• | Expanded operating income margin to 21.7% |
• | Increased quarterly dividend 11% to $0.10 per share |
• | Declared special dividend of $0.35 per share |
• | Total revenue decreased 19% to $59.9 million, compared to $74.3 million in the first quarter of 2016. |
◦ | Revenue from the Company’s Hong Kong operations, which represented 91% of total revenue, decreased 20% to $54.6 million, compared to $68.2 million in the first quarter of 2016. |
◦ | Outside of Hong Kong, revenue in China decreased 47% year-over-year and was offset by increases in North America and Europe of 37% and 297% year-over-year, respectively. |
• | Operating income decreased 7% to $13.0 million, compared to $14.0 million in the first quarter of 2016. As a percent of total revenue, operating income was 21.7%, compared to 18.8% in the first quarter of 2016. |
• | Net income was $10.4 million, or $0.93 per diluted share, compared to $11.3 million, or $0.95 per diluted share, in the first quarter of 2016. |
• | The number of Active Members1 decreased 4% to 113,710 at March 31, 2017, compared to 118,960 at December 31, 2016, and decreased 5% compared to 119,800 at March 31, 2016. |
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. |
• | Net cash provided by operating activities in the first quarter of 2017 was $13.8 million, consistent with the first quarter of 2016. |
• | On April 24, 2017, the Company's Board of Directors declared a quarterly dividend of $0.10 per share on outstanding common stock, which represents an 11% increase over the prior quarter dividend, and a special cash dividend of $0.35 per share on outstanding common stock. The dividends will be payable on May 19, 2017 to stockholders of record as of May 9, 2017. |
Date: | Thursday, April 27, 2017 |
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: | 13657892 |
Webcast: | http://public.viavid.com/index.php?id=123414 |
March 31, 2017 | December 31, 2016 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 134,672 | $ | 125,921 | |||
Inventories | 9,170 | 11,257 | |||||
Other current assets | 2,687 | 4,066 | |||||
Total current assets | 146,529 | 141,244 | |||||
Property and equipment, net | 1,330 | 1,388 | |||||
Goodwill | 1,764 | 1,764 | |||||
Restricted cash | 2,992 | 2,963 | |||||
Other assets | 776 | 692 | |||||
Total assets | $ | 153,391 | $ | 148,051 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 2,085 | $ | 2,145 | |||
Income taxes payable | 2,464 | 663 | |||||
Accrued commissions | 13,196 | 13,611 | |||||
Other accrued expenses | 12,048 | 14,989 | |||||
Deferred revenue | 4,301 | 4,948 | |||||
Amounts held in eWallets | 20,261 | 19,165 | |||||
Other current liabilities | 1,954 | 1,633 | |||||
Total current liabilities | 56,309 | 57,154 | |||||
Deferred tax liability | 266 | 268 | |||||
Long-term incentive | 7,720 | 8,190 | |||||
Total liabilities | 64,295 | 65,612 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 13 | 13 | |||||
Additional paid-in capital | 86,657 | 86,574 | |||||
Retained earnings | 43,992 | 38,548 | |||||
Accumulated other comprehensive loss | (996 | ) | (807 | ) | |||
Treasury stock, at cost | (40,570 | ) | (41,889 | ) | |||
Total stockholders’ equity | 89,096 | 82,439 | |||||
Total liabilities and stockholders’ equity | $ | 153,391 | $ | 148,051 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(Unaudited) | |||||||
Net sales | $ | 59,874 | $ | 74,346 | |||
Cost of sales | 11,245 | 14,280 | |||||
Gross profit | 48,629 | 60,066 | |||||
Operating expenses: | |||||||
Commissions expense | 25,965 | 35,086 | |||||
Selling, general and administrative expenses | 9,536 | 10,904 | |||||
Depreciation and amortization | 136 | 89 | |||||
Total operating expenses | 35,637 | 46,079 | |||||
Income from operations | 12,992 | 13,987 | |||||
Other income (expense), net | 156 | (24 | ) | ||||
Income before income taxes | 13,148 | 13,963 | |||||
Income tax provision | 2,723 | 2,683 | |||||
Net income | $ | 10,425 | $ | 11,280 | |||
Net income per common share: | |||||||
Basic | $ | 0.93 | $ | 0.96 | |||
Diluted | $ | 0.93 | $ | 0.95 | |||
Weighted-average number of common shares outstanding: | |||||||
Basic | 11,229 | 11,773 | |||||
Diluted | 11,251 | 11,817 | |||||
Cash dividends declared per common share | $ | 0.44 | $ | 0.05 |
Three Months Ended March 31, | |||||||
2017 | 2016 | ||||||
(Unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 10,425 | $ | 11,280 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 136 | 89 | |||||
Stock-based compensation | 9 | 74 | |||||
Cumulative translation adjustment realized in net income | (258 | ) | — | ||||
Changes in assets and liabilities: | |||||||
Inventories | 2,091 | 189 | |||||
Other current assets | 1,419 | (45 | ) | ||||
Other assets | (62 | ) | 5 | ||||
Accounts payable | (61 | ) | (840 | ) | |||
Income taxes payable | 1,798 | 2,620 | |||||
Accrued commissions | (428 | ) | (2,923 | ) | |||
Other accrued expenses | (1,555 | ) | 925 | ||||
Deferred revenue | (647 | ) | 2,445 | ||||
Amounts held in eWallets | 1,138 | 280 | |||||
Other current liabilities | 314 | (157 | ) | ||||
Long-term incentive | (508 | ) | (120 | ) | |||
Net cash provided by operating activities | 13,811 | 13,822 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (72 | ) | (240 | ) | |||
Net cash used in investing activities | (72 | ) | (240 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Repurchase of common stock | — | (18,319 | ) | ||||
Dividends paid | (4,981 | ) | (576 | ) | |||
Net cash used in financing activities | (4,981 | ) | (18,895 | ) | |||
Effect of exchange rates on cash and cash equivalents | (7 | ) | 30 | ||||
Net increase (decrease) in cash and cash equivalents | 8,751 | (5,283 | ) | ||||
CASH AND CASH EQUIVALENTS, beginning of period | 125,921 | 104,914 | |||||
CASH AND CASH EQUIVALENTS, end of period | $ | 134,672 | $ | 99,631 | |||
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||||
Issuance of treasury stock for employee awards, net | 1,393 | — |