Natural Health Trends Reports Second Quarter 2018 Financial Results
August 01 2018 - 09:00AM
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
second quarter ended June 30, 2018.
Second Quarter 2018 Financial
Highlights
- Total revenue of $50.9 million decreased 1% compared to $51.5
million in the second quarter of 2017, and decreased 3% compared to
$52.4 million in the first quarter of 2018.
- Revenue from the Company’s Hong Kong operations, which
represented 88% of total revenue, was $44.6 million, a decrease of
2% compared to $45.7 million in the second quarter of 2017.
- Revenue outside of Hong Kong of $6.3 million increased 9%
compared to $5.8 million in the second quarter of 2017.
- Gross profit was $40.5 million compared to $41.7 million in the
second quarter of 2017, and $42.1 million in the first quarter of
2018. As a percent of total revenue, gross profit was 80% compared
to 81% in the second quarter of 2017 and 80% in the first quarter
of 2018.
- Operating income was $10.1 million compared to $12.9 million in
the second quarter of 2017, and $10.0 million in the first quarter
of 2018. As a percent of total revenue, operating income was 20%
compared to 25% in the second quarter of 2017 and 19% in the first
quarter of 2018.
- Net income was $9.0 million, or $0.80 per diluted share,
compared to net income of $10.3 million, or $0.91 per diluted
share, in the second quarter of 2017, and $8.8 million, or $0.78
per diluted share, in the first quarter of 2018.
- The number of Active Members1 decreased 2% to 93,000 at
June 30, 2018, compared to 95,040 at March 31, 2018, and
decreased 13% compared to 107,290 at June 30, 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.
Year-to-Date 2018 Financial Highlights
- Total revenue of $103.3 million decreased 7% compared to $111.3
million in the first six months of 2017.
- Gross profit was $82.7 million compared to $90.3 million in the
first six months of 2017. As a percent of total revenue, gross
profit was 80% compared to 81% in the first six months of
2018.
- Operating income was $20.2 million compared to $25.9 million in
the first six months of 2017. As a percent of total revenue,
operating income was 20% compared to 23% in the first six months of
2017.
- Net income was $17.8 million, or $1.58 per diluted share,
compared to net income of $20.7 million, or $1.84 per diluted
share, in the first six months of 2017.
Management Commentary
“Our second quarter performance reflected a continuation of the
momentum we established in the fourth quarter of 2017,” commented
Chris Sharng, President of Natural Health Trends. “The 3%
sequential decline in quarterly revenue can be attributed to the
timing of our promotional activities. Major incentive trips, such
as those to Australia and Seattle, took our members out of the
markets in the second quarter. However, the associated
qualification periods concluded in prior quarters.”
Balance Sheet and Cash Flow
- Net cash provided by operating activities was $5.3 million,
compared to $6.8 million in the second quarter of 2017. For the
first six months of 2018, net cash provided by operating activities
was $16.5 million, compared to $20.6 million in the first six
months of 2017.
- On July 18, 2018, the Company’s Board of Directors
declared a quarterly cash dividend of $0.15, which represents a 7%
increase over the prior quarter dividend, as well as a special cash
dividend of $0.25 per share on outstanding common stock. The
dividends will be payable on August 24, 2018 to stockholders
of record as of August 14, 2018.
Second Quarter 2018 Financial Results Conference
Call
Management will host a conference call to discuss the second
quarter 2018 financial results today, Wednesday, August 1, 2018 at
11:30 a.m. Eastern Time. The conference call details are as
follows:
Date: |
Wednesday,
August 1, 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: |
13681507 |
Webcast: |
http://public.viavid.com/index.php?id=130459 |
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 August 1, 2018 through 11:59 p.m. Eastern Time on August
15, 2018 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671
(international) and referencing the replay pin number:
13681507.
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.
NATURAL HEALTH TRENDS
CORP.CONSOLIDATED BALANCE
SHEETS(In thousands)
|
June 30, 2018 |
|
December 31, 2017 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
128,270 |
|
|
$ |
135,311 |
|
Inventories |
10,358 |
|
|
8,398 |
|
Other current assets |
5,550 |
|
|
7,534 |
|
Total
current assets |
144,178 |
|
|
151,243 |
|
Property
and equipment, net |
1,025 |
|
|
1,149 |
|
Goodwill |
1,764 |
|
|
1,764 |
|
Restricted
cash |
3,111 |
|
|
3,167 |
|
Deferred
tax asset |
1,435 |
|
|
1,435 |
|
Other
assets |
854 |
|
|
796 |
|
Total
assets |
$ |
