Natural Health Trends Corp 8-K, filed Aug 2, 2023
Natural Health Trends Corp (NHTC)
About this 8-K
Natural Health Trends Corp filed this 8-K on August 2, 2023.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
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Date of Report (Date of earliest event reported)
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Emerging growth company
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☐
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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.
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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The
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(d)
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Exhibits.
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| 99.1 | Press Release of Natural Health Trends Corp. dated August 2, 2023 | ||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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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 Second Quarter 2023 Financial Results
| – | Total orders taken were roughly flat despite stronger U.S. dollar, Hong Kong orders increased 5% year-over-year | |
| – | Cash flows from operations before tax installment payment was positive, an improvement from the first quarter | |
| – | Declared a quarterly cash dividend of $0.20 per share |
HONG KONG – August 2, 2023 – 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 June 30, 2023.
Second Quarter 2023 Financial Highlights
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Revenue of $10.5 million decreased 21% compared to $13.4 million in the second quarter of 2022. The decrease in revenue was primarily due to the changes in deferred revenue in the two respective quarters. Deferred revenue increased $1.2 million in the second quarter of 2023 but decreased $1.4 million in the same quarter last year, accounting for $2.6 million of the $2.8 million revenue variance. |
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Operating loss was $743,000 compared to operating income of $215,000 in the second quarter of 2022. |
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Net loss was $219,000, or $0.02 per diluted share, compared to net income of $183,000, or $0.02 per diluted share, in the second quarter of 2022. |
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The number of Active Members1 was down 4% to 36,730 at June 30, 2023 compared to 38,330 at March 31, 2023, and decreased 15% compared to 43,020 at June 30, 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. |
Year-to-Date 2023 Financial Highlights
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Revenue of $22.4 million decreased 10% compared to $24.9 million in the first six months of 2022. The revenue decrease was primarily due to the changes in deferred revenue in the two respective six-month periods. Deferred revenue increased $1.3 million in 2023 but decreased $1.8 million in the same period a year ago, resulting in a $3.1 million revenue variance. |
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Operating loss was $1.1 million compared to $168,000 in the first six months of 2022. |
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Net income was $38,000, or breakeven per diluted share, compared to $78,000, or $0.01 per diluted share, in the first six months of 2022. |
Management Commentary
“Despite tepid consumer sentiment in post zero-Covid China, we were able to generate orders roughly comparable to a year ago as orders in Hong Kong increased 5% year-over-year. However, as most of the orders were received in mid to late June, they did not all ship during the quarter. This late surge in orders followed our first large-scale event in more than three years in Macau where nearly 900 guests attended and we kicked off an incentive that helped bring in more order volume. We’re pleased to see that our events and programs resonate with our members and they positively respond to our initiatives,” commented Chris Sharng, President of Natural Health Trends Corp.
Mr. Sharng continued, “We continue to make progress on key initiatives to drive engagement and improve customer experience. We remain committed and focused on our business essentials of providing top-quality, in-demand products to consumers and supporting our dedicated members and leaders on their NHT Global journey.”
Balance Sheet and Cash Flow
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Net cash used in operating activities was $3.3 million in the first six months of 2023 compared to $3.5 million in the first six months of 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 $307,000 in the first six months 2023, versus $1.9 million in the comparable period a year ago. Of the total Tax Act liability of $20.2 million, $11.1 million has been paid to date. |
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Total cash and cash equivalents were $61.6 million at June 30, 2023, down from $66.6 million at March 31, 2023. |
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On July 31, 2023, 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 August 25, 2023 to stockholders of record as of August 15, 2023. |
Second Quarter 2023 Financial Results Conference Call
Management will host a conference call to discuss the second quarter 2023 financial results today, Wednesday, August 2, 2023 at 11:30 a.m. Eastern Time. The conference call details are as follows:
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Date: |
Wednesday, August 2, 2023 |
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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: |
13739190 |
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Webcast: |
https://viavid.webcasts.com/starthere.jsp?ei=1618885&tp_key=88a2fd9f8e |
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 August 2, 2023 through 11:59 p.m. Eastern Time on August 9, 2023 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13739190.
