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8-K - FORM 8-K - NATURAL HEALTH TRENDS CORPnhtc20141104_8k.htm

Exhibit 99.1

 

Company Contact

Investor Contact

Scott Davidson

Brett Maas

Chief Financial Officer

Managing Partner

Natural Health Trends Corp.

Hayden IR

Tel: 972-241-4080

Tel: 646-536-7331

scott.davidson@nhtglobal.com

brett@haydenir.com

 

FOR IMMEDIATE RELEASE

 

NHTC Reports Quarterly Revenue Increased 125% to $31.8 Million;

EPS Increased 250% to $0.42

 

Announces $5 Million Stock Repurchase Program; Company to Pursue Nasdaq Listing

 

DALLAS, TX, November 5, 2014 -- Natural Health Trends Corp. (OTCQB: NHTC), a leading direct selling company that markets premium quality personal care, wellness and “quality of life” products under the NHT Global brand, today announced financial results for the quarter and nine month periods ended September 30, 2014.

 

Third Quarter Financial Highlights

 

Total revenues were $31.8 million, up 125% compared to $14.2 million in the third quarter last year.

 

Operating income was $5.5 million, up 312% compared to $1.3 million in the third quarter last year.

 

Net income was $5.4 million, or $0.42 per diluted share, compared to $1.3 million, or $0.12 per diluted share, in the third quarter last year.

 

Year-to-Date Financial Highlights

 

Year-to-date revenues were $89.2 million, up 167% compared to $33.4 million in the first nine months last year.

 

Operating income was $14.8 million, up 475% compared to $2.6 million in the first nine months last year.

 

Net income was $14.6 million, or $1.16 per diluted share, compared to $2.5 million, or $0.22 per diluted share, in the first nine months last year.

 

“We continued our strong momentum into the third quarter, with our highest level of orders in any quarter this year,” commented Chris Sharng, President of Natural Health Trends Corp. “We are effectively leveraging our business model, with a 308% increase in net income during the quarter. In just nine months, we have delivered a 256% increase in net income compared to all of 2013.”

 

“Our efforts to add new products have helped accelerate our growth, and we are simultaneously working to improve the performance of our distributors, through leadership development and training programs, services and promotions, and this effort is showing positive results as our member base is increasingly well informed and motivated, driving higher average sales per member,” continued Mr. Sharng. “We remain very pleased with the recent performance and we are increasingly optimistic about the long-term future of Natural Health Trends.”

 

 
 

 

 

Dividend and Share Repurchase

 

Yesterday, the Board of Directors declared a cash dividend of $0.032 per share on outstanding Series A preferred stock, which represents the accrued unpaid dividends through the declaration date, and a cash dividend of $0.01 per share on each share of common stock outstanding, representing an aggregate dividend amount of $130,000, payable in cash on December 3, 2014 to stockholders of record on November 25, 2014.

 

Additionally, on November 4, 2014, the Board of Directors approved a special, stock repurchase program of up to $5 million of the Company’s outstanding shares of common stock. Such repurchases are expected to begin during November and be complete by January 2015. Such purchases will be made in accordance with all applicable securities laws and regulations, including Rule 10b-18 of the Securities Exchange Act of 1934 (the “Exchange Act”). For all or a portion of the authorized repurchase amount, the Company may enter into a plan that is compliant with Rule 10b5-1 of the Exchange Act that is designed to facilitate these purchases. The repurchase program does not require the Company to acquire a specific number of shares, and may be suspended from time to time or discontinued. The share repurchases will be funded from available working capital.

 

The Company is advised by George K. Broady, its largest shareholder and a member of its Board of Directors, that Mr. Broady desires to participate in the Company’s repurchase program on a basis roughly proportional to his ownership interest, with an estimate of generating approximately $1.5 million through the sale of a portion of the shares of the Company’s common stock held by him. To that end, the Company and Mr. Broady are in discussions regarding the terms of a mutually agreeable stock purchase agreement.

 

“The Board of Directors believes that, at the current valuation, a stock repurchase program will serve the best interests of all shareholders and represents a compelling use of the Company’s capital,” added Mr. Sharng.

 

Listing of Shares on The Nasdaq Capital Market

 

Finally, on November 4, 2014, the Board of Directors authorized management to pursue the listing of its shares of common stock on The Nasdaq Capital Market. “With the Company’s solid and expanding profitability and strong balance sheet, the Board believes now is the optimal time to pursue a listing of our common stock,” said Mr. Sharng. Although the Company believes that it will be able to satisfy Nasdaq’s applicable listing requirements, there can be no assurance as to whether, or in what timeframe, it will be able to do so.

 

 
 

 

 

Shareholder Conference Call

 

Management will conduct a conference call to discuss its third quarter financial results. Details of the call are as follows:

 

 

Date: Wednesday, November 5, 2014

 

Time: 10 a.m. ET/9 a.m. CT/7 a.m. PT

 

Dial-in number: 1-888-430-8709 (domestic) 1-719-325-2455 (international)

 

Webcast link: http://public.viavid.com/index.php?id=111135

 

A replay will be available from 1 p.m. ET on November 5 through 11:59 p.m. ET on November 12, by dialing 1-877-870-5176 (domestic) and 1-858-384-5517 (international) and referencing replay pin number 9253268.

 

About Natural Health Trends Corp.

 

Natural Health Trends Corp. 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, wellness and “quality of life” products under the NHT Global brand. Additional information can be found on the company's website, www.naturalhealthtrendscorp.com.

