growth. Synergy worldwide best first quarter ever driven by successful business model and process improvements taking hold in our key Asian markets and finally positive progress in China towards obtaining our direct selling license in the third quarter of 2016 through our Joint venture with Fosun Pharma. Now turning to our segment results. NSP America's first quarter sales of $45.2 million decreased by 0.9% year-over-year in local currencies and represented 55% of total company sales. NSP U.S. and NSP Canada both achieved their seventh consecutive quarters of year-over-year local currency sales growth of 1% and 3.1% respectively. Our IN.FORM business model which is focused on both weight management and building a daily habit of health has been the primary driver of growth in the region. Through the end of the first quarter, we had a total of 1336 coaches certified. The majority of which are practitioners and 413 groups up and running to help facilitate adoption of this program. In fact, both practitioners and retailers that are utilizing in form are significantly outperforming those and are not. The incremental additions of coaches and groups also experience double digit increases during the first quarter versus last year's levels. Sales of products related to IN.FORM line grew 13% year-over-year during the quarter In addition, we launched a new patent pending IN.FORM program at our April national convention that addresses many prominent health trends associated with core metabolic functions and has been designed to target gut health and to comprehensively addressed cardio-metabolic function at its roots. This new IN.FORM program those clinically study at out Hughes center for research and innovation and demonstrate superior health support to other published programs on the market today. Using the medium figures, study participants who receive the IN.FORM settlement by 17 pounds of fat and 26 pounds overall. We also saw great improvements in other key health indicators already in the healthy range such as reduced levels of triglycerides LBL cholesterol, total cholesterol and insulin levels. When compared to the control group, we used only diet and exercise of own individuals pursuing the complete IN.FORM program experienced over 50% more body fat loss, over 50% more weight loss and between the 66% and 80% greater decrease in other key cardiovascular health indicators already within the healthy rate. Our retail channel also need to performed well driven by strength in online sales. We continue to report this channel through our key retail account management tools as well as store marketing and branding materials and new product launches. The 2015 re-launch of our updated and extended lines of authentic essential oils also contributed positively to the quarter with triple digit year-over-year growth in net sales. In addition, we posted strong performance in our digestive product categories lead by cleanses and probiotic. Such as our most recent shop stable probiotic introduction Neutrobiom launched in September 2015. In Latin America, sales decreased 10.4% year-over-year in local currency. The decline was magnified by decreased net sales in Mexico due to product availability issues as a result of the regulatory environment. We have been continuing our efforts to transition all of our Latin American markets to adopt the important programs which are classified as functional fruits and therefore not subject to stringent regulatory regulations as urban remedies. During the quarter we continue the expansion of IN.FORM in Mexico, Columbia and Ecuador and hired a general manager in Ecuador to help facilitate adoption in light of product and other macroeconomic initiatives. We're also introducing our line of authentic essential oils in Mexico later this year. While the changing product registration regulations create significant headwinds in this region due to the loss of several key products. We are optimistic that IN.FORM and our line of essential oils will be well received and help restore this region to growth. Turning to Synergy worldwide, first quarter sales of $29.8 million increased by 9.2% year-over-year in local currencies and represented 36% of total company sales. This was Synergy's best first quarter ever and the second best quarter of all time. The increase was primarily driven by growth in Synergy Asia mainly Korea, Japan, Indonesia and Taiwan. It was offset by declines in North America and Europe. Our patent pending ProAgri-9+ formula continues to be a top selling product in all major Synergy markets and was a meaningful contributor to the quarter. Our strategy for Synergy has been centered on streamlining multiple product strategies to a more cohesive sales method including a unified product offer geared towards detox, weight management and a daily habit of health, which I'll refer to as our elite health program. We planned to rollout our elite health program later this year are Korean and European Summit. Turning to South Korea, net sales increased by 19.5% year-over-year in local currency making the second sequential growth quarter and third consecutive quarter of year-over-year growth. Performance for the quarter is driven by our new distributor acquisition programs including the continued implementation of home health parties and expanded social media strategy and improvements in the right commencement and recognition program. Synergy Japan once again achieved strong sales with growth of 35.6% year-over-year in local currency. This growth was supported by the implementation of a sales system adopted from our Korean distributors as well as introduction of new projects and targeted promotions to stimulate activity. Indonesia and Taiwan continue to perform well with the year-over-year local currency sales growth of 2.8% and 48.4% respectively, primarily driven by new distributor leadership. We recently hired a new general manager in Taiwan and has been working closely with our leaders in the region to support the pending launch of elite health system as well as organized promotions and events. In Europe, sales decreased by 4.9% year-over-year in local currency primarily due to residual sales in the prior year period that were tied to launch of our of SLMsmart weight management program that did not recur this quarter. That said, we are very pleased that our efforts to stand the decline in this region have succeeded with the month of March representing the first month of year-over-year growth in five quarter. Our new VP of Europe, Carmelo D'Anzi has been busy touring our key European market to oversee the launch of new marketing and distributor recruitment and engagement initiatives specifically related to launch of our elite health system later this year. Net sales in Synergy North America which represents 3% of company sales remained challenged with the decline of 16.9% year-over-year primarily due to reduced distributive recruiting. We are focused on initiatives to boost the distributed recruiting, training and motivation to ensure we have proper commitment of our leaders in the region to support the pending launch of the Elite Health System. Turning to NSP Russia, Central and Eastern Europe. Net sales of $6.4 million decreased 13.9% over the prior year and represent 8% of total company sales. The net sales decline was primarily due to currency devaluation of the Russian ruble, the Ukrainian Hrynia which is their worse point during the first quarter and result in another sharp increase in the local cost of our products given that our pricing in the region expected the U.S. dollar. That said, whole and it's been a bright spot for us and reported local currency net sales growth of 80.8% year-over-year which is helping offset some of the decline in this segment. We've been operating through the ongoing political unrest in Russia and Ukraine. Now for over two years which continues to reduce the number of independent managers, distributors and customers buying and distributing our products due to reduced purchasing power. In an effort to boost recruiting, we launched an additional product kit during the quarter that healthy lubricate to join our existing line of product kits which help generate over $0.4 million in gross sales during the quarter. So first and for most we will continue to focus on initiatives to support and retain our managers, distributors and customers through promotional activities, discounts and training. Despite these economic challenges, our leaders have remained committed to our company. And while we do not expect conditions to improve in the foreseeable future, we are very pleased that our local partner in the region also remains committed. We view Russia, Central and Eastern Europe as a very strategic direct selling market and believe we'll be in a good position to eventually reignite growth once the situation is steady. Turning now to China and New market, first quarter net sales for this segment which currently only includes our wholesale business decreased to $1 million year-over-year from $1.2 million in the prior year and represented approximately 1% of total company sales. We've continue to make good progress in China to remain on track to obtain our direct fund license in the third quarter of this year. We've spent over a year and half building a strong foundation in China with the support of our joint venture partner Fosun Pharma. Under the leadership of Paul Noack, our President of China in New markets, we continue to make additional key hires during the quarter as well as further the general food importation process and the blue cap product registration for selected products. We look forward to keeping you updated on our progress in China over the next several quarters. In summary, I'm very pleased with the progress we have made in the first quarter to have position us for long-term sustainable growth. Our management team and board has a lot of confidence the significant growth capabilities of Nature's Sunshine. We will continue to allocate capital to invest in the various parts of our business who receive the most growth potential, namely in China, NSP North America and Synergy Europe and Asia-Pacific as well as return capital to our valued shareholders in the form of quarterly cash dividend. With that I'll turn the call over to Steve to review our first quarter financials.
