Nature's Sunshine Products (NATR) Q1 2021 Earnings Call Transcript

Nature's Sunshine Products (NATR 1.34%)
Q1 2021 Earnings Call
May 06, 2021, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, everyone, and thank you for participating in today's conference call to discuss Nature's Sunshine's financial results for the first quarter ended March 31, 2021. Joining us today are Nature Sunshine's CEO, Terrence Moorehead; CFO; Joseph Baty; and executive vice president and general counsel, Nathan Brower. Following their remarks, we'll open the call for your 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. Nathan, please go ahead.

Nathan Brower -- Executive Vice President and General Counsel

Thank you. Good afternoon, and thanks to all of you for joining our conference call to discuss our first-quarter 2021 financial results. I'd like to remind everyone that this call is available for replay via telephonic dial-ins through May '20 and via a live webcast that will be posted in the Investor Relations portion of our website at naturessunshine.com. The information on this call may contain certain forward-looking statements.

These statements are often characterized by terminology 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 imply forward-looking statements. Factors that could cause results to differ materially from those implied on this call 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 in 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'd like to turn the call over to the CEO of Nature's Sunshine, Mr. Terrence Moorehead. Terrence?

Terrence Moorehead -- Chief Executive Officer

Thank you, Nate, and good afternoon, everyone, and thank you for joining today's call. It's a pleasure to be here with you today as we continue our journey to transform our company. We continue to make excellent progress against our global strategies as we build momentum and strengthen our business. As a result of our efforts, I'm pleased to say that Nature's Sunshine was recently honored by the American business awards with six Stevie awards.

The awards include recognition for digital website achievements, achievement in management, brand renovation of the year, organizational recovery, most valuable COVID response, and customer service team of the year. The awards are a reaffirmation of the work we've done, but of course, our goal is to continue to transform the business and deliver exciting and innovative change that delivers historic results. And in the first quarter of 2021, we continue to make progress on our journey, while delivering another quarter of record-breaking results. I'm pleased to announce our third quarter -- excuse me, our third consecutive quarter of net sales over $100 million.

And once again, for the third consecutive quarter, we delivered the largest sales in the 49-year history of our company, outperforming the previous two quarters that also delivered historic results. Overall, consolidated first-quarter net sales came in at $102.4 million, up 7% versus the first quarter of 2020. Our Asian, Latin American, and European operating business units all reported robust growth for the quarter. North America was down slightly, but we're actually very pleased with the progress that we've seen with our North American business unit, and I'll share some additional insights later in the update.

I believe it's important to note that the entire team at Nature's Sunshine continues to remain focused in our passion and commitment to sharing the healing power of nature is stronger than ever. We're very pleased with the momentum we're seeing in the business and believe our first-quarter results underscore the progress we've made, repositioning our company for sustainable growth. Specifically, in the first quarter, top-line results benefited from our ability to execute against our five global growth strategies, brand power, field energy, digital-first, Manufacturing, Inc., and the right stuff, which led to the record-breaking performance across the business. Our strong performance was driven by increased customer growth and the continued positive response to our transformation initiatives by our incredible practitioners and retailers who have remained vigilant throughout.

Our strategies also helped to deliver improvements to the bottom line as adjusted net income attributable to common shareholders increased 68% to $4.1 million, and adjusted EBITDA increased 20% to $11.6 million. I'll provide a more comprehensive overview on our strategies a bit later. But first, I'd like to share a few key highlights from each of our views. Starting with North America.

We're reporting a 3% decrease in sales for the first quarter, with sales in NSP U.S. coming in relatively flat, down 1%, following four consecutive quarters of strong growth. Despite the slight decline in sales, there are actually quite a few encouraging signs as we see the underlying fundamentals behind the business continue to improve. Remember, at the end of the first quarter of 2020, U.S.

consumers were stockpiling goods, the onset of the pandemic. This resulted in a terrible first quarter. So we're pleased that we only saw a slight decline in sales. What's really encouraging, however, is that our award-winning branding and website are helping to generate more traffic to the business.

