Nature's Sunshine Products Inc (NATR) 2003 Q4 法說會逐字稿

Good morning and welcome to the Nature's Sunshine Products Inc. fourth-quarter 2003 operating results conference call. Statements made during this conference call concerning the Company's business outlook or future economic performance, anticipated profitability, revenues, expenses or other financial items, and product line growth together with other statements that are not historical facts are forward-looking statements as that term is defined under Federal Securities law.

Forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from those set forth in such statements. Such risks, uncertainties and factors include but are not limited to foreign business risks, industry, cyclicality, fluctuations in customer demand and order patterns, the seasonal nature of the business, changes in pricing and general economic conditions, as well as other risks detailed in the Company's filings with the Securities and Exchange Commission. The Company disclaims any obligation to update any forward-looking statements as a result of developments occurring after the date of this conference call. (OPERATOR INSTRUCTIONS).

I would now like to turn the floor over to your host, Mr. Faggioli. Sir, the floor is yours.

Thank you. Good morning and welcome to Nature's Sunshine conference call. We are pleased to have this opportunity to share a few minutes with you discussing the results of operations from our fourth quarter and year ended December 31st, 2004. First, we will have Craig Huff, our Chief Financial Officer, review some of the information from the news release, as well as selected financial information, and then I will add a few comments to that, and then we will open it up for some questions.

Craig, do you want to cover some of the financial information and news release?

Okay. Thank you, Doug. I appreciate this opportunity to share some information with you concerning our fourth quarter and our year ended December 31st, 2003.

For the quarter, sales were 78.8 million compared to 71.2 million. That is an increase of 10.7 percent. Net income for the quarter was 2.9 million compared to the prior year of 1.5 million. That is an increase of 101.6 percent. Diluted earnings per share are 21 cents compared to 9 cents last year. That is an increase of 133 percent. Year-to-date our sales revenue were 297.3 million compared to 298.7 million, about a .5 percent decrease which is quite an improvement from where we were in prior releases. Net income was 5.1 million compared to 7.1 million the prior year, a decrease of 28 percent.

In those year-to-date numbers, I just want to remind people about two charges that were taken during the year. In the second quarter, we mark-to-market our investment in HealtheTech stock, which took a charge of $1.8 million associated with that, and in the third quarter, we also in conjunction with our restructuring of our U.S. operations and realignment of some of our employees and market strategies, we took a charge of $2.2 million for a total charge of about $4 million that are nonrecurring charges.

EPS for the year were 36 cents compared to 42 cents the prior year. That is a decrease of 14 percent. As of year-end, our outstanding shares were 14,178,000 shares.

Our international operations, as you notice from our press release, were very positive for this quarter. If you remember back to June, our international operations were actually down in the neighborhood of 14 to 16 percent for the year. For the quarter, our sales were 36.6 million compared to 27.7 million the prior year. That is an increase of 32.3 percent. We are very pleased with that. International sales for the quarter represented 46 percent of our consolidated sales.

Year-to-date sales for our international operations were 124 million compared to 121 million. That is an increase of 2.4 percent and for the year represented about 42 percent of our consolidated sales. Again, remembering how far we were down at the end of June because of things happening in Korea and a couple of our other markets, we feel like that is a tremendous turnaround that has taken place over the last quarters in our international operations.

From a segment standpoint, we will report on the same three segments that we have in the past. Our Latin American segment for the quarter was 14.6 million compared to 13.8 million the prior year. That is an increase of 5.8 percent. We feel good about that also because it was a decrease as we have been in the past.

Our Asia-Pacific segment was 12.1 million compared to 6.6 million the prior year, which is an increase of 83 percent. That is almost directly associated with what we stated in the news release associated with our Synergy division, which has operations in the Asia-Pacific area. Most notably, the operations in Japan where things are going very well. Doug will talk a lot more about that.

