NHTC Announces 104% Revenue Increase, 101% Net Income Increase, for Second Quarter of 2015

Record Revenue Increases to $69.7 Million While Net Income Reaches $12.3 Million; Company Increases Dividend by 33% to $0.04 Per Share, Authorizes $15 Million Share Repurchase

Rolling Hills Estates, California, UNITED STATES

DALLAS, July 28, 2015 (GLOBE NEWSWIRE) -- Natural Health Trends Corp. (Nasdaq: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 continued growth for the quarter and six month periods ended June 30, 2015.

Second Quarter Highlights

  • Total revenues increased 104% to $69.7 million, compared to $34.2 million in the second quarter last year. Net income was $12.3 million, or $0.98 per diluted share, compared to $6.1 million, or $0.49 per diluted share, in the second quarter last year.
    • Revenue from Hong Kong operations, which represents 93% of total revenue, increased $33.2 million, or 105% over the same period last year
    • Revenue outside of Hong Kong increased $2.4 million, or 91% over the same period last year; excluding the Commonwealth of Independent States, revenue increased 151% over the same period last year
  • Operating income increased 99% to $12.3 million, compared to $6.2 million in the second quarter last year.
  • Total number of active distributors increased 23% to 76,400 at June 30, 2015 compared to March 31, 2015.
  • The Company's common stock joined the Russell Global, Russell 3000® and the Russell Microcap® Indices.

Year-to-Date Financial Highlights

  • Revenues were $110.4 million, up 93%, compared to $57.4 million in the first six months of last year. Net income was $19.0 million, or $1.52 per diluted share, compared to $9.2 million, or $0.76 per diluted share, in the first six months of last year.
  • Operating income was $19.2 million, up 107% compared to $9.3 million in the first six months of last year.

"We delivered another quarter of solid top-line growth and doubled our net income as we continue to leverage the strength and utility of our Hong Kong infrastructure to meet the increasing consumer demand for our health and wellness products," commented Chris Sharng, President of Natural Health Trends Corp. "During the quarter we launched several new products to extend our product line and kicked off additional incentive programs for top performers. The combination of consumer demand supported by our market-leading products and effective sales, leadership and incentive programs are proving to be very successful strategies for expanding our base of consumers and distributors while fortifying an already firm foundation for future growth."

"Our Hong Kong business continues to excel, and to date, the economic slowdown in China has not impacted us," continued Mr. Sharng. "In the long term, we feel that the re-orientation of the Chinese economy toward consumption is good for businesses like ours, as we work to introduce high-quality consumer products to the increasingly affluent Chinese consumers. We are in the Chinese market for the long haul and are bullish on its prospect."

"Further, during the quarter, we funded the required deposit for the consumer protection fund in China, which is a prerequisite to submitting our direct selling license application," concluded Mr. Sharng. "We view applying for a direct selling license as strategically valuable to help us drive incremental growth as our brand recognition continues to grow in China and Asia."

Balance Sheet

At June 30, 2015, cash and cash equivalents totaled $74.4 million, compared to $59.9 million as of March 31, 2015 and $44.8 million as of December 31, 2014.

Dividend and Share Repurchase

Today, the Board of Directors declared a cash dividend of $0.04 per share on outstanding common stock payable in cash on August 28, 2015 to stockholders of record on August 18, 2015.

Also today, the Board of Directors approved a stock repurchase plan of up to $15 million of Company's outstanding shares of common stock with the Company's on-going earnings or cash on hand through December 2016, including $5 million repurchases intended to be immediately executed. Since November 2014, the Company has repurchased 638,176 shares of common stock at a cost of $10.6 million.

"We are confident in our ability to consistently generate solid free cash flow to support future growth, while also rewarding our stockholders with capital return in the forms of both dividends and the repurchase of stock," added Mr. Sharng.

Shareholder Conference Call

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

A replay will be available from 1 p.m. ET on July 29, 2015 through 11:59 p.m. ET on August 5, 2015 by dialing 1-877-870-5176 (domestic) and 1-858-384-5517 (international) and referencing replay pin number 3259700.

