Natural Health Trends Reports Fourth Quarter and Full Year 2016 Financial Results
09 February 2017 - 1:00AM
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 fourth quarter and
full year ended December 31, 2016.
Fourth Quarter 2016 Financial
Highlights
- Total revenue decreased 15% to $62.3 million, compared to $73.7
million in the fourth quarter of 2015.
- Revenue from the Company’s Hong Kong operations, which
represented 90% of total revenue, decreased 17% to $56.1 million,
compared to $67.7 million in the fourth quarter of 2015.
- Revenue outside of Hong Kong increased 5% to $6.2 million,
compared to $5.9 million in the fourth quarter of 2015.
- Operating income increased 44% to $20.0 million, compared to
$13.9 million in the fourth quarter of 2015.
- Net income was $19.0 million, or $1.70 per diluted share,
compared to $13.7 million, or $1.13 per diluted share, in the
fourth quarter of 2015.
- The number of Active Members1 decreased 3% to 118,960 at
December 31, 2016, compared to 122,900 at September 30,
2016, and increased 9% compared to 109,360 at December 31,
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.
Full Year 2016 Financial
Highlights
- Total revenue increased 9% to $287.7 million, compared to
$264.9 million for the full year of 2015.
- Operating income increased 34% to $64.1 million, compared to
$47.9 million for the full year of 2015.
- Recognized income tax provision of $9.0 million primarily due
to the expected partial repatriation of overseas profits, an
increase of $8.4 million compared to the full year of
2015.
- Net income was $55.1 million, or $4.83 per diluted share,
compared to $47.2 million, or $3.82 per diluted share, for the full
year of 2015.
Management Commentary
“2016 was a tremendous year for Natural Health Trends and
reflected solid progress on our strategic plan despite some
external challenges we experienced throughout the year,” commented
Chris Sharng, President of Natural Health Trends Corp.
“Specifically, the fourth quarter reflected a continuation of some
of the challenges we discussed in the prior quarter, including a
slowdown in Hangzhou, one of our top three markets, after the G20
summit was held in that city last September. Local members in the
affected metropolitan area were unable to organize activities and
events for weeks, which are key to their effectiveness. In
addition, the Chinese yuan depreciated by 7% against the Hong Kong
dollar which effectively increased the price of our products for
our members residing in mainland China. We expect the first quarter
will also present a difficult year-over-year comparison as we plan
to launch various new products at our first-half event, the
re-branded Ambassador Academy, in March versus in January last
year.”
Mr. Sharng further commented, “We increased our full year 2016
revenue by 9% over 2015. We are working to strengthen growth
through increased leader training and motivation while expanding
our reach by geography and products. These efforts will be
supported by technological advancements to enhance overall member
communication and productivity. Further, due to the flexibility we
have built into many of our promotions and incentive programs, we
were able to generate record operating profit for the fourth
quarter of 2016. I’m also very pleased we will once again be
declaring a special dividend in the amount of $0.35 per share as
well as increasing our regular quarterly dividend to $0.09 per
share. Our ability to return capital to our stockholders is due to
our robust operating cash flow driven by effective management of
our working capital which has kept our balance sheet strong. We
look forward to a bright future for Natural Health Trends.”
Balance Sheet and Cash Flow
- Net cash provided by operating activities in the fourth quarter
of 2016 was $16.9 million, compared to $16.1 million in the fourth
quarter of 2015. For the full year of 2016, net cash provided by
operating activities was $53.2 million, compared to $81.3 million
for the full year of 2015.
- On January 24, 2017, the Company's Board of Directors declared
a quarterly dividend of $0.09 per share on outstanding common
stock, which represents a 13% increase over the prior quarter
dividend, and a special cash dividend of $0.35 per share on
outstanding common stock. The dividends will be payable on March 3,
2017 to stockholders of record as of February 21, 2017.
- For the full year of 2016, the Company repurchased $23.7
million of its common stock under its existing $70.0 million stock
repurchase program. At December 31, 2016, approximately $32.0
million remained available for repurchases, inclusive of related
estimated income tax.
