Good afternoon, everyone, and thank you for participating in today's conference call to discuss Nature's Sunshine's Financial Results for the Fourth Quarter and Full Year Ended December 31, 2024. 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 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. Nate, please go ahead.

Good afternoon, and thanks for joining our conference call to discuss our fourth quarter and full year 2024 financial results. I'd like to remind everyone that this call is available for replay via telephonic dial-in through March 25 and via a live webcast that will be posted on 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 fourth quarter and full year results. Today, I'll provide some context for our fourth 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. Let me begin by saying that we're very pleased to report our fourth quarter results, which saw reported revenue of $118 million or $120 million on a constant currency basis, reflecting strong performance with a 10% increase versus prior year. Adjusted EBITDA for the quarter came in at $10 million, up 6% year-over-year. In terms of revenues at $120 million, the fourth quarter represents the largest single quarter in the Company's 52-year history. These results demonstrate the strength and potential of our strategies, and we're encouraged by the progress we've made. Looking back, you may remember that in the first half of 2024, we made several strategic changes to the business to improve our competitiveness and build the foundation for long-term profitable growth. The first change focused on rebalancing our consumer proposition in several key Asia-Pacific markets to place greater emphasis on consumer-friendly product packs that offered easy and accessible health solutions to drive customer growth and support repeat purchases. Since implementing the strategy, we've seen a steady increase in the -- in customer order growth. And in the fourth quarter, we saw strong revenue growth as our marketing programs, combined with strong field incentives to deliver a 21% increase in sales versus prior year on a local currency basis. The strong performance was driven by Taiwan, Japan, and Korea, which continued to deliver exceptional results. China also showed encouraging signs, delivering positive sales growth in the quarter, driven by…

Thank you, Terrence. Moving on to our results. Net sales in the fourth quarter were $118.2 million compared to $108.9 million in the year ago quarter, a 9% increase versus the prior year or a 10% increase excluding the impact of foreign exchange rates. As Terrence discussed, this was driven by very good performance across Asia-Pacific and Europe. Consolidated net sales for the full year finished at $454.4 million compared to $445.3 million in the previous year, representing 2% growth or 4% growth excluding the $7.7 million headwind from foreign exchange rates. Looking at sales by market in Q4, I'll start with APAC. In Asia-Pacific, we reported growth of 18% to $56.3 million or up 21% when excluding the impact of foreign exchange. This was driven by very strong growth in Taiwan, Japan, and Korea, where sales on a local currency basis grew 29%, 27% and 21%, respectively, in Q4. The strategies we've implemented this year, including changes to our product merchandising and field incentives are working as intended, yielding significant growth in both customers and transactions. Full year 2024 sales in Asia-Pacific were $207.8 million, representing growth of 3% or 8% excluding the impact of foreign exchange. Sales in Europe during Q4 increased 8%, both on a reported basis and on a local currency basis. Excellent field execution combined with strong adoption of our Power Line products and continued expansion in the Baltics region drove robust growth in Central Europe, where sales increased 17%. Net sales in Europe for the full year 2024 increased 5% or 3% on a local currency basis to $84.8 million. Looking at our North America business, our fourth quarter sales declined by 2% versus last year but showed a modest sequential improvement from Q3. The year-over-year decline was driven by weaker-than-expected customer activation in…

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Susan Anderson for Canaccord. Please go ahead.

Nice job on the quarter. I wanted to maybe touch on Asia. It looks like it did see a nice pickup in growth. Maybe if you could talk about the successes there that's helping to drive that accelerated growth. And then, how are you thinking about this region as we look forward? I know you mentioned some macro pressures in your commentary. Is that more related to North America or do you think that's also going to be an impact globally?

Yes. No, in terms of Asia-Pacific, we really have great momentum there. I think the strategies that we put in place, as both I mentioned, as Shane mentioned, appear to be working, doing exactly what we wanted them to do. And the idea there was to hit the right price points with the right bundle of products that consumers can understand, that will help us attract more new customers. And then they're at, again, a price point and a level of daily usage that people will keep coming back to buy them. And so, I think the combination of the merchandising, along with the introduction of Subscribe & Thrive in those markets, really helps build this new customer acquisition followed by repeat purchases. So that combination seems to be working. And then we paired that up with some field incentives in the back half of the year just to motivate the field organization to really become active and drive sales through the business. So, I think that combination really worked going forward. Our anticipation is that we'll continue to have strong growth. I don't think we'll continue to have 20-plus percent growth necessarily. That certainly wasn't what we're looking for. But I think we're expecting good robust growth driven by field fundamentals and a marketing proposition that makes sense to people. And in terms of the kind of macroeconomic challenges that we face, I think those are largely focused on China, which is still a relatively small portion of the portfolio, but also the foreign exchange impact, which has been somewhat considerable going forward. And that will have an impact on consumers around the world. But we do expect consumers in North America, you mentioned that, to be impacted by some economic pressures as well. And you can start to see just a fair amount of uncertainty with consumers today. Did I leave anything else, Shane?

