Natural Health Trends Corp 8-K, filed Feb 7, 2024
Natural Health Trends Corp (NHTC)
About this 8-K
Natural Health Trends Corp filed this 8-K on February 7, 2024.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
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(State or other jurisdiction of incorporation)
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(IRS Employer Identification No.)
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The
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(d)
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Exhibits.
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NATURAL HEALTH TRENDS CORP.
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By:
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/s/ Timothy S. Davidson
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Timothy S. Davidson
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Senior Vice President and Chief Financial Officer
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Exhibit 99.1
Natural Health Trends Reports Fourth Quarter and Full Year 2023 Financial Results
– Fourth quarter revenue of $10.9 million increased 3% compared to the third quarter of 2023
– Cash flows from operations improved $2.0 million year-over-year before tax installment payments
– Declared a quarterly cash dividend of $0.20 per share
HONG KONG – February 7, 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 fourth quarter and full year ended December 31, 2023.
Fourth Quarter 2023 Financial Highlights
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Revenue of $10.9 million increased 3% compared to $10.6 million in the third quarter of 2023 and decreased 13% compared to $12.5 million in the fourth quarter of 2022. |
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Operating loss was $242,000 compared to operating loss of $292,000 in the third quarter of 2023 and operating income of $43,000 in the fourth quarter of 2022. |
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Net income was $358,000, or $0.03 per diluted share, compared to $172,000, or $0.02 per diluted share, in the third quarter of 2023 and $188,000, or $0.02 per diluted share, in the fourth quarter of 2022. |
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The number of Active Members1 were down 6% to 32,410 at December 31, 2023, compared to 34,660 at September 30, 2023, and decreased 16% compared to 38,660 at December 31, 2022. |
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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 2023 Financial Highlights
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Revenue of $43.9 million decreased 11% compared to $49.1 million in 2022. |
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Operating loss was $1.7 million, compared to $270,000 in 2022. |
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Net income was $568,000, or $0.05 per diluted share, compared to $313,000, or $0.03 per diluted share, in 2022. |
Management Commentary
“We managed to achieve a sequential increase in orders despite tepid consumer sentiment in China and price increases in several markets in the quarter. We believe the increased frequency and size of in-person activities contributed to the uptick. We plan to sponsor more such events in the coming months to continue improving the effectiveness of our market campaigns.” commented Chris Sharng, President of Natural Health Trends Corp.
Mr. Sharng continued, “Though under pressure from lingering inflation and stronger dollar, we succeeded in protecting margin and controlling costs. With more emphasis on training in the coming year, we believe we are well positioned to benefit from further volume boost.”
Balance Sheet and Cash Flow
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Net cash used in operating activities was $69,000 in the fourth quarter of 2023, compared net cash provided by operating activities of $938,000 in the fourth quarter of 2022. Net cash used in operating activities was $4.3 million in 2023, compared to $4.9 million in 2022. Before tax installment payments, the liability of which arises from the 2017 U.S. Tax Cuts and Jobs Act (the “Act Act”), cash used in operating activities was $1.2 million in 2023, versus $3.2 million a year ago. Of the total Tax Act liability of $20.2 million, $11.2 million has been paid to date. |
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Total cash and cash equivalents were $56.2 million as of December 31, 2023, down from $69.7 million as of December 31, 2022. |
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On February 5, 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 March 1, 2024 to stockholders of record as of February 20, 2024. |
The Company expects to issue its 2023 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 2023 audited financial results.
Fourth Quarter and Full Year 2023 Financial Results Conference Call
Management will host a conference call to discuss the fourth quarter and full year 2023 financial results today, Wednesday, February 7, 2024 at 11:30 a.m. Eastern Time. The conference call details are as follows:
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Wednesday, February 7, 2024 |
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Time: |
11:30 a.m. Eastern Time / 8:30 a.m. Pacific Time |
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Dial-in: |
1-877-407-0789 (Domestic) 1-201-689-8562 (International) |
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Conference ID: |
13743993 |
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Webcast: |
https://viavid.webcasts.com/starthere.jsp?ei=1653011&tp_key=5a8602f7ee |
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 7, 2024 through 11:59 p.m. Eastern Time on February 14, 2024 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13743993.
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.
