Natural Health Trends Announces Second Quarter 2009 Results and Early Redemption of Convertible Debentures
DALLAS, TX -- (MARKET WIRE) -- 08/10/09 -- Natural Health Trends Corp. (NASDAQ: BHIP) today announced its financial results for the quarter ended June 30, 2009. The company reported sales of $8.5 million and an operating loss of $1.4 million for the quarter.
Chris Sharng, president of Natural Health Trends, said, "Despite a difficult operating environment in the second quarter, we continue to make progress toward the goal of cash flow breaking even. Our cash used in operations was a negative $92,000, almost breaking even, compared to $486,000 cash used in the first quarter, or $1.5 million in the first half of 2008. The other important milestone is that, as of today, we have entered into an early redemption arrangement with the holders of the convertible debentures that were to mature in October 2009 and have paid off the remaining balance. We are debt free once again.
"On the other hand, in the second quarter, orders were not as robust as we anticipated. The orders taken, which are roughly measured as revenue adjusted by the change in deferred revenue, were slightly greater in the second quarter, about $8.5 million, than the $8.2 million in the first quarter. During the quarter, we had to reckon with the unexpected development that one of our members' groups in Greater China went through an internal reorganization. Certain sub-groups were re-aligned to work separately. This change required us to make adjustments to our marketing plans and effectively defer some marketing activities into the late third quarter or fourth quarter. The disruptive effect this has had on our marketing programs lingers on into the 3rd quarter, a traditionally slower season."
The company plans to host a conference call at 11:30 a.m. EDT, August 12, 2009. Those who wish to participate may call telephone number (866) 672-2663, or (973) 582-2772 for international callers, 15 minutes before 11:30 a.m. EDT. Callers will need to give the conference identification number, 24633385. If you cannot participate in the call, but wish to hear it, you may log in to the company's homepage at www.naturalhealthtrendscorp.com and click on the conference call 1 1/2 hours after the completion of the call.
About Natural Health Trends Corp.
Natural Health Trends Corp. 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, and management encourages interested parties to register for updated corporate information via email on the company's home page, www.naturalhealthtrendscorp.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Forward-looking statements in this release do not constitute guarantees of future performance. Such forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. Such risks and uncertainties include the risks and uncertainties detailed under the caption "Risk Factors" in our Annual Report on Form 10-K filed on March 23, 2009, with the Securities and Exchange Commission. We assume 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 June 30,
31, 2008 2009
----------- -----------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 3,491 $ 5,031
Restricted cash 340 377
Accounts receivable 71 99
Inventories, net 2,141 1,607
Other current assets 735 578
----------- -----------
Total current assets 6,778 7,692
Property and equipment, net 1,173 1,006
Goodwill 1,764 1,764
Intangible assets, net 1,800 1,400
Restricted cash 3,646 369
Other assets 1,464 1,082
----------- -----------
Total assets $ 16,625 $ 13,313
=========== ===========
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable $ 1,746 $ 2,585
Income taxes payable 187 211
Accrued distributor commissions 554 1,030
Other accrued expenses 2,456 3,007
Deferred revenue 2,841 1,065
Current portion of convertible debentures,
net of discount of $2,320 and $970 at
December 31, 2008 and June 30, 2009,
respectively 1,534 1,863
Deferred tax liability 351 351
Other current liabilities 1,170 1,188
----------- -----------
Total liabilities 10,839 11,300
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value; 5,000,000
shares authorized; 1,761,900 shares
designated Series A convertible preferred
stock, 138,400 shares issued and outstanding
at December 31, 2008 and June 30, 2009,
aggregate liquidation value of $271 124 124
Common stock, $0.001 par value; 50,000,000
shares authorized; 10,691,582 and 10,788,714
shares issued and outstanding at December
31, 2008 and June 30, 2009, respectively 11 11
Additional paid-in capital 79,711 80,077
Accumulated deficit (74,853) (78,946)
Accumulated other comprehensive income:
