Natural Health Trends Reports Third Quarter 2020 Financial Results
November 04 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 third quarter ended September 30, 2020.
Third Quarter 2020 Financial
Highlights
- Revenue of $14.1 million decreased 14% compared to $16.4
million in the second quarter of 2020 and decreased 17% compared to
$17.0 million in the third quarter of 2019.
- Operating income was $668,000 compared to $183,000 in the
second quarter of 2020 and a loss of $1.1 million in the third
quarter of 2019.
- Net income was $635,000, or $0.06 per diluted share, compared
to $34,000, or break-even per diluted share, in the second quarter
of 2020 and net loss of $1.2 million, or $0.12 per diluted share,
in the third quarter of 2019.
- The number of Active Members1 decreased 2% to 53,300 at
September 30, 2020 compared to 54,370 at June 30, 2020, and
decreased 22% compared to 68,150 at September 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 $45.5 million decreased 24% compared to $59.8
million in the first nine months of 2019.
- Operating loss was $597,000 compared to a loss of $3.8 million
in the first nine months of 2019.
- Net income was $96,000, or $0.01 per diluted share, compared to
a net loss of $2.8 million, or $0.25 per diluted share, in the
first nine months of 2019.
Management Commentary
“The challenging macroeconomic conditions inherent in the global
economy as a result of the COVID-19 pandemic continued to weigh on
our financial performance with third quarter revenue of $14.1
million down 14% compared to the prior quarter,” commented Chris
Sharng, President of Natural Health Trends Corp. “Our total third
quarter orders were relatively consistent with both the prior
quarter and the first quarter of 2020 with our deferred revenue
balance increasing by $832,000 from June to September 2020.
Additionally, there were a number of bright spots in certain
markets with third quarter order volume exceeding that of the first
two quarters of the year and revenue outside of Hong Kong
increasing 10% over the prior quarter. When coupled with our
proactive cost reduction efforts, we were able to maintain our
profitability on reduced sales in the third quarter.”
Mr. Sharng concluded, “We have continued to manage the elements
of our business that are within our control to preserve our
profitability and leader base which we view as critical to our
success. Further, we were pleased to remain in a position to return
value to our stockholders through our quarterly cash dividend, made
possible by our strong balance sheet. I’d like to extend my thanks
to all of our leaders, members, preferred customers and
shareholders for their ongoing commitment to NHT Global. Through
all of the challenges 2020 has presented, we are very grateful to
continue supporting our mission of improving health and quality of
life through our superior products and global opportunity.”
Balance Sheet and Cash Flow
- Net cash used in operating activities was $1.5 million in the
first nine months of 2020, compared to $18.7 million in the first
nine months of 2019.
- Total cash and cash equivalents were $90.8 million at September
30, 2020, down slightly from $93.2 million at June 30, 2020.
- On November 2, 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 November 27, 2020 to
stockholders of record as of November 17, 2020.
Third Quarter 2020 Financial Results Conference
Call
Management will host a conference call to discuss the third
quarter 2020 financial results today, Wednesday, November 4, 2020
at 11:30 a.m. Eastern Time. The conference call details are as
follows:
Date: |
Wednesday, November 4, 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: |
13711362 |
Webcast: |
http://public.viavid.com/index.php?id=141728 |
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 November 4, 2020 through 11:59 p.m. Eastern Time on
November 18, 2020 by dialing 1-844-512-2921 (domestic) and
1-412-317-6671 (international) and referencing the replay pin
number: 13711362.
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)
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
|
|
(Unaudited) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
90,789 |
|
|
$ |
96,035 |
|
Inventories |
|
|
4,259 |
|
|
|
6,404 |
|
Other current assets |
|
|
4,972 |
|
|
|
5,936 |
|
Total current assets |
|
|
100,020 |
|
|
|
108,375 |
|
Property and equipment,
net |
|
|
581 |
|
|
|
735 |
|
Operating lease right-of-use
assets |
|
|
4,200 |
|
|
|
3,135 |
|
Restricted cash |
|
|
517 |
|
|
|
3,390 |
|
Deferred tax asset |
|
|
1,069 |
|
|
|
2,039 |
|
Other assets |
|
|
701 |
|
|
|
823 |
|
Total assets |
|
$ |
107,088 |
|
|
$ |
118,497 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
887 |
|
|
$ |
680 |
|
Accrued commissions |
|
|
3,046 |
|
|
|
2,931 |
|
Other accrued expenses |
|
|
1,786 |
|
|
|
2,387 |
|