Our other markets were 9.9 million compared to 7.3 million. That is an increase of 35.6 percent. So for the quarter, you can see that each of our segments is increasing, which we feel very good about. Year-to-date for our segments, Latin America was 56.9 million compared to 61.7 million. That is decrease of 7.8 percent for the year. Asia-Pacific was 32.9 million compared to 33.4 million. That is a decrease of 1 percent. Again, a lot of that is associated with the decreases we experienced in Korea.

In our other market segments, we were at 34.2 million compared to 26.0 million. That is an increase of 31.5 percent year-to-date for our other markets, which includes companies such as Israel and Russia, Canada and our export market. Domestically, which we know we still have some challenges, for the quarter, our sales were 42.2 million compared to 43.5 million. That is a decrease of 3 percent, and year-to-date our sales in our domestic markets were 173.3 million compared to 177.7 million. That is a decrease of 2.5 percent.

Our distributors and managers continue to grow. Total distributors at the end of the year were 562,000. That is an 11 percent increase over last year. Our managers were 15,150. That is an 8 percent increase over last year. As you are aware, we have had some short-term debt that we have had on the books that was associated with our stock buyback program. At the end of the year, we had a balance of about $5 million left associated with that. The high in the year was about $10 million. Since that time, we have paid that short-term loan off.

Our cash and cash equivalents for the year and long-term investments totaled 37.1 million compared to 36.6 million the prior year. Our inventory remained constant at 26.5 million. Our return on shareholders equity was 6.3 percent, and our book value per share was $5.45.

As you are aware, in the past we have had a stock buyback program repurchase program. In the year, we purchased a total of 1,326,000 shares at a cost of $11.8 million; average price of about 8.89 cents per share. Since the middle of the second quarter, we have actually not had an authorization for a buyback program as has been mentioned in prior news releases.

And in this news release, there were issues concerning where our volume incentive should be placed on the financial statement with the SEC. We have reclassed those as you will notice up against and into the sales. We now report gross sales and net sales with volume incentives. It has no impact on anything else. Once that is finally resolved with the SEC, I would anticipate that the Board has been positive about continuing that share buyback program, and once that is finally resolved, then we will go to the Board and see if they want to continue that program.

Cost of goods sold for the year we feel very good about. It came down from 17.8 percent last year, down to 17.5 percent this year, and we feel good we will able to maintain that going forward.

One area that has been a special emphasis for us, as you are aware from our release in the third quarter, is our SG&A. SG&A for the year was 104.7 million, which is a 2.8 percent increase over the prior year. SG&A as a percent of sales for the year was 35.2 percent. That is up from 34 percent to last year. For the quarter, SG&A was 26.9 million compared 24.8 million. That is an increase of 8.5 percent. As a percent of sales, though, it is 34.2 compared to 33.3.

As you are aware and I have mentioned earlier, we have made some significant cuts in our SG&A and some of our other expenses. The benefits from those we really did not experience much of a benefit for that in the fourth quarter. We anticipate that during the entire next year is when we will see the benefit from those costs and feel very good about we will be able to bring our SG&A down and to bring that in line with historical levels.

One area that we have experienced some benefit from from last year also is in our tax provision. For the quarter, we were at 27.5 percent compared to 31.8 percent, and for year-to-date, it was 29.5 percent compared to 34 percent last year. And we feel that we will be able to continue to maintain our control on our taxes and be able to continue to recognize some significant benefits compared to historical levels of benefit based upon some tax planning that has been put in place.

That is a review of the financial information. At this time, I would now like to turn the time back over to Doug Faggioli.

Thank you, Craig, for going through those financial numbers and information. I hope that everybody got a copy of the news release and understands really most of what we have been through in the fourth quarter and the year of 2003.

I just want to say that it is really great to have this opportunity to spend a few minutes talking with you about Nature's Sunshine and some of my thoughts and some of the things that we are doing and going through, and then we will open it up for whatever questions that you might have. I have to say that I don't know that there is any better business to be in. I just really enjoy being part of Nature's Sunshine and am pleased to have this opportunity to maybe have a greater impact on the Company hopefully and look forward to the things we can do.

