Natural Health Trends Corp. Aktie

Good day, and welcome to the Natural Health Trends Corp. Quarter 2 2026 Earnings Conference Call.

At this time, I would like to turn the conference over to Michelle Glidewell.

Thank you, and welcome to Natural Health Trends Second Quarter 2026 Earnings Conference Call.

During today's call, there may be statements made relating to the future results of the company that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements due to the result of certain factors, including those set forth in the company's filings with the Securities and Exchange Commission.

It should also be noted that a replay of today's call can be found on the Investors section of the company's corporate website at naturalhealthtrendscorp.com.

At this time, I'd like to turn the call over to Chris Sharng, President of Natural Health Trends.

Thank you, Michelle. Good morning, and thanks to everyone joining us to discuss our second quarter 2026 financial results.

Scott Davidson, our Senior Vice President and Chief Financial Officer, is also here today.

Second quarter net sales were $7.6 million, a 23% decrease compared to the second quarter of 2025. In China, consumers continue to be cautious about spending and investing, while regulatory uncertainty caused some members to pause activities during the quarter. We also identified conduct by certain members that violated the company's Hong Kong policies, procedures and professional code of conduct. These activities disrupted our business and adversely affected our second quarter revenue and operating results.

At the same time, the restructuring initiatives implemented late last year drove improvements in gross margin and reduced operating expenses by approximately $300,000 during the quarter. Year-to-date, these actions have generated more than $600,000 in savings with additional savings expected to be realized in the second half of the year.

During the quarter, we launched SuperNutri One, our new tropical flavor of grain powder formulated to support digestion, p classification and immune health. Early customer response has been encouraging with positive feedback across our markets on the product's taste, convenience and overall value proposition. We also reinforced our commitment to product quality by hosting a group of field leaders at one of our primary manufacturing facilities in Korea, providing them with firsthand insight into our manufacturing processes and quality standards.

Across our global markets, we continue to execute targeted product launches, promotions, recognition programs and incentive initiatives designed to increase engagement, strengthen customer loyalty and support long-term sales growth. We look forward to celebrating our 25th anniversary in Hong Kong next month. Leading up to and throughout the event, customers will have the opportunity to qualify for a range of prices and rewards. We expect to welcome more than 1,000 attendees from around the world as we reaffirm our long-term strategy to strengthen engagement with our global field leadership and reinforce our commitment to future growth.

As we look ahead, our priorities remain clear: execute with financial discipline, invest in initiatives that strengthen our competitive position and support our field with innovative products, enhanced digital capabilities and tools and meaningful engagement. These actions position us to capitalize on opportunities as market conditions improve.

On that note, our Board of Directors authorized the resumption of share repurchases under our existing stock repurchase program with $15.9 million remaining available. This initiative indicates our confidence in the business as well as continued commitment to returning cash to the shareholders.

With that, I'd like to turn the call over to our CFO, Scott Davidson, to discuss our financial results in greater detail. Scott?

Thank you, Chris.

Total revenue for the second quarter was $7.6 million compared to $9.8 million in the second quarter of 2025, a decline of 23%, primarily due to, as Chris mentioned, Chinese consumers' continued hesitancy to spend and regulatory uncertainty in China that caused some of our members to pause activities during the quarter. We also identified conduct by certain members that violated the company's Hong Kong policies, procedures and code of conduct that disrupted our business and impacted second quarter results.

Turning to our cost and operating expenses. We are seeing the impact of strong execution on our previously announced restructuring program with improved margin and reduced operating expenses. Gross profit margin increased to 75.2% from 73.9% in the second quarter last year due to the transition of much of our product manufacturing from the United States to East Asia, closer to our main markets. Commissions expense as a percent of total revenue for the second quarter was 40.9%, consistent with the second quarter last year. Selling, general and administrative expenses for the quarter were $3.3 million, a decrease of $323,000 compared to a year ago.

Operating loss for the quarter was $643,000 compared to $333,000 in the second quarter last year. Net loss for the second quarter was $451,000 or $0.05 per diluted share compared to a net income of $15,000 or breakeven per diluted share in the second quarter of 2025.

