– | Revenue of $23.4 million, a 21% increase compared to the first quarter of 2019 |
– | Net income of $0.4 million |
– | Repurchased $6.7 million of common stock |
• | Revenue of $23.4 million decreased 54% compared to $50.9 million in the second quarter of 2018 and increased 21% compared to $19.3 million in the first quarter of 2019. |
• | Gross profit was $18.0 million compared to $40.5 million in the second quarter of 2018, and $14.1 million in the first quarter of 2019. As a percent of total revenue, gross profit was 77% compared to 80% in the second quarter of 2018 and 73% in the first quarter of 2019. |
• | Operating loss was $4,000 compared to operating income of $10.1 million in the second quarter of 2018, and operating loss of $2.7 million in the first quarter of 2019. |
• | Net income was $397,000, or $0.04 per diluted share, compared to $9.0 million, or $0.80 per diluted share, in the second quarter of 2018, and a net loss of $1.9 million, or $0.17 per diluted share, in the first quarter of 2019. |
• | The number of Active Members1 decreased 10% to 78,280 at June 30, 2019, compared to 87,340 at March 31, 2019, and decreased 16% compared to 93,000 at June 30, 2018. |
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. |
• | Revenue of $42.8 million decreased 59% compared to $103.3 million in the first six months of 2018. |
• | Gross profit was $32.1 million compared to $82.7 million in the first six months of 2018. As a percent of total revenue, gross profit was 75% compared to 80% in the first six months of 2018. |
• | Operating loss was $2.7 million compared to operating income of $20.2 million in the first six months of 2018. |
• | Net loss was $1.5 million, or $0.14 per diluted share, compared to net income of $17.8 million, or $1.58 per diluted share, in the first six months of 2018. |
• | Net cash used in operating activities was $3.7 million, including a $1.7 million installment payment on tax payables arising from the 2016 Tax Reform Act effect, compared to $11.4 million in the first quarter of 2019, and net cash provided by operating activities of $5.3 million in the second quarter of 2018. For the first six months of 2019, net cash used in operating activities was $15.1 million, compared to net cash provided by operating activities of $16.5 million in the first six months of 2018. |
• | Total cash and cash equivalents were $108.1 million as of June 30, 2019, down from $132.7 million as of December 31, 2018. |
• | The Company repurchased 612,729 shares of its common stock at an average price of $10.90 for a total of $6.7 million during the second quarter of 2019. As of June 30, 2019, $25.3 million of the stock repurchase program remained available for future purchases, inclusive of related estimated income tax. |
Date: | Wednesday, August 7, 2019 |
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: | 13691790 |
Webcast: | http://public.viavid.com/index.php?id=134956 |
June 30, 2019 | December 31, 2018 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 108,106 | $ | 132,653 | |||
Inventories | 10,343 | 12,165 | |||||
Other current assets | 6,127 | 5,369 | |||||
Total current assets | 124,576 | 150,187 | |||||
Property and equipment, net | 887 | 934 | |||||
Operating lease right-of-use assets | 3,796 | — | |||||
Goodwill | 1,764 | 1,764 | |||||
Restricted cash | 3,000 | 2,998 | |||||
Deferred tax asset | 1,210 | 1,207 | |||||
Other assets | 858 | 831 | |||||
Total assets | $ | 136,091 | $ | 157,921 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 675 | $ | 1,631 | |||
Accrued commissions | 7,051 | 12,502 | |||||
Other accrued expenses | 3,676 | 6,121 | |||||
Deferred revenue | 3,390 | 6,795 | |||||
Amounts held in eWallets | 13,879 | 14,611 | |||||
Operating lease liabilities | 1,741 | — | |||||
Other current liabilities | 1,116 | 1,424 | |||||
