Natural Health Trends Reports Fourth Quarter and Full Year 2022 Financial Results

– Fourth quarter revenue of $12.5 million increased 7% compared to the third quarter of 2022 
– Generated positive operating income, net income and cash flow from operations in the fourth quarter
– Declared a quarterly cash dividend of $0.20 per share 

HONG KONG, Feb. 08, 2023 (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 fourth quarter and full year ended December 31, 2022.

Fourth Quarter 2022 Financial Highlights

  • Revenue of $12.5 million increased 7% compared to $11.7 million in the third quarter of 2022 and decreased 22% compared to $16.1 million in the fourth quarter of 2021.
  • Operating income was $43,000 compared to operating loss of $145,000 in the third quarter of 2022 and operating income of $487,000 million in the fourth quarter of 2021.
  • Net income was $188,000, or $0.02 per diluted share, compared to $47,000, or breakeven per diluted share, in the third quarter of 2022 and $232,000, or $0.02 per diluted share, in the fourth quarter of 2021.  
  • The number of Active Members1 were down 6% to 38,660 at December 31, 2022, compared to 41,170 at September 30, 2022, and decreased 12% compared to 45,760 at December 31, 2021.
  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.

Full Year 2022 Financial Highlights

  • Revenue of $49.1 million decreased 18% compared to $60.0 million in 2021.  
  • Operating loss was $270,000 compared to operating income of $1.6 million in 2021.  
  • Net income was $313,000, or $0.03 per diluted share, compared to $1.1 million, or $0.09 per diluted share, in 2021.

Management Commentary

“During most of the 4th quarter, much of the urban Chinese population was still under some forms of restrictions. In this difficult operating environment, we focused on protecting our margin by diligently controlling costs and exercising discipline in marketing and product mix, while still managing to increase revenue sequentially compared to the third quarter. The result of our effort was positive operating and net income for the fourth quarter, as well as cash from operations,” commented Chris Sharng, President of Natural Health Trends Corp.

Mr. Sharng continued, “With the ending of the “Zero-Covid” policy, we are hopeful that our members can conduct more in-person meetings while we support more events and incentive trips. We wish to thank all of our hard-working members, old and new, who have endured the past few years and demonstrated strong commitment to our products and our business.”

Balance Sheet and Cash Flow

  • Net cash provided by operating activities was $938,000 in the fourth quarter of 2022, compared to $1.6 million in the fourth quarter of 2021. Net cash used in operating activities was $4.9 million in 2022, compared to net cash provided by operating activities of $1.0 million in 2021.  
  • Total cash and cash equivalents were $69.7 million as of December 31, 2022, down from $83.8 million as of December 31, 2021.   
  • On February 6, 2023, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 on each share of common stock outstanding. The dividend will be payable on March 3, 2023 to stockholders of record as of February 21, 2023.

The Company expects to issue its 2022 audited financial results in late February with its Annual Report on Form 10-K to be filed with the United States Securities and Exchange Commission. These financial results are preliminary and the accompanying financial statements have not been audited or have not yet been reviewed by the Company’s independent accountants. Significant updates and revisions may be required before the release of the Company’s 2022 audited financial results.

Fourth Quarter and Full Year 2022 Financial Results Conference Call

Management will host a conference call to discuss the fourth quarter and full year 2022 financial results today, Wednesday, February 8, 2023 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date: Wednesday, February 8, 2023
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: 13735133
Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1590879&tp_key=3af4576222

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 February 8, 2023 through 11:59 p.m. Eastern Time on February 22, 2023 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number:  13735133.

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 February 25, 2022 with the Securities and Exchange Commission (SEC), as well as in subsequent reports filed this year with the SEC. 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, except share data) 

