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Natural Health Trends Reports Second Quarter 2020 Financial Results

business wire
Natural Health Trends Reports Second Quarter 2020 Financial Results

– Revenue of $16.4 million increased 10% from the first quarter of 2020
– Aggressive cost cutting measures facilitated a return to profitability in the second quarter of 2020
– Strong balance sheet with ample liquidity and $93.2 million in cash and cash equivalents
– Declared a quarterly cash dividend of $0.20 per share

HONG KONG, Aug. 05, 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 second quarter ended June 30, 2020.

Second Quarter 2020 Financial Highlights

  • Revenue of $16.4 million increased 10% compared to $14.9 million in the first quarter of 2020 and decreased 30% compared to $23.4 million in the second quarter of 2019.

  • Operating income was $183,000 compared to a loss of $1.4 million in the first quarter of 2020 and a loss of $4,000 in the second quarter of 2019.

  • Net income was $34,000, or break-even per diluted share, compared to a net loss of $573,000, or $0.05 per diluted share, in the first quarter of 2020 and net income of $397,000, or $0.04 per diluted share, in the second quarter of 2019.

  • The number of Active Members1 decreased 4% to 54,370 at June 30, 2020 compared to 56,490 at March 31, 2020, and decreased 31% compared to 78,280 at June 30, 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.

Year-to-Date 2020 Financial Highlights

  • Revenue of $31.4 million decreased 27% compared to $42.8 million in the first six months of 2019.

  • Operating loss was $1.3 million compared to a loss of $2.7 million in the first six months of 2019.

  • Net loss was $539,000, or $0.05 per diluted share, compared to a net loss of $1.5 million, or $0.14 per diluted share, in the first six months of 2019.

Management Commentary

“The second quarter marked a continuation of the challenging macroeconomic climate we experienced during the first quarter of 2020 as the COVID-19 pandemic persisted into the summer months,” commented Chris Sharng, President of Natural Health Trends Corp. “We were very pleased with the stability and resilience of our field leadership which helped us generate a 10% sequential increase in our second quarter revenue to $16.4 million. In addition, our aggressive cost reduction measures enabled us to return to profitability during the quarter. As previously announced, we put a program in place in the second half of 2019 to position us for increased operating efficiencies moving forward. Through this program, we made significant progress in reducing our SG&A expenses through reductions of nearly 20% versus the first quarter of 2020 and more than one-third versus the prior year period.”

Mr. Sharng concluded, “I am very pleased with our ability to manage elements within our control throughout this global crisis which led us to achieving positive growth in total revenue, gross profit, operating income and net income for the second quarter of 2020 over the prior quarter. Further, our strong balance sheet, ample liquidity position and conservative capital allocation philosophy, which is designed to help support our members and business, enabled us to continue returning value to our stockholders through our quarterly cash dividend. I’d like to once again thank all of our leaders who have proven themselves time and time again in navigating difficult and complex operating environments such as this one. We remain cautiously optimistic the macroeconomic situation will continue to improve in the second half of 2020.”

Balance Sheet and Cash Flow

 

  • Net cash used in operating activities was $1.0 million in the first six months of 2020, compared to $15.1 million in the first six months of 2019.

  • Total cash and cash equivalents were $93.2 million at June 30, 2020, down slightly from $95.4 million at March 31, 2020.

  • On August 3, 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 August 28, 2020 to stockholders of record as of August 18, 2020.

Second Quarter 2020 Financial Results Conference Call

Management will host a conference call to discuss the second quarter 2020 financial results today, Wednesday, August 5, 2020 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date:

Wednesday, August 5, 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:

13706115

Webcast:

http://public.viavid.com/index.php?id=140483 

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 August 5, 2020 through 11:59 p.m. Eastern Time on August 19, 2020 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13706115.

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) 

 

June 30, 2020

 

 

December 31, 2019

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

93,206

 

 

$

96,035

 

Inventories

 

4,114

 

 

 

6,404

 

Other current assets

 

5,057

 

 

 

5,936

 

Total current assets

 

102,377

 

 

 

108,375

 

Property and equipment, net

 

599

 

 

 

735

 

Operating lease right-of-use assets

 

3,096

 

 

 

3,135

 

Restricted cash

 

513

 

 

 

3,390

 

Deferred tax asset

 

1,163

 

 

 

2,039

 

Other assets

 

729

 

 

 

823

 

Total assets

$

108,477

 

 

$

118,497

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

1,084

 

 

$

680

 

Accrued commissions

 

3,113

 

 

 

2,931

 

Other accrued expenses

 

1,763

 

 

 

2,387

 

Deferred revenue

 

2,645

 

 

 

4,506

 