 

Forward Looking Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 -- Forward-looking statements in this release do not constitute guarantees of future performance. Such forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those anticipated. Such risks and uncertainties include the risks and uncertainties referenced in this press release, as well as those detailed under the caption "Risk Factors" in our Annual Report on Form 10-K filed on March 7, 2014, with the Securities and Exchange Commission. We assume no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.

 

-- Tables follow --

 

 
 

 

 

NATURAL HEALTH TRENDS CORP.

 

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Share Data)

 

   

December 31, 2013

   

September 30, 2014

 
           

(Unaudited)

 

ASSETS

               

Current assets:

               

Cash and cash equivalents

  $ 14,550     $ 39,748  

Accounts receivable

    134       101  

Inventories, net

    1,828       4,320  

Other current assets

    658       831  

Total current assets

    17,170       45,000  

Property and equipment, net

    265       377  

Goodwill

    1,764       1,764  

Restricted cash

    328       330  

Other assets

    300       316  

Total assets

  $ 19,827     $ 47,787  
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               
                 

Current liabilities:

               

Accounts payable

  $ 3,058     $ 4,411  

Income taxes payable

    25       166  

Accrued distributor commissions

    3,962       7,121  

Other accrued expenses

    3,146       6,589  

Deferred revenue

    2,569       2,901  

Deferred tax liability

    108       108  

Other current liabilities

    882       1,309  

Total current liabilities

    13,750       22,605  

Commitments and contingencies

               

Stockholders’ equity:

               

Preferred stock

    111       55  

Common stock

    11       13  

Additional paid-in capital

    80,655       85,602  

Accumulated deficit

    (74,619 )     (60,399 )

Accumulated other comprehensive loss:

               

Foreign currency translation adjustments

    (81 )     (89 )

Total stockholders’ equity

    6,077       25,182  

Total liabilities and stockholders’ equity

  $ 19,827     $ 47,787  

 

 
 

 

 

NATURAL HEALTH TRENDS CORP.

 

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In Thousands, Except Per Share Data)

 

   

Three Months Ended September 30,

   

Nine Months Ended September 30,

 
   

2013

   

2014

   

2013

   

2014

 
                                 

Net sales

  $ 14,177     $ 31,833     $ 33,426     $ 89,184  

Cost of sales

    3,362       6,756       8,160       19,517  

Gross profit

    10,815       25,077       25,266       69,667  

Operating expenses:

                               

Distributor commissions

    6,259       14,509       14,376       40,390  

Selling, general and administrative expenses

    3,216       5,076       8,270       14,454  

Depreciation and amortization

    13       28       53       72  

Total operating expenses

    9,488       19,613       22,699       54,916  

Income from operations

    1,327       5,464       2,567       14,751  

Other income (expense), net

    15       (31 )     (6 )     (39 )

Income before income taxes

    1,342       5,433       2,561       14,712  

Income tax provision

    21       46       49       144  

Net income

    1,321       5,387       2,512       14,568  

Preferred stock dividends

    (4 )     (2 )     (12 )     (9 )

Net income available to common stockholders

  $ 1,317     $ 5,385     $ 2,500     $ 14,559  
                                 

Income per common share:

                               

Basic

  $ 0.12     $ 0.43     $ 0.22     $ 1.22  

Diluted

  $ 0.12     $ 0.42     $ 0.22     $ 1.16  
                                 

Weighted-average number of common shares outstanding:

                               

Basic

    11,181       12,455       11,128       11,883  

Diluted

    11,312       12,774       11,294       12,424  
                                 

Cash dividends declared per share:

                               

Common

  $ -     $ 0.010     $ -     $ 0.020  

Series A preferred stock

  $ -     $ 0.027     $ -     $ 0.862  

 

 
 

 

 

NATURAL HEALTH TRENDS CORP.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(In Thousands)

 

   

Nine Months Ended

September 30,

 
   

2013

   

2014

 
                 

CASH FLOWS FROM OPERATING ACTIVITIES:

               

Net income

  $ 2,512     $ 14,568  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation and amortization

    53       72  

Stock-based compensation

    82       42  

Changes in assets and liabilities:

               

Accounts receivable

    (174 )     25  

Inventories, net

    (346 )     (2,547 )

Other current assets

    68       (205 )

Other assets

    (35 )     (16 )

Accounts payable

    683       1,359  

Income taxes payable

    49       140  

Accrued distributor commissions

    994       3,218  

Other accrued expenses

    704       3,479  

Deferred revenue

    708       346  

Other current liabilities

    (195 )     442  

Net cash provided by operating activities

    5,103       20,923  
                 

CASH FLOWS FROM INVESTING ACTIVITIES:

               

Purchases of property and equipment, net

    (57 )     (199 )

Increase in restricted cash

    (82 )  

 

Net cash used in investing activities

    (139 )     (199 )
                 

CASH FLOWS FROM FINANCING ACTIVITIES:

               

Proceeds from exercise of warrants

 

      4,948  

Dividends paid

 

      (348 )

Repurchase of common stock

    (32 )     (97 )

Net cash provided by (used in) financing activities

    (32 )     4,503  
                 

Effect of exchange rates on cash and cash equivalents

    (8 )     (29 )

Net increase in cash and cash equivalents

    4,924       25,198  

CASH AND CASH EQUIVALENTS, beginning of period

    4,207       14,550  

CASH AND CASH EQUIVALENTS, end of period

  $ 9,131     $ 39,748  

 

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