  December 31,  
  2022   2021  
  (Unaudited)    
ASSETS            
Current assets:            
Cash and cash equivalents $ 69,667   $ 83,843  
Inventories   4,525     5,257  
Other current assets   3,359     4,369  
Total current assets   77,551     93,469  
Property and equipment, net   394     463  
Operating lease right-of-use assets   3,992     3,021  
Restricted cash   79     522  
Deferred tax asset   195     309  
Other assets   606     571  
Total assets $ 82,817   $ 98,355  
LIABILITIES AND STOCKHOLDERS’ EQUITY            
Current liabilities:            
Accounts payable $ 810   $ 761  
Income taxes payable   2,972     1,345  
Accrued commissions   2,943     3,636  
Other accrued expenses   1,181     1,933  
Deferred revenue   5,597     8,536  
Amounts held in eWallets   4,895     6,341  
Operating lease liabilities   1,135     1,239  
Other current liabilities   905     865  
Total current liabilities   20,438     24,656  
Income taxes payable   9,098     12,130  
Deferred tax liability   141     153  
Operating lease liabilities   2,989     1,928  
Total liabilities   32,666     38,867  
Stockholders’ equity:            
Preferred stock        
Common stock   13     13  
Additional paid-in capital   86,102     86,102  
Accumulated deficit   (9,056 )   (231 )
Accumulated other comprehensive loss   (1,004 )   (492 )
Treasury stock, at cost   (25,904 )   (25,904 )
Total stockholders’ equity   50,151     59,488  
Total liabilities and stockholders’ equity $ 82,817   $ 98,355  
             

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

  Three Months Ended December 31,   Year Ended December 31,  
  2022   2021   2022   2021  
  (Unaudited)   (Unaudited)        
Net sales $ 12,512   $ 16,108   $ 49,134   $ 60,005  
Cost of sales   3,263     4,153     12,661     15,010  
Gross profit   9,249     11,955     36,473     44,995  
Operating expenses:                        
Commissions expense   5,377     7,110     20,747     25,578  
Selling, general and administrative expenses   3,829     4,358     15,996     17,846  
Total operating expenses   9,206     11,468     36,743     43,424  
Income (loss) from operations   43     487     (270 )   1,571  
Other income (expense), net   400     31     872     (61 )
Income before income taxes   443     518     602     1,510  
Income tax provision   255     286     289     425  
Net income $ 188   $ 232   $ 313   $ 1,085  
Net income per common share:                        
Basic $ 0.02   $ 0.02   $ 0.03   $ 0.10  
Diluted $ 0.02   $ 0.02   $ 0.03   $ 0.09  
Weighted-average number of common shares outstanding:                        
Basic   11,423     11,159     11,362     11,017  
Diluted   11,423     11,423     11,423     11,423  
                         

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

  Year Ended December 31,  
  2022   2021  
CASH FLOWS FROM OPERATING ACTIVITIES:   (Unaudited)        
Net income $ 313   $ 1,085  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:            
Depreciation and amortization   204     299  
Noncash lease expense   1,172     1,163  
Deferred income taxes   90     362  
Changes in assets and liabilities:            
Inventories   680     (1,547 )
Other current assets   992     (803 )
Other assets   (67 )   68  
Accounts payable   52     182  
Income taxes payable   (1,404 )   (1,753 )
Accrued commissions   (654 )   212  
Other accrued expenses   (732 )   20  
Deferred revenue   (2,901 )   5,482  
Amounts held in eWallets   (1,432 )   (2,122 )
Operating lease liabilities   (1,220 )   (1,237 )
Other current liabilities   55     (395 )
Net cash provided by (used in) operating activities   (4,852 )   1,016  
CASH FLOWS FROM INVESTING ACTIVITIES:            
Purchases of property and equipment   (143 )   (225 )
Net cash used in investing activities   (143 )   (225 )
CASH FLOWS FROM FINANCING ACTIVITIES:            
Dividends paid   (9,138 )   (9,138 )
Net cash used in financing activities   (9,138 )   (9,138 )
Effect of exchange rates on cash, cash equivalents and restricted cash   (486 )   (180 )
Net decrease in cash, cash equivalents and restricted cash   (14,619 )   (8,527 )
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period   84,365     92,892  
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ 69,746   $ 84,365  
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:            
Right-of-use assets obtained in exchange for operating lease liabilities $ 2,234   $ 472  

CONTACT:

Scott Davidson
Senior Vice President and Chief Financial Officer
Natural Health Trends Corp.
Tel (Hong Kong): +852-3107-0800
Tel (U.S.): 310-541-0888
investor.relations@nhtglobal.com


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Source: Natural Health Trends Corp.