Exhibit 99.1

 

Natural Health Trends Reports Second Quarter 2020 Financial Results

 

 

Revenue of $16.4 million increased 10% from the first quarter of 2020

 

Aggressive cost cutting measures facilitated a return to profitability in the second quarter of 2020
 

Strong balance sheet with ample liquidity and $93.2 million in cash and cash equivalents

  Declared a quarterly cash dividend of $0.20 per share

 

HONG KONG – August 5, 2020 – 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, 2020.

 

Second Quarter 2020 Financial Highlights

 

 

Revenue of $16.4 million increased 10% compared to $14.9 million in the first quarter of 2020 and decreased 30% compared to $23.4 million in the second quarter of 2019.

 

 

Operating income was $183,000 compared to a loss of $1.4 million in the first quarter of 2020 and a loss of $4,000 in the second quarter of 2019.

 

 

Net income was $34,000, or break-even per diluted share, compared to a net loss of $573,000, or $0.05 per diluted share, in the first quarter of 2020 and net income of $397,000, or $0.04 per diluted share, in the second quarter of 2019.

 

 

The number of Active Members1 decreased 4% to 54,370 at June 30, 2020 compared to 56,490 at March 31, 2020, and decreased 31% compared to 78,280 at June 30, 2019.

 

 

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 2020 Financial Highlights

 

 

Revenue of $31.4 million decreased 27% compared to $42.8 million in the first six months of 2019.

 

 

Operating loss was $1.3 million compared to a loss of $2.7 million in the first six months of 2019.

 

 

Net loss was $539,000, or $0.05 per diluted share, compared to a net loss of $1.5 million, or $0.14 per diluted share, in the first six months of 2019.

 

Management Commentary

 

“The second quarter marked a continuation of the challenging macroeconomic climate we experienced during the first quarter of 2020 as the COVID-19 pandemic persisted into the summer months,” commented Chris Sharng, President of Natural Health Trends Corp. “We were very pleased with the stability and resilience of our field leadership which helped us generate a 10% sequential increase in our second quarter revenue to $16.4 million. In addition, our aggressive cost reduction measures enabled us to return to profitability during the quarter. As previously announced, we put a program in place in the second half of 2019 to position us for increased operating efficiencies moving forward. Through this program, we made significant progress in reducing our SG&A expenses through reductions of nearly 20% versus the first quarter of 2020 and more than one-third versus the prior year period.”

 

Mr. Sharng concluded, “I am very pleased with our ability to manage elements within our control throughout this global crisis which led us to achieving positive growth in total revenue, gross profit, operating income and net income for the second quarter of 2020 over the prior quarter. Further, our strong balance sheet, ample liquidity position and conservative capital allocation philosophy, which is designed to help support our members and business, enabled us to continue returning value to our stockholders through our quarterly cash dividend. I’d like to once again thank all of our leaders who have proven themselves time and time again in navigating difficult and complex operating environments such as this one. We remain cautiously optimistic the macroeconomic situation will continue to improve in the second half of 2020.”

 

1

 

Balance Sheet and Cash Flow

 

 

Net cash used in operating activities was $1.0 million in the first six months of 2020, compared to $15.1 million in the first six months of 2019.

 

Total cash and cash equivalents were $93.2 million at June 30, 2020, down slightly from $95.4 million at March 31, 2020.

 

On August 3, 2020, 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 August 28, 2020 to stockholders of record as of August 18, 2020.

 

Second Quarter 2020 Financial Results Conference Call

 

Management will host a conference call to discuss the second quarter 2020 financial results today, Wednesday, August 5, 2020 at 11:30 a.m. Eastern Time. The conference call details are as follows:

 

Date:

Wednesday, August 5, 2020

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:

13706115

Webcast:

http://public.viavid.com/index.php?id=140483

 

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 5, 2020 through 11:59 p.m. Eastern Time on August 19, 2020 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13706115.

 

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.

 

2

 

CONTACTS:

 

Company Contact:

Scott Davidson

Senior Vice President and Chief Financial Officer

Natural Health Trends Corp.

