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Natural Health Trends Reports Strong Fourth Quarter and Full Year 2015 Financial Results

  • Fourth quarter revenue increased 108% year-over-year to $73.7 million
  • Fourth quarter net income of $13.7 million or $1.13 per diluted share
  • Record full year revenue increased 113% year-over-year to $264.9 million
  • Record full year net income of $47.2 million or $3.82 per diluted share

LOS ANGELES, Feb. 02, 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 fourth quarter and full year ended December 31, 2015.

Fourth Quarter 2015 Financial Highlights

  • Total revenue increased 108% to $73.7 million, compared to $35.4 million in the fourth quarter of 2014.

    • Revenue from the Company’s Hong Kong operations, which represented 92% of total revenue, increased 120% to $67.7 million, compared to $30.7 million in the fourth quarter of 2014.

    • Revenue outside of Hong Kong increased 27% to $5.9 million, compared to $4.7 million in the fourth quarter of 2014.

  • Operating income increased 129% to $13.9 million, compared to $6.1 million in the fourth quarter of 2014.

  • Net income available to common stockholders was $13.7 million, or $1.13 per diluted share, compared to $5.8 million, or $0.45 per diluted share, in the fourth quarter of 2014.

  • The number of Active Members1 increased 15% to 109,360 at December 31, 2015, compared to 94,700 at September 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.

Full Year 2015 Financial Highlights

  • Total revenue increased 113% to $264.9 million, compared to $124.6 million for the full year of 2014.
  • Operating income increased 130% to $47.9 million, compared to $20.8 million for the full year of 2014.
  • Net income available to common stockholders was $47.2 million, or $3.82 per diluted share, compared to $20.4 million, or $1.61 per diluted share, for the full year of 2014.

Management Commentary

“2015 was a record year for Natural Health Trends and we are very pleased with all we have accomplished,” commented Chris Sharng, President of Natural Health Trends Corp. “The triple-digit increase in revenue and net income over 2014 was driven by impressive growth in our active member base as well as the ongoing development of our leadership programs, product development initiatives and successful execution of our marketing programs and member services. 2016 marks NHT Global's 15th anniversary and our committed leadership's enthusiasm for our products and opportunity are at an all-time high.”

Mr. Sharng continued, “In light of the recent short selling campaign which sought to damage our brand, reputation and shareholder value, we are diligently working to defend our Company. Nevertheless, it provides a great opportunity to allocate our capital towards repurchasing our shares which our Board of Directors strongly believes is an attractive investment. Their authorization of an additional $55 million for repurchases underscores their confidence. Separately, we are in regular contact with Chinese officials at several government agencies. While we take our disclosure obligations very seriously, we do not intend to make any additional comments regarding this matter unless and until there are additional material developments to disclose.”

Balance Sheet and Cash Flow

  • At December 31, 2015, cash and cash equivalents totaled $104.9 million, compared to $94.6 million at September 30, 2015.
  • Net cash provided by operating activities in the fourth quarter of 2015 was $16.1 million, compared to $9.7 million in the fourth quarter of 2014. For the full year of 2015, net cash provided by operating activities was $81.3 million, compared to $30.6 million for the full year of 2014.
  • During the three months ended December 31, 2015, the Company repurchased a total of $5.0 million of its common stock under its stock repurchase program. On January 13, 2016, the Company announced that its Board of Directors authorized an increase in the stock repurchase program from $15.0 million to $70.0 million. The Company expects to continue executing against the $70.0 million stock repurchase program and anticipates it will begin repurchasing soon. Since November 2014, the Company has repurchased 906,882 shares of common stock at a cost of $20.6 million.

Fourth Quarter and Full Year 2015 Financial Results Conference Call

Management will host a conference call to discuss the fourth quarter and full year 2015 financial results today, Tuesday, February 2, 2016 at 4:30 p.m. Eastern Time. The conference call details are as follows:

Date:Tuesday, February 2, 2016
Time:4:30 p.m. Eastern Time / 1:30 p.m. Pacific Time
Dial-in:1-877-407-0789 (Domestic)
1-201-689-8562 (International)
Conference ID: 13627796
Webcast:http://public.viavid.com/index.php?id=117686

For those unable to participate during the live broadcast, a replay of the call will also be available from 7:30 p.m. Eastern Time on February 2, 2016 through 11:59 p.m. Eastern Time on February 16, 2016 by dialing 1-877-870-5176 (domestic) and 1-858-384-5517 (international) and referencing the replay pin number: 13627796.

