NHTC 8-K
Natural Health Trends Corp (NHTC)
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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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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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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 November 3, 2021 | ||
| 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 Third Quarter 2021 Financial Results
| – | Sixth consecutive quarter of positive operating income and net income | |
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Strong balance sheet with ample liquidity |
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Achieved strong sales momentum in Peru, Japan and India |
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| – | Declared a quarterly cash dividend of $0.20 per share |
HONG KONG – November 3, 2021 – 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 September 30, 2021.
Third Quarter 2021 Financial Highlights
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Revenue of $14.3 million decreased 12% compared to $16.2 million in the second quarter of 2021 and increased 1% compared to $14.1 million in the third quarter of 2020. |
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Operating income of $479,000 increased 24% compared to $385,000 in the second quarter of 2021 and decreased 28% compared to $668,000 in the third quarter of 2020. |
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Net income was $471,000, or $0.04 per diluted share, compared to $229,000, or $0.02 per diluted share, in the second quarter of 2021 and $635,000, or $0.06 per diluted share, in the third quarter of 2020. |
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The number of Active Members1 decreased 2% to 45,950 at September 30, 2021 compared to 46,860 at June 30, 2021, and decreased 14% compared to 53,300 at September 30, 2020. |
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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 2021 Financial Highlights
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Revenue of $43.9 million decreased 3% compared to $45.5 million in the first nine months of 2020. |
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Operating income was $1.1 million compared to an operating loss of $597,000 in the first nine months of 2020. |
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Net income was $853,000, or $0.07 per diluted share, compared to net income of $96,000, or $0.01 per diluted share, in the first nine months of 2020. |
Management Commentary
“During the third quarter our leaders continued to face challenges in conducting their business following renewed government-mandated restrictions and shutdowns amid scattered outbreaks in COVID-19 cases. The quarter marked the first quarter since the beginning of the pandemic we were unable to sponsor in-person member events in China, Macau or Hong Kong, and we had to abruptly cancel a previously scheduled event in September. Despite these difficult circumstances, we still managed to deliver revenue and order volume growth year-over-year, and our sixth consecutive quarter of positive operating income and net income,” commented Chris Sharng, President of Natural Health Trends Corp. “Revenue of $14.3 million increased 1% compared to the third quarter of 2020 driven by strength in Peru, Japan and India, which all experienced strong top-line growth year-over-year.”
Mr. Sharng continued, “Further, we are pleased to announce the SEC has closed its investigation and the IRS has completed its tax audit. We fully cooperated with the SEC and IRS throughout their respective review processes and we are pleased to put these matters behind us.” Mr. Sharng concluded, “As we continue to navigate the evolving operating environment resulting from the COVID-19 pandemic, we remain highly focused on the fundamentals of our business including supporting our members, maintaining our strong financial disciplines, and operating our business efficiently.”
Balance Sheet and Cash Flow
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Net cash used in operating activities was $557,000 in the first nine months of 2021, compared to net cash used of $1.5 million in the first nine months of 2020. |
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Total cash and cash equivalents were $84.6 million at September 30, 2021, down slightly from $88.1 million at June 30, 2021. |
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On November 1, 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 November 26, 2021 to stockholders of record as of November 16, 2021. |
Third Quarter 2021 Financial Results Conference Call
Management will host a conference call to discuss the third quarter 2021 financial results today, Wednesday, November 3, 2021 at 11:30 a.m. Eastern Time. The conference call details are as follows:
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Date: |
Wednesday, November 3, 2021 |
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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: |
13723871 |
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Webcast: |
http://public.viavid.com/index.php?id=146859 |
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 November 3, 2021 through 11:59 p.m. Eastern Time on November 17, 2021 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13723871.
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.