Deferred revenue |
|
|
3,477 |
|
|
|
4,506 |
|
Amounts held in eWallets |
|
|
9,831 |
|
|
|
12,938 |
|
Operating lease liabilities |
|
|
1,217 |
|
|
|
1,655 |
|
Other current liabilities |
|
|
1,067 |
|
|
|
1,205 |
|
Total current liabilities |
|
|
21,311 |
|
|
|
26,302 |
|
Income taxes payable |
|
|
13,748 |
|
|
|
15,365 |
|
Deferred tax liability |
|
|
203 |
|
|
|
202 |
|
Operating lease
liabilities |
|
|
3,150 |
|
|
|
1,564 |
|
Total liabilities |
|
|
38,412 |
|
|
|
43,433 |
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock |
|
|
— |
|
|
|
— |
|
Common stock |
|
|
13 |
|
|
|
13 |
|
Additional paid-in capital |
|
|
86,102 |
|
|
|
86,102 |
|
Retained earnings |
|
|
9,358 |
|
|
|
16,117 |
|
Accumulated other comprehensive loss |
|
|
(893 |
) |
|
|
(1,264 |
) |
Treasury stock, at cost |
|
|
(25,904 |
) |
|
|
(25,904 |
) |
Total stockholders’
equity |
|
|
68,676 |
|
|
|
75,064 |
|
Total liabilities and
stockholders’ equity |
|
$ |
107,088 |
|
|
$ |
118,497 |
|
NATURAL HEALTH TRENDS
CORP. CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)(In thousands, except per share
data)
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net sales |
|
$ |
14,124 |
|
|
$ |
17,023 |
|
|
$ |
45,476 |
|
|
$ |
59,779 |
|
Cost of sales |
|
|
3,635 |
|
|
|
4,371 |
|
|
|
12,966 |
|
|
|
15,002 |
|
Gross profit |
|
|
10,489 |
|
|
|
12,652 |
|
|
|
32,510 |
|
|
|
44,777 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions expense |
|
|
5,620 |
|
|
|
7,362 |
|
|
|
19,336 |
|
|
|
28,258 |
|
Selling, general and administrative expenses |
|
|
4,201 |
|
|
|
6,354 |
|
|
|
13,771 |
|
|
|
20,296 |
|
Total operating expenses |
|
|
9,821 |
|
|
|
13,716 |
|
|
|
33,107 |
|
|
|
48,554 |
|
Income (loss) from
operations |
|
|
668 |
|
|
|
(1,064 |
) |
|
|
(597 |
) |
|
|
(3,777 |
) |
Other income, net |
|
|
385 |
|
|
|
323 |
|
|
|
603 |
|
|
|
1,128 |
|
Income (loss) before income
taxes |
|
|
1,053 |
|
|
|
(741 |
) |
|
|
6 |
|
|
|
(2,649 |
) |
Income tax provision
(benefit) |
|
|
418 |
|
|
|
502 |
|
|
|
(90 |
) |
|
|
120 |
|
Net income (loss) |
|
$ |
635 |
|
|
$ |
(1,243 |
) |
|
$ |
96 |
|
|
$ |
(2,769 |
) |
Net income (loss) per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.06 |
|
|
$ |
(0.12 |
) |
|
$ |
0.01 |
|
|
$ |
(0.25 |
) |
Diluted |
|
$ |
0.06 |
|
|
$ |
(0.12 |
) |
|
$ |
0.01 |
|
|
$ |
(0.25 |
) |
Weighted-average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
10,678 |
|
|
|
10,623 |
|
|
|
10,581 |
|
|
|
11,010 |
|
Diluted |
|
|
11,424 |
|
|
|
10,623 |
|
|
|
11,424 |
|
|
|
11,010 |
|
NATURAL HEALTH TRENDS
CORP.CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)(In thousands)
|
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
96 |
|
|
$ |
(2,769 |
) |
Adjustments to reconcile net
income (loss) to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
301 |
|
|
|
290 |
|
Noncash lease expense |
|
|
1,199 |
|
|
|
1,336 |
|
Deferred income taxes |
|
|
979 |
|
|
|
(3 |
) |
Changes in assets and
liabilities: |
|
|
|
|
|
|
|
|
Inventories |
|
|
2,193 |
|
|
|
4,104 |
|
Other current assets |
|
|
923 |
|
|
|
(1,674 |
) |
Other assets |
|
|
120 |
|
|
|
2 |
|
Accounts payable |
|
|
206 |
|
|
|
(1,002 |
) |
Accrued commissions |
|
|
136 |
|
|
|
(8,683 |
) |
Other accrued expenses |
|
|
(598 |
) |
|
|
(1,779 |
) |
Deferred revenue |
|
|
(1,045 |
) |
|
|
(3,485 |
) |
Amounts held in eWallets |
|
|
(3,163 |
) |
|
|
(1,508 |
) |
Operating lease liabilities |
|
|
(1,120 |
) |
|
|
(1,392 |
) |
Income taxes payable |
|
|
(1,617 |
) |
|
|
(1,617 |
) |
Other current liabilities |
|
|
(140 |
) |
|
|
(235 |
) |
Long-term incentive |
|
|
— |
|
|
|
(333 |
) |
Net cash used in operating
activities |
|
|
(1,530 |
) |
|
|
(18,748 |
) |
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(147 |
) |
|
|
(181 |
) |
Net cash used in investing
activities |
|
|
(147 |
) |
|
|
(181 |
) |
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
|
Repurchase of common stock |
|
|
— |
|
|
|
(9,564 |
) |
Dividends paid |
|
|
(6,855 |
) |
|
|
(2,736 |
) |
Net cash used in financing
activities |
|
|
(6,855 |
) |
|
|
(12,300 |
) |
Effect of exchange rates on
cash, cash equivalents and restricted cash |
|
|
413 |
|
|
|
(428 |
) |
Net decrease in cash, cash
equivalents and restricted cash |
|
|
(8,119 |
) |
|
|
(31,657 |
) |
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH, beginning of period |
|
|
99,425 |
|
|
|
135,651 |
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH, end of period |
|
$ |
91,306 |
|
|
$ |
103,994 |
|
SUPPLEMENTAL DISCLOSURES OF
OTHER CASH FLOW INFORMATION: |
|
|
|
|
|
|
|
|
Issuance of treasury stock for employee awards, net |
|
$ |
— |
|
|
$ |
8,289 |
|
Right-of-use assets obtained in exchange for operating lease
liabilities |
|
$ |
2,724 |
|
|
$ |
5,058 |
|
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
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