Natural Health Trends Reports First Quarter 2018 Financial Results

Download as PDF

Related Documents

  • Second sequential quarterly increase in net sales

  • Declared special dividend of $20.0 million, or $1.76 per share

  • Increased quarterly dividend 8% to $0.14 per share

LOS ANGELES, May 02, 2018 (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 first quarter ended March 31, 2018.

First Quarter 2018 Financial Highlights

  • Total revenue of $52.4 million decreased 13% compared to $59.9 million in the first quarter of 2017 and increased 14% compared to $46.1 million in the fourth quarter of 2017.   

    -- Revenue from the Company’s Hong Kong operations, which represented 91% of total revenue, was $47.6 million, a decrease of 13% compared to $54.6 million in the first quarter of 2017, and an increase of 20% compared to $39.6 million in the fourth quarter of 2017.

    -- Revenue outside of Hong Kong of $4.7 million decreased 11% compared to $5.3 million in the first quarter of 2017 and decreased 28% compared to $6.5 million in the fourth quarter of 2017.

  • Operating income was $10.0 million compared to $13.0 million in the first quarter of 2017 and $8.7 million in the fourth quarter of 2017.

  • Net income was $8.8 million, or $0.78 per diluted share, compared to net income of $10.4 million, or $0.93 per diluted share, in the first quarter of 2017.

  • The number of Active Members1 decreased 1% to 95,040 at March 31, 2018, compared to 95,670 at December 31, 2017, and decreased 16% compared to 113,710 at March 31, 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.

Management Commentary

“Our momentum in the back half of 2017 carried into 2018 with our total revenue increasing 14% over the prior quarter, marking our second consecutive quarter of sales growth,” commented Chris Sharng, President of Natural Health Trends Corp. “Our improved top-line performance is a direct result of the enhancements made to our commission plan to better incentivize up-and-coming members and ease rank advancement, along with our effective marketing programs. We also held our international Ambassador Academy in Hong Kong, which attracted over 5,500 people. The orders generated by promotions directly related to the event exceeded those of the last three years.”

Mr. Sharng further commented, “With our revenue for the quarter improved, 2018 is off to a good start. Our leaders remain energized and enthusiastic and we look forward to more productive incentive trips and targeted training programs this year to drive further progress and growth.”

Balance Sheet and Cash Flow

  • Net cash provided by operating activities was $11.1 million, compared to $13.8 million in the first quarter of 2017.

  • On April 17, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.14, which represents an 8% increase over the prior quarter dividend, as well as a special cash dividend of $1.76 per share on outstanding common stock. The dividends will be payable on May 25, 2018 to stockholders of record as of May 15, 2018.

First Quarter 2018 Financial Results Conference Call

Management will host a conference call to discuss the first quarter 2018 financial results today, Wednesday, May 2, 2018 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date: Wednesday, May 2, 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: 13678508
Webcast: http://public.viavid.com/index.php?id=129162

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 May 2, 2018 through 11:59 p.m. Eastern Time on May 16, 2018 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13678508.

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, the Americas, 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 27, 2018 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, 2018   December 31, 2017
  (Unaudited)    
ASSETS      
Current assets:      
Cash and cash equivalents $ 145,095     $ 135,311  
Inventories 7,944     8,398  
Other current assets 6,021     7,534  
Total current assets 159,060     151,243  
Property and equipment, net 1,040     1,149  
Goodwill 1,764     1,764  
Restricted cash 3,279     3,167  
Deferred tax asset 1,435     1,435  
Other assets 809     796  
Total assets $ 167,387     $ 159,554  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 2,669     $ 1,751  
Income taxes payable 42     309  
Accrued commissions 10,027     11,170  
Other accrued expenses 8,549     7,605  
Deferred revenue 4,112     4,455  
Amounts held in eWallets 14,623     15,152  
Other current liabilities 1,756     1,479  
Total current liabilities 41,778     41,921  
Income taxes payable 19,052     19,052  
Deferred tax liability 55     56  
Long-term incentive 7,596     7,904  
Total liabilities 68,481     68,933  
Commitments and contingencies      
Stockholders’ equity:      
Preferred stock —     —  
Common stock 13     13  
Additional paid-in capital 86,415     86,683  
Retained earnings 52,253     44,908  
Accumulated other comprehensive loss (27 )   (413 )
Treasury stock, at cost (39,748 )   (40,570 )
Total stockholders’ equity 98,906     90,621  
Total liabilities and stockholders’ equity $ 167,387     $ 159,554  
               


   
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
   
  Three Months Ended March 31,
  2018   2017
  (Unaudited)
Net sales $ 52,367     $ 59,874  
Cost of sales 10,221     11,245  
Gross profit 42,146     48,629  
Operating expenses:      
Commissions expense 22,980     25,965  
Selling, general and administrative expenses 9,122     9,672  
Total operating expenses 32,102     35,637  
Income from operations 10,044     12,992  
Other income, net 163     156  
Income before income taxes 10,207     13,148  
Income tax provision 1,383     2,723  
Net income $ 8,824     $ 10,425  
Net income per common share:      
Basic $ 0.78     $ 0.93  
Diluted $ 0.78     $ 0.93  
Weighted-average number of common shares outstanding:      
Basic 11,286     11,229  
Diluted 11,288     11,251  
Cash dividends declared per common share $ 0.13     $ 0.44  
               


   
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
   
  Three Months Ended March 31,
  2018   2017
  (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income $ 8,824     $ 10,425  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 131     136  
Stock-based compensation —     9  
Cumulative translation adjustment realized in net income —     (258 )
Changes in assets and liabilities:      
Inventories 473     2,091  
Other current assets 1,548     1,419  
Other assets (5 )   (62 )
Accounts payable 920     (61 )
Income taxes payable (275 )   1,798  
Accrued commissions (1,119 )   (428 )
Other accrued expenses 1,483     (1,555 )
Deferred revenue (333 )   (647 )
Amounts held in eWallets (466 )   1,138  
Other current liabilities 272     314  
Long-term incentive (308 )   (508 )
Net cash provided by operating activities 11,145     13,811  
CASH FLOWS FROM INVESTING ACTIVITIES:      
Purchases of property and equipment (17 )   (72 )
Net cash used in investing activities (17 )   (72 )
CASH FLOWS FROM FINANCING ACTIVITIES:      
Dividends paid (1,479 )   (4,981 )
Net cash used in financing activities (1,479 )   (4,981 )
Effect of exchange rates on cash, cash equivalents and restricted cash 247     22  
Net increase in cash, cash equivalents and restricted cash 9,896     8,780  
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 138,478     128,884  
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ 148,374     $ 137,664  
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:      
Issuance of treasury stock for employee awards, net 554     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

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

Primary Logo

Source: Natural Health Trends Corp.

Released May 2, 2018