Natural Health Trends Reports First Quarter 2023 Financial Results

Natural Health Trends Reports First Quarter 2023 Financial Results

  First year-over-year increase in net sales since the third quarter of 2021 and the second since the third quarter of 2018
  Hong Kong net sales increased 10% compared to the first quarter of 2022
  Fourth consecutive quarter of positive net income
  Declared a quarter cash dividend of $0.20 per share

HONG KONG, May 03, 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 March 31, 2023.

First Quarter 2023 Financial Highlights

  • Revenue of $11.9 million increased 3% compared to $11.5 million in the first quarter of 2022.
  • Operating loss was $394,000 compared to $383,000 in the first quarter of 2022.
  • Net income was $257,000, or $0.02 per diluted share, compared to net loss of $105,000, or $0.01 per diluted share, in the first quarter of 2022.
  • The number of Active Members1 was down slightly to 38,330 at March 31, 2023 compared to 38,660 at December 31, 2022, and decreased 14% compared to 44,490 at March 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.

Management Commentary

“Despite the end of the Zero-Covid policies last December, our experience is that consumers have been slow and gradual to participate in the reopening. In this more positive environment, we are encouraged that our Hong Kong business has shown good progress as revenue increased 3% year-over-year, the first year-over-year increase since the third quarter of 2021 and the second increase since the third quarter of 2018,” commented Chris Sharng, President of Natural Health Trends Corp.

Mr. Sharng continued, “If the current trend of an improving operating environment continues, we are hopeful that our business can benefit from the prospect that people are more willing to meet, gather and travel, all important activities to how we facilitate our business development.”

Balance Sheet and Cash Flow

  • Net cash used in operating activities was $696,000 in the first quarter of 2023, compared to net cash used in operating activities of $2.3 million in the first quarter of 2022.
  • Total cash and cash equivalents were $66.6 million at March 31, 2023, down from $69.7 million at December 31, 2022.
  • On May 1, 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 May 26, 2023 to stockholders of record as of May 16, 2023.

First Quarter 2023 Financial Results Conference Call

Management will host a conference call to discuss the first quarter 2023 financial results today, Wednesday, May 3, 2023 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date: Wednesday, May 3, 2023
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: 13737199
Webcast: https://viavid.webcasts.com/starthere.jsp?ei=1605531&tp_key=86671cf781

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 May 3, 2023 through 11:59 p.m. Eastern Time on May 10, 2023 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13737199.

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) 

    March 31, 2023     December 31, 2022  
    (Unaudited)          
ASSETS                
Current assets:                
Cash and cash equivalents   $ 66,610     $ 69,667  
Inventories     4,982       4,525  
Other current assets     3,420       3,359  
Total current assets     75,012       77,551  
Property and equipment, net     354       394  
Operating lease right-of-use assets     3,909       3,992  
Restricted cash     38       79  
Deferred tax asset     253       195  
Other assets     616       606  
Total assets   $ 80,182     $ 82,817  
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable   $ 1,147     $ 810  
Income taxes payable     3,012       2,972  
Accrued commissions     2,470       2,943  
Other accrued expenses     1,105       1,181  
Deferred revenue     5,617       5,597  
Amounts held in eWallets     4,657       4,895  
Operating lease liabilities     1,158       1,135  
Other current liabilities     859       905  
Total current liabilities     20,025       20,438  
Income taxes payable     9,098       9,098  
Deferred tax liability     140       141  
Operating lease liabilities     2,869       2,989  
Total liabilities     32,132       32,666  
Stockholders’ equity:                
Preferred stock            
Common stock     13       13  
Additional paid-in capital     84,519       86,102  
Accumulated deficit     (11,103 )     (9,056 )
Accumulated other comprehensive loss     (1,104 )     (1,004 )
Treasury stock, at cost     (24,275 )     (25,904 )
Total stockholders’ equity     48,050       50,151  
Total liabilities and stockholders’ equity   $ 80,182     $ 82,817  

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

    Three Months Ended March 31,  
    2023     2022  
Net sales   $ 11,861     $ 11,546  
Cost of sales     3,031       2,908  
Gross profit     8,830       8,638  
Operating expenses:                
Commissions expense     4,992       4,740  
Selling, general and administrative expenses     4,232       4,281  
Total operating expenses     9,224       9,021  
Loss from operations     (394 )     (383 )
Other income, net     681       110  
Income (loss) before income taxes     287       (273 )
Income tax provision (benefit)     30       (168 )
Net income (loss)   $ 257     $ (105 )
Net income (loss) per common share:                
Basic   $ 0.02     $ (0.01 )
Diluted   $ 0.02     $ (0.01 )
Weighted average common shares outstanding:                
Basic     11,424       11,254  
Diluted     11,428       11,254  

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

    Three Months Ended March 31,  
    2023     2022  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net income (loss)   $ 257     $ (105 )
Adjustments to reconcile net income (loss) to net cash used in operating activities:                
Depreciation and amortization     46       53  
Share-based compensation     46        
Noncash lease expense     280       302  
Deferred income taxes     (57 )     (9 )
Changes in assets and liabilities:                
Inventories     (490 )     350  
Other current assets     (78 )     (332 )
Other assets     (18 )     (3 )
Accounts payable     338       64  
Income taxes payable     40       53  
Accrued commissions     (465 )     (1,129 )
Other accrued expenses     (76 )     (592 )
Deferred revenue     43       (447 )
Amounts held in eWallets     (215 )     (253 )
Operating lease liabilities     (301 )     (296 )
Other current liabilities     (46 )     (4 )
Net cash used in operating activities     (696 )     (2,348 )
CASH FLOWS FROM INVESTING ACTIVITIES:                
Purchases of property and equipment     (7 )     (40 )
Net cash used in investing activities     (7 )     (40 )
CASH FLOWS FROM FINANCING ACTIVITIES:                
Dividends paid     (2,304 )     (2,285 )
Net cash used in financing activities     (2,304 )     (2,285 )
Effect of exchange rates on cash, cash equivalents and restricted cash     (91 )     (228 )
Net decrease in cash, cash equivalents and restricted cash     (3,098 )     (4,901 )
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period     69,746       84,365  
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period   $ 66,648     $ 79,464  
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:                
Right-of-use assets obtained in exchange for operating lease liabilities   $ (78 )   $  

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
investor.relations@nhtglobal.com

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