Natural Health Trends Reports First Quarter 2013 Financial Results

Download as PDF

Related Documents

Eighth Consecutive Quarter of Profitability

DALLAS, May 8, 2013 (GLOBE NEWSWIRE) -- Natural Health Trends Corp. (OTCQB:NHTC), a leading direct selling company that markets premium quality personal care, wellness and "quality of life" products under the NHT Global brand, today announced financial results for the quarter ended March 31, 2013.

First Quarter Financial Highlights

  • Total revenues were $8.7 million compared to $9.1 million in the first quarter last year and $8.1 million in the fourth quarter of 2012. The year-over-year decrease in revenues for the first quarter reflects a change in the Company's promotional plans. In 2013, a cash promotion in Greater China runs through the entire year. In 2012, the comparable cash promotion ended at June 30th.
  • Net income available to common stockholders of Natural Health Trends was $283,000, or $0.03 per diluted share, compared to net income of $503,000, or $0.04 per diluted share last year.
  • Cash and cash equivalents increased to $5.2 million as of March 31, 2013 from $4.2 million at December 31, 2012. Cash flow from operations increased 18% year-on-year.

"We are pleased with our members' enthusiastic response to our marketing plans in this new year," commented Chris Sharng, President of Natural Health Trends Corp. "The events in Macau and St. Petersburg respectively staged for our Greater China and Commonwealth of Independent States markets were both very successful. Our sales are keeping pace with a very strong first half a year ago. Thus far, 2013 has been a year of exceptional activity, as we focus on leveraging our established leaders with new promotions, robust training, and additional products to drive growth."

Operational Highlights

  • Natural Health Trends continued to execute promotional and incentive activities around the world, including:

-- Held Macau event at the Banyan Tree Hotel, with more than 1,000 members in attendance.

-- Launched a new program, called "Supreme Bonus," in Hong Kong and Taiwan. This is a year-long program designed around the Company's International Recognition Program offering cash and prize incentives throughout the year.

-- Embarked on Singapore incentive trip with qualifiers from Hong Kong.

  • Launched a new product line in Hong Kong, and introduced two new products to the Russian market:

-- The NHT Global Herbal product line, which is the best of Eastern traditional Chinese herbal ingredients and western technology. The first product in this line is Natural Health Trends' Cordyceps CS-4 and Agaricus blazei Extract blend.

-- Triotien™ and HerBalance™ launched in Russia in April.

  • Expanded training programs, designed to increase product awareness, market new products, and grow sales. Activities included:

-- A multi-city training roadshow in Russia, Kazakhstan and Ukraine in February 2013.

-- A training event in St. Petersburg, Russia in April 2013 to introduce Triotien™ and HerBalance™ to the market.

  • Identified a new Korean office in the premier Gangnam district with the expectation of a grand opening in June 2013.

"The changes in timing of our 2013 marketing programs, many of which culminated after the quarter ended, caused a slight year-over-year decrease in revenue for the first quarter. To keep the promotions running through the beginning of the Tomb Sweeping Festival in early April serves our Greater Chinese markets better, but resulted in some orders coming in after the end of the first quarter," Mr. Sharng continued. "We're currently wrapping up a Fly High training and team building event for the Hong Kong and China markets in Yunnan, China. We will also have a two-week product road show for ReStor throughout nine cities in Russia, Kazakhstan and Ukraine. We expect to open our Kazakhstan marketing office and distribution center in early June. Finally, in Hong Kong we will conduct a four-city incentive trip to London, Paris, Brussels and Amsterdam, as well as a Hong Kong Success Forum event in July to introduce a new NHT Global Herbal product promoting liver health."

Shareholder Conference Call

Management will conduct a conference call to discuss its quarterly financial results for the period ended March 31, 2013.

Details of the call are as follows:

A replay will be available from 7:30 p.m. ET on May 8 through 11:59 p.m. ET on May 15, by dialing 1-877-870-5176 (domestic) and 1-858-384-5517 (international) and referencing replay pin number 4617581.

