Nature's Sunshine Products Inc (NATR) 2024 Q3 法說會逐字稿

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, 2024. Joining us today are Nature's Sunshine CEO; Terrence Moorehead, CFO; Shane Jones and General Counsel; Nathan Brower.

大家下午好。感謝您參加今天的電話會議，討論自然陽光截至 2024 年 9 月 30 日第三季的財務業績。今天與我們一起參加的有 Nature's Sunshine 執行長；特倫斯·摩爾黑德（Terrence Moorehead），財務長； Shane Jones 和總法律顧問；內森·布勞爾。

(Operator Instructions)

（操作員指令）

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.

我想將電話轉給布勞爾先生，他將根據 1995 年《私人證券訴訟改革法案》的含義閱讀公司的安全港聲明，該聲明對前瞻性陳述提供了重要警告。內特，請繼續。

Thank you.

謝謝。

Good afternoon and thanks for joining our conference call to discuss our third quarter, 2024 financial results.

下午好，感謝您參加我們的電話會議討論我們 2024 年第三季的財務業績。

I'd like to remind everyone that this call is available for replay via telephonic dial in through November 21st and via a live webcast that will be posted in the investor relations portion of our website at ir.naturesunshine.com

我想提醒大家，本次電話會議可透過電話撥號重播至 11 月 21 日，也可透過網路直播重播，網路直播將發佈在我們網站 ir.naturesunshine.com 的投資者關係部分。

The information on this call contains forward-looking statements.

本次電話會議中的資訊包含前瞻性陳述。

These statements are often characterized by terminologies such as believe, hope, may, anticipate, expect, will and other similar expressions.

這些陳述通常以諸如相信、希望、可能、預期、期望、將和其他類似的表達方式為特徵。

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.

前瞻性陳述並不能保證未來的業績，實際結果可能與前瞻性陳述所暗示的結果有重大差異。

Factors that could cause results to differ materially from those implied therein, 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.

可能導致結果與本文所述結果有重大差異的因素包括但不限於公司在 10-K 表格年度報告中「風險因素」標題下披露的因素以及向美國證券交易委員會提交的其他報告中披露的因素。

The information on this call speaks only as of today's date and the company disclaims any duty to update the information provided herein.

本次電話會議中的資訊僅代表截至今日的觀點，本公司不承擔更新本次電話會議中提供的資訊的任何義務。

Now, I would like to turn the call over to the CEO of Nature's Sunshine Terrence Moorehead, Terence.

現在，我想將電話轉給 Nature's Sunshine 的執行長 Terrence Moorehead，Terence。

Thank you, Nate and good afternoon everyone. I want to thank you for joining today's call to discuss our third quarter results.

謝謝你，Nate，大家下午好。感謝您參加今天的電話會議討論我們的第三季業績。

During the third quarter, we continued to make good progress, executing our global growth strategies and the investments that we've made to expand our digital capabilities, improve our consumer proposition, strengthen our brand presence and drive out cost. All combined to help drive performance in the third quarter.

第三季度，我們繼續取得良好進展，執行我們的全球成長策略和投資，以擴大我們的數位能力，改善我們的消費者主張，加強我們的品牌影響力並降低成本。所有這些因素共同推動了第三季的業績。

While each of the initiatives is at a different stage of execution. We're excited about the actions we've taken to advance our strategic agenda and remain confident that our omni channel approach will allow us to attract and retain more customers drive profitable growth and build shareholder value.

儘管每個舉措都處於不同的執行階段。我們對推動策略議程的行動感到非常興奮，並堅信全通路方式將使我們能夠吸引和留住更多客戶，推動獲利成長並創造股東價值。

Our plans are clearly benefiting the business as the third quarter delivered the highest sales volume this year with $114.6 million of sales up 4% versus prior year on a local currency basis.

我們的計劃顯然使業務受益，因為第三季的銷售量是今年最高的，達到 1.146 億美元，以當地貨幣計算比上年增長 4%。

The strong third quarter results were driven by a positive consumer response to our global growth strategies and the actions we've taken to amplify (those) strategies in the second quarter.

第三季強勁的業績得益於消費者對我們的全球成長策略的積極反應，以及我們在第二季度為擴大（這些）策略而採取的行動。

As you may remember in the second quarter, we upgraded our digital platform in North America made the strategic move to rebalance our portfolio in key markets in Asia Pacific and implemented incremental cost savings initiatives to improve productivity.

您可能還記得，在第二季度，我們升級了北美的數位平台，採取了戰略舉措，重新平衡了亞太地區主要市場的投資組合，並實施了漸進式成本節約舉措以提高生產力。

With respect to our first strategic action. We were excited to upgrade North America's digital platform with new technology and improved mobile first capabilities.

