Greetings, and welcome to the Nature's Sunshine Products Fourth Quarter and Full Year 2019 Earnings Conference Call. All participants are in a listen-only mode 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 now have the floor.

Good afternoon. Thanks to all of you for joining our conference call to discuss our fourth quarter 2019 financial results. This call is available for replay in a live webcast that we will post on our website at naturessunshine.com. The information on this call may contain forward-looking statements. Those statements are often characterized by terminology such as believe, 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 those implied 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.

Thank you, Nate. Good afternoon, everyone, and thank you for joining us for today's call. I'm pleased to be with you with here today to discuss our fourth quarter results, the excellent progress we've made transforming our business, and to share some of the upcoming initiatives the we're pursuing in 2020. Our Chief Financial Officer, Joe Baty, isn't with us today. So today we'll be joined by our Vice President of Finance and Corporate Controller, John Lanoy, who will take you through our financial results in greater detail. But before I walk you through an overview of the business, I'd like to take a few moments and make some comments about the coronavirus and the recent passing of one of our Founders, Kristine Hughes. And let me start with Kristine, because she truly was the pioneer and innovator in this industry. As the Founder of the first company to encapsulate herbs and botanicals. Kristine passed away peacefully in her sleep on Sunday mornings, February 23, and -- and for most of us that knew her, she was much more than just the Founder of our company and the pioneer of the modern supplements industry; she was truly a friend, a partner, and so much more to so many people. She was someone that made an unforgettable impact on everyone around her, and her greatest satisfaction came from helping other people achieve greater health and prosperity, and she really just loved the fact that Nature's Sunshine gave her an opportunity, and a platform to help people all around the world. So I am personally grateful for the opportunity to have known and worked with Kristine, and we're all dedicated to keeping her legacy alive in everything that we do, each and every day; her kindness, compassion, and genuine caring for others are an inspiration that will live on through our continued efforts. And we are a better company and a stronger company because of Kristine Hughes, and she will be missed. But we'll move forward with the strength and conviction that she would have wanted us to and that would make her proud. Now, let me just switch gears and talk a little bit about the coronavirus and provide some perspective on the impact it's having on our business. First and foremost, our focus is on the health and safety of our people, and that includes our employees, distributors and customers. To that end, we've taken a series of precautionary measures that include actions as small as adding hand-sanitizers, kind of throughout our buildings and providing training on proper hand washing techniques to all associates, all the way upto canceling all international travel, and reducing and eliminating large gatherings where -- around the world. The good news is that to-date, none of our employees or distributors have been affected by the virus, and we're working diligently to ensure that this continues to be the case.

Thank you, Terrence from good afternoon, everyone. Net sales in the fourth quarter of 2019 were $91.7 million compared to $97.4 million in the same quarter last year. On a local currency basis, net sales decreased 5% year-over-year or 5.8% as reported, and favorable foreign currency exchange rate fluctuations impacted net sales by $0.8 million compared to the prior year. Asia net sales declined 13% year-over-year to $36.1 million during the fourth quarter, but decreased 11.4% in local currencies. On a local currency basis, decline was driven by 26.2% decrease in China and a 5.9% decline in South Korea offset by growth in Japan. Net sales in Europe increased 17% year-over-year to $17.2 million or 18% growth in local currencies. The increase in net sales reflect the continued growth in Central/Eastern Europe, including strong performance in Russia.

Thank you. At this time, we will be conducting a question-and-answer session. Our first question is from Steven Martin from Mona's Crispian Art . Please proceed with your question.

All right, thanks a lot guys. I was very encouraged by the EBITDA growth rate this quarter. Although we've got a lot of initiatives for the coming year; well, how does that fit into the cost structure? And are we going to see SG&A or some other costs pop-up? And secondly, the corollary to that is, is this going to be the answer to driving or getting North America sales to reverse?

