Natural Health Trends Reports Strong First Quarter 2016 Financial Results

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  • Revenue increased 83% year-over-year to $74.3 million
  • Net income of $11.3 million or $0.95 per diluted share
  • Increased quarterly dividend by 20% to $0.06 per share
  • Repurchased $18.3 million of common stock during the quarter

LOS ANGELES, April 27, 2016 (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 quarter ended March 31, 2016.

First Quarter 2016 Financial Highlights

  • Total revenue increased 83% to $74.3 million, compared to $40.7 million in the first quarter of 2015.
    • Revenue from the Company’s Hong Kong operations, which represented 92% of total revenue, increased 83% to $68.2 million, compared to $37.3 million in the first quarter of 2015.
    • Revenue outside of Hong Kong increased 84% to $6.1 million, compared to $3.4 million in the first quarter of 2015.
  • Operating income increased 102% to $14.0 million, compared to $6.9 million in the first quarter of 2015.
  • Net income was $11.3 million, or $0.95 per diluted share, compared to $6.7 million, or $0.54 per diluted share, in the first quarter of 2015.
  • Additional income tax provision of $2.4 million was recognized in the first quarter of 2016 for the expected partial repatriation of overseas profits, resulting in an overall effective tax rate of 19%. Net income, excluding the impact of the additional tax charge, would have been $13.6 million, or $1.15 per diluted share.
  • The number of Active Members1 increased 10% to 119,800 at March 31, 2016, compared to 109,360 at December 31, 2015 and 62,010 at March 31, 2015.

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.

Management Commentary

“Our positive momentum continued with a strong start to 2016,” commented Chris Sharng, President of Natural Health Trends Corp. “The double-digit increase in revenue growth for the quarter was driven by our emphasis on leadership programs, product development and promotional incentives.  We believe that these strategies will help drive sustainable growth in our active member base which now consists of 119,800 and growing.”

Mr. Sharng further commented, “During the first quarter, we experienced strong consumer demand for our products. We were pleased to announce that we recently received the United States Department of Agriculture Organic Certification for our top-selling product, Premium Noni JuiceTM. Furthermore, we launched a new product, StemRenuTM, only available to NHT Global through an exclusive licensing arrangement, as well as AquaPur, our new water purifier product in China.”

Balance Sheet and Cash Flow

  • At March 31, 2016, cash and cash equivalents totaled $99.6 million, compared to $104.9 million at December 31, 2015.
     
  • Net cash provided by operating activities in the first quarter of 2016 was $13.8 million, compared to $16.6 million in the first quarter of 2015.
     
  • On April 21, 2016, the Company’s Board of Directors declared a quarterly cash dividend of $0.06 per share on outstanding common stock, a 20% increase over the prior quarter dividend, which will be payable on May 20, 2016 to stockholders of record as of May 10, 2016.
     
  • During the three months ended March 31, 2016, the Company repurchased an additional $18.3 million of its common stock under its existing $70.0 million stock repurchase program. At March 31, 2016, approximately $41.7 million remained available for repurchase.

First Quarter 2016 Financial Results Conference Call

Management will host a conference call to discuss the first quarter 2016 financial results today, Wednesday, April 27, 2016 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date:         Wednesday, April 27, 2016
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:         13632555
Webcast:         http://public.viavid.com/index.php?id=118679
           

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 April 27, 2016 through 11:59 p.m. Eastern Time on May 11, 2016 by dialing 1-877-870-5176 (domestic) and 1-858-384-5517 (international) and referencing the replay pin number: 13632555.

