GlobeNewswire Inc | Feb 10, 2021 09:00AM EST

February 10, 2021

Fourth quarter revenue of $16.6 million increased 17% compared to the third quarter of 2020Reduced full year 2020 operating expenses by $9.0 millionThird consecutive quarter of positive operating incomeGenerated positive cash flow from operations in the fourth quarter and full year of 2020Declared a quarterly cash dividend of $0.20 per share

HONG KONG, Feb. 10, 2021 (GLOBE NEWSWIRE) -- Natural Health Trends Corp. (NASDAQ: NHTC), a leading direct-selling and e-commerce company that markets premium quality personal care, wellness andquality of lifeproducts under the NHT Global brand, today announced its financial results for the fourth quarter and full year ended December31, 2020.

Fourth Quarter2020 Financial Highlights

-- Revenue of $16.6 million increased 17% compared to $14.1 million in the third quarter of 2020 and decreased 7% compared to $17.8 million in the fourth quarter of 2019. -- Operating income was $1.3 million compared to $668,000 in the third quarter of 2020 and operating loss of $3.2 million in the fourth quarter of 2019. Operating loss for the fourth quarter of 2019 included an impairment charge of $1.8 million upon the early adoption of a new accounting standard pertaining to goodwill that arose from a merger transaction in March 2004. -- Net income was $747,000, or $0.07per diluted share, compared to $635,000, or $0.06 per diluted share, in the third quarter of 2020 and net loss of $2.8 million, or $0.27 per diluted share, in the fourth quarter of 2019. -- The number of Active Members1 decreased 2% to 52,230 at December31, 2020, compared to 53,300 at September 30, 2020, and decreased 9% compared to 57,410 at December31, 2019.

Natural Health Trends defines Active Members as those that have placed 1 at least one product order with the Company during the preceding twelve-month period.

Full Year2020 Financial Highlights

-- Revenue of $62.1 million decreased 20% compared to $77.6 million in 2019. -- Operating income was $669,000compared to operating loss of $7.0million in 2019. Operating loss included a goodwill impairment charge of $1.8 million in 2019. -- Net income was $843,000, or $0.07 per diluted share, compared to net loss of $5.6 million, or $0.52per diluted share, in 2019.

Management Commentary

2020 revenue of $62.1 million decreased 20% compared to $77.6 million in 2019 as elements such as government-mandated travel restrictions, shutdowns and limitations surrounding in-person events and activities hindered our leaders ability to conduct business, commented Chris Sharng, President of Natural Health Trends Corp. However, for the fourth quarter of 2020, revenueof $16.6 million increased 17% over the third quarter of 2020 with orders improving 14%asrestrictions began to ease in our key markets.

Mr. Sharng continued, The cost savings initiatives we implemented in the second half of 2019 resulted in 2020 cost reductions of over $9.0 million year-over-year. As a result, we reported positive operating income for both the full year and the third consecutive quarter which helped fuel positive cash provided by operating activities in 2020.

Balance Sheet and Cash Flow

-- Net cashprovided by operating activities was$1.9 million in 2020compared tonet cash used inoperating activities of $18.6 millionin2019. -- Total cash and cash equivalents were $92.4 million as of December31, 2020, down from $96.0 million as of December 31, 2019. -- On February 8, 2021, the Companys Board of Directors declared a quarterly cash dividend of $0.20 on each share of common stock outstanding. The dividend will be payable on March 5, 2021 to stockholders of record as of February 23, 2021.

The Company expects to issue its 2020 audited financial results in late February with its Annual Report on Form 10-K to be filed with the Securities and Exchange Commission. The financial results are preliminary and the accompanying financial statements have not been audited or have not yet been reviewed by the Companys independent accountants. Significant updates and revisions may be required before the release of the Companys 2020 audited financial results.

Fourth Quarter and Full Year 2020 Financial Results Conference Call

Management will host a conference call to discuss the fourth quarter and full year 2020financial results today, Wednesday, February 10, 2021 at 11:30 a.m. Eastern Time. The conference call details are as follows:

Date: Wednesday, February 10, 2021Time: 11:30 a.m. Eastern Time / 8:30 a.m. Pacific TimeDial-in: 1-877-407-0789 (Domestic) 1-201-689-8562 (International)Conference ID: 13714821Webcast: http://public.viavid.com/index.php?id=142946

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 10, 2021 through 11:59 p.m. Eastern Time on February 24, 2021 by dialing 1-844-512-2921 (domestic) and 1-412-317-6671 (international) and referencing the replay pin number: 13714821.