關於我們的第一個戰略行動。我們很高興能夠利用新技術和改進的行動優先功能來升級北美的數位平台。

The changes helped improve site load speeds, conversion rates and stability. While creating a pathway for continued improvements in the future.

這些變化有助於提高網站的載入速度、轉換率和穩定性。同時為未來持續改善創造道路。

We believe these improvements will continue to support meaningful growth. And in the third quarter, digital sales grew 17% in North America as we continued to see a positive consumer response to the brand. Moving forward, we'll continue to invest in our digital capabilities by improving and expanding the tools that are available to our nutritional health practitioners and specialty retailers.

我們相信這些改進將繼續支持有意義的成長。第三季度，北美數位銷售額成長了 17%，我們繼續看到消費者對該品牌的正面反應。展望未來，我們將繼續投資於我們的數位化能力，改善和擴展我們營養保健從業者和專業零售商可用的工具。

Over time, we believe the changes will help improve the performance of distributors. Looking for a stronger more modern platform which is an exciting opportunity.

隨著時間的推移，我們相信這些變化將有助於提高經銷商的表現。尋找更強大、更現代化的平台，這是一個令人興奮的機會。

Overall, North America sales were down about 3% which is a slight improvement on a consecutive basis versus the second quarter.

總體而言，北美銷售額下降約 3%，與第二季相比連續略有改善。

Longer term, we expect to see positive momentum from the North American business as our OMNI channel approach continues to build momentum, and as we invest in more powerful tools for our nutritional health practitioners and specialty retailers.

從長遠來看，隨著我們的 OMNI 通路方法繼續增強勢頭，以及我們為營養健康從業者和專業零售商投資更強大的工具，我們預計北美業務將呈現積極勢頭。

Regarding our second strategic action, we placed greater emphasis on introducing more consumer friendly products packs in markets like South Korea, Taiwan and Japan.

關於我們的第二項策略行動，我們更重視在韓國、台灣和日本等市場推出更多適合消費者的產品包裝。

We also invested in field activation to support these programs and generate incremental field activity.

我們還投資了現場激活來支援這些計劃並產生增量現場活動。

The strategy paid strong dividends in the third quarter as customer and order growth surged, leading to significant sales increases in Korea, Taiwan and Japan of 3%, 20% and 34% respectively.

該策略在第三季獲得了豐厚回報，客戶和訂單大幅成長，韓國、台灣和日本的銷售額分別大幅成長 3%、20% 和 34%。

China is a different story.

中國的情況則不同。

Our research suggests that consumers continue to have favorable attitudes towards supplements. But the sharp downturn in the macroeconomic environment has negatively affected their willingness to spend leading to more cautious purchase behavior.

我們的研究表明，消費者對補充劑仍然持積極態度。但宏觀經濟環境的急劇下滑，對消費者的消費意願產生了負面影響，導致其購買行為更加謹慎。

As a result, China's third quarter sales decreased 23% versus prior year in local currency.

因此，中國第三季的銷售額以當地貨幣計算較上年同期下降了 23%。

We continue to believe that digital live streaming is a powerful tool with significant upside potential. And our long term goal is to expand our digital live streaming platform to allow us to attract and retain more new customers by first strengthening our product line to offer more consumer friendly solutions. Second, upgrading our branding and packaging to align with consumer preferences. And third, introducing a localized version of our successful subscribe and thrive auto ship program to encourage and reward repeat purchases.

我們仍然相信數位直播是一個強大的工具，具有巨大的上升潛力。我們的長期目標是擴大我們的數位直播平台，首先加強我們的產品線，提供更多消費者友善的解決方案，從而吸引和留住更多的新客戶。第二，升級我們的品牌和包裝，以符合消費者的喜好。第三，推出我們成功的訂閱和自動發貨計劃的本地化版本，以鼓勵和獎勵重複購買。

Overall, we're pleased with the consumers' response to our growth strategies as third quarter sales in Asia Pacific increased 9% versus prior year on a local currency basis.

總體而言，我們對消費者對我們的成長策略的反應感到滿意，因為亞太地區第三季的銷售額以當地貨幣計算較上年增長了 9%。

Our plans to improve performance by building a more attractive consumer friendly proposition appear to be working and we believe our results are illustrative of the long-term potential these markets represent. Our third strategic action focused on delivering $5 million of annualized cost savings that allowed us to continue to fund strategic investments while contributing to improved profitability for the quarter adjusted EBITDA was strong coming in at $10.7 million which was a 5% increase versus prior year. In closing, we're very pleased with the quarter and with the direction we're taking, and we continue to be excited about the long-term potential of our omni channel business. Once again, we believe the recent changes we've made will lead to a better shopping experience while giving our distributors a more powerful set of tools to build their businesses. Ultimately, that will allow us to attract and retain more customers drive order growth and build sustainable profitable growth to create shareholder value. And with that, I want to turn the call over to our Chief Financial Officer, Shane Jones, Shane.

