- 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.
- 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.
- 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 receivable | 93 | 57 | |||||
| Inventories, net | 12,302 | 10,455 | |||||
| Other current assets | 2,893 | 2,286 | |||||
| Total current assets | 124,937 | 117,712 | |||||
| Property and equipment, net | 1,236 | 894 | |||||
| Goodwill | 1,764 | 1,764 | |||||
| Restricted cash | 3,097 | 3,166 | |||||
| Other assets | 620 | 616 | |||||
| Total assets | $ | 131,654 | $ | 124,152 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 3,525 | $ | 2,862 | |||
| Income taxes payable | 862 | 379 | |||||
| Accrued commissions | 18,651 | 19,634 | |||||
| Other accrued expenses | 17,570 | 16,703 | |||||
| Deferred revenue | 8,832 | 4,011 | |||||
| Deferred tax liability | 60 | 60 | |||||
| Amounts held in eWallets | 18,162 | 16,414 | |||||
| Other current liabilities | 1,715 | 1,510 | |||||
| Total current liabilities | 69,377 | 61,573 | |||||
| Long-term incentive | 5,264 | 5,770 | |||||
| Total liabilities | 74,641 | 67,343 | |||||
| Commitments and contingencies | |||||||
| Stockholders’ equity: | |||||||
| Preferred stock | — | — | |||||
| Common stock | 13 | 13 | |||||
| Additional paid-in capital | 86,554 | 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’ equity | 57,013 | 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 sales | 15,059 | 14,094 | 29,339 | 23,024 | |||||||||||
| Gross profit | 65,332 | 55,622 | 125,398 | 87,401 | |||||||||||
| Operating expenses: | |||||||||||||||
| Commissions expense | 37,883 | 35,010 | 72,969 | 53,407 | |||||||||||
| Selling, general and administrative expenses | 12,431 | 8,281 | 23,335 | 14,704 | |||||||||||
| Depreciation and amortization | 91 | 68 | 180 | 109 | |||||||||||
| Total operating expenses | 50,405 | 43,359 | 96,484 | 68,220 | |||||||||||
| Income from operations | 14,927 | 12,263 | 28,914 | 19,181 | |||||||||||
| Other income (expense), net | 16 | 132 | (8 | ) | 23 | ||||||||||
| Income before income taxes | 14,943 | 12,395 | 28,906 | 19,204 | |||||||||||
| Income tax provision | 2,742 | 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: | |||||||||||||||
| Basic | 11,333 | 12,403 | 11,553 | 12,428 | |||||||||||
| Diluted | 11,359 | 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 amortization | 180 | 109 | |||||
| Stock-based compensation | 84 | 35 | |||||
| Cumulative translation adjustment realized in net income | 132 | (82 | ) | ||||
| Changes in assets and liabilities: | |||||||
| Accounts receivable | (34 | ) | (186 | ) | |||
| Inventories, net | (1,865 | ) | (1,524 | ) | |||
| Other current assets | (578 | ) | (672 | ) | |||
| Other assets | 2 | (232 | ) | ||||
| Accounts payable | 665 | 849 | |||||
| Income taxes payable | 487 | 56 | |||||
| Accrued commissions | (989 | ) | 5,471 | ||||
| Other accrued expenses | 2,597 | 4,674 | |||||
| Deferred revenue | 4,816 | 5,459 | |||||
| Amounts held in eWallets | 1,759 | 6,468 | |||||
| Other current liabilities | 203 | 186 | |||||
| Long-term incentive | (506 | ) | (141 | ) | |||
| Net cash provided by operating activities | 30,434 | 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 equivalents | 4,735 | 29,606 | |||||
| CASH AND CASH EQUIVALENTS, beginning of period | 104,914 | 44,816 | |||||
| CASH AND CASH EQUIVALENTS, end of period | $ | 109,649 | $ | 74,422 | |||
| NON-CASH FINANCING ACTIVITY: | |||||||
| Issuance of treasury stock | $ | 1,741 | $ | 666 | |||