Full Press Release Details
Natural Health Trends Reports Fourth Quarter and Full Year 2019 Financial Results
HONG KONG - February 12, 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 announced its financial results for the fourth quarter and full year ended December 31, 2019.
Fourth Quarter 2019 Financial Highlights
Full Year 2019 Financial Highlights
Management Commentary
"2019 was a challenging year for our business amid a host of macroeconomic and industry-specific factors that created a highly difficult operating environment," commented Chris Sharng, President of Natural Health Trends Corp. "In addition to China's 100 day campaign announced last January and negative sentiment stemming from social media as it relates to health products companies in China, additional developments such as ongoing global trade tensions, China's slowing economy and civil unrest in Hong Kong further contributed to the decline in revenue for 2019. That said, order volume in the fourth quarter of 2019 increased 12% over the prior quarter as a result of our successful event in Macau, along with a positive response to our various product promotions and incentives."
Mr. Sharng further commented, "While our first quarter results are typically affected by the Chinese New Year, the coronavirus outbreak and the unprecedented measures to control it are posing further challenges to the market. Following the extended Chinese New Year holidays, we plan to rely on product promotions and webcast training to overcome physical restrictions. We are continuing to monitor the evolving situation closely and will adapt our marketing programs accordingly. Looking ahead, we have implemented a strategy to more effectively manage elements within our control including: ensuring our incentives remain attractive to our leaders and member base; continuing to expand our operations into new geographies; and reducing our cost structure. To that end, we expect to achieve annualized cost savings of approximately $6.5 million in 2020."
Balance Sheet and Cash Flow
The Company expects to issue its 2019 audited financial results in March with its Annual Report on Form 10-K to be filed with the Securities and Exchange Commission. The financial results are preliminary and the accompanying financial statements have not been audited or have not yet been reviewed by the Company's independent accountants. Significant updates and revisions may be required before the release of the Company's 2019 audited financial results.
Fourth Quarter and Full Year 2019 Financial Results Conference Call
Management will host a conference call to discuss the fourth quarter and full year 2019 financial results today, Wednesday, February 12, 2020 at 11:30 a.m. Eastern Time. The conference call details are as follows:
| Date: | Wednesday, February 12, 2020 |
| 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: | 13698060 |
| Webcast: | http://public.viavid.com/index.php?id=137649 |
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 February 12, 2020 through 11:59 p.m. Eastern Time on February 26, 2020 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13698060.
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 (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.
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)
| December 31, 2019 | December 31, 2018 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 96,035 | $ | 132,653 | |||
| Inventories | 6,404 | 12,165 | |||||
| Other current assets | 5,936 | 5,369 | |||||
| Total current assets | 108,375 | 150,187 | |||||
| Property and equipment, net | 735 | 934 | |||||
| Operating lease right-of-use assets | 3,135 | - | |||||
| Goodwill | - | 1,764 | |||||
| Restricted cash | 3,390 | 2,998 | |||||
| Deferred tax asset | 2,039 | 1,207 | |||||
| Other assets | 823 | 831 | |||||
| Total assets | $ | 118,497 | $ | 157,921 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 680 | $ | 1,631 | |||
| Accrued commissions | 2,931 | 12,502 | |||||
| Other accrued expenses | 2,387 | 6,121 | |||||
| Deferred revenue | 4,506 | 6,795 | |||||
| Amounts held in eWallets | 12,938 | 14,611 | |||||
| Operating lease liabilities | 1,655 | - | |||||
| Other current liabilities | 1,205 | 1,424 | |||||
| Total current liabilities | 26,302 | 43,084 | |||||
