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Natural Health Trends Reports First Quarter 2020 Financial Results

Seeking Alpha
Natural Health Trends Reports First Quarter 2020 Financial Results

|GlobeNewswire|About: NHTC

  • Strong balance sheet with ample liquidity and $95 million in cash and cash equivalents

  • Declared a quarterly cash dividend of $0.20 per share

  • Expect to realize $8 million in annualized cost savings in 2020

HONG KONG, May 06, 2020 (GLOBE NEWSWIRE) -- Natural Health Trends Corp. (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 first quarter ended March 31, 2020.

First Quarter 2020 Financial Highlights

  • Revenue of $14.9 million decreased 23% compared to $19.3 million in the first quarter of 2019.

  • Operating loss was $1.4 million compared to a loss of $2.7 million in the first quarter of 2019.

  • Net loss was $573,000, or $0.05 per diluted share, compared to a net loss of $1.9 million, or $0.17 per diluted share, in the first quarter of 2019.

  • The number of Active Members1 decreased 2% to 56,490 at March 31, 2020 compared to 57,410 at December 31, 2019, and decreased 35% compared to 87,340 at March 31, 2019.

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

“First and foremost, our thoughts are with all of those around the world who have been impacted by the coronavirus,” commented Chris Sharng, President of Natural Health Trends Corp. “I am pleased that we have continued to run our operations efficiently with the health and safety of our employees, members and customers guiding our decisions as our top priority. The impact of the pandemic followed the already difficult operating conditions we experienced throughout 2019. While we could have never foreseen the impact COVID-19 would have on the global economy, we focused our efforts in 2019 on preparing our business to adapt to new realities following China’s 100-day campaign and have been applying key learnings from our experience to support our affected markets. To that end, we started implementing aggressive cost reduction measures beginning in the second half of 2019 which were partially offset by additional spending during the first quarter in direct response to COVID-19 and the governments’ measures to control the spread of the virus.  As a result of the net effect of these actions, we narrowed the scope of our first quarter operating loss and decline in cash flow from operations despite the fact that our main markets were under severe lockdown for most of first quarter of 2020.”

Mr. Sharng concluded, “We have ample liquidity with $95 million in cash and cash equivalents and zero debt. Further, our highly variable cost structure allows us the flexibility to adapt in-line with order volume. As previously announced, we put a program in place to position us for increased operating efficiencies in several areas including reducing headcount and promotional spending. As a result, we now expect to realize annualized cost savings of approximately $8 million in 2020. I feel confident our employees and members will work together through these unprecedented times with our support and that we will emerge from this downturn even stronger than before.”

Balance Sheet and Cash Flow

  • Net cash used in operating activities was $990,000 in the first quarter of 2020, compared to $11.3 million in the first quarter of 2019.

  • Total cash and cash equivalents were $95.4 million at March 31, 2020, down slightly from $96.0 million at December 31, 2019.

  • On May 4, 2020, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 on each share of common stock outstanding. The dividend will be payable on May 29, 2020 to stockholders of record as of May 19, 2020.

First Quarter 2020 Financial Results Conference Call

Management will host a conference call to discuss the first quarter 2020 financial results today, Wednesday, May 6, 2020 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date:

Wednesday, May 6, 2020

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:

13700943

Webcast:

http://public.viavid.com/index.php?id=138751

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 May 6, 2020 through 11:59 p.m. Eastern Time on May 20, 2020 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13700943.

About Natural Health Trends Corp.

Natural Health Trends Corp. is an international direct-selling and e-commerce company operating through its subsidiaries throughout Asia, the Americas, 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 9, 2020 with the Securities and Exchange Commission (SEC), as well as in subsequent reports filed this year with the SEC.  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, except share data)

 

 

 

 

 

March 31, 2020

 

December 31, 2019

 

(Unaudited)

 

 

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

95,393

 

 

$

96,035

 

Inventories

5,406

 

 

6,404

 

Other current assets

6,922

 

 

5,936

 

Total current assets

107,721

 

 

108,375

 

Property and equipment, net

649

 

 

735

 

Operating lease right-of-use assets

2,878

 

 

3,135

 

Restricted cash

505

 

 

3,390

 

Deferred tax asset

1,162

 

 

2,039

 

Other assets

754

 

 

823

 

Total assets

$

113,669

 

 

$

118,497

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

848

 

 

$

680

 

