NATURAL HEALTH TRENDS CORP - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - April 27, 2016

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Exhibit 99.1

Natural Health Trends Reports Strong First Quarter 2016 Financial Results

•
Revenue increased 83% year-over-year to $74.3 million
•
Net income of $11.3 million or $0.95 per diluted share
•
Increased quarterly dividend by 20% to $0.06 per share
•
Repurchased $18.3 million of common stock during the quarter

LOS ANGELES – April 27, 2016 – 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 quarter ended March 31, 2016.

First Quarter 2016 Financial Highlights

•
Total revenue increased 83% to $74.3 million, compared to $40.7 million in the first quarter of 2015.

◦
Revenue from the Company’s Hong Kong operations, which represented 92% of total revenue, increased 83% to $68.2 million, compared to $37.3 million in the first quarter of 2015.

◦
Revenue outside of Hong Kong increased 84% to $6.1 million, compared to $3.4 million in the first quarter of 2015.

•
Operating income increased 102% to $14.0 million, compared to $6.9 million in the first quarter of 2015.

•
Net income was $11.3 million, or $0.95 per diluted share, compared to $6.7 million, or $0.54 per diluted share, in the first quarter of 2015.

•
Additional income tax provision of $2.4 million was recognized in the first quarter of 2016 for the expected partial repatriation of overseas profits, resulting in an overall effective tax rate of 19%. Net income, excluding the impact of the additional tax charge, would have been $13.6 million, or $1.15 per diluted share.

•
The number of Active Members1 increased 10% to 119,800 at March 31, 2016, compared to 109,360 at December 31, 2015 and 62,010 at March 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.


1


Management Commentary

“Our positive momentum continued with a strong start to 2016,” commented Chris Sharng, President of Natural Health Trends Corp. “The double-digit increase in revenue growth for the quarter was driven by our emphasis on leadership programs, product development and promotional incentives. We believe that these strategies will help drive sustainable growth in our active member base which now consists of 119,800 and growing.”

Mr. Sharng further commented, “During the first quarter, we experienced strong consumer demand for our products. We were pleased to announce that we recently received the United States Department of Agriculture Organic Certification for our top-selling product, Premium Noni JuiceTM. Furthermore, we launched a new product, StemRenuTM, only available to NHT Global through an exclusive licensing arrangement, as well as AquaPur, our new water purifier product in China.”

Balance Sheet and Cash Flow

•
At March 31, 2016, cash and cash equivalents totaled $99.6 million, compared to $104.9 million at December 31, 2015.

•
Net cash provided by operating activities in the first quarter of 2016 was $13.8 million, compared to $16.6 million in the first quarter of 2015.

•
On April 21, 2016, the Company’s Board of Directors declared a quarterly cash dividend of $0.06 per share on outstanding common stock, a 20% increase over the prior quarter dividend, which will be payable on May 20, 2016 to stockholders of record as of May 10, 2016.

•
During the three months ended March 31, 2016, the Company repurchased an additional $18.3 million of its common stock under its existing $70.0 million stock repurchase program. At March 31, 2016, approximately $41.7 million remained available for repurchase.


2


First Quarter 2016 Financial Results Conference Call

Management will host a conference call to discuss the first quarter 2016 financial results today, Wednesday, April 27, 2016 at 11:30 a.m. Eastern Time. The conference call details are as follows:
Date:
Wednesday, April 27, 2016
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:
13632555
Webcast:
http://public.viavid.com/index.php?id=118679

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 April 27, 2016 through 11:59 p.m. Eastern Time on May 11, 2016 by dialing 1-877-870-5176 (domestic) and 1-858-384-5517 (international) and referencing the replay pin number: 13632555.

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.