And as consumers continue to prioritize their health, we're seeing customer growth accelerate and an uptick in engagement. A good example is the increase in the number of people signing up for our Subscribe to Thrive auto-ship program, which now represents more than 25% of our orders in the U.S. We've already doubled the number of people in the program, and as we move forward, we'll continue to focus on driving customer growth and aggressively expanding Subscribe and Thrive, as we believe this will significantly improve our long-term growth potential. In the meantime, the team continues to make excellent progress implementing the new business model and a quick look at the team's performance in April suggests that they're on track to deliver strong growth with solid increases in customer acquisition, orders, and sales.

We look forward to rolling out the next generation of enhancements to the business model in the second half of the year, and we'll continue to fine-tune our key initiatives as we build momentum. Moving to Asia. We saw sales for the quarter grew 9% in local currency, driven by 38% growth in China and 44% growth in Japan, both on a local-currency basis. China's growth was driven by our award-winning rebranding and the launch of a new and improved version of their Metabolic Fortress product line.

They also benefited from increased digital activity that focused on driving more online traffic and increased customer acquisition. In Japan, the growth was driven by a series of field incentives designed to take advantage of the local market trend of people being more engaged and more interested in improving their health. And as a result, we were able to enjoy significant order growth from new customers. In Taiwan, we continue to aggressively build field fundamentals to further penetrate the market as sales increased 285% on a local-currency basis.

Finally, Korea, our largest market in Asia, was down 16% as pandemic-related restrictions continue to hamper our ability to fully unleash our team. We continue to focus on the health and safety of our South Korean distributors, and our team in Korea remains committed to working on new initiatives to meet customer needs despite the ongoing COVID restrictions. We're confident that our Korean business will strengthen and rebound as COVID restrictions are relaxed, and we expect to see continued growth across the region, driven by strong field fundamentals, attractive incentive programs, and increased customer engagement. In Europe, we experienced 5% growth on a local-currency basis.

Sales in Russia were relatively flat, up 0.4% in local currency due to the rescheduling of some of the new product launches that have been shifted to later in the year and the ongoing challenges from COVID restrictions. Nevertheless, the team used digital events and targeted promotions to maintain sales and build momentum for the second quarter. We also took the opportunity to open three new retail centers in underpenetrated areas of the country that we believe will improve our ability to drive growth in the near future. The locations are owned and operated by our distributors, and they provide enhanced access to products, training, and support for customers looking for a convenient way to improve their health with a brand they know they can trust.

In Poland, we saw a tremendous growth in the first quarter, with sales increasing 43% in local currency. Consistent execution and an intense focus on field fundamentals helped deliver strong results for that business. In Western Europe, COVID restrictions and market closures led to a modest 2% sales decrease in local currency. However, we continue to host virtual events and use targeted promotions to drive customer activation.

Moving forward, we believe Western Europe offers significant growth potential for our company. The industry is attractive and growing, and we are already seeing a glimpse of the potential power of these markets with strong growth for markets like the U.K., where our sales are increasing in excess of 25% with limited support. As such, we're currently on pace to begin the process of fundamentally relaunching our business in Western Europe in the back half of 2021. The relaunch will include new, more attractive branding, updated packaging, enhanced field support, and a new digital toolkit.

The initiatives will be rolled out over time. And similar to our other transformation initiatives, we expect performance to significantly improve as a result of the changes. Finally, in Latin America, our transformation initiatives and revamped go-to-market strategy have been a tremendous success as first-quarter sales increased 21% in local currency, with each market in the region, growing double digits. This is the third consecutive quarter of growth for LATAM, and the team has done an excellent job executing our plan.

