Release Date: April 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sequential increase in orders by 9% over the fourth quarter of 2024, indicating sustained interest in products.
- Successful marketing initiatives in China and Hong Kong, including a city roadshow with expert insights.
- Introduction of new products in the Twin Slim weight management line received strong customer feedback.
- Opening of a new office in Bogota, Colombia, to serve as a central hub for the newest market.
- Gross profit margin increased slightly to 73.6% from 73.4% in the first quarter of last year.
Negative Points
- Revenue decreased by 2% compared to the first quarter of 2024.
- Active member base decreased by 5% from the previous year.
- Net income for the first quarter decreased to $122,000 from $188,000 in the first quarter of 2024.
- Total cash equivalents and marketable securities decreased from $43.9 million to $41.9 million due to dividend payments.
- Potential impact of tariffs on operations, requiring strategic actions to optimize the supply chain.
Q & A Highlights
Q: Can you elaborate on the reasons behind the 2% decrease in revenue for the first quarter of 2025 compared to the same period last year?
A: Christopher Sharng, President, explained that the decrease was primarily due to the timing of incentive calendars between the two periods. However, there was a sequential increase in orders by 9% over the fourth quarter of 2024, indicating sustained interest in their products.
Q: What steps is Natural Health Trends taking to address the changes in the international trade environment?
A: Christopher Sharng, President, stated that the company is working to streamline its supply chain by bringing manufacturing closer to primary markets in Asia and simplifying logistics to improve long-term efficiency amidst the uncertainty.
Q: How did the active member base change during the first quarter of 2025?
A: Scott Davison, CFO, reported a slight decrease in the active member base to 30,180 as of March 31st, down from 30,870 on December 31st, 2024, and a 5% decrease from 31,620 on March 31st last year.
Q: What was the impact on gross profit margin and commissions expense during the first quarter?
A: Scott Davison, CFO, noted that the gross profit margin increased slightly to 73.6% from 73.4% in the first quarter of last year. Commissions expense as a percentage of total revenue was 41.8%, up from 41% a year ago, due to higher weekly commissions earned by members.
Q: Can you provide details on the company's cash position and dividend policy?
A: Scott Davison, CFO, mentioned that total cash equivalents and marketable securities were $41.9 million as of March 31st, down from $43.9 million on December 31st, 2024, due to the quarterly dividend payment. The board declared a quarterly cash dividend of $0.20 per share, payable on May 23rd to stockholders of record as of May 13th.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
