Natural Health Trends Reports Fourth Quarter and Full Year 2023 Financial Results
- Sequential increase in orders despite consumer sentiment and price increases
- Net cash provided by operating activities of $938,000 in the fourth quarter of 2022
- Total cash and cash equivalents were $56.2 million as of December 31, 2023
- Decrease in the number of active members by 6%
- Full-year revenue decreased by 11% compared to 2022
- Operating loss of $1.7 million for the full year
Insights
The announcement of Natural Health Trends Corp.'s financial results for the fourth quarter and the full year provides several indicators of the company's financial health and operational efficiency. Notably, the 3% sequential increase in revenue suggests a modest improvement in sales activities, likely reflecting the company's efforts to boost orders through increased in-person activities. However, the year-over-year decline in revenue and the decrease in active members raise concerns about the company's ability to sustain growth and retain its customer base in a challenging economic environment.
The operating loss reported, although improved from the previous quarter, still indicates that the company is facing challenges in achieving profitability. The decrease in net cash from operating activities year-over-year, even when tax installment payments related to the Tax Cuts and Jobs Act are excluded, further underscores the cash flow pressures faced by the company. The decline in cash and cash equivalents year-over-year could impact the company's ability to invest in growth initiatives or weather prolonged economic downturns.
The declaration of a quarterly cash dividend suggests confidence by the board in the company's liquidity position and commitment to returning value to shareholders. However, investors should closely monitor the company's future cash flows and profitability metrics to assess the sustainability of such dividends.
From a market perspective, the consumer sentiment in China and the effects of global inflation and currency fluctuations are external factors that have impacted Natural Health Trends Corp.'s performance. The company's acknowledgment of these challenges and its strategic response, including price adjustments and a focus on training and in-person events, provides insight into the management's adaptability and proactive measures to stimulate demand.
Additionally, the 16% decrease in active members is a significant metric for direct-selling companies, as it may reflect on the effectiveness of the company's sales force and market penetration strategies. This decrease could be indicative of broader trends in the direct-selling industry or specific to the company's operational execution.
Investors and market analysts should consider the competitive landscape and evolving consumer preferences in the personal care and wellness sector when evaluating the company's potential for recovery and growth.
Examining the macroeconomic context, inflationary pressures and a stronger dollar can have a dual impact on companies like Natural Health Trends Corp. that operate internationally. While a stronger dollar can increase the cost of goods sold in foreign markets, inflation can erode consumer purchasing power, leading to reduced sales volumes. The company's performance must be viewed against this backdrop, with an understanding that these economic headwinds can significantly influence both revenue and profit margins.
The company's efforts to protect margins and control costs in such an environment are critical for maintaining operational viability. The effectiveness of these measures should be continuously evaluated as part of a broader analysis of the company's financial resilience and strategic direction in the face of ongoing economic volatility.
– Fourth quarter revenue of
– Cash flows from operations improved
– Declared a quarterly cash dividend of
HONG KONG, Feb. 07, 2024 (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 fourth quarter and full year ended December 31, 2023.
Fourth Quarter 2023 Financial Highlights
| • | Revenue of | |
| • | Operating loss was | |
| • | Net income was | |
| • | The number of Active Members1 were down | |
| 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 2023 Financial Highlights
| • | Revenue of | |
| • | Operating loss was | |
| • | Net income was | |
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
| • | Net cash used in operating activities was | |
| • | Total cash and cash equivalents were | |
| • | On February 5, 2024, the Company’s Board of Directors declared a quarterly cash dividend of | |
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:
| Date: | Wednesday, February 7, 2024 |
| 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: | 13743993 |
| 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.