我們透過建立更具吸引力的消費者友善主張來提高績效的計劃似乎正在奏效，我們相信我們的結果說明了這些市場所代表的長期潛力。我們的第三個策略行動重點是實現 500 萬美元的年度成本節約，這使我們能夠繼續為戰略投資提供資金，同時有助於提高本季的盈利能力，調整後的 EBITDA 強勁增長至 1070 萬美元，比上年增長 5%。最後，我們對本季的表現以及我們所採取的方向感到非常滿意，我們繼續對全通路業務的長期潛力感到興奮。我們再次相信，我們最近所做的改變將帶來更好的購物體驗，同時為我們的經銷商提供更強大的工具來發展他們的業務。最終，這將使我們能夠吸引和留住更多客戶，推動訂單成長並實現可持續的獲利成長，從而創造股東價值。接下來，我想將電話轉給我們的財務長 Shane Jones，Shane。

Thank you, Terrence. Moving to our third quarter results, net sales in the third quarter were $114.6 million compared to $111.2 million in the year ago quarter. A 3% increase versus the prior year or a 4% increase excluding the impact from foreign exchange rates. As Terence discussed, this was driven by strong performance in Taiwan and Japan and outperformance in Central Europe partially offset by continued weakness in China.

謝謝你，特倫斯。查看我們第三季的業績，第三季的淨銷售額為 1.146 億美元，而去年同期為 1.112 億美元。較上年成長 3%，若不計外匯匯率的影響則成長 4%。正如特倫斯 (Terence) 所討論的，這是由於台灣和日本的強勁表現以及中歐的優異表現，但被中國持續的疲軟部分抵消。

Now diving into more detail on our regional performance, I'll start with APAC. In Asia Pacific, we reported growth of 6% to $55.3 million or up 9% when excluding the impact of foreign exchange. This was largely driven by a resurgence of growth in Japan and Taiwan, which were up on a constant currency basis by 34% and 20% respectively.

現在深入了解我們的區域表現，我將從亞太地區開始。在亞太地區，我們的營收成長了 6%，達到 5,530 萬美元，若排除外匯影響則成長了 9%。這主要是由於日本和台灣經濟復甦的推動，以固定匯率計算，這兩個地區的經濟分別成長了 34％ 和 20％。

This was led by a powerful customer response to our field activation initiatives and a surge in new customers. We're very pleased with the momentum driven by our growth strategies and the resulting acceleration in these important markets. While we expect meaningful growth in these markets in Q4 and into 2025 we do not expect growth at the levels achieved this quarter. In South Korea, we are gaining confidence in this market's turnaround, both new customers and average order value improved year over year resulting in 3% constant currency growth in the quarter. We're encouraged by the progress made in Korea this year and expect continued measured improvement, offsetting an otherwise strong quarter on APAC was the continued macroeconomic weakness in China where Q3 revenue declined 23% in constant currency.

這是由於客戶對我們的現場啟動舉措的強烈反應以及新客戶的激增。我們對我們的成長策略所推動的勢頭以及由此在這些重要市場所取得的加速發展感到非常高興。雖然我們預計這些市場在第四季和 2025 年將實現有意義的成長，但我們預計成長不會達到本季的水平。在韓國，我們對該市場的復甦越來越有信心，新客戶和平均訂單價值同比都有所提高，導致本季以固定匯率計算成長了 3%。我們對今年韓國的進展感到鼓舞，並預計將繼續取得穩步改善，抵消亞太地區本季強勁表現的是中國宏觀經濟持續疲軟的影響，按固定匯率計算，中國第三季度收入下降了 23%。

While we are working hard to refine our value proposition and reenergize customer demand in this market.

我們正在努力完善我們的價值主張並重新激發該市場的客戶需求。

The sharp downturn in the macroeconomic environment for the chinese consumer continues to negatively impact consumer spending. The resulting sales declines in China are likely to moderate going forward but it will take some time to get back on a growth trajectory.

中國消費者宏觀經濟環境的急劇下滑持續對消費支出產生負面影響。由此導致的中國銷售額下滑未來可能會有所緩和，但恢復成長軌道則需要一段時間。

Our European business continues to operate well in a challenging environment. Q3 sales increased 5% or 3% in local currency.

