Natural Health Trends Reports First Quarter 2022 Financial Results

Rhea-AI Summary

Natural Health Trends Corp. (NASDAQ: NHTC) reported a 14% decline in revenue to $11.5 million for Q1 2022, down from $13.5 million in Q1 2021. The company experienced an operating loss of $383,000, contrasting with a $220,000 operating income in the prior year. A net loss of $105,000 was noted, reversing from a net income of $153,000 a year earlier. Active Members dropped 3% to 44,490. Despite the challenges posed by COVID-19 restrictions in China, growth was sustained in Japan and Southeast Asia, alongside a declared dividend of $0.20 per share.

Positive

• Sustained sales momentum in Japan and Southeast Asia.
• Declared a quarterly cash dividend of $0.20 per share.

Negative

• Revenue declined by 14% year-over-year.
• Operating loss of $383,000 compared to operating income of $220,000 in Q1 2021.
• Net loss of $105,000, down from net income of $153,000 in Q1 2021.
• Active Members decreased by 3% to 44,490.

- Hong Kong and China COVID restrictions impacted our logistics
- Sales momentum in Japan and Southeast Asia continued  
- Declared a quarterly cash dividend of $0.20 per share

HONG KONG, May 04, 2022 (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, 2022.

First Quarter 2022 Financial Highlights

• Revenue of $11.5 million decreased 14% compared to $13.5 million in the first quarter of 2021.
  
  
• Operating loss was $383,000 compared to operating income of $220,000 in the first quarter of 2021.
  
  
• Net loss was $105,000, or $0.01 per diluted share, compared to net income of $153,000, or $0.01 per diluted share, in the first quarter of 2021.
  
  
• The number of Active Members1 decreased 3% to 44,490 at March 31, 2022 compared to 45,760 at December 31, 2021, and decreased 10% compared to 49,420 at March 31, 2021.

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

“The first quarter was challenging due to a significant increase in COVID-19 government-mandated restrictions and lockdowns impacting Hong Kong and China, especially Shenzhen, immediately following the Chinese New Year holiday. The additional measures disrupted supply chains, created order delivery uncertainty, and prohibited us from holding in-person member events in China and Macau. Even though much of the Mainland Chinese population was under some forms of lockdown during the quarter, our leaders remain committed to finding and implementing innovative ways to conduct business as our staff continues to adjust to the ever-changing needs of our global business,” said Chris Sharng, President of Natural Health Trends Corp.

Mr. Sharng continued, “We are encouraged by the sustained growth in Japan and Southeast Asia and continue to ready ourselves for expansion and diversification in Latin America. We recently conducted successful virtual events for members in North America, Peru, Japan, India and CIS markets and an in-person event for members in Europe. We are pleased with the enthusiasm and participation to embrace our products and marketing programs as they bring our health, wellness and beauty products to customers around the world.”

Balance Sheet and Cash Flow

• Net cash used in operating activities was $2.3 million in the first quarter of 2022, compared to net cash provided by operating activities of $414,000 in the first quarter of 2021.
  
• Total cash and cash equivalents were $79.4 million at March 31, 2022, down from $83.8 million at December 31, 2021.
  
• On May 2, 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 May 27, 2022 to stockholders of record as of May 17, 2022.

First Quarter 2022 Financial Results Conference Call

Management will host a conference call to discuss the first quarter 2022 financial results today, Wednesday, May 4, 2022 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date:	Wednesday, May 4, 2022
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:	13727755
Webcast:	https://viavid.webcasts.com/starthere.jsp?ei=1534881&tp_key=6bc04f960d

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 4, 2022 through 11:59 p.m. Eastern Time on May 18, 2022 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13727755.

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 25, 2022 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, 2022				December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	79,382			$	83,843
Inventories		4,860				5,257
Other current assets		4,674				4,369
Total current assets		88,916				93,469
Property and equipment, net		450				463
Operating lease right-of-use assets		2,708				3,021
Restricted cash		82				522
Deferred tax asset		318				309
Other assets		568				571
Total assets	$	93,042			$	98,355
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	824			$	761
Income taxes payable		1,397				1,345
Accrued commissions		2,512				3,636
Other accrued expenses		1,332				1,933
Deferred revenue		8,049				8,536
Amounts held in eWallets		6,055				6,341
Operating lease liabilities		1,174				1,239
Other current liabilities		855				865
Total current liabilities		22,198				24,656
Income taxes payable		12,130				12,130
Deferred tax liability		153				153
Operating lease liabilities		1,691				1,928
Total liabilities		36,172				38,867
Stockholders’ equity:
Preferred stock		—				—
Common stock		13				13
Additional paid-in capital		86,102				86,102
Accumulated deficit		(2,621	)			(231	)
Accumulated other comprehensive loss		(720	)			(492	)
Treasury stock, at cost		(25,904	)			(25,904	)
Total stockholders’ equity		56,870				59,488
Total liabilities and stockholders’ equity	$	93,042			$	98,355

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

	Three Months Ended March 31,
	2022				2021
Net sales	$	11,546			$	13,469
Cost of sales		2,908				3,255
Gross profit		8,638				10,214
Operating expenses:
Commissions expense		4,740				5,514
Selling, general and administrative expenses		4,281				4,480
Total operating expenses		9,021				9,994
Income (loss) from operations		(383	)			220
Other income, net		110				20
Income (loss) before income taxes		(273	)			240
Income tax provision (benefit)		(168	)			87
Net income (loss)	$	(105	)		$	153
Net income (loss) per common share:
Basic	$	(0.01	)		$	0.01
Diluted	$	(0.01	)		$	0.01
Weighted average common shares outstanding:
Basic		11,254				10,874
Diluted		11,254				11,424

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

	Three Months Ended March 31,
	2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	(105	)		$	153
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		53				79
Noncash lease expense		302				294
Deferred income taxes		(9	)			9
Changes in assets and liabilities:
Inventories		350				123
Other current assets		(332	)			195
Other assets		(3	)			2
Accounts payable		64				176
Income taxes payable		53				67
Accrued commissions		(1,129	)			(344	)
Other accrued expenses		(592	)			(245	)
Deferred revenue		(447	)			1,093
Amounts held in eWallets		(253	)			(727	)
Operating lease liabilities		(296	)			(322	)
Other current liabilities		(4	)			(139	)
Net cash provided by (used in) operating activities		(2,348	)			414
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(40	)			(63	)
Net cash used in investing activities		(40	)			(63	)
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		(228	)			(222	)
Net decrease in cash, cash equivalents and restricted cash		(4,901	)			(2,156	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period		84,365				92,892
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	79,464			$	90,736
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:
Right-of-use assets obtained in exchange for operating lease liabilities	$	—			$	400

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

FAQ

What are the Q1 2022 financial results for NHTC?

NHTC reported Q1 2022 revenue of $11.5 million, a 14% decrease from Q1 2021, and an operating loss of $383,000.

What is the Q1 2022 net loss for Natural Health Trends Corp.?

The net loss for Q1 2022 was $105,000, or $0.01 per diluted share, compared to a net income of $153,000 in Q1 2021.

Did NHTC declare a dividend for Q1 2022?

Yes, NHTC declared a quarterly cash dividend of $0.20 per share, payable on May 27, 2022.

How many Active Members did NHTC have as of March 31, 2022?

NHTC had 44,490 Active Members as of March 31, 2022, a decrease of 3% from the previous quarter.

What challenges did NHTC face in Q1 2022?

NHTC faced significant challenges due to COVID-19 restrictions impacting logistics and in-person member events in Hong Kong and China.