• Natural Health Trends Reports Fourth Quarter and Full Year 2020 Financial Results

    Source: Nasdaq GlobeNewswire / 10 Feb 2021 09:00:00   America/New_York

    – Fourth quarter revenue of $16.6 million increased 17% compared to the third quarter of 2020 
    – Reduced full year 2020 operating expenses by $9.0 million
    – Third consecutive quarter of positive operating income
    – Generated positive cash flow from operations in the fourth quarter and full year of 2020
    – Declared a quarterly cash dividend of $0.20 per share 

    HONG KONG, Feb. 10, 2021 (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, 2020.

    Fourth Quarter 2020 Financial Highlights

    • Revenue of $16.6 million increased 17% compared to $14.1 million in the third quarter of 2020 and decreased 7% compared to $17.8 million in the fourth quarter of 2019.  
    • Operating income was $1.3 million compared to $668,000 in the third quarter of 2020 and operating loss of $3.2 million in the fourth quarter of 2019. Operating loss for the fourth quarter of 2019 included an impairment charge of $1.8 million upon the early adoption of a new accounting standard pertaining to goodwill that arose from a merger transaction in March 2004.  
    • Net income was $747,000, or $0.07 per diluted share, compared to $635,000, or $0.06 per diluted share, in the third quarter of 2020 and net loss of $2.8 million, or $0.27 per diluted share, in the fourth quarter of 2019.  
    • The number of Active Members1 decreased 2% to 52,230 at December 31, 2020, compared to 53,300 at September 30, 2020, and decreased 9% compared to 57,410 at December 31, 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.

    Full Year 2020 Financial Highlights

    • Revenue of $62.1 million decreased 20% compared to $77.6 million in 2019.  
    • Operating income was $669,000 compared to operating loss of $7.0 million in 2019. Operating loss included a goodwill impairment charge of $1.8 million in 2019.  
    • Net income was $843,000, or $0.07 per diluted share, compared to net loss of $5.6 million, or $0.52 per diluted share, in 2019.

    Management Commentary

    “2020 revenue of $62.1 million decreased 20% compared to $77.6 million in 2019 as elements such as government-mandated travel restrictions, shutdowns and limitations surrounding in-person events and activities hindered our leaders’ ability to conduct business,” commented Chris Sharng, President of Natural Health Trends Corp. “However, for the fourth quarter of 2020, revenue of $16.6 million increased 17% over the third quarter of 2020 with orders improving 14% as restrictions began to ease in our key markets.”

    Mr. Sharng continued, “The cost savings initiatives we implemented in the second half of 2019 resulted in 2020 cost reductions of over $9.0 million year-over-year. As a result, we reported positive operating income for both the full year and the third consecutive quarter which helped fuel positive cash provided by operating activities in 2020.”

    Balance Sheet and Cash Flow

    • Net cash provided by operating activities was $1.9 million in 2020 compared to net cash used in operating activities of $18.6 million in 2019.
    • Total cash and cash equivalents were $92.4 million as of December 31, 2020, down from $96.0 million as of December 31, 2019.     
    • On February 8, 2021, 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 5, 2021 to stockholders of record as of February 23, 2021.

    The Company expects to issue its 2020 audited financial results in late February with its Annual Report on Form 10-K to be filed with the Securities and Exchange Commission. The 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 2020 audited financial results.

    Fourth Quarter and Full Year 2020 Financial Results Conference Call

    Management will host a conference call to discuss the fourth quarter and full year 2020 financial results today, Wednesday, February 10, 2021 at 11:30 a.m. Eastern Time. The conference call details are as follows:

    Date:Wednesday, February 10, 2021
    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:13714821
    Webcast:http://public.viavid.com/index.php?id=142946

    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 10, 2021 through 11:59 p.m. Eastern Time on February 24, 2021 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number:  13714821.

    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.

