Natural Health Trends Reports Third Quarter 2024 Financial Results

Rhea-AI Summary

Natural Health Trends Corp. (NASDAQ: NHTC) reported Q3 2024 financial results with revenue of $10.7 million, up 1% from Q3 2023. The company posted an operating loss of $275,000 and net income of $35,000 (breakeven per share). Active Members decreased 11% year-over-year to 30,880. For the first nine months of 2024, revenue was $32.1 million, down 3% year-over-year, with net income of $396,000 ($0.03 per share). The company maintained $46.3 million in cash and equivalents and declared a quarterly dividend of $0.20 per share.

Positive

• Revenue increased 1% year-over-year to $10.7 million in Q3 2024
• Operating loss improved to $878,000 from $1.4 million in first nine months
• Generated positive operating cash flow of $514,000 before Tax Act installment
• Maintained strong cash position of $46.3 million
• Continued quarterly dividend payment of $0.20 per share

Negative

• Operating loss of $275,000 in Q3 2024
• Net income decreased to $35,000 from $172,000 in Q3 2023
• Revenue declined 3% to $32.1 million in first nine months of 2024
• Active Members decreased 11% year-over-year
• Net cash used in operating activities was $3.5 million in first nine months

Insights

Financial Analyst

Natural Health Trends Corp's Q3 2024 results reveal a mixed financial picture. The $10.7 million revenue shows minimal growth of 1% year-over-year, while operating losses narrowed slightly to $275,000. The concerning trends include:

• Active Members declined 11% year-over-year to 30,880
• Net income dropped to $35,000 from $172,000 in Q3 2023
• Cash position decreased to $46.3 million from $48.7 million in Q2

While the company maintains a strong cash position and continues paying a $0.20 quarterly dividend, the declining member base and weak consumer spending in their main market suggest ongoing challenges. The positive operating cash flow of $514,000 (before Tax Act payments) shows some operational improvement, but sustained growth remains elusive.

• Total net sales increased sequentially and year-over-year during the third quarter of 2024
• Improved operating bottom line for three consecutive quarters
• Generated cash flows from operations before 2017 Tax Act installment of $514,000 during the first nine months of 2024
• Declared a quarterly cash dividend of $0.20 per share

HONG KONG, Oct. 30, 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 quarter ended September 30, 2024.

Third Quarter 2024 Financial Highlights

• Revenue of $10.7 million increased 1% compared to $10.6 million in the third quarter of 2023.

• Operating loss was $275,000 compared to $292,000 in the third quarter of 2023.

• Net income was $35,000, or breakeven per diluted share, compared to $172,000, or $0.02 per diluted share, in the third quarter of 2023. The decrease was attributable to lower interest income and higher effective tax rate as compared to the third quarter of 2023.

• The number of Active Members1 was down 1% to 30,880 at September 30, 2024 compared to 31,110 at June 30, 2024, and decreased 11% compared to 34,660 at September 30, 2023.

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 2024 Financial Highlights

• Revenue of $32.1 million decreased 3% compared to $33.0 million in the first nine months of 2023.

• Operating loss improved to $878,000 compared to $1.4 million in the first nine months of 2023.

• Net income was $396,000, or $0.03 per diluted share, compared to $210,000, or $0.02 per diluted share, in the first nine months of 2023.

Management Commentary

"Consumer spending in our main market continues to be weak. However, we still managed to achieve sequential growth in net sales, as well as a year-over-year improvement in the third quarter. While the pace of growth is not where we’d like it to be, our customers and leaders continue to demonstrate strong engagement, and we are working closely with them to navigate these changing times with trainings, product roadshows and new products to help drive growth and expand their customer base," commented Chris Sharng, President of Natural Health Trends Corp.

Mr. Sharng continued, “Our ability to adapt, adjust programs, and fine-tune our plans has been instrumental in supporting our customer base while also acting in the best interests of our shareholders. We are maintaining attentive focus on cost control, including expense management, inventory, and product optimization, to ensure the company remains positioned for future success.”

Balance Sheet and Cash Flow

• Net cash used in operating activities was $3.5 million in the first nine months of 2024 compared to $4.2 million in the first nine months of 2023. Before tax installment payments, the liability of which arises from the 2017 U.S. Tax Cuts and Jobs Act (the “Tax Act”), cash provided by operating activities was $514,000 in the first nine months 2024, versus cash used in operating activities of $1.2 million in the comparable period a year ago. Of the total Tax Act liability of $20.2 million, $15.1 million has been paid to date.
• Total cash, cash equivalents and marketable securities were $46.3 million at September 30, 2024, down from $48.7 million at June 30, 2024.
• On October 28, 2024, 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 22, 2024 to stockholders of record as of November 12, 2024.