Total current liabilities | 31,528 | 43,084 | |||||
Income taxes payable | 15,365 | 16,982 | |||||
Deferred tax liability | 187 | 186 | |||||
Long-term incentive | 7,531 | 7,808 | |||||
Operating lease liabilities | 2,128 | — | |||||
Total liabilities | 56,739 | 68,060 | |||||
Stockholders’ equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 13 | 13 | |||||
Additional paid-in capital | 86,249 | 86,415 | |||||
Retained earnings | 40,169 | 44,431 | |||||
Accumulated other comprehensive loss | (1,192 | ) | (1,250 | ) | |||
Treasury stock, at cost | (45,887 | ) | (39,748 | ) | |||
Total stockholders’ equity | 79,352 | 89,861 | |||||
Total liabilities and stockholders’ equity | $ | 136,091 | $ | 157,921 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net sales | $ | 23,428 | $ | 50,910 | $ | 42,756 | $ | 103,277 | |||||||
Cost of sales | 5,407 | 10,399 | 10,631 | 20,620 | |||||||||||
Gross profit | 18,021 | 40,511 | 32,125 | 82,657 | |||||||||||
Operating expenses: | |||||||||||||||
Commissions expense | 11,398 | 22,310 | 20,896 | 45,290 | |||||||||||
Selling, general and administrative expenses | 6,627 | 8,093 | 13,942 | 17,215 | |||||||||||
Total operating expenses | 18,025 | 30,403 | 34,838 | 62,505 | |||||||||||
Income (loss) from operations | (4 | ) | 10,108 | (2,713 | ) | 20,152 | |||||||||
Other income, net | 373 | 53 | 805 | 216 | |||||||||||
Income (loss) before income taxes | 369 | 10,161 | (1,908 | ) | 20,368 | ||||||||||
Income tax provision (benefit) | (28 | ) | 1,138 | (382 | ) | 2,521 | |||||||||
Net income (loss) | $ | 397 | $ | 9,023 | $ | (1,526 | ) | $ | 17,847 | ||||||
Net income (loss) per common share: | |||||||||||||||
Basic | $ | 0.04 | $ | 0.80 | $ | (0.14 | ) | $ | 1.58 | ||||||
Diluted | $ | 0.04 | $ | 0.80 | $ | (0.14 | ) | $ | 1.58 | ||||||
Weighted-average number of common shares outstanding: | |||||||||||||||
Basic | 11,082 | 11,298 | 11,207 | 11,292 | |||||||||||
Diluted | 11,082 | 11,305 | 11,207 | 11,297 |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income (loss) | $ | (1,526 | ) | $ | 17,847 | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 189 | 235 | |||||
Noncash lease expense | 914 | — | |||||
Deferred income taxes | (3 | ) | — | ||||
Changes in assets and liabilities: | |||||||
Inventories | 1,881 | (2,057 | ) | ||||
Other current assets | (752 | ) | 1,955 | ||||
Other assets | (35 | ) | (73 | ) | |||
Accounts payable | (956 | ) | 1,246 | ||||
Accrued commissions | (5,475 | ) | (707 | ) | |||
Other accrued expenses | (1,946 | ) | 1,119 | ||||
Deferred revenue | (3,409 | ) | (592 | ) | |||
Amounts held in eWallets | (765 | ) | (192 | ) | |||
Operating lease liabilities | (964 | ) | — | ||||
Income taxes payable | (1,617 | ) | (1,657 | ) | |||
Other current liabilities | (318 | ) | (72 | ) | |||
Long-term incentive | (277 | ) | (562 | ) | |||
Net cash provided by (used in) operating activities | (15,059 | ) | 16,490 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (141 | ) | (113 | ) | |||
Net cash used in investing activities | (141 | ) | (113 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Repurchase of common stock | (6,682 | ) | — | ||||
Dividends paid | (2,736 | ) | (23,093 | ) | |||
Net cash used in financing activities | (9,418 | ) | (23,093 | ) | |||
Effect of exchange rates on cash, cash equivalents and restricted cash | 73 | (381 | ) | ||||
Net decrease in cash, cash equivalents and restricted cash | (24,545 | ) | (7,097 | ) | |||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 135,651 | 138,478 | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 111,106 | $ | 131,381 | |||
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||||
Issuance of treasury stock for employee awards, net | $ | 377 | $ | 554 | |||
Right-of-use assets obtained in exchange for operating lease liabilities | $ | 4,697 | $ | — |