Natural Health Trends Reports First Quarter 2017 Financial Results
April 27 2017 - 9:00AM
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 quarter ended
March 31, 2017.
First Quarter 2017 Financial
Highlights
- Total revenue decreased 19% to $59.9 million, compared to $74.3
million in the first quarter of 2016.
- Revenue from the Company’s Hong Kong operations, which
represented 91% of total revenue, decreased 20% to $54.6 million,
compared to $68.2 million in the first quarter of 2016.
- Outside of Hong Kong, revenue in China decreased 47%
year-over-year and was offset by increases in North America and
Europe of 37% and 297% year-over-year, respectively.
- Operating income decreased 7% to $13.0 million, compared to
$14.0 million in the first quarter of 2016. As a percent of total
revenue, operating income was 21.7%, compared to 18.8% in the first
quarter of 2016.
- Net income was $10.4 million, or $0.93 per diluted share,
compared to $11.3 million, or $0.95 per diluted share, in the first
quarter of 2016.
- The number of Active Members1 decreased 4% to 113,710 at
March 31, 2017, compared to 118,960 at December 31, 2016,
and decreased 5% compared to 119,800 at March 31, 2016.
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 first quarter 2017 revenue declined year-over-year as we
are still working to overcome the slowdown we have been
experiencing since the third quarter of 2016,” commented Chris
Sharng, President of Natural Health Trends Corp. “We also moved our
first half major event from early January in prior years, to March
this year, making the year-over-year comparison challenging. In
addition, the stronger dollar made our products more expensive for
our Chinese consumers. Partially offsetting the factors affecting
our top-line was heightened productivity in March, following our
successful Ambassador Academy in Macau, which attracted over 6,000
members and guests. We were very pleased with the record turnout
after moving the event to after the Chinese New Year, which we
believe will improve the member experience longer-term.”
Mr. Sharng further commented, “Our strong balance sheet and
working capital management afford us the ability to focus on our
growth initiatives while simultaneously returning capital to our
valued stockholders. I am pleased to announce our Board of
Directors declared a special dividend in the amount of $0.35 per
share as well as an 11% increase in our quarterly dividend to $0.10
per share, compared to the prior quarter. While it will take
time for the results of our strategic initiatives to bear fruit, we
are confident in our ability to attract, motivate and retain a
strong member base as well as to expand our product offering into
new geographies and categories.”
Balance Sheet and Cash Flow
- Net cash provided by operating activities in the first quarter
of 2017 was $13.8 million, consistent with the first quarter of
2016.
- On April 24, 2017, the Company's Board of Directors declared a
quarterly dividend of $0.10 per share on outstanding common stock,
which represents an 11% increase over the prior quarter dividend,
and a special cash dividend of $0.35 per share on outstanding
common stock. The dividends will be payable on May 19, 2017 to
stockholders of record as of May 9, 2017.
First Quarter 2017 Financial Results Conference
Call
Management will host a conference call to discuss the first
quarter 2017 financial results today, Thursday, April 27, 2017 at
11:30 a.m. Eastern Time. The conference call details are as
follows:
Date: |
|
Thursday, April 27,
2017 |
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: |
|
13657892 |
Webcast: |
|
http://public.viavid.com/index.php?id=123414 |
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 April 27, 2017 through 11:59 p.m. Eastern Time on May 11,
2017 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671
(international) and referencing the replay pin number:
13657892.