我們的歐洲業務在充滿挑戰的環境中繼續運作良好。第三季銷售額成長 5%，以當地貨幣計算成長 3%。

Central Europe continued to perform exceptionally well. Growing sales by 23% or 17% in local currency. Largely driven by a positive response to our recently launched powerline products as well as continued new market expansion in the Baltic region.

中歐地區持續表現出色。銷售額成長 23%，以當地貨幣計算則成長 17%。這很大程度上得益於我們最近推出的電力線產品的積極響應以及波羅的海地區新市場的持續擴張。

Our teams also continued to do a remarkable job keeping our Eastern European market stable given the protracted war in Ukraine. Looking at our North America business, our third quarter net sales were down 3%. As discussed on our last earnings call. We upgraded our digital platform in North America to strengthen our digital capabilities and improve mobile first performance. This is an exciting transformation that will enhance the customer experience, improve site performance and benefit both distributors and consumers. While the transition has resulted in a short-term dip in customer acquisition and efficiency of media spend, we are very encouraged by improvement across our key customer metrics and the resulting robust growth in our digital business. In Q3, our North America digital business grew 17% bolstered by improvement in both conversion and retention.

儘管烏克蘭戰爭曠日持久，我們的團隊仍繼續出色地保持東歐市場的穩定。縱觀我們的北美業務，我們第三季的淨銷售額下降了 3%。正如我們上次財報電話會議上所討論的。我們升級了北美的數位平台，以增強我們的數位能力並提高行動優先的效能。這是一次令人興奮的轉變，它將增強客戶體驗、提高網站效能並使經銷商和消費者受益。雖然這項轉變導致客戶獲取量和媒體支出效率在短期內下降，但我們對關鍵客戶指標的改善以及隨之而來的數位業務強勁成長感到非常鼓舞。第三季度，由於轉換率和保留率的提高，我們的北美數位業務成長了 17%。

Gross margin in the third quarter decreased 172 basis points to 71.3% compared to 73.1% a year ago.

第三季毛利率為 71.3%，較去年同期的 73.1% 下降 172 個基點。

The decrease was primarily driven by higher inflation and unfavorable foreign currency exchange which in Q3 continued to mask the favorable results of our savings initiatives.

下降的主要原因是通貨膨脹率上升和外匯匯率不利，這在第三季度繼續掩蓋了我們的儲蓄計劃的良好結果。

We expect sequential improvement in gross margin for Q4 with the full results of our savings initiatives becoming more apparent in our consolidated financial results in 2025. Volume incentives as a percentage of net sales were 31.0% compared to 30.7% in the year ago quarter. The increase was primarily driven due to changes in market mix selling general and administrative expenses during the third quarter were $41 million compared to $41.3 million in the year ago quarter.

我們預計第四季度的毛利率將連續改善，我們的節約計畫的全部成果將在 2025 年的綜合財務表現中更加明顯。銷售獎勵佔淨銷售額的百分比為 31.0%，去年同期為 30.7%。成長的主要原因是市場組合銷售變化，第三季一般及行政開支為 4,100 萬美元，而去年同期為 4,130 萬美元。

As a percentage of net sales SG&A expenses were 35.7% in the third quarter compared to 37.1% last year.

第三季銷售、一般及行政支出佔淨銷售額的百分比為 35.7%，去年同期為 37.1%。

We are seeing the benefit of the $5 million of cost out actions taken in Q2 and continue to look for additional opportunities to increase efficiency and reduce waste.

我們看到了第二季採取的 500 萬美元成本削減行動帶來的效益，並將繼續尋找提高效率和減少浪費的更多機會。

We also note that Q3 had roughly $1 million of onetime expenses that distort our true run rate.

我們還注意到，第三季的一次性支出約為 100 萬美元，這扭曲了我們的真實運行率。

Operating income decreased to $5.3 million or 4.6% of net sales compared to $5.8 million or 5.2% of net sales in the year ago quarter, GAAP net income attributable to common shareholders for the third quarter was $4.3 million or $0.23 per diluted common share compared to $2.8 million or $0.14 per diluted share In the year ago quarter adjusted EBITDA as defined in our earnings release increased 5% to $10.7 million compared to $10.3 million in the year ago quarter.

