Natural Health Trends Corporation

10/30/2024 | Press release | Distributed by Public on 10/30/2024 07:11

Natural Health Trends Reports Third Quarter 2024 Financial Results Form 8 K

Natural Health Trends Reports Third Quarter 2024 Financial Results

- Total net sales increased sequentially and year-over-year during the third quarter of 2024
- Improved operating bottom line for three consecutive quarters
- Generated cash flows from operations before 2017 Tax Act installment of $514,000 during the first nine months of 2024
- Declared a quarterly cash dividend of $0.20 per share

HONG KONG - October 30, 2024 - 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, 2024.

Third Quarter 2024 Financial Highlights

Revenue of $10.7 million increased 1% compared to $10.6 million in the third quarter of 2023.

Operating loss was $275,000 compared to $292,000 in the third quarter of 2023.

Net income was $35,000, or breakeven per diluted share, compared to $172,000, or $0.02 per diluted share, in the third quarter of 2023. The decrease was attributable to lower interest income and higher effective tax rate as compared to the third quarter of 2023.

The number of Active Members1 was down 1% to 30,880 at September 30, 2024 compared to 31,110 at June 30, 2024, and decreased 11% compared to 34,660 at September 30, 2023.

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-Date2024Financial Highlights

Revenue of $32.1 million decreased 3% compared to $33.0 million in the first nine months of 2023.

Operating loss improved to $878,000 compared to $1.4 million in the first nine months of 2023.

Net income was $396,000, or $0.03 per diluted share, compared to $210,000, or $0.02 per diluted share, in the first nine months of 2023.

Management Commentary

"Consumer spending in our main market continues to be weak. However, we still managed to achieve sequential growth in net sales, as well as a year-over-year improvement in the third quarter. While the pace of growth is not where we'd like it to be, our customers and leaders continue to demonstrate strong engagement, and we are working closely with them to navigate these changing times with trainings, product roadshows and new products to help drive growth and expand their customer base," commented Chris Sharng, President of Natural Health Trends Corp.

Mr. Sharng continued, "Our ability to adapt, adjust programs, and fine-tune our plans has been instrumental in supporting our customer base while also acting in the best interests of our shareholders. We are maintaining attentive focus on cost control, including expense management, inventory, and product optimization, to ensure the company remains positioned for future success."

1

Balance Sheet and Cash Flow

Net cash used in operating activities was $3.5 million in the first nine months of 2024 compared to $4.2 million in the first nine months of 2023. Before tax installment payments, the liability of which arises from the 2017 U.S. Tax Cuts and Jobs Act (the "Tax Act"), cash provided by operating activities was $514,000 in the first nine months 2024, versus cash used in operating activities of $1.2 million in the comparable period a year ago. Of the total Tax Act liability of $20.2 million, $15.1 million has been paid to date.

Total cash, cash equivalents and marketable securities were $46.3 million at September 30, 2024, down from $48.7 million at June 30, 2024.

On October 28, 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 November 22, 2024 to stockholders of record as of November 12, 2024.

Third Quarter 2024 Financial Results Conference Call

Management will host a conference call to discuss the third quarter 2024 financial results today, Wednesday, October 30, 2024 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date:

Wednesday, October 30, 2024

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:

13749004

Webcast:

https://viavid.webcasts.com/starthere.jsp?ei=1689949&tp_key=eea2c2882e

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 October 30, 2024 through 11:59 p.m. Eastern Time on November 6, 2024 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13749004.

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 February 28, 2024 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

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

[email protected]

3

NATURAL HEALTH TRENDS CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

September 30, 2024

December 31, 2023

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$ 22,899 $ 56,178

Marketable securities

23,429 -

Inventories

3,684 4,293

Other current assets

3,830 3,758

Total current assets

53,842 64,229

Property and equipment, net

205 266

Operating lease right-of-use assets

2,784 3,319

Restricted cash

38 39

Deferred tax asset

307 369

Other assets

1,115 869

Total assets

$ 58,291 $ 69,091

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$ 548 $ 990

Income taxes payable

5,032 3,716

Accrued commissions

2,029 2,067

Other accrued expenses

1,350 1,170

Deferred revenue

6,832 6,166

Amounts held in eWallets

3,458 3,945

Operating lease liabilities

1,191 1,146

Other current liabilities

672 784

Total current liabilities

21,112 19,984

Income taxes payable

- 5,054

Deferred tax liability

135 135

Operating lease liabilities

1,739 2,318

Total liabilities

22,986 27,491

Stockholders' equity:

Preferred stock

- -

Common stock

13 13

Additional paid-in capital

84,865 84,695

Accumulated deficit

(24,216 ) (17,703 )

Accumulated other comprehensive loss

(960 ) (1,069 )

Treasury stock, at cost

(24,397 ) (24,336 )

Total stockholders' equity

35,305 41,600

Total liabilities and stockholders' equity

$ 58,291 $ 69,091
4

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,

2024

2023

2024

2023

Net sales

$ 10,691 $ 10,615 $ 32,117 $ 32,987

Cost of sales

2,765 2,689 8,376 8,386

Gross profit

7,926 7,926 23,741 24,601

Operating expenses:

Commissions expense

4,333 4,361 13,022 13,861

Selling, general and administrative expenses

3,868 3,857 11,597 12,169

Total operating expenses

8,201 8,218 24,619 26,030

Loss from operations

(275 ) (292 ) (878 ) (1,429 )

Other income, net

441 585 1,523 1,708

Income before income taxes

166 293 645 279

Income tax provision

131 121 249 69

Net income

$ 35 $ 172 $ 396 $ 210

Net income per common share:

Basic

$ 0.00 $ 0.02 $ 0.03 $ 0.02

Diluted

$ 0.00 $ 0.02 $ 0.03 $ 0.02

Weighted average common shares outstanding:

Basic

11,471 11,440 11,464 11,432

Diluted

11,490 11,454 11,488 11,449
5

NATURAL HEALTH TRENDS CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In thousands)

Nine Months Ended September 30,

2024

2023

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$ 396 $ 210

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

Depreciation and amortization

100 130

Net accretion of marketable securities

(350 ) -

Share-based compensation

109 123

Noncash lease expense

825 830

Deferred income taxes

62 (117 )

Changes in assets and liabilities:

Inventories

619 (420 )

Other current assets

(110 ) (425 )

Other assets

(250 ) (92 )

Accounts payable

(441 ) (141 )

Income taxes payable

(3,738 ) (2,923 )

Accrued commissions

(34 ) (315 )

Other accrued expenses

179 (58 )

Deferred revenue

641 674

Amounts held in eWallets

(501 ) (725 )

Operating lease liabilities

(851 ) (812 )

Other current liabilities

(111 ) (148 )

Net cash used in operating activities

(3,455 ) (4,209 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(37 ) (32 )

Purchases of marketable securities

(44,839 ) -

Proceeds from maturities of marketable securities

21,786 -

Net cash used in investing activities

(23,090 ) (32 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Dividends paid

(6,909 ) (6,911 )

Net cash used in financing activities

(6,909 ) (6,911 )

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

174 (145 )

Net decrease in cash, cash equivalents and restricted cash

(33,280 ) (11,297 )

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period

56,217 69,746

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period

$ 22,937 $ 58,449

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

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

$ 191 $ 115
6