Natural Health Trends Announces Third Quarter 2009 Results
DALLAS, TX -- (MARKET WIRE) -- 11/16/09 -- Natural Health Trends Corp. (PINKSHEETS: BHIP) today announced its financial results for the quarter ended September 30, 2009. The company reported sales of $5.7 million and an operating loss of $1.7 million for the quarter.
The company attributed lower sales to multiple factors. There was an increase of $1.5 million in unshipped orders in Hong Kong caused by certain customs issues that delayed orders placed between mid-August through the end of the quarter. These issues were mostly resolved by early November. However, this delay also caused a delay in new product orders as some members waited for a resolution of the customs issue. Additionally, the company typically experiences a slow down caused by summer vacations. Lastly, as the company previously disclosed, it deferred marketing activities because of the reorganization of one of our member groups in Greater China. This reorganization required the company to make adjustments to its marketing plans and defer some marketing activities into the fourth quarter. The orders taken, which are roughly measured as revenue adjusted by the change in deferred revenue, were $7.3 million in the third quarter, compared to $8.5 million in the second quarter and $8.2 million in the first quarter.
"We are encouraged by recent business developments in Russia, Hong Kong and Korea," said Chris Sharng, president of Natural Health Trends. "Our Grand Opening in Moscow in late October and the Anniversary Celebration in Hong Kong last week were very well attended and created a lot of positive momentum in those markets. In Korea, we have seen a sustained increase in sales since October. On the cost side, after extensive expense reductions and restructuring, the Company's business is well positioned to benefit from the excitement and growth that we're seeing in our international markets."
The company plans to host a conference call at 11:30 a.m. EST, November 18, 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. EST. Callers will need to give the conference identification number, 42236983. 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 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, www.naturalhealthtrendscorp.com.
About the Company's Common Stock
The Company's common stock is quoted under the symbol "BHIP" on the Current Information tier of the Pink Sheets, a centralized electronic quotation service run by Pink OTC Markets Inc. for over-the-counter securities. Interested parties can obtain stock quotes by clicking on the "Stock Quote" link on the Company's home page, www.naturalhealthtrendscorp.com, or by going to www.pinksheets.com and searching for the symbol "BHIP." Parties wishing to trade stock on the Pink Sheets should contact their broker to make the trades. More information about buying and selling stock on the Pink Sheets may be found at http://www.pinksheets.com/pink/otcguide/investors_howtobuy.jsp.
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 31, September 30,
2008 2009
------------ ------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 3,491 $ 1,473
Restricted cash 340 399
Accounts receivable 71 97
Inventories, net 2,141 1,804
Other current assets 735 987
------------ ------------
Total current assets 6,778 4,760
Property and equipment, net 1,173 882
Goodwill 1,764 1,764
Intangible assets, net 1,800 1,200
Restricted cash 3,646 393
Other assets 1,464 905
------------ ------------
Total assets $ 16,625 $ 9,904
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,746 $ 2,394
Income taxes payable 187 252
Accrued distributor commissions 554 637
Other accrued expenses 2,456 3,399
Deferred revenue 2,841 2,397
Current portion of convertible debentures,
net of discount of $2,320 at December 31,
2008 1,534 -
Deferred tax liability 351 351
Other current liabilities 1,170 1,053
------------ ------------
Total liabilities 10,839 10,483
Commitments and contingencies
Stockholders' equity (deficit):
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 September 30, 2009,
aggregate liquidation value of $275 124 124
Common stock, $0.001 par value; 50,000,000
shares authorized; 10,691,582 and 10,833,709
shares issued and outstanding at December 31,
2008 and September 30, 2009, respectively 11 11
Additional paid-in capital 79,711 80,158
Accumulated deficit (74,853) (81,774)
Accumulated other comprehensive income:
