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Natural Health Trends Reports Second Quarter 2023 Financial Results

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 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, Aug. 02, 2023 (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 June 30, 2023.

Second Quarter 2023 Financial Highlights

  • 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.
  • Operating loss was $743,000 compared to operating income of $215,000 in the second quarter of 2022.
  • 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.
  • 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.

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.

Year-to-Date 2023 Financial Highlights

  • 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.
  • Operating loss was $1.1 million compared to $168,000 in the first six months of 2022.
  • 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

  • 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.
  • Total cash and cash equivalents were $61.6 million at June 30, 2023, down from $66.6 million at March 31, 2023.
  • 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:

Date:Wednesday, August 2, 2023
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:13739190
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.



NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) 

  June 30, 2023  December 31, 2022 
  (Unaudited)     
ASSETS        
Current assets:        
Cash and cash equivalents $61,567  $69,667 
Inventories  4,715   4,525 
Other current assets  3,665   3,359 
Total current assets  69,947   77,551 
Property and equipment, net  311   394 
Operating lease right-of-use assets  3,601   3,992 
Restricted cash  38   79 
Deferred tax asset  273   195 
Other assets  646   606 
Total assets $74,816  $82,817 
LIABILITIES AND STOCKHOLDERS’ EQUITY        
Current liabilities:        
Accounts payable $725  $810 
Income taxes payable  3,939   2,972 
Accrued commissions  2,562   2,943 
Other accrued expenses  1,235   1,181 
Deferred revenue  6,851   5,597 
Amounts held in eWallets  4,335   4,895 
Operating lease liabilities  1,054   1,135 
Other current liabilities  837   905 
Total current liabilities  21,538   20,438 
Income taxes payable  5,054   9,098 
Deferred tax liability  140   141 
Operating lease liabilities  2,659   2,989 
Total liabilities  29,391   32,666 
Stockholders’ equity:        
Preferred stock      
Common stock  13   13 
Additional paid-in capital  84,558   86,102 
Accumulated deficit  (13,626)  (9,056)
Accumulated other comprehensive loss  (1,245)  (1,004)
Treasury stock, at cost  (24,275)  (25,904)
Total stockholders’ equity  45,425   50,151 
Total liabilities and stockholders’ equity $74,816  $82,817 


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

  Three Months Ended June 30,  Six Months Ended June 30, 
  2023  2022  2023  2022 
Net sales $10,511  $13,360  $22,372  $24,906 
Cost of sales  2,666   3,392   5,697   6,300 
Gross profit  7,845   9,968   16,675   18,606 
Operating expenses:                
Commissions expense  4,508   5,767   9,500   10,507 
Selling, general and administrative expenses  4,080   3,986   8,312   8,267 
Total operating expenses  8,588   9,753   17,812   18,774 
Income (loss) from operations  (743)  215   (1,137)  (168)
Other income, net  442   175   1,123   285 
Income (loss) before income taxes  (301)  390   (14)  117 
Income tax provision (benefit)  (82)  207   (52)  39 
Net income (loss) $(219) $183  $38  $78 
Net income (loss) per common share:                
Basic $(0.02) $0.02  $0.00  $0.01 
Diluted $(0.02) $0.02  $0.00  $0.01 
Weighted average common shares outstanding:                
Basic  11,432   11,346   11,428   11,300 
Diluted  11,432   11,424   11,439   11,424 


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

  Six Months Ended June 30, 
  2023  2022 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income $38  $78 
Adjustments to reconcile net income to net cash used in operating activities:        
Depreciation and amortization  91   106 
Share-based compensation  85    
Noncash lease expense  564   599 
Deferred income taxes  (82)  12 
Changes in assets and liabilities:        
Inventories  (228)  7 
Other current assets  (362)  1,002 
Other assets  (52)  1 
Accounts payable  (82)  2 
Income taxes payable  (3,076)  (1,390)
Accrued commissions  (374)  (531)
Other accrued expenses  68   (132)
Deferred revenue  1,270   (1,788)
Amounts held in eWallets  (541)  (862)
Operating lease liabilities  (595)  (600)
Other current liabilities  (64)  (4)
Net cash used in operating activities  (3,340)  (3,500)
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of property and equipment  (14)  (78)
Net cash used in investing activities  (14)  (78)
CASH FLOWS FROM FINANCING ACTIVITIES:        
Dividends paid  (4,608)  (4,570)
Net cash used in financing activities  (4,608)  (4,570)
Effect of exchange rates on cash, cash equivalents and restricted cash  (179)  (506)
Net decrease in cash, cash equivalents and restricted cash  (8,141)  (8,654)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period  69,746   84,365 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period $61,605  $75,711 
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:        
Right-of-use assets obtained in exchange for operating lease liabilities $(125) $77 


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.

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