Nature's Sunshine — Second Quarter 2026 Earnings Summary

Financial Performance

• Net sales increased 2% to $117.0 million in Q2 2026 compared to $114.8 million in Q2 2025; excluding foreign exchange impact, sales grew 4%.
• Gross profit margin expanded 194 basis points to 73.7% in Q2 2026 from 71.7% in Q2 2025, driven by cost savings initiatives and market mix.
• GAAP net income attributable to common shareholders decreased to $3.5 million ($0.19 per diluted share) in Q2 2026 from $5.3 million ($0.28 per diluted share) in Q2 2025.
• Adjusted EBITDA remained flat at $11.3 million for Q2 2026 compared to $11.3 million in Q2 2025.
• Operating income increased to $5.5 million (4.7% of net sales) in Q2 2026 from $4.3 million (3.7% of net sales) in Q2 2025.
• Selling, general and administrative (SG&A) expenses rose to $44.9 million in Q2 2026 from $43.7 million in Q2 2025, representing 38.4% of net sales compared to 38.1% previously.
• Volume incentives as a percentage of net sales increased to 30.6% in Q2 2026 from 29.9% in Q2 2025.
• Net cash used by operating activities was $1.0 million for the six months ended June 30, 2026, compared to $6.9 million provided in the same period in 2025.
• Capital expenditures totaled $5.3 million for the six months ended June 30, 2026, compared to $2.5 million in the prior year period.
• As of June 30, 2026, the company held $82.5 million in cash and cash equivalents with zero debt.

Guidance and Future Outlook

• Full-year 2026 net sales guidance was lowered to a range of $490 million to $500 million, down from the previous range of $500 million to $515 million, reflecting a stronger U.S. dollar and softness in the China market.
• Full-year 2026 Adjusted EBITDA guidance was lowered to a range of $48 million to $52 million, down from the previous range of $50 million to $54 million.
• The company initiated investments in its "Vision for Growth" plan to accelerate long-term growth through digital business expansion, enhanced digital tools for consultants, deeper market penetration, and entry into new markets.

Business Segments and Product Lines

• Asia Pacific net sales grew 5% in Q2 2026, driven by strong consultant engagement.
• North America net sales grew 2.8% in Q2 2026, with digital sales increasing 26% fueled by new and returning customers.
• Europe net sales increased 4.4% in Q2 2026.
• Latin America and Other net sales decreased 0.5% in Q2 2026.
• Growth was supported by customer acquisition, expansion of digital capabilities, increased adoption of auto-ship subscription programs, and solid consultant growth.
• The company manufactures most products through its own facilities to ensure quality, safety, and efficacy.

Market and Competitive Landscape

• The company operates in more than 40 countries.
• Foreign exchange fluctuations impacted results, with net foreign exchange losses of $0.1 million in Q2 2026 compared to $3.3 million in net gains in Q2 2025.
• The company noted a stronger U.S. dollar as a headwind for full-year sales guidance.

Risks and Challenges

• Risks include extensive government regulations, trade restrictions, export controls, and product registration difficulties in foreign markets.
• Legal challenges regarding the direct selling program and consultant classification may restrict operations in certain markets.
• Risks associated with independent consultants include improper activity, loss of key consultants with significant sales networks, and compliance with advertising laws.
• Supply chain disruptions, ingredient shortages, and manufacturing interruptions pose potential challenges.
• Fluctuating foreign exchange rates and geopolitical issues, including changes to U.S. trade policy and tariffs, remain risks.
• Cybersecurity threats and data privacy regulations are identified as potential concerns.

Management Commentary and Tone

• CEO Ken Romanzi described the quarter as "solid," highlighting constant currency sales growth of 4% across nearly all geographic regions.
• Management attributed gross margin expansion to strong execution, disciplined cost management, and ongoing productivity initiatives.
• Management expressed confidence that the "Vision for Growth" investments, combined with the strong business model and disciplined execution, position the company for sustainable, accelerated long-term growth.

Other Key Points

• During the six months ended June 30, 2026, the company repurchased 113,000 shares of common stock at a total cost of $2.6 million, or $22.55 per share.
• A purchase of noncontrolling interests in December 2025 resulted in no net income attributable to NSP China for Q2 2026, compared to $0.9 million in Q2 2025.
• Deferred revenue decreased to $1.981 million as of June 30, 2026, from $5.840 million as of December 31, 2025.
• Accounts receivable increased to $13.861 million as of June 30, 2026, from $8.602 million as of December 31, 2025.
• The company held a conference call on August 6, 2026, to discuss the results.