We like what we saw in the fourth quarter. There were some positive things. Like anything, there is a balance. There are obviously some negative things and things we have to deal with in terms of challenges, but overall we like the improvement that we have seen, and I will speak for myself, as well as the employees and other officers, we have got some things we want to deal with, and we feel like there is a lot of room for improvement and things that we can do to improve the business in terms of the top line growth and the profitability. And so, yes, there are some challenges, but we think there is a lot less to be done, and we're excited about that.

I guess what I am talking about is the potential. I see that Nature's Sunshine has a great deal of potential, and we want to try to realize more of that than we have been able to in the past. So I am just really excited about everything that we see going on, and I am confident in our ability to deal with a numbers of these issues.

We just recently had a leader's conference for our U.S. division in February. It was really a great conference I have to tell you. There is really a renewed feeling of optimism. It is positive as I have really seen it, and part of it is our philosophy that we are going to concentrate on the basics of the business and what really drives Nature's Sunshine in terms of the products and the managers and distributors, and we're not going to get sidetracked and distracted with some of the things that Craig had talked about earlier in terms of some write-downs and things like that.

It is such a great business to be in. I want to focus on that, and I think people are excited about that, both in the field and our employees. We have a great group of employees and officers, and we are finding that they are really excited about the things that we think we can accomplish going forward. So that is what we're going to focus on.

Craig mentioned the numbers of distributors. We have 562,000 distributors and 15,150 sales leaders. There is a lot of strength in that, and when I say that, there is a lot of strength in that to build on. So we really need to do a lot of things going forward that are going to take this company hopefully to a new level and restore the confidence and respect that we believe the Company deserves.

I just want to talk briefly about new products in the U.S.. We have -- new products is an important issue, an important part of the business. This last year we had about $20 million in sales from new products, which is about 11 percent -- a little more than 11 percent of our U.S. sales. That is a little bit of an improvement over what we have experienced in the last couple of years. We're going to continue to focus on new products, even though I will mention a couple of these that we experienced and had some good success with this last year. We really want to change it a little bit, focus a little bit more on reducing the number to what we think are going to be even bigger products. We will still continue to come out with quite a number of new products, but we think we have a couple of new products. Hopefully I will be able to talk to you about in the second quarter that we think are going to do really well. We are very positive about those and looking forward to what they can contribute.

We had a number of products this year that I will just mention briefly and tell you a lot about. But we had a product called Probiotic Eleven that seemed to be very popular. Another product we had was a product called Paw Paw that people had a lot of interest in, and it seemed to sell very well. We have a new product called Nutri-Burn that is a meal replacement product with CLA, Conjugated Linoleic Acid, as well as whey protein, and it really is a good product that can get all of your essential needs for the date and also the nutritious way to help you lose weight. And the other product I just wanted to mention briefly was a single product called CLA, which is what I mentioned earlier, the Conjugated Linoleic Acid.

So we really had a number of products, and I won't talk too much about product, but just sort of the philosophy. We want to be a little more timely on our introductions and improve that, and we think we can do better with our new product introductions if we do that. So I am really pleased with that.

Another thing I want to just mention briefly because I think it is important is we have had a little bit of an organizational change in the U.S. market in terms of the management. Just a little shifting of responsibility -- not a little shifting but I mean a shifting of responsibilities in terms of operations, as well as focusing people's talents where they really can be utilized the best. I am pleased with how that is going as well. We think that will have an impact in the U.S. market, and so that is just one of the things I wanted to mention.

So overall we are looking forward to the improvements that we think we can do. Craig mentioned SG&A. I really asked him to do a lot of work on that, and I think the other officers understand that well. They are focused with him, and we think maybe over the next three years or so we can improve the profitability of the Company through that as well, in addition to increasing sales.

