NHTC Reports Quarterly Revenue Increased 125% to $31.8 Million; EPS Increased 250% to $0.42

Announces $5 Million Stock Repurchase Program; Company to Pursue Nasdaq Listing

DALLAS, Nov. 5, 2014 (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 and nine month periods ended September 30, 2014.

Third Quarter Financial Highlights

  • Total revenues were $31.8 million, up 125% compared to $14.2 million in the third quarter last year.
  • Operating income was $5.5 million, up 312% compared to $1.3 million in the third quarter last year.
  • Net income was $5.4 million, or $0.42 per diluted share, compared to $1.3 million, or $0.12 per diluted share, in the third quarter last year.

Year-to-Date Financial Highlights

  • Year-to-date revenues were $89.2 million, up 167% compared to $33.4 million in the first nine months last year.
  • Operating income was $14.8 million, up 475% compared to $2.6 million in the first nine months last year.
  • Net income was $14.6 million, or $1.16 per diluted share, compared to $2.5 million, or $0.22 per diluted share, in the first nine months last year.

"We continued our strong momentum into the third quarter, with our highest level of orders in any quarter this year," commented Chris Sharng, President of Natural Health Trends Corp. "We are effectively leveraging our business model, with a 308% increase in net income during the quarter. In just nine months, we have delivered a 256% increase in net income compared to all of 2013."

"Our efforts to add new products have helped accelerate our growth, and we are simultaneously working to improve the performance of our distributors, through leadership development and training programs, services and promotions, and this effort is showing positive results as our member base is increasingly well informed and motivated, driving higher average sales per member," continued Mr. Sharng. "We remain very pleased with the recent performance and we are increasingly optimistic about the long-term future of Natural Health Trends."

Dividend and Share Repurchase

Yesterday, the Board of Directors declared a cash dividend of $0.032 per share on outstanding Series A preferred stock, which represents the accrued unpaid dividends through the declaration date, and a cash dividend of $0.01 per share on each share of common stock outstanding, representing an aggregate dividend amount of $130,000, payable in cash on December 3, 2014 to stockholders of record on November 25, 2014.

Additionally, on November 4, 2014, the Board of Directors approved a special stock repurchase program of up to $5 million of the Company's outstanding shares of common stock. Such repurchases are expected to begin during November and be complete by January 2015. Such purchases will be made in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934 (the "Exchange Act"). For all or a portion of the authorized repurchase amount, the Company may enter into a plan that is compliant with Rule 10b5-1 of the Exchange Act that is designed to facilitate these purchases. The repurchase program does not require the Company to acquire a specific number of shares, and may be suspended from time to time or discontinued. The share repurchases will be funded from available working capital.

The Company is advised by George K. Broady, its largest shareholder and a member of its Board of Directors, that Mr. Broady desires to participate in the Company's repurchase program on a basis roughly proportional to his ownership interest, with an estimate of generating approximately $1.5 million through the sale of a portion of the shares of the Company's common stock held by him. To that end, the Company and Mr. Broady are in discussions regarding the terms of a mutually agreeable stock purchase agreement.

"The Board of Directors believes that, at the current valuation, a stock repurchase program will serve the best interests of all shareholders and represents a compelling use of the Company's capital," added Mr. Sharng.

Listing of Shares on The Nasdaq Capital Market

Finally, on November 4, 2014, the Board of Directors authorized management to pursue the listing of its shares of common stock on The Nasdaq Capital Market. "With the Company's solid and expanding profitability and strong balance sheet, the Board believes now is the optimal time to pursue a listing of our common stock," said Mr. Sharng. Although the Company believes that it will be able to satisfy Nasdaq's applicable listing requirements, there can be no assurance as to whether, or in what timeframe, it will be able to do so.

Shareholder Conference Call

Management will conduct a conference call to discuss its third quarter financial results. Details of the call are as follows:

A replay will be available from 1 p.m. ET on November 5 through 11:59 p.m. ET on November 12, by dialing 1-877-870-5176 (domestic) and 1-858-384-5517 (international) and referencing replay pin number 9253268.