營業收入下降至 530 萬美元，佔淨銷售額的 4.6%，而去年同期為 580 萬美元，佔淨銷售額的 5.2%，第三季度歸屬於普通股股東的 GAAP 淨收入為 430 萬美元，即每股攤薄普通股 0.23 美元，而去年同期為 280 萬美元，即每股收益 15% 調整後的成本，至 1,070 萬美元，而去年同期為 1,030 萬美元。

Our balance sheet remains clean with cash and cash equivalents of $78.7 million and 0 debt. Inventory was $62.3 million at the end of the third quarter, which is $4.6 million less than we ended 2023.

我們的資產負債表保持清晰，現金和現金等價物為 7,870 萬美元，且無債務。第三季末的庫存為 6,230 萬美元，比 2023 年底的庫存減少 460 萬美元。

Net cash provided by operating activities was $13.1 million compared to $31.6 million in the prior year period.

經營活動產生的淨現金為 1,310 萬美元，去年同期為 3,160 萬美元。

The decline in operating cash flows versus prior year was driven by the timing of payments for accrued liabilities and receivables offset by reductions in inventory.

與前一年相比，經營現金流量的下降是由於應計負債和應收帳款的付款時間減少，但庫存減少所抵消。

We repurchased approximately $8.4 million worth of stock year-to-date with $9.2 million remaining on our $30 million share repurchase program.

我們今年迄今已回購了價值約 840 萬美元的股票，而我們 3,000 萬美元的股票回購計畫還剩餘 920 萬美元。

Looking beyond share repurchases our healthy capital allocation structure positions us very well to continue our digital transformation and other strategic initiatives.

除了股票回購之外，我們健康的資本配置結構使我們能夠很好地繼續進行數位轉型和其他策略計畫。

Now turning to our 2024 outlook given our third quarter sales performance and expectations for the remainder of the year, we are raising our prior range and now expect full year 2024 net sales to range between $443 million and $448 million from the $436 million to $445 million. Communicated last quarter for adjusted EBITDA We are also increasing the low end of our range to be $40 million to $42 million versus the previous range of $39 million to $42 million.

現在轉向我們的 2024 年展望，考慮到我們第三季的銷售業績和對今年剩餘時間的預期，我們提高了先前的預期範圍，現在預計 2024 年全年淨銷售額將在 4.43 億美元至 4.48 億美元之間，範圍從 4.36 億美元至 4.45 億美元。上個季度，我們發布了調整後 EBITDA 報告，我們將範圍的低端從之前的 3900 萬美元到 4200 萬美元提高到 4000 萬美元到 4200 萬美元。

In summary, we are pleased with our third quarter results and remain encouraged by the opportunity in front of us. We are seeing meaningful progress on our initiatives and acceleration in several key areas of the business.

總而言之，我們對第三季的業績感到滿意，並對我們面前的機會感到鼓舞。我們看到，我們在業務的幾個關鍵領域的舉措和加速都取得了有意義的進展。

In addition, we have taken steps to improve efficiency, reduce cost and position ourselves to accelerate profitability as the business continues to grow.

此外，隨著業務的不斷成長，我們也採取措施提高效率，降低成本，以加速獲利。

We are confident that these measures will lead to significant shareholder value in 2025 and beyond.

我們相信，這些措施將在 2025 年及以後為股東帶來顯著價值。

Now, I will turn the time back to the operator.

現在，我將把時間交還給接線員。

Thank you, sir.

謝謝您，先生。

(Operator Instructions)

（操作員指令）

Our first question will come from the line of Susan Anderson from (canaccordgenuity).

我們的第一個問題來自 Susan Anderson（可以符合天才）。

(Operator Instructions)

（操作員指令）

Nice job on the quarter. I was wondering, hi, how's it going? I guess just on the guide, the updated guide. Good to see the raise there. It's, I guess it implies maybe fourth quarter will be flattish. You said something about the sales growth you saw in Asia, not continuing. Maybe if you could just give some more color on kind of by region, how you expect that to pan out and to get to the guide for the year. Thanks.

本季表現良好。我想知道，嗨，一切順利嗎？我猜只是指南，更新後的指南。很高興看到那裡的加薪。我猜這意味著第四季度可能會持平。您之前說過亞洲的銷售成長並未持續下去。也許您可以根據地區提供更多詳細信息，說明您預計其將如何發展並獲得年度指南。謝謝。

Oh, you know what, Shane, why don't you take that one?