I just want to talk briefly about a couple of markets. I don't want to spend a lot of time, but one of the things that we're very pleased with is the results we are getting out of the Synergy Worldwide division. They are mainly focused in Japan, although they have -- you will see in the news release there are a couple of other markets that they are in -- Thailand, as well as Taiwan. But we are really pleased with the results they are getting in Japan. It is really exciting to see the kind of growth that they are getting and something that we expect to even get better as we go forward. So we are pleased with that.

Synergy has, I will just mention, a much more aggressive marketing plan, which is something we talked about in prior conference calls. We think it is going to be much more well accepted and more exciting to the Japanese market, and we are very pleased with what they have done and look forward to continued success there.

Craig mentioned Russia. Russia continues to do very well with some very impressive increases and things that are going on there. The new markets, we have a little bit different philosophy that we are developing. In our international area, they are working on a little bit different approach. I cannot go into the details of the right now. Hopefully, I can mention more of that as we get into the second quarter, and maybe I can talk a little bit more about that. But the markets that they are looking at are in Asia, and we are looking forward to the things that they can do there.

I just want to mention briefly the Dominican Republic. It has been a good source of growth for us in our Hispanic U.S. market. That is really part of that. I had the opportunity to go down there just not too long ago and be involved in some meetings that were held down there. I am very impressed with the people and their spirit and the way they react to what could be some challenges and some adversity.

Those of you who don't know, the Dominican Republic has been faced with a little bit of instability. They are heading into some elections, and Craig can give you the numbers. But they have had some devaluations, and it has not really totally settled out, and most people would see that as really a negative. And I have to tell you the spirit of the people there is really great. I am so impressed with how excited they were about the Nature's Sunshine opportunity and really how -- this is kind of what I wanted to say as part of this -- and how it has really touched their lives.

Some of the people down there really benefited from not just a product but the opportunity of Nature's Sunshine. It really in a way is really touching to see their spirit and how resilient they are. So we are really pleased with their attitude and hope for good things out of the Dominican Republic and our U.S. Hispanic market.

So I guess overall I would just summarize by saying we are pleased with what we saw in the fourth quarter. We think that we can do better, and we are going to work at improving everything that we do as a company. Raising the level of professionalism and the way we interact with our distributors and our incentives and all of our plans that we are working on.

So with that, I guess the goal of that is to keep all our distributors and managers happy and focused and challenged and trying to spread the good word of Nature's Sunshine around. So we are pleased with that, and that is what we are going to focus on, and hopefully we look forward to reporting to you better news as we go forward. That is really our challenge is to continually do better and to re-establish ourselves as a company in the marketplace.

So with that, I would like to open it up for whatever questions that you might have. Operator, takeover now.

(OPERATOR INSTRUCTIONS). Scott Hood, First Wilshire Securities.

This is Bill Caden (ph) with First Wilshire Securities. Excellent quarter. I was just curious if you guys are coming out -- you talked about new product introductions. Are any new products centered toward carbohydrate reductions and kind of like those type of reduction in carb? I don't know exactly how to word it, but any products in that line?

Are you talking like the Atkins Diet or something like that?

Something similar to that.

Well, the product that I mentioned, the Nutri-Burn product does have lower cards, but we have talked about maybe coming out with something specifically for the Atkins Diet that will address that. But we don't have anything at this point that we would want to announce on that. But it is something we have talked about. You see a lot of that going on, but we are not ready to announce anything like that.

In the Japan Synergy organization, you talked about more aggressive marketing plans. Can you just touch on how that differs than what to do in other markets?

To just give you an overall broad response to that, and I have mentioned this on other calls where we felt like the Japanese market, at least the things that we felt in the past, is looking for more aggressive kinds of marketing plans -- a little more emphasis on opportunity and less emphasis on product -- which is where we have been in the past in all the other markets, and it has worked very well for us.

It is not to say that Synergy is not focused on products. Of course, they are. But they look a little bit more toward the opportunity that that is offered, and that is really -- it is more aggressive in terms of building -- and this may or may not make any sense to you -- but it is more emphasis on building deeper organizations. That is what that marketing plan is designed to do. Whereas, the traditional Nature's Sunshine and our other international marketing plans result in sort of what we refer to as the flatter organization. So more incentives for that first level and possibly second level where the Synergy focus is more on building deeper, which is much greater depth into those organizations. I don't know if you follow that or not, but that is really the emphasis there.

