nhtc-20200506
0000912061false00009120612020-05-062020-05-06

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
 
May 6, 2020
Date of Report (Date of earliest event reported)
 NATURAL HEALTH TRENDS CORP.
(Exact name of registrant as specified in its charter)
Delaware001-3684959-2705336
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value 00009120612020-05-062020-05-06

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
 
May 6, 2020
Date of Report (Date of earliest event reported)
 NATURAL HEALTH TRENDS CORP.
(Exact name of registrant as specified in its charter)
Delaware001-3684959-2705336
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareNHTCThe NASDAQ Stock Market LLC




Item 2.02 Results of Operations and Financial Condition.
 
On May 6, 2020, Natural Health Trends Corp. issued an earnings release announcing its results for the quarter ended March 31, 2020. The press release is attached hereto as exhibit 99.1.
 
Item 9.01 Financial Statements and Exhibits.
 
(d)Exhibits.
 
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: May 6, 2020
 NATURAL HEALTH TRENDS CORP.
   
   
 By:/s/ Timothy S. Davidson                                                     
  Timothy S. Davidson
  Senior Vice President and Chief Financial Officer

NHTCThe NASDAQ Stock Market LLC




Item 2.02 Results of Operations and Financial Condition.
 
On May 6, 2020, Natural Health Trends Corp. issued an earnings release announcing its results for the quarter ended March 31, 2020. 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 May 6, 2020
 
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: May 6, 2020
 NATURAL HEALTH TRENDS CORP.
   
   
 By:/s/ Timothy S. Davidson                                                     
  Timothy S. Davidson
  Senior Vice President and Chief Financial Officer


Document

Exhibit 99.1

Natural Health Trends Reports First Quarter 2020 Financial Results

Strong balance sheet with ample liquidity and $95 million in cash and cash equivalents
Declared a quarterly cash dividend of $0.20 per share
Expect to realize $8 million in annualized cost savings in 2020

HONG KONG – May 6, 2020 – 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 first quarter ended March 31, 2020.

First Quarter 2020 Financial Highlights

Revenue of $14.9 million decreased 23% compared to $19.3 million in the first quarter of 2019.
Operating loss was $1.4 million compared to a loss of $2.7 million in the first quarter of 2019.
Net loss was $573,000, or $0.05 per diluted share, compared to 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 2% to 56,490 at March 31, 2020 compared to 57,410 at December 31, 2019, and decreased 35% compared to 87,340 at March 31, 2019.
1Natural Health Trends defines Active Members as those that have placed at least one product order with the Company during the preceding twelve-month period.

Management Commentary

“First and foremost, our thoughts are with all of those around the world who have been impacted by the coronavirus,” commented Chris Sharng, President of Natural Health Trends Corp. “I am pleased that we have continued to run our operations efficiently with the health and safety of our employees, members and customers guiding our decisions as our top priority. The impact of the pandemic followed the already difficult operating conditions we experienced throughout 2019. While we could have never foreseen the impact COVID-19 would have on the global economy, we focused our efforts in 2019 on preparing our business to adapt to new realities following China’s 100-day campaign and have been applying key learnings from our experience to support our affected markets. To that end, we started implementing aggressive cost reduction measures beginning in the second half of 2019 which were partially offset by additional spending during the first quarter in direct response to COVID-19 and the governments’ measures to control the spread of the virus. As a result of the net effect of these actions, we narrowed the scope of our first quarter operating loss and decline in cash flow from operations despite the fact that our main markets were under severe lockdown for most of first quarter of 2020.”

Mr. Sharng concluded, “We have ample liquidity with $95 million in cash and cash equivalents and zero debt. Further, our highly variable cost structure allows us the flexibility to adapt in-line with order volume. As previously announced, we put a program in place to position us for increased operating efficiencies in several areas including reducing headcount and promotional spending. As a result, we now expect to realize annualized cost savings of approximately $8 million in 2020. I feel confident our employees and members will work together through these unprecedented times with our support and that we will emerge from this downturn even stronger than before.”
1



Balance Sheet and Cash Flow

Net cash used in operating activities was $990,000 in the first quarter of 2020, compared to $11.3 million in the first quarter of 2019.
Total cash and cash equivalents were $95.4 million at March 31, 2020, down slightly from $96.0 million at December 31, 2019.
On May 4, 2020, 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 May 29, 2020 to stockholders of record as of May 19, 2020.