The launch of a new business model has increased the amount of field contact and improved communication. While the new compensation plan appears to be having a positive impact on sales force productivity. We're still in the early days, but overall, we're pleased with how customers and distributors have responded to the transformation, and we expect to see meaningful improvements to fee fundamentals, customer activation, and continued growth as we move forward. The solid performance across OBUs demonstrates that our transformation initiatives are starting to take hold.

The entire team at Nature's Sunshine is dedicated to driving our sales, driving our strategies, penetrating our key markets, and keeping the positive momentum moving forward. Before diving into an update on our five global growth strategies, I'd like to make a few comments on the external factors impacting our supply chain. Since the start of the pandemic, our business has been relatively unaffected by what COVID-19 has done to the supply chains of so many other businesses around the world. We took aggressive actions at the beginning of the pandemic to increase inventory, and that has served us well.

However, toward the end of the first quarter, we started to see more intense pressure on ingredient and packaging availability, as well as an end-to-end tightening across all aspects of our logistics pipeline, causing product delays and driving up costs in several areas. As a result, we've experienced an increase in product shortages and saw Q1 gross margins decreased by 60 basis points as we intensified our efforts to meet growing demand by investing more heavily to compensate for gaps in the supply chain. Fortunately, we believe that our unique small-batch manufacturing capabilities, our skilled and flexible QA team, and our long-term supplier relationships will help shelter us from the full impact of the world's supply chain issues, and we've done an excellent job so far. As the market remains dynamic, I reaffirm my confidence in the strong operational and financial foundation that our team has built, and we work to offset the incremental impact on gross margins with savings in other areas.

Now, I'd like to move on and discuss our progress on our five global risk strategies, and let's start with brand power and our award-winning rebranding. The updates to our packaging and marketing collateral are receiving a strong reception from consumers and distributors alike, and we will be rolling out the full rebranding to our international markets in the second half of the year. Our initial feedback suggests that the rebranding not only energizes existing customers, but that is also more attractive to new consumers as well. This is important because we believe that a customer's experience with the brand is an important part of building sustainable relationships.

In the first quarter, we were excited to introduce a new unboxing experience that featured a newly designed and stylized shipping box, a thank you message welcoming new customers, and more customer-friendly packaging. We also improved the customer experience through the introduction of our Force of Nature digital marketing campaign that more effectively positions the company in line with consumer aspirations. So far, the new campaign has exceeded our expectations, outperforming customer engagement benchmarks and delivering excellent performance versus industry standards on response rates and conversions. In summary, we continue to see a strong positive response to our revamped marketing efforts, and we believe our brand power initiatives will continue to drive customer growth.

On field energy, we continue to rely on remote work tools to stay connected as we navigate pandemic-related restrictions. Fortunately, we've been able to reach an incredible number of distributors through Zoom calls, webinars, and video conferences, and the team is aggressively looking for new ways to drive customer growth and improve activation. The team in Asia has done an especially good job leveraging technology to improve field communications, as evidenced by the tremendous growth in China, Japan, and Taiwan. Of course, field energy isn't just about developing strong field fundamentals.

It's also about redefining and expanding our sphere of influence in the market. And to that end, as I mentioned earlier, we opened three new retail centers in Russia as part of our plan to be more omnipresent and accelerate customer growth. Another important part of our field energy strategy is the overhaul of our business model. We continue to make excellent progress in our two initial launch markets, North America, and Latin America, and it's actually quite phenomenal what we've been able to accomplish in the six months since we launched.

The progress we're making on Subscribe and Thrive, where we've doubled the number of people in the program is an excellent example. We're also making strong inroads on our new affiliate program that is specifically designed to attract influencers that love to share the healing power of Nature's Sunshine and receive rewards when they do so. Since its launch in September, we've seen about a 300% increase in affiliate-generated orders as new affiliates use our products and then share and recommend them to friends, family, and acquaintances on their social media. Of course, practitioners and retailers continue to be the driving force behind our business, and we're grateful for their continued support and partnership as we transform the business together.