One final question. You said you had cash and investments of about 37 million. What was the cash portion of that?

The cash portion of that is 30.1 million.

30.1 million?

Yes.

Okay. Thank you.

Abba Horovitz (ph), Human (ph) Capital.

Hi, Doug and Craig. Congratulations on a great quarter. Doug, we are all betting on you I believe, and I know you are going to do the job. My question -- I have a few questions. I hope that is all right. I am just wondering, you were talking about the SG&A line coming down over the year due to the work you have done. I am wondering do you have a number you can give us of what you see the SG&A line going down to?

Let me just respond this way. To be blunt on Craig's case about that, although it is not just his responsibility, but we really have let as a company -- I don't want to blame Craig -- but as a company, we have let that hit way to far. What was the number -- 34 percent or something like that?

34.2.

I am not say saying that given what we have done in the cost-cutting this last year that we can do that all in one quarter or one year, but I really think if we focus on that over the next three years or so, we ought to be able to get that down 10 percentage points. It ought to be down closer to 24 percent. That is really where it ought to be. It's going to take some effort, and that is why I was talking to Andrew we have got to do a lot of work on that, but I think Craig has the support of the officers, and we are going to drag that down if we can to 24 percent over the next three years.

Okay. The leverage is huge if that were to happen.

We need to do that. Really this company should be a lot more profitable than we have been, and again I am not saying we can do it over one quarter, but I think over the next three years we ought to bring that down closer to the 24 percent range.

And what about also just on the cost of goods line, you actually versus last year -- this year versus last year, you actually brought the line down pretty dramatically in the fourth quarter. And I wondering if we could see the cost of goods throughout the year at Q4 level and if there is even more room to bring that down?

I think that the Q4 level -- I am not willing to go out on the line and say the Q4 level is where we will end up -- but as we get into something like Synergy -- their cost of goods sold is very good. So as they grow and add to the bottom line or to the sales line, our cost of goods sold will have the opportunity to come down a little bit. As to some of our other markets where we have had problems with devaluation stabilized and we are able to do our price increases there, we should see that come down a little bit. But I am not willing to got out and say we are going to see it at Q4 level, but I think there is the opportunity to come down. But really if I could stay at the 17.5 level right now and make sure that I hit that and if there is some additional improvement, I would feel good about that.

Fair enough. Just the tax rate, that has come down quite dramatically as well, and I am wondering how sustainable is the 27.5 percent for next year?

I would not -- I don't think I can say it would sustain that. I would probably say that that is going to come up a little bit.

Okay. Does your tax rate on Synergy -- where does that stand?

The tax rate on Synergy is going to be -- a lot of those -- we did part of that through a personal import, so that comes back through the U.S.. Part of their taxes come back through the U.S. rather than through the Japanese market. So as that grows, I don't think I can give you a tax rate where that is going to land for them. But part of that is already in the U.S. income -- at the U.S. income tax rate.

So that is why your tax rate in theory could go up because if Synergy grows, that is going to grow with it. (multiple speakers)

The Japanese tax, it is just hard to say.

In Asia, you did 12.1 million. Was that all Synergy?

No. That includes Japan -- we have a Nature's Sunshine Japan business. We also have Korea that are in that also. To give you an idea, Korea for the quarter was close to $2 million, and Japan Nature's Sunshine was close to about $1.6 million. Then we reported in the news release what Synergy was for the quarter.

Okay. How big can we get on Synergy if we dream a little bit? I remember that HerboLife (ph) went to Japan and went from 0 to well over 100 million very quickly. And what I am wondering is, is Synergy on a similar growth path now that it is starting to work for you guys?

I am going to let the sales guys answer that one.

