Natural Health Trends Reports Second

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

Quarter 2020 Financial Results

Revenue of $16.4 million increased 10% from the first quarter of 2020

Aggressive cost cutting measures facilitated a return to profitability in the second quarter of 2020

Strong balance sheet with ample liquidity and $93.2 million in cash and cash equivalents

Declared a quarterly cash dividend of $0.20 per share

HONG KONG – August 5, 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 an nounced its financial results for the second quarter ended

June 30, 2020

Second

2020 Financial Highlights

Revenue of 

million increased 10% compared to $14.9 million in the first quarter of 2020 and decreased 

compared to 

second quarter of 2019

Operating income was $183,000 compared to a loss of $1.4 million in the first quarter of 2020 and a loss of $4,000 in the

Net income was $34,000, or break-even per diluted share, compared to a net loss of $573,000, or $0.05 per diluted share, in the first quarter of 2020 and net income of $397,000, or $0.04 per diluted share, in the

The number of Active Members

decreased 4% to 54,370 at

 compared to 56,490 at March 31, 2020, and decreased 31% compared to 78,280 at

June 30, 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.

Year-to-Date

2020 Financial Highlights

million decreased 27% compared to 

first six months of 2019

Operating loss was 

million compared to a loss of 

Net loss was $539,000, or $0.05 per diluted share, compared to a net loss of

 million, or $0.14 per diluted share, in the

Management Commentary

“The second quarter marked a continuation of the challenging macroeconomic climate we experienced during the first quarter of 2020 as the COVID-19 pandemic persisted into the summer months,” commented Chris Sharng, President of Natural Health Trends Corp. “We were very pleased with the stability and resilience of our field leadership which helped us generate a 10% sequential increase in our second quarter revenue to $16.4 million. In addition, our aggressive cost reduction measures enabled us to return to profitability during the quarter. As previously announced, we put a program in place in the second half of 2019 to position us for increased operating efficiencies moving forward. Through this program, we made significant progress in reducing our SG&A expenses through reductions of nearly 20% versus the first quarter of 2020 and more than one-third versus the prior year period.”

Mr. Sharng concluded, “I am very pleased with our ability to manage elements within our control throughout this global crisis which led us to achieving positive growth in total revenue, gross profit, operating income and net income for the second quarter of 2020 over the prior quarter. Further, our strong balance sheet, ample liquidity position and conservative capital allocation philosophy, which is designed to help support our members and business, enabled us to continue returning value to our stockholders through our quarterly cash dividend. I’d like to once again thank all of our leaders who have proven themselves time and time again in navigating difficult and complex operating environments such as this one. We remain cautiously optimistic the macroeconomic situation will continue to improve in the second half of 2020.”

Balance Sheet and Cash Flow

Net cash used in operating activities was $1.0 million in the

first six months of 2020

, compared to $15.1 million in the

Total cash and cash equivalents were $93.2 million at

, down slightly from $95.4 million at March 31, 2020.

On August 3, 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 August 28, 2020 to stockholders of record as of August 18, 2020.

Quarter 2020 Financial Results Conference Call

Management will host a conference call to discuss the second quarter 2020 financial results today, Wednesday, August 5, 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:

13706115

Webcast:

http://public.viavid.com/index.php?id=140483

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 August 5, 2020 through 11:59 p.m. Eastern Time on August 19, 2020 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13706115.

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)

December 31, 2019

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

93,206

96,035

Inventories

Other current assets

Total current assets

102,377

108,375

Property and equipment, net

Operating lease right-of-use assets

Restricted cash

Deferred tax asset

Other assets

Total assets

108,477

118,497

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

Accrued commissions

Other accrued expenses

Deferred revenue

Amounts held in eWallets

11,438

12,938

Operating lease liabilities

Other current liabilities

Total current liabilities

22,728

26,302

Income taxes payable

13,748

15,365

Deferred tax liability

Total liabilities

38,642

43,433

Stockholders’ equity:

Preferred stock

Common stock

Additional paid-in capital

86,102

Retained earnings

11,008

16,117

Accumulated other comprehensive loss

(1,384

(1,264

Treasury stock, at cost

(25,904

Total stockholders’ equity

69,835

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 June 30,

Six Months Ended June 30,

Net sales

16,404

23,428

31,352

42,756

Cost of sales

10,631

Gross profit

11,587

18,021

22,021

32,125

Operating expenses:

Commissions expense

11,398

13,716

20,896

Selling, general and administrative expenses

13,942

Total operating expenses

11,404

18,025

23,286

34,838

Income (loss) from operations

(1,265

(2,713

Other income, net

Income (loss) before income taxes

(1,047

(1,908

Income tax provision (benefit)

Net income (loss)

(1,526

Net income (loss) per common share:

Diluted

Weighted-average common shares outstanding:

10,580

11,082

10,532

11,207

11,424

11,135

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:

(5,475

(1,946

(1,872

(3,409

(1,560

(1,617

Long-term incentive

(1,018

(15,059

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

(6,682

Dividends paid

(4,570

(2,736

Net cash used in financing activities

(9,418

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

Net decrease in cash, cash equivalents and restricted cash

(5,706

(24,545

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

99,425

135,651

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

93,719

111,106

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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