Great, good morning, and welcome to Needham's 26th Annual Growth Conference. My name is Anna Andreeva. I am a senior analyst covering e-commerce and global brands here at the firm. Next up, we are very excited to have Nature's Sunshine Products. From the company, we have Terrence Moorehead, CEO, as well as Shane Jones, CFO. Welcome, guys.
Thank you. Yes, good to be here.
Great. We're gonna kick this off with a presentation. To those investors interested in asking a question, you can either input that into your portal or alternatively email me at aandreeva@needhamco.com, and we will have time to go through those at the end of the session. And Terrence, please take it away.
Thank you. Thanks, Anna, and thank you, everybody, for joining us today. I'm excited to share the Nature's Sunshine opportunity with you today. And you know what? Let's just go right to the next slide, and you can skip this one. Yeah, you know, Nature's Sunshine is an incredible company, been around for over 50 years. We were actually the first company to encapsulate herbs in the U.S. So we're a global natural health and wellness company. We operate in 40 markets around the world. We are the herbal experts in the marketplace. No one knows more about herbs, no one has done more in the space of herbs and botanicals than Nature's Sunshine has.
And that's reflected in a very robust product portfolio in that we've got over 800 products that we bring to market, and that's across six different categories. We have a fully integrated model, which is very unique to the industry. We do our own R&D that's driven by PhDs and scientists. We do our own sourcing, so we have relationships with farmers, producers. We go out into the wild and and actually kind of work with these people to make sure that they're using appropriate regenerative farming techniques and treating their workers, you know, kind of right. But most, most importantly for us also is that we're getting the right ingredients that when we're kind of sourcing from people. We do our own testing.
We perform over 600 tests through the work that we do, and then, of course, we manufacture our own products. So it's an end-to-end, fully integrated model, very unique in the marketplace. 85%-90% of the other companies in the marketplace don't do any of those things. They just go to third-party manufacturers, so that really helps us stand out in the market. We've got advanced digital tools that we've started building as we build out our omni-channel approach to the business. And, and then we've got a passionate, well-trained international sales force, around those, for those 40 markets around the world. And again, it's just a tremendous growth opportunity in every single channel, but we're really excited about our new digital business as well. Let's go to the next slide.
Simply just wanna let you know that the wellness industry is a steadily growing industry. You know, on the left side, you just see that the global supplement industry overall growing at 6%, and that's just the average growth, varies by market, and varies by segment. So when you look at segments like botanicals and herbs, that segment's actually growing a bit faster, somewhere, you know, kind of anywhere between 6% and 10%, depending on the time frame. So it's a really exciting business, and it is a global industry as well. North America is the largest market, followed by Asia, Europe, LatAm, and then Africa, Middle East, Africa. Let's go to the next slide. Again, I mentioned that we're in 40 markets around the world.
Our largest business unit right now is Asia Pacific, followed by North America, Europe, then LatAm. Let's go to the next one. We have a really attractive consumer profile. You know, the consumers that are interested in Nature's Sunshine, first and foremost, they care about their health. They're really passionate about their health. They're passionate about what they're putting in their bodies, so they care about, you know, the ingredients and how their products are made. So they really are a premium consumer. They're willing to pay more for the products that they believe will deliver results, but also deliver them credibly.
And again, whether that's because of the ingredients that are put into them, the testing that's done, or the manufacturing process, you know, these people really care about those things, and it's a large and growing percentage of the marketplace. So when you look at a company like Nature's Sunshine, because we're one of the very few companies that have 50+ years of experience, that does this, you know, kind of fully integrated, end-to-end process of bringing products to market, consumers really are attracted to that, and they trust us, you know, kind of considerably. And when consumers, you know, kind of find out about us, we have a long track record with them, so there's a lot of stickiness to our business. Let's go to the next slide.
Again, I mentioned we do business across a variety of different categories, but the largest ones being digestive health, which is really where we started the business on things like detoxes and gut health. So we have tremendous expertise in that area, but also in terms of things like general health and cardiovascular. We're building out some muscle and building out some capabilities in immune and sports and energy. But those first three really are kind of our bread and butter to date, and where so much of kind of people's health concerns are today as well. Let's go to the next slide. I spoke briefly about our...
