May 7, 2019 | ||
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.) |
Units 1205-07, 12F, Mira Place Tower A, 132 Nathan Road, Tsimshatsui, Kowloon, Hong Kong | ||
(Address of principal executive offices, including zip code) | ||
+852-3107-0800 | ||
(Registrant’s telephone number, including area code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.001 per share | NHTC | The NASDAQ Stock Market LLC |
(d) | Exhibits. |
NATURAL HEALTH TRENDS CORP. | ||
By: | /s/ Timothy S. Davidson | |
Timothy S. Davidson | ||
Senior Vice President and Chief Financial Officer |
• | Total revenue of $19.3 million decreased 63% compared to $52.4 million in the first quarter of 2018 primarily due to a decline in Greater China revenue. |
• | Gross profit was $14.1 million compared to $42.1 million in the first quarter of 2018. As a percent of total revenue, gross profit was 73% compared to 81% in the first quarter of 2018 primarily due to product promotions and higher logistics costs. |
• | Operating loss was $2.7 million compared to operating income of $10.0 million in the first quarter of 2018. |
• | Net loss was $1.9 million, or $0.17 per diluted share, compared to net income of $8.8 million, or $0.78 per diluted share, in the first quarter of 2018. |
• | The number of Active Members1 decreased 11% to 87,340 at March 31, 2019, compared to 97,840 at December 31, 2018, and decreased 8% compared to 95,040 at March 31, 2018. |
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. |
• | Net cash used in operating activities was $11.4 million, compared to net cash provided by operating activities of $11.1 million in the first quarter of 2018. |
• | Total cash and cash equivalents were $118.7 million as of March 31, 2019, down from $132.7 million as of December 31, 2018. |
• | As of March 31, 2019, $32.0 million of the stock repurchase program previously approved on July 28, 2015 and increased on January 13, 2016 remained available for future purchases, inclusive of related estimated income tax. |
Date: | Tuesday, May 7, 2019 |
Time: | 1:30 p.m. Eastern Time / 10:30 a.m. Pacific Time |
Dial-in: | 1-877-407-0789 (Domestic) 1-201-689-8562 (International) |
Conference ID: | 13689758 |
Webcast: | http://public.viavid.com/index.php?id=134051 |
March 31, 2019 | December 31, 2018 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 118,699 | $ | 132,653 | |||
Inventories | 12,310 | 12,165 | |||||
Other current assets | 6,551 | 5,369 | |||||
Total current assets | 137,560 | 150,187 | |||||
Property and equipment, net | 888 | 934 | |||||
Operating lease right-of-use assets | 4,032 | — | |||||
Goodwill | 1,764 | 1,764 | |||||
Restricted cash | 3,068 | 2,998 | |||||
Deferred tax asset | 1,207 | 1,207 | |||||
Other assets | 829 | 831 | |||||
Total assets | $ | 149,348 | $ | 157,921 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,456 | $ | 1,631 | |||
Accrued commissions | 8,909 | 12,502 | |||||
Other accrued expenses | 4,823 | 6,121 | |||||
Deferred revenue | 3,754 | 6,795 | |||||
Amounts held in eWallets | 14,435 | 14,611 | |||||
Operating lease liabilities | 1,762 | — | |||||
Other current liabilities | 1,191 | 1,424 | |||||
Total current liabilities | 36,330 | 43,084 | |||||
Income taxes payable | 16,982 | 16,982 | |||||
Deferred tax liability | 186 | 186 | |||||
Long-term incentive | 7,650 | 7,808 | |||||
Operating lease liabilities | 2,345 | — | |||||
Total liabilities | 63,493 | 68,060 | |||||
Stockholders’ equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 13 | 13 | |||||
Additional paid-in capital | 86,249 | 86,415 | |||||
Retained earnings | 39,772 | 44,431 | |||||
Accumulated other comprehensive loss | (974 | ) | (1,250 | ) | |||
Treasury stock, at cost | (39,205 | ) | (39,748 | ) | |||
Total stockholders’ equity | 85,855 | 89,861 | |||||
Total liabilities and stockholders’ equity | $ | 149,348 | $ | 157,921 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
Net sales | $ | 19,328 | $ | 52,367 | |||
Cost of sales | 5,224 | 10,221 | |||||
Gross profit | 14,104 | 42,146 | |||||
Operating expenses: | |||||||
Commissions expense | 9,498 | 22,980 | |||||
Selling, general and administrative expenses | 7,315 | 9,122 | |||||
Total operating expenses | 16,813 | 32,102 | |||||
Income (loss) from operations | (2,709 | ) | 10,044 | ||||
Other income, net | 432 | 163 | |||||
Income (loss) before income taxes | (2,277 | ) | 10,207 | ||||
Income tax provision (benefit) | (354 | ) | 1,383 | ||||
Net income (loss) | $ | (1,923 | ) | $ | 8,824 | ||
Net income (loss) per common share: | |||||||
Basic | $ | (0.17 | ) | $ | 0.78 | ||
Diluted | $ | (0.17 | ) | $ | 0.78 | ||
Weighted-average number of common shares outstanding: | |||||||
Basic | 11,333 | 11,286 | |||||
Diluted | 11,333 | 11,288 |
Three Months Ended March 31, | |||||||
2019 | 2018 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income (loss) | $ | (1,923 | ) | $ | 8,824 | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||
Depreciation and amortization | 93 | 131 | |||||
Noncash lease expense | 447 | — | |||||
Changes in assets and liabilities: | |||||||
Inventories | (192 | ) | 473 | ||||
Other current assets | (1,159 | ) | 1,548 | ||||
Other assets | (2 | ) | (5 | ) | |||
Accounts payable | (174 | ) | 920 | ||||
Accrued commissions | (3,575 | ) | (1,119 | ) | |||
Other accrued expenses | (795 | ) | 1,483 | ||||
Deferred revenue | (3,030 | ) | (333 | ) | |||
Amounts held in eWallets | (142 | ) | (466 | ) | |||
Operating lease liabilities | (499 | ) | — | ||||
Other current liabilities | (241 | ) | (3 | ) | |||
Long-term incentive | (158 | ) | (308 | ) | |||
Net cash provided by (used in) operating activities | (11,350 | ) | 11,145 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (46 | ) | (17 | ) | |||
Net cash used in investing activities | (46 | ) | (17 | ) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Dividends paid | (2,736 | ) | (1,479 | ) | |||
Net cash used in financing activities | (2,736 | ) | (1,479 | ) | |||
Effect of exchange rates on cash, cash equivalents and restricted cash | 248 | 247 | |||||
Net increase (decrease) in cash, cash equivalents and restricted cash | (13,884 | ) | 9,896 | ||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 135,651 | 138,478 | |||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 121,767 | $ | 148,374 | |||
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||||
Issuance of treasury stock for employee awards, net | $ | 377 | $ | 554 | |||
Right-of-use assets obtained in exchange for operating lease liabilities | $ | 4,462 | $ | — |