- Total orders taken were roughly flat despite continued headwinds of a stronger dollar and trepid consumer sentiment
- Cash flows from operations improved
$1.4 million - Declared a quarterly cash dividend of
$0.20 per share
Third Quarter 2023 Financial Highlights
- Revenue of
$10.6 million decreased 9% compared to$11.7 million in the third quarter of 2022. The decrease in revenue was primarily due to the changes in deferred revenue in the two respective quarters. Deferred revenue decreased$603,000 and$1.4 million during the third quarter of 2023 and 2022, respectively, resulting in an$835,000 unfavorable revenue variance. - Operating loss was
$292,000 compared to$145,000 in the third quarter of 2022. - Net income was
$172,000 , or$0.02 per diluted share, compared to$47,000 , or breakeven per diluted share, in the third quarter of 2022. - The number of Active Members1 was down 6% to 34,660 at
September 30, 2023 compared to 36,730 atJune 30, 2023 , and decreased 16% compared to 41,170 atSeptember 30, 2022 .
1
Year-to-Date 2023 Financial Highlights
- Revenue of
$33 .0 million decreased 10% compared to$36 .6 million in the first nine months of 2022. The revenue decrease was primarily due to the changes in deferred revenue in the two respective nine-month periods. Deferred revenue increased$651,000 during the first nine months of 2023, but decreased $3.3 million during the same period last year, resulting in a$3 .9 million unfavorable revenue variance. - Operating loss was $1.4 million compared to
$313,000 in the first nine months of 2022. - Net income was
$210,000 , or$0 .02 per diluted share, compared to$125,000 , or$0 .01 per diluted share, in the first nine months of 2022.
Management Commentary
“Adapting to the current environment in which Chinese consumers are reluctant to spend or invest, we managed to generate orders on pace with those of last year. Orders grew 3% at a constant exchange rate compared to the third quarter of 2022, while year-to-date 2023 orders increased 8% compared to prior year. The reported decrease in revenue was largely due to changes in deferred revenue, partly because orders tended to be received later in the quarter this year. Importantly, our members remained responsive to our programs, demonstrating that our promotions, incentives and high-quality product offerings continue to resonate,” commented
Balance Sheet and Cash Flow
- Net cash used in operating activities was
$4 .2 million in the first nine months of 2023 compared to$5.8 million in the first nine 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$1.2 million in the first nine months 2023, versus$4 .2 million in the comparable period a year ago. Of the total Tax Act liability of$20.2 million ,$11 .2 million has been paid to date. - Total cash and cash equivalents were
$58 .4 million atSeptember 30, 2023 , down from$61 .6 million atJune 30, 2023 . - On
October 30, 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 November 24, 2023 to stockholders of record as ofNovember 14, 2023 .
Third Quarter 2023 Financial Results Conference Call
Management will host a conference call to discuss the third quarter 2023 financial results today, Wednesday, November 1, 2023 at 11:30 a.m. Eastern Time. The conference call details are as follows:
Date: | |
Time: | |
Dial-in: | 1-877-407-0789 (Domestic) 1-201-689-8562 (International) |
Conference ID: | 13740859 |
Webcast: | https://viavid.webcasts.com/starthere.jsp?ei=1631150&tp_key=ea6cd96ef7 |
For those unable to participate during the live broadcast, a replay of the call will also be available from
About
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
CONTACT:
Senior Vice President and Chief Financial Officer
Tel (
Tel (
investor.relations@nhtglobal.com
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 58,412 | $ | 69,667 | ||||
Inventories | 4,882 | 4,525 | ||||||
Other current assets | 3,675 | 3,359 | ||||||
Total current assets | 66,969 | 77,551 | ||||||
Property and equipment, net | 284 | 394 | ||||||
Operating lease right-of-use assets | 3,549 | 3,992 | ||||||
Restricted cash | 37 | 79 | ||||||
Deferred tax asset | 303 | 195 | ||||||
Other assets | 679 | 606 | ||||||