Moving to digital-first. We continue to make progress building engagement and making enhancements to our digital platform. Since launching our award-winning website, we've seen a significant increase in traffic as consumers find the site more attractive and easier to shop. Based on the results of our initial testing, we're also expanding our digital marketing campaign in the U.S.

and expect to make continued inroads attracting new customers to our brand. Moving forward, I'm excited to share the next step in our digital-first transformation. In the second half of 2021, Nature's Sunshine will introduce new personalization capabilities for our distributors in the United States. This is an exciting new breakthrough for our company, and we are delighted that the new capabilities will allow our distributors to customize and personalize orders for their customers.

This is an important initiative for us because it's an integral part of our strategy to move away from transactional relationships to life cycle relationships that make Nature's Sunshine a meaningful part of customers' daily lives. With the first phase of our personalization initiative, we're focused on giving our distributors a one-of-a-kind set of proprietary tools that customize and personalize their customers' orders with future opportunities for customers to build their own personalized health programs. Under the new personalization program, customers will receive personalized health packs presorted and conveniently packed based on their individual needs. The program organizes the customer's vitamins and minerals in individual pouches or packs that are organized for morning, noon, and evening or night consumption or however, The Nature's Sunshine practitioner decides.

The packs are convenient to use, easy to take with you on the go, and the service is complementary. Each month, consumers will receive a full month supply of nutrients that will be automatically replenished and shipped directly to their homes. If the customers or their practitioners want to change their program, they can do so at any time. What's so exciting about the program is that our research suggests that personalization can improve customer compliance and usage by as much as 50%, resulting in improved health for our clients and increased sales for our practitioners and retailers.

Once again, this is an exciting next step for our business, and we believe the fact that we have a world-class network of herbal healers, industry-leading product quality, one of the most extensive product lines in the industry capable of addressing almost any health issue, and a 49-year tradition of formulating and manufacturing products that deliver results you can feel, gives us a competitive advantage over other players in the market. We're extremely excited about the new personalization program, and we look forward to continuing to sharing the healing power of nature with even more people as we move forward. Turning to Manufacturing, Inc. We've made tremendous progress distinguishing ourselves from the competition by amassing an industry-leading list of accreditations and manufacturing certifications.

Our excellence in product quality, performance, reliability, and testing is a hallmark of Nature's Sunshine. Additionally, our small-batch manufacturing capabilities, combine the precision, care. And attention to detail of artisanal artisanship with the speed and efficiency of an operation that has almost 50 years of global experience. That's just one of the many ways that Nature's sunshine is able to consistently deliver superior products without sacrificing productivity.

Small batch manufacturing allows us to respond to shifting demand trends, but more importantly, it allows us to use rare and superior grade ingredients like our wild-crafted cascara and many other wild-crafted herbs that are harvested in their purest form and not pulled from bulk production. It's a special skill, and it makes a difference when you want to deliver products that offer the highest levels of potency and effectiveness. And when you need to address the discriminating concerns of consumers looking to benefit from personalization, those consumers want real science and real results from a company they can trust. Finally, our Right Stuff initiatives continue to drive transformational change.

Our ongoing effort to improve organizational effectiveness means that we continue to evaluate every area of our business and look for new ways to improve productivity. In the first quarter, our restructuring initiatives and process helped increase operating profit 7% and delivered $7.6 million, while operating margins improved 60 basis points, excluding one-time and unusual expenses. EBITDA also improved significantly, up 20% versus prior year, reaching $11.6 million, which is the highest first-quarter EBITDA in the company's history. Based on our plans moving forward, we expect to see continued profit improvements as we enhance productivity and streamline processes.

As I hope you can see, we are committed to moving the business to the next level while significantly improving shareholder value. We expect our business to continue to build momentum and deliver strong results, and our capital allocation strategy is designed to complement our operating strategy by effectively putting our capital to work. That means our first priority is to make sure that we have sufficient cash reserves on hand to meet our financial obligations. But our second priority is to make strategic investments that expand our capabilities and accelerate market penetration.

