Full Press Release Details
Natural Health Trends Reports Third Quarter 2018 Financial Results
LOS ANGELES - October 30, 2018 - 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 third quarter ended September 30, 2018.
Third Quarter 2018 Financial Highlights
Year-to-Date 2018 Financial Highlights
Management Commentary
"Despite a generally difficult trading environment, our performance in the third quarter was driven by the momentum we created since the beginning of the year," commented Chris Sharng, President of Natural Health Trends. "So far in 2018, both a rapidly depreciating Chinese yuan, down 10% since February, and the seasonality associated with the summer months, contributed to an 8% decline in our revenue from the second quarter to the third quarter this year. Without the adverse effect of the yuan devaluation, our third quarter revenue would have been flat with the second quarter. While we have no control over these conditions, I believe we have been doing a good job navigating in an increasingly difficult and unpredictable setting."
Balance Sheet and Cash Flow
Third Quarter 2018 Financial Results Conference Call
Management will host a conference call to discuss the third quarter 2018 financial results today, Tuesday, October 30, 2018 at 11:30 a.m. Eastern Time. The conference call details are as follows:
| Date: | Tuesday, October 30, 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: | 13683905 |
| Webcast: | http://public.viavid.com/index.php?id=131653 |
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 October 30, 2018 through 11:59 p.m. Eastern Time on November 13, 2018 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13683905.
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 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.
Senior Vice President and Chief Financial Officer
Natural Health Trends Corp.
ADDO Investor Relations
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEETS
| September 30, 2018 | December 31, 2017 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 132,206 | $ | 135,311 | |||
| Inventories | 11,119 | 8,398 | |||||
| Other current assets | 4,918 | 7,534 | |||||
| Total current assets | 148,243 | 151,243 | |||||
| Property and equipment, net | 988 | 1,149 | |||||
| Goodwill | 1,764 | 1,764 | |||||
| Restricted cash | 3,003 | 3,167 | |||||
| Deferred tax asset | 1,435 | 1,435 | |||||
| Other assets | 859 | 796 | |||||
| Total assets | $ | 156,292 | $ | 159,554 | |||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 2,715 | $ | 1,751 | |||
| Income taxes payable | 168 | 309 | |||||
| Accrued commissions | 13,125 | 11,170 | |||||
| Other accrued expenses | 7,341 | 7,605 | |||||
| Deferred revenue | 4,462 | 4,455 | |||||
| Amounts held in eWallets | 14,196 | 15,152 | |||||
| Other current liabilities | 1,906 | 1,479 | |||||
| Total current liabilities | 43,913 | 41,921 | |||||
| Income taxes payable | 16,982 | 19,052 | |||||
| Deferred tax liability | 75 | 56 | |||||
| Long-term incentive | 7,104 | 7,904 | |||||
| Total liabilities | 68,074 | 68,933 | |||||
| Commitments and contingencies | |||||||
| Stockholders' equity: | |||||||
| Preferred stock | - | - | |||||
| Common stock | 13 | 13 | |||||
| Additional paid-in capital | 86,415 | 86,683 | |||||
| Retained earnings | 42,740 | 44,908 | |||||
| Accumulated other comprehensive loss | (1,202 | ) | (413 | ) | |||
| Treasury stock, at cost | (39,748 | ) | (40,570 | ) | |||
| Total stockholders' equity | 88,218 | 90,621 | |||||
| Total liabilities and stockholders' equity | $ | 156,292 | $ | 159,554 |
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||
| (Unaudited) | |||||||||||||||
| Net sales | $ | 47,043 | $ | 40,132 | $ | 150,320 | $ | 151,471 | |||||||
| Cost of sales | 9,926 | 8,183 | 30,546 | 29,221 | |||||||||||
| Gross profit | 37,117 | 31,949 | 119,774 | 122,250 | |||||||||||
| Operating expenses: | |||||||||||||||
| Commissions expense | 22,001 | 15,802 | 67,291 | 63,842 | |||||||||||
| Selling, general and administrative expenses | 7,269 | 7,633 | 24,484 | 24,035 | |||||||||||
| Total operating expenses | 29,270 | 23,435 | 91,775 | 87,877 | |||||||||||
| Income from operations | 7,847 | 8,514 | 27,999 | 34,373 | |||||||||||
| Other income (expense), net | 249 | (12 | ) | 465 | 224 | ||||||||||
| Income before income taxes | 8,096 | 8,502 | 28,464 | 34,597 | |||||||||||
| Income tax provision | 467 | 1,164 | 2,988 | 6,531 | |||||||||||
| Net income | $ | 7,629 | $ | 7,338 | $ | 25,476 | $ | 28,066 | |||||||
| Net income per common share: | |||||||||||||||
| Basic | $ | 0.67 | $ | 0.65 | $ | 2.25 | $ | 2.50 | |||||||
| Diluted | $ | 0.67 | $ | 0.65 | $ | 2.25 | $ | 2.49 | |||||||
| Weighted-average number of common shares outstanding: | |||||||||||||||
| Basic | 11,309 | 11,258 | 11,298 | 11,244 | |||||||||||
| Diluted | 11,322 | 11,276 | 11,307 | 11,269 | |||||||||||
| Cash dividends declared per common share | $ | 0.40 | $ | 0.36 | $ | 2.43 | $ | 1.25 |
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Nine Months Ended September 30, | |||||||
| 2018 | 2017 | ||||||
| (Unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
| Net income | $ | 25,476 | $ | 28,066 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 332 | 414 | |||||
| Stock-based compensation | - | 26 | |||||
| Cumulative translation adjustment realized in net income | - | (258 | ) | ||||
| Changes in assets and liabilities: | |||||||
| Inventories | (2,828 | ) | 590 | ||||
| Other current assets | 2,548 | 1,164 | |||||
| Other assets | (83 | ) | (61 | ) | |||
| Accounts payable | 967 | (1,121 | ) | ||||
| Income taxes payable | (2,201 | ) | 392 | ||||
| Accrued commissions | 2,003 | (3,143 | ) | ||||
| Other accrued expenses | 314 | (5,064 | ) | ||||
| Deferred revenue | 26 | (1,364 | ) | ||||
| Amounts held in eWallets | (930 | ) | (2,856 | ) | |||
| Other current liabilities | 438 | 51 | |||||
| Long-term incentive | (800 | ) | (1,498 | ) | |||
| Net cash provided by operating activities | 25,262 | 15,338 | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
| Purchases of property and equipment | (176 | ) | (238 | ) | |||
| Net cash used in investing activities | (176 | ) | (238 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
| Dividends paid | (27,644 | ) | (14,157 | ) | |||
| Net cash used in financing activities | (27,644 | ) | (14,157 | ) | |||
| Effect of exchange rates on cash, cash equivalents and restricted cash | (711 | ) | 218 | ||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (3,269 | ) | 1,161 | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 138,478 | 128,884 | |||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 135,209 | $ | 130,045 | |||
| SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||||
| Issuance of treasury stock for employee awards, net | 554 | 1,393 |