Foreign currency translation adjustments 759 902
------------ ------------
Total Natural Health Trends
stockholders' equity (deficit) 5,752 (579)
Noncontrolling interest 34 -
------------ ------------
Total stockholders' equity (deficit) 5,786 (579)
------------ ------------
Total liabilities and stockholders' equity $ 16,625 $ 9,904
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NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
2008 2009 2008 2009
-------- -------- -------- --------
Net sales $ 11,016 $ 5,698 $ 34,734 $ 24,039
Cost of sales 3,050 1,874 9,585 7,176
-------- -------- -------- --------
Gross profit 7,966 3,824 25,149 16,863
Operating expenses:
Distributor commissions 4,573 1,997 13,170 9,098
Selling, general and administrative
expenses (including stock-based
compensation expense of $128 and
$81 during the three months
ended September 30, 2008 and
2009, respectively, and $421 and
$447 during the nine months
ended September 30, 2008 and
2009, respectively) 4,358 3,196 13,226 10,685
Depreciation and amortization 338 324 1,090 992
Impairment of long-lived assets 2 - 30 -
-------- -------- -------- --------
Total operating expenses 9,271 5,517 27,516 20,775
-------- -------- -------- --------
Loss from operations (1,305) (1,693) (2,367) (3,912)
Other income (expense), net:
Loss on foreign exchange (345) (82) (92) (125)
Interest income 18 3 86 27
Interest expense (including
amortization of debt issuance
costs and accretion of debt
discount of $559 and $411
during the three months ended
September 30, 2008 and 2009,
respectively, and $1,370 and
$2,039 during the nine months
ended September 30, 2008 and
2009, respectively) (666) (565) (1,609) (2,420)
Loss on redemption of convertible
debentures - (683) - (683)
De-recognition of commission
liabilities - 221 - 221
Other 19 (24) 5 (10)
-------- -------- -------- --------
Total other income (expense), net (974) (1,130) (1,610) (2,990)
-------- -------- -------- --------
Loss before income taxes (2,279) (2,823) (3,977) (6,902)
Income tax provision (37) (28) (116) (63)
-------- -------- -------- --------
Net loss (2,316) (2,851) (4,093) (6,965)
Plus: Net loss attributable to the
noncontrolling interest - 23 - 44
-------- -------- -------- --------
Net loss attributable to Natural
Health Trends (2,316) (2,828) (4,093) (6,921)
Preferred stock dividends (4) (4) (12) (12)
-------- -------- -------- --------
Net loss attributable to common
stockholders of Natural Health
Trends $ (2,320) $ (2,832) $ (4,105) $ (6,933)
======== ======== ======== ========
Loss per share of Natural Health
Trends - basic and diluted $ (0.24) $ (0.28) $ (0.42) $ (0.69)
======== ======== ======== ========
Weighted-average number of shares
outstanding 9,719 10,261 9,670 10,079
======== ======== ======== ========
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
Nine Months Ended
September 30,
------------------
2008 2009
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,093) $ (6,965)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization of property and
equipment 490 392
Amortization of intangibles 600 600
Amortization of debt issuance costs 234 502
Accretion of debt discount 1,136 1,537
Loss on redemption of convertible debentures - 683
Stock-based compensation 421 447
Impairment of long-lived assets 30 -
Changes in assets and liabilities:
Accounts receivable 159 (24)
Inventories, net 1,540 332
Other current assets 432 (243)
Other assets 285 91
Accounts payable (773) 647
Income taxes payable 9 59
Accrued distributor commissions (901) 74
Other accrued expenses (826) 938
Deferred revenue (1,363) (445)
Other current liabilities (200) (123)
-------- --------
Net cash used in operating activities (2,820) (1,498)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (276) (95)
Decrease in restricted cash 665 3,212
-------- --------
Net cash provided by investing activities 389 3,117
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from debt 145 -
Payments on debt (145) (3,754)
-------- --------
Net cash used in financing activities - (3,754)
-------- --------
Effect of exchange rates on cash and cash equivalents 118 117
-------- --------
Net decrease in cash and cash equivalents (2,313) (2,018)
CASH AND CASH EQUIVALENTS, beginning of period 6,282 3,491
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 3,969 $ 1,473
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Contact: Jean Bono Natural Health Trends Corp. Email Contact
Released November 16, 2009