NHTC - Natural Health Trends Reports First Quarter 2019 Financial Results

May, 07 2019 09:00 AM Natural Health Trends Corp.

HONG KONG, May 07, 2019 (GLOBE NEWSWIRE) -- 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 first quarter ended March 31, 2019.

First Quarter 2019 Financial Highlights

Total revenue of $19.3 million decreased 63% compared to $52.4 million in the first quarter of 2018 primarily due to a decline in Greater China revenue.

Gross profit was $14.1 million compared to $42.1 million in the first quarter of 2018. As a percent of total revenue, gross profit was 73% compared to 81% in the first quarter of 2018 primarily due to product promotions and higher logistics costs.

Operating loss was $2.7 million compared to operating income of $10.0 million in the first quarter of 2018.

Net loss was $1.9 million, or $0.17 per diluted share, compared to net income of $8.8 million, or $0.78 per diluted share, in the first quarter of 2018.

The number of Active Members¹ decreased 11% to 87,340 at March 31, 2019, compared to 97,840 at December 31, 2018, and decreased 8% compared to 95,040 at March 31, 2018.

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.

Management Commentary

“As we previously disclosed, in response to the Chinese government’s announcement of its 100-day campaign in January, as was the case with many peer companies, we voluntarily suspended our member activities,” commented Chris Sharng, President of Natural Health Trends Corp. “The suspension covered more than 90% of the number of days in the first quarter, which also included the Chinese New Year holidays. We have made it our priority to fully cooperate with the government and to proactively ensure we continue to conduct our business in compliance with all applicable laws in China. While our financial performance was adversely impacted by this initiative during the quarter, we strongly support the actions taken by the Chinese government to root out bad products and deceptive practices in order to protect Chinese consumers.”

Mr. Sharng further commented, “While the 100-day campaign expired in late April, there has been no official conclusion to end the program. We have great confidence in our ability to navigate the business through uncertain times and to renew growth once the macroclimate improves. While we are cautious as it relates to our overall performance for the remainder of 2019 given the uncertain trade and regulatory environment, we were pleased with the outcome of our successful major event in Hong Kong at the end of March and ongoing support of our market leaders. We were also thrilled to have launched NHT Global in India and remain encouraged by the continued growth we have been experiencing in Latin America, led by Peru.”

Corporate Development

On April 29, 2019, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC stating that the Company has regained compliance with Nasdaq Listing Rule 5250(c)(1), which requires timely filing of all required periodic reports with the Securities and Exchange Commission. The letter was sent to confirm the Company’s compliance with the rule following the April 26, 2019 filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

Balance Sheet and Cash Flow

Net cash used in operating activities was $11.4 million, compared to net cash provided by operating activities of $11.1 million in the first quarter of 2018.

Total cash and cash equivalents were $118.7 million as of March 31, 2019, down from $132.7 million as of December 31, 2018.

As of March 31, 2019, $32.0 million of the stock repurchase program previously approved on July 28, 2015 and increased on January 13, 2016 remained available for future purchases, inclusive of related estimated income tax.

First Quarter 2019 Financial Results Conference Call

Management will host a conference call to discuss the first quarter 2019 financial results today, Tuesday, May 7, 2019 at 1:30 p.m. Eastern Time. The conference call details are as follows:

Date:

Tuesday, May 7, 2019

Time:

1:30 p.m. Eastern Time / 10:30 a.m. Pacific Time

Dial-in:

1-877-407-0789 (Domestic)
1-201-689-8562 (International)

Conference ID:

13689758

Webcast:

http://public.viavid.com/index.php?id=134051

For those unable to participate during the live broadcast, a replay of the call will also be available from 4:30 p.m. Eastern Time on May 7, 2019 through 11:59 p.m. Eastern Time on May 21, 2019 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13689758.