Now I'll turn to our balance sheet and cash flow. Net cash used in operating activities was $2.2 million during the first 6 months of 2026 compared to $5.2 million in the first 6 months of 2025. Total cash, cash equivalents and marketable securities were $18.6 million at June 30, down from $28.9 million at December 31, 2025, primarily due to the repurchase of shares of common stock and dividends paid during the first 6 months of 2026. On April 27, our Board of Directors authorized the resumption of share repurchases under our existing stock repurchase program with $15.9 million remaining available.

While the operating environment remains challenging, we continue to take proactive steps to strengthen the business through disciplined execution, operational efficiency and targeted investments that support long-term growth. The restructuring initiatives implemented late last year are delivering the expected financial benefits and contributing to improved gross margin, and we expect additional savings to be realized in the second half of the year.

We remain confident in our strategy and focus on building a stronger foundation for the future through continued innovation, enhanced digital capabilities and deeper engagement with our global field. Our upcoming 25th anniversary celebration in Hong Kong represents an important milestone as we bring our global community together and reaffirm our commitment to the next chapter of growth.

That concludes our prepared remarks. I will now turn the call back over to the operator.

This concludes today's call. Thank you for your participation. You may now disconnect.

Good day, and welcome to the Natural Health Trends Corp. First Quarter 2026 Earnings Conference Call. At this time, I would like to turn the conference over to Michelle Glidewell with Natural Health Trends. Please go ahead.

Thank you, and welcome to Natural Health Trends First Quarter 2026 Earnings Conference Call. During today's call, there may be statements made relating to the future results of the company that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements as a result of certain factors, including those set forth in the company's filings with the Securities and Exchange Commission. It should also be noted that a replay of today's call can be found on the Investors section of the company's corporate website at naturalhealthtrendscorp.com.

At this time, I'd like to turn the call over to Chris Sharng, President of Natural Health Trends.

Thank you, Michelle. Good morning, and thanks to everyone joining us to discuss our first quarter 2026 financial results. Scott Davidson, our Senior Vice President and Chief Financial Officer, is also here today.

Our business was adversely impacted a year ago when trade war rhetoric between America and China intensified. Since then, despite continued macroeconomic pressure and subdued consumer spending, we have managed to stabilize our top line. Importantly, tangible benefits from the restructuring program implemented in the fourth quarter of last year have begun to materialize. During the first quarter, these efforts contributed to an improvement in gross profit margin and a reduction in operating expenses, totaling approximately $300,000.

Meanwhile, we continue to invest in improving our business efficiency. We just launched our enhanced nhtglobal.com website. The new site introduces refreshed branding, more robust product information and a modern intuitive customer journey. Also well underway are our new back-office platform and AI-powered member app and AI agents for logistics and member services. These technologies will support future growth by strengthening member productivity and knowledge, enhancing end-to-end selling and the customer experience and improving our business insights.

Just last week, we introduced our newest product, Super Nutri One, a tropical flavor greens powder for digestion, detox and immunity. We are also looking forward to our 25th anniversary in Hong Kong later this year. A full calendar of events and brand initiatives is in the works. We look forward to marking this important milestone in our company's history.

While external conditions remain challenging, we believe that by reducing costs, streamlining our business and investing in technologies, we are positioned to navigate the current environment and grow our revenue. Our leaders are experienced, deeply committed and actively engaged in both our business opportunity and our products as they pursue their personal success and wellness goals. We appreciate their dedication and hard work amid a challenging and complex sales landscape.

With that, I'd like to turn the call over to our CFO, Scott Davidson, to discuss our financial results in greater detail. Scott?

Thank you, Chris. Total revenue for the first quarter was $9.2 million, a decrease of 6% from $9.7 million in the fourth quarter of 2025 and a decline of 14% compared to $10.7 million in the first quarter of 2025.

Turning to our cost and operating expenses. We are seeing the impact of executing on our previously announced restructuring program with improved margin and reduced operating expenses. Gross profit margin increased to 75% from 73.6% in the first quarter last year as we continue to transition much of our product manufacturing from the United States to East Asia, closer to our main markets.

