Natural Health Trends Reports First Quarter 2017 Financial Results

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LOS ANGELES, April 27, 2017 (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 March 31, 2017.

First Quarter 2017 Financial Highlights

  • 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.

Management Commentary

“Our first quarter 2017 revenue declined year-over-year as we are still working to overcome the slowdown we have been experiencing since the third quarter of 2016,” commented Chris Sharng, President of Natural Health Trends Corp. “We also moved our first half major event from early January in prior years, to March this year, making the year-over-year comparison challenging. In addition, the stronger dollar made our products more expensive for our Chinese consumers. Partially offsetting the factors affecting our top-line was heightened productivity in March, following our successful Ambassador Academy in Macau, which attracted over 6,000 members and guests. We were very pleased with the record turnout after moving the event to after the Chinese New Year, which we believe will improve the member experience longer-term.”

Mr. Sharng further commented, “Our strong balance sheet and working capital management afford us the ability to focus on our growth initiatives while simultaneously returning capital to our valued stockholders. I am pleased to announce our Board of Directors declared a special dividend in the amount of $0.35 per share as well as an 11% increase in our quarterly dividend to $0.10 per share, compared to the prior quarter.  While it will take time for the results of our strategic initiatives to bear fruit, we are confident in our ability to attract, motivate and retain a strong member base as well as to expand our product offering into new geographies and categories.”

Balance Sheet and Cash Flow

  • 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. 

First Quarter 2017 Financial Results Conference Call

Management will host a conference call to discuss the first quarter 2017 financial results today, Thursday, April 27, 2017 at 11:30 a.m. Eastern Time. The conference call details are as follows:

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 

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 April 27, 2017 through 11:59 p.m. Eastern Time on May 11, 2017 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13657892.

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, North America, 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 March 10, 2017 with the Securities and Exchange Commission.  The Company assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.

 
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
  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  
               


NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 
  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  
               


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

 

CONTACTS:

Company Contact:
Scott Davidson
Senior Vice President and Chief Financial Officer
Natural Health Trends Corp.
Tel: 310-541-0888
scott.davidson@nhtglobal.com

Investors:
ADDO Investor Relations
Tel: 310-829-5400
investor.relations@nhtglobal.com

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Source: Natural Health Trends Corp.

Released April 27, 2017