Natural Health Trends Reports Fourth Quarter and Full Year 2020 Financial Results
February 10 2021 - 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 fourth quarter and full year ended December 31, 2020.
Fourth Quarter 2020 Financial
Highlights
- Revenue of $16.6 million increased 17% compared to $14.1
million in the third quarter of 2020 and decreased 7% compared to
$17.8 million in the fourth quarter of 2019.
- Operating income was $1.3 million compared to $668,000 in the
third quarter of 2020 and operating loss of $3.2 million in the
fourth quarter of 2019. Operating loss for the fourth quarter of
2019 included an impairment charge of $1.8 million upon the early
adoption of a new accounting standard pertaining to goodwill that
arose from a merger transaction in March 2004.
- Net income was $747,000, or $0.07 per diluted share,
compared to $635,000, or $0.06 per diluted share, in the third
quarter of 2020 and net loss of $2.8 million, or $0.27 per diluted
share, in the fourth quarter of 2019.
- The number of Active Members1 decreased 2% to 52,230 at
December 31, 2020, compared to 53,300 at September 30, 2020,
and decreased 9% compared to 57,410 at December 31, 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. |
Full Year 2020 Financial Highlights
- Revenue of $62.1 million decreased 20% compared to $77.6
million in 2019.
- Operating income was $669,000 compared to operating loss
of $7.0 million in 2019. Operating loss included a goodwill
impairment charge of $1.8 million in 2019.
- Net income was $843,000, or $0.07 per diluted share, compared
to net loss of $5.6 million, or $0.52 per diluted share, in
2019.
Management Commentary
“2020 revenue of $62.1 million decreased 20% compared to $77.6
million in 2019 as elements such as government-mandated travel
restrictions, shutdowns and limitations surrounding in-person
events and activities hindered our leaders’ ability to conduct
business,” commented Chris Sharng, President of Natural Health
Trends Corp. “However, for the fourth quarter of 2020,
revenue of $16.6 million increased 17% over the third quarter
of 2020 with orders improving 14% as restrictions began
to ease in our key markets.”
Mr. Sharng continued, “The cost savings initiatives we
implemented in the second half of 2019 resulted in 2020 cost
reductions of over $9.0 million year-over-year. As a result, we
reported positive operating income for both the full year and the
third consecutive quarter which helped fuel positive cash provided
by operating activities in 2020.”
Balance Sheet and Cash Flow
- Net cash provided by operating activities was $1.9
million in 2020 compared to net cash used
in operating activities of $18.6
million in 2019.
- Total cash and cash equivalents were $92.4 million as of
December 31, 2020, down from $96.0 million as of December 31,
2019.
- On February 8, 2021, 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 March 5, 2021 to
stockholders of record as of February 23, 2021.
The Company expects to issue its 2020 audited financial results
in late February with its Annual Report on Form 10-K to be filed
with the Securities and Exchange Commission. The financial results
are preliminary and the accompanying financial statements have not
been audited or have not yet been reviewed by the Company’s
independent accountants. Significant updates and revisions may be
required before the release of the Company’s 2020 audited financial
results.
Fourth Quarter and Full Year 2020 Financial Results
Conference Call
Management will host a conference call to discuss the fourth
quarter and full year 2020 financial results today, Wednesday,
February 10, 2021 at 11:30 a.m. Eastern Time. The conference call
details are as follows:
Date: |
Wednesday, February 10, 2021 |
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: |
13714821 |
Webcast: |
http://public.viavid.com/index.php?id=142946 |
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 February 10, 2021 through 11:59 p.m. Eastern Time on
February 24, 2021 by dialing 1-844-512-2921 (domestic) and
1-412-317-6671 (international) and referencing the replay pin
number: 13714821.
