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Natural Health Trends Reports Fourth Quarter and Full Year 2020 Financial Results

Seeking Alpha
Natural Health Trends Reports Fourth Quarter and Full Year 2020 Financial Results

– Fourth quarter revenue of $16.6 million increased 17% compared to the third quarter of 2020 
– Reduced full year 2020 operating expenses by $9.0 million
– Third consecutive quarter of positive operating income
– Generated positive cash flow from operations in the fourth quarter and full year of 2020
– Declared a quarterly cash dividend of $0.20 per share 

HONG KONG, Feb. 10, 2021 (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 fourth quarter and full year ended December 31, 2020.

Fourth Quarter 2020 Financial Highlights

  • Revenue of $16.6 million increased 17% compared to $14.1 million in the third quarter of 2020 and decreased 7% compared to $17.8 million in the fourth quarter of 2019.  

  • Operating income was $1.3 million compared to $668,000 in the third quarter of 2020 and operating loss of $3.2 million in the fourth quarter of 2019. Operating loss for the fourth quarter of 2019 included an impairment charge of $1.8 million upon the early adoption of a new accounting standard pertaining to goodwill that arose from a merger transaction in March 2004.  

  • Net income was $747,000, or $0.07 per diluted share, compared to $635,000, or $0.06 per diluted share, in the third quarter of 2020 and net loss of $2.8 million, or $0.27 per diluted share, in the fourth quarter of 2019.  

  • The number of Active Members1 decreased 2% to 52,230 at December 31, 2020, compared to 53,300 at September 30, 2020, and decreased 9% compared to 57,410 at December 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.

Full Year 2020 Financial Highlights

  • Revenue of $62.1 million decreased 20% compared to $77.6 million in 2019.  

  • Operating income was $669,000 compared to operating loss of $7.0 million in 2019. Operating loss included a goodwill impairment charge of $1.8 million in 2019.  

  • Net income was $843,000, or $0.07 per diluted share, compared to net loss of $5.6 million, or $0.52 per diluted share, in 2019.

Management Commentary

“2020 revenue of $62.1 million decreased 20% compared to $77.6 million in 2019 as elements such as government-mandated travel restrictions, shutdowns and limitations surrounding in-person events and activities hindered our leaders’ ability to conduct business,” commented Chris Sharng, President of Natural Health Trends Corp. “However, for the fourth quarter of 2020, revenue of $16.6 million increased 17% over the third quarter of 2020 with orders improving 14% as restrictions began to ease in our key markets.”

Mr. Sharng continued, “The cost savings initiatives we implemented in the second half of 2019 resulted in 2020 cost reductions of over $9.0 million year-over-year. As a result, we reported positive operating income for both the full year and the third consecutive quarter which helped fuel positive cash provided by operating activities in 2020.”

Balance Sheet and Cash Flow

  • Net cash provided by operating activities was $1.9 million in 2020 compared to net cash used in operating activities of $18.6 million in 2019.

  • Total cash and cash equivalents were $92.4 million as of December 31, 2020, down from $96.0 million as of December 31, 2019.     

  • On February 8, 2021, 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 March 5, 2021 to stockholders of record as of February 23, 2021.

The Company expects to issue its 2020 audited financial results in late February with its Annual Report on Form 10-K to be filed with the Securities and Exchange Commission. The financial results are preliminary and the accompanying financial statements have not been audited or have not yet been reviewed by the Company’s independent accountants. Significant updates and revisions may be required before the release of the Company’s 2020 audited financial results.

Fourth Quarter and Full Year 2020 Financial Results Conference Call

Management will host a conference call to discuss the fourth quarter and full year 2020 financial results today, Wednesday, February 10, 2021 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date:

Wednesday, February 10, 2021

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:

13714821

Webcast:

http://public.viavid.com/index.php?id=142946

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 February 10, 2021 through 11:59 p.m. Eastern Time on February 24, 2021 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number:  13714821.

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) 

 

 

December 31,

 

 

2020

 

 

2019

 

 

(Unaudited)

 

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

92,367

 

 

$

96,035

 

Inventories

 

3,779

 

 

 

6,404

 

Other current assets

 

3,595

 

 

 

5,936

 

Total current assets

 

99,741

 

 

 

108,375

 

Property and equipment, net

 

539

 

 

 

735

 

Operating lease right-of-use assets

 

3,745

 

 

 

3,135

 

Restricted cash

 

525

 

 

 

3,390

 

Deferred tax asset

 

731

 

 

 

2,039

 

Other assets

 

661

 

 

 

823

 

Total assets

$

105,942

 

 

$

118,497

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

580

 

 

$

680

 

Income taxes payable

 

1,481

 

 

 

173

 

Accrued commissions

 

3,496

 

 

 

2,931

 

Other accrued expenses

 

1,922

 

 

 

2,387

 

Deferred revenue

 

3,091

 

 

 

4,506

 

Amounts held in eWallets

 

8,503

 

 

 

12,938

 