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 April 26, 2019 with the Securities and Exchange Commission. 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)


March 31, 2019

December 31, 2018

(Unaudited)


ASSETS



Current assets:



Cash and cash equivalents
$
118,699


$
132,653

Inventories
12,310


12,165

Other current assets
6,551


5,369

Total current assets
137,560


150,187

Property and equipment, net
888


934

Operating lease right-of-use assets
4,032


—

Goodwill
1,764


1,764

Restricted cash
3,068


2,998

Deferred tax asset
1,207


1,207

Other assets
829


831

Total assets
$
149,348


$
157,921

LIABILITIES AND STOCKHOLDERS’ EQUITY



Current liabilities:



Accounts payable
$
1,456


$
1,631

Accrued commissions
8,909


12,502

Other accrued expenses
4,823


6,121

Deferred revenue
3,754


6,795

Amounts held in eWallets
14,435


14,611

Operating lease liabilities
1,762


—

Other current liabilities
1,191


1,424

Total current liabilities
36,330


43,084

Income taxes payable
16,982


16,982

Deferred tax liability
186


186

Long-term incentive
7,650


7,808

Operating lease liabilities
2,345


—

Total liabilities
63,493


68,060

Stockholders’ equity:



Preferred stock
—


—

Common stock
13


13

Additional paid-in capital
86,249


86,415

Retained earnings
39,772


44,431

Accumulated other comprehensive loss
(974
)

(1,250
)
Treasury stock, at cost
(39,205
)

(39,748
)
Total stockholders’ equity
85,855


89,861

Total liabilities and stockholders’ equity
$
149,348


$
157,921

NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)


Three Months Ended March 31,

2019

2018
Net sales
$
19,328


$
52,367

Cost of sales
5,224


10,221

Gross profit
14,104


42,146

Operating expenses:



Commissions expense
9,498


22,980

Selling, general and administrative expenses
7,315


9,122

Total operating expenses
16,813


32,102

Income (loss) from operations
(2,709
)

10,044

Other income, net
432


163

Income (loss) before income taxes
(2,277
)

10,207

Income tax provision (benefit)
(354
)

1,383

Net income (loss)
$
(1,923
)

$
8,824

Net income (loss) per common share:



Basic
$
(0.17
)

$
0.78

Diluted
$
(0.17
)

$
0.78

Weighted-average number of common shares outstanding:



Basic
11,333


11,286

Diluted
11,333


11,288

NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)


Three Months Ended March 31,

2019

2018
CASH FLOWS FROM OPERATING ACTIVITIES:



Net income (loss)
$
(1,923
)

$
8,824

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:



Depreciation and amortization
93


131

Noncash lease expense
447


—

Changes in assets and liabilities:



Inventories
(192
)

473

Other current assets
(1,159
)

1,548

Other assets
(2
)

(5
)
Accounts payable
(174
)

920

Accrued commissions
(3,575
)

(1,119
)
Other accrued expenses
(795
)

1,483

Deferred revenue
(3,030
)

(333
)
Amounts held in eWallets
(142
)

(466
)
Operating lease liabilities
(499
)

—

Other current liabilities
(241
)

(3
)
Long-term incentive
(158
)

(308
)
Net cash provided by (used in) operating activities
(11,350
)

11,145

CASH FLOWS FROM INVESTING ACTIVITIES:



Purchases of property and equipment
(46
)

(17
)
Net cash used in investing activities
(46
)

(17
)
CASH FLOWS FROM FINANCING ACTIVITIES:



Dividends paid
(2,736
)

(1,479
)
Net cash used in financing activities
(2,736
)

(1,479
)
Effect of exchange rates on cash, cash equivalents and restricted cash
248


247

Net increase (decrease) in cash, cash equivalents and restricted cash
(13,884
)

9,896

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period
135,651


138,478

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
$
121,767


$
148,374

SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:



Issuance of treasury stock for employee awards, net
$
377


$
554

Right-of-use assets obtained in exchange for operating lease liabilities
$
4,462


$
—

CONTACTS:

Company Contact:
Scott Davidson
Senior Vice President and Chief Financial Officer
Natural Health Trends Corp.
Tel (Hong Kong): +852-3107-0800
Tel (U.S.): 310-541-0888
scott.davidson@nhtglobal.com

Investor Contact:
ADDO Investor Relations
Tel: 310-829-5400
investor.relations@nhtglobal.com

Company Name:	Natural Health Trends Corp.
Stock Symbol:	NHTC
Market:	NASDAQ
Website:	naturalhealthtrendscorp.com

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