Tel (Hong Kong): +852-3107-0800

Tel (U.S.): 310-541-0888

scott.davidson@nhtglobal.com

 

Investor Contact:

ADDO Investor Relations

Tel: 310-829-5400

investor.relations@nhtglobal.com

 

3

 

NATURAL HEALTH TRENDS CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data) 

 

   

June 30, 2020

   

December 31, 2019

 
   

(Unaudited)

         

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 93,206     $ 96,035  

Inventories

    4,114       6,404  

Other current assets

    5,057       5,936  

Total current assets

    102,377       108,375  

Property and equipment, net

    599       735  

Operating lease right-of-use assets

    3,096       3,135  

Restricted cash

    513       3,390  

Deferred tax asset

    1,163       2,039  

Other assets

    729       823  

Total assets

  $ 108,477     $ 118,497  

LIABILITIES AND STOCKHOLDERS’ EQUITY

               

Current liabilities:

               

Accounts payable

  $ 1,084     $ 680  

Accrued commissions

    3,113       2,931  

Other accrued expenses

    1,763       2,387  

Deferred revenue

    2,645       4,506  

Amounts held in eWallets

    11,438       12,938  

Operating lease liabilities

    1,247       1,655  

Other current liabilities

    1,438       1,205  

Total current liabilities

    22,728       26,302  

Income taxes payable

    13,748       15,365  

Deferred tax liability

    203       202  

Operating lease liabilities

    1,963       1,564  

Total liabilities

    38,642       43,433  

Stockholders’ equity:

               

Preferred stock

           

Common stock

    13       13  

Additional paid-in capital

    86,102       86,102  

Retained earnings

    11,008       16,117  

Accumulated other comprehensive loss

    (1,384 )     (1,264 )

Treasury stock, at cost

    (25,904 )     (25,904 )

Total stockholders’ equity

    69,835       75,064  

Total liabilities and stockholders’ equity

  $ 108,477     $ 118,497  

 

4

 

NATURAL HEALTH TRENDS CORP. 

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except per share data)

 

   

Three Months Ended June 30,

   

Six Months Ended June 30,

 
   

2020

   

2019

   

2020

   

2019

 

Net sales

  $ 16,404     $ 23,428     $ 31,352     $ 42,756  

Cost of sales

    4,817       5,407       9,331       10,631  

Gross profit

    11,587       18,021       22,021       32,125  

Operating expenses:

                               

Commissions expense

    7,113       11,398       13,716       20,896  

Selling, general and administrative expenses

    4,291       6,627       9,570       13,942  

Total operating expenses

    11,404       18,025       23,286       34,838  

Income (loss) from operations

    183       (4 )     (1,265 )     (2,713 )

Other income, net

    125       373       218       805  

Income (loss) before income taxes

    308       369       (1,047 )     (1,908 )

Income tax provision (benefit)

    274       (28 )     (508 )     (382 )

Net income (loss)

  $ 34     $ 397     $ (539 )   $ (1,526 )
Net income (loss) per common share:                                

Basic

  $ 0.00     $ 0.04     $ (0.05 )   $ (0.14 )

Diluted

  $ 0.00     $ 0.04     $ (0.05 )   $ (0.14 )
Weighted-average common shares outstanding:                                
Basic     10,580       11,082       10,532       11,207  
Diluted     11,424       11,135       10,532       11,207  

 

5

 

NATURAL HEALTH TRENDS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

 

   

Six Months Ended June 30,

 
   

2020

   

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net loss

  $ (539 )   $ (1,526 )

Adjustments to reconcile net loss to net cash used in operating activities:

               

Depreciation and amortization

    202       189  

Noncash lease expense

    834       914  

Deferred income taxes

    870       (3 )

Changes in assets and liabilities:

               

Inventories

    2,314       1,881  

Other current assets

    845       (752 )

Other assets

    82       (35 )

Accounts payable

    402       (956 )

Accrued commissions

    212       (5,475 )

Other accrued expenses

    (617 )     (1,946 )

Deferred revenue

    (1,872 )     (3,409 )

Amounts held in eWallets

    (1,560 )     (765 )

Operating lease liabilities

    (811 )     (964 )
Income taxes payable     (1,617 )     (1,617 )

Other current liabilities

    237       (318 )

Long-term incentive

          (277 )

Net cash used in operating activities

    (1,018 )     (15,059 )

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Purchases of property and equipment

    (68 )     (141 )

Net cash used in investing activities

    (68 )     (141 )

CASH FLOWS FROM FINANCING ACTIVITIES:

               
Repurchase of common stock           (6,682 )

Dividends paid

    (4,570 )     (2,736 )

Net cash used in financing activities

    (4,570 )     (9,418 )

Effect of exchange rates on cash, cash equivalents and restricted cash

    (50 )     73  

Net decrease in cash, cash equivalents and restricted cash

    (5,706 )     (24,545 )

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

    99,425       135,651  

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

  $ 93,719     $ 111,106  

SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:

               

Issuance of treasury stock for employee awards, net

  $     $ 377  

Right-of-use assets obtained in exchange for operating lease liabilities

  $ 1,081     $ 4,697  

 

6