Okay, so first with respect to SG&A; we are committed to maintaining the discipline of driving our SG&A costs down, on overhead down. We're kind of preaching and talking to this misconcept of zero overhead growth rate and negative overhead growth. We've recognized that our operating margins are kind of not where we want them to be still, so we want them to be kind of -- I'll say competitive within our peer set within the industry. We also have an aspiration and plans to improve our gross margins as well; so again, recognizing that our gross margins -- that there is room for opportunity for us to improve our gross margins. So, what I would say is, the push to implement new strategies is not at the expense of profitability. We really don't have to have the luxury, it's -- our focus is on finding opportunities to more efficiently drive sales. And you know, we kind of saw that in the fourth quarter of this year where we recognized that some of the things that the business units were doing just weren't profitable, and so we backed-off on them and we're able to effectively either hold our business or drive profitability in the direction we wanted to go into. The second question was, are the strategies that we're planning; the silver bullet for North America? And what I would say is, I think they are certainly the right strategies, these. We know we have to fix the brand, we know -- well, we've done extensive research, we made significant investments in talking to consumers and talking to our distributors; so we know that there is a branding proposition issue and a positioning issue that needs to be addressed and we really do have a groundbreaking kind of new branding…

Yes, I think it does. And you guys have done -- you haven't been here that long, you've done a great job of sort of getting the business -- cleaning up the profitability; even at these low rates, you're generating plus $30 million of EBITDA. You've got a share -- your stock is trading right now at about three -- a little over three times at $32 million of EBITDA. You used to pay a dividend, you don't anymore. You've got $50-something million of cash that is not being productive; and I want to know what you plan to do with it? A year or two ago, the answer was, well, the business is rocky, so we can't make commitments. While the business isn't rocky anymore, you've got it under relative control, and I'm not saying you know, earnings are where we want it to be. But we sold -- you sold a lot of stock to the Chinese and they haven't really delivered what we thought they were going to deliver? And so now that cash is sitting there doing nothing. And I would propose to you that you could pay out a dividend, you could buyback shares, but you should do something with it because it's -- so when your return-on-equity and you'll return-on-investment.

Yes, so I won't comment for the behalf of the entire Board of Directors. But we realize that the same kind of data points that you've pointed out, we certainly realized as well. We do want to make sure that we are in a position to invest in the business and invest in a lot of those things that I was talking about. But at the same point in time, we're very sensitive to the shareholders as well. And so, we're having discussions with the board on this very topic.

All right, one other. Is there something you guys can do to address the tax rate, the costs or the EBITDA because of the taxes you're not taking a whole lot to the bottom-line? And what is it you guys can do to fix that?

That's a good question. John, you want to talk to this?

Maybe I'll take a swing at that.

Yes.

Our tax division because we operate in so many markets is very difficult. I mean, it's very complex. And then, we do have markets to hover , we don't have profitable operations where we may be aren't taking the benefits that we would like to take on those. And so that requires -- that pushes our rate up a little bit. Also, some of the impact of the change in the tax legislations, we're not able to leverage some of that as much either. I think as we continue to see improvements in the operating results of the business, and that will continue to push income up. Those things will have less impact on our rate, so as we grow profits, our race should start to improve.

Right. But you know, when -- you've got markets you don't make money in. Okay, and at what point do you sort of decide that maybe we shouldn't be in that market? And are you really getting benefits out of those markets?

You know, we've actually got very aggressive restructuring to address those issues. So part of that I talked about, Latin America, that's an aggressive overhaul of that entire region. And then, we've got a couple other select markets as well. So we've got really direct initiatives and a direct focus on profitability in every single one of our markets. And to your point, if we can't make it in any one of these markets, we'll get out of them and we'll just have to exit them. In the past, however, I'm just not convinced that we had pursued enough creative options to find that path towards profitability. And kind of based on what I've experienced in the past, and what I see in the business right now; we should be able to be very profitable in every market that we do business in, it's just the -- kind of -- just working through that path to get there. And we don't have a tremendous amount of patience with that either, so it will happen quickly.

