- Second sequential quarterly increase in net sales
- Declared special dividend of $20.0 million, or $1.76 per share
- Increased quarterly dividend 8% to $0.14 per share
LOS ANGELES, May 02, 2018 (GLOBE NEWSWIRE) -- Natural Health Trends Corp. (NHTC, Financial), 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, 2018.
First Quarter 2018 Financial Highlights
- Total revenue of $52.4 million decreased 13% compared to $59.9 million in the first quarter of 2017 and increased 14% compared to $46.1 million in the fourth quarter of 2017.
-- Revenue from the Company’s Hong Kong operations, which represented 91% of total revenue, was $47.6 million, a decrease of 13% compared to $54.6 million in the first quarter of 2017, and an increase of 20% compared to $39.6 million in the fourth quarter of 2017.
-- Revenue outside of Hong Kong of $4.7 million decreased 11% compared to $5.3 million in the first quarter of 2017 and decreased 28% compared to $6.5 million in the fourth quarter of 2017. - Operating income was $10.0 million compared to $13.0 million in the first quarter of 2017 and $8.7 million in the fourth quarter of 2017.
- Net income was $8.8 million, or $0.78 per diluted share, compared to net income of $10.4 million, or $0.93 per diluted share, in the first quarter of 2017.
- The number of Active Members1 decreased 1% to 95,040 at March 31, 2018, compared to 95,670 at December 31, 2017, and decreased 16% compared to 113,710 at March 31, 2017.
1 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
“Our momentum in the back half of 2017 carried into 2018 with our total revenue increasing 14% over the prior quarter, marking our second consecutive quarter of sales growth,” commented Chris Sharng, President of Natural Health Trends Corp. “Our improved top-line performance is a direct result of the enhancements made to our commission plan to better incentivize up-and-coming members and ease rank advancement, along with our effective marketing programs. We also held our international Ambassador Academy in Hong Kong, which attracted over 5,500 people. The orders generated by promotions directly related to the event exceeded those of the last three years.”
Mr. Sharng further commented, “With our revenue for the quarter improved, 2018 is off to a good start. Our leaders remain energized and enthusiastic and we look forward to more productive incentive trips and targeted training programs this year to drive further progress and growth.”
Balance Sheet and Cash Flow
- Net cash provided by operating activities was $11.1 million, compared to $13.8 million in the first quarter of 2017.
- On April 17, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.14, which represents an 8% increase over the prior quarter dividend, as well as a special cash dividend of $1.76 per share on outstanding common stock. The dividends will be payable on May 25, 2018 to stockholders of record as of May 15, 2018.
First Quarter 2018 Financial Results Conference Call
Management will host a conference call to discuss the first quarter 2018 financial results today, Wednesday, May 2, 2018 at 11:30 a.m. Eastern Time. The conference call details are as follows:
| Date: | Wednesday, May 2, 2018 |
| Time: | 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: | 13678508 |
| Webcast: | http://public.viavid.com/index.php?id=129162 |
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 2, 2018 through 11:59 p.m. Eastern Time on May 16, 2018 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13678508.
About Natural Health Trends Corp.
Natural Health Trends Corp. (NHTC, Financial) 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 27, 2018 with the Securities and Exchange Commission. The Company assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.