Foreign currency translation adjustments 759 734
----------- -----------
Total Natural Health Trends stockholders’
equity 5,752 2,000
Noncontrolling interest 34 13
----------- -----------
Total stockholders’ equity 5,786 2,013
----------- -----------
Total liabilities and stockholders’ equity $ 16,625 $ 13,313
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NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, Except Per Share Data)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2008 2009 2008 2009
---------- ---------- ---------- ----------
Net sales $ 12,323 $ 8,472 $ 23,718 $ 18,341
Cost of sales 3,445 2,505 6,535 5,302
---------- ---------- ---------- ----------
Gross profit 8,878 5,967 17,183 13,039
Operating expenses:
Distributor commissions 4,600 3,322 8,597 7,101
Selling, general and
administrative expenses
(including stock-based
compensation expense of
$129 and $255 during
the three months ended
June 30, 2008 and 2009,
respectively, and $293
and $366 during the six
months ended June 30,
2008 and 2009,
respectively) 4,272 3,718 8,868 7,489
Depreciation and
amortization 366 338 752 668
Impairment of long-lived
assets 4 - 28 -
---------- ---------- ---------- ----------
Total operating expenses 9,242 7,378 18,245 15,258
---------- ---------- ---------- ----------
Loss from operations (364) (1,411) (1,062) (2,219)
Other income (expense),
net:
Gain (loss) on foreign
exchange (118) (41) 253 (43)
Interest income 33 10 68 24
Interest expense
(including amortization
of debt issuance costs
and accretion of debt
discount of $449 and
$853 during the three
months ended June 30,
2008 and 2009,
respectively, and $811
and $1,628 during the
six months ended June
30, 2008 and 2009,
respectively) (556) (989) (943) (1,855)
Other (22) 3 (14) 14
---------- ---------- ---------- ----------
Total other income
(expense), net (663) (1,017) (636) (1,860)
---------- ---------- ---------- ----------
Loss before income taxes (1,027) (2,428) (1,698) (4,079)
Income tax provision (42) 79 (79) (35)
---------- ---------- ---------- ----------
Net loss (1,069) (2,349) (1,777) (4,114)
Plus: Net loss
attributable to the
noncontrolling interest - - - 21
---------- ---------- ---------- ----------
Net loss attributable to
Natural Health Trends (1,069) (2,349) (1,777) (4,093)
Preferred stock dividends (4) (4) (8) (8)
---------- ---------- ---------- ----------
Net loss attributable to
common stockholders of
Natural Health Trends $ (1,073) $ (2,353) $ (1,785) $ (4,101)
========== ========== ========== ==========
Loss per share of Natural
Health Trends - basic and
diluted $ (0.11) $ (0.23) $ (0.19) $ (0.41)
========== ========== ========== ==========
Weighted-average number of
shares outstanding 9,619 10,068 9,610 9,986
========== ========== ========== ==========
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
Six Three Three
Months Months Months
Ended Ended Ended
June 30, March June 30,
2008 31, 2009 2009
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,777) $ (1,765) $ (2,349)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization of property
and equipment 352 130 138
Amortization of intangibles 400 200 200
Amortization of debt issuance costs 138 132 146
Accretion of debt discount 673 643 707
Stock-based compensation 293 111 255
Impairment of long-lived assets 28 - -
Changes in assets and liabilities:
Accounts receivable 86 (34) 6
Inventories, net 712 31 482
Other current assets 239 (61) 216
Other assets 142 96 (9)
Accounts payable (703) 977 (136)
Income taxes payable 2 114 (83)
Accrued distributor commissions (495) 362 114
Other accrued expenses (683) 396 158
Deferred revenue (892) (1,723) (52)
Other current liabilities (43) (95) 115
-------- -------- --------
Net cash used in operating activities (1,528) (486) (92)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (146) (58) (41)
Decrease in restricted cash 707 266 2,954
-------- -------- --------
Net cash provided by investing activities 561 208 2,913
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt 145 - -
Payments on debt - (490) (531)
-------- -------- --------
Net cash provided by (used in) financing
activities 145 (490) (531)
-------- -------- --------
Effect of exchange rates on cash and cash
equivalents (251) (87) 105
-------- -------- --------
Net increase (decrease) in cash and cash
equivalents (1,073) (855) 2,395
CASH AND CASH EQUIVALENTS, beginning of
period 6,282 3,491 2,636
-------- -------- --------
CASH AND CASH EQUIVALENTS, end of period $ 5,209 $ 2,636 $ 5,031
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Contact: Jean Bono Natural Health Trends Corp. Email Contact
Released August 10, 2009