哦，你知道嗎，肖恩，你為什麼不接受這個？

Absolutely. Yes. That, as you noted, that implies a Q4 of down 2% to up 2%. So a flattish Q4 on the top line. As, as we look at where that comes from in the APAC region, as you know, we had very strong results in Taiwan and Japan. Some of that (very, that) strength, a portion of that is some timing such that it will be a little bit less, but we pulled a little bit of Q4 into Q3. So although we expect to continue to see strong results in those regions, it won't be at the rate that we've seen, it will be a lesser in Q4. And then obviously, we'll have growth, strong growth next year as well, as we look at China, China will continue to be, the trend will get a little bit better than what it's been. As far as down, it won't be down as much, but we will still be down significantly. As we look at central Europe, we, we expected to see similar results to Q3 there. And then in North America, our digital business will continue to perform well. But in a similar, you know, high 10s to 20% ish growth there and we do expect to be see some continued headwinds in the North America core business that will offset that. So that's the detail by region.

絕對地。是的。正如您所提到的，這意味著第四季度的銷售額將從下降 2% 成長 2%。因此第四季的營收表現持平。正如我們觀察亞太地區的情況一樣，如您所知，我們在台灣和日本取得了非常強勁的業績。其中的一些（非常，那種）力量，其中的一部分是一些時間，因此它會少一點，但我們將 Q4 的一點點拉到了 Q3。因此，儘管我們預計這些地區將繼續取得強勁業績，但其成長速度不會像我們已經看到的那樣，第四季度的增幅會較低。顯然，明年我們也將成長，強勁成長。至於下降，雖然不會下降那麼多，但仍會大幅下降。當我們放眼中歐時，我們預計那裡將看到與第三季類似的結果。在北美，我們的數位業務將繼續表現良好。但在類似的，你知道，那裡的成長率高達 10% 到 20% 左右的情況下，我們確實預期北美核心業務將持續面臨一些阻力，抵消這一影響。這就是按地區劃分的詳細情況。

Okay, great. That's really helpful. And then maybe if you could just talk about the new consumer products pack that you introduced in the markets in Asia, I guess, you know, I guess what are those Entel? And then also if you could talk about the performance of the power line, both in the US and internationally and I guess, should we expect more product to be introduced down the road in the power line? Thanks.

好的，太好了。這真的很有幫助。然後，如果您可以談談您在亞洲市場推出的新消費產品包，我想，您知道，我想那些是什麼 Entel？另外，如果您可以談談電力線在美國和國際上的性能，我想，我們是否應該期待未來在電力線上推出更多產品？謝謝。

Yeah, sure, absolutely. So as it relates to the kind of the rebalancing the portfolio in APAC and some of the packs we put in place, really, what we've done is trying to make a migration. And, you know, obviously the old products are still there, but they were selling a lot of detox products. So it was a heavy focus on detox. And as you might imagine, you can only detox so many times a year and there are only so many people that would do detox. So really it was a shift in focus adding kind of on top of that kind of more vitality driven packs that we were selling, that would A appeal to a broader range of people, but also would encourage people to purchase more frequently and kind of more often. So it's a nice shift and we also kind of rebalance the the price of those packs slightly. So initially, what we knew we were going to see was more people coming in driving new customer growth, driving order growth with some, you know, kind of slightly lower average order in the near term. But that has since been offset by kind of the volume of new customers and new orders that we're getting in and the repeat orders that we're getting from that as we're migrating people into our subscription programs. So really pleased about that, your the second piece of your question on the, the power line of great progress in Europe with the power line. It is kind of one of our top products. It represents an increasing percentage of sales in, in Europe, North America sales, you know, kind of achieving kind of near double digit growth as we continue to a year-to-date as we continue to sell those products into the marketplace, we'll continue to, I think very, you know, kind of cautiously and appropriately expand the line. We don't want to kind of balloon the line up too much. It really is all about improving people's metabolic performance. And so the, the greens, the beats and the meal product are truly foundational breakthrough products in each one of their respective areas. But now we're going to shift into and you'll see it kind of actually in the back half of 2025 really much more aggressively marketing all three of those products as a system. So we're excited about what lies ahead for the, for the power line. They're great products. They are like I said, breakthrough kind of results and breakthrough products in each one of their respective categories. But when you combine them, they really do start to have some pretty incredible results that they have, they're capable of delivering from the standpoint of improving people's metabolic performance. So I hope that answers your question.

