– | Repurchased $2.9 million of common stock |
– | Declared a special dividend of $0.40 per share |
• | Revenue of $17.0 million decreased 64% compared to $47.0 million in the third quarter of 2018. |
• | Gross profit was $12.7 million compared to $37.1 million in the third quarter of 2018. As a percent of total revenue, gross profit was 74% compared to 79% in the third quarter of 2018. |
• | Operating loss was $1.1 million compared to operating income of $7.8 million in the third quarter of 2018. |
• | Net loss was $1.2 million, or $0.12 per diluted share, compared to net income of $7.6 million, or $0.67 per diluted share, in the third quarter of 2018. |
• | The number of Active Members1 decreased 13% to 68,150 at September 30, 2019, compared to 78,280 at June 30, 2019, and decreased 30% compared to 97,160 at September 30, 2018. |
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. |
• | Revenue of $59.8 million decreased 60% compared to $150.3 million in the first nine months of 2018. |
• | Gross profit was $44.8 million compared to $119.8 million in the first nine months of 2018. As a percent of total revenue, gross profit was 75% compared to 80% in the first nine months of 2018. |
• | Operating loss was $3.8 million compared to operating income of $28.0 million in the first nine months of 2018. |
• | Net loss was $2.8 million, or $0.25 per diluted share, compared to net income of $25.5 million, or $2.25 per diluted share, in the first nine months of 2018. |
• | Net cash used in operating activities was $3.7 million compared to net cash provided by operating activities of $8.8 million in the third quarter of 2018. For the first nine months of 2019, net cash used in operating activities was $18.7 million, compared to net cash provided by operating activities of $25.3 million in the first nine months of 2018. |
• | Total cash and cash equivalents were $101.1 million as of September 30, 2019, down from $132.7 million as of December 31, 2018. |
• | On October 29, 2019, the Company’s Board of Directors declared a special cash dividend of $0.40 per share on outstanding common stock. The dividend will be payable on November 29, 2019 to stockholders of record as of November 19, 2019. |
• | During the three months ended September 30, 2019, the Company purchased a total of 383,127 shares of its common stock for an aggregate purchase price of $2.9 million, plus transaction costs. As of September 30, 2019, $22.4 million of the stock repurchase program remained available for future purchases, inclusive of related estimated income tax. |
Date: | Friday, November 1, 2019 |
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: | 13695076 |
Webcast: | http://public.viavid.com/index.php?id=136315 |
September 30, 2019 | December 31, 2018 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 101,113 | $ | 132,653 | |||
Inventories | 7,999 | 12,165 | |||||
Other current assets | 6,997 | 5,369 | |||||
Total current assets | 116,109 | 150,187 | |||||
Property and equipment, net | 821 | 934 | |||||
Operating lease right-of-use assets | 3,515 | — | |||||
Goodwill | 1,764 | 1,764 | |||||
Restricted cash | 2,881 | 2,998 | |||||
Deferred tax asset | 1,210 | 1,207 | |||||
Other assets | 807 | 831 | |||||
Total assets | $ | 127,107 | $ | 157,921 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 627 | $ | 1,631 | |||
Accrued commissions | 3,798 | 12,502 | |||||
Other accrued expenses | 3,392 | 6,121 | |||||
Deferred revenue | 3,302 | 6,795 | |||||
Amounts held in eWallets | 13,090 | 14,611 | |||||
Operating lease liabilities | 1,689 | — | |||||
Other current liabilities | 1,188 | 1,424 | |||||
Total current liabilities | 27,086 | 43,084 | |||||