...some of our internal capabilities, but again, this is, you know, one of the things that really does differentiate Nature's Sunshine from other companies out in the marketplace, and one of the reasons why people truly trust Nature's Sunshine when it comes to, you know, kind of their supplements. There's a lot that happens kind of behind the curtain or behind the bottle, as we might say, to make great products that people can rely on and that deliver results people can feel. But it starts with the highest quality raw ingredients that deliver bioavailability so your body can process them. We perform over 600 tests to ensure that each one of our formulas...
...not only contains exactly what we said it was gonna contain, but also has what we expect it to have at the right level of potency. We have strict compliance with FDA standards, but we go well beyond that through a whole host of certifications that you can see there on the right. We probably have more certifications than any other company in the industry, and simply because we take it that seriously. We've got our own 270,000 sq ft manufacturing facility right in Spanish Fork, Utah, right kind of up the street from our global headquarters.
And then again, I mentioned we have our own research center, the Hughes Research Center for [audio distortion], Hughes Center for Research and Innovation, which is a 5,400 sq ft laboratory and clinical space that, again, has products and has capabilities rather that very few other competitors have. You know, we've got equipment in our labs that one in five companies in North America have. So again, when it comes time to, for us to determine exactly what people are selling us or what suppliers are trying to sell us, exactly what's in our products, we can tell to a degree that other companies just cannot. Let's go to the next slide. Our sales approach, I mentioned this briefly, we do sell through an omni-channel platform. That omni-channel platform, it kind of starts with our health practitioners.
It's about a third of our business. And when I say health practitioners, I'm talking about people that are nutritionists, herbalists, chiropractors, herbal healers, naturopaths, et cetera, that would call on clients, make recommendations to them, and they'll work with Nature's Sunshine to provide those clients with products. So that's about a third of the business. Another third of the business would be specialty retailers, and those... And when I say specialty retailers, I want you to think of herb shops or independent local health food stores and health stores that you might see all around the country. There are literally, you know, tens of thousands of them. There are about 40,000 of them around, around the country. So those will be prime locations where you might find, again, those serious consumers and those serious people who are selling products.
And that's about a third of our business as well. Then we do sell direct to consumer. We have a company-owned website with our own customer acquisition tools, our own CRM kind of engine also to keep consumers coming back to us. But we also have an Amazon platform that's doing quite well for us as well. And then the remainder, remainder of our business, we just call it other. That would be a mix of influencers and social sellers, and people who are just passionate about the space and want to sell our products to you know, kind of once they've gotten great results with them, they wanna share those products with other people. So that's our business. Again, really a competitive driver for us.
We know for a fact that consumers like to shop and/or buy from at least 2-3 different channels at any point in time. So this omni-channel approach of ours really does help us cover a tremendous portion, about 60%, 60%-70% of the marketplace just by going to market this way. If you think about kind of big box mass market, that's only about 27% of the market overall. So we really are playing in, I believe, the right space for the type of products that we have and the type of consumers that we're going after, and it represents the lion's share of what consumers are looking for. So we're very excited about our omni-channel approach that we're building out. Let's go to the next slide.
Our company has been driven and our results have been driven by three global growth strategies. We call them digital-first, field energy, and brand power. Digital first is exactly what it sounds like. It's about driving sustainable, profitable sales growth through digital to our digital channel. Field energy is about recruiting and developing a new generation of distributors that are young and passionate, dedicated to sharing the healing power of nature with people. So that's, again, going out and finding more health practitioners, penetrate. There are some 100,000 health practitioners right now that we, that we have not penetrated. There are some 10-20,000, you know, I think target on, spot on target, specialty retailers that we haven't kind of targeted yet, that we haven't pursued and penetrated.
So tremendous opportunity for us to get that next generation of distributors for our business. And then finally, our last strategy is something we call brand power, and that's all about driving customer activation and reactivation with best-in-class products, innovation, and branding that really resonates with consumers. And I just wanna walk you through each one of these very quickly. So let's go to the next slide. Okay, let's start with digital first. And again, digital first is about increasing customer engagement, loyalty, and affinity with our new digital tool set. And right now, digital represents about 25% of our North American business. Our goal is to get that to be about 50% of our business, and we're doing that by building out our digital campaigns.
