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, 2020.

Fourth Quarter 2020 Financial Highlights

  • Revenue of $16.6 million increased 17% compared to $14.1 million in the third quarter of 2020 and decreased 7% compared to $17.8 million in the fourth quarter of 2019.  
  • Operating income was $1.3 million compared to $668,000 in the third quarter of 2020 and operating loss of $3.2 million in the fourth quarter of 2019. Operating loss for the fourth quarter of 2019 included an impairment charge of $1.8 million upon the early adoption of a new accounting standard pertaining to goodwill that arose from a merger transaction in March 2004.  
  • Net income was $747,000, or $0.07 per diluted share, compared to $635,000, or $0.06 per diluted share, in the third quarter of 2020 and net loss of $2.8 million, or $0.27 per diluted share, in the fourth quarter of 2019.  
  • The number of Active Members1 decreased 2% to 52,230 at December 31, 2020, compared to 53,300 at September 30, 2020, and decreased 9% compared to 57,410 at December 31, 2019.
  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.

Full Year 2020 Financial Highlights

  • Revenue of $62.1 million decreased 20% compared to $77.6 million in 2019.  
  • Operating income was $669,000 compared to operating loss of $7.0 million in 2019. Operating loss included a goodwill impairment charge of $1.8 million in 2019.  
  • Net income was $843,000, or $0.07 per diluted share, compared to net loss of $5.6 million, or $0.52 per diluted share, in 2019.

Management Commentary

“2020 revenue of $62.1 million decreased 20% compared to $77.6 million in 2019 as elements such as government-mandated travel restrictions, shutdowns and limitations surrounding in-person events and activities hindered our leaders’ ability to conduct business,” commented Chris Sharng, President of Natural Health Trends Corp. “However, for the fourth quarter of 2020, revenue of $16.6 million increased 17% over the third quarter of 2020 with orders improving 14% as restrictions began to ease in our key markets.”

Mr. Sharng continued, “The cost savings initiatives we implemented in the second half of 2019 resulted in 2020 cost reductions of over $9.0 million year-over-year. As a result, we reported positive operating income for both the full year and the third consecutive quarter which helped fuel positive cash provided by operating activities in 2020.”

Balance Sheet and Cash Flow

  • Net cash provided by operating activities was $1.9 million in 2020 compared to net cash used in operating activities of $18.6 million in 2019.
  • Total cash and cash equivalents were $92.4 million as of December 31, 2020, down from $96.0 million as of December 31, 2019.     
  • On February 8, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 on each share of common stock outstanding. The dividend will be payable on March 5, 2021 to stockholders of record as of February 23, 2021.

The Company expects to issue its 2020 audited financial results in late February 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 2020 audited financial results.

Fourth Quarter and Full Year 2020 Financial Results Conference Call

Management will host a conference call to discuss the fourth quarter and full year 2020 financial results today, Wednesday, February 10, 2021 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date: Wednesday, February 10, 2021
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: 13714821
Webcast: http://public.viavid.com/index.php?id=142946

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 10, 2021 through 11:59 p.m. Eastern Time on February 24, 2021 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number:  13714821.

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 9, 2020 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.

NATURAL HEALTH TRENDS CORP.CONSOLIDATED BALANCE SHEETS(In thousands, except share data) 

  December 31,  
  2020     2019  
       
  (Unaudited)    
ASSETS              
Current assets:              
Cash and cash equivalents $ 92,367     $ 96,035  
Inventories   3,779       6,404  
Other current assets   3,595       5,936  
Total current assets   99,741       108,375  
Property and equipment, net   539       735  
Operating lease right-of-use assets   3,745       3,135  
Restricted cash   525       3,390  
Deferred tax asset   731       2,039  
Other assets   661       823  
Total assets $ 105,942     $ 118,497  
LIABILITIES AND STOCKHOLDERS’ EQUITY              
Current liabilities:              
Accounts payable $ 580     $ 680  
Income taxes payable   1,481       173  
Accrued commissions   3,496       2,931  
Other accrued expenses   1,922       2,387  
Deferred revenue   3,091       4,506  
Amounts held in eWallets   8,503       12,938  
Operating lease liabilities   1,163       1,655  
Other current liabilities   1,270       1,032  
Total current liabilities   21,506       26,302  
Income taxes payable   13,748       15,365  
Deferred tax liability   216       202  
Operating lease liabilities   2,775       1,564  
Total liabilities   38,245       43,433  
Stockholders’ equity:              
Preferred stock          
Common stock   13       13  
Additional paid-in capital   86,102       86,102  
Retained earnings   7,822       16,117  
Accumulated other comprehensive loss   (336 )     (1,264 )
Treasury stock, at cost   (25,904 )     (25,904 )
Total stockholders’ equity   67,697       75,064  
Total liabilities and stockholders’ equity $ 105,942     $ 118,497  
               

NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)

  Three Months Ended December 31,     Year Ended December 31,  
  2020     2019     2020     2019  
                   
  (Unaudited)     (Unaudited)          
Net sales $ 16,595     $ 17,835     $ 62,071     $ 77,614  
Cost of sales   4,024       5,102       16,990       20,104  
Gross profit   12,571       12,733       45,081       57,510  
Operating expenses:                              
Commissions expense   6,868       7,291       26,204       35,549  
Selling, general and administrative expenses   4,437       6,924       18,208       27,220  
Goodwill impairment         1,764             1,764  
Total operating expenses   11,305       15,979       44,412       64,533  
Income (loss) from operations   1,266       (3,246 )     669       (7,023 )
Other income, net   218       298       821       1,426  
Income (loss) before income taxes   1,484       (2,948 )     1,490       (5,597 )
Income tax provision (benefit)   737       (106 )     647       14  
Net income (loss) $ 747     $ (2,842 )   $ 843     $ (5,611 )
Net income (loss) per common share:                              
Basic $ 0.07     $ (0.27 )   $ 0.08     $ (0.52 )
Diluted $ 0.07     $ (0.27 )   $ 0.07     $ (0.52 )
Weighted-average number of common shares outstanding:                              
Basic   10,777       10,456       10,630       10,871  
Diluted   11,424       10,456       11,424       10,871  
                               

NATURAL HEALTH TRENDS CORP.CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

  Year Ended December 31,  
  2020     2019  
               
CASH FLOWS FROM OPERATING ACTIVITIES:   (Unaudited)          
Net income (loss) $ 843     $ (5,611 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:              
Depreciation and amortization   410       387  
Noncash lease expense   1,532       1,760  
Deferred income taxes   1,339       (820 )
Goodwill impairment         1,764  
Changes in assets and liabilities:              
Inventories   2,700       5,820  
Other current assets   2,322       (554 )
Other assets   181        
Accounts payable   (102 )     (953 )
Income taxes payable   (311 )     (1,731 )
Accrued commissions   566       (9,598 )
Other accrued expenses   (471 )     (2,797 )
Deferred revenue   (1,433 )     (2,315 )
Amounts held in eWallets   (4,491 )     (1,742 )
Operating lease liabilities   (1,427 )     (1,807 )
Other current liabilities   227       (108 )
Long-term incentive         (333 )
Net cash provided by (used in) operating activities   1,885       (18,638 )
CASH FLOWS FROM INVESTING ACTIVITIES:              
Purchases of property and equipment   (211 )     (189 )
Net cash used in investing activities   (211 )     (189 )
CASH FLOWS FROM FINANCING ACTIVITIES:              
Repurchase of common stock         (10,117 )
Dividends paid   (9,138 )     (7,344 )
Net cash used in financing activities   (9,138 )     (17,461 )
Effect of exchange rates on cash, cash equivalents and restricted cash   931       62  
Net decrease in cash, cash equivalents and restricted cash   (6,533 )     (36,226 )
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period   99,425       135,651  
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ 92,892     $ 99,425  
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:              
Issuance of treasury stock for employee awards, net $     $ 8,289  
Right-of-use assets obtained in exchange for operating lease liabilities $ 2,747     $ 5,082  
               

CONTACTS:

Company Contact: Scott DavidsonSenior Vice President and Chief Financial OfficerNatural Health Trends Corp.Tel (Hong Kong): +852-3107-0800Tel (U.S.): 310-541-0888scott.davidson@nhtglobal.com         Investor Contact:ADDO Investor RelationsTel: 310-829-5400investor.relations@nhtglobal.com