Amounts held in eWallets

 

11,438

 

 

 

12,938

 

Operating lease liabilities

 

1,247

 

 

 

1,655

 

Other current liabilities

 

1,438

 

 

 

1,205

 

Total current liabilities

 

22,728

 

 

 

26,302

 

Income taxes payable

 

13,748

 

 

 

15,365

 

Deferred tax liability

 

203

 

 

 

202

 

Operating lease liabilities

 

1,963

 

 

 

1,564

 

Total liabilities

 

38,642

 

 

 

43,433

 

Stockholders’ equity:

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

Common stock

 

13

 

 

 

13

 

Additional paid-in capital

 

86,102

 

 

 

86,102

 

Retained earnings

 

11,008

 

 

 

16,117

 

Accumulated other comprehensive loss

 

(1,384

)

 

 

(1,264

)

Treasury (TSRMF) stock, at cost

 

(25,904

)

 

 

(25,904

)

Total stockholders’ equity

 

69,835

 

 

 

75,064

 

Total liabilities and stockholders’ equity

$

108,477

 

 

$

118,497

 

 

 

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

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net sales

$

16,404

 

 

$

23,428

 

 

$

31,352

 

 

$

42,756

 

Cost of sales

 

4,817

 

 

 

5,407

 

 

 

9,331

 

 

 

10,631

 

Gross profit

 

11,587

 

 

 

18,021

 

 

 

22,021

 

 

 

32,125

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commissions expense

 

7,113

 

 

 

11,398

 

 

 

13,716

 

 

 

20,896

 

Selling, general and administrative expenses

 

4,291

 

 

 

6,627

 

 

 

9,570

 

 

 

13,942

 

Total operating expenses

 

11,404

 

 

 

18,025

 

 

 

23,286

 

 

 

34,838

 

Income (loss) from operations

 

183

 

 

 

(4

)

 

 

(1,265

)

 

 

(2,713

)

Other income, net

 

125

 

 

 

373

 

 

 

218

 

 

 

805

 

Income (loss) before income taxes

 

308

 

 

 

369

 

 

 

(1,047

)

 

 

(1,908

)

Income tax provision (benefit)

 

274

 

 

 

(28

)

 

 

(508

)

 

 

(382

)

Net income (loss)

$

34

 

 

$

397

 

 

$

(539

)

 

$

(1,526

)

Net income (loss) per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.00

 

 

$

0.04

 

 

$

(0.05

)

 

$

(0.14

)

Diluted

$

0.00

 

 

$

0.04

 

 

$

(0.05

)

 

$

(0.14

)

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

10,580

 

 

 

11,082

 

 

 

10,532

 

 

 

11,207

 

Diluted

 

11,424

 

 

 

11,135

 

 

 

10,532

 

 

 

11,207

 

 

 

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

 

Six Months Ended June 30,

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net loss

$

(539

)

 

$

(1,526

)

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

 

 

 

 

 

 

 

Depreciation and amortization

 

202

 

 

 

189

 

Noncash lease expense

 

834

 

 

 

914

 

Deferred income taxes

 

870

 

 

 

(3

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

Inventories

 

2,314

 

 

 

1,881

 

Other current assets

 

845

 

 

 

(752

)

Other assets

 

82

 

 

 

(35

)

Accounts payable

 

402

 

 

 

(956

)

Accrued commissions

 

212

 

 

 

(5,475

)

Other accrued expenses

 

(617

)

 

 

(1,946

)

Deferred revenue

 

(1,872

)

 

 

(3,409

)

Amounts held in eWallets

 

(1,560

)

 

 

(765

)

Operating lease liabilities

 

(811

)

 

 

(964

)

Income taxes payable

 

(1,617

)

 

 

(1,617

)

Other current liabilities

 

237

 

 

 

(318

)

Long-term incentive

 

 

 

 

(277

)

Net cash used in operating activities

 

(1,018

)

 

 

(15,059

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Purchases of property and equipment

 

(68

)

 

 

(141

)

Net cash used in investing activities

 

(68

)

 

 

(141

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Repurchase of common stock

 

 

 

 

(6,682

)

Dividends paid

 

(4,570

)

 

 

(2,736

)

Net cash used in financing activities

 

(4,570

)

 

 

(9,418

)

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

 

(50

)

 

 

73

 

Net decrease in cash, cash equivalents and restricted cash

 

(5,706

)

 

 

(24,545

)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

 

99,425

 

 

 

135,651

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

$

93,719

 

 

$

111,106

 

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

$

1,081

 

 

$

4,697

 

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 

https://seekingalpha.com/pr/17959984-natural-health-trends-reports-second-quarter-2020-financial-results

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