We've got a kind of full funnel, end-to-end digital campaigns that we're investing in, and we've increased that investment fairly significantly. But very importantly here, we're managing not only for growth, but also for profitability. There are a lot of digital companies out there, there that are driving their digital businesses on the top line, but not making any money, and digital is actually our most profitable segment. So we're really excited about this, and we're driving great growth through it as well. Let's go to the next slide. Because one of the exciting pieces of our digital business is our subscription program, and subscription, you know, kind of right now, represents about 25% of our business in North America, but it's already about 50% of our business in places like Japan.
And we're gonna be launching our Subscribe and Thrive program, and that's just what we call it. It's a, you know, again, our auto-ship program. We're gonna be launching that in other global markets around the world in 2024 and 2025. But again, it, we know that when people sign up to get the products on a regular basis, it increases their compliance, increases their lifetime value, and it also drives out costs from our, our business because we can just more readily plan kind of shipping and production. So it's a great win-win for everybody. So we're really kind of all in on our subscription program.
Let's go to the next slide, and talk a little bit about field energy, which is all about managing the details of our business, trying to get better sales tools in our people's hands, making sure that, again, as we're going out to build that next generation of sellers, that we've got the right sales tools in their hands, we've got the right training programs. You know, we're really focused on, on kind of speaking to people that would resonate with our brand. And again, the emphasis here is on just building field fundamentals and and analytics so that we can be more effective at recruiting and empowering that next generation. And we've seen real significant growth in places like Taiwan and Japan.
So on the next slide, I just wanna to highlight the type of growth that we can see, that we can experience when we really kind of put our back into these field energy initiatives. And if you look at Taiwan over the last five years, we've grown on average the CAGR of 139%, almost 140% growth over the last five years. And you look at Japan, 22% growth. Absolutely incredible growth when you look at, you know, a Japanese market that's growing 1%-2%, and we're growing, and our competitors are down, you know, anywhere from 15%-30%. We're growing 22% in these markets.
And again, it's all about attracting, you know, new people to the business, young people, focusing on, on millennials, and, and, and kind of next gen after that, even, even Zs, to really strengthen our, our business and give us legs for the future. So a lot of excitement going on, on in, in Asia Pacific, but also kind of around the world, so expect to see more. Let's go to the next slide. We'll wrap this up by talking about brand power, which is really about capturing the imagination of, of customers and distributors with best-in-class products.
And and really, our emphasis here is right now, over the past couple of years, it's been to reposition the brand through a kind of an end-to-end rebranding of, you know, logos, colors, kind of how we go to market, you know, just in how the packaging, really everything. And now we've switched gears in our brand power initiative to really start to build out what we call master brands, that will attract, again, that next generation of consumers, that next generation of sellers, and really offer breakthrough products in high velocity categories. So let's go to the next slide, and you can see one of our new master brands. We call it the Power Line, and it includes a Power Greens product, something we call Power Meals, and Power Beets.
Each one of these are breakthrough products in each one of their categories. If you're familiar with products like AG1, if you love AG1, I hope you love it a lot because you have to drink three glasses of AG1 just to equal one glass of our Power Greens. That's how much better this product is than the competition. You might have heard of a product called SuperBeets. Similarly, you gotta drink 3-4 glasses of SuperBeets to equal one glass of our Power Beets product. So these really are significant products. Our meal replacement product, Power Meal, is a great, clean source of protein. It's got healthy, whole food, a whole food-based calories in it, as opposed to the competition, which largely offers calories from things like sugars and starches.
I don't know about you, I'd much rather get my calories from food as opposed to from sugars and starches. So again, for the consumer that really cares about performance, they care about what they're putting in their bodies, the Power Line is something that offers incredible nutrition, incredible performance for everybody, every single day. And each one of these products is priced competitively in the marketplace. So really quite excited about the launch of the Power Line. We just launched this. I think the whole line was finally launched as of the fourth quarter of 2023. So we'll be looking to see increased growth and momentum as we move throughout 2024. We've launched it just recently in the fourth quarter in Europe.
