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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Emerging growth company
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| 99.1 | Press Release of Natural Health Trends Corp. dated August 3, 2022 | ||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
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NATURAL HEALTH TRENDS CORP.
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By:
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/s/ Timothy S. Davidson
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Timothy S. Davidson
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Senior Vice President and Chief Financial Officer
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Exhibit 99.1
Natural Health Trends Reports Second Quarter 2022 Financial Results
| – | COVID restrictions and lockdowns in China continue to impact our business |
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– |
Generated positive operating income and net income despite challenges |
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| – | Declared a quarterly cash dividend of $0.20 per share |
HONG KONG – August 3, 2022 – 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, 2022.
Second Quarter 2022 Financial Highlights
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• |
Revenue of $13.4 million increased 16% compared to $11.5 million in the first quarter of 2022 and decreased 17% compared to $16.2 million in the second quarter of 2021. |
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Operating income was $215,000 compared to operating loss of $383,000 in the first quarter of 2022 and operating income of $385,000 in the second quarter of 2021. |
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Net income was $183,000, or $0.02 per diluted share, compared to net loss of $105,000, or $0.01 per diluted share, in the first quarter of 2022 and net income of $229,000, or $0.02 per diluted share, in the second quarter of 2021. |
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The number of Active Members1 decreased 3% to 43,020 at June 30, 2022 compared to 44,490 at March 31, 2022, and decreased 8% compared to 46,860 at June 30, 2021. |
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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 2022 Financial Highlights
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Revenue of $24.9 million decreased 16% compared to $29.6 million in the first six months of 2021. |
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Operating loss was $168,000 compared to operating income of $605,000 in the first six months of 2021. |
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Net income was $78,000, or $0.01 per diluted share, compared to $382,000, or $0.03 per diluted share, in the first six months of 2021. |
Management Commentary
“We continued to face significant and unpredictable COVID-related disruptions in the second quarter as lockdowns and social restrictions, along with supply chain bottlenecks, persisted in Greater China,” commented Chris Sharng, President of Natural Health Trends Corp. “Despite not being able to host any larger in-person activities, we finished the quarter strong with a well-attended virtual event and our members' positive response to promotional incentives. In June, working closely with our leaders, we rolled out a new virtual training system that incorporates company-sponsored product training and member-led business, motivational and leadership training to better support the ongoing development and engagement of members in the Greater China market.”
Mr. Sharng continued, “We are encouraged about the growth in the European market that emanated from our Swedish team after hosting a successful face-to-face event in April. In other markets outside of Greater China we supported our members both online and in-person through virtual events, incentive trips and local sales initiatives aimed at driving member and customer growth. We remain committed to the fundamentals of our business and to implementing strategies for future growth with the objective of returning value to our shareholders.”
Balance Sheet and Cash Flow
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Net cash used in operating activities was $3.5 million in the first six months of 2022, compared to net cash provided by operating activities of $548,000 in the first six months of 2021. |
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Total cash and cash equivalents were $75.6 million at June 30, 2022, down from $79.4 million at March 31, 2022. |
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On August 1, 2022, 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 August 26, 2022 to stockholders of record as of August 16, 2022. |
Second Quarter 2022 Financial Results Conference Call
Management will host a conference call to discuss the second quarter 2022 financial results today, Wednesday, August 3, 2022 at 11:30 a.m. Eastern Time. The conference call details are as follows:
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Date: |
Wednesday, August 3, 2022 |
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Time: |
11:30 a.m. Eastern Time / 8:30 a.m. Pacific Time |
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Dial-in: |
1-877-407-0789 (Domestic) 1-201-689-8562 (International) |
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Conference ID: |
13730852 |
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Webcast: |
https://viavid.webcasts.com/starthere.jsp?ei=1556559&tp_key=8061062de2 |
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 August 3, 2022 through 11:59 p.m. Eastern Time on August 17, 2022 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13730852.
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, the Americas, 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 February 25, 2022 with the Securities and Exchange Commission (SEC), as well as in subsequent reports filed this year with the SEC. The Company assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.
CONTACT:
Scott Davidson
Senior Vice President and Chief Financial Officer
Natural Health Trends Corp.