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, wellness and "quality of life" products under the NHT Global brand. Additional information can be found on the company's website, www.naturalhealthtrendscorp.com.

Forward-Looking Statement

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 12, 2013, 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, 2012		 March 31,
2013
    (Unaudited)
ASSETS    
Current assets:    
Cash and cash equivalents $4,207 $5,173
Accounts receivable 122 179
Inventories, net 867 888
Other current assets 641 406
Total current assets 5,837 6,646
Property and equipment, net 121 123
Goodwill 1,764 1,764
Restricted cash 239 231
Other assets 258 255
Total assets $8,219 $9,019
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Current liabilities:    
Accounts payable $1,385 $1,811
Income taxes payable 10 22
Accrued distributor commissions 1,308 1,512
Other accrued expenses 1,688 1,403
Deferred revenue 836 1,136
Deferred tax liability 92 92
Other current liabilities 991 856
Total current liabilities 6,310 6,832
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, 2012 and March 31, 2013, aggregate liquidation value of $333 124 124
Common stock, $0.001 par value; 50,000,000 shares authorized; 11,324,048 and 11,323,369 shares issued and outstanding at December 31, 2012 and March 31, 2013, respectively 11 11
Additional paid-in capital 80,584 80,603
Accumulated deficit (78,708) (78,421)
Accumulated other comprehensive loss:    
Foreign currency translation adjustments (102) (130)
Total stockholders' equity 1,909 2,187
Total liabilities and stockholders' equity $8,219 $9,019
 
NATURAL HEALTH TRENDS CORP.
     
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In Thousands, Except Per Share Data)
     
  Three Months Ended March 31,
  2012 2013
     
Net sales $9,090 $8,651
Cost of sales 2,399 2,228
Gross profit 6,691 6,423
Operating expenses:    
Distributor commissions 3,691 3,674
Selling, general and administrative expenses (including stock-based compensation expense of $20 and $30 during the three months ended March 31, 2012 and 2013, respectively) 2,437 2,445
Depreciation and amortization 12 12
Total operating expenses 6,140 6,131
Income from operations 551 292
Other income (expense), net (63) 7
Income before income taxes 488 299
Income tax provision (benefit) (19) 12
Net income 507 287
Preferred stock dividends (4) (4)
Net income available to common stockholders $503 $283
     
Income per share:    
Basic $0.05 $0.03
Diluted $0.04 $0.03
     
Weighted-average number of shares outstanding:    
Basic 10,863 11,069
Diluted 11,181 11,248
 
NATURAL HEALTH TRENDS CORP.
     
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In Thousands)
     
  Three Months Ended March 31,
  2012 2013
     
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income $507 $287
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation and amortization 12 12
Stock-based compensation 20 30
Changes in assets and liabilities:    
Accounts receivable (240) (59)
Inventories, net 95 (28)
Other current assets (102) 232
Other assets 3 (2)
Accounts payable (213) 428
Income taxes payable 11 12
Accrued distributor commissions 78 215
Other accrued expenses 306 (279)
Deferred revenue 359 304
Other current liabilities 24 (134)
Net cash provided by operating activities 860 1,018
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment, net (18) (14)
Decrease in restricted cash 247 –
Net cash provided by (used in) investing activities 229 (14)
     
CASH FLOWS FROM FINANCING ACTIVITIES    
Repurchase of common stock – (12)
 Net cash used in financing activities  – (12)
     
Effect of exchange rates on cash and cash equivalents 52 (26)
Net increase in cash and cash equivalents 1,141 966
CASH AND CASH EQUIVALENTS, beginning of period 1,617 4,207
CASH AND CASH EQUIVALENTS, end of period $2,758 $5,173 
CONTACT: Company Contact
         Scott Davidson
         Chief Financial Officer
         Natural Health Trends Corp.
         Tel: 972-241-4080
         scott.davidson@nthglobal.com

         Investor Contact
         Brett Maas
         Managing Partner
         Hayden IR
         Tel: 646-536-7331
         brett@haydenir.com
Source: Natural Health Trends Corp.

Released May 8, 2013