It was the one of the best launches in the history of the company out there. So again, really excited about the Power Line and what it has to offer, and we're supporting it, as such as well. If you go to the next slide, you can see again, we've got full digital campaigns. This is just to show you, you know, just quick examples of some of the things that we're doing on mobile. But again, really excited about what the Power Line has to offer, as well as our other master brands that we're gonna be launching and introducing over the course of the next 12-18 months. Let's go to the next slide. So this is the management team, and I'm not gonna go through each person.
You know, Shane is our CFO. He's on the line with us today. And we've recently brought on a new Chief Marketing Officer, Sarah Crockett, who has tremendous experience. But what I want to leave you with is, you know, we've built a management team that is strong, is passionate, experienced in this space, and really dedicated to transforming the business and taking us to really quite a new level going forward. Next slide. In terms of capital allocation, we've got strong cash flow, cash flow that's gonna allow us to continue to invest in our growth strategies, and we're very well positioned to drive shareholder value going forward.
We have $2.2 million in shares repurchased at an average cost of $12.35 a share in 2023. We've got almost $22 million remaining on our share repurchase program as of September 30th, 2023. Our investment in process improvement and supply chain are key areas for us. You know we've, we've really spent a lot of kind of time looking at areas where we can invest in our supply chain capabilities to drive out costs and improve productivity. So we've got some exciting things happening there. And then we're gonna continue to make ongoing investments in our organic growth, particularly in areas like field activation and digital activation as well. Again, two very productive areas for us to continue to invest our money in.
And we'll certainly opportunistically entertain strategic M&A as the opportunities present themselves. Anything that would help us accelerate our strategies or penetrate a market more effectively, we would certainly entertain those, and we have the cash and the capabilities to do that. Let's go to the next slide. Again, if you look at our five-year historic performance, solid growth across the period, and I think the highlight is on the right side, looking at our EBITDA approaching $40 million in trailing 12 months of 2023, and that will continue to expand going forward as we expect to see our our margins continue to grow, both at the gross margin level and at the operating and EBITDA level. Let's go to the next slide. Full year guidance.
We've issued guidance for top-line sales of between $443 million-$451 million, and EBITDA guidance of $37 million-$40 million, and I think we've communicated that we expect to be on the high end of both of those. So in summary, why Nature's Sunshine? Well, first of all, we've got an incredible product platform driven by science, and really targeted to where consumers are today. It's really, you know, kind of our, our, our product line, our area of focus, focusing on herbs, focusing on botanicals, it really does resonate with where consumers are today. And our brand repositioning has really helped us better serve and attract those more informed consumers. In the third quarter, our customer growth in North America was up 68%, that's 68%, versus prior year.
So again, I think the work that we've done with product and brand really is helping us drive new customer acquisition, and that's an exciting, you know, kind of driver for us, going forward. We've got three powerful growth strategies really designed to help take us into the future, and financially, we are well-positioned with significant cash, healthy EBITDA generation, and little to no debt on the books. So that's a summary of Nature's Sunshine. And Anna, I'll turn it back over to you.
Great. No, thank you. That that was terrific, a really helpful walkthrough. A few questions from us. Just taking a step back, Terrence, you mentioned the words a repositioning of the brand several times.
Mm-hmm.
Just maybe provide some history, what drove that decision, decision to reposition, and where are you now in that journey? You know, speaking of innings, how much more, I guess, you feel of that hard work is still ahead?
Yeah. You know, again, if you think about Nature's Sunshine, founded in 1972 by Gene and Kristine Hughes, literally sitting around their kitchen table, filling capsules by hand, first and foremost to help their own... You know, they were just trying to solve some of their own health problems.
Yeah.
And then they started sharing that with other people. So they started this idea of sharing the healing power of nature...
