Natural Health Trends Corp. (NHTC, Financial) reported second-quarter results on July 27 that included operating profits that were the highest in the company's history. Sales picked up, while the active member base went from 76,400 a year ago to 126,440 as of June 30.
Here's how far the company has come in the last year:
| Metric | Q2 2016 | Q2 2015 | Growth |
|---|---|---|---|
| Revenue | $80.39 Million | $69.7 Million | 15% |
| Net income | $12.2 million | $12.3 million | -1% |
| Earnings per share | $1.07 | $0.98 | 9% |
SOURCE: Natural Heath Trends Financials
Here are the other highlights from the quarter:
- Sales in Hong Kong accounted for 91% of second quarter revenue and increased 13% year-over-year. Revenue outside of Hong Kong increased 43% year-over-year
- Operating revenue reached new heights, with operating income reaching $14.9 million. This increase may be due to two consecutive incentive trips combined with a "supreme bonus program"
- Ecommerce sales were up as well. China ecommerce sales are up 209% year over year, up to $2.5 million. Management's approach has been to continue to better its products with new products that have better than average gross margins.
What Management had to Say
President Chris Sharng said management was "pleased" with their record quarter results and attributed an approach to sustainable long-term growth. He expressed that through stock buybacks and cash dividends, the company can continue remaining committed to maximizing shareholder value.
"During the first half of 2016, our two concurrent incentive trips coupled with supreme bonus program help us maintain strong momentum," Sharng said, "Our supreme bonus program offers annual supplemental rewards for our members based on their overall performance and their advancements in our international recognition program."
Looking Forward
Sharng and his team outlined their progress. Gross margins are improving, from 79.8% last quarter to 81.3% this quarter. Commissions are coming down, going from 50.2% of revenue last quarter down to 47.1% this quarter, mainly due to decreased costs for incentive programs. Shareholders should also be pleased as the Board of Directors raised the cash dividend 17% from the last quarter to seven cents a share.
Disclosure: No position in the stock mentioned.
Start a free 7-day trial of Premium Membership to GuruFocus.