Commissions expense as a percent of total revenue for the first quarter was 41.8%, consistent with the prior year. Selling, general and administrative expenses for the quarter were $3.5 million, a decrease of $238,000 compared to a year ago. Operating loss for the quarter was $474,000 compared to $345,000 in the first quarter last year. Net loss for the first quarter was $154,000 or $0.02 per diluted share compared to a net income of $122,000 or $0.01 per diluted share in the first quarter of 2025.

Now I'll turn to our balance sheet and cash flow. Net cash used in operating activities was $797,000 during the first 3 months of 2026 compared to net cash provided by operating activities of $484,000 during the first quarter a year ago. Total cash, cash equivalents and marketable securities were $21.2 million at March 31, down from $28.9 million at December 31, 2025, due to the repurchase of approximately 25.5% of our shares of common stock in February as well as our quarterly dividend payment and cash used in operations.

Returning capital to our stockholders remains a top priority. I am pleased to announce that on April 27, our Board of Directors declared another quarterly cash dividend of $0.10 per share. This will be payable on May 22 to stockholders of record as of May 12.

Referring back to Chris' earlier remarks, we have managed to stabilize our top line over the past 4 quarters despite a challenging operating environment, reflecting the resilience of our core markets. As a result of the restructuring program and our focus on top line growth, we are on a clear path towards profitability and improved financial performance. We look forward to celebrating our 25th anniversary with our leaders, members and new customers later this year. The activities before, during and after this milestone event are designed to drive engagement and strengthen the NHT Global brand as we build momentum into the next phase of the business.

That concludes our prepared remarks. I will now turn the call back over to the operator.

This does conclude today's call. Thank you for your participation. You may now disconnect.

Good day, and welcome to the Natural Health Trends Corp. Fourth Quarter 2025 Earnings Conference Call.

At this time, I would like to turn the conference over to Michelle Glidewell with Natural Health Trends Corp.

Thank you, and welcome to Natural Health Trends Fourth Quarter and Full Year 2025 Earnings Conference Call.

During today's call, there may be statements made relating to the future results of the company that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements through the result of certain factors, including those set forth in the company's filings with the Securities and Exchange Commission. It should also be noted that a replay of today's call can be found on the Investors section of the company's corporate website at naturalhealthtrendscorp.com.

At this time, I'd like to turn the call over to Chris Sharng, President of Natural Health Trends.

Thank you, Michelle, and thanks to everyone for joining us this morning to discuss our fourth quarter and full year 2025 financial results. With me today is Scott Davidson, our Senior Vice President and Chief Financial Officer.

In the fourth quarter, we delivered a 3% sequential increase in revenue over the preceding third quarter. Meanwhile, our full year performance is more balanced than it may appear as we saw glimpses of stability and rebound starting in April. For example, in our largest market, reorders as a percent of total orders increased compared to 2024 and sales of our curated product bundles rose 10% for the full year. These trends reflect continued member engagement and ongoing demand for our core products. We also saw encouraging growth in the fourth quarter in Taiwan and Peru. Moreover, Japan and Colombia achieved strong increases all year.

During the quarter, we continue to take actions to improve the efficiency and strength of our operations. Restructuring initiatives announced last quarter are substantially complete, including the relocation of about 40% of our product sourcing from America to East Asia in order to reduce tariff uncertainty and streamline logistics, also included our measures to optimize our workforce and downsize several offices. Of these actions, we expect to realize a significant portion of the associated $1.5 million annualized cost savings during 2026.

2026 represents an important milestone for the company as we celebrate our 25th anniversary. We have prepared exciting programs that include a big celebration event in Hong Kong, where we anticipate 1,500 attendees, signature products for the anniversary and incentives to leverage these special moments. We expect a catalyst for renewed momentum across our products and our business.

As I close, I want to sincerely thank our leaders, members, prefer customers, employees and stockholders. Your commitment is foundational to NHT Global's long-term success, and it directly supports the global reach and impact of our products. NHT Global continues to offer opportunities for people of all backgrounds, whether they seek to supplement income, build a business or take a more proactive approach to health and wellness. With a strong product portfolio and the renewed focus on execution, we are confident in our ability to support these goals in an evolving global environment. As we welcome the year of the horse, we extend our best wishes for health, prosperity and success throughout 2026.

Now I'll pass the call to our CFO, Scott Davidson, who will share a detailed review of our financial results. Scott?