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

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NATURAL HEALTH TRENDS CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
March 31, 2016
 
December 31, 2015
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
99,631

 
$
104,914

Accounts receivable
88

 
57

Inventories, net
10,269

 
10,455

Other current assets
2,324

 
2,286

Total current assets
112,312

 
117,712

Property and equipment, net
1,050

 
894

Goodwill
1,764

 
1,764

Restricted cash
3,189

 
3,166

Other assets
621

 
616

Total assets
$
118,936

 
$
124,152

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
2,019

 
$
2,862

Income taxes payable
3,002

 
379

Accrued commissions
16,714

 
19,634

Other accrued expenses
17,644

 
16,703

Deferred revenue
6,469

 
4,011

Deferred tax liability
60

 
60

Amounts held in eWallets
16,691

 
16,414

Other current liabilities
1,359

 
1,510

Total current liabilities
63,958

 
61,573

Long-term incentive
5,650

 
5,770

Total liabilities
69,608

 
67,343

Commitments and contingencies
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock
—

 
—

Common stock
13

 
13

Additional paid-in capital
86,037

 
85,963

Retained earnings (accumulated deficit)
1,057

 
(9,647
)
Accumulated other comprehensive loss
(41
)
 
(101
)
Treasury stock, at cost
(37,738
)
 
(19,419
)
Total stockholders’ equity
49,328

 
56,809

Total liabilities and stockholders’ equity
$
118,936

 
$
124,152



4


NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
 
Three Months Ended March 31,
 
2016
 
2015
Net sales
$
74,346

 
$
40,709

Cost of sales
14,280

 
8,930

Gross profit
60,066

 
31,779

Operating expenses:
 
 
 
Commissions expense
35,086

 
18,397

Selling, general and administrative expenses
10,904

 
6,423

Depreciation and amortization
89

 
41

Total operating expenses
46,079

 
24,861

Income from operations
13,987

 
6,918

Other expense, net
(24
)
 
(109
)
Income before income taxes
13,963

 
6,809

Income tax provision
2,683

 
71

Net income
$
11,280

 
$
6,738

Income per common share:
 
 
 
Basic
$
0.96

 
$
0.54

Diluted
$
0.95

 
$
0.54

Weighted-average number of common shares outstanding:
 
 
 
Basic
11,773

 
12,453

Diluted
11,817

 
12,548

Cash dividends declared per common share
$
0.05

 
$
0.02



5


NATURAL HEALTH TRENDS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
 
Three Months Ended March 31,
 
2016
 
2015
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
11,280

 
$
6,738

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
89

 
41

Stock-based compensation
74

 
15

Changes in assets and liabilities:
 
 
 
Accounts receivable
(29
)
 
(69
)
Inventories, net
189

 
(1,101
)
Other current assets
(16
)
 
(259
)
Other assets
5

 
(221
)
Accounts payable
(840
)
 
352

Income taxes payable
2,620

 
(59
)
Accrued commissions
(2,923
)
 
(1,419
)
Other accrued expenses
925

 
1,808

Deferred revenue
2,445

 
7,683

Amounts held in eWallets
280

 
2,897

Other current liabilities
(157
)
 
212

Long-term incentive
(120
)
 
(62
)
Net cash provided by operating activities
13,822

 
16,556

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Purchases of property and equipment, net
(240
)
 
(266
)
Net cash used in investing activities
(240
)
 
(266
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Repurchase of common stock
(18,319
)
 
(1,082
)
Dividends paid
(576
)
 
(250
)
Net cash used in financing activities
(18,895
)
 
(1,332
)
Effect of exchange rates on cash and cash equivalents
30

 
92

Net (decrease) increase in cash and cash equivalents
(5,283
)
 
15,050

CASH AND CASH EQUIVALENTS, beginning of period
104,914

 
44,816

CASH AND CASH EQUIVALENTS, end of period
$
99,631

 
$
59,866

NON-CASH FINANCING ACTIVITY:
 
 
 
Issuance of treasury stock
$
—

 
$
666


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NATURAL HEALTH TRENDS CORP Reports