Mm
... you know, 50 years ago when there was no wellness industry. Like, you couldn't go out and just buy herbs and, you know, take capsules. It just didn't exist. So company grew like crazy, was fantastic through the 1970s and 1980s, and then I think they they got complacent for a while and started feeling good about themselves. You know, they were still growing , growing consumer base, but they didn't upgrade the brand, and they didn't keep pace with, you know, kind of modern consumer sensibilities.
Mm.
And that was something, when I came on board in 2018, that our research suggested that we really had to change the tone of the brand, change the look of the brand. So again, we went through a significant amount of research. We talked to thousands of distributors, thousands of consumers, and and then built a branding platform and a branding proposition that we thought would really speak to the consumers. And when we went back to consumers and kind of showed them the old versus the new, we knew that we, you know, we had a hit.
So again, it was end-to-end. It was everything from the packaging, to the labels, to the logo, to the color schemes, to the type of language that we used, and it was really about getting back to our authentic roots as a pioneer and as adventurous pioneers in this industry, and making certain that consumers understood that. And I think what was happening before that was we were falling into the sea of sameness-
Mm
... where you've got thousands of companies out there that are, again, they're they're not, they're nutritional supplement companies. They're great marketing companies, but, you know, they're going off to third-party manufacturers and saying all the right words and using all the magic terminology. You know, kind of like, you know, saying, "We use only the finest ingredients," when they have no idea what's in their products, right? And so a company like Nature's Sunshine, on the other hand, really does and delivers products that are meaningful and deliver meaningful results to consumers. So we've... I think we've completed that that piece of the journey, Anna-
Mm
... and have now kind of switched gears to say, "Now let's let's kind of start looking at the product architecture, right, and the architecture of our portfolio, to make certain that not only is our messaging speaking to people, but that the products and how we talk about those products really speaks to people as well." And that's where you start to see some of this master branding come into play. So I'd say, you know, from an overall branding standpoint, you know, we're probably in the seventh, eighth... you know, maybe, maybe even the ninth inning from that standpoint. But from a master branding standpoint and building out that product architecture and making certain that we've got the kind of the right messages for this product, for that, you know, we're still in the fourth or fifth inning.
There's a lot of opportunities, you know, kind of still to come. When you launch a product like a line of products, like the Power line, there's a lot, there's a lot more exciting opportunities that lie ahead of us on that one.
That's, that's perfect, and certainly the vertical integration of the business, bears a lot of fruit as well. You mentioned a very, diverse product portfolio, I think over 800 products across-
Yes
... six different categories. And, you cover from kind of a immune, to weight management, as well.
Mm-hmm.
Pretty diverse. What do you think? I guess, what are you most excited about as you look across the portfolio, and what other verticals do you think make sense for the business?
Yeah, right, right now, we're kind of in the moment. Obviously, we're excited about the Power line. We've also launched, you know, we do a tremendous business in chlorophyll. We've just launched the market's first powdered stick pack chlorophyll. So, you know, historically, what you would find in the marketplace are liquid chlorophylls. You might find some chews also, not necessarily as effective, but you'd find liquid chlorophyll. And with our powdered chlorophyll, it's much more convenient to take. It's, you know, you can travel with it. You can tastes fantastic. We can offer it in different flavors, so we've just launched four different flavors in it. So excited about that. Excited about our ProArgi-9 business, which is a cardiovascular line of products that we sell through our Synergy platform.
So those would be some lead things that jump to mind. But I have to stick with the Power line really, just because those three products are so fundamental to people's metabolic health.
Mm-hmm.
And you know, kind of metabolic syndrome or metabolic health is really kind of one of the key issues that Americans are facing right now. And these three products are, they're designed, excuse me, they're designed for everybody to take every single day. They taste great. You know, normally when you say greens product, you say, "Oh, my God, this, you know, it's gonna taste terrible." You know, each one of those products has been designed to provide better nutrition, better performance, and better taste than anything else out there on the market. So we're excited about that, and again, we're gonna continue to lean into it.
Got it, got it. Terrific. You mentioned the 68% growth in active customers in the U.S. Pretty disruptive, you know, type of a numbers, and I'm sure the Power line probably is responsible for at least some of that.