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, 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 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 March 4, 2016 with the Securities and Exchange Commission.  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)
 
                March 31, 2016   December 31, 2015
                (Unaudited)    
ASSETS      
Current assets:                    
Cash and cash equivalents               $ 99,631     $ 104,914  
Accounts receivable               88     57  
Inventories, net               10,269     10,455  
Other current assets               2,324     2,286  
Total current assets               112,312     117,712  
Property and equipment, net               1,050     894  
Goodwill               1,764     1,764  
Restricted cash               3,189     3,166  
Other assets               621     616  
Total assets               $ 118,936     $ 124,152  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:                    
Accounts payable               $ 2,019     $ 2,862  
Income taxes payable               3,002     379  
Accrued commissions               16,714     19,634  
Other accrued expenses               17,644     16,703  
Deferred revenue               6,469     4,011  
Deferred tax liability               60     60  
Amounts held in eWallets               16,691     16,414  
Other current liabilities               1,359     1,510  
Total current liabilities               63,958     61,573  
Long-term incentive               5,650     5,770  
Total liabilities               69,608     67,343  
Commitments and contingencies                    
Stockholders’ equity:                    
Preferred stock               —     —  
Common stock               13     13  
Additional paid-in capital               86,037     85,963  
Retained earnings (accumulated deficit)               1,057     (9,647 )
Accumulated other comprehensive loss               (41 )   (101 )
Treasury stock, at cost               (37,738 )   (19,419 )
Total stockholders’ equity               49,328     56,809  
Total liabilities and stockholders’ equity               $ 118,936     $ 124,152  
                             

 

NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
 
  Three Months Ended March 31,
  2016   2015
Net sales $ 74,346     $ 40,709  
Cost of sales 14,280     8,930  
Gross profit 60,066     31,779  
Operating expenses:      
Commissions expense 35,086     18,397  
Selling, general and administrative expenses 10,904     6,423  
Depreciation and amortization 89     41  
Total operating expenses 46,079     24,861  
Income from operations 13,987     6,918  
Other expense, net (24 )   (109 )
Income before income taxes 13,963     6,809  
Income tax provision 2,683     71  
Net income $ 11,280     $ 6,738  
Income per common share:      
Basic $ 0.96     $ 0.54  
Diluted $ 0.95     $ 0.54  
Weighted-average number of common shares outstanding:      
Basic 11,773     12,453  
Diluted 11,817     12,548  
Cash dividends declared per common share $ 0.05     $ 0.02  
               

 

NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
 
  Three Months Ended March 31,
  2016   2015
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income $ 11,280     $ 6,738  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 89     41  
Stock-based compensation 74     15  
Changes in assets and liabilities:      
Accounts receivable (29 )   (69 )
Inventories, net 189     (1,101 )
Other current assets (16 )   (259 )
Other assets 5     (221 )
Accounts payable (840 )   352  
Income taxes payable 2,620     (59 )
Accrued commissions (2,923 )   (1,419 )
Other accrued expenses 925     1,808  
Deferred revenue 2,445     7,683  
Amounts held in eWallets 280     2,897  
Other current liabilities (157 )   212  
Long-term incentive (120 )   (62 )
Net cash provided by operating activities 13,822     16,556  
CASH FLOWS FROM INVESTING ACTIVITIES:      
Purchases of property and equipment, net (240 )   (266 )
Net cash used in investing activities (240 )   (266 )
CASH FLOWS FROM FINANCING ACTIVITIES:      
Repurchase of common stock (18,319 )   (1,082 )
Dividends paid (576 )   (250 )
Net cash used in financing activities (18,895 )   (1,332 )
Effect of exchange rates on cash and cash equivalents 30     92  
Net (decrease) increase in cash and cash equivalents (5,283 )   15,050  
CASH AND CASH EQUIVALENTS, beginning of period 104,914     44,816  
CASH AND CASH EQUIVALENTS, end of period $ 99,631     $ 59,866  
NON-CASH FINANCING ACTIVITY:      
Issuance of treasury stock $ —     $ 666  
                
CONTACTS:

Company Contact:
Scott Davidson
Senior Vice President and Chief Financial Officer
Natural Health Trends Corp.
Tel: 310-541-0888
scott.davidson@nhtglobal.com

Investors:
Addo Communications
Tel: 310-829-5400
investor.relations@nhtglobal.com

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Source: Natural Health Trends Corp.

Released April 27, 2016