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 referenced in this press release, as well as those detailed under the caption "Risk Factors" in our Annual Report on Form 10-K filed on March 7, 2014, 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.

-- Tables follow --

(In Thousands, Except Share Data)
  December 31,
September 30,
Current assets:    
Cash and cash equivalents $14,550 $39,748
Accounts receivable 134 101
Inventories, net 1,828 4,320
Other current assets 658 831
Total current assets 17,170 45,000
Property and equipment, net 265 377
Goodwill 1,764 1,764
Restricted cash 328 330
Other assets 300 316
Total assets $19,827 $47,787
Current liabilities:    
Accounts payable $3,058 $4,411
Income taxes payable 25 166
Accrued distributor commissions 3,962 7,121
Other accrued expenses 3,146 6,589
Deferred revenue 2,569 2,901
Deferred tax liability 108 108
Other current liabilities 882 1,309
Total current liabilities 13,750 22,605
Commitments and contingencies    
Stockholders' equity:    
Preferred stock 111 55
Common stock 11 13
Additional paid-in capital 80,655 85,602
Accumulated deficit (74,619) (60,399)
Accumulated other comprehensive loss:    
 Foreign currency translation adjustments (81) (89)
Total stockholders' equity 6,077 25,182
Total liabilities and stockholders' equity $19,827 $47,787
(In Thousands, Except Per Share Data)
  Three Months Ended
September 30,
Nine Months Ended
September 30,
  2013 2014 2013 2014
Net sales $14,177 $31,833 $33,426 $89,184
Cost of sales 3,362 6,756 8,160 19,517
Gross profit 10,815 25,077 25,266 69,667
Operating expenses:        
Distributor commissions 6,259 14,509 14,376 40,390
Selling, general and administrative expenses 3,216 5,076 8,270 14,454
Depreciation and amortization 13 28 53 72
Total operating expenses 9,488 19,613 22,699 54,916
Income from operations 1,327 5,464 2,567 14,751
Other income (expense), net 15 (31) (6) (39)
Income before income taxes 1,342 5,433 2,561 14,712
Income tax provision 21 46 49 144
Net income 1,321 5,387 2,512 14,568
Preferred stock dividends (4) (2) (12) (9)
Net income available to common stockholders $1,317 $5,385 $2,500 $14,559
Income per common share:        
Basic $0.12 $0.43 $0.22 $1.22
Diluted $0.12 $0.42 $0.22 $1.16
Weighted-average number of common shares outstanding:        
Basic 11,181 12,455 11,128 11,883
Diluted 11,312 12,774 11,294 12,424
Cash dividends declared per share:        
Common $– $0.010 $– $0.020
Series A preferred stock $– $0.027 $– $0.862
(In Thousands)
  Nine Months Ended
September 30,
  2013 2014
Net income $2,512 $14,568
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 53 72
Stock-based compensation 82 42
Changes in assets and liabilities:    
Accounts receivable (174) 25
Inventories, net (346) (2,547)
Other current assets 68 (205)
Other assets (35) (16)
Accounts payable 683 1,359
Income taxes payable 49 140
Accrued distributor commissions 994 3,218
Other accrued expenses 704 3,479
Deferred revenue 708 346
Other current liabilities (195) 442
Net cash provided by operating activities 5,103 20,923
Purchases of property and equipment, net (57) (199)
Increase in restricted cash (82)
Net cash used in investing activities (139) (199)
Proceeds from exercise of warrants 4,948
Dividends paid (348)
Repurchase of common stock (32) (97)
Net cash provided by (used in) financing activities  (32) 4,503
Effect of exchange rates on cash and cash equivalents (8) (29)
Net increase in cash and cash equivalents 4,924 25,198
CASH AND CASH EQUIVALENTS, beginning of period 4,207 14,550
CASH AND CASH EQUIVALENTS, end of period $9,131 $39,748
CONTACT: Company Contact
         Scott Davidson
         Chief Financial Officer
         Natural Health Trends Corp.
         Tel: 972-241-4080

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