8-K
Natural Health Trends Corp (NHTC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
February 9, 2022
Date of Report (Date of earliest event reported)
NATURAL HEALTH TRENDS CORP.
(Exact name of registrant as specified in its charter)
| Delaware | 001-36849 | 59-2705336 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Units 1205-07, 12F, Mira Place Tower A, 132 Nathan Road, Tsimshatsui, Kowloon, Hong Kong
(Address of principal executive offices, including zip code)
+852-3107-0800
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
☐ Emerging growth company
☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.001 per share | NHTC | The NASDAQ Stock Market LLC |
Item 2.02 Results of Operations and Financial Condition.
On February 9, 2022, Natural Health Trends Corp. issued an earnings release announcing its results for the quarter and year ended December 31, 2021. The press release is attached hereto as exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
| (d) | Exhibits. |
|---|---|
| 99.1 Press Release of Natural Health Trends Corp. dated February 9, 2022 | |
| 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: February 9, 2022
| NATURAL HEALTH TRENDS CORP. | |
|---|---|
| By: | /s/ Timothy S. Davidson |
| Timothy S. Davidson | |
| Senior Vice President and Chief Financial Officer |
ex_293748.htm
Exhibit 99.1
Natural Health Trends Reports Fourth Quarter and Full Year 2021 Financial Results
– Fourth quarter revenue of $16.1 million increased 13% compared to the third quarter of 2021
– Seventh consecutive quarter of positive operating income and net income
– Generated positive cash flow from operations in the fourth quarter and full year of 2021
– Declared a quarterly cash dividend of $0.20 per share
HONG KONG – February 9, 2022 – 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, 2021.
Fourth Quarter 2021 Financial Highlights
| • | Revenue of $16.1 million increased 13% compared to $14.3 million in the third quarter of 2021 and decreased 3% compared to $16.6 million in the fourth quarter of 2020. |
|---|---|
| • | Operating income was $487,000 compared to $479,000 in the third quarter of 2021 and $1.3 million in the fourth quarter of 2020. |
| • | Net income was $232,000, or $0.02 per diluted share, compared to $471,000, or $0.04 per diluted share, in the third quarter of 2021 and $747,000, or $0.07 per diluted share, in the fourth quarter of 2020. |
| • | The number of Active Members^1^ were down slightly to 45,760 at December 31, 2021, compared to 45,950 at September 30, 2021, and decreased 12% compared to 52,230 at December 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. |
| --- | --- |
Full Year 2021 Financial Highlights
| • | Revenue of $60.0 million decreased 3% compared to $62.1 million in 2020. |
|---|---|
| • | Operating income was $1.6 million compared to $669,000 in 2020. |
| • | Net income was $1.1 million, or $0.09 per diluted share, compared to $843,000, or $0.07 per diluted share, in 2020. |
Management Commentary
“We were pleased to report fourth quarter revenue of $16.1 million, an increase of 13% over the third quarter of 2021,” commented Chris Sharng, President of Natural Health Trends Corp. “The top-line improvement reflected double-digit growth in order volume given our increased ability to adapt to the ever-changing macroeconomic environment resulting from the pandemic. The increase in order volume resulted in our deferred revenue balance growing by $2.5 million from September 30 to December 31, 2021. Additionally, we reported our seventh consecutive quarter of positive operating income and net income.”
Mr. Sharng continued, “As we look ahead into 2022, the effects of the COVID-19 pandemic, and the associated government-mandated restrictions and lockdowns, will likely continue to present headwinds to our business. However, we believe we can continue to support our order volume due to the unwavering hard work and dedication of our employees, leaders and members, coupled with our ability to quickly respond and adapt to changing market conditions. We are guardedly optimistic we will benefit from a gradual resumption of in-person member events and activities going forward.”
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Balance Sheet and Cash Flow
| • | Net cash provided by operating activities was $1.0 million in 2021 compared to $1.9 million in 2020. |
|---|---|
| • | Total cash and cash equivalents were $83.8 million as of December 31, 2021, down from $92.4 million as of December 31, 2020. |
| • | On February 7, 2022, 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 4, 2022 to stockholders of record as of February 22, 2022. |
The Company expects to issue its 2021 audited financial results in late February with its Annual Report on Form 10-K to be filed with the United States Securities and Exchange Commission. These 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 2021 audited financial results.
Fourth Quarter and Full Year 2021 Financial Results Conference Call
Management will host a conference call to discuss the fourth quarter and full year 2021 financial results today, Wednesday, February 9, 2022 at 11:30 a.m. Eastern Time. The conference call details are as follows:
| Date: | Wednesday, February 9, 2022 |
|---|---|
| Time: | 11:30 a.m. Eastern Time / 8:30 a.m. Pacific Time |
| Dial-in: | 1-877-407-0789 (Domestic)<br><br> <br>1-201-689-8562 (International) |
| Conference ID: | 13726094 |
| Webcast: | https://viavid.webcasts.com/starthere.jsp?ei=1522631&tp_key=580f9875a9 |
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 9, 2022 through 11:59 p.m. Eastern Time on February 23, 2022 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13726094.
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.