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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June 30, 2023 |
December 31, 2022 |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 61,567 | $ | 69,667 | ||||
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Inventories |
4,715 | 4,525 | ||||||
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Other current assets |
3,665 | 3,359 | ||||||
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Total current assets |
69,947 | 77,551 | ||||||
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Property and equipment, net |
311 | 394 | ||||||
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Operating lease right-of-use assets |
3,601 | 3,992 | ||||||
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Restricted cash |
38 | 79 | ||||||
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Deferred tax asset |
273 | 195 | ||||||
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Other assets |
646 | 606 | ||||||
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Total assets |
$ | 74,816 | $ | 82,817 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 725 | $ | 810 | ||||
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Income taxes payable |
3,939 | 2,972 | ||||||
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Accrued commissions |
2,562 | 2,943 | ||||||
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Other accrued expenses |
1,235 | 1,181 | ||||||
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Deferred revenue |
6,851 | 5,597 | ||||||
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Amounts held in eWallets |
4,335 | 4,895 | ||||||
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Operating lease liabilities |
1,054 | 1,135 | ||||||
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Other current liabilities |
837 | 905 | ||||||
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Total current liabilities |
21,538 | 20,438 | ||||||
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Income taxes payable |
5,054 | 9,098 | ||||||
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Deferred tax liability |
140 | 141 | ||||||
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Operating lease liabilities |
2,659 | 2,989 | ||||||
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Total liabilities |
29,391 | 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 |
84,558 | 86,102 | ||||||
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Accumulated deficit |
(13,626 | ) | (9,056 | ) | ||||
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Accumulated other comprehensive loss |
(1,245 | ) | (1,004 | ) | ||||
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Treasury stock, at cost |
(24,275 | ) | (25,904 | ) | ||||
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Total stockholders’ equity |
45,425 | 50,151 | ||||||
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Total liabilities and stockholders’ equity |
$ | 74,816 | $ | 82,817 | ||||
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2023 |
2022 |
2023 |
2022 |
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Net sales |
$ | 10,511 | $ | 13,360 | $ | 22,372 | $ | 24,906 | ||||||||
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Cost of sales |
2,666 | 3,392 | 5,697 | 6,300 | ||||||||||||
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Gross profit |
7,845 | 9,968 | 16,675 | 18,606 | ||||||||||||
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Operating expenses: |
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Commissions expense |
4,508 | 5,767 | 9,500 | 10,507 | ||||||||||||
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Selling, general and administrative expenses |
4,080 | 3,986 | 8,312 | 8,267 | ||||||||||||
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Total operating expenses |
8,588 | 9,753 | 17,812 | 18,774 | ||||||||||||
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Income (loss) from operations |
(743 | ) | 215 | (1,137 | ) | (168 | ) | |||||||||
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Other income, net |
442 | 175 | 1,123 | 285 | ||||||||||||
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Income (loss) before income taxes |
(301 | ) | 390 | (14 | ) | 117 | ||||||||||
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Income tax provision (benefit) |
(82 | ) | 207 | (52 | ) | 39 | ||||||||||
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Net income (loss) |
$ | (219 | ) | $ | 183 | $ | 38 | $ | 78 | |||||||
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Net income (loss) per common share: |
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Basic |
$ | (0.02 | ) | $ | 0.02 | $ | 0.00 | $ | 0.01 | |||||||
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Diluted |
$ | (0.02 | ) | $ | 0.02 | $ | 0.00 | $ | 0.01 | |||||||
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Weighted average common shares outstanding: |
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Basic |
11,432 | 11,346 | 11,428 | 11,300 | ||||||||||||
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Diluted |
11,432 | 11,424 | 11,439 | 11,424 | ||||||||||||
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
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Six Months Ended June 30, |
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2023 |
2022 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
$ | 38 | $ | 78 | ||||
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Adjustments to reconcile net income to net cash used in operating activities: |
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Depreciation and amortization |
91 | 106 | ||||||
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Share-based compensation |
85 | — | ||||||
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Noncash lease expense |
564 | 599 | ||||||
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Deferred income taxes |
(82 | ) | 12 | |||||
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Changes in assets and liabilities: |
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Inventories |
(228 | ) | 7 | |||||
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Other current assets |
(362 | ) | 1,002 | |||||
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Other assets |
(52 | ) | 1 | |||||
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Accounts payable |
(82 | ) | 2 | |||||
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Income taxes payable |
(3,076 | ) | (1,390 | ) | ||||
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Accrued commissions |
(374 | ) | (531 | ) | ||||
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Other accrued expenses |
68 | (132 | ) | |||||
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Deferred revenue |
1,270 | (1,788 | ) | |||||
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Amounts held in eWallets |
(541 | ) | (862 | ) | ||||
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Operating lease liabilities |
(595 | ) | (600 | ) | ||||
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Other current liabilities |
(64 | ) | (4 | ) | ||||
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Net cash used in operating activities |
(3,340 | ) | (3,500 | ) | ||||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchases of property and equipment |
(14 | ) | (78 | ) | ||||
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Net cash used in investing activities |
(14 | ) | (78 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Dividends paid |
(4,608 | ) | (4,570 | ) | ||||
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Net cash used in financing activities |
(4,608 | ) | (4,570 | ) | ||||
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Effect of exchange rates on cash, cash equivalents and restricted cash |
(179 | ) | (506 | ) | ||||
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Net decrease in cash, cash equivalents and restricted cash |
(8,141 | ) | (8,654 | ) | ||||
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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 |
$ | 61,605 | $ | 75,711 | ||||
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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 |
$ | (125 | ) | $ | 77 | |||