• Revenue increased 15% year-over-year to $80.4 million
  • Record operating income increased 22% year-over-year to $14.9 million
  • Increased quarterly dividend by 17% to $0.07 per share
  • Repurchased $5.4 million of common stock during the quarter

LOS ANGELES, July 27, 2016 (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, 2016.

Second Quarter 2016 Financial Highlights 

  • Total revenue increased 15% to $80.4 million, compared to $69.7 million in the second quarter of 2015.

    • Revenue from the Company’s Hong Kong operations, which represented 91% of total revenue, increased 13% to $73.3 million, compared to $64.8 million in the second quarter of 2015.

    • Revenue outside of Hong Kong increased 43% to $7.0 million, compared to $4.9 million in the second quarter of 2015.

  • Operating income increased 22% to $14.9 million, compared to $12.3 million in the second quarter of 2015.

  • Additional income tax provision of $2.4 million was recognized in the second quarter of 2016 for the expected partial repatriation of overseas profits, resulting in an overall effective tax rate of 18%.

  • Net income was $12.2 million, or $1.07 per diluted share, compared to $12.3 million, or $0.98 per diluted share, in the second quarter of 2015. Net income, excluding the impact of the additional tax provision, would have increased 19% to $14.6 million, or $1.29 per diluted share.

  • The number of Active Members1 increased 6% to 126,440 at June 30, 2016, compared to 119,800 at March 31, 2016, and increased 65% compared to 76,400 at June 30, 2015.

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 2016 Financial Highlights

  • Total revenue increased 40% to $154.7 million, compared to $110.4 million in the first six months of 2015.
     
  • Operating income increased 51% to $28.9 million, compared to $19.2 million in the first six months of 2015.
     
  • Additional income tax provision of $4.8 million was recognized in the first six months of 2016 for the expected partial repatriation of overseas profits, resulting in an overall effective tax rate of 19%.
     
  • Net income was $23.5 million, or $2.03 per diluted share, compared to $19.0 million, or $1.52 per diluted share, in the first six months of 2015. Net income, excluding the impact of the additional tax provision, would have increased 49% to $28.2 million, or $2.44 per diluted share.

Management Commentary

“We had an excellent second quarter characterized by record product orders and operating profit,” commented Chris Sharng, President of Natural Health Trends Corp. “We once again achieved a double-digit, year-over-year increase in revenue growth driven by our emphasis on products, training, services and marketing.”

Mr. Sharng further commented, “Going forward, we will remain focused on expanding our global footprint, continuing to acquire members in new and existing markets, as well as our product development initiatives to drive sustainable, long-term growth. Through our strong cash generation, we are very well positioned to grow our business organically while simultaneously returning value to our stockholders through quarterly cash dividends and execution on our $70 million stock repurchase program.”

Balance Sheet and Cash Flow

  • At June 30, 2016, cash and cash equivalents totaled $109.6 million, compared to $99.6 million at March 31, 2016.
     
  • Net cash provided by operating activities in the second quarter of 2016 was $16.6 million, compared to $22.9 million in the second quarter of 2015. For the first six months of 2016, net cash provided by operating activities was $30.4 million, compared to $39.5 million in the first six months of 2015.
     
  • On July 19, 2016, the Company’s Board of Directors declared a quarterly cash dividend of $0.07 per share on outstanding common stock, which represents a 17% increase over the prior quarter dividend. The dividend will be payable on August 26, 2016 to stockholders of record as of August 16, 2016.
     
  • During the six months ended June 30, 2016, the Company repurchased $23.7 million of its common stock under its existing $70.0 million stock repurchase program. At June 30, 2016, approximately $32.0 million remained available for repurchases, inclusive of related estimated income tax.

Second Quarter 2016 Financial Results Conference Call

Management will host a conference call to discuss the second quarter 2016 financial results today, Wednesday, July 27, 2016 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date:Wednesday, July 27, 2016
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:13639821
Webcast:http://public.viavid.com/index.php?id=120028

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 July 27, 2016 through 11:59 p.m. Eastern Time on August 10, 2016 by dialing 1-877-870-5176 (domestic) and 1-858-384-5517 (international) and referencing the replay pin number: 13639821.