Thank you, Chris. Fourth quarter revenue of $9.7 million increased 3% compared to $9.5 million in the third quarter of 2025 and declined 10% compared to $10.8 million in the fourth quarter of last year. Revenue in our primary market of Greater China increased 2% compared to the third quarter and was supplemented by improvement in other markets, particularly Taiwan and Peru.

Gross profit margin was 73.9% in the fourth quarter compared with 74.2% in the fourth quarter of last year due to the write-off of components inventory related to discontinued products and products whose manufacturing has transitioned outside the United States. Gross profit margin would be comparable to last year without these write-offs. Commissions expense as a percent of net sales for the fourth quarter was 40.3% compared with 41.9% a year ago. Selling, general and administrative expenses were $3.8 million for the fourth quarter compared with $3.9 million a year ago. SG&A would have declined by $309,000 or 8% year-over-year, if not for the $208,000 of restructuring-related charges recognized in SG&A during the quarter.

As a result, operating loss for the quarter was $635,000 compared to $421,000 in the fourth quarter of last year. Excluding $283,000 of restructuring-related charges recognized in cost of sales and SG&A during the fourth quarter, operating loss would have been $352,000 during the quarter.

Net loss for the fourth quarter was $588,000 or $0.05 per diluted share compared to net income of $176,000 or $0.02 per diluted share in the fourth quarter of 2024. Despite the loss before income taxes in the fourth quarter this year, tax expense of $175,000 was recognized during the quarter due to an increase in foreign tax expense.

Now I'll turn to our cash flows and balance sheet. Net cash used in operating activities was $959,000 during the fourth quarter this year, primarily due to the restructuring-related activities and payments related to our new back office system implementation. For the full year, net cash used in operating activities was $6 million compared to $3.4 million a year ago. Excluding our required annual tax installment payment related to the 2017 U.S. Tax Cuts and Jobs Act, we used $943,000 in cash from operations during 2025. Total cash, cash equivalents and marketable securities were $28.9 million at December 31, down from $32 million at September 30 due to our quarterly dividend payment and the cash used in operations during the quarter. For the full year 2025, we paid out $9.2 million in dividends.

As returning capital to our stockholders remains a priority, I am pleased to announce that on February 2, our Board of Directors declared a quarterly cash dividend of $0.10 per share, which will be payable on February 27 to stockholders of record as of February 17.

In closing, I'm pleased with the progress we were able to make during the fourth quarter as our restructuring initiatives are substantially complete. Looking forward, we can expect to realize a significant portion of the approximately $1.5 million in cost savings during 2026, which positions the business on a clear path towards profitability and improved performance. As we enter our 25th anniversary year, we view this milestone as both a celebration of our legacy and a foundation for our future. We believe there will be a special and engaging year to be a part of our business, and we look forward to making it meaningful and rewarding for our global community.

That completes our prepared remarks. I will now turn the call back over to the operator.

This does conclude today's call. Thank you for your participation. You may now disconnect.

Greetings. Welcome to Natural Health Trends Corp.'s Third Quarter 2025 Earnings Conference Call. Please note, this conference is being recorded. I will now turn the conference over to Michelle Glidewell with Natural Health Trends Corp. Thank you. You may begin.

Thank you, and welcome to Natural Health Trends Third Quarter 2025 Earnings Conference Call. During today's call, there may be statements made relating to the future results of the company that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results, performance or achievements could differ materially from those anticipated in such forward-looking statements through the result of certain factors, including those set forth in the company's filings with the Securities and Exchange Commission. It should also be noted that a replay of today's call can be found on the Investors section of the company's corporate website at naturalhealthtrendscorp.com. At this time, I'd like to turn the call over to Chris Sarn, President of Natural Health Trends.

Thank you, and thanks to everyone our third quarter 2021 financial results today we stand higher to the third quarter of 2024, while orders declined 5% year-over-year. The decrease in net sales is in part due to the timing of product promotion and the presale of our new skin care line at the end of September 2025 in Hong Kong.

