The following excerpt is from the company's SEC filing.
Full year net income increased 32% year-over-year to $31.0 million
Full year cash flow from operations increased 12% year-over-year to $29.7 million
Declared special dividend of
per share for the fourth quarter
Returned $31.5 million to shareholders via dividends in 2018, up 83% year-over-year from $17.2 million
HONG KONG – February 22, 2019 – 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 f inancial results for the fourth quarter and full year ended
December 31, 2018
Total revenue of
Revenue from the Company’s Hong Kong operations, which represented
of total revenue, was
Revenue outside of Hong Kong of
Gross profit was
quarter of 2017, and
. As a percent of total revenue, gross profit was
Operating income was
. As a percent of total revenue, operating income was
Net income was
per diluted share, compared to a net loss of $4.5 million, or $0.40 per diluted share, in the
, and net income of
. Net loss for the fourth quarter of 2017 included a one-time net charge of $12.5 million, or $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 was due to the repatriation tax on the deemed repatriation of foreign income and the re-measurement of net deferred tax assets. Excluding the 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, 2018
December 31, 2017
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.
, consistent with 2017.
in 2017. As a percent of total revenue, operating income was
per diluted share, compared to net income of
per diluted share, in 2017. Excluding the impact of the Tax Act, Non-GAAP earnings per diluted share were $3.20 in 2017.
“While 2018 was a challenging year, I’m very pleased with the ability of our company and members to navigate the difficult macroeconomic environment,” commented Chris Sharng, President of Natural Health Trends Corp. “This unpredictable and challenging operating climate, driven by increased global trade tensions, China’s slowing economy and a weaker currency resulted in a decline in revenue. Notably, the Chinese Yuan’s depreciation of 10% against the Hong Kong dollar since February essentially made our products more expensive for our Chinese consumers in 2018. Without the impact of the Yuan devaluation, revenue for the full year of 2018 would have been flat with 2017.”
Mr. Sharng further commented, “While we experienced attractive growth in many global markets and are encouraged by the continuing positive sentiment from our leaders, given the global macroeconomic backdrop and the increased regulatory and media scrutiny in China, we are cautious regarding our performance in 2019 due to the potential impact on our operations from the global trade environment, exchange rate fluctuations, adverse local publicity and the Chinese government’s 100-day campaign. As a result of this campaign and consistent with our past strategies and those of peers, we voluntarily decided in January to temporarily suspend our member activities while proactively cooperating with all relevant government agencies to ensure we continue to conduct our business in compliance with all applicable laws in China. While I am confident this is the best approach to position our Company to successfully operate in the long-term, this suspension of member activities may have a material adverse effect on our business in the near-term. Despite these elements that are beyond our control, we remain focused on geographical expansion opportunities and leader education to further our progress.”
The Company has relocated its corporate headquarters from Los Angeles, California to Hong Kong. The strategic decision was made to align with and further expand the Company’s presence in Asia, where the majority of its business is conducted, improve operational efficiency, and provide greater access between leaders, members and the Company.
Balance Sheet and Cash Flow
Net cash provided by operating activities was $4.4 million, compared to $11.3 million in the
. For the full year of 2018, net cash provided by operating activities was
Total cash and cash equivalents were $132.7 million at the end of the fourth quarter of 2018, up from $132.2 million as of the third quarter of 2018, and down slightly from $135.3 million as of the fourth quarter 2017.
January 27, 2019
, the Company’s Board of Directors declared a quarterly cash dividend of
, as well as a special cash dividend of
per share on outstanding common stock. The dividends will be payable on
March 15, 2019
to stockholders of record as of
March 5, 2019
As of December 31, 2018, $32.0 million of the stock repurchase program previously approved on July 28, 2015 and increased on January 13, 2016 remained available for future purchases, inclusive of related estimated income tax.
The Company expects to issue its 2018 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 2018 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 2018 Financial Results Conference Call
Management will host a conference call to discuss the
quarter and full year 2018 financial results today, Thursday, February 21, 2019 at 4:30 p.m. Eastern Time. The conference call details are as follows:
4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time
For those unable to participate during the live broadcast, a replay of the call will also be available from 7:30 p.m. Eastern Time on February 21, 2019 through 11:59 p.m. Eastern Time on March 7, 2019 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13687705.
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 27, 2018 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
Tel (Hong Kong): +852-3107-0800
Tel (U.S.): 310-541-0888
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 December 31,
Cost of sales
Selling, general and administrative expenses
Total operating expenses
Income from operations
Other income, net
Income before income taxes
Income tax provision
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:
Depreciation and amortization
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:
Net cash used in financing activities
Effect of exchange rates on cash, cash equivalents and restricted cash
Net (decrease) increase in cash, cash equivalents and restricted cash
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:
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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