Third Quarter 2024 Financial Results Conference Call

Management will host a conference call to discuss the third quarter 2024 financial results today, Wednesday, October 30, 2024 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date:	Wednesday, October 30, 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:	13749004
Webcast:	https://viavid.webcasts.com/starthere.jsp?ei=1689949&tp_key=eea2c2882e

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 October 30, 2024 through 11:59 p.m. Eastern Time on November 6, 2024 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13749004.

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 28, 2024 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)
	September 30, 2024				December 31, 2023
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	22,899			$	56,178
Marketable securities		23,429				—
Inventories		3,684				4,293
Other current assets		3,830				3,758
Total current assets		53,842				64,229
Property and equipment, net		205				266
Operating lease right-of-use assets		2,784				3,319
Restricted cash		38				39
Deferred tax asset		307				369
Other assets		1,115				869
Total assets	$	58,291			$	69,091
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	548			$	990
Income taxes payable		5,032				3,716
Accrued commissions		2,029				2,067
Other accrued expenses		1,350				1,170
Deferred revenue		6,832				6,166
Amounts held in eWallets		3,458				3,945
Operating lease liabilities		1,191				1,146
Other current liabilities		672				784
Total current liabilities		21,112				19,984
Income taxes payable		—				5,054
Deferred tax liability		135				135
Operating lease liabilities		1,739				2,318
Total liabilities		22,986				27,491
Stockholders’ equity:
Preferred stock		—				—
Common stock		13				13
Additional paid-in capital		84,865				84,695
Accumulated deficit		(24,216	)			(17,703	)
Accumulated other comprehensive loss		(960	)			(1,069	)
Treasury stock, at cost		(24,397	)			(24,336	)
Total stockholders’ equity		35,305				41,600
Total liabilities and stockholders’ equity	$	58,291			$	69,091

NATURAL HEALTH TRENDS CORP.  CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands, except per share data)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2024				2023				2024				2023
Net sales	$	10,691			$	10,615			$	32,117			$	32,987
Cost of sales		2,765				2,689				8,376				8,386
Gross profit		7,926				7,926				23,741				24,601
Operating expenses:
Commissions expense		4,333				4,361				13,022				13,861
Selling, general and administrative expenses		3,868				3,857				11,597				12,169
Total operating expenses		8,201				8,218				24,619				26,030
Loss from operations		(275	)			(292	)			(878	)			(1,429	)
Other income, net		441				585				1,523				1,708
Income before income taxes		166				293				645				279
Income tax provision		131				121				249				69
Net income	$	35			$	172			$	396			$	210
Net income per common share:
Basic	$	0.00			$	0.02			$	0.03			$	0.02
Diluted	$	0.00			$	0.02			$	0.03			$	0.02
Weighted average common shares outstanding:
Basic		11,471				11,440				11,464				11,432
Diluted		11,490				11,454				11,488				11,449

NATURAL HEALTH TRENDS CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands)
	Nine Months Ended September 30,
	2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	396			$	210
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		100				130
Net accretion of marketable securities		(350	)			—
Share-based compensation		109				123
Noncash lease expense		825				830
Deferred income taxes		62				(117	)
Changes in assets and liabilities:
Inventories		619				(420	)
Other current assets		(110	)			(425	)
Other assets		(250	)			(92	)
Accounts payable		(441	)			(141	)
Income taxes payable		(3,738	)			(2,923	)
Accrued commissions		(34	)			(315	)
Other accrued expenses		179				(58	)
Deferred revenue		641				674
Amounts held in eWallets		(501	)			(725	)
Operating lease liabilities		(851	)			(812	)
Other current liabilities		(111	)			(148	)
Net cash used in operating activities		(3,455	)			(4,209	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(37	)			(32	)
Purchases of marketable securities		(44,839	)			—
Proceeds from maturities of marketable securities		21,786				—
Net cash used in investing activities		(23,090	)			(32	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid		(6,909	)			(6,911	)
Net cash used in financing activities		(6,909	)			(6,911	)
Effect of exchange rates on cash, cash equivalents and restricted cash		174				(145	)
Net decrease in cash, cash equivalents and restricted cash		(33,280	)			(11,297	)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period		56,217				69,746
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	22,937			$	58,449
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Right-of-use assets obtained in exchange for operating lease liabilities	$	191			$	115

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 was Natural Health Trends (NHTC) revenue in Q3 2024?

Natural Health Trends reported revenue of $10.7 million in Q3 2024, a 1% increase compared to $10.6 million in Q3 2023.

How much was NHTC's quarterly dividend for Q3 2024?

Natural Health Trends declared a quarterly cash dividend of $0.20 per share, payable on November 22, 2024.

What was NHTC's Active Member count as of September 30, 2024?

NHTC reported 30,880 Active Members as of September 30, 2024, down 11% from 34,660 in the prior year.

What was Natural Health Trends' cash position at the end of Q3 2024?

The company had total cash, cash equivalents and marketable securities of $46.3 million as of September 30, 2024.