Document
false0000912061 0000912061 2019-08-07 2019-08-07


UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
 
August 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)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

☐   Emerging growth company

o    If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Securities registered pursuant to Section 12(b) of the Exchange Act:
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





Item 2.02 Results of Operations and Financial Condition.
 
On August 7, 2019, Natural Health Trends Corp. issued an earnings release announcing its results for the quarter ended June 30, 2019. The press release is attached hereto as exhibit 99.1.
 
Item 9.01 Financial Statements and Exhibits.
 
(d)
Exhibits.
99.1       Press Release of Natural Health Trends Corp. dated August 7, 2019
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date: August 7, 2019
 
NATURAL HEALTH TRENDS CORP.
 
 
 
 
 
 
 
By:
/s/ Timothy S. Davidson                                                     
 
 
Timothy S. Davidson
 
 
Senior Vice President and Chief Financial Officer



 Exhibit
Exhibit 99.1

Natural Health Trends Reports Second Quarter 2019 Financial Results

–
Revenue of $23.4 million, a 21% increase compared to the first quarter of 2019
–
Net income of $0.4 million
–
Repurchased $6.7 million of common stock

HONG KONG – August 7, 2019 – 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 second quarter ended June 30, 2019.

Second Quarter 2019 Financial Highlights

•
Revenue of $23.4 million decreased 54% compared to $50.9 million in the second quarter of 2018 and increased 21% compared to $19.3 million in the first quarter of 2019.
•
Gross profit was $18.0 million compared to $40.5 million in the second quarter of 2018, and $14.1 million in the first quarter of 2019. As a percent of total revenue, gross profit was 77% compared to 80% in the second quarter of 2018 and 73% in the first quarter of 2019.
•
Operating loss was $4,000 compared to operating income of $10.1 million in the second quarter of 2018, and operating loss of $2.7 million in the first quarter of 2019.
•
Net income was $397,000, or $0.04 per diluted share, compared to $9.0 million, or $0.80 per diluted share, in the second quarter of 2018, and a net loss of $1.9 million, or $0.17 per diluted share, in the first quarter of 2019.
•
The number of Active Members1 decreased 10% to 78,280 at June 30, 2019, compared to 87,340 at March 31, 2019, and decreased 16% compared to 93,000 at June 30, 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.

Year-to-Date 2019 Financial Highlights

•
Revenue of $42.8 million decreased 59% compared to $103.3 million in the first six months of 2018.
•
Gross profit was $32.1 million compared to $82.7 million in the first six months of 2018. As a percent of total revenue, gross profit was 75% compared to 80% in the first six months of 2018.
•
Operating loss was $2.7 million compared to operating income of $20.2 million in the first six months of 2018.
•
Net loss was $1.5 million, or $0.14 per diluted share, compared to net income of $17.8 million, or $1.58 per diluted share, in the first six months of 2018.


1


Management Commentary

“While we continued to face challenges in China that placed significant pressure on our top-line, we were pleased with the high level of commitment shown by our members through the difficult operating environment,” commented Chris Sharng, President of Natural Health Trends Corp. “As a result, our second quarter revenue was up 21% compared to the first quarter of 2019. Though the Chinese government’s 100-day campaign expired in late April, there has been no official conclusion to formally end the program. As such, we continued our voluntary suspension of member activities in China through the entirety of the second quarter as our cooperation with the Chinese government is a top priority. We continue to believe this proactive approach is the best way to position our company for longer-term success and support the actions taken by the Chinese government to protect Chinese consumers.”

Mr. Sharng further commented, “We are encouraged by our progress in other key markets, especially Latin America, led by Peru; Southeast Asia; India and Europe. Further, we deployed several different promotions throughout the quarter to encourage product purchases which were very well received by our members.”

Balance Sheet and Cash Flow

•
Net cash used in operating activities was $3.7 million, including a $1.7 million installment payment on tax payables arising from the 2016 Tax Reform Act effect, compared to $11.4 million in the first quarter of 2019, and net cash provided by operating activities of $5.3 million in the second quarter of 2018. For the first six months of 2019, net cash used in operating activities was $15.1 million, compared to net cash provided by operating activities of $16.5 million in the first six months of 2018.
•
Total cash and cash equivalents were $108.1 million as of June 30, 2019, down from $132.7 million as of December 31, 2018.
•
The Company repurchased 612,729 shares of its common stock at an average price of $10.90 for a total of $6.7 million during the second quarter of 2019. As of June 30, 2019, $25.3 million of the stock repurchase program remained available for future purchases, inclusive of related estimated income tax.

Second Quarter 2019 Financial Results Conference Call

Management will host a conference call to discuss the second quarter 2019 financial results today, Wednesday, August 7, 2019 at 11:30 a.m. Eastern Time. The conference call details are as follows:
Date:
Wednesday, August 7, 2019
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:
13691790
Webcast:
http://public.viavid.com/index.php?id=134956
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 7, 2019 through 11:59 p.m. Eastern Time on August 21, 2019 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13691790.

2



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 April 26, 2019 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.

