• Natural Health Trends Reports Third Quarter 2023 Financial Results

    Source: Nasdaq GlobeNewswire / 01 Nov 2023 08:00:01   America/Chicago

    • Total orders taken were roughly flat despite continued headwinds of a stronger dollar and trepid consumer sentiment
    • Cash flows from operations improved $1.4 million
    • Declared a quarterly cash dividend of $0.20 per share

    HONG KONG, Nov. 01, 2023 (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 September 30, 2023.

    Third Quarter 2023 Financial Highlights

    • Revenue of $10.6 million decreased 9% compared to $11.7 million in the third quarter of 2022. The decrease in revenue was primarily due to the changes in deferred revenue in the two respective quarters. Deferred revenue decreased $603,000 and $1.4 million during the third quarter of 2023 and 2022, respectively, resulting in an $835,000 unfavorable revenue variance.

    • Operating loss was $292,000 compared to $145,000 in the third quarter of 2022.

    • Net income was $172,000, or $0.02 per diluted share, compared to $47,000, or breakeven per diluted share, in the third quarter of 2022.

    • The number of Active Members1 was down 6% to 34,660 at September 30, 2023 compared to 36,730 at June 30, 2023, and decreased 16% compared to 41,170 at September 30, 2022.

    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 2023 Financial Highlights

    • Revenue of $33.0 million decreased 10% compared to $36.6 million in the first nine months of 2022. The revenue decrease was primarily due to the changes in deferred revenue in the two respective nine-month periods. Deferred revenue increased $651,000 during the first nine months of 2023, but decreased $3.3 million during the same period last year, resulting in a $3.9 million unfavorable revenue variance.

    • Operating loss was $1.4 million compared to $313,000 in the first nine months of 2022.

    • Net income was $210,000, or $0.02 per diluted share, compared to $125,000, or $0.01 per diluted share, in the first nine months of 2022.

    Management Commentary

    “Adapting to the current environment in which Chinese consumers are reluctant to spend or invest, we managed to generate orders on pace with those of last year. Orders grew 3% at a constant exchange rate compared to the third quarter of 2022, while year-to-date 2023 orders increased 8% compared to prior year. The reported decrease in revenue was largely due to changes in deferred revenue, partly because orders tended to be received later in the quarter this year. Importantly, our members remained responsive to our programs, demonstrating that our promotions, incentives and high-quality product offerings continue to resonate,” commented Chris Sharng, President of Natural Health Trends Corp.

    Mr. Sharng continued, “Noteworthy to highlight are the signs of momentum extending to several of our other markets including Taiwan, Peru, North America and Japan, each of which delivered strong performance during the quarter. We’re hopeful that these signs of growth will continue supported by careful planning and execution to our strategies around digital enhancements, new product launches, geographic diversification and superior member support.”

    Balance Sheet and Cash Flow

    • Net cash used in operating activities was $4.2 million in the first nine months of 2023 compared to $5.8 million in the first nine months of 2022. Before tax installment payments, the liability of which arises from the 2017 U.S. Tax Cuts and Jobs Act (the “Act Act”), cash used in operating activities was $1.2 million in the first nine months 2023, versus $4.2 million in the comparable period a year ago. Of the total Tax Act liability of $20.2 million, $11.2 million has been paid to date.

    • Total cash and cash equivalents were $58.4 million at September 30, 2023, down from $61.6 million at June 30, 2023.

    • On October 30, 2023, 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 November 24, 2023 to stockholders of record as of November 14, 2023.

    Third Quarter 2023 Financial Results Conference Call

    Management will host a conference call to discuss the third quarter 2023 financial results today, Wednesday, November 1, 2023 at 11:30 a.m. Eastern Time. The conference call details are as follows:

    Date:Wednesday, November 1, 2023
    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:13740859
    Webcast:https://viavid.webcasts.com/starthere.jsp?ei=1631150&tp_key=ea6cd96ef7
      

    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 November 1, 2023 through 11:59 p.m. Eastern Time on November 8, 2023 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13740859.

    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, 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 3, 2023 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.