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, North America, 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 10, 2017 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, 2017 |
|
December 31, 2016 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
134,672 |
|
|
$ |
125,921 |
|
Inventories |
9,170 |
|
|
11,257 |
|
Other
current assets |
2,687 |
|
|
4,066 |
|
Total current
assets |
146,529 |
|
|
141,244 |
|
Property and equipment,
net |
1,330 |
|
|
1,388 |
|
Goodwill |
1,764 |
|
|
1,764 |
|
Restricted cash |
2,992 |
|
|
2,963 |
|
Other assets |
776 |
|
|
692 |
|
Total assets |
$ |
153,391 |
|
|
$ |
148,051 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
2,085 |
|
|
$ |
2,145 |
|
Income
taxes payable |
2,464 |
|
|
663 |
|
Accrued
commissions |
13,196 |
|
|
13,611 |
|
Other
accrued expenses |
12,048 |
|
|
14,989 |
|
Deferred
revenue |
4,301 |
|
|
4,948 |
|
Amounts
held in eWallets |
20,261 |
|
|
19,165 |
|
Other
current liabilities |
1,954 |
|
|
1,633 |
|
Total current
liabilities |
56,309 |
|
|
57,154 |
|
Deferred tax
liability |
266 |
|
|
268 |
|
Long-term
incentive |
7,720 |
|
|
8,190 |
|
Total liabilities |
64,295 |
|
|
65,612 |
|
Commitments and
contingencies |
|
|
|
Stockholders’
equity: |
|
|
|
Preferred
stock |
— |
|
|
— |
|
Common
stock |
13 |
|
|
13 |
|
Additional paid-in capital |
86,657 |
|
|
86,574 |
|
Retained
earnings |
43,992 |
|
|
38,548 |
|
Accumulated other comprehensive loss |
(996 |
) |
|
(807 |
) |
Treasury
stock, at cost |
(40,570 |
) |
|
(41,889 |
) |
Total stockholders’
equity |
89,096 |
|
|
82,439 |
|
Total liabilities and
stockholders’ equity |
$ |
153,391 |
|
|
$ |
148,051 |
|
|
|
|
|
|
|
|
|
NATURAL HEALTH TRENDS CORP. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share
data) |
|
|
Three Months Ended March 31, |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
Net sales |
$ |
59,874 |
|
|
$ |
74,346 |
|
Cost of sales |
11,245 |
|
|
14,280 |
|
Gross profit |
48,629 |
|
|
60,066 |
|
Operating
expenses: |
|
|
|
Commissions expense |
25,965 |
|
|
35,086 |
|
Selling,
general and administrative expenses |
9,536 |
|
|
10,904 |
|
Depreciation and amortization |
136 |
|
|
89 |
|
Total operating
expenses |
35,637 |
|
|
46,079 |
|
Income from
operations |
12,992 |
|
|
13,987 |
|
Other income (expense),
net |
156 |
|
|
(24 |
) |
Income before income
taxes |
13,148 |
|
|
13,963 |
|
Income tax
provision |
2,723 |
|
|
2,683 |
|
Net income |
$ |
10,425 |
|
|
$ |
11,280 |
|
Net income per common
share: |
|
|
|
Basic |
$ |
0.93 |
|
|
$ |
0.96 |
|
Diluted |
$ |
0.93 |
|
|
$ |
0.95 |
|
Weighted-average number
of common shares outstanding: |
|
|
|
Basic |
11,229 |
|
|
11,773 |
|
Diluted |
11,251 |
|
|
11,817 |
|
Cash dividends declared
per common share |
$ |
0.44 |
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
NATURAL HEALTH TRENDS CORP. |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands) |
|
Three Months Ended March 31, |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
(Unaudited) |
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
Net income |
$ |
10,425 |
|
|
$ |
11,280 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization |
136 |
|
|
89 |
|
Stock-based compensation |
9 |
|
|
74 |
|
Cumulative translation adjustment realized in net income |
(258 |
) |
|
— |
|
Changes in assets and
liabilities: |
|
|
|
Inventories |
2,091 |
|
|
189 |
|
Other
current assets |
1,419 |
|
|
(45 |
) |
Other
assets |
(62 |
) |
|
5 |
|
Accounts
payable |
(61 |
) |
|
(840 |
) |
Income
taxes payable |
1,798 |
|
|
2,620 |
|
Accrued
commissions |
(428 |
) |
|
(2,923 |
) |
Other
accrued expenses |
(1,555 |
) |
|
925 |
|
Deferred
revenue |
(647 |
) |
|
2,445 |
|
Amounts
held in eWallets |
1,138 |
|
|
280 |
|
Other
current liabilities |
314 |
|
|
(157 |
) |
Long-term
incentive |
(508 |
) |
|
(120 |
) |
Net cash provided by
operating activities |
13,811 |
|
|
13,822 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
Purchases
of property and equipment |
(72 |
) |
|
(240 |
) |
Net cash used in
investing activities |
(72 |
) |
|
(240 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
Repurchase of common stock |
— |
|
|
(18,319 |
) |
Dividends
paid |
(4,981 |
) |
|
(576 |
) |
Net cash used in
financing activities |
(4,981 |
) |
|
(18,895 |
) |
Effect of exchange
rates on cash and cash equivalents |
(7 |
) |
|
30 |
|
Net increase (decrease)
in cash and cash equivalents |
8,751 |
|
|
(5,283 |
) |
CASH AND CASH
EQUIVALENTS, beginning of period |
125,921 |
|
|
104,914 |
|
CASH AND CASH
EQUIVALENTS, end of period |
$ |
134,672 |
|
|
$ |
99,631 |
|
SUPPLEMENTAL
DISCLOSURES OF OTHER CASH FLOW INFORMATION: |
|
|
|
Issuance
of treasury stock for employee awards, net |
1,393 |
|
|
— |
|
CONTACTS:
Company Contact:
Scott Davidson
Senior Vice President and Chief Financial Officer
Natural Health Trends Corp.
Tel: 310-541-0888
scott.davidson@nhtglobal.com
Investors:
ADDO Investor Relations
Tel: 310-829-5400
investor.relations@nhtglobal.com
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