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, North America, 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 4, 2016 with the Securities and Exchange Commission. 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)
    
 June 30, 2016 December 31, 2015
 (Unaudited)  
ASSETS   
Current assets:   
Cash and cash equivalents$109,649  $104,914 
Accounts receivable93  57 
Inventories, net12,302  10,455 
Other current assets2,893  2,286 
Total current assets124,937  117,712 
Property and equipment, net1,236  894 
Goodwill1,764  1,764 
Restricted cash3,097  3,166 
Other assets620  616 
Total assets$131,654  $124,152 
LIABILITIES AND STOCKHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable$3,525  $2,862 
Income taxes payable862  379 
Accrued commissions18,651  19,634 
Other accrued expenses17,570  16,703 
Deferred revenue8,832  4,011 
Deferred tax liability60  60 
Amounts held in eWallets18,162  16,414 
Other current liabilities1,715  1,510 
Total current liabilities69,377  61,573 
Long-term incentive5,264  5,770 
Total liabilities74,641  67,343 
Commitments and contingencies   
Stockholders’ equity:   
Preferred stock   
Common stock13  13 
Additional paid-in capital86,554  85,963 
Retained earnings (accumulated deficit)12,572  (9,647)
Accumulated other comprehensive loss(237) (101)
Treasury stock, at cost(41,889) (19,419)
Total stockholders’ equity57,013  56,809 
Total liabilities and stockholders’ equity$131,654  $124,152 
        



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,
 2016 2015 2016 2015
Net sales$80,391  $69,716  $154,737  $110,425 
Cost of sales15,059  14,094  29,339  23,024 
Gross profit65,332  55,622  125,398  87,401 
Operating expenses:       
Commissions expense37,883  35,010  72,969  53,407 
Selling, general and administrative expenses12,431  8,281  23,335  14,704 
Depreciation and amortization91  68  180  109 
Total operating expenses50,405  43,359  96,484  68,220 
Income from operations14,927  12,263  28,914  19,181 
Other income (expense), net16  132  (8) 23 
Income before income taxes14,943  12,395  28,906  19,204 
Income tax provision2,742  122  5,425  193 
Net income$12,201  $12,273  $23,481  $19,011 
Income per common share:       
Basic$1.08  $0.99  $2.03  $1.53 
Diluted$1.07  $0.98  $2.03  $1.52 
Weighted-average number of common shares outstanding:       
Basic11,333  12,403  11,553  12,428 
Diluted11,359  12,461  11,579  12,513 
Cash dividends declared per common share$0.06  $0.03  $0.11  $0.05 
                



NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
 
 Six Months Ended June 30,
 2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES:   
Net income$23,481  $19,011 
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization180  109 
Stock-based compensation84  35 
Cumulative translation adjustment realized in net income132  (82)
Changes in assets and liabilities:   
Accounts receivable(34) (186)
Inventories, net(1,865) (1,524)
Other current assets(578) (672)
Other assets2  (232)
Accounts payable665  849 
Income taxes payable487  56 
Accrued commissions(989) 5,471 
Other accrued expenses2,597  4,674 
Deferred revenue4,816  5,459 
Amounts held in eWallets1,759  6,468 
Other current liabilities203  186 
Long-term incentive(506) (141)
Net cash provided by operating activities30,434  39,481 
CASH FLOWS FROM INVESTING ACTIVITIES:   
Purchases of property and equipment, net(524) (333)
Increase in restricted cash  (3,272)
Net cash used in investing activities(524) (3,605)
CASH FLOWS FROM FINANCING ACTIVITIES:   
Proceeds from exercise of warrants  309 
Repurchase of common stock(23,704) (6,082)
Dividends paid(1,262) (621)
Net cash used in financing activities(24,966) (6,394)
Effect of exchange rates on cash and cash equivalents(209) 124 
Net increase in cash and cash equivalents4,735  29,606 
CASH AND CASH EQUIVALENTS, beginning of period104,914  44,816 
CASH AND CASH EQUIVALENTS, end of period$109,649  $74,422 
NON-CASH FINANCING ACTIVITY:   
Issuance of treasury stock$1,741  $666 
        

 

CONTACTS:

Company Contact:
Scott Davidson
Senior Vice President and Chief Financial Officer
Natural Health Trends Corp.
Tel: 310-541-0888
scott.davidson@nhtglobal.com

Investors:
ADDO Investor Relations
Tel: 310-829-5400
investor.relations@nhtglobal.com

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