Fourth Quarter and Full Year 2016 Financial Results
Conference Call
Management will host a conference call to discuss the fourth
quarter and full year 2016 financial results today, Wednesday,
February 8, 2017 at 11:30 a.m. Eastern Time. The conference call
details are as follows:
Date: |
Wednesday, February 8,
2017 |
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:
|
13652401 |
Webcast: |
http://public.viavid.com/index.php?id=122399 |
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 February 8, 2017 through 11:59 p.m. Eastern Time on
February 22, 2017 by dialing 1-844-512-2921 (domestic) and
1-412-317-6671 (international) and referencing the replay pin
number: 13652401.
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) |
|
|
December 31, 2016 |
|
December 31, 2015 |
|
(Unaudited) |
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and
cash equivalents |
$ |
125,921 |
|
|
$ |
104,914 |
|
Inventories, net |
11,257 |
|
|
10,455 |
|
Other
current assets |
4,066 |
|
|
2,343 |
|
Total current
assets |
141,244 |
|
|
117,712 |
|
Property and equipment,
net |
1,388 |
|
|
894 |
|
Goodwill |
1,764 |
|
|
1,764 |
|
Restricted cash |
2,963 |
|
|
3,166 |
|
Other assets |
692 |
|
|
616 |
|
Total assets |
$ |
148,051 |
|
|
$ |
124,152 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities: |
|
|
|
Accounts
payable |
$ |
2,145 |
|
|
$ |
2,862 |
|
Income
taxes payable |
663 |
|
|
379 |
|
Accrued
commissions |
13,611 |
|
|
19,634 |
|
Other
accrued expenses |
14,989 |
|
|
16,703 |
|
Deferred
revenue |
4,948 |
|
|
4,011 |
|
Amounts
held in eWallets |
19,165 |
|
|
16,414 |
|
Other
current liabilities |
1,633 |
|
|
1,510 |
|
Total current
liabilities |
57,154 |
|
|
61,513 |
|
Deferred tax
liability |
268 |
|
|
60 |
|
Long-term
incentive |
8,190 |
|
|
5,770 |
|
Total liabilities |
65,612 |
|
|
67,343 |
|
Commitments and
contingencies |
|
|
|
Stockholders’
equity: |
|
|
|
Preferred
stock |
— |
|
|
— |
|
Common
stock |
13 |
|
|
13 |
|
Additional paid-in capital |
86,574 |
|
|
85,963 |
|
Retained
earnings (accumulated deficit) |
38,548 |
|
|
(9,647 |
) |
Accumulated other comprehensive loss |
(807 |
) |
|
(101 |
) |
Treasury
stock, at cost |
(41,889 |
) |
|
(19,419 |
) |
Total stockholders’
equity |
82,439 |
|
|
56,809 |
|
Total liabilities and
stockholders’ equity |
$ |
148,051 |
|
|
$ |
124,152 |
|
|
|
|
|
|
|
|
|
|
NATURAL HEALTH TRENDS CORP. |
CONSOLIDATED STATEMENTS OF
OPERATIONS |
(In thousands, except per share
data) |
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2016 |
|
2015 |
|
2016 |
|
2015 |
|
(Unaudited) |
|
(Unaudited) |
|
|
Net sales |
$ |
62,312 |
|
|
$ |
73,656 |
|
|
$ |
287,728 |
|
|
$ |
264,860 |
|
Cost of sales |
11,937 |
|
|
15,073 |
|
|
54,903 |
|
|
54,098 |
|
Gross profit |
50,375 |
|
|
58,583 |
|
|
232,825 |
|
|
210,762 |
|
Operating
expenses: |
|
|
|
|
|
|
|
Commissions expense |
21,503 |
|
|
33,155 |
|
|
125,050 |
|
|
126,598 |
|
Selling,
general and administrative expenses |
8,740 |
|
|
11,453 |
|
|
43,245 |
|
|
36,024 |
|
Depreciation and amortization |
118 |
|
|
82 |
|
|
394 |
|
|
263 |
|
Total operating
expenses |
30,361 |
|
|
44,690 |
|
|
168,689 |
|
|
162,885 |
|
Income from
operations |
20,014 |
|
|
13,893 |
|
|
64,136 |
|
|
47,877 |
|
Other income (expense),