152,367 |
|
|
$ |
159,554 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
2,995 |
|
|
$ |
1,751 |
|
Income taxes payable |
257 |
|
|
309 |
|
Accrued commissions |
10,399 |
|
|
11,170 |
|
Other accrued expenses |
8,157 |
|
|
7,605 |
|
Deferred revenue |
3,831 |
|
|
4,455 |
|
Amounts held in eWallets |
14,902 |
|
|
15,152 |
|
Other current liabilities |
1,446 |
|
|
1,479 |
|
Total
current liabilities |
41,987 |
|
|
41,921 |
|
Income
taxes payable |
17,395 |
|
|
19,052 |
|
Deferred
tax liability |
75 |
|
|
56 |
|
Long-term
incentive |
7,342 |
|
|
7,904 |
|
Total
liabilities |
66,799 |
|
|
68,933 |
|
Commitments
and contingencies |
|
|
|
Stockholders’ equity: |
|
|
|
Preferred stock |
— |
|
|
— |
|
Common stock |
13 |
|
|
13 |
|
Additional paid-in capital |
86,415 |
|
|
86,683 |
|
Retained earnings |
39,662 |
|
|
44,908 |
|
Accumulated other comprehensive loss |
(774 |
) |
|
(413 |
) |
Treasury stock, at cost |
(39,748 |
) |
|
(40,570 |
) |
Total
stockholders’ equity |
85,568 |
|
|
90,621 |
|
Total
liabilities and stockholders’ equity |
$ |
152,367 |
|
|
$ |
159,554 |
|
NATURAL HEALTH TRENDS
CORP.CONSOLIDATED STATEMENTS OF
OPERATIONS(In thousands, except per share
data)
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
|
(Unaudited) |
Net
sales |
$ |
50,910 |
|
|
$ |
51,465 |
|
|
$ |
103,277 |
|
|
$ |
111,339 |
|
Cost of
sales |
10,399 |
|
|
9,793 |
|
|
20,620 |
|
|
21,038 |
|
Gross
profit |
40,511 |
|
|
41,672 |
|
|
82,657 |
|
|
90,301 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Commissions expense |
22,310 |
|
|
22,075 |
|
|
45,290 |
|
|
48,040 |
|
Selling, general and administrative expenses |
8,093 |
|
|
6,730 |
|
|
17,215 |
|
|
16,402 |
|
Total
operating expenses |
30,403 |
|
|
28,805 |
|
|
62,505 |
|
|
64,442 |
|
Income from
operations |
10,108 |
|
|
12,867 |
|
|
20,152 |
|
|
25,859 |
|
Other
income, net |
53 |
|
|
80 |
|
|
216 |
|
|
236 |
|
Income
before income taxes |
10,161 |
|
|
12,947 |
|
|
20,368 |
|
|
26,095 |
|
Income tax
provision |
1,138 |
|
|
2,644 |
|
|
2,521 |
|
|
5,367 |
|
Net
income |
$ |
9,023 |
|
|
$ |
10,303 |
|
|
$ |
17,847 |
|
|
$ |
20,728 |
|
Net income
per common share: |
|
|
|
|
|
|
|
Basic |
$ |
0.80 |
|
|
$ |
0.92 |
|
|
$ |
1.58 |
|
|
$ |
1.84 |
|
Diluted |
$ |
0.80 |
|
|
$ |
0.91 |
|
|
$ |
1.58 |
|
|
$ |
1.84 |
|
Weighted-average number of common shares outstanding: |
|
|
|
|
|
|
|
Basic |
11,298 |
|
|
11,243 |
|
|
11,292 |
|
|
11,236 |
|
Diluted |
11,305 |
|
|
11,274 |
|
|
11,297 |
|
|
11,264 |
|
Cash
dividends declared per common share |
$ |
1.90 |
|
|
$ |
0.45 |
|
|
$ |
2.03 |
|
|
$ |
0.89 |
|
NATURAL HEALTH TRENDS
CORP.CONSOLIDATED STATEMENTS OF CASH
FLOWS(In thousands)
|
Six Months Ended June 30, |
|
2018 |
|
2017 |
|
(Unaudited) |
CASH FLOWS
FROM OPERATING ACTIVITIES: |
|
|
|
Net
income |
$ |
17,847 |
|
|
$ |
20,728 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
Depreciation and amortization |
235 |
|
|
276 |
|
Stock-based compensation |
— |
|
|
17 |
|
Cumulative translation adjustment realized in net income |
— |
|
|
(258 |
) |
Changes in
assets and liabilities: |
|
|
|
Inventories |
(2,057 |
) |
|
1,388 |
|
Other current assets |
1,955 |
|
|
489 |
|
Other assets |
(73 |
) |
|
(58 |
) |
Accounts payable |
1,246 |
|
|
226 |
|
Income taxes payable |
(1,705 |
) |
|
4,304 |
|
Accrued commissions |
(707 |
) |
|
(915 |
) |
Other accrued expenses |
1,119 |
|
|
(3,229 |
) |
Deferred revenue |
(592 |
) |
|
(939 |
) |
Amounts held in eWallets |
(192 |
) |
|
(327 |
) |
Other current liabilities |
(24 |
) |
|
(24 |
) |
Long-term incentive |
(562 |
) |
|
(1,049 |
) |
Net cash
provided by operating activities |
16,490 |
|
|
20,629 |
|
CASH FLOWS
FROM INVESTING ACTIVITIES: |
|
|
|
Purchases of property and equipment |
(113 |
) |
|
(170 |
) |
Net cash
used in investing activities |
(113 |
) |
|
(170 |
) |
CASH FLOWS
FROM FINANCING ACTIVITIES: |
|
|
|
Dividends paid |
(23,093 |
) |
|
(10,078 |
) |
Net cash
used in financing activities |
(23,093 |
) |
|
(10,078 |
) |
Effect of
exchange rates on cash, cash equivalents and restricted cash |
(381 |
) |
|
(41 |
) |
Net
(decrease) increase in cash, cash equivalents and restricted
cash |
(7,097 |
) |
|
10,340 |
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH, beginning of period |
138,478 |
|
|
128,884 |
|
CASH, CASH
EQUIVALENTS AND RESTRICTED CASH, end of period |
$ |
131,381 |
|
|
$ |
139,224 |
|
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: |
|
|
|
Issuance of treasury stock for employee awards, net |
554 |
|
|
1,393 |
|
CONTACTS:
Company Contact:Scott DavidsonSenior Vice
President and Chief Financial OfficerNatural Health Trends
Corp.Tel: 310-541-0888scott.davidson@nhtglobal.com
Investor Contact:ADDO Investor RelationsTel:
310-829-5400investor.relations@nhtglobal.com
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