Natural Health Trends Reports Second Quarter 2018 Financial Results
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
LOS ANGELES, Aug. 01, 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 second quarter ended June 30, 2018.
Second Quarter 2018 Financial Highlights
- 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.
Year-to-Date 2018 Financial Highlights
- 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.
“Our second quarter performance reflected a continuation of the momentum we established in the fourth quarter of 2017,” commented Chris Sharng, President of Natural Health Trends. “The 3% sequential decline in quarterly revenue can be attributed to the timing of our promotional activities. Major incentive trips, such as those to Australia and Seattle, took our members out of the markets in the second quarter. However, the associated qualification periods concluded in prior quarters.”
Balance Sheet and Cash Flow
- 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.
Second Quarter 2018 Financial Results Conference Call
Management will host a conference call to discuss the second quarter 2018 financial results today, Wednesday, August 1, 2018 at 11:30 a.m. Eastern Time. The conference call details are as follows:
|Date:||Wednesday, August 1, 2018|
|Time:||11:30 a.m. Eastern Time / 8:30 a.m. Pacific Time|
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 August 1, 2018 through 11:59 p.m. Eastern Time on August 15, 2018 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13681507.
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.
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
|June 30, 2018||December 31, 2017|
|Cash and cash equivalents||$||128,270||$||135,311|
|Other current assets||5,550||7,534|
|Total current assets||144,178||151,243|
|Property and equipment, net||1,025||1,149|
|Deferred tax asset||1,435||1,435|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Income taxes payable||257||309|
|Other accrued expenses||8,157||7,605|
|Amounts held in eWallets||14,902||15,152|
|Other current liabilities||1,446||1,479|
|Total current liabilities||41,987||41,921|
|Income taxes payable||17,395||19,052|
|Deferred tax liability||75||56|
|Commitments and contingencies|
|Additional paid-in capital||86,415||86,683|
|Accumulated other comprehensive loss||(774||)||(413||)|
|Treasury stock, at cost||(39,748||)||(40,570||)|
|Total stockholders’ equity||85,568||90,621|
|Total liabilities and stockholders’ equity||$||152,367||$||159,554|
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
|Three Months Ended June 30,||Six Months Ended June 30,|
|Cost of sales||10,399||9,793||20,620||21,038|
|Selling, general and administrative expenses||8,093||6,730||17,215||16,402|
|Total operating expenses||30,403||28,805||62,505||64,442|
|Income from operations||10,108||12,867||20,152||25,859|
|Other income, net||53||80||216||236|
|Income before income taxes||10,161||12,947||20,368||26,095|
|Income tax provision||1,138||2,644||2,521||5,367|
|Net income per common share:|
|Weighted-average number of common shares outstanding:|
|Cash dividends declared per common share||$||1.90||$||0.45||$||2.03||$||0.89|
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|Six Months Ended June 30,|
|CASH FLOWS FROM OPERATING ACTIVITIES:|
|Adjustments to reconcile net income to net cash provided by operating activities:|
|Depreciation and amortization||235||276|
|Cumulative translation adjustment realized in net income||—||(258||)|
|Changes in assets and liabilities:|
|Other current assets||1,955||489|
|Income taxes payable||(1,705||)||4,304|
|Other accrued expenses||1,119||(3,229||)|
|Amounts held in eWallets||(192||)||(327||)|
|Other current liabilities||(24||)||(24||)|
|Net cash provided by operating activities||16,490||20,629|
|CASH FLOWS FROM INVESTING ACTIVITIES:|
|Purchases of property and equipment||(113||)||(170||)|
|Net cash used in investing activities||(113||)||(170||)|
|CASH FLOWS FROM FINANCING ACTIVITIES:|
|Net cash used in financing activities||(23,093||)||(10,078||)|
|Effect of exchange rates on cash, cash equivalents and restricted cash||(381||)||(41||)|
|Net (decrease) increase in cash, cash equivalents and restricted cash||(7,097||)||10,340|
|CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period||138,478||128,884|
|CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period||$||131,381||$||139,224|
|SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:|
|Issuance of treasury stock for employee awards, net||554||1,393|
Senior Vice President and Chief Financial Officer
Natural Health Trends Corp.
ADDO Investor Relations
Released August 1, 2018