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 6, 2015 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, 2015 December 31, 2014
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents$104,914 $44,816
Accounts receivable57 107
Inventories, net10,455 3,760
Other current assets2,286 930
Total current assets117,712 49,613
Property and equipment, net894 476
Goodwill1,764 1,764
Restricted cash3,166 315
Other assets616 372
Total assets$124,152 $52,540
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$2,862 $2,232
Income taxes payable379 268
Accrued commissions19,634 8,853
Other accrued expenses16,703 6,743
Deferred revenue4,011 2,687
Deferred tax liability60 65
Amounts held in eWallets16,414 2,064
Other current liabilities1,510 1,513
Total current liabilities61,573 24,425
Long-term incentive5,770 1,665
Total liabilities67,343 26,090
Commitments and contingencies
Stockholders’ equity:
Preferred stock
Common stock13 13
Additional paid-in capital85,963 85,750
Accumulated deficit(9,647) (54,799)
Accumulated other comprehensive (loss) income(101) 62
Treasury stock, at cost(19,419) (4,576)
Total stockholders’ equity56,809 26,450
Total liabilities and stockholders’ equity$124,152 $52,540


NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended
December 31,
Year Ended
December 31,
2015 2014 2015 2014
(Unaudited) (Unaudited)
Net sales$73,656 $35,406 $264,860 $124,590
Cost of sales15,073 7,464 54,098 26,981
Gross profit58,583 27,942 210,762 97,609
Operating expenses:
Commissions expense33,155 16,607 126,598 56,997
Selling, general and administrative expenses11,453 5,233 36,024 19,687
Depreciation and amortization82 33 263 105
Total operating expenses44,690 21,873 162,885 76,789
Income from operations13,893 6,069 47,877 20,820
Other income (expense), net28 (145) (84) (184)
Income before income taxes13,921 5,924 47,793 20,636
Income tax provision222 122 552 266
Net income13,699 5,802 47,241 20,370
Preferred stock dividends (1) (10)
Net income available to common stockholders$13,699 $5,801 $47,241 $20,360
Income per common share:
Basic$1.13 $0.46 $3.84 $1.67
Diluted$1.13 $0.45 $3.82 $1.61
Weighted-average number of common shares outstanding:
Basic12,118 12,692 12,302 12,131
Diluted12,159 12,780 12,372 12,600
Cash dividends declared per share:
Common$0.050 $0.010 $0.140 $0.030
Series A preferred stock$ $0.032 $ $0.894


NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended December 31,
2015 2014
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income$47,241 $20,370
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization263 105
Stock-based compensation86 49
Cumulative translation adjustment realized in net income(82)
Deferred income taxes(15) (43)
Changes in assets and liabilities:
Accounts receivable41
Inventories, net(6,762) (2,029)
Other current assets(1,066) (501)
Other assets(267) (85)
Accounts payable637 (822)
Income taxes payable(115) 243
Accrued commissions10,840 5,077
Other accrued expenses10,714 3,706
Deferred revenue1,331 147
Amounts held in eWallets14,350 2,065
Other current liabilities25 666
Long-term incentive4,105 1,665
Net cash provided by operating activities81,326 30,613
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net(710) (339)
Increase in restricted cash(3,028)
Net cash used in investing activities(3,738) (339)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of warrants309 4,948
Repurchase of common stock(16,071) (4,661)
Dividends paid(1,709) (476)
Net cash used in financing activities(17,471) (189)
Effect of exchange rates on cash and cash equivalents(19) 181
Net increase in cash and cash equivalents60,098 30,266
CASH AND CASH EQUIVALENTS, beginning of period44,816 14,550
CASH AND CASH EQUIVALENTS, end of period$104,914 $44,816
NON-CASH FINANCING ACTIVITY:
Conversion of preferred stock$ $111
Issuance of treasury stock666


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 Communications Tel: 310-829-5400 investor.relations@nhtglobal.com

Source:Natural Health Trends Corp.