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
Investor Contact:
ADDO Investor Relations
Tel: 310-829-5400
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
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September 30, 2021 |
December 31, 2020 |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 84,640 | $ | 92,367 | ||||
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Inventories |
4,390 | 3,779 | ||||||
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Other current assets |
4,386 | 3,595 | ||||||
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Total current assets |
93,416 | 99,741 | ||||||
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Property and equipment, net |
463 | 539 | ||||||
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Operating lease right-of-use assets |
3,339 | 3,745 | ||||||
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Restricted cash |
524 | 525 | ||||||
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Deferred tax asset |
660 | 731 | ||||||
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Other assets |
574 | 661 | ||||||
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Total assets |
$ | 98,976 | $ | 105,942 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 879 | $ | 580 | ||||
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Income taxes payable |
1,844 | 1,481 | ||||||
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Accrued commissions |
3,441 | 3,496 | ||||||
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Other accrued expenses |
1,758 | 1,922 | ||||||
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Deferred revenue |
6,038 | 3,091 | ||||||
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Amounts held in eWallets |
6,756 | 8,503 | ||||||
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Operating lease liabilities |
1,304 | 1,163 | ||||||
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Other current liabilities |
847 | 1,270 | ||||||
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Total current liabilities |
22,867 | 21,506 | ||||||
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Income taxes payable |
12,130 | 13,748 | ||||||
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Deferred tax liability |
215 | 216 | ||||||
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Operating lease liabilities |
2,209 | 2,775 | ||||||
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Total liabilities |
37,421 | 38,245 | ||||||
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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 |
86,102 | 86,102 | ||||||
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Retained earnings |
1,820 | 7,822 | ||||||
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Accumulated other comprehensive loss |
(476 | ) | (336 | ) | ||||
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Treasury stock, at cost |
(25,904 | ) | (25,904 | ) | ||||
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Total stockholders’ equity |
61,555 | 67,697 | ||||||
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Total liabilities and stockholders’ equity |
$ | 98,976 | $ | 105,942 | ||||
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
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Three Months Ended September 30, |
Nine Months Ended September 30, |
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2021 |
2020 |
2021 |
2020 |
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Net sales |
$ | 14,276 | $ | 14,124 | $ | 43,897 | $ | 45,476 | ||||||||
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Cost of sales |
3,668 | 3,635 | 10,857 | 12,966 | ||||||||||||
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Gross profit |
10,608 | 10,489 | 33,040 | 32,510 | ||||||||||||
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Operating expenses: |
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Commissions expense |
6,027 | 5,620 | 18,468 | 19,336 | ||||||||||||
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Selling, general and administrative expenses |
4,102 | 4,201 | 13,488 | 13,771 | ||||||||||||
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Total operating expenses |
10,129 | 9,821 | 31,956 | 33,107 | ||||||||||||
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Income (loss) from operations |
479 | 668 | 1,084 | (597 | ) | |||||||||||
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Other income (expense), net |
(53 | ) | 385 | (92 | ) | 603 | ||||||||||
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Income before income taxes |
426 | 1,053 | 992 | 6 | ||||||||||||
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Income tax provision (benefit) |
(45 | ) | 418 | 139 | (90 | ) | ||||||||||
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Net income |
$ | 471 | $ | 635 | $ | 853 | $ | 96 | ||||||||
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Net income per common share: |
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Basic |
$ | 0.04 | $ | 0.06 | $ | 0.08 | $ | 0.01 | ||||||||
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Diluted |
$ | 0.04 | $ | 0.06 | $ | 0.07 | $ | 0.01 | ||||||||
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Weighted average common shares outstanding: |
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Basic |
11,063 | 10,678 | 10,969 | 10,581 | ||||||||||||
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Diluted |
11,424 | 11,424 | 11,424 | 11,424 | ||||||||||||
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
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Nine Months Ended September 30, |
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2021 |
2020 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
$ | 853 | $ | 96 | ||||
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Adjustments to reconcile net income to net cash used in operating activities: |
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Depreciation and amortization |
237 | 301 | ||||||
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Noncash lease expense |
895 | 1,199 | ||||||
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Deferred income taxes |
66 | 979 | ||||||
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Changes in assets and liabilities: |
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Inventories |
(675 | ) | 2,193 | |||||
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Other current assets |
(823 | ) | 923 | |||||
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Other assets |
65 | 120 | ||||||
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Accounts payable |
300 | 206 | ||||||
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Income taxes payable |
(1,253 | ) | (1,790 | ) | ||||
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Accrued commissions |
29 | 136 | ||||||
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Other accrued expenses |
(157 | ) | (598 | ) | ||||
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Deferred revenue |
2,973 | (1,045 | ) | |||||
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Amounts held in eWallets |
(1,716 | ) | (3,163 | ) | ||||
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Operating lease liabilities |
(935 | ) | (1,120 | ) | ||||
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Other current liabilities |
(416 | ) | 33 | |||||
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Net cash used in operating activities |
(557 | ) | (1,530 | ) | ||||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchases of property and equipment |
(165 | ) | (147 | ) | ||||
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Net cash used in investing activities |
(165 | ) | (147 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Dividends paid |
(6,855 | ) | (6,855 | ) | ||||
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Net cash used in financing activities |
(6,855 | ) | (6,855 | ) | ||||
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Effect of exchange rates on cash, cash equivalents and restricted cash |
(151 | ) | 413 | |||||
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Net decrease in cash, cash equivalents and restricted cash |
(7,728 | ) | (8,119 | ) | ||||
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period |
92,892 | 99,425 | ||||||
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
$ | 85,164 | $ | 91,306 | ||||
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SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: |
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Right-of-use assets obtained in exchange for operating lease liabilities |
$ | 516 | $ | 2,724 | ||||