net |
(99 |
) |
|
28 |
|
|
(59 |
) |
|
(84 |
) |
Income before income
taxes |
19,915 |
|
|
13,921 |
|
|
64,077 |
|
|
47,793 |
|
Income tax
provision |
867 |
|
|
222 |
|
|
8,991 |
|
|
552 |
|
Net income |
$ |
19,048 |
|
|
$ |
13,699 |
|
|
$ |
55,086 |
|
|
$ |
47,241 |
|
Income per common
share: |
|
|
|
|
|
|
|
Basic |
$ |
1.70 |
|
|
$ |
1.13 |
|
|
$ |
4.84 |
|
|
$ |
3.84 |
|
Diluted |
$ |
1.70 |
|
|
$ |
1.13 |
|
|
$ |
4.83 |
|
|
$ |
3.82 |
|
Weighted-average number
of common shares outstanding: |
|
|
|
|
|
|
|
Basic |
11,219 |
|
|
12,118 |
|
|
11,382 |
|
|
12,302 |
|
Diluted |
11,234 |
|
|
12,159 |
|
|
11,407 |
|
|
12,372 |
|
Cash dividends declared
per common share |
$ |
0.43 |
|
|
$ |
0.05 |
|
|
$ |
0.61 |
|
|
$ |
0.14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NATURAL HEALTH TRENDS CORP. |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(In thousands) |
|
|
Year Ended December 31, |
|
2016 |
|
2015 |
|
(Unaudited) |
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
Net income |
$ |
55,086 |
|
|
$ |
47,241 |
|
Adjustments to
reconcile net income to net cash provided by operating activities:
|
|
|
|
Depreciation and amortization |
394 |
|
|
263 |
|
Stock-based compensation |
104 |
|
|
86 |
|
Cumulative translation adjustment realized in net income |
132 |
|
|
(82 |
) |
Deferred
income taxes |
217 |
|
|
(15 |
) |
Changes in assets and
liabilities: |
|
|
|
Inventories, net |
(851 |
) |
|
(6,762 |
) |
Other
current assets |
(1,681 |
) |
|
(1,025 |
) |
Other
assets |
(90 |
) |
|
(267 |
) |
Accounts
payable |
(714 |
) |
|
637 |
|
Income
taxes payable |
303 |
|
|
(115 |
) |
Accrued
commissions |
(6,031 |
) |
|
10,840 |
|
Other
accrued expenses |
51 |
|
|
10,714 |
|
Deferred
revenue |
947 |
|
|
1,331 |
|
Amounts
held in eWallets |
2,752 |
|
|
14,350 |
|
Other
current liabilities |
135 |
|
|
25 |
|
Long-term
incentive |
2,420 |
|
|
4,105 |
|
Net cash provided by
operating activities |
53,174 |
|
|
81,326 |
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
Purchases
of property and equipment, net |
(905 |
) |
|
(710 |
) |
Increase
in restricted cash |
— |
|
|
(3,028 |
) |
Net cash used in
investing activities |
(905 |
) |
|
(3,738 |
) |
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
Proceeds
from exercise of warrants |
— |
|
|
309 |
|
Repurchase of common stock |
(23,704 |
) |
|
(16,071 |
) |
Dividends
paid |
(6,891 |
) |
|
(1,709 |
) |
Net cash used in
financing activities |
(30,595 |
) |
|
(17,471 |
) |
Effect of exchange
rates on cash and cash equivalents |
(667 |
) |
|
(19 |
) |
Net increase in cash
and cash equivalents |
21,007 |
|
|
60,098 |
|
CASH AND CASH
EQUIVALENTS, beginning of period |
104,914 |
|
|
44,816 |
|
CASH AND CASH
EQUIVALENTS, end of period |
$ |
125,921 |
|
|
$ |
104,914 |
|
SUPPLEMENTAL
DISCLOSURES OF OTHER CASH FLOW INFORMATION: |
|
|
|
Cash paid
for income taxes, net of refunds |
$ |
8,791 |
|
|
$ |
707 |
|
Issuance
of treasury stock |
1,741 |
|
|
666 |
|
CONTACTS:
Company Contact:
Scott Davidson
Senior Vice President and Chief Financial Officer
Natural Health Trends Corp.
Tel: 310-541-0888
scott.davidson@nhtglobal.com
Investors:
ADDO Investor Relations
Tel: 310-829-5400
investor.relations@nhtglobal.com
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