Good afternoon, everyone, and thank you for participating in today's conference call to discuss Nature's Sunshine's Financial Results for the Third Quarter Ended September 30, 2023. Joining us today are Nature's Sunshine's CEO, Terrence Moorehead; CFO, Shane Jones; and General Counsel, Nate Brower. Following their remarks, we'll open the call for analyst questions. Before we go further, I would like to turn the floor 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. Nate, please go ahead.

Thank you. Good afternoon, and thanks for joining our conference call to discuss our third quarter 2023 financial results. I'd like to remind everyone that this call is available for replay via telephonic dial-in through November 21 and via a live webcast that will be posted in the Investor Relations portion of our website at ir.naturessunshine.com. The information on this call contains forward-looking statements. These statements are often characterized by terminologies 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 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. Now I would like to turn the call over to the CEO of Nature's Sunshine, Terrence Moorehead. Terrence?

Thank you, Nate, and good afternoon, everyone. I want to thank you for joining today's call to discuss our third quarter results. 2023 has been another strong year for Nature's Sunshine, fueled by increased investment in our global growth strategies, digital first, brand power and field energy. And in the third quarter, we continued to gain traction and deliver strong results. Today, I'll provide some context for our third quarter performance and offer some insights on how we believe the business is progressing. Shane will then take you through our financials in more detail. As we continue to build on the momentum we experienced in the first half of the year, we can clearly see the positive impact our strategies are having on the business. In the third quarter, we continued to drive growth with reported net sales of $111 million or $112 million when excluding the impact of foreign exchange, which is a 7% increase versus the prior year. EBITDA was also strong in the third quarter coming in at $10.3 million, which was a 50% increase versus the prior year. Third quarter results were driven by another strong quarter of double digit sales growth from Asia Pacific, a breakout quarter from our North American business unit that also delivered double digit sales growth and strong performance on our gross margin improvement initiatives, where we're starting to realize some of the benefits from our $10 million gross cost savings plan. In Asia Pacific, we continue to deliver strong results as third quarter sales increased 12% versus the prior year on a constant currency basis. Field energy initiatives were a key driver with investments in field activation that focused on improved training and sales incentives, delivering solid order growth in the quarter. Brand power initiatives focused on investments in new…

Thank you, Terrence. As Terrence mentioned, we're seeing positive momentum across our largest segments, resulting in another strong quarter. Net sales in the third quarter were $111.2 million compared to $104.5 million in the year ago quarter, a 6% increase versus prior year or 7% growth excluding the impact in foreign exchange rates. This increase was driven by double digit sales growth in both Asia Pacific and North America. Looking at sales by market in the third quarter, Asia Pacific continued to see robust growth with sales increasing 12% on a local currency basis driven by our key initiatives. In China, our digital live stream model continued to respond well as sales increased 38% on a local currency basis. Our long-term outlook for China remains positive, and we expect our consumer focused approach to gain momentum as we continue to invest in our digital toolkit and as the market continues to evolve. Our Taiwan leaders also continue to drive customer acquisition and order growth, producing local currency sales growth of 21% in Q3. Likewise, in Japan, our focused product offerings and investments in field energy continue to resonate well with both customers and distributors, resulting in increased order counts and local currency sales growth of 8%. In North America, Q3 sales accelerated with growth of 10% versus last year or 11% on a currency neutral basis. Recent investments in our digital initiatives were key to this turnaround, as the North America digital business grew 68% during Q3. In addition, digital customers ordering directly from our website increased 68% versus prior year, a sequential uptick compared to the 52% increase we reported in Q2. Sales in Europe during Q3 decreased 2% or 7% on a currency neutral basis. This is reflective of the prolonged impact of the war and broader macroeconomic…

Ladies and gentlemen, thank you. We will now begin the question-and-answer session. [Operator Instructions]. Our first question today comes from Linda Bolton-Weiser from D.A. Davidson. Please go ahead with your question.

Yes. Hello. Congratulations on a great quarter.

Hi, Linda. Good to hear from you.

So I was wondering, you talked about e-commerce sales driving some of the growth in North America. I was curious what percentage of your sales in North America does e-commerce represent now?

It's just over 25%.

Okay. So I guess it seems like -- you're having growth in non-e-commerce channels as well it sounds like, correct?

