The following excerpt is from the company's SEC filing.
First sequential quarter increase in net sales since the second quarter of 2016
Positive annual sales momentum in Southeast Asia, Europe and Japan
Maintained strong annual gross profit and operating income margins
Increased quarterly dividend 8% to $0.13 per share
LOS ANGELES – February 14, 2018 – 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 fourth quarter and full year ended
December 31, 2017
Total revenue of
, and increased 15% compared to $40.1 million in the third quarter of 2017.
Revenue from the Company’s Hong Kong operations, which represented
of total revenue, was
, a decrease of
, and an increase of 13% compared to $35.0 million in the third quarter of 2017.
Revenue outside of Hong Kong of
, and increased 27% compared to $5.1 million in the third quarter of 2017.
Operating income of
, and increased 2% compared to $8.5 million in the third quarter of 2017.
Income tax provision of $13.3 million included a one-time net charge of $12.5 million, or an impact of $1.11 per diluted share, as a result of the Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The one-time net charge is due to the repatriation tax on the deemed repatriation of foreign income and the re-measurement of net deferred tax assets.
Net loss was
per diluted share, compared to net income of
per diluted share, in the
, and net income of $7.3 million, or $0.65 per diluted share, in the third quarter of 2017. Excluding the estimated impact of the Tax Act, Non-GAAP earnings per diluted share were $0.71 in the fourth quarter of 2017. Non-GAAP earnings per diluted share is defined below and is reconciled to earnings per diluted share in the table entitled “Reconciliation from earnings per diluted share to Non-GAAP earnings per diluted share.”
The number of Active Members
September 30, 2017
, and decreased
December 31, 2016
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.
. As a percent of total revenue, operating income was
, consistent with 2016.
Net income was
. Excluding the estimated impact of the Tax Act, Non-GAAP earnings per diluted share were $3.20 for the full year of 2017.
“While 2017 was a challenging year, we regained momentum in the fourth quarter with the first sequential quarter of sales growth since mid-2016,” commented Chris Sharng, President of Natural Health Trends Corp. “The overall sales decline can be traced to factors beyond our control which hindered our members’ ability to organize meetings and conduct business, including the G20 Summit in late 2016, the 20th Anniversary of Hong Kong’s handover and China’s Communist Party’s 19th National Congress.”
Mr. Sharng further commented, “We believe our ability to increase sales over the prior quarter was a result of the improvements we made to our commission plan, combined with a number of productive incentive trips and training programs held throughout the year. Additionally, we continued to gain traction in international markets such as Europe, Southeast Asia and Japan, which all grew sales over 2016. We have also worked hard to preserve our strong margin profile despite our top-line decline through diligent expense management that aligned our cost structure to current sales levels. As we look ahead to 2018, we believe our targeted training programs and promotions, opportunities for international expansion and new product introductions will translate into improved financial performance in the quarters to come.”
Balance Sheet and Cash Flow
Net cash provided by operating activities was $11.3 million, compared to $16.9 million in the
. For the full year of 2017, net cash provided by operating activities was $26.6 million, compared to $53.2 million in
On February 6, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.13, which represents an 8% increase over the prior quarter dividend. The dividend will be payable on March 9, 2018 to stockholders of record as of February 27, 2018.
The Company expects to issue its 2017 audited financial results in March 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 2017 audited financial results.
Use of Non-GAAP Financial Measure
The Company included in this release a non-GAAP financial measure, “Non-GAAP earnings per diluted share,” which is derived by excluding the one-time net charge resulting from the Tax Act from the most directly comparable GAAP financial measure of “earnings per diluted share” for both the quarter and year ended December 31, 2017.
Management’s exclusion of the one-time net charge in calculating Non-GAAP earnings per diluted share is intended to facilitate a more useful period-to-period comparison of the Company’s financial results and to provide additional information about the incremental impact of the Tax Act, namely the repatriation tax on the deemed repatriation of foreign income and the re-measurement of net deferred tax assets to which the Company was subject in the fourth quarter and year ended December 31, 2017. This non-GAAP financial measure is supplemental and should not be considered in isolation or as a substitute for the corresponding financial measure prepared in accordance with GAAP.
The Company’s financial statements provided with this release include a reconciliation of Non-GAAP earnings per diluted share to earnings per diluted share.
Quarter and Full Year 2017 Financial Results Conference Call
Management will host a conference call to discuss the
quarter and full year 2017 financial results today, Wednesday, February 14, 2018 at 11:30 a.m. Eastern Time. The conference call details are as follows:
11:30 a.m. Eastern Time / 8:30 a.m. Pacific Time
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 14, 2018 through 11:59 p.m. Eastern Time on February 28, 2018 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13675025.
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.
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
in Natural Health Trends Corp.’s Annual Report on Form 10-K filed on March 10, 2017 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.
Senior Vice President and Chief Financial Officer
ADDO Investor Relations
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents
Other current assets
Total current assets
Property and equipment, net
Deferred tax asset
LIABILITIES AND STOCKHOLDERS’ EQUITY
Income taxes payable
Other accrued expenses
Amounts held in eWallets
Other current liabilities
Total current liabilities
Deferred tax liability
Commitments and contingencies
Additional paid-in capital
Accumulated other comprehensive loss
Treasury stock, at cost
Total stockholders’ equity
Total liabilities and stockholders’ equity
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended
Cost of sales
Selling, general and administrative expenses
Depreciation and amortization
Total operating expenses
Income from operations
Other income (expense), net
Income before income taxes
Net income (loss)
Net income (loss) per common share:
Weighted-average number of common shares outstanding:
Cash dividends declared per common share
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
CASH FLOWS FROM OPERATING ACTIVITIES:
Adjustments to reconcile net income to net cash provided by operating activities:
Cumulative translation adjustment realized in net income
Deferred income taxes
Changes in assets and liabilities:
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment
Net cash used in investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock
Net cash used in financing activities
Effect of exchange rates on cash and cash equivalents
Net increase in cash and cash equivalents
CASH AND CASH EQUIVALENTS, beginning of period
CASH AND CASH EQUIVALENTS, end of period
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:
Cash paid for income taxes, net of refunds
Issuance of treasury stock for employee awards, net
RECONCILIATION FROM EARNINGS PER DILUTED SHARE TO NON-GAAP EARNINGS PER DILUTED SHARE
Net income (loss) per diluted share
Exclude Tax Act one-time net charge per share
The above information was disclosed in a filing to the SEC. To see the filing, click here.
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