是的，當然，絕對是。因此，就其與亞太地區投資組合的重新平衡以及我們實施的一些方案而言，我們實際上所做的就是嘗試進行遷移。而且，你知道，舊產品顯然仍然存在，但他們銷售了許多排毒產品。因此，我們非常重視排毒。你可能想像到，每年你只能排毒這麼多次，而且排毒的人也只有這麼多。因此，這實際上是一種焦點的轉移，在我們銷售的更有活力的包裝的基礎上添加一些內容，這不僅可以吸引更廣泛的人群，還可以鼓勵人們更頻繁地購買。所以這是一個很好的轉變，我們也稍微重新平衡了這些包的價格。因此最初，我們知道會看到更多的人湧入，推動新客戶成長，推動訂單成長，但短期內平均訂單量會略有下降。但隨著我們將人們遷移到我們的訂閱計劃中，這一增長已經被我們獲得的新客戶和新訂單的數量以及由此獲得的重複訂單所抵消。所以真的很高興，你提出的第二個問題是關於歐洲電力線的巨大進步。它是我們的頂級產品之一。它代表著我們在歐洲、北美的銷售百分比不斷增加，隨著我們年初至今繼續向市場銷售這些產品，實現了接近兩位數的增長，我認為我們將繼續非常謹慎和適當地擴大產品線。我們不想讓排隊人數太過龐大。這實際上是為了提高人們的新陳代謝性能。因此，綠色產品、節拍產品和膳食產品在各自的領域中真正是基礎性的突破性產品。但現在我們將轉向，你會看到在 2025 年下半年，我們將更積極地將這三種產品作為一個系統進行行銷。因此，我們對電力線的前景感到興奮。它們都是很棒的產品。就像我說的，它們在各自的類別中都取得了突破性的成果，並取得了突破性的產品。但當你將它們結合起來時，它們確實開始產生一些非常令人難以置信的效果，從改善人們的新陳代謝性能的角度來看，它們能夠發揮作用。我希望這能回答你的問題。

Yeah, that was great. Thanks so much for all the details. I'll go ahead and pass it along. Good luck the rest of the year.

是的，非常棒。非常感謝您提供的所有詳細資訊。我會繼續並將其傳遞下去。祝今年餘下的時間一切順利。

Thank you.

謝謝。

(Operator Instructions)

（操作員指令）

Now for our next question, this will come from the line of Ms. Linda Bolton Weiser from D A Davidson.

下一個問題來自 D A Davidson 的 Linda Bolton Weiser 女士。

(Operator Instructions)

（操作員指令）

I missed the very part of your narrative in the beginning. But somebody referred to headwinds in your North American core business. Can you just give a little more color? What are you referring to? Is that just the kind of strapped consumer situation or is there something else you're, you're talking about?

我錯過了你一開始敘述的部分。但有人提到你們在北美核心業務方面遇到了阻力。能再多給點顏色看看嗎？你指的是什麼？這只是消費者陷入困境的狀況，還是您在談論其他事情？

Yeah, there's a piece of it where consumers are just a little strapped and you know, kind of holding back on some purchases to a minor extent. Another piece of it is, you know, when we made the switch to our digital platform, we did the consumer kind of facing piece first and then there's a follow on piece for the, you know, kind of the back end for distributors and helping them process their customer orders. So that's just coming online and, we'll see the full alignment as we get further into the of kind of the systems as we get into the, into the fourth quarter. So it's just kind of a natural progression of moving our platform around and having some friction points that are a result of that. But you know, kind of, I think by the time we get through the fourth quarter, all of those friction points will be taken care of will be addressed. And then it will simply be a matter of just helping people kind of build momentum and get back on track. So that's really what we're talking about, what we were speaking to Linda.

是的，確實存在這樣的情況，即消費者手頭有點拮据，他們會在一定程度上抑制購買。另一部分是，當我們轉換到數位平台時，我們先做面向消費者的部分，然後再做後續的部分，也就是面向經銷商的後端，幫助他們處理客戶訂單。這才剛剛上線，隨著我們進入第四季度，對系統進行進一步的了解，我們將看到全面的調整。因此，這只是我們平台移動的自然過程，也會跟著產生一些摩擦點。但你知道，我認為到第四季時，所有這些摩擦點都會得到解決。然後這將只是幫助人們累積動力並回到正軌的問題。這就是我們正在談論的、與琳達交談的內容。

Okay, thank you. And then I'm just wondering again, I'm sorry if I missed this, but I know you have the initiative to you know and reduce cost and improve efficiencies to help gross margin. You had some targets for that. Can you just talk about how that's going and whether you're on target and will there be any more savings in 2025? And then second part on the cost is I think you had mentioned at one point, some shortages are hard to get certain herbs and things like that. Are there any shortages or any other issues with any of your inputs at this point?

