- Published: 29 July 2015
- Written by Editor
NHTC Announces 104% Revenue Increase, 101% Net Income Increase, for Second Quarter of 2015
Record Revenue Increases to $69.7 Million While Net Income Reaches $12.3 Million; Company Increases Dividend by 33% to $0.04 Per Share, Authorizes $15 Million Share Repurchase
DALLAS, July 28, 2015 -- Natural Health Trends Corp. (NHTC), a leading direct selling company that markets premium quality personal care, wellness and "quality of life" products under the NHT Global brand, today announced continued growth for the quarter and six month periods ended June 30, 2015.
Second Quarter Highlights
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Total revenues increased 104% to $69.7 million, compared to $34.2 million in the second quarter last year. Net income was $12.3 million, or $0.98 per diluted share, compared to $6.1 million, or $0.49 per diluted share, in the second quarter last year.
- Revenue from Hong Kong operations, which represents 93% of total revenue, increased $33.2 million, or 105% over the same period last year
- Revenue outside of Hong Kong increased $2.4 million, or 91% over the same period last year; excluding the Commonwealth of Independent States, revenue increased 151% over the same period last year
- Operating income increased 99% to $12.3 million, compared to $6.2 million in the second quarter last year.
- Total number of active distributors increased 23% to 76,400 at June 30, 2015 compared to March 31, 2015.
- The Company's common stock joined the Russell Global, Russell 3000(R) and the Russell Microcap(R) Indices.
Year-to-Date Financial Highlights
- Revenues were $110.4 million, up 93%, compared to $57.4 million in the first six months of last year. Net income was $19.0 million, or $1.52 per diluted share, compared to $9.2 million, or $0.76 per diluted share, in the first six months of last year.
- Operating income was $19.2 million, up 107% compared to $9.3 million in the first six months of last year.
"We delivered another quarter of solid top-line growth and doubled our net income as we continue to leverage the strength and utility of our Hong Kong infrastructure to meet the increasing consumer demand for our health and wellness products," commented Chris Sharng, President of Natural Health Trends Corp. "During the quarter we launched several new products to extend our product line and kicked off additional incentive programs for top performers. The combination of consumer demand supported by our market-leading products and effective sales, leadership and incentive programs are proving to be very successful strategies for expanding our base of consumers and distributors while fortifying an already firm foundation for future growth."
"Our Hong Kong business continues to excel, and to date, the economic slowdown in China has not impacted us," continued Mr. Sharng. "In the long term, we feel that the re-orientation of the Chinese economy toward consumption is good for businesses like ours, as we work to introduce high-quality consumer products to the increasingly affluent Chinese consumers. We are in the Chinese market for the long haul and are bullish on its prospect."
"Further, during the quarter, we funded the required deposit for the consumer protection fund in China, which is a prerequisite to submitting our direct selling license application," concluded Mr. Sharng. "We view applying for a direct selling license as strategically valuable to help us drive incremental growth as our brand recognition continues to grow in China and Asia."
Balance Sheet
At June 30, 2015, cash and cash equivalents totaled $74.4 million, compared to $59.9 million as of March 31, 2015 and $44.8 million as of December 31, 2014.
Dividend and Share Repurchase
Today, the Board of Directors declared a cash dividend of $0.04 per share on outstanding common stock payable in cash on August 28, 2015 to stockholders of record on August 18, 2015.
Also today, the Board of Directors approved a stock repurchase plan of up to $15 million of Company's outstanding shares of common stock with the Company's on-going earnings or cash on hand through December 2016, including $5 million repurchases intended to be immediately executed. Since November 2014, the Company has repurchased 638,176 shares of common stock at a cost of $10.6 million.
"We are confident in our ability to consistently generate solid free cash flow to support future growth, while also rewarding our stockholders with capital return in the forms of both dividends and the repurchase of stock," added Mr. Sharng.
Shareholder Conference Call
Management will conduct a conference call to discuss its second quarter financial results. Details of the call are as follows:
- Date: Wednesday July 29, 2015
- Time: 10 a.m. ET/9 a.m. CT/7 a.m. PT
- Dial-in number: 1-888-455-2296 (domestic) 1-719-457-2627 (international)
- Webcast link: http://public.viavid.com/index.php?id=115429
A replay will be available from 1 p.m. ET on July 29, 2015 through 11:59 p.m. ET on August 5, 2015 by dialing 1-877-870-5176 (domestic) and 1-858-384-5517 (international) and referencing replay pin number 3259700.
About Natural Health Trends Corp.
Natural Health Trends Corp. is an international direct-selling and e-commerce company operating through its subsidiaries throughout Asia, North America, and Europe. The company markets premium quality personal care, wellness and "quality of life" products under the NHT Global brand. Additional information can be found on the company's website, www.naturalhealthtrendscorp.com.
Forward Looking Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Forward-looking statements in this release do not constitute guarantees of future performance. Such forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. Such risks and uncertainties include the risks and uncertainties detailed under the caption "Risk Factors" in our Annual Report on Form 10-K filed on March 6, 2015, with the Securities and Exchange Commission. We assume no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.