| NATURAL HEALTH TRENDS CORP. CONSOLIDATED BALANCE SHEETS (In thousands, except share data) | ||||||||
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 56,178 | $ | 69,667 | ||||
| Inventories | 4,293 | 4,525 | ||||||
| Other current assets | 3,758 | 3,359 | ||||||
| Total current assets | 64,229 | 77,551 | ||||||
| Property and equipment, net | 266 | 394 | ||||||
| Operating lease right-of-use assets | 3,319 | 3,992 | ||||||
| Restricted cash | 39 | 79 | ||||||
| Deferred tax asset | 369 | 195 | ||||||
| Other assets | 869 | 606 | ||||||
| Total assets | $ | 69,091 | $ | 82,817 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 990 | $ | 810 | ||||
| Income taxes payable | 3,716 | 2,972 | ||||||
| Accrued commissions | 2,067 | 2,943 | ||||||
| Other accrued expenses | 1,170 | 1,181 | ||||||
| Deferred revenue | 6,166 | 5,597 | ||||||
| Amounts held in eWallets | 3,945 | 4,895 | ||||||
| Operating lease liabilities | 1,146 | 1,135 | ||||||
| Other current liabilities | 784 | 905 | ||||||
| Total current liabilities | 19,984 | 20,438 | ||||||
| Income taxes payable | 5,054 | 9,098 | ||||||
| Deferred tax liability | 135 | 141 | ||||||
| Operating lease liabilities | 2,318 | 2,989 | ||||||
| Total liabilities | 27,491 | 32,666 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 13 | 13 | ||||||
| Additional paid-in capital | 84,695 | 86,102 | ||||||
| Accumulated deficit | (17,703 | ) | (9,056 | ) | ||||
| Accumulated other comprehensive loss | (1,069 | ) | (1,004 | ) | ||||
| Treasury stock, at cost | (24,336 | ) | (25,904 | ) | ||||
| Total stockholders’ equity | 41,600 | 50,151 | ||||||
| Total liabilities and stockholders’ equity | $ | 69,091 | $ | 82,817 | ||||
| NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) | ||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
| Net sales | $ | 10,937 | $ | 12,512 | $ | 43,924 | $ | 49,134 | ||||||||
| Cost of sales | 2,789 | 3,263 | 11,175 | 12,661 | ||||||||||||
| Gross profit | 8,148 | 9,249 | 32,749 | 36,473 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Commissions expense | 4,553 | 5,377 | 18,414 | 20,747 | ||||||||||||
| Selling, general and administrative expenses | 3,837 | 3,829 | 16,006 | 15,996 | ||||||||||||
| Total operating expenses | 8,390 | 9,206 | 34,420 | 36,743 | ||||||||||||
| Income (loss) from operations | (242 | ) | 43 | (1,671 | ) | (270 | ) | |||||||||
| Other income, net | 708 | 400 | 2,416 | 872 | ||||||||||||
| Income before income taxes | 466 | 443 | 745 | 602 | ||||||||||||
| Income tax provision | 108 | 255 | 177 | 289 | ||||||||||||
| Net income | $ | 358 | $ | 188 | $ | 568 | $ | 313 | ||||||||
| Net income per common share: | ||||||||||||||||
| Basic | $ | 0.03 | $ | 0.02 | $ | 0.05 | $ | 0.03 | ||||||||
| Diluted | $ | 0.03 | $ | 0.02 | $ | 0.05 | $ | 0.03 | ||||||||
| Weighted-average number of common shares outstanding: | ||||||||||||||||
| Basic | 11,448 | 11,423 | 11,436 | 11,362 | ||||||||||||
| Diluted | 11,461 | 11,423 | 11,456 | 11,423 | ||||||||||||
| NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | ||||||||
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | (Unaudited) | |||||||
| Net income | $ | 568 | $ | 313 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 164 | 204 | ||||||
| Share-based compensation | 161 | — | ||||||
| Noncash lease expense | 1,109 | 1,172 | ||||||
| Deferred income taxes | (178 | ) | 90 | |||||
| Changes in assets and liabilities: | ||||||||
| Inventories | 228 | 680 | ||||||
| Other current assets | (452 | ) | 992 | |||||
| Other assets | (270 | ) | (67 | ) | ||||
| Accounts payable | 181 | 52 | ||||||
| Income taxes payable | (3,299 | ) | (1,404 | ) | ||||
| Accrued commissions | (866 | ) | (654 | ) | ||||
| Other accrued expenses | (4 | ) | (732 | ) | ||||
| Deferred revenue | 565 | (2,901 | ) | |||||
| Amounts held in eWallets | (947 | ) | (1,432 | ) | ||||
| Operating lease liabilities | (1,119 | ) | (1,220 | ) | ||||
| Other current liabilities | (119 | ) | 55 | |||||
| Net cash used in operating activities | (4,278 | ) | (4,852 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property and equipment | (46 | ) | (143 | ) | ||||
| Net cash used in investing activities | (46 | ) | (143 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Dividends paid | (9,215 | ) | (9,138 | ) | ||||
| Net cash used in financing activities | (9,215 | ) | (9,138 | ) | ||||
| Effect of exchange rates on cash, cash equivalents and restricted cash | 10 | (486 | ) | |||||
| Net decrease in cash, cash equivalents and restricted cash | (13,529 | ) | (14,619 | ) | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 69,746 | 84,365 | ||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 56,217 | $ | 69,746 | ||||
| SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | $ | 147 | $ | 2,234 | ||||
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
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