好的，謝謝。然後我再次想知道，如果我錯過了這一點，我很抱歉，但我知道你有主動性，你知道，降低成本，提高效率，以幫助提高毛利率。你對此有一些目標。您能否談談進展如何、是否達到了目標以及 2025 年是否還會有更多的節省？然後關於成本的第二部分，我認為你曾經提到過，由於某些物資短缺，很難獲得某些草藥和類似的東西。目前您的投入是否有任何短缺或其他問題？

Yeah. Okay. Absolutely. You know, I'll start and then I'll let Shane elaborate. So as it relates to our gross margin savings initiatives. We are on track. The team has done an incredible job of driving of identifying the savings and then kind of driving them through the system. We're starting to see some of those savings come through. And I'll let Shane speak to some of the challenges that we're facing that would kind of mask some of those results. But, as far as the savings that we said, we were going to chase after the team has really done everything that they said they're going to do and, we do believe there's more upside opportunity going forward as we get into 2025. Second part of your question was.

是的。好的。絕對地。你知道，我先開始，然後讓 Shane 詳細說明。因此這與我們的毛利率節約計劃有關。我們正步入正軌。該團隊在確定節省金額並將其通過系統推行方面做得非常出色。我們開始看到部分節省的效果。我讓肖恩談談我們面臨的一些挑戰，這些挑戰可能會掩蓋一些結果。但是，就我們所說的節省而言，我們將在團隊真正完成他們所說的一切之後進行追求，並且我們確實相信，隨著進入 2025 年，未來還會有更多的上行機會。您的問題的第二部分是。

It was about any shortages of herbs or any other kind of input?

是否涉及草藥或其他種類投入的短缺？

You know, there's intermittently, there might be something, you know, kind of right now, I think supplies are, are actually, you know, kind of very good. The supply chain team has been identifying, you know, there's the things that are like I said, intermittently, challenging and then there are other things that are just, you know, they're just hard to get, you know, frequently we're dealing with, with some rare, you know, kind of hard to find ingredients. And so we're going through a process in many cases of reformulating products so that we can just overcome that and improve our service levels. But right now Linda, there's really nothing that is a real barrier from a supply chain product availability standpoint, Shane, you want to add some commentary around and color around the savings.

你知道，偶爾會有某種情況，你知道，現在，我認為供應實際上非常好。供應鏈團隊一直在辨識一些像我說過的、時常具有挑戰性的事情，還有一些很難取得的事情，我們經常要處理一些稀有的、難以找到的原料。因此，在許多情況下，我們都在經歷重新配製產品的過程，以便我們能夠克服這個問題並提高我們的服務水準。但現在，琳達，從供應鏈產品可用性的角度來看，實際上沒有什麼是真正的障礙，肖恩，你想在節省方面添加一些評論和色彩。

Sure. First of all, Linda to give you a little more detail. Last year, we realized about $3 million in the previous year in 2023 of those savings as they were just starting to roll on, this year we expect to have a see about a year-to-date we've gotten most of this already another an additional $7 million. So, by the end of the year, we will have achieved that $10 million target. We do expect going forward in the next year as Terrence noticed or noted additional savings to come in as well. So, we will exceed that target, but it has been masked. So far in that we have seen a significant amount of headwind in FX rates as well as inflation that has made it so that those improvements have not been, you know, it's been difficult to see in our P&L we do expect that we are at your inflection point at this point. In that you'll see improvement in Q4, we expect inflection and improvement in Q4 gross margin rates and then a meaningful increase as we go into next year as well.

當然。首先，Linda 將向您提供更詳細的資訊。去年，我們在 2023 年實現了約 300 萬美元的節省，這些節省才剛開始，今年我們預計，到目前為止，我們已經獲得了大部分節省，另外還有 700 萬美元。因此，到今年年底，我們將實現 1000 萬美元的目標。我們確實預計明年還會有進一步的儲蓄，因為 Terrence 也注意到了或記下了額外的儲蓄。因此，我們將超越這一目標，但它已經被掩蓋了。到目前為止，我們已經看到外匯匯率和通貨膨脹方面存在相當大的阻力，這使得這些改革並沒有實現，你知道，在我們的損益表中很難看到這一點，我們確實預計我們此時正處於拐點。您將看到第四季度的情況有所改善，我們預計第四季度的毛利率將出現轉折點和改善，並且進入明年也將出現有意義的成長。

Okay. Thank you very much. I appreciate it.

好的。非常感謝。我很感激。

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

到此，我們的問答環節就結束了。現在我想將發言權交還給莫爾黑德先生，請他作最後發言。

Okay. Thank you. And finally, you know, we'd like to thank everybody for listening to today's call and we look forward to speaking with you when we report our fourth quarter and full year result in 2025. Thanks again for joining us and take care.

好的。謝謝。最後，我們要感謝大家聆聽今天的電話會議，我們期待在報告 2025 年第四季和全年業績時與您交談。再次感謝您的加入並保重。

(Operator Instructions)

（操作員指令）