Natural Health Trends Reports Second Quarter 2020 Financial Results
August 05 2020 - 9:00AM
Natural Health Trends Corp. (NASDAQ: NHTC), a leading
direct-selling and e-commerce company that markets premium quality
personal care, wellness and “quality of life” products
under the NHT Global brand, today announced its financial results
for the second quarter ended June 30, 2020.
Second Quarter 2020 Financial
Highlights
- Revenue of $16.4 million increased 10% compared to $14.9
million in the first quarter of 2020 and decreased 30% compared to
$23.4 million in the second quarter of 2019.
- Operating income was $183,000 compared to a loss
of $1.4 million in the first quarter of 2020 and a loss of
$4,000 in the second quarter of 2019.
- Net income was $34,000, or break-even per diluted share,
compared to a net loss of $573,000, or $0.05 per diluted
share, in the first quarter of 2020 and net income of $397,000, or
$0.04 per diluted share, in the second quarter of 2019.
- The number of Active Members1 decreased 4% to 54,370 at June
30, 2020 compared to 56,490 at March 31, 2020, and decreased 31%
compared to 78,280 at June 30, 2019.
1 Natural Health Trends defines Active Members as those
that have placed at least one product order with the Company during
the preceding twelve-month period.
Year-to-Date 2020 Financial Highlights
- Revenue of $31.4 million decreased 27% compared to $42.8
million in the first six months of 2019.
- Operating loss was $1.3 million compared to a loss of $2.7
million in the first six months of 2019.
- Net loss was $539,000, or $0.05 per diluted share, compared to
a net loss of $1.5 million, or $0.14 per diluted share, in the
first six months of 2019.
Management Commentary
“The second quarter marked a continuation of the
challenging macroeconomic climate we experienced during the first
quarter of 2020 as the COVID-19 pandemic persisted into the summer
months,” commented Chris Sharng, President of Natural Health Trends
Corp. “We were very pleased with the stability and resilience of
our field leadership which helped us generate a 10% sequential
increase in our second quarter revenue to $16.4 million. In
addition, our aggressive cost reduction measures enabled us to
return to profitability during the quarter. As previously
announced, we put a program in place in the second half of 2019 to
position us for increased operating efficiencies moving forward.
Through this program, we made significant progress in reducing
our SG&A expenses through reductions of nearly 20% versus
the first quarter of 2020 and more than one-third versus the
prior year period.”
Mr. Sharng concluded, “I am very pleased with
our ability to manage elements within our control throughout this
global crisis which led us to achieving positive growth in total
revenue, gross profit, operating income and net income for the
second quarter of 2020 over the prior quarter. Further, our strong
balance sheet, ample liquidity position and conservative capital
allocation philosophy, which is designed to help support our
members and business, enabled us to continue returning value to our
stockholders through our quarterly cash dividend. I’d like to once
again thank all of our leaders who have proven themselves time and
time again in navigating difficult and complex operating
environments such as this one. We remain cautiously optimistic the
macroeconomic situation will continue to improve in the second half
of 2020.”
Balance Sheet and Cash Flow
- Net cash used in operating activities was $1.0 million in the
first six months of 2020, compared to $15.1 million in the first
six months of 2019.
- Total cash and cash equivalents were $93.2 million at June 30,
2020, down slightly from $95.4 million at March 31, 2020.
- On August 3, 2020, the Company’s Board of Directors declared a
quarterly cash dividend of $0.20 on each share of common stock
outstanding. The dividend will be payable on August 28, 2020 to
stockholders of record as of August 18, 2020.
Second Quarter 2020 Financial Results Conference
Call
Management will host a conference call to discuss the second
quarter 2020 financial results today, Wednesday, August 5, 2020 at
11:30 a.m. Eastern Time. The conference call details are as
follows:
Date: |
Wednesday, August 5, 2020 |
Time: |
11:30 a.m. Eastern Time / 8:30
a.m. Pacific Time |
Dial-in: |
1-877-407-0789
(Domestic)1-201-689-8562 (International) |
Conference
ID: |
13706115 |
Webcast: |
http://public.viavid.com/index.php?id=140483 |
For those unable to participate during the live
broadcast, a replay of the call will also be available from 2:30
p.m. Eastern Time on August 5, 2020 through 11:59 p.m. Eastern Time
on August 19, 2020 by dialing 1-844-512-2921 (domestic) and
1-412-317-6671 (international) and referencing the replay pin
number: 13706115.
About Natural Health Trends Corp.
Natural Health Trends Corp. (NASDAQ: NHTC) is an
international direct-selling and e-commerce company operating
through its subsidiaries throughout Asia, the Americas, and Europe.