Tel (Hong Kong): +852-3107-0800
Tel (U.S.): 310-541-0888
investor.relations@nhtglobal.com
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
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June 30, 2022 |
December 31, 2021 |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | 75,633 | $ | 83,843 | ||||
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Inventories |
5,193 | 5,257 | ||||||
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Other current assets |
3,408 | 4,369 | ||||||
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Total current assets |
84,234 | 93,469 | ||||||
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Property and equipment, net |
430 | 463 | ||||||
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Operating lease right-of-use assets |
2,460 | 3,021 | ||||||
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Restricted cash |
78 | 522 | ||||||
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Deferred tax asset |
289 | 309 | ||||||
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Other assets |
541 | 571 | ||||||
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Total assets |
$ | 88,032 | $ | 98,355 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 758 | $ | 761 | ||||
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Income taxes payable |
2,987 | 1,345 | ||||||
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Accrued commissions |
3,096 | 3,636 | ||||||
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Other accrued expenses |
1,789 | 1,933 | ||||||
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Deferred revenue |
6,692 | 8,536 | ||||||
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Amounts held in eWallets |
5,441 | 6,341 | ||||||
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Operating lease liabilities |
1,131 | 1,239 | ||||||
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Other current liabilities |
850 | 865 | ||||||
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Total current liabilities |
22,744 | 24,656 | ||||||
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Income taxes payable |
9,098 | 12,130 | ||||||
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Deferred tax liability |
153 | 153 | ||||||
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Operating lease liabilities |
1,489 | 1,928 | ||||||
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Total liabilities |
33,484 | 38,867 | ||||||
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Stockholders’ equity: |
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Preferred stock |
— | — | ||||||
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Common stock |
13 | 13 | ||||||
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Additional paid-in capital |
86,102 | 86,102 | ||||||
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Accumulated deficit |
(4,723 | ) | (231 | ) | ||||
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Accumulated other comprehensive loss |
(940 | ) | (492 | ) | ||||
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Treasury stock, at cost |
(25,904 | ) | (25,904 | ) | ||||
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Total stockholders’ equity |
54,548 | 59,488 | ||||||
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Total liabilities and stockholders’ equity |
$ | 88,032 | $ | 98,355 | ||||
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
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Three Months Ended June 30, |
Six Months Ended June 30, |
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2022 |
2021 |
2022 |
2021 |
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Net sales |
$ | 13,360 | $ | 16,152 | $ | 24,906 | $ | 29,621 | ||||||||
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Cost of sales |
3,392 | 3,934 | 6,300 | 7,189 | ||||||||||||
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Gross profit |
9,968 | 12,218 | 18,606 | 22,432 | ||||||||||||
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Operating expenses: |
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Commissions expense |
5,767 | 6,927 | 10,507 | 12,441 | ||||||||||||
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Selling, general and administrative expenses |
3,986 | 4,906 | 8,267 | 9,386 | ||||||||||||
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Total operating expenses |
9,753 | 11,833 | 18,774 | 21,827 | ||||||||||||
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Income (loss) from operations |
215 | 385 | (168 | ) | 605 | |||||||||||
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Other income (expense), net |
175 | (59 | ) | 285 | (39 | ) | ||||||||||
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Income before income taxes |
390 | 326 | 117 | 566 | ||||||||||||
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Income tax provision |
207 | 97 | 39 | 184 | ||||||||||||
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Net income |
$ | 183 | $ | 229 | $ | 78 | $ | 382 | ||||||||
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Net income per common share: |
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Basic |
$ | 0.02 | $ | 0.02 | $ | 0.01 | $ | 0.03 | ||||||||
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Diluted |
$ | 0.02 | $ | 0.02 | $ | 0.01 | $ | 0.03 | ||||||||
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Weighted average common shares outstanding: |
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Basic |
11,346 | 10,968 | 11,300 | 10,921 | ||||||||||||
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Diluted |
11,424 | 11,424 | 11,424 | 11,424 | ||||||||||||
NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
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Six Months Ended June 30, |
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2022 |
2021 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
$ | 78 | $ | 382 | ||||
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Adjustments to reconcile net income to net cash provided by (used in) operating activities: |
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Depreciation and amortization |
106 | 156 | ||||||
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Noncash lease expense |
599 | 594 | ||||||
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Deferred income taxes |
12 | 24 | ||||||
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Changes in assets and liabilities: |
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Inventories |
7 | 53 | ||||||
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Other current assets |
1,002 | (117 | ) | |||||
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Other assets |
1 | 65 | ||||||
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Accounts payable |
2 | 446 | ||||||
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Income taxes payable |
(1,390 | ) | (1,376 | ) | ||||
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Accrued commissions |
(531 | ) | (37 | ) | ||||
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Other accrued expenses |
(132 | ) | (66 | ) | ||||
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Deferred revenue |
(1,788 | ) | 2,629 | |||||
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Amounts held in eWallets |
(862 | ) | (1,186 | ) | ||||
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Operating lease liabilities |
(600 | ) | (629 | ) | ||||
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Other current liabilities |
(4 | ) | (390 | ) | ||||
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Net cash provided by (used in) operating activities |
(3,500 | ) | 548 | |||||
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchases of property and equipment |
(78 | ) | (147 | ) | ||||
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Net cash used in investing activities |
(78 | ) | (147 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Dividends paid |
(4,570 | ) | (4,570 | ) | ||||
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Net cash used in financing activities |
(4,570 | ) | (4,570 | ) | ||||
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Effect of exchange rates on cash, cash equivalents and restricted cash |
(506 | ) | (86 | ) | ||||
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Net decrease in cash, cash equivalents and restricted cash |
(8,654 | ) | (4,255 | ) | ||||
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period |
84,365 | 92,892 | ||||||
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CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period |
$ | 75,711 | $ | 88,637 | ||||
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SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: |
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Right-of-use assets obtained in exchange for operating lease liabilities |
$ | 77 | $ | 400 | ||||
Document And Entity Information |
Aug. 03, 2022 |
|---|---|
| Document Information [Line Items] | |
| Entity, Registrant Name | NATURAL HEALTH TRENDS CORP. |
| Document, Type | 8-K |
| Document, Period End Date | Aug. 03, 2022 |
| Entity, Incorporation, State or Country Code | DE |
| Entity, File Number | 001-36849 |
| Entity, Tax Identification Number | 59-2705336 |
| Entity, Address, Address Line One | Units 1205-07, 12F, Mira Place Tower A |
| Entity, Address, Address Line Two | 132 Nathan Road |
| Entity, Address, Address Line Three | Tsimshatsui |
| Entity, Address, City or Town | Kowloon |
| Entity, Address, Country | HK |
| City Area Code | 852 |
| Local Phone Number | 3107-0800 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Entity, Emerging Growth Company | false |
| Title of 12(b) Security | Common Stock |
| Trading Symbol | NHTC |
| Security Exchange Name | NASDAQ |
| Amendment Flag | false |
| Entity, Central Index Key | 0000912061 |