Operating lease liabilities

 

1,163

 

 

 

1,655

 

Other current liabilities

 

1,270

 

 

 

1,032

 

Total current liabilities

 

21,506

 

 

 

26,302

 

Income taxes payable

 

13,748

 

 

 

15,365

 

Deferred tax liability

 

216

 

 

 

202

 

Operating lease liabilities

 

2,775

 

 

 

1,564

 

Total liabilities

 

38,245

 

 

 

43,433

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

13

 

 

 

13

 

Additional paid-in capital

 

86,102

 

 

 

86,102

 

Retained earnings

 

7,822

 

 

 

16,117

 

Accumulated other comprehensive loss

 

(336

)

 

 

(1,264

)

Treasury (TSRMF) stock, at cost

 

(25,904

)

 

 

(25,904

)

Total stockholders’ equity

 

67,697

 

 

 

75,064

 

Total liabilities and stockholders’ equity

$

105,942

 

 

$

118,497

 

 

 

 

 

 

 

 

 

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

 

 

Three Months Ended December 31,

 

 

Year Ended December 31,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

(Unaudited)

 

 

(Unaudited)

 

 

 

 

 

Net sales

$

16,595

 

 

$

17,835

 

 

$

62,071

 

 

$

77,614

 

Cost of sales

 

4,024

 

 

 

5,102

 

 

 

16,990

 

 

 

20,104

 

Gross profit

 

12,571

 

 

 

12,733

 

 

 

45,081

 

 

 

57,510

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions expense

 

6,868

 

 

 

7,291

 

 

 

26,204

 

 

 

35,549

 

Selling, general and administrative expenses

 

4,437

 

 

 

6,924

 

 

 

18,208

 

 

 

27,220

 

Goodwill impairment

 

 

 

 

1,764

 

 

 

 

 

 

1,764

 

Total operating expenses

 

11,305

 

 

 

15,979

 

 

 

44,412

 

 

 

64,533

 

Income (loss) from operations

 

1,266

 

 

 

(3,246

)

 

 

669

 

 

 

(7,023

)

Other income, net

 

218

 

 

 

298

 

 

 

821

 

 

 

1,426

 

Income (loss) before income taxes

 

1,484

 

 

 

(2,948

)

 

 

1,490

 

 

 

(5,597

)

Income tax provision (benefit)

 

737

 

 

 

(106

)

 

 

647

 

 

 

14

 

Net income (loss)

$

747

 

 

$

(2,842

)

 

$

843

 

 

$

(5,611

)

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.07

 

 

$

(0.27

)

 

$

0.08

 

 

$

(0.52

)

Diluted

$

0.07

 

 

$

(0.27

)

 

$

0.07

 

 

$

(0.52

)

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

10,777

 

 

 

10,456

 

 

 

10,630

 

 

 

10,871

 

Diluted

 

11,424

 

 

 

10,456

 

 

 

11,424

 

 

 

10,871

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Year Ended December 31,

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

(Unaudited)

 

 

 

 

 

Net income (loss)

$

843

 

 

$

(5,611

)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

410

 

 

 

387

 

Noncash lease expense

 

1,532

 

 

 

1,760

 

Deferred income taxes

 

1,339

 

 

 

(820

)

Goodwill impairment

 

 

 

 

1,764

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

Inventories

 

2,700

 

 

 

5,820

 

Other current assets

 

2,322

 

 

 

(554

)

Other assets

 

181

 

 

 

 

Accounts payable

 

(102

)

 

 

(953

)

Income taxes payable

 

(311

)

 

 

(1,731

)

Accrued commissions

 

566

 

 

 

(9,598

)

Other accrued expenses

 

(471

)

 

 

(2,797

)

Deferred revenue

 

(1,433

)

 

 

(2,315

)

Amounts held in eWallets

 

(4,491

)

 

 

(1,742

)

Operating lease liabilities

 

(1,427

)

 

 

(1,807

)

Other current liabilities

 

227

 

 

 

(108

)

Long-term incentive

 

 

 

 

(333

)

Net cash provided by (used in) operating activities

 

1,885

 

 

 

(18,638

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchases of property and equipment

 

(211

)

 

 

(189

)

Net cash used in investing activities

 

(211

)

 

 

(189

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Repurchase of common stock

 

 

 

 

(10,117

)

Dividends paid

 

(9,138

)

 

 

(7,344

)

Net cash used in financing activities

 

(9,138

)

 

 

(17,461

)

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

 

931

 

 

 

62

 

Net decrease in cash, cash equivalents and restricted cash

 

(6,533

)

 

 

(36,226

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

 

99,425

 

 

 

135,651

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

$

92,892

 

 

$

99,425

 

SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:

 

 

 

 

 

 

 

Issuance of treasury stock for employee awards, net

$

 

 

$

8,289

 

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

$

2,747

 

 

$

5,082

 

 

 

 

 

 

 

 

 

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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Source: Natural Health Trends Corp. 2021 GlobeNewswire, Inc.

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