The Company markets premium quality personal care products under
the NHT Global brand. Additional information can be found on the
Company’s website at www.naturalhealthtrendscorp.com.
Forward-Looking Statements
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995 -- Forward-looking
statements in this press release do not constitute guarantees of
future performance. Such forward-looking statements are subject to
risks and uncertainties that could cause the Company’s actual
results to differ materially from those anticipated. Such risks and
uncertainties include the risks and uncertainties detailed under
the caption “Risk Factors” in Natural Health Trends Corp.’s Annual
Report on Form 10-K filed on March 9, 2020 with the Securities and
Exchange Commission (SEC), as well as in subsequent reports filed
this year with the SEC. The Company assumes no obligation to update
any forward-looking information contained in this press release or
with respect to the announcements described herein.
NATURAL HEALTH TRENDS
CORP.CONSOLIDATED BALANCE
SHEETS(In thousands, except share
data)
|
June 30, 2020 |
|
|
December 31, 2019 |
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
93,206 |
|
|
$ |
96,035 |
|
Inventories |
|
4,114 |
|
|
|
6,404 |
|
Other current assets |
|
5,057 |
|
|
|
5,936 |
|
Total current assets |
|
102,377 |
|
|
|
108,375 |
|
Property and equipment,
net |
|
599 |
|
|
|
735 |
|
Operating lease right-of-use
assets |
|
3,096 |
|
|
|
3,135 |
|
Restricted cash |
|
513 |
|
|
|
3,390 |
|
Deferred tax asset |
|
1,163 |
|
|
|
2,039 |
|
Other assets |
|
729 |
|
|
|
823 |
|
Total assets |
$ |
108,477 |
|
|
$ |
118,497 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
1,084 |
|
|
$ |
680 |
|
Accrued commissions |
|
3,113 |
|
|
|
2,931 |
|
Other accrued expenses |
|
1,763 |
|
|
|
2,387 |
|
Deferred revenue |
|
2,645 |
|
|
|
4,506 |
|
Amounts held in eWallets |
|
11,438 |
|
|
|
12,938 |
|
Operating lease liabilities |
|
1,247 |
|
|
|
1,655 |
|
Other current liabilities |
|
1,438 |
|
|
|
1,205 |
|
Total current liabilities |
|
22,728 |
|
|
|
26,302 |
|
Income taxes payable |
|
13,748 |
|
|
|
15,365 |
|
Deferred tax liability |
|
203 |
|
|
|
202 |
|
Operating lease
liabilities |
|
1,963 |
|
|
|
1,564 |
|
Total liabilities |
|
38,642 |
|
|
|
43,433 |
|
Stockholders’ equity: |
|
|
|
|
|
|
|
Preferred stock |
|
— |
|
|
|
— |
|
Common stock |
|
13 |
|
|
|
13 |
|
Additional paid-in capital |
|
86,102 |
|
|
|
86,102 |
|
Retained earnings |
|
11,008 |
|
|
|
16,117 |
|
Accumulated other comprehensive loss |
|
(1,384 |
) |
|
|
(1,264 |
) |
Treasury stock, at cost |
|
(25,904 |
) |
|
|
(25,904 |
) |
Total stockholders’
equity |
|
69,835 |
|
|
|
75,064 |
|
Total liabilities and
stockholders’ equity |
$ |
108,477 |
|
|
$ |
118,497 |
|
NATURAL HEALTH TRENDS
CORP. CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)(In thousands, except per share
data)
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net sales |
$ |
16,404 |
|
|
$ |
23,428 |
|
|
$ |
31,352 |
|
|
$ |
42,756 |
|
Cost of sales |
|
4,817 |
|
|
|
5,407 |
|
|
|
9,331 |
|
|
|
10,631 |
|
Gross profit |
|
11,587 |
|
|
|
18,021 |
|
|
|
22,021 |
|
|
|
32,125 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions expense |
|
7,113 |
|
|
|
11,398 |
|
|
|
13,716 |
|
|
|
20,896 |
|
Selling, general and administrative expenses |
|
4,291 |
|
|
|
6,627 |
|
|
|
9,570 |
|
|
|
13,942 |
|
Total operating expenses |
|
11,404 |
|
|
|
18,025 |
|
|
|
23,286 |
|
|
|
34,838 |
|
Income (loss) from
operations |
|
183 |
|
