Nature's Sunshine continues record run as war complicates future

By Hank Schultz contact

- Last updated on GMT

©Getty Images - beeldbewerking
©Getty Images - beeldbewerking

Related tags: Ukraine, Russia-Ukraine conflict, International trade

Multi level marketing company Nature’s Sunshine has recorded a sixth straight quarter of rapid growth. But as the company has significant operations in Russia and Ukraine, the war has complicated the company’s task of forecasting future results.

In an earnings call with analysts, CEO Terrence Moorehead said the primary focus of the company, which markets dietary supplements and personal care products, is on the health and safety of its distributors in Ukraine.

“We unequivocally support the Ukrainian people's effort to live, grow and work in a free and peaceful society, and our hearts go out to our distributors, the people of Ukraine and peace loving people everywhere as we watch the situation unfold in front of us. This is a very personal issue for us at Nature's Sunshine because we have longstanding personal relationships with people whose lives are directly impacted,”​ Moorhead said in the call.

“Through our Impact Foundation, Nature's Sunshine will be making charitable contributions to ensure that our distributions and the Ukrainian people have the critical lifesaving assistance they need during these challenging times,”​ he added.

A transcript of the earnings call was posted yesterday on the site seekingalpha.com.

In the fourth quarter of 2021, the company, which celebrated its 50th anniversary this year, recorded a record $118 million in net sales, which represented a 16% year over year increase.  

For the full year, the company notched $444 million in net sales, another record.  That represented a 15% increase over 2020.

Hit to future results in Eastern Europe

Moorehead noted that of that $444 million, more than $61 million was generated in Russia, Ukraine, Belarus and a few other markets grouped in that segment.  While results in those markets are not broken out separately, he did say that more than 40% of the total, or about $24 million, was recorded in Ukraine.

Products sold in the region are made in the company’s Spanish Fork, UT, facility, and no products are being shipped to either Ukraine or Russia at the moment.  But Moorehead said that distributors in those regions typically have three to five months worth of inventory on hand.

Nevertheless, he said the situation may be a potential drain on the company’s future prospects.  Sales had grown strongly in the region in 2021, and the expectation is that the war and its aftermath will affect future returns. The company declined to speculate further as Nature’s Sunshine has had a corporate practice of not providing future earnings projections to investors.

“We're continuing to evaluate that day-after-day, week-after-week. So that comes into play. It's just premature to say, overall 2022, what's the impact is going to be say versus 2021. But here in another six weeks or so, we'll be reporting on the first quarter of 2022. And I certainly hope that we have a much better feel for what the potential impact could be this year,”​ said CFO Joseph Baty, who also participated in the call.

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