February 8, 2017 | ||
Date of Report (Date of earliest event reported) | ||
NATURAL HEALTH TRENDS CORP. | ||
(Exact name of registrant as specified in its charter) |
Delaware | 001-36849 | 59-2705336 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
609 Deep Valley Drive, Suite 395, Rolling Hills Estates, California 90274 | ||
(Address of principal executive offices, including zip code) | ||
(310) 541-0888 | ||
(Registrant’s telephone number, including area code) |
(d) | Exhibits. |
NATURAL HEALTH TRENDS CORP. | ||
By: | /s/ Timothy S. Davidson | |
Timothy S. Davidson | ||
Senior Vice President and Chief Financial Officer |
• | Record quarterly operating income increased 44% year-over-year to $20.0 million |
• | Active Members1 increased 9% year-over-year to 118,960 |
• | Increased quarterly dividend 13% to $0.09 per share |
• | Declared special dividend of $0.35 per share |
• | Total revenue decreased 15% to $62.3 million, compared to $73.7 million in the fourth quarter of 2015. |
◦ | Revenue from the Company’s Hong Kong operations, which represented 90% of total revenue, decreased 17% to $56.1 million, compared to $67.7 million in the fourth quarter of 2015. |
◦ | Revenue outside of Hong Kong increased 5% to $6.2 million, compared to $5.9 million in the fourth quarter of 2015. |
• | Operating income increased 44% to $20.0 million, compared to $13.9 million in the fourth quarter of 2015. |
• | Net income was $19.0 million, or $1.70 per diluted share, compared to $13.7 million, or $1.13 per diluted share, in the fourth quarter of 2015. |
• | The number of Active Members1 decreased 3% to 118,960 at December 31, 2016, compared to 122,900 at September 30, 2016, and increased 9% compared to 109,360 at December 31, 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. |
• | Total revenue increased 9% to $287.7 million, compared to $264.9 million for the full year of 2015. |
• | Operating income increased 34% to $64.1 million, compared to $47.9 million for the full year of 2015. |
• | Recognized income tax provision of $9.0 million primarily due to the expected partial repatriation of overseas profits, an increase of $8.4 million compared to the full year of 2015. |
• | Net income was $55.1 million, or $4.83 per diluted share, compared to $47.2 million, or $3.82 per diluted share, for the full year of 2015. |
• | Net cash provided by operating activities in the fourth quarter of 2016 was $16.9 million, compared to $16.1 million in the fourth quarter of 2015. For the full year of 2016, net cash provided by operating activities was $53.2 million, compared to $81.3 million for the full year of 2015. |
• | On January 24, 2017, the Company's Board of Directors declared a quarterly dividend of $0.09 per share on outstanding common stock, which represents a 13% increase over the prior quarter dividend, and a special cash dividend of $0.35 per share on outstanding common stock. The dividends will be payable on March 3, 2017 to stockholders of record as of February 21, 2017. |
• | For the full year of 2016, the Company repurchased $23.7 million of its common stock under its existing $70.0 million stock repurchase program. At December 31, 2016, approximately $32.0 million remained available for repurchases, inclusive of related estimated income tax. |
Date: | Wednesday, February 8, 2017 |
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: | 13652401 |
Webcast: | http://public.viavid.com/index.php?id=122399 |
December 31, 2016 | December 31, 2015 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 125,921 | $ | 104,914 | |||
Inventories, net | 11,257 | 10,455 | |||||
Other current assets | 4,066 | 2,343 | |||||
Total current assets | 141,244 | 117,712 | |||||
Property and equipment, net | 1,388 | 894 | |||||
Goodwill | 1,764 | 1,764 | |||||
Restricted cash | 2,963 | 3,166 | |||||
Other assets | 692 | 616 | |||||
Total assets | $ | 148,051 | $ | 124,152 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 2,145 | $ | 2,862 | |||
Income taxes payable | 663 | 379 | |||||
Accrued commissions | 13,611 | 19,634 | |||||
Other accrued expenses | 14,989 | 16,703 | |||||
