Natural Health Trends Reports Third Quarter 2021 Financial Results

Sixth consecutive quarter of positive operating income and net income
Strong balance sheet with ample liquidity
Achieved strong sales momentum in Peru, Japan and India
Declared a quarterly cash dividend of $0.20 per share

HONG KONG, Nov. 03, 2021 (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 quarter ended September 30, 2021.

Third Quarter 2021 Financial Highlights

  • Revenue of  $14.3 million decreased 12% compared to $16.2 million in the second quarter of 2021 and increased 1% compared to $14.1 million in the third quarter of 2020.
  • Operating income of $479,000 increased 24% compared to $385,000 in the second quarter of 2021 and decreased 28% compared to $668,000 in the third quarter of 2020.
  • Net income was $471,000, or $0.04 per diluted share, compared to $229,000, or $0.02 per diluted share, in the second quarter of 2021 and $635,000, or $0.06 per diluted share, in the third quarter of 2020.
  • The number of Active Members1 decreased 2% to 45,950 at September 30, 2021 compared to 46,860 at June 30, 2021, and decreased 14% compared to 53,300 at September 30, 2020.
  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 2021 Financial Highlights

  • Revenue of $43.9 million decreased 3% compared to $45.5 million in the first nine months of 2020.
  • Operating income was $1.1 million compared to an operating loss of $597,000 in the first nine months of 2020.
  • Net income was $853,000, or $0.07 per diluted share, compared to net income of $96,000, or $0.01 per diluted share, in the first nine months of 2020.

Management Commentary

“During the third quarter our leaders continued to face challenges in conducting their business following renewed government-mandated restrictions and shutdowns amid scattered outbreaks in COVID-19 cases. The quarter marked the first quarter since the beginning of the pandemic we were unable to sponsor any in-person member events in China, Macau or Hong Kong and we had to abruptly cancel a previously scheduled event in September. Despite these difficult circumstances, we still managed to deliver revenue and order volume growth year-over-year, and our sixth consecutive quarter of positive operating income and net income,” commented Chris Sharng, President of Natural Health Trends Corp. “Revenue of $14.3 million increased 1% compared to the third quarter of 2020 driven by strength in Peru, Japan and India, which all experienced strong top-line growth year-over-year.”

Mr. Sharng continued, “Further, we are pleased to announce the SEC has closed its investigation and the IRS has completed its tax audit. We fully cooperated with the SEC and IRS throughout their respective review processes and we are pleased to put these matters behind us.” Mr. Sharng concluded, “As we continue to navigate the evolving operating environment resulting from the COVID-19 pandemic, we remain highly focused on the fundamentals of our business including supporting our members, maintaining our strong financial discipline, and operating our business efficiently.”

Balance Sheet and Cash Flow

  • Net cash used in operating activities was $557,000 in the first nine months of 2021, compared to net cash used of $1.5 million in the first nine months of 2020.
  • Total cash and cash equivalents were $84.6 million at September 30, 2021, down slightly from $88.1 million at June 30, 2021.
  • On November 1, 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 November 26, 2021 to stockholders of record as of November 16, 2021.

Third Quarter 2021 Financial Results Conference Call

Management will host a conference call to discuss the third quarter 2021 financial results today, Wednesday, November 3, 2021 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date: Wednesday, November 3, 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: 13723871
Webcast: http://public.viavid.com/index.php?id=146859

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 3, 2021 through 11:59 p.m. Eastern Time on November 17, 2021 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13723871.

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 February 26, 2021 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.

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


NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) 

    September 30,
2021
    December 31,
2020
 
    (Unaudited)          
ASSETS                
Current assets:                
Cash and cash equivalents   $ 84,640     $ 92,367  
Inventories     4,390       3,779  
Other current assets     4,386       3,595  
Total current assets     93,416       99,741  
Property and equipment, net     463       539  
Operating lease right-of-use assets     3,339       3,745  
Restricted cash     524       525  
Deferred tax asset     660       731  
Other assets     574       661  
Total assets   $ 98,976     $ 105,942  
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable   $ 879     $ 580  
Income taxes payable     1,844       1,481  
Accrued commissions     3,441       3,496  
Other accrued expenses     1,758       1,922  
Deferred revenue     6,038       3,091  
Amounts held in eWallets     6,756       8,503  
Operating lease liabilities     1,304       1,163  
Other current liabilities     847       1,270  
Total current liabilities     22,867       21,506  
Income taxes payable     12,130       13,748  
Deferred tax liability     215       216  
Operating lease liabilities     2,209       2,775  
Total liabilities     37,421       38,245  
Stockholders’ equity:                
Preferred stock            
Common stock     13       13  
Additional paid-in capital     86,102       86,102  
Retained earnings     1,820       7,822  
Accumulated other comprehensive loss     (476 )     (336 )
Treasury stock, at cost     (25,904 )     (25,904 )
Total stockholders’ equity     61,555       67,697  
Total liabilities and stockholders’ equity   $ 98,976     $ 105,942  


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,
 
    2021     2020     2021     2020  
Net sales   $ 14,276     $ 14,124     $ 43,897     $ 45,476  
Cost of sales     3,668       3,635       10,857       12,966  
Gross profit     10,608       10,489       33,040       32,510  
Operating expenses:                                
Commissions expense     6,027       5,620       18,468       19,336  
Selling, general and administrative expenses     4,102       4,201       13,488       13,771  
Total operating expenses     10,129       9,821       31,956       33,107  
Income (loss) from operations     479       668       1,084       (597 )
Other income (expense), net     (53 )     385       (92 )     603  
Income before income taxes     426       1,053       992       6  
Income tax provision (benefit)     (45 )     418       139       (90 )
Net income   $ 471     $ 635     $ 853     $ 96  
Net income per common share:                                
Basic   $ 0.04     $ 0.06     $ 0.08     $ 0.01  
Diluted   $ 0.04     $ 0.06     $ 0.07     $ 0.01  
Weighted average common shares outstanding:                                
Basic     11,063       10,678       10,969       10,581  
Diluted     11,424       11,424       11,424       11,424  


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

    Nine Months Ended September 30,  
    2021     2020  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net income   $ 853     $ 96  
Adjustments to reconcile net income to net cash used in operating activities:                
Depreciation and amortization     237       301  
Noncash lease expense     895       1,199  
Deferred income taxes     66       979  
Changes in assets and liabilities:                
Inventories     (675 )     2,193  
Other current assets     (823 )     923  
Other assets     65       120  
Accounts payable     300       206  
Income taxes payable     (1,253 )     (1,790 )
Accrued commissions     29       136  
Other accrued expenses     (157 )     (598 )
Deferred revenue     2,973       (1,045 )
Amounts held in eWallets     (1,716 )     (3,163 )
Operating lease liabilities     (935 )     (1,120 )
Other current liabilities     (416 )     33  
Net cash used in operating activities     (557 )     (1,530 )
CASH FLOWS FROM INVESTING ACTIVITIES:                
Purchases of property and equipment     (165 )     (147 )
Net cash used in investing activities     (165 )     (147 )
CASH FLOWS FROM FINANCING ACTIVITIES:                
Dividends paid     (6,855 )     (6,855 )
Net cash used in financing activities     (6,855 )     (6,855 )
Effect of exchange rates on cash, cash equivalents and restricted cash     (151 )     413  
Net decrease in cash, cash equivalents and restricted cash     (7,728 )     (8,119 )
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period     92,892       99,425  
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period   $ 85,164     $ 91,306  
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:                
Right-of-use assets obtained in exchange for operating lease liabilities   $ 516     $ 2,724  


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Source: Natural Health Trends Corp.