• | Maintained strong gross profit and operating income margins |
• | Declared special dividend of $0.25 per share |
• | Increased quarterly dividend 7% to $0.15 per share |
• | Total revenue of $50.9 million decreased 1% compared to $51.5 million in the second quarter of 2017, and decreased 3% compared to $52.4 million in the first quarter of 2018. |
◦ | Revenue from the Company’s Hong Kong operations, which represented 88% of total revenue, was $44.6 million, a decrease of 2% compared to $45.7 million in the second quarter of 2017. |
◦ | Revenue outside of Hong Kong of $6.3 million increased 9% compared to $5.8 million in the second quarter of 2017. |
• | Gross profit was $40.5 million compared to $41.7 million in the second quarter of 2017, and $42.1 million in the first quarter of 2018. As a percent of total revenue, gross profit was 80% compared to 81% in the second quarter of 2017 and 80% in the first quarter of 2018. |
• | Operating income was $10.1 million compared to $12.9 million in the second quarter of 2017, and $10.0 million in the first quarter of 2018. As a percent of total revenue, operating income was 20% compared to 25% in the second quarter of 2017 and 19% in the first quarter of 2018. |
• | Net income was $9.0 million, or $0.80 per diluted share, compared to net income of $10.3 million, or $0.91 per diluted share, in the second quarter of 2017, and $8.8 million, or $0.78 per diluted share, in the first quarter of 2018. |
• | The number of Active Members1 decreased 2% to 93,000 at June 30, 2018, compared to 95,040 at March 31, 2018, and decreased 13% compared to 107,290 at June 30, 2017. |
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 of $103.3 million decreased 7% compared to $111.3 million in the first six months of 2017. |
• | Gross profit was $82.7 million compared to $90.3 million in the first six months of 2017. As a percent of total revenue, gross profit was 80% compared to 81% in the first six months of 2018. |
• | Operating income was $20.2 million compared to $25.9 million in the first six months of 2017. As a percent of total revenue, operating income was 20% compared to 23% in the first six months of 2017. |
• | Net income was $17.8 million, or $1.58 per diluted share, compared to net income of $20.7 million, or $1.84 per diluted share, in the first six months of 2017. |
• | Net cash provided by operating activities was $5.3 million, compared to $6.8 million in the second quarter of 2017. For the first six months of 2018, net cash provided by operating activities was $16.5 million, compared to $20.6 million in the first six months of 2017. |
• | On July 18, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.15, which represents a 7% 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 24, 2018 to stockholders of record as of August 14, 2018. |
Date: | Wednesday, August 1, 2018 |
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: | 13681507 |
Webcast: | http://public.viavid.com/index.php?id=130459 |
June 30, 2018 | December 31, 2017 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 128,270 | $ | 135,311 | |||
Inventories | 10,358 | 8,398 | |||||
Other current assets | 5,550 | 7,534 | |||||
Total current assets | 144,178 | 151,243 | |||||
Property and equipment, net | 1,025 | 1,149 | |||||
Goodwill | 1,764 | 1,764 | |||||
Restricted cash | 3,111 | 3,167 | |||||
Deferred tax asset | 1,435 | 1,435 | |||||
Other assets | 854 | 796 | |||||
Total assets | $ | 152,367 | $ | 159,554 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 2,995 | $ | 1,751 | |||
Income taxes payable | 257 | 309 | |||||
Accrued commissions | 10,399 | 11,170 | |||||
Other accrued expenses | 8,157 | 7,605 | |||||
Deferred revenue | 3,831 | 4,455 | |||||
Amounts held in eWallets | 14,902 | 15,152 | |||||
