Natural Health Trends Reports Fourth Quarter and Full Year 2023 Financial Results
Natural Health Trends Corp. (NHTC) reported a 3% increase in fourth quarter revenue to $10.9 million compared to the third quarter of 2023. The company also declared a quarterly cash dividend of $0.20 per share. However, the number of active members decreased by 6% to 32,410, and full-year revenue decreased by 11% to $43.9 million compared to 2022. Operating loss was $1.7 million for the full year, and net cash used in operating activities was $4.3 million in 2023.
Positive
Sequential increase in orders despite consumer sentiment and price increases
Net cash provided by operating activities of $938,000 in the fourth quarter of 2022
Total cash and cash equivalents were $56.2 million as of December 31, 2023
Negative
Decrease in the number of active members by 6%
Full-year revenue decreased by 11% compared to 2022
Operating loss of $1.7 million for the full year
The announcement of Natural Health Trends Corp.'s financial results for the fourth quarter and the full year provides several indicators of the company's financial health and operational efficiency. Notably, the 3% sequential increase in revenue suggests a modest improvement in sales activities, likely reflecting the company's efforts to boost orders through increased in-person activities. However, the year-over-year decline in revenue and the decrease in active members raise concerns about the company's ability to sustain growth and retain its customer base in a challenging economic environment.
The operating loss reported, although improved from the previous quarter, still indicates that the company is facing challenges in achieving profitability. The decrease in net cash from operating activities year-over-year, even when tax installment payments related to the Tax Cuts and Jobs Act are excluded, further underscores the cash flow pressures faced by the company. The decline in cash and cash equivalents year-over-year could impact the company's ability to invest in growth initiatives or weather prolonged economic downturns.
The declaration of a quarterly cash dividend suggests confidence by the board in the company's liquidity position and commitment to returning value to shareholders. However, investors should closely monitor the company's future cash flows and profitability metrics to assess the sustainability of such dividends.
From a market perspective, the consumer sentiment in China and the effects of global inflation and currency fluctuations are external factors that have impacted Natural Health Trends Corp.'s performance. The company's acknowledgment of these challenges and its strategic response, including price adjustments and a focus on training and in-person events, provides insight into the management's adaptability and proactive measures to stimulate demand.
Additionally, the 16% decrease in active members is a significant metric for direct-selling companies, as it may reflect on the effectiveness of the company's sales force and market penetration strategies. This decrease could be indicative of broader trends in the direct-selling industry or specific to the company's operational execution.
Investors and market analysts should consider the competitive landscape and evolving consumer preferences in the personal care and wellness sector when evaluating the company's potential for recovery and growth.
Examining the macroeconomic context, inflationary pressures and a stronger dollar can have a dual impact on companies like Natural Health Trends Corp. that operate internationally. While a stronger dollar can increase the cost of goods sold in foreign markets, inflation can erode consumer purchasing power, leading to reduced sales volumes. The company's performance must be viewed against this backdrop, with an understanding that these economic headwinds can significantly influence both revenue and profit margins.
The company's efforts to protect margins and control costs in such an environment are critical for maintaining operational viability. The effectiveness of these measures should be continuously evaluated as part of a broader analysis of the company's financial resilience and strategic direction in the face of ongoing economic volatility.
02/07/2024 - 09:00 AM
– Fourth quarter revenue of $10.9 million increased 3% compared to the third quarter of 2023 – Cash flows from operations improved $2.0 million year-over-year before tax installment payments – Declared a quarterly cash dividend of $0.20 per share
HONG KONG, Feb. 07, 2024 (GLOBE NEWSWIRE) -- 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, 2023.