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, the Americas, and Europe. The Company markets premium quality personal care products under the NHT Global brand. Additional information can be found on the Companys 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 Companys 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 9, 2020with the Securities and Exchange Commission (SEC), as well as in subsequent reports filed this year with the SEC. 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, except share data)

December 31, 2020 2019 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 92,367 $ 96,035 Inventories 3,779 6,404 Other current assets 3,595 5,936 Total current assets 99,741 108,375 Property and equipment, net 539 735 Operating lease right-of-use assets 3,745 3,135 Restricted cash 525 3,390 Deferred tax asset 731 2,039 Other assets 661 823 Total assets $ 105,942 $ 118,497 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable $ 580 $ 680 Income taxes payable 1,481 173 Accrued commissions 3,496 2,931 Other accrued expenses 1,922 2,387 Deferred revenue 3,091 4,506 Amounts held in eWallets 8,503 12,938 Operating lease liabilities 1,163 1,655 Other current liabilities 1,270 1,032 Total current liabilities 21,506 26,302 Income taxes payable 13,748 15,365 Deferred tax liability 216 202 Operating lease liabilities 2,775 1,564 Total liabilities 38,245 43,433 Stockholders? equity: Preferred stock ? ? Common stock 13 13 Additional paid-in capital 86,102 86,102 Retained earnings 7,822 16,117 Accumulated other comprehensive loss (336 ) (1,264 )Treasury stock, at cost (25,904 ) (25,904 )Total stockholders? equity 67,697 75,064 Total liabilities and stockholders? equity $ 105,942 $ 118,497

NATURAL HEALTH TRENDS CORP.CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data)

Three Months Ended Year Ended December 31, December 31, 2020 2019 2020 2019 (Unaudited) (Unaudited) Net sales $ 16,595 $ 17,835 $ 62,071 $ 77,614 Cost of sales 4,024 5,102 16,990 20,104 Gross profit 12,571 12,733 45,081 57,510 Operating expenses: Commissions expense 6,868 7,291 26,204 35,549 Selling, general and 4,437 6,924 18,208 27,220 administrative expensesGoodwill impairment ? 1,764 ? 1,764 Total operating expenses 11,305 15,979 44,412 64,533 Income (loss) from 1,266 (3,246 ) 669 (7,023 )operationsOther income, net 218 298 821 1,426 Income (loss) before income 1,484 (2,948 ) 1,490 (5,597 )taxesIncome tax provision 737 (106 ) 647 14 (benefit)Net income (loss) $ 747 $ (2,842 ) $ 843 $ (5,611 )Net income (loss) per common share:Basic $ 0.07 $ (0.27 ) $ 0.08 $ (0.52 )Diluted $ 0.07 $ (0.27 ) $ 0.07 $ (0.52 )Weighted-average number of common shares outstanding:Basic 10,777 10,456 10,630 10,871 Diluted 11,424 10,456 11,424 10,871

NATURAL HEALTH TRENDS CORP.CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)

Year Ended December 31, 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: (Unaudited) Net income (loss) $ 843 $ (5,611 )Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:Depreciation and amortization 410 387 Noncash lease expense 1,532 1,760 Deferred income taxes 1,339 (820 )Goodwill impairment ? 1,764 Changes in assets and liabilities: Inventories 2,700 5,820 Other current assets 2,322 (554 )Other assets 181 ? Accounts payable (102 ) (953 )Income taxes payable (311 ) (1,731 )Accrued commissions 566 (9,598 )Other accrued expenses (471 ) (2,797 )Deferred revenue (1,433 ) (2,315 )Amounts held in eWallets (4,491 ) (1,742 )Operating lease liabilities (1,427 ) (1,807 )Other current liabilities 227 (108 )Long-term incentive ? (333 )Net cash provided by (used in) operating 1,885 (18,638 )activitiesCASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (211 ) (189 )Net cash used in investing activities (211 ) (189 )CASH FLOWS FROM FINANCING ACTIVITIES: Repurchase of common stock ? (10,117 )Dividends paid (9,138 ) (7,344 )Net cash used in financing activities (9,138 ) (17,461 )Effect of exchange rates on cash, cash 931 62 equivalents and restricted cashNet decrease in cash, cash equivalents and (6,533 ) (36,226 )restricted cashCASH, CASH EQUIVALENTS AND RESTRICTED CASH, 99,425 135,651 beginning of periodCASH, CASH EQUIVALENTS AND RESTRICTED CASH, end $ 92,892 $ 99,425 of periodSUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:Issuance of treasury stock for employee awards, $ ? $ 8,289 netRight-of-use assets obtained in exchange for $ 2,747 $ 5,082 operating lease liabilities

CONTACTS:

Company Contact: Scott DavidsonSenior Vice President and Chief Financial OfficerNatural Health Trends Corp.Tel (Hong Kong): +852-3107-0800Tel (U.S.): 310-541-0888scott.davidson@nhtglobal.com

Investor Contact:ADDO Investor RelationsTel: 310-829-5400investor.relations@nhtglobal.com