CONTACTS:

Company 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
scott.davidson@nhtglobal.com
         
Investor Contact:
ADDO Investor Relations
Tel: 310-829-5400
investor.relations@nhtglobal.com

3


NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) 

 
June 30, 2019
 
December 31, 2018
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
108,106

 
$
132,653

Inventories
10,343

 
12,165

Other current assets
6,127

 
5,369

Total current assets
124,576

 
150,187

Property and equipment, net
887

 
934

Operating lease right-of-use assets
3,796

 
—

Goodwill
1,764

 
1,764

Restricted cash
3,000

 
2,998

Deferred tax asset
1,210

 
1,207

Other assets
858

 
831

Total assets
$
136,091

 
$
157,921

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
675

 
$
1,631

Accrued commissions
7,051

 
12,502

Other accrued expenses
3,676

 
6,121

Deferred revenue
3,390

 
6,795

Amounts held in eWallets
13,879

 
14,611

Operating lease liabilities
1,741

 
—

Other current liabilities
1,116

 
1,424

Total current liabilities
31,528

 
43,084

Income taxes payable
15,365

 
16,982

Deferred tax liability
187

 
186

Long-term incentive
7,531

 
7,808

Operating lease liabilities
2,128

 
—

Total liabilities
56,739

 
68,060

Stockholders’ equity:
 
 
 
Preferred stock
—

 
—

Common stock
13

 
13

Additional paid-in capital
86,249

 
86,415

Retained earnings
40,169

 
44,431

Accumulated other comprehensive loss
(1,192
)
 
(1,250
)
Treasury stock, at cost
(45,887
)
 
(39,748
)
Total stockholders’ equity
79,352

 
89,861

Total liabilities and stockholders’ equity
$
136,091

 
$
157,921



4


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,
 
2019
 
2018
 
2019
 
2018
Net sales
$
23,428

 
$
50,910

 
$
42,756

 
$
103,277

Cost of sales
5,407

 
10,399

 
10,631

 
20,620

Gross profit
18,021

 
40,511

 
32,125

 
82,657

Operating expenses:
 
 
 
 
 
 
 
Commissions expense
11,398

 
22,310

 
20,896

 
45,290

Selling, general and administrative expenses
6,627

 
8,093

 
13,942

 
17,215

Total operating expenses
18,025

 
30,403

 
34,838

 
62,505

Income (loss) from operations
(4
)
 
10,108

 
(2,713
)
 
20,152

Other income, net
373

 
53

 
805

 
216

Income (loss) before income taxes
369

 
10,161

 
(1,908
)
 
20,368

Income tax provision (benefit)
(28
)
 
1,138

 
(382
)
 
2,521

Net income (loss)
$
397

 
$
9,023

 
$
(1,526
)
 
$
17,847

Net income (loss) per common share:
 
 
 
 
 
 
 
Basic
$
0.04

 
$
0.80

 
$
(0.14
)
 
$
1.58

Diluted
$
0.04

 
$
0.80

 
$
(0.14
)
 
$
1.58

Weighted-average number of common shares outstanding:
 
 
 
 
 
 
 
Basic
11,082

 
11,298

 
11,207

 
11,292

Diluted
11,082

 
11,305

 
11,207

 
11,297



5


NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
 
 
Six Months Ended June 30,
 
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income (loss)
$
(1,526
)
 
$
17,847

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
189

 
235

Noncash lease expense
914

 
—

Deferred income taxes
(3
)
 
—

Changes in assets and liabilities:
 
 
 
Inventories
1,881

 
(2,057
)
Other current assets
(752
)
 
1,955

Other assets
(35
)
 
(73
)
Accounts payable
(956
)
 
1,246

Accrued commissions
(5,475
)
 
(707
)
Other accrued expenses
(1,946
)
 
1,119

Deferred revenue
(3,409
)
 
(592
)
Amounts held in eWallets
(765
)
 
(192
)
Operating lease liabilities
(964
)
 
—

Income taxes payable
(1,617
)
 
(1,657
)
Other current liabilities
(318
)
 
(72
)
Long-term incentive
(277
)
 
(562
)
Net cash provided by (used in) operating activities
(15,059
)
 
16,490

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Purchases of property and equipment
(141
)
 
(113
)
Net cash used in investing activities
(141
)
 
(113
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Repurchase of common stock
(6,682
)
 
—

Dividends paid
(2,736
)
 
(23,093
)
Net cash used in financing activities
(9,418
)
 
(23,093
)
Effect of exchange rates on cash, cash equivalents and restricted cash
73

 
(381
)
Net decrease in cash, cash equivalents and restricted cash
(24,545
)
 
(7,097
)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period
135,651

 
138,478

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period
$
111,106

 
$
131,381

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
$
4,697

 
$
—



6

v3.19.2
Document And Entity Information
Aug. 07, 2019
Cover page.  
Document Type 8-K
Document Period End Date Aug. 07, 2019
Entity Registrant Name NATURAL HEALTH TRENDS CORP.
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
Entity Address, Address Line Two Mira Place Tower A
Entity Address, Address Line Three 132 Nathan Road
Entity Address, City or Town Tsimshatsui
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, par value $0.001 per share
Trading Symbol NHTC
Entity Central Index Key 0000912061
Amendment Flag false