| NATURAL HEALTH TRENDS CORP. CONSOLIDATED BALANCE SHEETS (In thousands) | |||||||
| March 31, 2018 | December 31, 2017 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 145,095 | $ | 135,311 | |||
| Inventories | 7,944 | 8,398 | |||||
| Other current assets | 6,021 | 7,534 | |||||
| Total current assets | 159,060 | 151,243 | |||||
| Property and equipment, net | 1,040 | 1,149 | |||||
| Goodwill | 1,764 | 1,764 | |||||
| Restricted cash | 3,279 | 3,167 | |||||
| Deferred tax asset | 1,435 | 1,435 | |||||
| Other assets | 809 | 796 | |||||
| Total assets | $ | 167,387 | $ | 159,554 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 2,669 | $ | 1,751 | |||
| Income taxes payable | 42 | 309 | |||||
| Accrued commissions | 10,027 | 11,170 | |||||
| Other accrued expenses | 8,549 | 7,605 | |||||
| Deferred revenue | 4,112 | 4,455 | |||||
| Amounts held in eWallets | 14,623 | 15,152 | |||||
| Other current liabilities | 1,756 | 1,479 | |||||
| Total current liabilities | 41,778 | 41,921 | |||||
| Income taxes payable | 19,052 | 19,052 | |||||
| Deferred tax liability | 55 | 56 | |||||
| Long-term incentive | 7,596 | 7,904 | |||||
| Total liabilities | 68,481 | 68,933 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity: | |||||||
| Preferred stock | — | — | |||||
| Common stock | 13 | 13 | |||||
| Additional paid-in capital | 86,415 | 86,683 | |||||
| Retained earnings | 52,253 | 44,908 | |||||
| Accumulated other comprehensive loss | (27 | ) | (413 | ) | |||
| Treasury stock, at cost | (39,748 | ) | (40,570 | ) | |||
| Total stockholders’ equity | 98,906 | 90,621 | |||||
| Total liabilities and stockholders’ equity | $ | 167,387 | $ | 159,554 | |||
| NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) | |||||||
| Three Months Ended March 31, | |||||||
| 2018 | 2017 | ||||||
| (Unaudited) | |||||||
| Net sales | $ | 52,367 | $ | 59,874 | |||
| Cost of sales | 10,221 | 11,245 | |||||
| Gross profit | 42,146 | 48,629 | |||||
| Operating expenses: | |||||||
| Commissions expense | 22,980 | 25,965 | |||||
| Selling, general and administrative expenses | 9,122 | 9,672 | |||||
| Total operating expenses | 32,102 | 35,637 | |||||
| Income from operations | 10,044 | 12,992 | |||||
| Other income, net | 163 | 156 | |||||
| Income before income taxes | 10,207 | 13,148 | |||||
| Income tax provision | 1,383 | 2,723 | |||||
| Net income | $ | 8,824 | $ | 10,425 | |||
| Net income per common share: | |||||||
| Basic | $ | 0.78 | $ | 0.93 | |||
| Diluted | $ | 0.78 | $ | 0.93 | |||
| Weighted-average number of common shares outstanding: | |||||||
| Basic | 11,286 | 11,229 | |||||
| Diluted | 11,288 | 11,251 | |||||
| Cash dividends declared per common share | $ | 0.13 | $ | 0.44 | |||
| NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | |||||||
| Three Months Ended March 31, | |||||||
| 2018 | 2017 | ||||||
| (Unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
| Net income | $ | 8,824 | $ | 10,425 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 131 | 136 | |||||
| Stock-based compensation | — | 9 | |||||
| Cumulative translation adjustment realized in net income | — | (258 | ) | ||||
| Changes in assets and liabilities: | |||||||
| Inventories | 473 | 2,091 | |||||
| Other current assets | 1,548 | 1,419 | |||||
| Other assets | (5 | ) | (62 | ) | |||
| Accounts payable | 920 | (61 | ) | ||||
| Income taxes payable | (275 | ) | 1,798 | ||||
| Accrued commissions | (1,119 | ) | (428 | ) | |||
| Other accrued expenses | 1,483 | (1,555 | ) | ||||
| Deferred revenue | (333 | ) | (647 | ) | |||
| Amounts held in eWallets | (466 | ) | 1,138 | ||||
| Other current liabilities | 272 | 314 | |||||
| Long-term incentive | (308 | ) | (508 | ) | |||
| Net cash provided by operating activities | 11,145 | 13,811 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
| Purchases of property and equipment | (17 | ) | (72 | ) | |||
| Net cash used in investing activities | (17 | ) | (72 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
| Dividends paid | (1,479 | ) | (4,981 | ) | |||
| Net cash used in financing activities | (1,479 | ) | (4,981 | ) | |||
| Effect of exchange rates on cash, cash equivalents and restricted cash | 247 | 22 | |||||
| Net increase in cash, cash equivalents and restricted cash | 9,896 | 8,780 | |||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 138,478 | 128,884 | |||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 148,374 | $ | 137,664 | |||
| SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||||
| Issuance of treasury stock for employee awards, net | 554 | 1,393 | |||||
CONTACTS:
Company Contact:
Scott Davidson
Senior Vice President and Chief Financial Officer
Natural Health Trends Corp.
Tel: 310-541-0888
[email protected]
Investor Contact:
ADDO Investor Relations
Tel: 310-829-5400
[email protected]
