Natural Health Trends Reports

The following excerpt is from the company's SEC filing.

Quarter 2019 Financial Results

Repurchased $2.9 million of common stock

Declared a special dividend of $0.40 per share

HONG KONG –

November 1, 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 financial results for the

quarter ended

September 30, 2019

Financial Highlights

Revenue of

$17.0 million

decreased

compared to

$47.0 million

in the

quarter of

Gross profit was

$12.7 million

$37.1 million

quarter of 2018. As a percent of total revenue, gross profit was

Operating loss was

$1.1 million

compared to operating income of

$7.8 million

Net loss was

$1.2 million

per diluted share, compared to net income of

$7.6 million

per diluted share, in the

The number of Active Members

decreased 13% to 68,150 at

, compared to 78,280 at June 30, 2019, and

30% compared to 97,160 at

September 30, 2018

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 2019 Financial Highlights

$59.8 million

decreased 60% compared to

$150.3 million

in the first

months of 2018.

$44.8 million

$119.8 million

months of 2018. As a percent of total revenue, gross profit was

$3.8 million

$28.0 million

$2.8 million

$25.5 million

per diluted share, in the first

Management Commentary

“The business environment in China continued to present broad challenges during the third quarter,” commented Chris Sharng, President of Natural Health Trends Corp. “In addition, protests in Hong Kong posed new complications. As a result, we suspended company-sponsored meetings in Hong Kong as current conditions are not conducive to hosting visitors.”

Mr. Sharng further commented, “Beyond the elements that are not within our control, we remain pleased with our leaders’ abilities to adapt our business strategy and to continue performing under these circumstances. Subsequent to quarter end, we held a successful event in Macau which was traditionally held during the third quarter. Our fourth quarter order volume trends are already improving following this major event which is a promising development. Lastly, in light of the current business environment, we are implementing cost reduction measures to focus resources on our members and markets. We expect to realize an annualized $5.7 million in savings by the first quarter of 2020.”

Balance Sheet and Cash Flow

Net cash used in operating activities was $3.7 million compared to net cash provided by operating activities of $8.8 million in the

. For the first 

 months of 2019, net cash used in operating activities was 

$18.7 million

, compared to net cash provided by operating activities of

$25.3 million

 in the first 

 months of 2018.

Total cash and cash equivalents were

$101.1 million

as of

, down from

$132.7 million

as of December 31, 2018.

On October 29, 2019, the Company’s Board of Directors declared a special cash dividend of $0.40 per share on outstanding common stock. The dividend will be payable on November 29, 2019 to stockholders of record as of November 19, 2019.

During the three months ended September 30, 2019, the Company purchased a total of 383,127 shares of its common stock for an aggregate purchase price of $2.9 million, plus transaction costs. As of

, $22.4 million of the stock repurchase program remained available for future purchases, inclusive of related estimated income tax.

Quarter 2019 Financial Results Conference Call

Management will host a conference call to discuss the

quarter 2019 financial results today, Friday November 1, 2019 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Friday, November 1, 2019

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:

13695076

Webcast:

http://public.viavid.com/index.php?id=136315

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, 2019 through 11:59 p.m. Eastern Time on November 15, 2019 by

dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13695076.

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 April 26, 2019 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.

CONTACTS:

Company Contact:

Scott Davidson

Senior Vice President and Chief Financial Officer

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

NATURAL HEALTH TRENDS CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

December 31, 2018

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

101,113

132,653

Inventories

12,165

Other current assets

Total current assets

116,109

150,187

Property and equipment, net

Operating lease right-of-use assets

Goodwill

Restricted cash

Deferred tax asset

Other assets

Total assets

127,107

157,921

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued commissions

12,502

Other accrued expenses

Deferred revenue

Amounts held in eWallets

13,090

14,611

Operating lease liabilities

Other current liabilities

Total current liabilities

27,086

43,084

Income taxes payable

15,365

16,982

Deferred tax liability

Long-term incentive

Total liabilities

44,540

68,060

Stockholders’ equity:

Preferred stock

Common stock

Additional paid-in capital

86,102

86,415

Retained earnings

23,567

44,431

Accumulated other comprehensive loss

(1,764

(1,250

Treasury stock, at cost

(25,351

(39,748

Total stockholders’ equity

82,567

89,861

Total liabilities and stockholders’ equity

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,

Net sales

17,023

47,043

59,779

150,320

Cost of sales

15,002

30,546

12,652

37,117

44,777

119,774

Operating expenses:

Commissions expense

22,001

28,258

67,291

Selling, general and administrative expenses

20,296

24,484

Total operating expenses

13,716

29,270

48,554

91,775

Income (loss) from operations

(1,064

(3,777

27,999

Other income, net

Income (loss) before income taxes

(2,649

28,464

Income tax provision

Net income (loss)

(1,243

(2,769

25,476

Net income (loss) per common share:

Diluted

Weighted-average number of common shares outstanding:

10,623

11,309

11,010

11,298

11,322

11,307

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Depreciation and amortization

Noncash lease expense

Deferred income taxes

Changes in assets and liabilities:

(2,828

(1,674

(1,002

(8,683

(1,779

(3,485

(1,508

(1,392

(1,617

(2,201

Net cash provided by (used in) operating activities

(18,748

25,262

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

(9,564

Dividends paid

(2,736

(27,644

Net cash used in financing activities

(12,300

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

Net decrease in cash, cash equivalents and restricted cash

(31,657

(3,269

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

135,651

138,478

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

103,994

135,209

SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:

Issuance of treasury stock for employee awards, net

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

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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