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)
|
December 31, |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
(Unaudited) |
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
92,367 |
|
|
$ |
96,035 |
|
Inventories |
|
3,779 |
|
|
|
6,404 |
|
Other current assets |
|
3,595 |
|
|
|
5,936 |
|
Total current assets |
|
99,741 |
|
|
|
108,375 |
|
Property and equipment,
net |
|
539 |
|
|
|
735 |
|
Operating lease right-of-use
assets |
|
3,745 |
|
|
|
3,135 |
|
Restricted cash |
|
525 |
|
|
|
3,390 |
|
Deferred tax asset |
|
731 |
|
|
|
2,039 |
|
Other assets |
|
661 |
|
|
|
823 |
|
Total assets |
$ |
105,942 |
|
|
$ |
118,497 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
580 |
|
|
$ |
680 |
|
Income taxes payable |
|
1,481 |
|
|
|
173 |
|
Accrued commissions |
|
3,496 |
|
|
|
2,931 |
|
Other accrued expenses |
|
1,922 |
|
|
|
2,387 |
|
Deferred revenue |
|
3,091 |
|
|
|
4,506 |
|
Amounts held in eWallets |
|
8,503 |
|
|
|
12,938 |
|
Operating lease liabilities |
|
1,163 |
|
|
|
1,655 |
|
Other current liabilities |
|
1,270 |
|
|
|
1,032 |
|
Total current liabilities |
|
21,506 |
|
|
|
26,302 |
|
Income taxes payable |
|
13,748 |
|
|
|
15,365 |
|
Deferred tax liability |
|
216 |
|
|
|
202 |
|
Operating lease
liabilities |
|
2,775 |
|
|
|
1,564 |
|
Total liabilities |
|
38,245 |
|
|
|
43,433 |
|
Stockholders’ equity: |
|
|
|
|
|
|
|
Preferred stock |
|
— |
|
|
|
— |
|
Common stock |
|
13 |
|
|
|
13 |
|
Additional paid-in capital |
|
86,102 |
|
|
|
86,102 |
|
Retained earnings |
|
7,822 |
|
|
|
16,117 |
|
Accumulated other comprehensive loss |
|
(336 |
) |
|
|
(1,264 |
) |
Treasury stock, at cost |
|
(25,904 |
) |
|
|
(25,904 |
) |
Total stockholders’
equity |
|
67,697 |
|
|
|
75,064 |
|
Total liabilities and
stockholders’ equity |
$ |
105,942 |
|
|
$ |
118,497 |
|
|
|
|
|
|
|
|
|
NATURAL HEALTH TRENDS
CORP. CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share
data)
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
|
|
|
Net sales |
$ |
16,595 |
|
|
$ |
17,835 |
|
|
$ |
62,071 |
|
|
$ |
77,614 |
|
Cost of sales |
|
4,024 |
|
|
|
5,102 |
|
|
|
16,990 |
|
|
|
20,104 |
|
Gross profit |
|
12,571 |
|
|
|
12,733 |
|
|
|
45,081 |
|
|
|
57,510 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commissions expense |
|
6,868 |
|
|
|
7,291 |
|
|
|
26,204 |
|
|
|
35,549 |
|
Selling, general and administrative expenses |
|
4,437 |
|
|
|
6,924 |
|
|
|
18,208 |
|
|
|
27,220 |
|
Goodwill impairment |
|
— |
|
|
|
1,764 |
|
|
|
— |
|
|
|
1,764 |
|
Total operating expenses |
|
11,305 |
|
|
|
15,979 |
|
|
|
44,412 |
|
|
|
64,533 |
|
Income (loss) from
operations |
|
1,266 |
|
|
|
(3,246 |
) |
|
|
669 |
|
|
|
(7,023 |
) |
Other income, net |
|
218 |
|
|
|
298 |
|
|
|
821 |
|
|
|
1,426 |
|
Income (loss) before income
taxes |
|
1,484 |
|
|
|
(2,948 |
) |
|
|
1,490 |
|
|
|
(5,597 |
) |
Income tax provision
(benefit) |
|
737 |
