Natural Health Trends Reports Third Quarter 2023 Financial Results
Natural Health Trends Corp. (NASDAQ: NHTC) announced its financial results for the third quarter of 2023. Despite headwinds of a stronger dollar and consumer sentiment, total orders remained flat. Cash flows from operations improved by $1.4 million. The company declared a quarterly cash dividend of $0.20 per share.
Positive
Cash flows from operations improved by $1.4 million.
Declared a quarterly cash dividend of $0.20 per share.
Negative
Total orders taken were roughly flat despite headwinds of a stronger dollar and consumer sentiment.
11/01/2023 - 09:00 AM
Total orders taken were roughly flat despite continued headwinds of a stronger dollar and trepid consumer sentiment Cash flows from operations improved $1.4 million Declared a quarterly cash dividend of $0.20 per share HONG KONG, Nov. 01, 2023 (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 quarter ended September 30, 2023.
Third Quarter 2023 Financial Highlights
Revenue of $10.6 million decreased 9% compared to $11.7 million in the third quarter of 2022. The decrease in revenue was primarily due to the changes in deferred revenue in the two respective quarters. Deferred revenue decreased $603,000 and $1.4 million during the third quarter of 2023 and 2022, respectively, resulting in an $835,000 unfavorable revenue variance. Operating loss was $292,000 compared to $145,000 in the third quarter of 2022. Net income was $172,000 , or $0.02 per diluted share, compared to $47,000 , or breakeven per diluted share, in the third quarter of 2022. The number of Active Members1 was down 6% to 34,660 at September 30, 2023 compared to 36,730 at June 30, 2023, and decreased 16% compared to 41,170 at September 30, 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.
Year-to-Date 2023 Financial Highlights
Revenue of $33.0 million decreased 10% compared to $36.6 million in the first nine months of 2022. The revenue decrease was primarily due to the changes in deferred revenue in the two respective nine-month periods. Deferred revenue increased $651,000 during the first nine months of 2023, but decreased $3.3 million during the same period last year, resulting in a $3.9 million unfavorable revenue variance. Operating loss was $1.4 million compared to $313,000 in the first nine months of 2022. Net income was $210,000 , or $0.02 per diluted share, compared to $125,000 , or $0.01 per diluted share, in the first nine months of 2022. Management Commentary
“Adapting to the current environment in which Chinese consumers are reluctant to spend or invest, we managed to generate orders on pace with those of last year. Orders grew 3% at a constant exchange rate compared to the third quarter of 2022, while year-to-date 2023 orders increased 8% compared to prior year. The reported decrease in revenue was largely due to changes in deferred revenue, partly because orders tended to be received later in the quarter this year. Importantly, our members remained responsive to our programs, demonstrating that our promotions, incentives and high-quality product offerings continue to resonate,” commented Chris Sharng, President of Natural Health Trends Corp.
Mr. Sharng continued, “Noteworthy to highlight are the signs of momentum extending to several of our other markets including Taiwan, Peru, North America and Japan, each of which delivered strong performance during the quarter. We’re hopeful that these signs of growth will continue supported by careful planning and execution to our strategies around digital enhancements, new product launches, geographic diversification and superior member support.”
Balance Sheet and Cash Flow
Net cash used in operating activities was $4.2 million in the first nine months of 2023 compared to $5.8 million in the first nine months of 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 the first nine months 2023, versus $4.2 million in the comparable period 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 $58.4 million at September 30, 2023, down from $61.6 million at June 30, 2023. On October 30, 2023, 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 November 24, 2023 to stockholders of record as of November 14, 2023. Third Quarter 2023 Financial Results Conference Call
Management will host a conference call to discuss the third quarter 2023 financial results today, Wednesday, November 1, 2023 at 11:30 a.m. Eastern Time. The conference call details are as follows:
Date: Wednesday, November 1, 2023 Time: 11:30 a.m. Eastern Time / 8:30 a.m. Pacific Time Dial-in: 1-877-407-0789 (Domestic) Conference ID: 13740859 Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1631150&tp_key=ea6cd96ef7
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 November 1, 2023 through 11:59 p.m. Eastern Time on November 8, 2023 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13740859.
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.
