• | Expanded operating income margin to 25% |
• | Increased quarterly dividend 10% to $0.11 per share |
• | Declared special dividend of $0.25 per share |
• | Announced official market entry into Peru |
• | Received preliminary approval for Malaysian Direct Selling License |
• | Total revenue decreased 36% to $51.5 million, compared to $80.4 million in the second quarter of 2016. |
◦ | Revenue from the Company’s Hong Kong operations, which represented 89% of total revenue, decreased 38% to $45.7 million, compared to $73.3 million in the second quarter of 2016. |
◦ | Revenue outside of Hong Kong decreased 18% to $5.8 million, compared to $7.1 million in the second quarter of 2016, and was partly mitigated by an increase in Europe of 256% year-over-year. |
• | Operating income decreased 14% to $12.9 million, compared to $14.9 million in the second quarter of 2016. As a percent of total revenue, operating income was 25%, compared to 19% in the second quarter of 2016. |
• | Net income was $10.3 million, or $0.91 per diluted share, compared to $12.2 million, or $1.07 per diluted share, in the second quarter of 2016. |
• | The number of Active Members1 decreased 6% to 107,290 at June 30, 2017, compared to 113,710 at March 31, 2017, and decreased 15% compared to 126,440 at June 30, 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. |
• | Total revenue decreased 28% to $111.3 million, compared to $154.7 million in the first six months of 2016. |
• | Operating income decreased 11% to $25.9 million, compared to $28.9 million in the first six months of 2016. As a percent of total revenue, operating income was 23%, compared to 19% in the first six months of 2016. |
• | Net income was $20.7 million, or $1.84 per diluted share, compared to $23.5 million, or $2.03 per diluted share, in the first six months of 2016. |
• | Net cash provided by operating activities in the second quarter of 2017 was $6.8 million, compared to $16.6 million in the second quarter of 2016. For the first six months of 2017, net cash provided by operating activities was $20.6 million, compared to $30.4 million in the first six months of 2016. |
• | On July 31, 2017, the Company's Board of Directors declared a quarterly dividend of $0.11 per share on outstanding common stock, which represents a 10% increase over the prior quarter dividend, as well as a special cash dividend of $0.25 per share on outstanding common stock. The dividends will be payable on August 31, 2017 to stockholders of record as of August 21, 2017. |
Date: | Wednesday, August 2, 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: | 13664982 |
Webcast: | http://public.viavid.com/index.php?id=125041 |
June 30, 2017 | December 31, 2016 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 136,261 | $ | 125,921 | |||
Inventories | 9,804 | 11,257 | |||||
Other current assets | 3,638 | 4,066 | |||||
Total current assets | 149,703 | 141,244 | |||||
Property and equipment, net | 1,292 | 1,388 | |||||
Goodwill | 1,764 | 1,764 | |||||
Restricted cash | 3,039 | 2,963 | |||||
Other assets | 768 | 692 | |||||
Total assets | $ | 156,566 | $ | 148,051 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 2,371 | $ | 2,145 | |||
Income taxes payable | 4,971 | 663 | |||||
Accrued commissions | 12,666 | 13,611 | |||||
Other accrued expenses | 10,366 | 14,989 | |||||
Deferred revenue | 3,994 | 4,948 | |||||
Amounts held in eWallets | 18,713 | 19,165 | |||||
Other current liabilities | 1,622 | 1,633 | |||||
Total current liabilities | 54,703 | 57,154 | |||||
Deferred tax liability | 285 | 268 | |||||
Long-term incentive | 7,179 | 8,190 | |||||
Total liabilities | 62,167 | 65,612 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 13 | 13 | |||||
Additional paid-in capital | 86,665 | 86,574 | |||||
Retained earnings | 49,198 | 38,548 | |||||
Accumulated other comprehensive loss | (907 | ) | (807 | ) | |||
Treasury stock, at cost | (40,570 | ) | (41,889 | ) | |||
Total stockholders’ equity | 94,399 | 82,439 | |||||
Total liabilities and stockholders’ equity | $ | 156,566 | $ | 148,051 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(Unaudited) | |||||||||||||||
Net sales | $ | 51,465 | $ | 80,391 | $ | 111,339 | $ | 154,737 | |||||||
Cost of sales | 9,793 | 15,059 | 21,038 | 29,339 | |||||||||||
Gross profit | 41,672 | 65,332 | 90,301 | 125,398 | |||||||||||
Operating expenses: | |||||||||||||||
Commissions expense | 22,075 | 37,883 | 48,040 | 72,969 | |||||||||||
Selling, general and administrative expenses | 6,590 | 12,431 | 16,126 | 23,335 | |||||||||||
Depreciation and amortization | 140 | 91 | 276 | 180 | |||||||||||
Total operating expenses | 28,805 | 50,405 | 64,442 | 96,484 | |||||||||||
Income from operations | 12,867 | 14,927 | 25,859 | 28,914 | |||||||||||
Other income (expense), net | 80 | 16 | 236 | (8 | ) | ||||||||||
Income before income taxes | 12,947 | 14,943 | 26,095 | 28,906 | |||||||||||
Income tax provision | 2,644 | 2,742 | 5,367 | 5,425 | |||||||||||
Net income | $ | 10,303 | $ | 12,201 | $ | 20,728 | $ | 23,481 | |||||||
Net income per common share: | |||||||||||||||
Basic | $ | 0.92 | $ | 1.08 | $ | 1.84 | $ | 2.03 | |||||||
Diluted | $ | 0.91 | $ | 1.07 | $ | 1.84 | $ | 2.03 | |||||||
Weighted-average number of common shares outstanding: | |||||||||||||||
Basic | 11,243 | 11,333 | 11,236 | 11,553 | |||||||||||
Diluted | 11,274 | 11,359 | 11,264 | 11,579 | |||||||||||
Cash dividends declared per common share | $ | 0.45 | $ | 0.06 | $ | 0.89 | $ | 0.11 |
Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
(Unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 20,728 | $ | 23,481 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 276 | 180 | |||||
Stock-based compensation | 17 | 84 | |||||
Cumulative translation adjustment realized in net income | (258 | ) | 132 | ||||
Changes in assets and liabilities: | |||||||
Inventories | 1,388 | (1,865 | ) | ||||
Other current assets | 489 | (612 | ) | ||||
Other assets | (58 | ) | 2 | ||||
Accounts payable | 226 | 665 | |||||
Income taxes payable | 4,304 | 487 | |||||
Accrued commissions | (915 | ) | (989 | ) | |||
Other accrued expenses | (3,229 | ) | 2,597 | ||||
Deferred revenue | (939 | ) | 4,816 | ||||
Amounts held in eWallets | (327 | ) | 1,759 | ||||
Other current liabilities | (24 | ) | 203 | ||||
Long-term incentive | (1,049 | ) | (506 | ) | |||
Net cash provided by operating activities | 20,629 | 30,434 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (170 | ) | (524 | ) | |||
Net cash used in investing activities | (170 | ) | (524 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Repurchase of common stock | — | (23,704 | ) | ||||
Dividends paid | (10,078 | ) | (1,262 | ) | |||
Net cash used in financing activities | (10,078 | ) | (24,966 | ) | |||
Effect of exchange rates on cash and cash equivalents | (41 | ) | (209 | ) | |||
Net increase in cash and cash equivalents | 10,340 | 4,735 | |||||
CASH AND CASH EQUIVALENTS, beginning of period | 125,921 | 104,914 | |||||
CASH AND CASH EQUIVALENTS, end of period | $ | 136,261 | $ | 109,649 | |||
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||||
Issuance of treasury stock for employee awards, net | 1,393 | 1,741 |