First Quarter 2020 Financial Results Conference Call

Management will host a conference call to discuss the first quarter 2020 financial results today, Wednesday, May 6, 2020 at 11:30 a.m. Eastern Time. The conference call details are as follows:
Date:
Wednesday, May 6, 2020
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:
13700943
Webcast:
http://public.viavid.com/index.php?id=138751

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 May 6, 2020 through 11:59 p.m. Eastern Time on May 20, 2020 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13700943.

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 March 9, 2020 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.

2


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) 

 March 31, 2020December 31, 2019
 (Unaudited) 
ASSETS  
Current assets:  
Cash and cash equivalents$95,393  $96,035  
Inventories5,406  6,404  
Other current assets6,922  5,936  
Total current assets107,721  108,375  
Property and equipment, net649  735  
Operating lease right-of-use assets2,878  3,135  
Restricted cash505  3,390  
Deferred tax asset1,162  2,039  
Other assets754  823  
Total assets$113,669  $118,497  
LIABILITIES AND STOCKHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$848  $680  
Accrued commissions2,341  2,931  
Other accrued expenses1,971  2,387  
Deferred revenue3,994  4,506  
Amounts held in eWallets12,823  12,938  
Operating lease liabilities1,549  1,655  
Other current liabilities1,275  1,205  
Total current liabilities24,801  26,302  
Income taxes payable15,365  15,365  
Deferred tax liability203  202  
Operating lease liabilities1,403  1,564  
Total liabilities41,772  43,433  
Stockholders’ equity:  
Preferred stock—  —  
Common stock13  13  
Additional paid-in capital86,102  86,102  
Retained earnings13,259  16,117  
Accumulated other comprehensive loss(1,573) (1,264) 
Treasury stock, at cost(25,904) (25,904) 
Total stockholders’ equity71,897  75,064  
Total liabilities and stockholders’ equity$113,669  $118,497  

4


NATURAL HEALTH TRENDS CORP. 
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
 
 Three Months Ended March 31,
 20202019
Net sales$14,948  $19,328  
Cost of sales4,514  5,224  
Gross profit10,434  14,104  
Operating expenses:  
Commissions expense6,603  9,498  
Selling, general and administrative expenses5,279  7,315  
Total operating expenses11,882  16,813  
Loss from operations(1,448) (2,709) 
Other income, net93  432  
Loss before income taxes(1,355) (2,277) 
Income tax benefit(782) (354) 
Net loss$(573) $(1,923) 
Net loss per common share – basic and diluted$(0.05) $(0.17) 
Weighted-average common shares outstanding – basic and diluted10,483  11,333  

5


NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
 
 Three Months Ended March 31,
 20202019
CASH FLOWS FROM OPERATING ACTIVITIES: 
Net loss$(573) $(1,923) 
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization95  93  
Noncash lease expense418  447  
Deferred income taxes869  —  
Changes in assets and liabilities:
Inventories1,001  (192) 
Other current assets(1,033) (1,159) 
Other assets52  (2) 
Accounts payable168  (174) 
Accrued commissions(528) (3,575) 
Other accrued expenses(398) (795) 
Deferred revenue(521) (3,030) 
Amounts held in eWallets(175) (142) 
Operating lease liabilities(440) (499) 
Other current liabilities75  (241) 
Long-term incentive—  (158) 
Net cash used in operating activities(990) (11,350) 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment(12) (46) 
Net cash used in investing activities(12) (46) 
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid(2,285) (2,736) 
Net cash used in financing activities(2,285) (2,736) 
Effect of exchange rates on cash, cash equivalents and restricted cash(240) 248  
Net decrease in cash, cash equivalents and restricted cash(3,527) (13,884) 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period99,425  135,651  
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period$95,898  $121,767  
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:  
Issuance of treasury stock for employee awards, net$—  $377  
Right-of-use assets obtained in exchange for operating lease liabilities$194  $4,462  

6
v3.20.1
Cover Page
May 06, 2020
Cover [Abstract]  
Document Type 8-K
Document Period End Date May 06, 2020
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
Security Exchange Name NASDAQ
Entity Central Index Key 0000912061
Amendment Flag false