Full Press Release Details
Natural Health Trends Reports First Quarter 2019 Financial Results
HONG KONG - May 7, 2019 - 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, 2019.
First Quarter 2019 Financial Highlights
Management Commentary
"As we previously disclosed, in response to the Chinese government's announcement of its 100-day campaign in January, as was the case with many peer companies, we voluntarily suspended our member activities," commented Chris Sharng, President of Natural Health Trends Corp. "The suspension covered more than 90% of the number of days in the first quarter, which also included the Chinese New Year holidays. We have made it our priority to fully cooperate with the government and to proactively ensure we continue to conduct our business in compliance with all applicable laws in China. While our financial performance was adversely impacted by this initiative during the quarter, we strongly support the actions taken by the Chinese government to root out bad products and deceptive practices in order to protect Chinese consumers."
Mr. Sharng further commented, "While the 100-day campaign expired in late April, there has been no official conclusion to end the program. We have great confidence in our ability to navigate the business through uncertain times and to renew growth once the macroclimate improves. While we are cautious as it relates to our overall performance for the remainder of 2019 given the uncertain trade and regulatory environment, we were pleased with the outcome of our successful major event in Hong Kong at the end of March and ongoing support of our market leaders. We were also thrilled to have launched NHT Global in India and remain encouraged by the continued growth we have been experiencing in Latin America, led by Peru."
Corporate Development
On April 29, 2019, the Company received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC stating that the Company has regained compliance with Nasdaq Listing Rule 5250(c)(1), which requires timely filing of all required periodic reports with the Securities and Exchange Commission. The letter was sent to confirm the Company's compliance with the rule following the April 26, 2019 filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2018.
Balance Sheet and Cash Flow
First Quarter 2019 Financial Results Conference Call
Management will host a conference call to discuss the first quarter 2019 financial results today, Tuesday, May 7, 2019 at 1:30 p.m. Eastern Time. The conference call details are as follows:
| Date: | Tuesday, May 7, 2019 |
| Time: | 1:30 p.m. Eastern Time / 10:30 a.m. Pacific Time |
| Dial-in: | 1-877-407-0789 (Domestic) 1-201-689-8562 (International) |
| Conference ID: | 13689758 |
| Webcast: | http://public.viavid.com/index.php?id=134051 |
For those unable to participate during the live broadcast, a replay of the call will also be available from 4:30 p.m. Eastern Time on May 7, 2019 through 11:59 p.m. Eastern Time on May 21, 2019 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13689758.
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 April 26, 2019 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.
Senior Vice President and Chief Financial Officer
Natural Health Trends Corp.
Tel (Hong Kong): +852-3107-0800
Tel (U.S.): 310-541-0888
ADDO Investor Relations
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| March 31, 2019 | December 31, 2018 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 118,699 | $ | 132,653 | |||
| Inventories | 12,310 | 12,165 | |||||
| Other current assets | 6,551 | 5,369 | |||||
| Total current assets | 137,560 | 150,187 | |||||
| Property and equipment, net | 888 | 934 | |||||
| Operating lease right-of-use assets | 4,032 | - | |||||
| Goodwill | 1,764 | 1,764 | |||||
| Restricted cash | 3,068 | 2,998 | |||||
| Deferred tax asset | 1,207 | 1,207 | |||||
| Other assets | 829 | 831 | |||||
| Total assets | $ | 149,348 | $ | 157,921 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 1,456 | $ | 1,631 | |||