Income taxes payable | 15,365 | 16,982 | |||||
Deferred tax liability | 186 | 186 | |||||
Long-term incentive | — | 7,808 | |||||
Operating lease liabilities | 1,903 | — | |||||
Total liabilities | 44,540 | 68,060 | |||||
Stockholders’ equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 13 | 13 | |||||
Additional paid-in capital | 86,102 | 86,415 | |||||
Retained earnings | 23,567 | 44,431 | |||||
Accumulated other comprehensive loss | (1,764 | ) | (1,250 | ) | |||
Treasury stock, at cost | (25,351 | ) | (39,748 | ) | |||
Total stockholders’ equity | 82,567 | 89,861 | |||||
Total liabilities and stockholders’ equity | $ | 127,107 | $ | 157,921 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net sales | $ | 17,023 | $ | 47,043 | $ | 59,779 | $ | 150,320 | |||||||
Cost of sales | 4,371 | 9,926 | 15,002 | 30,546 | |||||||||||
Gross profit | 12,652 | 37,117 | 44,777 | 119,774 | |||||||||||
Operating expenses: | |||||||||||||||
Commissions expense | 7,362 | 22,001 | 28,258 | 67,291 | |||||||||||
Selling, general and administrative expenses | 6,354 | 7,269 | 20,296 | 24,484 | |||||||||||
Total operating expenses | 13,716 | 29,270 | 48,554 | 91,775 | |||||||||||
Income (loss) from operations | (1,064 | ) | 7,847 | (3,777 | ) | 27,999 | |||||||||
Other income, net | 323 | 249 | 1,128 | 465 | |||||||||||
Income (loss) before income taxes | (741 | ) | 8,096 | (2,649 | ) | 28,464 | |||||||||
Income tax provision | 502 | 467 | 120 | 2,988 | |||||||||||
Net income (loss) | $ | (1,243 | ) | $ | 7,629 | $ | (2,769 | ) | $ | 25,476 | |||||
Net income (loss) per common share: | |||||||||||||||
Basic | $ | (0.12 | ) | $ | 0.67 | $ | (0.25 | ) | $ | 2.25 | |||||
Diluted | $ | (0.12 | ) | $ | 0.67 | $ | (0.25 | ) | $ | 2.25 | |||||
Weighted-average number of common shares outstanding: | |||||||||||||||
Basic | 10,623 | 11,309 | 11,010 | 11,298 | |||||||||||
Diluted | 10,623 | 11,322 | 11,010 | 11,307 |
Nine Months Ended September 30, | |||||||
2019 | 2018 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income (loss) | $ | (2,769 | ) | $ | 25,476 | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 290 | 332 | |||||
Noncash lease expense | 1,336 | — | |||||
Deferred income taxes | (3 | ) | — | ||||
Changes in assets and liabilities: | |||||||
Inventories | 4,104 | (2,828 | ) | ||||
Other current assets | (1,674 | ) | 2,548 | ||||
Other assets | 2 | (83 | ) | ||||
Accounts payable | (1,002 | ) | 967 | ||||
Accrued commissions | (8,683 | ) | 2,003 | ||||
Other accrued expenses | (1,779 | ) | 314 | ||||
Deferred revenue | (3,485 | ) | 26 | ||||
Amounts held in eWallets | (1,508 | ) | (930 | ) | |||
Operating lease liabilities | (1,392 | ) | — | ||||
Income taxes payable | (1,617 | ) | (2,201 | ) | |||
Other current liabilities | (235 | ) | 438 | ||||
Long-term incentive | (333 | ) | (800 | ) | |||
Net cash provided by (used in) operating activities | (18,748 | ) | 25,262 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (181 | ) | (176 | ) | |||
Net cash used in investing activities | (181 | ) | (176 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Repurchase of common stock | (9,564 | ) | — | ||||
Dividends paid | (2,736 | ) | (27,644 | ) | |||
Net cash used in financing activities | (12,300 | ) | (27,644 | ) | |||
Effect of exchange rates on cash, cash equivalents and restricted cash | (428 | ) | (711 | ) | |||
Net decrease in cash, cash equivalents and restricted cash | (31,657 | ) | (3,269 | ) | |||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 135,651 | 138,478 | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 103,994 | $ | 135,209 | |||
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 | $ | 5,058 | $ | — |