Accrued commissions

2,341

 

 

2,931

 

Other accrued expenses

1,971

 

 

2,387

 

Deferred revenue

3,994

 

 

4,506

 

Amounts held in eWallets

12,823

 

 

12,938

 

Operating lease liabilities

1,549

 

 

1,655

 

Other current liabilities

1,275

 

 

1,205

 

Total current liabilities

24,801

 

 

26,302

 

Income taxes payable

15,365

 

 

15,365

 

Deferred tax liability

203

 

 

202

 

Operating lease liabilities

1,403

 

 

1,564

 

Total liabilities

41,772

 

 

43,433

 

Stockholders’ equity:

 

 

 

Preferred stock

 

 

 

Common stock

13

 

 

13

 

Additional paid-in capital

86,102

 

 

86,102

 

Retained earnings

13,259

 

 

16,117

 

Accumulated other comprehensive loss

(1,573

)

 

(1,264

)

Treasury (TSRMF) stock, at cost

(25,904

)

 

(25,904

)

Total stockholders’ equity

71,897

 

 

75,064

 

Total liabilities and stockholders’ equity

$

113,669

 

 

$

118,497

 

 

 

 

 

 

 

 

 

 

NATURAL HEALTH TRENDS CORP. 
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)

 

 

Three Months Ended March 31,

 

2020

 

2019

Net sales

$

14,948 

 

 

$

19,328 

 

Cost of sales

4,514 

 

 

5,224 

 

Gross profit

10,434 

 

 

14,104 

 

Operating expenses:

 

 

 

Commissions expense

6,603 

 

 

9,498 

 

Selling, general and administrative expenses

5,279 

 

 

7,315 

 

Total operating expenses

11,882 

 

 

16,813 

 

Loss from operations

(1,448

)

 

(2,709

)

Other income, net

93 

 

 

432 

 

Loss before income taxes

(1,355

)

 

(2,277

)

Income tax benefit

(782

)

 

(354

)

Net loss

$

(573

)

 

$

(1,923

)

 

 

 

 

Net loss per common share – basic and diluted

$

(0.05

)

 

$

(0.17

)

Weighted-average common shares outstanding – basic and diluted

10,483 

 

 

11,333 

 

 

 

 

 

 

 

 

 

 

NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)

 

 

 

Three Months Ended March 31,

 

2020

 

2019

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

Net loss

$

(573

)

 

$

(1,923

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

95 

 

 

93 

 

Noncash lease expense

418 

 

 

447 

 

Deferred income taxes

869 

 

 

— 

 

Changes in assets and liabilities:

 

 

 

Inventories

1,001 

 

 

(192

)

Other current assets

(1,033

)

 

(1,159

)

Other assets

52 

 

 

(2

)

Accounts payable

168 

 

 

(174

)

Accrued commissions

(528

)

 

(3,575

)

Other accrued expenses

(398

)

 

(795

)

Deferred revenue

(521

)

 

(3,030

)

Amounts held in eWallets

(175

)

 

(142

)

Operating lease liabilities

(440

)

 

(499

)

Other current liabilities

75 

 

 

(241

)

Long-term incentive

— 

 

 

(158

)

Net cash used in operating activities

(990

)

 

(11,350

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

Purchases of property and equipment

(12

)

 

(46

)

Net cash used in investing activities

(12

)

 

(46

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

Dividends paid

(2,285

)

 

(2,736

)

Net cash used in financing activities

(2,285

)

 

(2,736

)

Effect of exchange rates on cash, cash equivalents and restricted cash

(240

)

 

248 

 

Net decrease in cash, cash equivalents and restricted cash

(3,527

)

 

(13,884

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

99,425 

 

 

135,651 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

$

95,898 

 

 

$

121,767 

 

SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:

 

 

 

 

 

 

 

Issuance of treasury stock for employee awards, net

$

— 

 

 

$

377 

 

Right-of-use assets obtained in exchange for operating lease liabilities

$

194 

 

 

$

4,462 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONTACTS:

Company Contact:
Scott Davidson
Senior Vice President and Chief Financial Officer
Natural Health Trends Corp.
Tel (Hong Kong): +852-3107-0800
Tel (U.S.): 310-541-0888

scott.davidson@nhtglobal.com  
        
Investor Contact:
ADDO Investor Relations
Tel: 310-829-5400

investor.relations@nhtglobal.com 

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