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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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NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
| December 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| (Unaudited) | ||||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 83,843 | $ | 92,367 | ||
| Inventories | 5,257 | 3,779 | ||||
| Other current assets | 4,369 | 3,595 | ||||
| Total current assets | 93,469 | 99,741 | ||||
| Property and equipment, net | 463 | 539 | ||||
| Operating lease right-of-use assets | 3,021 | 3,745 | ||||
| Restricted cash | 522 | 525 | ||||
| Deferred tax asset | 309 | 731 | ||||
| Other assets | 571 | 661 | ||||
| Total assets | $ | 98,355 | $ | 105,942 | ||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 761 | $ | 580 | ||
| Income taxes payable | 1,345 | 1,481 | ||||
| Accrued commissions | 3,636 | 3,496 | ||||
| Other accrued expenses | 1,933 | 1,922 | ||||
| Deferred revenue | 8,536 | 3,091 | ||||
| Amounts held in eWallets | 6,341 | 8,503 | ||||
| Operating lease liabilities | 1,239 | 1,163 | ||||
| Other current liabilities | 865 | 1,270 | ||||
| Total current liabilities | 24,656 | 21,506 | ||||
| Income taxes payable | 12,130 | 13,748 | ||||
| Deferred tax liability | 153 | 216 | ||||
| Operating lease liabilities | 1,928 | 2,775 | ||||
| Total liabilities | 38,867 | 38,245 | ||||
| Stockholders’ equity: | ||||||
| Preferred stock | — | — | ||||
| Common stock | 13 | 13 | ||||
| Additional paid-in capital | 86,102 | 86,102 | ||||
| Retained earnings (accumulated deficit) | (231 | ) | 7,822 | |||
| Accumulated other comprehensive loss | (492 | ) | (336 | ) | ||
| Treasury stock, at cost | (25,904 | ) | (25,904 | ) | ||
| Total stockholders’ equity | 59,488 | 67,697 | ||||
| Total liabilities and stockholders’ equity | $ | 98,355 | $ | 105,942 |
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NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | ||||||
| (Unaudited) | (Unaudited) | ||||||||
| Net sales | $ | 16,108 | $ | 16,595 | $ | 60,005 | $ | 62,071 | |
| Cost of sales | 4,153 | 4,024 | 15,010 | 16,990 | |||||
| Gross profit | 11,955 | 12,571 | 44,995 | 45,081 | |||||
| Operating expenses: | |||||||||
| Commissions expense | 7,110 | 6,868 | 25,578 | 26,204 | |||||
| Selling, general and administrative expenses | 4,358 | 4,437 | 17,846 | 18,208 | |||||
| Total operating expenses | 11,468 | 11,305 | 43,424 | 44,412 | |||||
| Income from operations | 487 | 1,266 | 1,571 | 669 | |||||
| Other income (expense), net | 31 | 218 | (61 | ) | 821 | ||||
| Income before income taxes | 518 | 1,484 | 1,510 | 1,490 | |||||
| Income tax provision | 286 | 737 | 425 | 647 | |||||
| Net income | $ | 232 | $ | 747 | $ | 1,085 | $ | 843 | |
| Net income per common share: | |||||||||
| Basic | $ | 0.02 | $ | 0.07 | $ | 0.10 | $ | 0.08 | |
| Diluted | $ | 0.02 | $ | 0.07 | $ | 0.09 | $ | 0.07 | |
| Weighted-average number of common shares outstanding: | |||||||||
| Basic | 11,159 | 10,777 | 11,017 | 10,630 | |||||
| Diluted | 11,424 | 11,424 | 11,424 | 11,424 |
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NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Year Ended December 31, | ||||||
|---|---|---|---|---|---|---|
| 2021 | 2020 | |||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | (Unaudited) | |||||
| Net income | $ | 1,085 | $ | 843 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 299 | 410 | ||||
| Noncash lease expense | 1,163 | 1,532 | ||||
| Deferred income taxes | 362 | 1,339 | ||||
| Changes in assets and liabilities: | ||||||
| Inventories | (1,547 | ) | 2,700 | |||
| Other current assets | (803 | ) | 2,322 | |||
| Other assets | 68 | 181 | ||||
| Accounts payable | 182 | (102 | ) | |||
| Income taxes payable | (1,753 | ) | (311 | ) | ||
| Accrued commissions | 212 | 566 | ||||
| Other accrued expenses | 20 | (471 | ) | |||
| Deferred revenue | 5,482 | (1,433 | ) | |||
| Amounts held in eWallets | (2,122 | ) | (4,491 | ) | ||
| Operating lease liabilities | (1,237 | ) | (1,427 | ) | ||
| Other current liabilities | (395 | ) | 227 | |||
| Net cash provided by operating activities | 1,016 | 1,885 | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
| Purchases of property and equipment | (225 | ) | (211 | ) | ||
| Net cash used in investing activities | (225 | ) | (211 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
| Dividends paid | (9,138 | ) | (9,138 | ) | ||
| Net cash used in financing activities | (9,138 | ) | (9,138 | ) | ||
| Effect of exchange rates on cash, cash equivalents and restricted cash | (180 | ) | 931 | |||
| Net decrease in cash, cash equivalents and restricted cash | (8,527 | ) | (6,533 | ) | ||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 92,892 | 99,425 | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 84,365 | $ | 92,892 | ||
| SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | ||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | $ | 472 | $ | 2,747 |
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