-- Tables follow --
| NATURAL HEALTH TRENDS CORP. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (In Thousands, Except Share Data) | ||
|
December 31, 2014 |
June 30, 2015 |
|
| (Unaudited) | ||
| ASSETS | ||
| Current assets: | ||
| Cash and cash equivalents | $44,816 | $74,422 |
| Accounts receivable | 107 | 297 |
| Inventories, net | 3,760 | 5,287 |
| Other current assets | 930 | 1,643 |
| Total current assets | 49,613 | 81,649 |
| Property and equipment, net | 476 | 702 |
| Goodwill | 1,764 | 1,764 |
| Restricted cash | 315 | 3,591 |
| Other assets | 372 | 598 |
| Total assets | $52,540 | $88,304 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $2,232 | $3,082 |
| Income taxes payable | 268 | 323 |
| Accrued distributor commissions | 8,853 | 14,338 |
| Other accrued expenses | 6,743 | 10,751 |
| Deferred revenue | 2,687 | 8,151 |
| Deferred tax liability | 65 | 65 |
| Amounts held in distributor eWallets | 2,064 | 8,533 |
| Other current liabilities | 1,513 | 1,696 |
| Total current liabilities | 24,425 | 46,939 |
| Long-term incentive | 1,665 | 1,524 |
| Total liabilities | 26,090 | 48,463 |
| Commitments and contingencies | ||
| Stockholders' equity: | ||
| Preferred stock | -- | -- |
| Common stock | 13 | 13 |
| Additional paid-in capital | 85,750 | 85,928 |
| Accumulated deficit | (54,799) | (36,549) |
| Accumulated other comprehensive income | 62 | 135 |
| Treasury stock, at cost | (4,576) | (9,686) |
| Total stockholders' equity | 26,450 | 39,841 |
| Total liabilities and stockholders' equity | $52,540 | $88,304 |
| 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, | |||
| 2014 | 2015 | 2014 | 2015 | |
| Net sales | $34,189 | $69,716 | $57,351 | $110,425 |
| Cost of sales | 7,509 | 14,094 | 12,761 | 23,024 |
| Gross profit | 26,680 | 55,622 | 44,590 | 87,401 |
| Operating expenses: | ||||
| Distributor commissions | 15,458 | 35,010 | 25,881 | 53,407 |
| Selling, general and administrative expenses | 5,031 | 8,281 | 9,378 | 14,704 |
| Depreciation and amortization | 23 | 68 | 44 | 109 |
| Total operating expenses | 20,512 | 43,359 | 35,303 | 68,220 |
| Income from operations | 6,168 | 12,263 | 9,287 | 19,181 |
| Other income (expense), net | 1 | 132 | (8) | 23 |
| Income before income taxes | 6,169 | 12,395 | 9,279 | 19,204 |
| Income tax provision | 59 | 122 | 98 | 193 |
| Net income | 6,110 | 12,273 | 9,181 | 19,011 |
| Preferred stock dividends | (3) | -- | (7) | -- |
| Net income available to common stockholders | $6,107 | $12,273 | $9,174 | $19,011 |
| Income per common share: | ||||
| Basic | $0.51 | $0.99 | $0.78 | $1.53 |
| Diluted | $0.49 | $0.98 | $0.76 | $1.52 |
| Weighted-average number of common shares outstanding: | ||||
| Basic | 11,821 | 12,403 | 11,592 | 12,428 |
| Diluted | 12,305 | 12,461 | 12,050 | 12,513 |
| Cash dividends declared per share: | ||||
| Common | $0.005 | $0.03 | $0.010 | $0.05 |
| Series A preferred stock | $0.020 | -- | $0.835 | -- |
| NATURAL HEALTH TRENDS CORP. | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||
| (In Thousands) | ||
| Six Months Ended June 30, | ||
| 2014 | 2015 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income | $9,181 | $19,011 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation and amortization | 44 | 109 |
| Stock-based compensation | 34 | 35 |
| Cumulative translation adjustment realized in net income | -- | (82) |
| Changes in assets and liabilities: | ||
| Accounts receivable | 24 | (186) |
| Inventories, net | (2,502) | (1,524) |
| Other current assets | (104) | (672) |
| Other assets | (16) | (232) |
| Accounts payable | 1,586 | 849 |
| Income taxes payable | 86 | 56 |
| Accrued distributor commissions | 1,268 | 5,471 |
| Other accrued expenses | 2,466 | 4,674 |
| Deferred revenue | 606 | 5,459 |
| Amounts held in distributor eWallets | -- | 6,468 |
| Other current liabilities | 152 | 186 |
| Long-term incentive | -- | (141) |
| Net cash provided by operating activities | 12,825 | 39,481 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchases of property and equipment, net | (97) | (333) |
| Increase in restricted cash | -- | (3,272) |
| Net cash used in investing activities | (97) | (3,605) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Proceeds from exercise of warrants | 2,630 | 309 |
| Repurchase of common stock | (63) | (6,082) |
| Dividends paid | (195) | (621) |
| Net cash provided by (used in) financing activities | 2,372 | (6,394) |
| Effect of exchange rates on cash and cash equivalents | (28) | 124 |
| Net increase in cash and cash equivalents | 15,072 | 29,606 |
| CASH AND CASH EQUIVALENTS, beginning of period | 14,550 | 44,816 |
| CASH AND CASH EQUIVALENTS, end of period | $29,622 | $74,422 |
Company Contact Scott Davidson Chief Financial Officer Natural Health Trends Corp. Tel: 972-241-4080 This email address is being protected from spambots. You need JavaScript enabled to view it. Investor Contact Brett Maas Managing Partner Hayden IR Tel: 646-536-7331 This email address is being protected from spambots. You need JavaScript enabled to view it.