No, I don't think so.

Yes.

Okay, great. And then maybe if you could talk about, I guess, where you're at with the upgrade of the digital business in North America. Is that, I guess, 100% complete now, not only the e-commerce business but I guess the distributor part of the digital business as well? I know you talked about rolling out some new tools for distributors. I guess when should we think about those being in place? And maybe if you could give some more color there on kind of the tools that will add for them.

Yes. So, from a digital platform standpoint, I think we're largely set. There will be a series of things that we need to do to refine our approach. Just like any digital business, you're constantly kind of fine-tuning and refining your approach and making sure that you're being as efficient and as effective as possible. So that's an ongoing challenge for us just like any other digital business, so we'll obviously put attention to detail there. In terms of the new toolkit that we've talked about, to date, we've had some sharing tools for our distributors, and we've had replicated websites for them so they can send out links and people can click through and still get credit for their sales. But now we're talking about something really completely different, where they will have at their disposal a full complement of tools where they'll be able to send out e-mails, social media posts, managed CRM, follow-up campaigns with their customers. And it's all -- there's AI kind of backing to this so that they can get recommendations on who to contact this week and what to follow up on. And it's a whole kind of mobile-based system that they'll have at their disposal. So, we'll probably be launching that, like I mentioned, in the back half of the year. I would anticipate late third quarter, maybe early fourth quarter. But it's going to be a fairly kind of significant rollout, and we'll pace ourselves with it so that we make certain that as we're turning this tool over to our distributors, they know how to use it, they -- it gets fully integrated into their day-to-day processes. And again, the intent here is to allow them to manage their businesses more effectively and to give them greater outreach in the marketplace.

Okay, great. That sounds exciting. Maybe if I could add one more then to, I guess, just on the tariff impact. You mentioned that there probably would be, I guess, depending on what the tariffs end up being, but potentially a raw material cost. Maybe if you could quantify what that could be. And are these raw materials coming from China or other countries?

Yes. And we have taken some preventative measures to try and minimize the impact of any tariff activity. I mentioned that we have some extended contracts in place. We've also kind of tried to build our inventory and safety stock reserves. But you can't cover off everything. And maybe I'll let Shane speak to kind of where we think the tariff impact might land.

So, we have modeled out, obviously, it's a moving target and that this is literally changing by the hour. But we have modeled out the tariffs that have been talked about, proposed at this point in time and what that impact would be on our business. If all of those were enacted and were on -- were present for the entire year, that we would expect a $2 million to $3 million impact to our gross margin. But obviously, that could change. It's a moving target.

Historically also when there are tariffs, we have seen exceptions for products in the health space and supplement space. This time, we just don't know. As Shane mentioned, it's changing day to day, sometimes morning to evening.

And your next question comes from the line of Linda Bolton-Weiser from D.A. Davidson. Please go ahead.

So just on the tariffs, just to follow up. Are you saying that $2 million to $3 million would be just -- I mean, does that impact include retaliatory tariffs or does it not include retaliatory tariffs?

It does include the retaliatory tariffs that have been discussed at this point in time. So those, I believe, are, right now, proposed to go in effect in April. If those happen in April, then yes, those are included.

And if they go through, the whole year.

If they go through, the whole year.

Right. So, I'm more talking about, because you make a lot of products in the U.S. or other parts of the world. Am I remembering that correctly?

Yes. So about 60% of what we produce, we produce in the United States. And yes.

So, I guess what I'm wondering...

Okay, I guess 80% of what we produce is in the United States. I thought it was 60%.

Right, so I'm talking...

Oh, what we produce. Sorry. Sorry, sorry. I misunderstood. Linda, were you asking what we produce or what we purchase? Because what we produce, 80% is in the United States. What we purchase, 60% is in the United States, just to clarify.

Right. So, I guess what I'm concerned about is that your products made in the U.S. that you're shipping to other markets, that you'll be -- you'll have tariffs imposed on that, as retaliatory measures by like Canada. Just as a -- I don't know if you ship from the U.S. into Canada. I don't know how much business you do in Canada, but is that -- like that's the retaliatory tariffs I'm asking about.

Okay, yes. So those retaliatory tariffs, we are not included in that $2.3 million.