|
|
|
(106 |
) |
|
|
647 |
|
|
|
14 |
|
Net income (loss) |
$ |
747 |
|
|
$ |
(2,842 |
) |
|
$ |
843 |
|
|
$ |
(5,611 |
) |
Net income (loss) per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.07 |
|
|
$ |
(0.27 |
) |
|
$ |
0.08 |
|
|
$ |
(0.52 |
) |
Diluted |
$ |
0.07 |
|
|
$ |
(0.27 |
) |
|
$ |
0.07 |
|
|
$ |
(0.52 |
) |
Weighted-average number of
common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
10,777 |
|
|
|
10,456 |
|
|
|
10,630 |
|
|
|
10,871 |
|
Diluted |
|
11,424 |
|
|
|
10,456 |
|
|
|
11,424 |
|
|
|
10,871 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NATURAL HEALTH TRENDS
CORP.CONSOLIDATED STATEMENTS OF CASH
FLOWS (In thousands)
|
Year Ended December 31, |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
(Unaudited) |
|
|
|
|
|
Net income (loss) |
$ |
843 |
|
|
$ |
(5,611 |
) |
Adjustments to reconcile net
income (loss) to net cash provided by (used in) operating
activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
410 |
|
|
|
387 |
|
Noncash lease expense |
|
1,532 |
|
|
|
1,760 |
|
Deferred income taxes |
|
1,339 |
|
|
|
(820 |
) |
Goodwill impairment |
|
— |
|
|
|
1,764 |
|
Changes in assets and
liabilities: |
|
|
|
|
|
|
|
Inventories |
|
2,700 |
|
|
|
5,820 |
|
Other current assets |
|
2,322 |
|
|
|
(554 |
) |
Other assets |
|
181 |
|
|
|
— |
|
Accounts payable |
|
(102 |
) |
|
|
(953 |
) |
Income taxes payable |
|
(311 |
) |
|
|
(1,731 |
) |
Accrued commissions |
|
566 |
|
|
|
(9,598 |
) |
Other accrued expenses |
|
(471 |
) |
|
|
(2,797 |
) |
Deferred revenue |
|
(1,433 |
) |
|
|
(2,315 |
) |
Amounts held in eWallets |
|
(4,491 |
) |
|
|
(1,742 |
) |
Operating lease liabilities |
|
(1,427 |
) |
|
|
(1,807 |
) |
Other current liabilities |
|
227 |
|
|
|
(108 |
) |
Long-term incentive |
|
— |
|
|
|
(333 |
) |
Net cash provided by (used in)
operating activities |
|
1,885 |
|
|
|
(18,638 |
) |
CASH FLOWS FROM INVESTING
ACTIVITIES: |
|
|
|
|
|
|
|
Purchases of property and equipment |
|
(211 |
) |
|
|
(189 |
) |
Net cash used in investing
activities |
|
(211 |
) |
|
|
(189 |
) |
CASH FLOWS FROM FINANCING
ACTIVITIES: |
|
|
|
|
|
|
|
Repurchase of common stock |
|
— |
|
|
|
(10,117 |
) |
Dividends paid |
|
(9,138 |
) |
|
|
(7,344 |
) |
Net cash used in financing
activities |
|
(9,138 |
) |
|
|
(17,461 |
) |
Effect of exchange rates on
cash, cash equivalents and restricted cash |
|
931 |
|
|
|
62 |
|
Net decrease in cash, cash
equivalents and restricted cash |
|
(6,533 |
) |
|
|
(36,226 |
) |
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH, beginning of period |
|
99,425 |
|
|
|
135,651 |
|
CASH, CASH EQUIVALENTS AND
RESTRICTED CASH, end of period |
$ |
92,892 |
|
|
$ |
99,425 |
|
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 |
$ |
2,747 |
|
|
$ |
5,082 |
|
|
|
|
|
|
|
|
|
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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