CONTACT:
Scott Davidson
NATURAL HEALTH TRENDS CORP. CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
September 30, 2023 December 31, 2022 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 58,412 $ 69,667 Inventories 4,882 4,525 Other current assets 3,675 3,359 Total current assets 66,969 77,551 Property and equipment, net 284 394 Operating lease right-of-use assets 3,549 3,992 Restricted cash 37 79 Deferred tax asset 303 195 Other assets 679 606 Total assets $ 71,821 $ 82,817 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 666 $ 810 Income taxes payable 4,092 2,972 Accrued commissions 2,589 2,943 Other accrued expenses 1,100 1,181 Deferred revenue 6,248 5,597 Amounts held in eWallets 4,154 4,895 Operating lease liabilities 1,182 1,135 Other current liabilities 747 905 Total current liabilities 20,778 20,438 Income taxes payable 5,054 9,098 Deferred tax liability 140 141 Operating lease liabilities 2,539 2,989 Total liabilities 28,511 32,666 Stockholders’ equity: Preferred stock — — Common stock 13 13 Additional paid-in capital 84,657 86,102 Accumulated deficit (15,757 ) (9,056 ) Accumulated other comprehensive loss (1,267 ) (1,004 ) Treasury stock, at cost (24,336 ) (25,904 ) Total stockholders’ equity 43,310 50,151 Total liabilities and stockholders’ equity $ 71,821 $ 82,817
NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share data)
Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net sales $ 10,615 $ 11,716 $ 32,987 $ 36,622 Cost of sales 2,689 3,098 8,386 9,398 Gross profit 7,926 8,618 24,601 27,224 Operating expenses: Commissions expense 4,361 4,863 13,861 15,370 Selling, general and administrative expenses 3,857 3,900 12,169 12,167 Total operating expenses 8,218 8,763 26,030 27,537 Loss from operations (292 ) (145 ) (1,429 ) (313 ) Other income, net 585 187 1,708 472 Income before income taxes 293 42 279 159 Income tax provision (benefit) 121 (5 ) 69 34 Net income $ 172 $ 47 $ 210 $ 125 Net income per common share: Basic $ 0.02 $ 0.00 $ 0.02 $ 0.01 Diluted $ 0.02 $ 0.00 $ 0.02 $ 0.01 Weighted average common shares outstanding: Basic 11,440 11,423 11,432 11,341 Diluted 11,454 11,423 11,449 11,423
NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)
Nine Months Ended September 30, 2023 2022 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 210 $ 125 Adjustments to reconcile net income to net cash used in operating activities: Depreciation and amortization 130 156 Share-based compensation 123 — Noncash lease expense 830 889 Deferred income taxes (117 ) (2 ) Changes in assets and liabilities: Inventories (420 ) 140 Other current assets (425 ) 1,000 Other assets (92 ) (44 ) Accounts payable (141 ) 228 Income taxes payable (2,923 ) (1,382 ) Accrued commissions (315 ) (1,055 ) Other accrued expenses (58 ) (540 ) Deferred revenue 674 (3,209 ) Amounts held in eWallets (725 ) (1,150 ) Operating lease liabilities (812 ) (950 ) Other current liabilities (148 ) 4 Net cash used in operating activities (4,209 ) (5,790 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (32 ) (130 ) Net cash used in investing activities (32 ) (130 ) CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid (6,911 ) (6,855 ) Net cash used in financing activities (6,911 ) (6,855 ) Effect of exchange rates on cash, cash equivalents and restricted cash (145 ) (858 ) Net decrease in cash, cash equivalents and restricted cash (11,297 ) (13,633 ) CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 69,746 84,365 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $ 58,449 $ 70,732 SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: Right-of-use assets obtained in exchange for operating lease liabilities $ 115 $ 2,218
What is the stock symbol for Natural Health Trends Corp.?
The stock symbol for Natural Health Trends Corp. is NHTC.
What were the financial highlights for the third quarter of 2023?
Revenue was $10.6 million, a decrease of 9% compared to the same period last year. Operating loss was $292,000. Net income was $172,000, or $0.02 per diluted share. The number of Active Members decreased by 6%.
What were the year-to-date financial highlights for 2023?
Revenue was $33.0 million, a decrease of 10% compared to the same period last year. Operating loss was $1.4 million. Net income was $210,000, or $0.02 per diluted share.
What did the management say about the financial results?
The management mentioned that despite the challenging environment, orders remained on pace with last year. They highlighted signs of growth in several markets and expressed hope for continued growth supported by strategic initiatives.
What was the cash flow and balance sheet situation?
Net cash used in operating activities was $4.2 million in the first nine months of 2023. Total cash and cash equivalents were $58.4 million at September 30, 2023. The company's Board of Directors declared a quarterly cash dividend of $0.20 per share.
When is the conference call to discuss the financial results?
The conference call will be held on Wednesday, November 1, 2023, at 11:30 a.m. Eastern Time.