    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
    investor.relations@nhtglobal.com

    NATURAL HEALTH TRENDS CORP.
    CONSOLIDATED BALANCE SHEETS
    (In thousands, except share data) 

      September 30, 2023  December 31, 2022 
      (Unaudited)     
    ASSETS        
    Current assets:        
    Cash and cash equivalents $58,412  $69,667 
    Inventories  4,882   4,525 
    Other current assets  3,675   3,359 
    Total current assets  66,969   77,551 
    Property and equipment, net  284   394 
    Operating lease right-of-use assets  3,549   3,992 
    Restricted cash  37   79 
    Deferred tax asset  303   195 
    Other assets  679   606 
    Total assets $71,821  $82,817 
    LIABILITIES AND STOCKHOLDERS’ EQUITY        
    Current liabilities:        
    Accounts payable $666  $810 
    Income taxes payable  4,092   2,972 
    Accrued commissions  2,589   2,943 
    Other accrued expenses  1,100   1,181 
    Deferred revenue  6,248   5,597 
    Amounts held in eWallets  4,154   4,895 
    Operating lease liabilities  1,182   1,135 
    Other current liabilities  747   905 
    Total current liabilities  20,778   20,438 
    Income taxes payable  5,054   9,098 
    Deferred tax liability  140   141 
    Operating lease liabilities  2,539   2,989 
    Total liabilities  28,511   32,666 
    Stockholders’ equity:        
    Preferred stock  —   — 
    Common stock  13   13 
    Additional paid-in capital  84,657   86,102 
    Accumulated deficit  (15,757)  (9,056)
    Accumulated other comprehensive loss  (1,267)  (1,004)
    Treasury stock, at cost  (24,336)  (25,904)
    Total stockholders’ equity  43,310   50,151 
    Total liabilities and stockholders’ equity $71,821  $82,817 
             

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

      Three Months Ended September 30,  Nine Months Ended September 30, 
      2023  2022  2023  2022 
    Net sales $10,615  $11,716  $32,987  $36,622 
    Cost of sales  2,689   3,098   8,386   9,398 
    Gross profit  7,926   8,618   24,601   27,224 
    Operating expenses:                
    Commissions expense  4,361   4,863   13,861   15,370 
    Selling, general and administrative expenses  3,857   3,900   12,169   12,167 
    Total operating expenses  8,218   8,763   26,030   27,537 
    Loss from operations  (292)  (145)  (1,429)  (313)
    Other income, net  585   187   1,708   472 
    Income before income taxes  293   42   279   159 
    Income tax provision (benefit)  121   (5)  69   34 
    Net income $172  $47  $210  $125 
    Net income per common share:                
    Basic $0.02  $0.00  $0.02  $0.01 
    Diluted $0.02  $0.00  $0.02  $0.01 
    Weighted average common shares outstanding:                
    Basic  11,440   11,423   11,432   11,341 
    Diluted  11,454   11,423   11,449   11,423 
                     

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

      Nine Months Ended September 30, 
      2023  2022 
    CASH FLOWS FROM OPERATING ACTIVITIES:        
    Net income $210  $125 
    Adjustments to reconcile net income to net cash used in operating activities:        
    Depreciation and amortization  130   156 
    Share-based compensation  123   — 
    Noncash lease expense  830   889 
    Deferred income taxes  (117)  (2)
    Changes in assets and liabilities:        
    Inventories  (420)  140 
    Other current assets  (425)  1,000 
    Other assets  (92)  (44)
    Accounts payable  (141)  228 
    Income taxes payable  (2,923)  (1,382)
    Accrued commissions  (315)  (1,055)
    Other accrued expenses  (58)  (540)
    Deferred revenue  674   (3,209)
    Amounts held in eWallets  (725)  (1,150)
    Operating lease liabilities  (812)  (950)
    Other current liabilities  (148)  4 
    Net cash used in operating activities  (4,209)  (5,790)
    CASH FLOWS FROM INVESTING ACTIVITIES:        
    Purchases of property and equipment  (32)  (130)
    Net cash used in investing activities  (32)  (130)
    CASH FLOWS FROM FINANCING ACTIVITIES:        
    Dividends paid  (6,911)  (6,855)
    Net cash used in financing activities  (6,911)  (6,855)
    Effect of exchange rates on cash, cash equivalents and restricted cash  (145)  (858)
    Net decrease in cash, cash equivalents and restricted cash  (11,297)  (13,633)
    CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period  69,746   84,365 
    CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $58,449  $70,732 
    SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:        
    Right-of-use assets obtained in exchange for operating lease liabilities $115  $2,218 
             

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