The problem is he says that, but I could probably get carried away and then he would get mad at me. I have some great expectations for Synergy in Japan, in that market. I don't want to put any limitation on it by throwing out a number there, but I have to tell you that their growth this last quarter was something like around 400 percent, something like that, and we think they can continue that. So I think Synergy can become very significant for Nature's Sunshine in Japan.

As far as the number, I don't think I can venture that. But I just want you to know that I have got some great expectations for that because of the people that are involved in it, because of the management of that really work with our international people as well. There are some pretty great expectations out there, and I think they can meet or exceed those. We are very excited about it.

My final question is America, the U.S.. That has been a thorn in your side for quite a while, although the decline I think is getting better. You are sort of leveling off here. I am just wondering, is that a mature market for you guys? Are there ways to reignite that market to show some growth?

Let me tell you this, I don't know the right word to tell you. I am convinced, confident -- I am really banking on the U.S.. It is not a mature market for us. In my view, we have barely scratched the surface. Obviously we have not found the right formula yet. We have done a number of things with some promotions and some programs this year. I think there is sort of a spirit of optimism and positivity that it is starting in the U.S., and obviously we have some more things to do there.

But when you look at it, the numbers are really going our way. What is it -- 76 million baby boomers and that kind of thing. They are all going to need products like these. We just have to change our approach and work on it. I know we can get this U.S. business going. I know the people we have working on it are going to be able to do that, and it is a question of timing.

But you know what? My philosophy is we have to have the U.S. market growing as well as international. It is great that we have the international markets and like having that, but I want the U.S. as part of that. The U.S. is very important to me, to Nature's Sunshine, and we are a working at that, and we are going to find a way to get that going because we need that.

I would imagine a few of your competitors have gone out of business over the last couple of years, and I imagine that is probably going to help you a little bit in your markets.

I think that and just kind of the things that we are doing in terms of new products, the training that we do, the incentives that we put in place. We have got to focus on our business, and having competitors go out, yes, I think that will help. But we want to build our business whether or not there are competitors there.

Wonderful. Doug, congratulations, as well as you, Craig. I know both of you guys have been really instrumental in making this company turnaround, and I have all the faith.

Thank you, Abba. I appreciate that.

Evan Stein (ph), EOS.

Most of my questions have been answered, but let me try two. First of all, could you, just on the quarter, can you comment how much Forex helped revenues and profits?

At this point, I don't think there is not much from foreign exchange. It is interesting because everybody says the U.S. dollar is weakening, and that is the case in Japan and you know in the UK and in Canada a little bit. But it is offset -- we are almost offset totally by the devaluations that have taken place in the Dominican Republic. In Venezuela, I don't know if you noticed that Venezuela has been fairly constant at a $1600 to the dollar exchange. They just changed that to 1900 to the dollar. So it is basically for us it has been all offset, and we really do not have a huge benefit or a huge negative that has come from the exchange gains or losses for the quarter, so.

Fair enough. Then in terms of getting back to the U.S. and actually the foreign in terms of the number of distributors. The foreign distributors are really starting to pick up here, and I am on just wondering how much of that is from Synergy? Also, the U.S. seems to have stabilized. I am wondering some of the things that you are looking to do to get that moving as well?

I will let Craig talk about the detail numbers of the distributors. But I will just tell you from the U.S. standpoint I mentioned briefly that we are changing a little bit on our product introduction, our philosophy of the products that we will introduce and how we will do that -- timing and those kind of things.

We are also doing a lot to look at training and changing the way we do training. We do a lot of training at Nature's Sunshine. We are going to redo that and refocus. We just introduced a program at our leaders conference talking about that, but sort of the idea is to simplify it to some extent and redirect it and focus it on the basics of the business. We have been continuing to be impressed with the numbers of Nature's Sunshine managers in the United States.

We tend to look at that market and say, well, it is off a little bit or it is flat or whatever. But the exciting part of this is our Vice President of U.S. Sales and Marketing, Greg Holiday (ph), has been visiting really quite a few managers that are growing 15, 20 percent. The interesting thing is while there are some differences and things like that, we find that it is from focusing on the basics. By that I mean holding meetings, talking about products, (inaudible), just sort of basic kinds of things.