|
|
(4 |
) |
|
|
(1,265 |
) |
|
|
(2,713 |
) |
Other income, net |
|
125 |
|
|
|
373 |
|
|
|
218 |
|
|
|
805 |
|
Income (loss) before income
taxes |
|
308 |
|
|
|
369 |
|
|
|
(1,047 |
) |
|
|
(1,908 |
) |
Income tax provision
(benefit) |
|
274 |
|
|
|
(28 |
) |
|
|
(508 |
) |
|
|
(382 |
) |
Net income (loss) |
$ |
34 |
|
|
$ |
397 |
|
|
$ |
(539 |
) |
|
$ |
(1,526 |
) |
Net income (loss) per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.00 |
|
|
$ |
0.04 |
|
|
$ |
(0.05 |
) |
|
$ |
(0.14 |
) |
Diluted |
$ |
0.00 |
|
|
$ |
0.04 |
|
|
$ |
(0.05 |
) |
|
$ |
(0.14 |
) |
Weighted-average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
10,580 |
|
|
|
11,082 |
|
|
|
10,532 |
|
|
|
11,207 |
|
Diluted |
|
11,424 |
|
|
|
11,135 |
|
|
|
10,532 |
|
|
|
11,207 |
|
NATURAL HEALTH TRENDS
CORP.CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)(In thousands)
|
Six Months Ended June 30, |
|
|
2020 |
|
|
2019 |
|
CASH FLOWS FROM OPERATING
ACTIVITIES: |
|
|
|
|
|
|
|
Net loss |
$ |
(539 |
) |
|
$ |
(1,526 |
) |
Adjustments to reconcile net
loss to net cash used in operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
202 |
|
|
|
189 |
|
Noncash lease expense |
|
834 |
|
|
|
914 |
|
Deferred income taxes |
|
870 |
|
|
|
(3 |
) |
Changes in assets and
liabilities: |
|
|
|
|
|
|
|
Inventories |
|
2,314 |
|
|
|
1,881 |
|
Other current assets |
|
845 |
|
|
|
(752 |
) |
Other assets |
|
82 |
|
|
|
(35 |
) |
Accounts payable |
|
402 |
|
|
|
(956 |
) |
Accrued commissions |
|
212 |
|
|
|
(5,475 |
) |
Other accrued expenses |
|
(617 |
) |
|
|
(1,946 |
) |
Deferred revenue |
|
(1,872 |
) |
|
|
(3,409 |
) |
Amounts held in eWallets |
|
(1,560 |
) |
|
|
(765 |
) |
Operating lease liabilities |
|
(811 |
) |
|
|
(964 |
) |
Income taxes payable |
|
(1,617 |
) |
|
|
(1,617 |
) |
Other current liabilities |
|
237 |
|
|
|
(318 |
) |
Long-term incentive |
|
— |
|
|
|
(277 |
) |
Net cash used in operating
activities |
|
(1,018 |
) |
|
|
(15,059 |
) |
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
Purchases of property and equipment |
|
(68 |
) |
|
|
(141 |
) |
Net cash used in investing
activities |
|
(68 |
) |
|
|
(141 |
) |
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
Repurchase of common stock |
|
— |
|
|
|
(6,682 |
) |
Dividends paid |
|
(4,570 |
) |
|
|
(2,736 |
) |
Net cash used in financing
activities |
|
(4,570 |
) |
|
|
(9,418 |
) |
Effect of exchange rates on
cash, cash equivalents and restricted cash |
|
(50 |
) |
|
|
73 |
|
Net decrease in cash, cash
equivalents and restricted cash |
|
(5,706 |
) |
|
|
(24,545 |
) |
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH, beginning of period |
|
99,425 |
|
|
|
135,651 |
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH, end of period |
$ |
93,719 |
|
|
$ |
111,106 |
|
SUPPLEMENTAL DISCLOSURES OF
OTHER CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
Issuance of treasury stock for employee awards, net |
$ |
— |
|
|
$ |
377 |
|
Right-of-use assets obtained in exchange for operating lease
liabilities |
$ |
1,081 |
|
|
$ |
4,697 |
|
CONTACTS:
Company Contact: Scott DavidsonSenior Vice
President and Chief Financial OfficerNatural Health Trends Corp.Tel
(Hong Kong): +852-3107-0800Tel (U.S.):
310-541-0888scott.davidson@nhtglobal.com
Investor Contact:ADDO Investor RelationsTel:
310-829-5400investor.relations@nhtglobal.com
Natural Health Trends (NASDAQ:NHTC)
Historical Stock Chart
From Jun 2024 to Jul 2024
Natural Health Trends (NASDAQ:NHTC)
Historical Stock Chart
From Jul 2023 to Jul 2024