Total assets | $ | 71,821 | $ | 82,817 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 666 | $ | 810 | ||||
Income taxes payable | 4,092 | 2,972 | ||||||
Accrued commissions | 2,589 | 2,943 | ||||||
Other accrued expenses | 1,100 | 1,181 | ||||||
Deferred revenue | 6,248 | 5,597 | ||||||
Amounts held in eWallets | 4,154 | 4,895 | ||||||
Operating lease liabilities | 1,182 | 1,135 | ||||||
Other current liabilities | 747 | 905 | ||||||
Total current liabilities | 20,778 | 20,438 | ||||||
Income taxes payable | 5,054 | 9,098 | ||||||
Deferred tax liability | 140 | 141 | ||||||
Operating lease liabilities | 2,539 | 2,989 | ||||||
Total liabilities | 28,511 | 32,666 | ||||||
Stockholders’ equity: | ||||||||
Preferred stock | — | — | ||||||
Common stock | 13 | 13 | ||||||
Additional paid-in capital | 84,657 | 86,102 | ||||||
Accumulated deficit | (15,757 | ) | (9,056 | ) | ||||
Accumulated other comprehensive loss | (1,267 | ) | (1,004 | ) | ||||
(24,336 | ) | (25,904 | ) | |||||
Total stockholders’ equity | 43,310 | 50,151 | ||||||
Total liabilities and stockholders’ equity | $ | 71,821 | $ | 82,817 | ||||
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
Three Months Ended | Nine Months Ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net sales | $ | 10,615 | $ | 11,716 | $ | 32,987 | $ | 36,622 | ||||||||
Cost of sales | 2,689 | 3,098 | 8,386 | 9,398 | ||||||||||||
Gross profit | 7,926 | 8,618 | 24,601 | 27,224 | ||||||||||||
Operating expenses: | ||||||||||||||||
Commissions expense | 4,361 | 4,863 | 13,861 | 15,370 | ||||||||||||
Selling, general and administrative expenses | 3,857 | 3,900 | 12,169 | 12,167 | ||||||||||||
Total operating expenses | 8,218 | 8,763 | 26,030 | 27,537 | ||||||||||||
Loss from operations | (292 | ) | (145 | ) | (1,429 | ) | (313 | ) | ||||||||
Other income, net | 585 | 187 | 1,708 | 472 | ||||||||||||
Income before income taxes | 293 | 42 | 279 | 159 | ||||||||||||
Income tax provision (benefit) | 121 | (5 | ) | 69 | 34 | |||||||||||
Net income | $ | 172 | $ | 47 | $ | 210 | $ | 125 | ||||||||
Net income per common share: | ||||||||||||||||
Basic | $ | 0.02 | $ | 0.00 | $ | 0.02 | $ | 0.01 | ||||||||
Diluted | $ | 0.02 | $ | 0.00 | $ | 0.02 | $ | 0.01 | ||||||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 11,440 | 11,423 | 11,432 | 11,341 | ||||||||||||
Diluted | 11,454 | 11,423 | 11,449 | 11,423 | ||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Nine Months Ended | ||||||||
2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 210 | $ | 125 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation and amortization | 130 | 156 | ||||||
Share-based compensation | 123 | — | ||||||
Noncash lease expense | 830 | 889 | ||||||
Deferred income taxes | (117 | ) | (2 | ) | ||||
Changes in assets and liabilities: | ||||||||
Inventories | (420 | ) | 140 | |||||
Other current assets | (425 | ) | 1,000 | |||||
Other assets | (92 | ) | (44 | ) | ||||
Accounts payable | (141 | ) | 228 | |||||
Income taxes payable | (2,923 | ) | (1,382 | ) | ||||
Accrued commissions | (315 | ) | (1,055 | ) | ||||
Other accrued expenses | (58 | ) | (540 | ) | ||||
Deferred revenue | 674 | (3,209 | ) | |||||
Amounts held in eWallets | (725 | ) | (1,150 | ) | ||||
Operating lease liabilities | (812 | ) | (950 | ) | ||||
Other current liabilities | (148 | ) | 4 | |||||
Net cash used in operating activities | (4,209 | ) | (5,790 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment | (32 | ) | (130 | ) | ||||
Net cash used in investing activities | (32 | ) | (130 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Dividends paid | (6,911 | ) | (6,855 | ) | ||||
Net cash used in financing activities | (6,911 | ) | (6,855 | ) | ||||
Effect of exchange rates on cash, cash equivalents and restricted cash | (145 | ) | (858 | ) | ||||
Net decrease in cash, cash equivalents and restricted cash | (11,297 | ) | (13,633 | ) | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 69,746 | 84,365 | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 58,449 | $ | 70,732 | ||||
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Right-of-use assets obtained in exchange for operating lease liabilities | $ | 115 | $ | 2,218 | ||||
Source:
2023 GlobeNewswire, Inc., source