Fourth Quarter 2023 Financial Highlights
• Revenue of $10.9 million increased 3% compared to $10.6 million in the third quarter of 2023 and decreased 13% compared to $12.5 million in the fourth quarter of 2022. • Operating loss was $242,000 compared to operating loss of $292,000 in the third quarter of 2023 and operating income of $43,000 in the fourth quarter of 2022. • Net income was $358,000 , or $0.03 per diluted share, compared to $172,000 , or $0.02 per diluted share, in the third quarter of 2023 and $188,000 , or $0.02 per diluted share, in the fourth quarter of 2022. • The number of Active Members1 were down 6% to 32,410 at December 31, 2023, compared to 34,660 at September 30, 2023, and decreased 16% compared to 38,660 at December 31, 2022. 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.
Full Year 2023 Financial Highlights
• Revenue of $43.9 million decreased 11% compared to $49.1 million in 2022. • Operating loss was $1.7 million , compared to $270,000 in 2022. • Net income was $568,000 , or $0.05 per diluted share, compared to $313,000 , or $0.03 per diluted share, in 2022.
Management Commentary
“We managed to achieve a sequential increase in orders despite tepid consumer sentiment in China and price increases in several markets in the quarter. We believe the increased frequency and size of in-person activities contributed to the uptick. We plan to sponsor more such events in the coming months to continue improving the effectiveness of our market campaigns,” commented Chris Sharng, President of Natural Health Trends Corp.
Mr. Sharng continued, “Though under pressure from lingering inflation and stronger dollar, we succeeded in protecting margin and controlling costs. With more emphasis on training in the coming year, we believe we are well positioned to benefit from further volume boost.”
Balance Sheet and Cash Flow
• Net cash used in operating activities was $69,000 in the fourth quarter of 2023, compared net cash provided by operating activities of $938,000 in the fourth quarter of 2022. Net cash used in operating activities was $4.3 million in 2023, compared to $4.9 million in 2022. Before tax installment payments, the liability of which arises from the 2017 U.S. Tax Cuts and Jobs Act (the “Act Act”), cash used in operating activities was $1.2 million in 2023, versus $3.2 million a year ago. Of the total Tax Act liability of $20.2 million , $11.2 million has been paid to date. • Total cash and cash equivalents were $56.2 million as of December 31, 2023, down from $69.7 million as of December 31, 2022. • On February 5, 2024, 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 1, 2024 to stockholders of record as of February 20, 2024.
The Company expects to issue its 2023 audited financial results in late February with its Annual Report on Form 10-K to be filed with the United States Securities and Exchange Commission. These 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 2023 audited financial results.
Fourth Quarter and Full Year 2023 Financial Results Conference Call
Management will host a conference call to discuss the fourth quarter and full year 2023 financial results today, Wednesday, February 7, 2024 at 11:30 a.m. Eastern Time. The conference call details are as follows:
Date: Wednesday, February 7, 2024 Time: 11:30 a.m. Eastern Time / 8:30 a.m. Pacific Time Dial-in: 1-877-407-0789 (Domestic) Conference ID: 13743993 Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1653011&tp_key=5a8602f7ee
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 7, 2024 through 11:59 p.m. Eastern Time on February 14, 2024 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13743993.