That's correct. Yes. So it's expanding on an expanding base.

Okay. And then I'm just curious what other -- that 25%, would that include your own website as well as like Amazon?

Yes, it does. That's all digital.

Okay, got it. And it sounds like the digital kind of strategy is working well in China as well. So I'm just wondering, why not -- I'm sure you are working to expand, but why not just take this kind of digital strategy to kind of more markets, some of the markets that are struggling a little more for growth? Are you trying to accelerate that or are some of the markets not appropriate necessarily for the e-commerce approach?

Some of the markets don't necessarily need it right now. We do have a rollout plan to expand digital kind of globally. So a lot of this also is we have to build the capabilities kind of globally as well. So we don't want to get ahead of our skis on this one.

Okay.

Clearly, you're right. The opportunities are there and we'll be pursuing them where it makes sense.

Right. And so I was just curious about the really strong digital growth in North America. Are you driving that at all through any sort of corporate paid for digital marketing, or is this just all organic in the sense that it's coming from the direct sales force?

No, it's a corporate digital marketing program. So it's a fully leveraged kind of plan traditional e-commerce marketing.

Okay, got you. All right. And then it sounds like the growth margin, the initiatives are really coming along very well. So that's good to see. I haven't worked on the math versus your guidance. But are you thinking that gross margin will be up further sequentially in the fourth quarter?

Share, do you want to talk about that?

Yes. In Q4, we don't expect a sequential improvement. Definitely, it will be a year-over-year improvement, but not a sequential improvement in Q4. As we move into next year, there will be sequential improvement.

Okay, got you. And then in terms of your -- your gross margin you did say was helped somewhat by pricing. Can you remind us what magnitude you've taken this year? And other companies have been sort of saying that pricing has been difficult, some of the direct sellers like it's impacting demand and it hasn't been easy. What do you think the root of your success of your pricing initiatives has been?

Well, to answer your first question, I'll do the first and then I'll pass it over to Shane. Price increases were just around 3% plus or minus and it wasn't a flat 3%. Some markets and some products were higher, some were lower. So we tried to be very strategic in terms of where we thought we could take price. And so, again, it's not as straight across the board. And as it relates to kind of some of the success we're seeing, Shane, you want to add a comment?

Yes. It has been successful, because as Terrence points out, we're being very thoughtful about this. So looking at the impact and looking where we have the most opportunity to be able to take price in places where we can't take price, and really understanding our elasticity of demand not only by region but also by product type so that we can do that in the right places at the right time without an impact to demand. So as of yet, we continue to -- we pass along about 3% and without any substantial or any meaningful pullback in demand.

Okay. And can you talk about -- are there any particular new product introductions that are really helping drive things, especially in Asia right now and North America, where you're getting the best growth?

In Asia, I referenced a new product bundle that the team has focused on. They call that their one pack. And the one pack is a -- it's a simplified version of what they were selling in the past. And it's good for daily use on an ongoing basis. Historically, they've sold into a larger, more complex detox program. This new one pack really does encourage easier adoption and increased repeat usage. So you can use it on an ongoing basis. With a detox, you're not going to necessarily use that every single day on an ongoing basis. So they're getting some velocity from that. And that's really quite encouraging. And then in other parts of the world, especially in North America, we have launched our Power Line. We're extremely excited about the Power Line. That's three new products; Power Greens, Power Meal that literally just launched and a Power Beets product. And each one of those are category killers. They've been designed to be category killers in each one of their respective markets, and they work together synergistically to form a foundation of nutrition that basically every consumer can consume every single day. Great tasting, highly effective products that will deliver results you can feel. So we're excited about the Power Line. It's still new. We're just kind of a couple of months into it, partial year introduction on those, but already starting to see some good uptake and kind of some of our best product launches that we've had to date. So we're really excited about that. And then we'll be launching that throughout the world globally as we go into 2024.

Okay. Thank you very much. I'll pass it on. Thanks.

Sounds good. Thanks, Linda. Great hearing from you.

And ladies and gentlemen, with that we will be concluding today's question-and-answer session. I'd like to turn the floor back over to management for any closing remarks.

Thank you very much. And again, we'd like to thank everyone for listening to today's call. We look forward to speaking with you again soon at our next call. And again, thanks for joining us. Take care.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.