Natural Health Trends Reports First Quarter 2020 Financial Results

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

Strong balance sheet with ample liquidity and $95 million in cash and cash equivalents

Declared a quarterly cash dividend of $0.20 per share

Expect to realize $8 million in annualized cost savings in 2020

HONG KONG – May 6, 2020 – 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 first quarter ended March 31, 2020.

First Quarter

2020 Financial Highlights

Revenue of $14.9 millio n decreased 23% compared to $19.3 million in the first quarter of 2019.

Operating loss was $1.4 million compared to a loss of $2.7 million in the first quarter of 2019.

Net loss was $573,000, or $0.05 per diluted share, compared to a net loss of $1.9 million, or $0.17 per diluted share, in the first quarter of 2019.

The number of Active Members

decreased 2% to 56,490 at March 31, 2020 compared to 57,410 at December 31, 2019, and decreased 35% compared to 87,340 at March 31, 2019.

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.

Management Commentary

“First and foremost, our thoughts are with all of those around the world who have been impacted by the coronavirus,” commented Chris Sharng, President of Natural Health Trends Corp. “I am pleased that we have continued to run our operations efficiently with the health and safety of our employees, members and customers guiding our decisions as our top priority. The impact of the pandemic followed the already difficult operating conditions we experienced throughout 2019. While we could have never foreseen the impact COVID-19 would have on the global economy, we focused our efforts in 2019 on preparing our business to adapt to new realities following China’s 100-day campaign and have been applying key learnings from our experience to support our affected markets. To that end, we started implementing aggressive cost reduction measures beginning in the second half of 2019 which were partially offset by additional spending during the first quarter in direct response to COVID-19 and the governments’ measures to control the spread of the virus. As a result of the net effect of these actions, we narrowed the scope of our first quarter operating loss and decline in cash flow from operations despite the fact that our main markets were under severe lockdown for most of first quarter of 2020.”

Mr. Sharng concluded, “We have ample liquidity with $95 million in cash and cash equivalents and zero debt. Further, our highly variable cost structure allows us the flexibility to adapt in-line with order volume. As previously announced, we put a program in place to position us for increased operating efficiencies in several areas including reducing headcount and promotional spending. As a result, we now expect to realize annualized cost savings of approximately $8 million in 2020. I feel confident our employees and members will work together through these unprecedented times with our support and that we will emerge from this downturn even stronger than before.”

Balance Sheet and Cash Flow

Net cash used in operating activities was $990,000 in the first quarter of 2020, compared to $11.3 million in the first quarter of 2019.

Total cash and cash equivalents were $95.4 million at March 31, 2020, down slightly from $96.0 million at December 31, 2019.

On May 4, 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 May 29, 2020 to stockholders of record as of May 19, 2020.

First Quarter 2020 Financial Results Conference Call

Management will host a conference call to discuss the first quarter 2020 financial results today, Wednesday, May 6, 2020 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

Dial-in:

1-877-407-0789 (Domestic)

1-201-689-8562 (International)

Conference ID:

13700943

Webcast:

http://public.viavid.com/index.php?id=138751

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 May 6, 2020 through 11:59 p.m. Eastern Time on May 20, 2020 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13700943.

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 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.

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)

March 31, 2020

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

95,393 

96,035 

Inventories

5,406 

6,404 

Other current assets

6,922 

5,936 

Total current assets

107,721 

108,375 

Property and equipment, net

Operating lease right-of-use assets

2,878 

3,135 

Restricted cash

3,390 

Deferred tax asset

1,162 

2,039 

Other assets

Total assets

113,669 

118,497 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued commissions

2,341 

2,931 

Other accrued expenses

1,971 

2,387 

Deferred revenue

3,994 

4,506 

Amounts held in eWallets

12,823 

12,938 

Operating lease liabilities

1,549 

1,655 

Other current liabilities

1,275 

1,205 

Total current liabilities

24,801 

26,302 

Income taxes payable

15,365 

Deferred tax liability

1,403 

1,564 

Total liabilities

41,772 

43,433 

Stockholders’ equity:

Preferred stock

Common stock

Additional paid-in capital

86,102 

Retained earnings

13,259 

16,117 

Accumulated other comprehensive loss

(1,573)

(1,264)

Treasury stock, at cost

(25,904)

Total stockholders’ equity

71,897 

75,064 

Total liabilities and stockholders’ equity

NATURAL HEALTH TRENDS CORP. 

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except per share data)

Three Months Ended March 31,

Net sales

14,948 

19,328 

Cost of sales

4,514 

5,224 

Gross profit

10,434 

14,104 

Operating expenses:

Commissions expense

6,603 

9,498 

Selling, general and administrative expenses

5,279 

7,315 

Total operating expenses

11,882 

16,813 

Loss from operations

(1,448)

(2,709)

Other income, net

Loss before income taxes

(1,355)

(2,277)

Income tax benefit

(1,923)

Net loss per common share – basic and diluted

(0.05)

(0.17)

Weighted-average common shares outstanding – basic and diluted

10,483 

11,333 

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Depreciation and amortization

Noncash lease expense

Deferred income taxes

Changes in assets and liabilities:

1,001 

(1,033)

(1,159)

(3,575)

(3,030)

Long-term incentive

(11,350)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Dividends paid

(2,285)

(2,736)

Net cash used in financing activities

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

Net decrease in cash, cash equivalents and restricted cash

(3,527)

(13,884)

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

99,425 

135,651 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

95,898 

121,767 

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

4,462 

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

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