So the training that we do and some of the programs that we do really are going to be designed on how we get more people doing that because I think that proves the opportunity that we had. Abba asked if this is a mature market? Obviously not. As far as Nature's Sunshine is concerned, we have barely scratched the surface. So we need to get more people doing that and working on that, and that is what we our challenge is and what we are going to try to do.

I cannot go into a lot of detail on this, but we have some product introductions that hopefully I can talk to you about maybe next quarter or the quarter after that that are actually going to have incentives geared towards the marketing plan, a little bit of a change in terms of the approach incentive, and we think that is going to be a big product for us and may tend to, to use Abba's words, reignite at least part of the market. So there are some things we are doing. Plus there is some geographical focus that we are trying to put in place and that kind of thing.

So I guess there are a lot of things we are doing. Overall I just want to do understand or know that our commitment and challenge and what we are working at is getting that U.S. business going. It is really important to us as a company.

Just to give you some idea on the numbers of distributors. From our international operations, our distributors were 322,000. That is an 18 percent increase over prior year. Our managers were 8800 - 8900. That is a 17 percent increase. So they are increasing, but it is not just -- Synergy is doing great. Their number of distributors has increased about 30,000 over last year. Asia itself is only up 18, so you can see that we have decreased distributors mostly in our Korean operation, so those two offset. But the Americas are doing very well also.

Our other markets are up 13,000, or 18,000 distributors. Our Latin American markets are up 13,000 distributors. So the increase is not all associated with Synergy because everybody else is doing well also. But Synergy is up and does represent a good chunk of that.

Okay. Thanks very much. Congratulations on a very good quarter.

Michael Weiss (ph), Joclinda (ph) Capital.

Almost all my questions have been answered. I will let somebody else come in. Thanks.

Karen Lawrence, Nature's Sunshine. (technical difficulty)--. Abba Horovitz, Human (ph) Capital.

You had mentioned, Doug, that we can get the SG&A line down to possibly 24 percent over the next couple of years, I understand that. If that were to happen and we just keep the sales level flat, you would be able to earn over $2.00 a share just on my estimates. Am I correct here where we are going assuming 0 revenue growth?

No, Abba. You are really kind of putting me in a hard spot, but you might have some pretty big objectives. You are trying to force me to give you -- (multiple speakers) I am very interested. Let me just say this. I am very interested in that number and maybe more.

Basically we are talking about multiyear story here where you really see both a topline growth and a expense reduction, which will come together, merge together, and we will get some real leverage here on the bottom line where you would be able to probably record earnings over the next couple of years and that is your goal?

That is my goal, and I guess to put sort of a timeframe on it, we have sort of a three-year time window we are looking at as far as getting the SG&A down as well as the sales up, and that is where I am looking at is those three years. What I would like to see is gradual improvement over that period of time. That is the challenge. Yes, it is pretty exciting when you start looking at the possibilities.

Wonderful. Thanks, Doug.

(OPERATOR INSTRUCTIONS). Mr. Faggioli, I am showing there are no further questions. Did you have any closing comments?

I just wanted to say a few things. I appreciate your participation, your interest, your questions. As I mentioned, our challenges and opportunities here at Nature's Sunshine we feel good about we are doing and where we are headed, and we are trying to do the best thing for our managers and distributors and our shareholders. We think that going forward we are going to have some good things to talk about, and we look forward to that. We appreciate your interest as shareholders, and we look forward to the future. Thank you very much.

Thank you. A replay of this broadcast will be available until Sunday, March 7 at 12 midnight. You may access this replay by dialing 1-877-519-4471. The PIN number is 4505529. International callers dial 973-341-3080 and use the same PIN number. This replay is also available through the World Investor Links Website, www.vcall.com.

This does conclude today's teleconference. Please disconnect your lines at this time and have a wonderful day.