Yeah
... but curious, can you talk about where this consumer is coming from? And I think you mentioned a generally higher income, type of a customer. I would be curious in, other kind of a demographic color that you could provide.
Yeah. You know, again, since the rebranding and since our channel shift, we've seen a much younger consumer, so a lot more millennials. When you go online, you start to see, and you look at our social, you're starting to see a lot more people in kind of late 20s to kind of late 30s, you know, kind of promoting and engaging with the brand. That's a departure from where we were, you know, historically. You might have seen people in their 50+, kind of rallying around the brand in the past. So, a lot of this customer growth is coming from the younger demographic. It's also coming from digital. So much of that growth is driven by digital.
And again, it's it's the full funnel digital campaigns that we've put out there, our social presence. It's just really helping to throw a broader net out into the marketplace and attract more people into the business. So, that's where a lot of the the kind of energy and momentum is coming from right now.
Okay. Okay, can you talk about your distribution? Also pretty unique, with our own DTC, as well as Amazon and multiple independent,
Mm-hmm
... type of providers in the industry. What's the general health of your distribution currently and in the U.S. to get to the goals of, I think, 50% DTC penetration? What do you think needs to happen to get there?
Yeah, a lot of it, I'll speak to the last point first. I think a lot of what just needs to happen is, you know, basic blocking and tackling. You have to earn your way, you know, to get there. So conversion rates, you know, kind of need to continue to improve. We also need to continue to see retention rates and lifetime value, you know, kind of strengthen. So I mentioned our Subscribe and Thrive program that we deployed. You know, right now, that's about 27%, 25%-27% of our business in North America. As that number expands to 30%, 40%, 50%, that just, you know, really helps the multiple. So all those new customers that we bring in, there's just a higher stickiness factor to them.
So I think we're pretty satisfied with the average order that we're getting from those online consumers at about $80 or so, which is, you know, quite good. But, you know, we want them to be as sticky as possible so that they keep coming back. And by the way, that's the only way people are going to get healthy also. So, you know, us selling somebody one bottle of whatever it is-
Mm-hmm
... or one bag of greens-
Mm-hmm
... isn't gonna help them. They really do need to be on those products for a sustained period of time. So we're trying to make it as easy as possible, as economically attractive as possible.
Mm-hmm.
And you know, and that's what our Subscribe and Thrive program is really designed to do. So I think those couple of things working in conjunction with one another, making certain that I spoke a little bit earlier about branding and kind of refining our messaging as we move towards master branding, and making sure that, you know, kind of we're really resonating with consumers there.
We wanna keep that that customer growth, customer acquisition engine as strong as possible, and then make sure we have a strong net on the back end to make it as easy as possible and as obvious as possible for people to say, "Hey, I wanna stick with this because the products work, they taste great, and they're, you know, kind of economically attractive and I don't have to think too hard about it.
Okay, and then the health of the distribution, just with a pretty significant number of independents out there, just curious how they're faring in this economy?
Yeah, they, they've actually done very well. And they've picked up momentum. I think they obviously, our physical locations took a hit during COVID when things were closed down. A lot of them learned how to, how to be more more digital, you know, kind of when when things were you know when we had, when we had the closures. Inflation was certainly challenging for them in 2022-
Mm-hmm
... as consumers started to make some trade-offs, you know, trading down in certain areas on, on so, you know, on products that might be considered commodity-type products. And that's where the launch of something like, you know, the Power Line, going back to the Power Line, where you've got really and truly unique products, breakthrough products, has has significantly helped them rebound and and kind of re-engage some consumers that may have lapsed or increase the average order for existing consumers as well. So I think we're starting to see a lot better health in the, in the various, kind of the various channels, traditional channels. And there's still, as I mentioned before, a tremendous amount of untapped potential-
Mm-hmm
... in both the practitioner channel, where we've got 100,000 or so folks that we haven't even talked to yet, we haven't even started talking to.
Mm.
Then there's another, roughly we're kind of targeting 10,000 or so out of the 40,000 specialty retailers that kind of might kind of fit with us. You know, a significant number of specialty retailers that are untapped also. So I think that's where the real excitement is. It's in that kind of untapped potential. And it's gonna take us, you know, several cycles in order to you know, kind of go through those people and win them over.