All right, one last, if I may. I know you don't love to give guidance, and -- but when you look out to 2020 with all the initiatives and a trailing, you know, in 2019 EBITDA of somewhere around $32 million -- $31 million. Directionally, should we expect that the EBITDA -- recognizing that there are some things related to the coronavirus, etcetera. But directionally, should we expect the EBITDA to improve again this year?

Let's say, I can't comment right now directly on the forecasts for corona. And if there are so many unknowns out there, but let me just say that our strategy is designed to continue to drive the top line, as you can see, based on the things I talked about; and we have very specific initiatives in place to help us drive out costs from the business from a SG&A standpoint and from a gross margin standpoint. So, if that's helpful for you, that's -- that's what we're kind of -- directionally, as a management team trying to accomplish.

Okay, thank you very much.

Okay.

Our next question is from Darryl Catalina -- Catalino , I'm sorry, a private investment. Please proceed with your question.

Yes, a couple of points. So I want to pyramid of off something the previous caller talked about. I've been an investor in Nature's Sunshine for many years, and it's been kind of a disappointing experience, financially. And I'm just curious, I just think you should spend a little bit more attention on either a one-time dividend for shareholders, because we certainly deserve it, or share buyback; that's my first point. And on EBITDA, the second thing I want to share with you is; I understand what you've done in reference to measures to keep employees safe and everybody associated with NATR is safe about with coronavirus. But what steps are you taking in a positive way, in a healthy way to have Nature's Sunshine Products empty on the shelf, so to speak, and sell into the coronavirus there? I know, I walk into stores and there are certain products I can't buy. And I spoke to a very savvy investor with billions today and I said, "What do you think the play is in the stock market right now? I don't want to go short, I want to go long." And he said to me, vitamin companies; and I said to him, "I'm in a vitamin company, it hasn't been too good." So it's just interesting how big financial people are looking at vitamin companies right now for the long-term. And I want to feel comfortable that my company, Nature's Sunshine, not to say take advantage. But man, you guys have -- you're wide open right now and this virus thing can really push vitamins.

Yes, that's a great comment. And we've got some very good products like our Silver Shield products that is -- and some other immune support type products. Obviously, we can't and would not make any claims around curative solutions for the coronavirus or any other virus but in terms of supporting your immune system, that really is an area that we're -- I mean, we're selling through our and people are stocking up on our Silver Shield product right now, and if you've never used it, you should grab some because it really is a great product. And it's just -- when you start feeling symptoms of cold come around, I mean, I personally, I've used it and it just makes you kind of feel better. But there is a huge opportunity there for us to build out the immune products, we're going to be pushing that much more aggressively in Asia. It is our belief that after this, this kind of whole thing -- during and after this, that there is going to be much heightened sensitivity towards people of taking care of their -- your immune system, and that's going to be not only in Asia, but here in the States as well. So that's one area in particular where we're building it out. There are some other adjacent opportunities, like gut health, you know, people in general who have healthy guts, that does tend to support the immune system better as well; we happen to be particularly good in that area and we're going to be making those connections, kind of -- in a relevant manner. But yes, I agree with you on both of your comments. You know, kind of the first one; we're certainly going to be addressing something with -- kind of just again, with how we make sure that the shareholders get their returns. And secondly, on taking -- I don't want to say take advantage of, but certainly making sure that we are poised to have a positive impact on folks that want to protect themselves in an environment where disease and infection are increasingly a risk to our societies. That is your question, Darryl?

Can I take…

Well, having a problem hearing you.

And I do apologize, we have reached our limit. And we will turn the call back over to management.

Okay. Well, again, thank you everybody for joining us today. I want to say how much we appreciate your ongoing support and participation with the company. We really are, again, excited about the future that lies ahead of us and are doing everything we can to transform the business, get us to a new place, and we're excited about the future that lies ahead. So, again, I want to thank you and have a great day. Take care.

Thank you. This concludes the end of your conference. You may disconnect your phone lines.