And finally, our third priority is to reward shareholders directly by allocating funds to dividend payments and share repurchase programs as possible. We believe these priorities align with and support shareholder interest and will continue to drive growth. With that, I'd like to turn the call over to Joe, who will walk you through our first-quarter '21 financial results in more detail. Joe?

Joe Baty -- Chief Financial Officer

Thank you, Terrence, and good afternoon, everyone. So let's jump right into it. Net sales in the first quarter increased 7% to a company record of $102.4 million, compared to $95.9 million in the year-ago quarter. This is the third consecutive quarter of record net sales.

This increase was primarily driven by our execution of our business transformation plans, new product developments, and growth in new customer acquisition across markets. Excluding foreign exchange rates, net sales increased 4% in the first quarter of 2021. On an absolute basis, net sales in Asia increased 16% to $35.8 million, compared to $31 million in the year-ago quarter. This represented a 9% increase on a local-currency basis.

The increase was primarily attributable to strong sales in China and Japan, which saw year-over-year increases of 38% and 44%, respectively. Net sales in Europe increased 8% to $22.2 million, compared to $20.6 million in the year-ago quarter. This represented a 5% increase on a local-currency basis. The increase reflects the continued success of new product launches and stronger field fundamentals throughout Central and Eastern Europe.

Poland had an especially strong quarter with 40% year-over-year local-currency growth. North America net sales were $37.8 million, compared to $38.8 million in the year-ago quarter. The slight decrease is attributed to the fact the first quarter of 2020 was a tough comp as it takes into account the impact of U.S. consumers stockpiling consumer goods at the start of the pandemic.

Net sales in Latin America and other increased 21% in local currency to $6.7 million, compared to $5.6 million in the year-ago quarter, with the increase primarily due to the continued success of our transformation initiatives in these markets, particularly with our revamped field fundamentals and the new compensation plan, as Terrence mentioned. Gross margin was 73.7%, compared to 74.3% in the year-ago quarter. The reduction reflects the impact of inventory reserves, changes in market mix, and certain supply chain challenges. Volume incentives as a percentage of net sales were 33.4%, compared to 34.4% in the year-ago quarter.

The decline is due to changes in market mix, including growth in NSP China. The improvement also reflects initial savings from the prior-year launch of our new business model and compensation plan in North America and LATAM. Selling, general, and administrative expenses were $33.6 million, compared to $31.1 million in the year-ago quarter. The increase was primarily attributable to sales growth and higher costs associated with the implementation of our business transformation initiatives.

As a percentage of net sales, SG&A expenses were 32.8%, compared to 32.4% in the year-ago quarter. Excluding the impact of capital allocation-related expenses in the first quarter of this year and VAT refunds in the prior-year quarter, SG&A expenses were 32.6% of net sales, compared to 32.9% in the year-ago quarter. Operating income in the first quarter improved to $7.6 million or 7.5% of net sales, compared to operating income of $7.2 million or 7.5% of net sales in the year-ago quarter. Excluding impact of the current-year capital allocation expenses and prior-year refunds, we generated $7.8 million of operating income or 7.8% of net sales for the current quarter, an increase of 17%, compared to $6.7 million or 6.9% of sales in the year-ago quarter.

The increase is primarily attributed to the aforementioned net sales increase. Adjusted EBITDA, as defined in our press release as net income from continuing operations before income taxes, depreciation, amortization, and other income or loss adjusted to exclude share-based compensation and certain noted adjustments increased 20% to $11.6 million in the first quarter as compared to $9.7 million in the year-ago quarter. Net income attributable to common shareholders for the quarter increased significantly to $4 million or $0.20 per diluted share as compared to $2.5 million or $0.15 per diluted share in the year-ago quarter. Turning to liquidity.