Mm-hmm.
But it, you know, it's just great having that potential in front of us.
Okay, makes sense.
Yeah.
Great. As you've undergone this brand repositioning, just curious if you can speak to brand awareness, where it sits now versus, you know, maybe several years ago, pre-repositioning. And as you think about marketing and driving that DTC channel, you know, especially what works, you know, for the brand the best, and what kind of efficacy are you seeing on the marketing spend?
Yeah, you know, I'd say our awareness is still nascent.
Mm-hmm.
So we've just started our digital, you know full digital ad campaigns about, I'll say 18 months ago. So we're, you know. So if you think about it, maybe it's about 24 months ago. You know, your first 12 months or so, you know, when you're making that first lap, is all test and learn, and then after that, you're starting to build on that. So we're, we're still very early in the kind of awareness-building process. I think we've spent probably more of our resources driving conversion-
Mm
... than on building awareness, if we're being honest, kind of lower funnel versus top-of-funnel investment. And we've done that, again, trying to be as efficient and driving growth profitably, which I think was a smart play for us. And so now as we build momentum, we can now kind of accelerate that awareness building going forward, but we're really still on the front end of that. And what was the back end of your question, Anna?
Just some of the efficacy of marketing, which-
Ah
... you mentioned some of it.
Yeah. Email is still tremendously effective for us.
Mm.
You know, so things like Facebook, so social is still quite good. Our ourhealth practitioners and especially retailers have a constant flow of new consumers coming into them. So again, as we provide them with the right set of tools and the right set of products, and whether those be in-store displays, or just, you know, kind of effective... And you saw the, you know, how attractive the PowerLine-
Yeah
... packaging is. You know, it's quite striking when you walk into a retailer and you see that. It's very noticeable, it has a presence to it. And so those things have really kind of worked pretty consistently for us, but more to do.
Okay. All right, terrific.
Yeah.
The last few minutes that we have, not to leave Shane out of the conversation, but you know, curious about just thoughts on, thoughts on profitability. Looking out, Terrence, I think you mentioned opportunity both on the gross margin side of things, especially as the subscription business continues to scale up, and SG&A. So curious, Shane, how do you think about the buckets of opportunity looking out?
Yeah, no, I'm really excited about the opportunity we have to expand margin across the P&L. And so, there's a number of levers here. I mean, let's start with gross margin. You know, a year ago, we announced that we had started an initiative to cut out $10 million out of our supply chain cost. That work has been going on vigorously this year. We're, we've seen great results. Most of that has to work through our inventories, so there's a lag in when it actually shows up on the P&L. And and so we just began, we started to see some of that come into the P&L in Q3. We'll see more in Q4 and and obviously a lot more go forward into into 2024.
So excited that I, Terrence and I are very committed to delivering not only that $10 million, but more than that $10 million this year and likely into 2025 as well. So that's, that's a great opportunity for us that we will start to see. In addition to that, just as we mix more towards digital, our digital is the most profitable channel that we have in our business. So as that grows from, you know, 25% of our business in North America to 50% of our business, that will provide a natural tailwind to our margins, and we'll see that pick up as well, which will be, you know, very, very exciting there as well.
In addition to that, on the SG&A front, a lot of our SG&A is fixed, and frankly, in our operations and some of the things we do, we're very underutilized. So as we're able to grow that, and see the growth on the top line, we'll be able to leverage that growth significantly through SG&A and then not be able... not have to increase SG&A nearly as much as the top line. So therefore, we'll see on that pay a dividend as well. So all of those things combined, we've talked about increasing our, actually doubling our EBITDA margins and maybe, maybe being able to do better than that. So excited about all of those, and excited to begin to see all of that happen, and and we'll continue to see progressive progress there over this year and next.
Okay. No, that's terrific. I think that's a perfect point to end on. Thank you to the Nature's Sunshine team. Thank you to everyone who listened in. Again, appreciate it, and hope everyone has a great weekend.
Thank you, Anna, and thanks everyone for joining.