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 3, 2023 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, 2023 2022 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 56,178 $ 69,667 Inventories 4,293 4,525 Other current assets 3,758 3,359 Total current assets 64,229 77,551 Property and equipment, net 266 394 Operating lease right-of-use assets 3,319 3,992 Restricted cash 39 79 Deferred tax asset 369 195 Other assets 869 606 Total assets $ 69,091 $ 82,817 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 990 $ 810 Income taxes payable 3,716 2,972 Accrued commissions 2,067 2,943 Other accrued expenses 1,170 1,181 Deferred revenue 6,166 5,597 Amounts held in eWallets 3,945 4,895 Operating lease liabilities 1,146 1,135 Other current liabilities 784 905 Total current liabilities 19,984 20,438 Income taxes payable 5,054 9,098 Deferred tax liability 135 141 Operating lease liabilities 2,318 2,989 Total liabilities 27,491 32,666 Stockholders’ equity: Preferred stock — — Common stock 13 13 Additional paid-in capital 84,695 86,102 Accumulated deficit (17,703 ) (9,056 ) Accumulated other comprehensive loss (1,069 ) (1,004 ) Treasury stock, at cost (24,336 ) (25,904 ) Total stockholders’ equity 41,600 50,151 Total liabilities and stockholders’ equity $ 69,091 $ 82,817
NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended Year Ended December 31, 2023 2022 2023 2022 (Unaudited) (Unaudited) Net sales $ 10,937 $ 12,512 $ 43,924 $ 49,134 Cost of sales 2,789 3,263 11,175 12,661 Gross profit 8,148 9,249 32,749 36,473 Operating expenses: Commissions expense 4,553 5,377 18,414 20,747 Selling, general and administrative expenses 3,837 3,829 16,006 15,996 Total operating expenses 8,390 9,206 34,420 36,743 Income (loss) from operations (242 ) 43 (1,671 ) (270 ) Other income, net 708 400 2,416 872 Income before income taxes 466 443 745 602 Income tax provision 108 255 177 289 Net income $ 358 $ 188 $ 568 $ 313 Net income per common share: Basic $ 0.03 $ 0.02 $ 0.05 $ 0.03 Diluted $ 0.03 $ 0.02 $ 0.05 $ 0.03 Weighted-average number of common shares outstanding: Basic 11,448 11,423 11,436 11,362 Diluted 11,461 11,423 11,456 11,423
NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Year Ended December 31, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: (Unaudited) Net income $ 568 $ 313 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 164 204 Share-based compensation 161 — Noncash lease expense 1,109 1,172 Deferred income taxes (178 ) 90 Changes in assets and liabilities: Inventories 228 680 Other current assets (452 ) 992 Other assets (270 ) (67 ) Accounts payable 181 52 Income taxes payable (3,299 ) (1,404 ) Accrued commissions (866 ) (654 ) Other accrued expenses (4 ) (732 ) Deferred revenue 565 (2,901 ) Amounts held in eWallets (947 ) (1,432 ) Operating lease liabilities (1,119 ) (1,220 ) Other current liabilities (119 ) 55 Net cash used in operating activities (4,278 ) (4,852 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (46 ) (143 ) Net cash used in investing activities (46 ) (143 ) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid (9,215 ) (9,138 ) Net cash used in financing activities (9,215 ) (9,138 ) Effect of exchange rates on cash, cash equivalents and restricted cash 10 (486 ) Net decrease in cash, cash equivalents and restricted cash (13,529 ) (14,619 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 69,746 84,365 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ 56,217 $ 69,746 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Right-of-use assets obtained in exchange for operating lease liabilities $ 147 $ 2,234
CONTACT:
Scott Davidson
What is the ticker symbol for Natural Health Trends Corp.?
The ticker symbol for Natural Health Trends Corp. is NHTC.
What was the fourth quarter revenue for NHTC?
The fourth quarter revenue for NHTC was $10.9 million, which is a 3% increase compared to the third quarter of 2023.
What was the full-year revenue for NHTC?
The full-year revenue for NHTC was $43.9 million, which is an 11% decrease compared to 2022.
What was the operating loss for NHTC in 2023?
The operating loss for NHTC in 2023 was $1.7 million.
What was the net income for NHTC in the fourth quarter of 2023?
The net income for NHTC in the fourth quarter of 2023 was $358,000, or $0.03 per diluted share.
How many active members did NHTC have at December 31, 2023?
NHTC had 32,410 active members at December 31, 2023, which is a 6% decrease compared to September 30, 2023.
What is the cash dividend declared by NHTC?
NHTC declared a quarterly cash dividend of $0.20 per share.
What was the net cash used in operating activities for NHTC in the fourth quarter of 2023?
The net cash used in operating activities for NHTC in the fourth quarter of 2023 was $69,000.
What were the total cash and cash equivalents for NHTC as of December 31, 2023?
The total cash and cash equivalents for NHTC as of December 31, 2023 were $56.2 million.
