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Natural Health Trends Reports First Quarter 2021 Financial Results

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  • Fourth consecutive quarter of positive operating income and net income
  • Strong balance sheet with ample liquidity and $90.2 million in cash and cash equivalents
  • Second consecutive quarter of positive cash flow from operations
  • Achieved strong sales momentum in Japan, India, Peru, Europe and Malaysia
  • Declared a quarterly cash dividend of $0.20 per share

HONG KONG, May 05, 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 quarter ended March 31, 2021.

First Quarter 2021 Financial Highlights

  • Revenue of $13.5 million decreased 10% compared to $14.9 million in the first quarter of 2020 due to a $1.1 million increase in deferred revenue which the Company expects to recognize as revenue in the second quarter of 2021. Orders taken were relatively consistent with the first quarter of 2020.

  • Operating income was $220,000 compared to an operating loss of $1.4 million in the first quarter of 2020.

  • Net income was $153,000, or $0.01 per diluted share, compared to a net loss of $573,000, or $0.05 per diluted share, in the first quarter of 2020.

  • The number of Active Members1 decreased 5% to 49,420 at March 31, 2021 compared to 52,230 at December 31, 2020, and decreased 13% compared to 56,490 at March 31, 2020.

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

"Following a highly productive January, severe government-mandated restrictions and limitations surrounding in-person events and the Chinese New Year holiday restricted our leaders from properly conducting business," commented Chris Sharng, President of Natural Health Trends Corp.

Mr. Sharng continued, "That said, our first quarter order trends sustained positive momentum with order volume approaching levels achieved in the prior year quarter. A strong contributor to our order volume was our January in-person training event which attracted nearly 700 participants. We also saw notable progress in Japan, India, Peru, Europe and Malaysia which all experienced strong top-line growth year-over-year. In an effort to further boost sales, we began the implementation of social selling in select markets to raise awareness and knowledge of our product lines and business opportunity. In addition, our diligent expense management resulted in our fourth consecutive quarter of positive operating income and net income, in addition to our second consecutive quarter of positive cash flow generation."

Mr. Sharng concluded, "Despite having to delay our second Fly-High training to April, the event was successful and exceeded the attendance of our January event with follow-up marketing activities already well underway. Next, we expect to hold our first major in-person event since the beginning of the pandemic in Macau in June, where we intend to introduce a new wellness product, Time Release Ultra B Complex, to an audience of over 1,500. As we continue to emerge from the pandemic, we believe we are well-positioned to begin the process of safely resuming our normal business operations as the economy recovers."

Balance Sheet and Cash Flow

  • Net cash provided by operating activities was $414,000 in the first quarter of 2021, compared to cash used of $990,000 in the first quarter of 2020.

  • Total cash and cash equivalents were $90.2 million at March 31, 2021, down slightly from $92.4 million at December 31, 2020.

  • On May 3, 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 May 28, 2021 to stockholders of record as of May 18, 2021.

First Quarter 2021 Financial Results Conference Call

Management will host a conference call to discuss the first quarter 2021 financial results today, Wednesday, May 5, 2021 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date: Wednesday, May 5, 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: 13718088
Webcast: http://public.viavid.com/index.php?id=144114

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 5, 2021 through 11:59 p.m. Eastern Time on May 19, 2021 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13718088.

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 26, 2021 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, 2021     December 31, 2020  
    (Unaudited)          
ASSETS                
Current assets:                
Cash and cash equivalents   $ 90,214     $ 92,367  
Inventories     3,627       3,779  
Other current assets     3,393       3,595  
Total current assets     97,234       99,741  
Property and equipment, net     521       539  
Operating lease right-of-use assets     3,839       3,745  
Restricted cash     522       525  
Deferred tax asset     721       731  
Other assets     648       661  
Total assets   $ 103,485     $ 105,942  
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
Accounts payable   $ 756     $ 580  
Income taxes payable     1,547       1,481  
Accrued commissions     3,116       3,496  
Other accrued expenses     1,670       1,922  
Deferred revenue     4,169       3,091  
Amounts held in eWallets     7,754       8,503  
Operating lease liabilities     1,252       1,163  
Other current liabilities     1,125       1,270  
Total current liabilities     21,389       21,506  
Income taxes payable     13,748       13,748  
Deferred tax liability     216       216  
Operating lease liabilities     2,756       2,775  
Total liabilities     38,109       38,245  
Stockholders' equity:                
Preferred stock            
Common stock     13       13  
Additional paid-in capital     86,102       86,102  
Retained earnings     5,690       7,822  
Accumulated other comprehensive loss     (525 )     (336 )
Treasury stock, at cost     (25,904 )     (25,904 )
Total stockholders' equity     65,376       67,697  
Total liabilities and stockholders' equity   $ 103,485     $ 105,942  
                 

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

    Three Months Ended March 31,  
    2021     2020  
Net sales   $ 13,469     $ 14,948  
Cost of sales     3,255       4,514  
Gross profit     10,214       10,434  
Operating expenses:                
Commissions expense     5,514       6,603  
Selling, general and administrative expenses     4,480       5,279  
Total operating expenses     9,994       11,882  
Income (loss) from operations     220       (1,448 )
Other income, net     20       93  
Income (loss) before income taxes     240       (1,355 )
Income tax provision (benefit)     87       (782 )
Net income (loss)   $ 153     $ (573 )
Net income (loss) per common share:                
Basic   $ 0.01     $ (0.05 )
Diluted   $ 0.01     $ (0.05 )
Weighted average common shares outstanding:                
Basic     10,874       10,483  
Diluted     11,424       10,483  
                 

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

    Three Months Ended March 31,  
    2021     2020  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net income (loss)   $ 153     $ (573 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                
Depreciation and amortization     79       95  
Noncash lease expense     294       418  
Deferred income taxes     9       869  
Changes in assets and liabilities:                
Inventories     123       1,001  
Other current assets     195       (1,033 )
Other assets     2       52  
Accounts payable     176       168  
Income taxes payable     67       (164 )
Accrued commissions     (344 )     (528 )
Other accrued expenses     (245 )     (398 )
Deferred revenue     1,093       (521 )
Amounts held in eWallets     (727 )     (175 )
Operating lease liabilities     (322 )     (440 )
Other current liabilities     (139 )     239  
Net cash provided by (used in) operating activities     414       (990 )
CASH FLOWS FROM INVESTING ACTIVITIES:                
Purchases of property and equipment     (63 )     (12 )
Net cash used in investing activities     (63 )     (12 )
CASH FLOWS FROM FINANCING ACTIVITIES:                
Dividends paid     (2,285 )     (2,285 )
Net cash used in financing activities     (2,285 )     (2,285 )
Effect of exchange rates on cash, cash equivalents and restricted cash     (222 )     (240 )
Net decrease in cash, cash equivalents and restricted cash     (2,156 )     (3,527 )
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period     92,892       99,425  
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period   $ 90,736     $ 95,898  
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:                
Right-of-use assets obtained in exchange for operating lease liabilities   $ 400     $ 194  
                 

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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