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 detailed under the caption "Risk Factors" in our Annual Report on Form 10-K filed on March 6, 2015, 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 --

(In Thousands, Except Share Data) 
  December 31,
June 30,
Current assets:    
Cash and cash equivalents $44,816 $74,422
Accounts receivable 107 297
Inventories, net 3,760 5,287
Other current assets 930 1,643
Total current assets 49,613 81,649
Property and equipment, net 476 702
Goodwill 1,764 1,764
Restricted cash 315 3,591
Other assets 372 598
Total assets $52,540 $88,304
Current liabilities:    
Accounts payable $2,232 $3,082
Income taxes payable 268 323
Accrued distributor commissions 8,853 14,338
Other accrued expenses 6,743 10,751
Deferred revenue 2,687 8,151
Deferred tax liability 65 65
Amounts held in distributor eWallets 2,064 8,533
Other current liabilities 1,513 1,696
Total current liabilities 24,425 46,939
Long-term incentive 1,665 1,524
Total liabilities 26,090 48,463
Commitments and contingencies    
Stockholders' equity:    
Preferred stock
Common stock 13 13
Additional paid-in capital 85,750 85,928
Accumulated deficit (54,799) (36,549)
Accumulated other comprehensive income 62 135
Treasury stock, at cost (4,576) (9,686)
Total stockholders' equity 26,450 39,841
Total liabilities and stockholders' equity $52,540 $88,304
(In Thousands, Except Per Share Data) 
  Three Months Ended June 30, Six Months Ended June 30,
  2014 2015 2014 2015
Net sales $34,189 $69,716 $57,351 $110,425
Cost of sales 7,509 14,094 12,761 23,024
Gross profit 26,680 55,622 44,590 87,401
Operating expenses:        
Distributor commissions 15,458 35,010 25,881 53,407
Selling, general and administrative expenses 5,031 8,281 9,378 14,704
Depreciation and amortization 23 68 44 109
Total operating expenses 20,512 43,359 35,303 68,220
Income from operations 6,168 12,263 9,287 19,181
Other income (expense), net 1 132 (8) 23
Income before income taxes 6,169 12,395 9,279 19,204
Income tax provision 59 122 98 193
Net income 6,110 12,273 9,181 19,011
Preferred stock dividends (3) (7)
Net income available to common stockholders $6,107 $12,273 $9,174 $19,011
Income per common share:        
Basic $0.51 $0.99 $0.78 $1.53
Diluted $0.49 $0.98 $0.76 $1.52
Weighted-average number of common shares outstanding:        
Basic 11,821 12,403 11,592 12,428
Diluted 12,305 12,461 12,050 12,513
Cash dividends declared per share:        
Common $0.005 $0.03 $0.010 $0.05
Series A preferred stock $0.020 $0.835
(In Thousands) 
  Six Months Ended June 30,
  2014 2015
Net income $9,181 $19,011
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 44 109
Stock-based compensation 34 35
Cumulative translation adjustment realized in net income (82)
Changes in assets and liabilities:    
Accounts receivable 24 (186)
Inventories, net (2,502) (1,524)
Other current assets (104) (672)
Other assets (16) (232)
Accounts payable 1,586 849
Income taxes payable 86 56
Accrued distributor commissions 1,268 5,471
Other accrued expenses 2,466 4,674
Deferred revenue 606 5,459
Amounts held in distributor eWallets 6,468
Other current liabilities 152 186
Long-term incentive (141)
Net cash provided by operating activities 12,825 39,481
Purchases of property and equipment, net (97) (333)
Increase in restricted cash (3,272)
Net cash used in investing activities (97) (3,605)
Proceeds from exercise of warrants 2,630 309
Repurchase of common stock (63) (6,082)
Dividends paid (195) (621)
Net cash provided by (used in) financing activities  2,372 (6,394)
Effect of exchange rates on cash and cash equivalents (28) 124
Net increase in cash and cash equivalents 15,072 29,606
CASH AND CASH EQUIVALENTS, beginning of period 14,550 44,816
CASH AND CASH EQUIVALENTS, end of period $29,622 $74,422


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