Deferred revenue | 4,948 | 4,011 | |||||
Amounts held in eWallets | 19,165 | 16,414 | |||||
Other current liabilities | 1,633 | 1,510 | |||||
Total current liabilities | 57,154 | 61,513 | |||||
Deferred tax liability | 268 | 60 | |||||
Long-term incentive | 8,190 | 5,770 | |||||
Total liabilities | 65,612 | 67,343 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 13 | 13 | |||||
Additional paid-in capital | 86,574 | 85,963 | |||||
Retained earnings (accumulated deficit) | 38,548 | (9,647 | ) | ||||
Accumulated other comprehensive loss | (807 | ) | (101 | ) | |||
Treasury stock, at cost | (41,889 | ) | (19,419 | ) | |||
Total stockholders’ equity | 82,439 | 56,809 | |||||
Total liabilities and stockholders’ equity | $ | 148,051 | $ | 124,152 |
Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||
Net sales | $ | 62,312 | $ | 73,656 | $ | 287,728 | $ | 264,860 | |||||||
Cost of sales | 11,937 | 15,073 | 54,903 | 54,098 | |||||||||||
Gross profit | 50,375 | 58,583 | 232,825 | 210,762 | |||||||||||
Operating expenses: | |||||||||||||||
Commissions expense | 21,503 | 33,155 | 125,050 | 126,598 | |||||||||||
Selling, general and administrative expenses | 8,740 | 11,453 | 43,245 | 36,024 | |||||||||||
Depreciation and amortization | 118 | 82 | 394 | 263 | |||||||||||
Total operating expenses | 30,361 | 44,690 | 168,689 | 162,885 | |||||||||||
Income from operations | 20,014 | 13,893 | 64,136 | 47,877 | |||||||||||
Other income (expense), net | (99 | ) | 28 | (59 | ) | (84 | ) | ||||||||
Income before income taxes | 19,915 | 13,921 | 64,077 | 47,793 | |||||||||||
Income tax provision | 867 | 222 | 8,991 | 552 | |||||||||||
Net income | $ | 19,048 | $ | 13,699 | $ | 55,086 | $ | 47,241 | |||||||
Income per common share: | |||||||||||||||
Basic | $ | 1.70 | $ | 1.13 | $ | 4.84 | $ | 3.84 | |||||||
Diluted | $ | 1.70 | $ | 1.13 | $ | 4.83 | $ | 3.82 | |||||||
Weighted-average number of common shares outstanding: | |||||||||||||||
Basic | 11,219 | 12,118 | 11,382 | 12,302 | |||||||||||
Diluted | 11,234 | 12,159 | 11,407 | 12,372 | |||||||||||
Cash dividends declared per common share | $ | 0.43 | $ | 0.05 | $ | 0.61 | $ | 0.14 |
Year Ended December 31, | |||||||
2016 | 2015 | ||||||
(Unaudited) | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 55,086 | $ | 47,241 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 394 | 263 | |||||
Stock-based compensation | 104 | 86 | |||||
Cumulative translation adjustment realized in net income | 132 | (82 | ) | ||||
Deferred income taxes | 217 | (15 | ) | ||||
Changes in assets and liabilities: | |||||||
Inventories, net | (851 | ) | (6,762 | ) | |||
Other current assets | (1,681 | ) | (1,025 | ) | |||
Other assets | (90 | ) | (267 | ) | |||
Accounts payable | (714 | ) | 637 | ||||
Income taxes payable | 303 | (115 | ) | ||||
Accrued commissions | (6,031 | ) | 10,840 | ||||
Other accrued expenses | 51 | 10,714 | |||||
Deferred revenue | 947 | 1,331 | |||||
Amounts held in eWallets | 2,752 | 14,350 | |||||
Other current liabilities | 135 | 25 | |||||
Long-term incentive | 2,420 | 4,105 | |||||
Net cash provided by operating activities | 53,174 | 81,326 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment, net | (905 | ) | (710 | ) | |||
Increase in restricted cash | — | (3,028 | ) | ||||
Net cash used in investing activities | (905 | ) | (3,738 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from exercise of warrants | — | 309 | |||||
Repurchase of common stock | (23,704 | ) | (16,071 | ) | |||
Dividends paid | (6,891 | ) | (1,709 | ) | |||
Net cash used in financing activities | (30,595 | ) | (17,471 | ) | |||
Effect of exchange rates on cash and cash equivalents | (667 | ) | (19 | ) | |||
Net increase in cash and cash equivalents | 21,007 | 60,098 | |||||
CASH AND CASH EQUIVALENTS, beginning of period | 104,914 | 44,816 | |||||
CASH AND CASH EQUIVALENTS, end of period | $ | 125,921 | $ | 104,914 | |||
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||||
Cash paid for income taxes, net of refunds | $ | 8,791 | $ | 707 | |||
Issuance of treasury stock | 1,741 | 666 |