| Accrued commissions | 8,909 | 12,502 | |||||
| Other accrued expenses | 4,823 | 6,121 | |||||
| Deferred revenue | 3,754 | 6,795 | |||||
| Amounts held in eWallets | 14,435 | 14,611 | |||||
| Operating lease liabilities | 1,762 | - | |||||
| Other current liabilities | 1,191 | 1,424 | |||||
| Total current liabilities | 36,330 | 43,084 | |||||
| Income taxes payable | 16,982 | 16,982 | |||||
| Deferred tax liability | 186 | 186 | |||||
| Long-term incentive | 7,650 | 7,808 | |||||
| Operating lease liabilities | 2,345 | - | |||||
| Total liabilities | 63,493 | 68,060 | |||||
| Stockholders' equity: | |||||||
| Preferred stock | - | - | |||||
| Common stock | 13 | 13 | |||||
| Additional paid-in capital | 86,249 | 86,415 | |||||
| Retained earnings | 39,772 | 44,431 | |||||
| Accumulated other comprehensive loss | (974 | ) | (1,250 | ) | |||
| Treasury stock, at cost | (39,205 | ) | (39,748 | ) | |||
| Total stockholders' equity | 85,855 | 89,861 | |||||
| Total liabilities and stockholders' equity | $ | 149,348 | $ | 157,921 |
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
| Three Months Ended March 31, | |||||||
| 2019 | 2018 | ||||||
| Net sales | $ | 19,328 | $ | 52,367 | |||
| Cost of sales | 5,224 | 10,221 | |||||
| Gross profit | 14,104 | 42,146 | |||||
| Operating expenses: | |||||||
| Commissions expense | 9,498 | 22,980 | |||||
| Selling, general and administrative expenses | 7,315 | 9,122 | |||||
| Total operating expenses | 16,813 | 32,102 | |||||
| Income (loss) from operations | (2,709 | ) | 10,044 | ||||
| Other income, net | 432 | 163 | |||||
| Income (loss) before income taxes | (2,277 | ) | 10,207 | ||||
| Income tax provision (benefit) | (354 | ) | 1,383 | ||||
| Net income (loss) | $ | (1,923 | ) | $ | 8,824 | ||
| Net income (loss) per common share: | |||||||
| Basic | $ | (0.17 | ) | $ | 0.78 | ||
| Diluted | $ | (0.17 | ) | $ | 0.78 | ||
| Weighted-average number of common shares outstanding: | |||||||
| Basic | 11,333 | 11,286 | |||||
| Diluted | 11,333 | 11,288 |
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
| Three Months Ended March 31, | |||||||
| 2019 | 2018 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
| Net income (loss) | $ | (1,923 | ) | $ | 8,824 | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
| Depreciation and amortization | 93 | 131 | |||||
| Noncash lease expense | 447 | - | |||||
| Changes in assets and liabilities: | |||||||
| Inventories | (192 | ) | 473 | ||||
| Other current assets | (1,159 | ) | 1,548 | ||||
| Other assets | (2 | ) | (5 | ) | |||
| Accounts payable | (174 | ) | 920 | ||||
| Accrued commissions | (3,575 | ) | (1,119 | ) | |||
| Other accrued expenses | (795 | ) | 1,483 | ||||
| Deferred revenue | (3,030 | ) | (333 | ) | |||
| Amounts held in eWallets | (142 | ) | (466 | ) | |||
| Operating lease liabilities | (499 | ) | - | ||||
| Other current liabilities | (241 | ) | (3 | ) | |||
| Long-term incentive | (158 | ) | (308 | ) | |||
| Net cash provided by (used in) operating activities | (11,350 | ) | 11,145 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
| Purchases of property and equipment | (46 | ) | (17 | ) | |||
| Net cash used in investing activities | (46 | ) | (17 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
| Dividends paid | (2,736 | ) | (1,479 | ) | |||
| Net cash used in financing activities | (2,736 | ) | (1,479 | ) | |||
| Effect of exchange rates on cash, cash equivalents and restricted cash | 248 | 247 | |||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | (13,884 | ) | 9,896 | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 135,651 | 138,478 | |||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 121,767 | $ | 148,374 | |||
| SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||||
| Issuance of treasury stock for employee awards, net | $ | 377 | $ | 554 | |||
| Right-of-use assets obtained in exchange for operating lease liabilities | $ | 4,462 | $ | - |