| Income taxes payable | 15,365 | 16,982 | |||||
| Deferred tax liability | 202 | 186 | |||||
| Long-term incentive | - | 7,808 | |||||
| Operating lease liabilities | 1,564 | - | |||||
| Total liabilities | 43,433 | 68,060 | |||||
| Stockholders' equity: | |||||||
| Preferred stock | - | - | |||||
| Common stock | 13 | 13 | |||||
| Additional paid-in capital | 86,102 | 86,415 | |||||
| Retained earnings | 16,117 | 44,431 | |||||
| Accumulated other comprehensive loss | (1,264 | ) | (1,250 | ) | |||
| Treasury stock, at cost | (25,904 | ) | (39,748 | ) | |||
| Total stockholders' equity | 75,064 | 89,861 | |||||
| Total liabilities and stockholders' equity | $ | 118,497 | $ | 157,921 |
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| (Unaudited) | (Unaudited) | ||||||||||||||
| Net sales | $ | 17,835 | $ | 41,590 | $ | 77,614 | $ | 191,910 | |||||||
| Cost of sales | 5,102 | 8,821 | 20,104 | 39,367 | |||||||||||
| Gross profit | 12,733 | 32,769 | 57,510 | 152,543 | |||||||||||
| Operating expenses: | |||||||||||||||
| Commissions expense | 7,291 | 20,211 | 35,549 | 87,502 | |||||||||||
| Selling, general and administrative expenses | 6,924 | 6,825 | 27,220 | 31,309 | |||||||||||
| Goodwill impairment | 1,764 | - | 1,764 | - | |||||||||||
| Total operating expenses | 15,979 | 27,036 | 64,533 | 118,811 | |||||||||||
| Income (loss) from operations | (3,246 | ) | 5,733 | (7,023 | ) | 33,732 | |||||||||
| Other income, net | 298 | 324 | 1,426 | 789 | |||||||||||
| Income (loss) before income taxes | (2,948 | ) | 6,057 | (5,597 | ) | 34,521 | |||||||||
| Income tax provision (benefit) | (106 | ) | 498 | 14 | 3,486 | ||||||||||
| Net income (loss) | $ | (2,842 | ) | $ | 5,559 | $ | (5,611 | ) | $ | 31,035 | |||||
| Net income (loss) per common share: | |||||||||||||||
| Basic | $ | (0.27 | ) | $ | 0.49 | $ | (0.52 | ) | $ | 2.75 | |||||
| Diluted | $ | (0.27 | ) | $ | 0.49 | $ | (0.52 | ) | $ | 2.74 | |||||
| Weighted-average number of common shares outstanding: | |||||||||||||||
| Basic | 10,456 | 11,321 | 10,871 | 11,304 | |||||||||||
| Diluted | 10,456 | 11,329 | 10,871 | 11,318 |
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year Ended December 31, | |||||||
| 2019 | 2018 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | (Unaudited) | ||||||
| Net income (loss) | $ | (5,611 | ) | $ | 31,035 | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
| Depreciation and amortization | 387 | 424 | |||||
| Noncash lease expense | 1,760 | - | |||||
| Deferred income taxes | (820 | ) | 358 | ||||
| Goodwill impairment | 1,764 | - | |||||
| Changes in assets and liabilities: | |||||||
| Inventories | 5,820 | (3,879 | ) | ||||
| Other current assets | (554 | ) | 2,065 | ||||
| Other assets | - | (55 | ) | ||||
| Accounts payable | (953 | ) | (116 | ) | |||
| Accrued commissions | (9,598 | ) | 1,410 | ||||
| Other accrued expenses | (2,797 | ) | (883 | ) | |||
| Deferred revenue | (2,315 | ) | 2,359 | ||||
| Amounts held in eWallets | (1,742 | ) | (509 | ) | |||
| Operating lease liabilities | (1,807 | ) | - | ||||
| Income taxes payable | (1,617 | ) | (2,077 | ) | |||
| Other current liabilities | (222 | ) | (326 | ) | |||
| Long-term incentive | (333 | ) | (96 | ) | |||
| Net cash provided by (used in) operating activities | (18,638 | ) | 29,710 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
| Purchases of property and equipment | (189 | ) | (214 | ) | |||
| Net cash used in investing activities | (189 | ) | (214 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
| Repurchase of common stock | (10,117 | ) | - | ||||
| Dividends paid | (7,344 | ) | (31,512 | ) | |||
| Net cash used in financing activities | (17,461 | ) | (31,512 | ) | |||
| Effect of exchange rates on cash, cash equivalents and restricted cash | 62 | (811 | ) | ||||
| Net decrease in cash, cash equivalents and restricted cash | (36,226 | ) | (2,827 | ) | |||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 135,651 | 138,478 | |||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 99,425 | $ | 135,651 | |||
| SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||||
| Issuance of treasury stock for employee awards, net | $ | 8,289 | $ | 554 | |||
| Right-of-use assets obtained in exchange for operating lease liabilities | $ | 5,082 | $ | - |