We had cash and cash equivalents on 31st March of $91.3 million or $71.4 million post funding of the special dividend and $3.3 million of debt. For the quarter, we generated $2.7 million of cash from operations as compared to $13.5 million in the prior-year quarter. The quarter-over-quarter difference is primarily due to timing-related working capital changes. For 2021, we expect future capital allocation initiatives will continue to include strategic investments to support our customer acquisition and activation.

While we anticipate that the investments we are currently making and plan to make as part of our business transformation, will increase our SG&A and capital expenditure costs going forward, we expect the long-term benefit of these investments will allow us to sustain our growth and drive future operational improvements for years to come. Furthermore, we will closely monitor overall return on investment on our investments and adjust as deemed appropriate. We look forward to sharing more information in the future as we continue our strategic and transformative investments. Now, I will turn the time back to the operator for Q&A.

Operator?

Questions & Answers:

Operator

Thank you, sir. [Operator instructions] We'll take our first question today from Jon Hollander with Chesapeake Advisory Group.

Jon Hollander -- Chesapeake Advisory Group -- Analyst

Hi, everyone. Thanks for the time and congratulations.

Joe Baty -- Chief Financial Officer

Thanks, Jon.

Jon Hollander -- Chesapeake Advisory Group -- Analyst

Thanks for doing the call. I just wanted to ask a little bit about capex. On the prior call, I believe the guide was to about two times the spending of year-end 2020. For this quarter, in the financials, we can see about $1 million was spent on capex.

Could you update the capex guidance? Is that still in line with two times of last year?

Joe Baty -- Chief Financial Officer

No, I think that's where we expect to be in 2021. Yes, there was only $1 million in the first quarter, but as I pointed out in my comments, we do believe over the subsequent quarters, our investment in capex will increase. But overall, we're somewhere in that 2x multiple for 2020, which was approximately $5 million.

Jon Hollander -- Chesapeake Advisory Group -- Analyst

Great. Thank you. When you think about that capex spend, do you have a target return, like return on invested capital that you use?

Joe Baty -- Chief Financial Officer

Well, we certainly look at the long-term return on all our capital expenditures. But I would say, generally, while it's not -- it may be different for each particular investment. Just overall, we expect those capital investments to pay for themselves in a relatively short period of time in the neighborhood of two to three years.

Jon Hollander -- Chesapeake Advisory Group -- Analyst

OK. Thank you. On the prior call, I asked about which metrics tracked. And I was referred to prior comments, which track the Subscribe and Thrive and also track the numbers, really.

On this call, it doesn't seem like those numbers moved very much. The prior call was a reference of 25% of orders from Subscribe and Thrive, and this fall, again, 25%. And then also in the prior call, 300% increase in people joining the affiliates. And I guess on this call was 300% of affiliate-generated orders.

I was just hoping you could comment if these are the right metrics we tracked.

Terrence Moorehead -- Chief Executive Officer

Yeah. I think those are -- again, we're still early on in the launch process. So I just wanted to give you kind of a sense that we are tracking, moving in the right direction. We actually continue to build momentum in both of those areas.

As we see the progress that we're making and getting more learnings on each one of those key programs, we're fine-tuning. Our goal is to kind of get to a very kind of different place. But again, you're talking about a relatively large installed base of consumers on something -- or orders on something like Subscribe and Thrive. So even as we're amassing kind of more and more orders, the incremental kind of gains are relatively small at this point in time.

But again, our expectation is that we'll see some pretty dramatic movement on that in the future. And obviously, you can just kind of do the math on it. For every percentage of orders that we're getting that are in Subscribe and Thrive, the incremental orders that we get on that really does have an impact on lifetime value of consumers. So it's an area where we really do want to focus.

And on the affiliate program, again, I gave you some general numbers around growth. That's what I'm sharing at this point in time because we're so early in the program. But again, the residual off of one person, one consumer sharing with two, three, four, five other people is, again, a nice new addition to the business. And we're still dealing with relatively kind of small baseline numbers.

But the impact is starting to -- we're actually starting to be able to see the impact.

