Greetings, and welcome to the Nature's Sunshine Products Second Quarter 2019 Earnings Conference Call. [Operator Instructions] And this conference is being recorded. I would now like to turn the conference over to your host Mr. Nate Brower, General Counsel of Nature's Sunshine Products. Thank you, Mr. Brower. You may now have the floor.

Good afternoon, and thanks to all of you for joining our conference call to discuss our second quarter 2019 financial results. This call is available for replay in a live webcast that we post -- that we will post on our website at www.naturessunshine.com in the Investors section.The information on this call may contain certain forward-looking statements. These statements are often characterized by terminologies such as belief, hope, may, anticipate, expect, will, and other similar expressions.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. Factors that could cause results to differ materially from these -- from those implied herein, include but are not limited to, those factors disclosed in the company's annual report on Form 10-K under the caption Risk Factors and other reports filed with the Securities and Exchange Commission.The information on this call speaks only as of today's date, and the company disclaims any duty to update the information provided herein.I will now turn the call over to Terrence Moorehead, CEO of Nature's Sunshine Products.

Thank you, Nate, and good afternoon, everyone, and thank you for joining us for today's call. I'm pleased to be here with you today to discuss our second quarter results and to share some emerging thoughts regarding progress on our strategic transformation.With me is our Chief Financial Officer Joe Baty, who will walk you through our financials in greater detail, but I'm going to kick things off today with a brief summary of the business.Overall, we had a very productive second quarter which started with the announcement of our 5 global strategies and included a series of restructuring initiatives and the launch of a new regional organization.For the quarter, we generated just over 2% growth in local currency net sales. However, we continue to see the positive impact of our strategic restructuring initiatives, with net sales -- excuse me, with net income showing significant improvement, increasing from being negative last year to a positive $2.9 million this year.Growth in EBITDA was also very strong, increasing over 80% for the quarter. We'll continue to identify opportunities to drive our costs, as we simultaneously implement growth strategies designed to enhance our competitive position in the market.Speaking of being more competitive, as we discussed last quarter, our vision is to be more consumer-focused with the objective of being more modern, more flexible and more profitable in everything we do.Last quarter, I shared details of our multi-year strategy designed to unleash the potential of our business, reimagine our brand and redefine herbal traditions to make the healing power of nature accessible to everyone.Our plan focuses on 5 global strategies, and we're making progress upon each one of them. Our first strategy, brand power, is all about creating a more aspirational brand that excites, inspires and transforms the way people think and feel about our…

Thank you, Terrence, and good afternoon, everyone. Net sales in the second quarter of 2019 were $90.7 million compared to $91.3 million in the same quarter last year. On a local currency basis, net sales increased 2.3% year-over-year or decreased 0.6% as reported. Unfavorable foreign currency exchange rate fluctuations impacted net sales by $2.6 million compared to the prior year.Asia net sales declined 1.6% year-over-year to $35.2 million during the second quarter, but increased 4.2% in local currencies. On a local currency basis, the growth was driven by a 4.2% increase in South Korea, a 7% increase in Japan and a 1.9% increase in China.Net sales in Europe increased 8.3% year-over-year to $15.1 million or 11% growth in local currencies. The net sales increase reflects continued growth in Central and Eastern Europe.North America net sales in the second quarter declined 2.7% year-over-year to $34.6 million or a 2.4% decline on a local currency basis. As anticipated, we continue to see lower recruiting rates that are not offsetting attrition in NSP Americas, and this trend may continue in the near term. However, new leadership and initiatives have been put in place to support our North America operations.Net sales for Latin America and Other decreased 3.2% year-over-year to $5.9 million or a 1.8% decline on a local currency basis. The decline in net sales was mainly due to decreases in distributor retention and average purchase size.Gross margin increased 30 basis points to 73.7% compared to the year ago period. The gross margin increase was driven primarily by favorable changes in market mix and manufacturing efficiency. Volume incentives as a percentage of net sales were 34.5%, consistent with the same period last year.Selling, general and administrative expenses were $31 million, down $2.3 million year-over-year. The decrease in SG&A is primarily due to savings…

Of course, thank you. [Operator Instructions] And I'll take our first question from Jurriaan Hofman from Robeco. Please go ahead.

Hi. Thank you very much. First of all, can you comment just on the cost-savings initiatives? So costs seem to have gone down quite significantly. Just how far you -- far along are you on the cost-saving program? And secondly, can you provide some more insights in the trends with regards to sales representatives in China and Korea, please?

On your first question regarding our cost -- or I should say strategic restructuring, we had a fairly significant look and take at our corporate overhead and really just largely focused on kind of reducing some bad account in areas in restructuring the team on a corporate basis. And so the combination of doing that, plus some process changes and general efficiencies are the source of the changes. So we believe the savings are sustainable and they're built into our baseline operating model.In terms of where are we on the process? I won't necessarily comment on that fully, but I will say that our plan and our approach is based around kind of 2 central principles. One is 0 overhead growth and another is negative overhead growth, which we affectionately call ZOG, zero overhead growth, and NOG, negative overhead growth.And again, the idea there is to on an ongoing basis continue to drive out inefficiencies and drive cost out of the business. I did reference the changes that we're going to be making in Latin America. But this is an ongoing process for us to improve our profitability, become more, I guess, competitive from the standpoint of our overall SG&A utilization. And so again, it's a major piece of our strategy and it's a major piece of our -- what we call the right stuff strategy.With respect to staff growth and representative growth, I think, you mentioned in China and Korea. The teams continue to work aggressively. We got a great management team on the ground. I think, in Korea, we're seeing actually really quite good business fundamentals.And when I talk about field fundamentals, I would be talking about recruiting, retaining people and retaining them. And so I think we're seeing really good strong fundamentals in Korea. We're seeing continued progress in China. And again, I think that's reflected in the fact that we continue to grow in the market despite any disruptions there.

Okay. And on overheads, so how many employees did you have at the end of the second quarter?

We don't disclose that level of detail. But just say that, obviously, we took a $1.6 million charge in the second quarter. And that clearly included number of folks, but we don't disclose the exact number.

[Operator Instructions] At this time, it does not appear to be any further questions. So I'd like to turn the conference back to the presenters.

Okay. Well, there are no other questions, again, I want to thank you all for your support in participating in today's call, and have a great day. Thank you very much.

Thank you.

This concludes today's call. Thank you for your participation. You may now disconnect.