NHTC - Natural Health Trends Reports Second Quarter 2020 Financial Results

August, 05 2020 09:00 AM Natural Health Trends Corp.

– Revenue of $16.4 million increased 10% from the first quarter of 2020
– Aggressive cost cutting measures facilitated a return to profitability in the second quarter of 2020
– Strong balance sheet with ample liquidity and $93.2 million in cash and cash equivalents
– Declared a quarterly cash dividend of $0.20 per share

HONG KONG, Aug. 05, 2020 (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 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 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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