Jon Hollander -- Chesapeake Advisory Group -- Analyst

OK. Great. Thank you. Also, just one more brief question.

In the beginning of the call, there was a comment about gross margin being impacted by packaging and other core-related costs. Are you able to quantify that a little bit? Was it 20 bps, 50 bps, or 100 bps?

Terrence Moorehead -- Chief Executive Officer

Do you want to take that one, Joe?

Joe Baty -- Chief Financial Officer

Well, the overall change in gross profit margin was clearly less than 100 bps. But it's a combination of different things that led to the approximate 60 bps decline in gross profit margin, including some inventory reserves and a couple of other promotional kind of situations. But in regards to the pandemic, I can't quantify exactly. We did have some situations where we had to air free some inventory and so forth.

So out of that 60 bps, maybe a third of it is associated with that kind of activity.

Jon Hollander -- Chesapeake Advisory Group -- Analyst

OK. Thanks. And then, I'm sorry, just one last question I had right now. I forgot to ask was what percent of sales in Q1 were digitally driven.

Terrence Moorehead -- Chief Executive Officer

You got that number, Joe?

Joe Baty -- Chief Financial Officer

I don't have that number off the top of my head. We can make note of that and get back to you if you so request.

Jon Hollander -- Chesapeake Advisory Group -- Analyst

OK. Great. Thank you very much for your time. Those are all my questions.

You got to get on that, I swear.

Terrence Moorehead -- Chief Executive Officer

Thanks, Jon.

Joe Baty -- Chief Financial Officer

Yeah. Thanks for the questions.

Operator

[Operator instructions] We'll hear from Steven Martin with Slater.

Terrence Moorehead -- Chief Executive Officer

Hi, Steve. How's it going?

Steven Martin -- Slater Capital Management LLC -- Analyst

Good, good. Can you hear me?

Terrence Moorehead -- Chief Executive Officer

Yeah. I can hear you OK.

Steven Martin -- Slater Capital Management LLC -- Analyst

OK. A couple of things. Last year, you deferred your forward price increase. Did you take that later in this year or did you [Inaudible]?

Terrence Moorehead -- Chief Executive Officer

Hi, Steve. We're having trouble hearing you right now. Could you -- I don't know if you're calling on a cellphone.

Steven Martin -- Slater Capital Management LLC -- Analyst

Yeah. No, I took it off speaker. I was having a hard time. So what I asked was, last year, you had an April 1 price increase that you deferred due to the pandemic.

Did you take it this year to offset some of your cost increases?

Terrence Moorehead -- Chief Executive Officer

We actually took the price increase in -- I believe it was April, Joe? Yes. So not in the first quarter. You'll see that in the second quarter.

Steven Martin -- Slater Capital Management LLC -- Analyst

OK. That's good. Is it enough to offset some of those headwinds you're talking about?

Joe Baty -- Chief Financial Officer

Yes. We certainly believe it's going to offset a meaningful portion of them, yes. Now, again, it's difficult to predict how it all plays forward. But as Terrence mentioned in his comments, we believe we did a very good job in being proactive and trying to strengthen our overall supply chain position and so forth to do as best as we can, minimize the impact.

But there's still some uncertainty on that as it plays forward.

Steven Martin -- Slater Capital Management LLC -- Analyst

Got it. With respect to Korea, what's your expectation on timing of that market sort of starting at least to return to normal?

Terrence Moorehead -- Chief Executive Officer

You know, I think we expect to see some relief relatively soon this year. But as I mentioned, I won't be able to really unleash the power of that team until the restrictions at least have been eased. They still can't have meetings face-to-face with more than, I think it's five people, and they really do rely on a lot of -- it's just a high-touch market for them. But they've got a lot of things going on.

They've launched a new app to supplement their kind of the training that they would normally do in person, and they put literally hundreds of product videos, training videos. So this was relatively recently introduced. So they really are kind of working around the clock to try and kind of figure out a new way to drive activation. And so we'll see some uptick in their performance kind of shortly.