Okay. But I mean, I would think they could be fairly significant if all the countries around the world are going to do retaliatory tariffs.

It's really impossible to say what that looks like, so we haven't been able to estimate that at this point in time.

And based on what we know, I mean, sales in Canada are relatively small. Sales in Mexico, relatively small.

Yes. The biggest impact would be Asia and we don't know of any at this point in time that -- what that would look like.

Most of the products in China are produced there so that's not an issue.

Okay. And then for the Korea and what's the other big market in Asia that you have, Japan...

Taiwan?

Taiwan, Japan, and Korea.

Taiwan, Japan, and Korea. So where is that production for those markets?

It is 80% in the United States. But at this point in time, there is no discussion of retaliatory tariffs for them. That can change.

Okay, got you. And then moving on to just the sales performance in Asia, it was really, really good. And it looks to me like the difference, the swing factor that made it so much better than third quarter was China and Korea. So, China was down over 20% or something like that in the third quarter and you said it was up in the fourth quarter. Yes. How much was...

It was really -- the build impact was, Taiwan was a big part of that. Very, very strong growth there, Japan and Korea, all three. But then, yes, you're correct. The China, instead of declining, it was actually up slightly in Q4.

Right.

It's a smaller market.

Right, right, right. But like Japan was also strong in the third quarter. It's not like a difference. It's not changing. Japan was strong in the third quarter and in the fourth quarter, right?

Right, right.

Okay, fair enough. Yes.

Okay, really -- but I can tell you, they really took off. Both Taiwan and Japan really took off in the fourth quarter. Taiwan up 29%. I think Japan was up 27%.

27%. And Korea 21%

Yes. So really, really like a nice just acceleration. But it was great having China be kind of up 2 points. That was certainly nice.

Right. So, Korea was flat in the third quarter and now it was up 21%. So, Korea is like -- that's the change, like, right?

It's a big part of the change. If you're looking sequentially from Q3 to Q4, you're correct. Korea is a big part of that.

So then is that sustainable in Korea? Because Korea has been kind of sluggish for a while. I mean, is that quite sustainable, do you think?

I think growth is sustainable but not at 21%.

Right. You'll remember, Linda, we've been working on the fundamentals there, our field fundamentals and really putting in place that new merchandising kind of concept for -- it took a good four quarters really to start building that momentum. And so -- and now, we're starting to see it. But again, we don't expect to see that type of growth in Korea on an ongoing basis. But we do expect positive momentum to continue.

Okay, yes. No, that's really good to see because it's -- I know you've been working on Korea so that's really, really good. So, can I just ask -- can I ask you about Russia? Because I know you used to have a really good business there, and then kind of some of it shifted to other countries around there with the war going on. If the war ends like in 2025, do you think some of that business actually in Russia will come back to you or is it kind of gone forever?

No. It's hard to say and we haven't built anything into our plans. We still have infrastructure there to do business. We certainly have the capability to drive sales in the marketplace. A lot of it depends on what happens with the currency and consumers' ability to spend. But I think, overall, we're well positioned and well situated in Central and Eastern Europe. We'd be eager to see some stability in the region.

So, your Eastern Europe business is which countries now?

It's -- so well, Central and Eastern Europe would include Poland, the Baltic states, Slovenia, Slovakia. Ukraine is in there. Kind of Russia's in there. Belarus.

Okay, okay. And then -- let's see. I just wanted to say...

And again, right now, Linda, just to be specific, the real growth is being driven by Poland, the Baltic states, Slovenia, Slovakia. I mean, that's where we're seeing double-digit growth, 17-plus percent growth and really driving market penetration.

Right, yes. Yes, that's great. And then, I just was curious if you could tell us the percentage of revenue in North America and for the total company that is digital in the fourth quarter or for the year, whichever?

North America, it's about 25%.

It's about 25%. It's -- yes, I did the math, it's about $30 million for the year.

Yes. And then again, you've got our business in China that's 100% digital live streaming so that's just how they go to market there. And then we have kind of various hybrid digital activation throughout the world with people ordering digitally, but not the same type of DTC business that we would have in North America. As you remember, Linda, North America was kind of a pilot for us to really drive a pure digital kind of business. And then again, you do have, in China, I would say, is very digital as well with 100% of the sales coming through digital live streaming. So hopefully, that's helpful.

Yes. Yes, that is very helpful. And then, I think that was all my questions, actually. Thank you very much. I appreciate it.

Yes. Good hearing from you.

Thank you. At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Moorehead for closing remarks.

Okay. Well, thank you. I want to thank everybody for listening to today's call, and we look forward to speaking with you again when we report our first quarter 2025 results, and again, thanks for joining us, and goodbye.

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