    NATURAL HEALTH TRENDS CORP.
    CONSOLIDATED BALANCE SHEETS
    (In thousands, except share data) 

     December 31, 
     2020  2019 
        
     (Unaudited)  
    ASSETS       
    Current assets:       
    Cash and cash equivalents$92,367  $96,035 
    Inventories 3,779   6,404 
    Other current assets 3,595   5,936 
    Total current assets 99,741   108,375 
    Property and equipment, net 539   735 
    Operating lease right-of-use assets 3,745   3,135 
    Restricted cash 525   3,390 
    Deferred tax asset 731   2,039 
    Other assets 661   823 
    Total assets$105,942  $118,497 
    LIABILITIES AND STOCKHOLDERS’ EQUITY       
    Current liabilities:       
    Accounts payable$580  $680 
    Income taxes payable 1,481   173 
    Accrued commissions 3,496   2,931 
    Other accrued expenses 1,922   2,387 
    Deferred revenue 3,091   4,506 
    Amounts held in eWallets 8,503   12,938 
    Operating lease liabilities 1,163   1,655 
    Other current liabilities 1,270   1,032 
    Total current liabilities 21,506   26,302 
    Income taxes payable 13,748   15,365 
    Deferred tax liability 216   202 
    Operating lease liabilities 2,775   1,564 
    Total liabilities 38,245   43,433 
    Stockholders’ equity:       
    Preferred stock —   — 
    Common stock 13   13 
    Additional paid-in capital 86,102   86,102 
    Retained earnings 7,822   16,117 
    Accumulated other comprehensive loss (336)  (1,264)
    Treasury stock, at cost (25,904)  (25,904)
    Total stockholders’ equity 67,697   75,064 
    Total liabilities and stockholders’ equity$105,942  $118,497 
            

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

     Three Months Ended December 31,  Year Ended December 31, 
     2020  2019  2020  2019 
              
     (Unaudited)  (Unaudited)     
    Net sales$16,595  $17,835  $62,071  $77,614 
    Cost of sales 4,024   5,102   16,990   20,104 
    Gross profit 12,571   12,733   45,081   57,510 
    Operating expenses:               
    Commissions expense 6,868   7,291   26,204   35,549 
    Selling, general and administrative expenses 4,437   6,924   18,208   27,220 
    Goodwill impairment —   1,764   —   1,764 
    Total operating expenses 11,305   15,979   44,412   64,533 
    Income (loss) from operations 1,266   (3,246)  669   (7,023)
    Other income, net 218   298   821   1,426 
    Income (loss) before income taxes 1,484   (2,948)  1,490   (5,597)
    Income tax provision (benefit) 737   (106)  647   14 
    Net income (loss)$747  $(2,842) $843  $(5,611)
    Net income (loss) per common share:               
    Basic$0.07  $(0.27) $0.08  $(0.52)
    Diluted$0.07  $(0.27) $0.07  $(0.52)
    Weighted-average number of common shares outstanding:               
    Basic 10,777   10,456   10,630   10,871 
    Diluted 11,424   10,456   11,424   10,871 
                    

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

     Year Ended December 31, 
     2020  2019 
            
    CASH FLOWS FROM OPERATING ACTIVITIES: (Unaudited)     
    Net income (loss)$843  $(5,611)
    Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:       
    Depreciation and amortization 410   387 
    Noncash lease expense 1,532   1,760 
    Deferred income taxes 1,339   (820)
    Goodwill impairment —   1,764 
    Changes in assets and liabilities:       
    Inventories 2,700   5,820 
    Other current assets 2,322   (554)
    Other assets 181   — 
    Accounts payable (102)  (953)
    Income taxes payable (311)  (1,731)
    Accrued commissions 566   (9,598)
    Other accrued expenses (471)  (2,797)
    Deferred revenue (1,433)  (2,315)
    Amounts held in eWallets (4,491)  (1,742)
    Operating lease liabilities (1,427)  (1,807)
    Other current liabilities 227   (108)
    Long-term incentive —   (333)
    Net cash provided by (used in) operating activities 1,885   (18,638)
    CASH FLOWS FROM INVESTING ACTIVITIES:       
    Purchases of property and equipment (211)  (189)
    Net cash used in investing activities (211)  (189)
    CASH FLOWS FROM FINANCING ACTIVITIES:       
    Repurchase of common stock —   (10,117)
    Dividends paid (9,138)  (7,344)
    Net cash used in financing activities (9,138)  (17,461)
    Effect of exchange rates on cash, cash equivalents and restricted cash 931   62 
    Net decrease in cash, cash equivalents and restricted cash (6,533)  (36,226)
    CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 99,425   135,651 
    CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period$92,892  $99,425 
    SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:       
    Issuance of treasury stock for employee awards, net$—  $8,289 
    Right-of-use assets obtained in exchange for operating lease liabilities$2,747  $5,082 
            

    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


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