But again, we won't be able to unleash that market until some of those restrictions come down.

Steven Martin -- Slater Capital Management LLC -- Analyst

OK. And I know we're still coming out of pandemic-related issues like Korea. We've talked in the past about guidance and your being prepared to give us some range -- even with a range, where do you feel we are in that process?

Terrence Moorehead -- Chief Executive Officer

Right now, we really are still driving through the transformation. So I've kind of got two things I'm managing, Steve. One is kind of making sure that the transformation initiatives that we're putting in place are solid and sustainable, which everything that we're seeing would support that, again, both in the U.S., in Latin America, in the key areas where we're focused, in China and in Japan. So we're really starting to see some good stability in those markets.

But we are still in the learning process. And then, of course, you overlay on top of that COVID and the uncertainty that lies with that. So I don't think we have a high enough degree of confidence to give full guidance yet, but we do have real confidence in our business, real confidence in the momentum going forward. We're still several quarters away probably from providing some solid guidance to you.

Joe, do you have any additional comments on that?

Joe Baty -- Chief Financial Officer

No, I think Terrence responded appropriately, Steve, to your question.

Terrence Moorehead -- Chief Executive Officer

Yes. I was just going to say, this being our third consecutive $100 million quarter. You'll remember two quarters ago, I said $100 million. Don't expect that to be the new trend line.

Kind of we don't know yet, and then we delivered another one. Now, we've delivered our third kind of consecutive quarter, plus $100 million. So again, I think we're starting to get some build momentum each one of those quarters, larger than the previous one. Strategy is starting to really come online and gain some traction.

So again, we feel really good about the business internally. And again, as soon as we can, we'll start to unveil more to you.

Steven Martin -- Slater Capital Management LLC -- Analyst

OK. I applaud, as you know, your special dividend, and I know you talked about capital allocation. You announced a buyback, recognizing that it was toward the end of the quarter. Do you have a target for the buyback in the way of share count reduction? Do you have a goal of utilizing X amount of dollars per year? Because you still are going to throw off $20-plus million of cash.

And you're still cheap, and it would be great if the share count got reduced a little.

Terrence Moorehead -- Chief Executive Officer

Yeah. Well, I'll start, and I'll let Joe follow up. We've announced the buyback, we put the parameters around it. We will be as, I guess, appropriately as aggressive as we can in pursuing that.

I don't want to be too forward-looking on that. But we have the authorization, and we're going to take the opportunities as we can. Joe, do you have any additional comments?

Joe Baty -- Chief Financial Officer

Yes. I would just add to Steve, obviously, we did pay out a special dividend, close to $20 million, here about one month ago, right? We did announce the stock repurchase plan. Set aside $15 million for that. And I'd just say, we intend to use that money appropriately and wisely.

And it's a little bit early to comment specifically on targets and so forth. But I would just say we do have a fully integrated capital allocation policy. We certainly want to maintain cash reserves and also make sure we have plenty of liquidity to invest in the business. And to the extent that we end up concluding that there's excess capital, one way or the other, we'll look to send that back to our shareholders.

Steven Martin -- Slater Capital Management LLC -- Analyst

All right. Thanks a lot, guys.

Terrence Moorehead -- Chief Executive Officer

Thanks, Steve.

Operator

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

Terrence Moorehead -- Chief Executive Officer

OK. Well, again, I want to thank everybody for participating in today's call. And again, we look forward to speaking with you again when we report our second-quarter results in August. So with that, I'll conclude the call.

Thanks again. Take care, everybody.

Operator

[Operator signoff]

Duration: 53 minutes

Call participants:

Nathan Brower -- Executive Vice President and General Counsel

Terrence Moorehead -- Chief Executive Officer

Joe Baty -- Chief Financial Officer

Jon Hollander -- Chesapeake Advisory Group -- Analyst

Steven Martin -- Slater Capital Management LLC -- Analyst

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