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
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
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December 31, |
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2023 |
2022 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 56,178 | $ | 69,667 | ||||
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Inventories |
4,293 | 4,525 | ||||||
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Other current assets |
3,758 | 3,359 | ||||||
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Total current assets |
64,229 | 77,551 | ||||||
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Property and equipment, net |
266 | 394 | ||||||
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Operating lease right-of-use assets |
3,319 | 3,992 | ||||||
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Restricted cash |
39 | 79 | ||||||
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Deferred tax asset |
369 | 195 | ||||||
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Other assets |
869 | 606 | ||||||
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Total assets |
$ | 69,091 | $ | 82,817 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 990 | $ | 810 | ||||
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Income taxes payable |
3,716 | 2,972 | ||||||
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Accrued commissions |
2,067 | 2,943 | ||||||
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Other accrued expenses |
1,170 | 1,181 | ||||||
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Deferred revenue |
6,166 | 5,597 | ||||||
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Amounts held in eWallets |
3,945 | 4,895 | ||||||
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Operating lease liabilities |
1,146 | 1,135 | ||||||
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Other current liabilities |
784 | 905 | ||||||
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Total current liabilities |
19,984 | 20,438 | ||||||
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Income taxes payable |
5,054 | 9,098 | ||||||
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Deferred tax liability |
135 | 141 | ||||||
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Operating lease liabilities |
2,318 | 2,989 | ||||||
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Total liabilities |
27,491 | 32,666 | ||||||
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Stockholders’ equity: |
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Preferred stock |
— | — | ||||||
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Common stock |
13 | 13 | ||||||
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Additional paid-in capital |
84,695 | 86,102 | ||||||
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Accumulated deficit |
(17,703 | ) | (9,056 | ) | ||||
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Accumulated other comprehensive loss |
(1,069 | ) | (1,004 | ) | ||||
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Treasury stock, at cost |
(24,336 | ) | (25,904 | ) | ||||
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Total stockholders’ equity |
41,600 | 50,151 | ||||||
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Total liabilities and stockholders’ equity |
$ | 69,091 | $ | 82,817 | ||||
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
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Three Months Ended December 31, |
Year Ended December 31, |
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2023 |
2022 |
2023 |
2022 |
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(Unaudited) |
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Net sales |
$ | 10,937 | $ | 12,512 | $ | 43,924 | $ | 49,134 | ||||||||
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Cost of sales |
2,789 | 3,263 | 11,175 | 12,661 | ||||||||||||
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Gross profit |
8,148 | 9,249 | 32,749 | 36,473 | ||||||||||||
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Operating expenses: |
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Commissions expense |
4,553 | 5,377 | 18,414 | 20,747 | ||||||||||||
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Selling, general and administrative expenses |
3,837 | 3,829 | 16,006 | 15,996 | ||||||||||||
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Total operating expenses |
8,390 | 9,206 | 34,420 | 36,743 | ||||||||||||
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Income (loss) from operations |
(242 | ) | 43 | (1,671 | ) | (270 | ) | |||||||||
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Other income, net |
708 | 400 | 2,416 | 872 | ||||||||||||
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Income before income taxes |
466 | 443 | 745 | 602 | ||||||||||||
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Income tax provision |
108 | 255 | 177 | 289 | ||||||||||||
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Net income |
$ | 358 | $ | 188 | $ | 568 | $ | 313 | ||||||||
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Net income per common share: |
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Basic |
$ | 0.03 | $ | 0.02 | $ | 0.05 | $ | 0.03 | ||||||||
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Diluted |
$ | 0.03 | $ | 0.02 | $ | 0.05 | $ | 0.03 | ||||||||
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Weighted-average number of common shares outstanding: |
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Basic |
11,448 | 11,423 | 11,436 | 11,362 | ||||||||||||
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Diluted |
11,461 | 11,423 | 11,456 | 11,423 | ||||||||||||
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
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Year Ended December 31, |
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2023 |
2022 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
(Unaudited) | |||||||
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Net income |
$ | 568 | $ | 313 | ||||
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Adjustments to reconcile net income to net cash used in operating activities: |
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Depreciation and amortization |
164 | 204 | ||||||
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Share-based compensation |
161 | — | ||||||
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Noncash lease expense |
1,109 | 1,172 | ||||||
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Deferred income taxes |
(178 | ) | 90 | |||||
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Changes in assets and liabilities: |
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Inventories |
228 | 680 | ||||||
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Other current assets |
(452 | ) | 992 | |||||
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Other assets |
(270 | ) | (67 | ) | ||||
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Accounts payable |
181 | 52 | ||||||
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Income taxes payable |
(3,299 | ) | (1,404 | ) | ||||
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Accrued commissions |
(866 | ) | (654 | ) | ||||
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Other accrued expenses |
(4 | ) | (732 | ) | ||||
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Deferred revenue |
565 | (2,901 | ) | |||||
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Amounts held in eWallets |
(947 | ) | (1,432 | ) | ||||
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Operating lease liabilities |
(1,119 | ) | (1,220 | ) | ||||
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Other current liabilities |
(119 | ) | 55 | |||||
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Net cash used in operating activities |
(4,278 | ) | (4,852 | ) | ||||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchases of property and equipment |
(46 | ) | (143 | ) | ||||
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Net cash used in investing activities |
(46 | ) | (143 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Dividends paid |
(9,215 | ) | (9,138 | ) | ||||
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Net cash used in financing activities |
(9,215 | ) | (9,138 | ) | ||||
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Effect of exchange rates on cash, cash equivalents and restricted cash |
10 | (486 | ) | |||||
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Net decrease in cash, cash equivalents and restricted cash |
(13,529 | ) | (14,619 | ) | ||||
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period |
69,746 | 84,365 | ||||||
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
$ | 56,217 | $ | 69,746 | ||||
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SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: |
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Right-of-use assets obtained in exchange for operating lease liabilities |
$ | 147 | $ | 2,234 | ||||