Other current liabilities | 1,446 | 1,479 | |||||
Total current liabilities | 41,987 | 41,921 | |||||
Income taxes payable | 17,395 | 19,052 | |||||
Deferred tax liability | 75 | 56 | |||||
Long-term incentive | 7,342 | 7,904 | |||||
Total liabilities | 66,799 | 68,933 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 13 | 13 | |||||
Additional paid-in capital | 86,415 | 86,683 | |||||
Retained earnings | 39,662 | 44,908 | |||||
Accumulated other comprehensive loss | (774 | ) | (413 | ) | |||
Treasury stock, at cost | (39,748 | ) | (40,570 | ) | |||
Total stockholders’ equity | 85,568 | 90,621 | |||||
Total liabilities and stockholders’ equity | $ | 152,367 | $ | 159,554 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(Unaudited) | |||||||||||||||
Net sales | $ | 50,910 | $ | 51,465 | $ | 103,277 | $ | 111,339 | |||||||
Cost of sales | 10,399 | 9,793 | 20,620 | 21,038 | |||||||||||
Gross profit | 40,511 | 41,672 | 82,657 | 90,301 | |||||||||||
Operating expenses: | |||||||||||||||
Commissions expense | 22,310 | 22,075 | 45,290 | 48,040 | |||||||||||
Selling, general and administrative expenses | 8,093 | 6,730 | 17,215 | 16,402 | |||||||||||
Total operating expenses | 30,403 | 28,805 | 62,505 | 64,442 | |||||||||||
Income from operations | 10,108 | 12,867 | 20,152 | 25,859 | |||||||||||
Other income, net | 53 | 80 | 216 | 236 | |||||||||||
Income before income taxes | 10,161 | 12,947 | 20,368 | 26,095 | |||||||||||
Income tax provision | 1,138 | 2,644 | 2,521 | 5,367 | |||||||||||
Net income | $ | 9,023 | $ | 10,303 | $ | 17,847 | $ | 20,728 | |||||||
Net income per common share: | |||||||||||||||
Basic | $ | 0.80 | $ | 0.92 | $ | 1.58 | $ | 1.84 | |||||||
Diluted | $ | 0.80 | $ | 0.91 | $ | 1.58 | $ | 1.84 | |||||||
Weighted-average number of common shares outstanding: | |||||||||||||||
Basic | 11,298 | 11,243 | 11,292 | 11,236 | |||||||||||
Diluted | 11,305 | 11,274 | 11,297 | 11,264 | |||||||||||
Cash dividends declared per common share | $ | 1.90 | $ | 0.45 | $ | 2.03 | $ | 0.89 |
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
(Unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 17,847 | $ | 20,728 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 235 | 276 | |||||
Stock-based compensation | — | 17 | |||||
Cumulative translation adjustment realized in net income | — | (258 | ) | ||||
Changes in assets and liabilities: | |||||||
Inventories | (2,057 | ) | 1,388 | ||||
Other current assets | 1,955 | 489 | |||||
Other assets | (73 | ) | (58 | ) | |||
Accounts payable | 1,246 | 226 | |||||
Income taxes payable | (1,705 | ) | 4,304 | ||||
Accrued commissions | (707 | ) | (915 | ) | |||
Other accrued expenses | 1,119 | (3,229 | ) | ||||
Deferred revenue | (592 | ) | (939 | ) | |||
Amounts held in eWallets | (192 | ) | (327 | ) | |||
Other current liabilities | (24 | ) | (24 | ) | |||
Long-term incentive | (562 | ) | (1,049 | ) | |||
Net cash provided by operating activities | 16,490 | 20,629 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (113 | ) | (170 | ) | |||
Net cash used in investing activities | (113 | ) | (170 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Dividends paid | (23,093 | ) | (10,078 | ) | |||
Net cash used in financing activities | (23,093 | ) | (10,078 | ) | |||
Effect of exchange rates on cash, cash equivalents and restricted cash | (381 | ) | (41 | ) | |||
Net (decrease) increase in cash, cash equivalents and restricted cash | (7,097 | ) | 10,340 | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 138,478 | 128,884 | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 131,381 | $ | 139,224 | |||
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||||
Issuance of treasury stock for employee awards, net | 554 | 1,393 |