The economic outlook in our largest market remains challenging in the near term. In response, we're executing a targeted major restructuring plan, which we expect will result in $1.5 million annualized savings by mid-2026. The -- our ongoing measures include optimizing our workforce by approximately 10%, reducing operating costs and cutting back or exiting certain facility leases. Also, as reported last quarter, we've already begun the process of transitioning U.S.-based product manufacturing to be closer to Asia to mitigate tariff uncertainty, streamline logistics and reduce costs.

As part of these restructuring initiatives, we expect to incur a onetime charge of approximately $250,000 in the fourth quarter and anticipate a reduction in our quarterly cash dividend to $0.10 per share in the first quarter next year. These actions will enable investments in new systems and technologies including an AI-enabled marketing app and a member interface business suite as well as new marketing initiatives designed to drive growth and engagement.

By aligning costs with global sales performance, -- we are positioning the company for sustainable growth, profitability and long-term value creation. In mid-September, we hosted a 4-day cruise to Kagoshima Japan recognizing our top-performing and up-and-coming members and qualifiers with immersive training and team building experiences designed to strengthen collaboration and performance.

Our Greater China market remains focused on continuous training and leadership development to deepen product expertise and reinforce the strong foundation needed for sustained business growth. In Hong Kong, we prelaunched a new Korean formulated moisturizing skincare series called -- so Via in September.

The 4-step line features a cleaner toner, probiotic-infused booster serum and cream design to support skin barrier repair and deliver lasting hydration. Our markets and product teams are working to roll out these new products to the global markets in the near future. To honor 10 successful years in Sweden, we also hosted a sagitory in-person event in September, unveiling Celine, a limited-edition anti-aging cream formulated to hydrate restore and diminish the signs of aging.

Next year marks 25 years of our company's journey, a legacy build on meaningful relationships, share wellness traditions, and providing opportunity to all to achieve their health and wellness goals. We are thoughtfully preparing a year-long celebration designed to deepen member engagement, strengthen our brand and create new opportunities for growth.

We're excited about this opportunity to showcase our 25-year history while setting the groundwork for our future. Together, we will honor our past celebrate our presence and embrace the promise of the future. With that, I'd like to turn the call over to our CFO, Scott Davidson, to discuss our financial results in greater detail. Scott?

Thank you, Chris. Net sales in the third quarter were $9.5 million, a decline of 11% compared to $10.7 million in the third quarter a year ago. Our sales in Hong Kong which made up 82% of our sales during the quarter declined 8% over a year ago or 4% excluding the impact of the product promotion and the presale of our new skin care line at the end of September that Chris mentioned. Gross profit margin was 73.7% for the third quarter compared with 74.1% last year due to the write-off of components inventory related to discontinued products. Commissions expense as a percent of total sales for the third quarter was 40.9% compared with 40.5% a year ago. Commissions expense as a percent of net sales increased primarily due to higher weekly commissions earned by our members during the third quarter of this year. Selling, general and administrative expenses declined $262,000 to $3.6 million for the quarter from $3.9 million in the third quarter a year ago.

As a result, Operating loss for the quarter was $495,000 compared to $275,000 in the third quarter last year, partially due to, as I mentioned previously, the timing of product promotions and new product presales in Hong Kong during the quarter as well as the write-off of components inventory related to discontinued products during the third quarter.

Net loss for the third quarter was $431,000 or $0.04 per diluted share compared to net income of $35,000 or breakeven per diluted share in the third quarter of 2024. Despite the loss before income taxes in the third quarter of this year, tax expense of $142,000 was recognized during the quarter due to the fluctuation in our annual effective tax rate quarter-over-quarter.

I'll now turn to our cash flows and balance sheet. Net cash used in operating activities was $5 million during the first 9 months of 2025 compared to $3.5 million during the comparable period a year ago. Excluding our required annual tax installment payments related to the 2017 U.S. Tax Cuts and Jobs Act, cash provided by operating activities was $16,000 in the first 9 months of 2025 compared to $514,000 during the same period a year ago. Total cash, cash equivalents and marketable securities were $32 million at September 30 down from $43.9 million at December 31, 2024.

In regard to our quarterly dividend, I am pleased to announce that on November 3, our Board of Directors declared another cash dividend of $0.20 per share, which will be payable on November 28 to stockholders of record as of November 18. In closing, we continue to navigate near-term challenges in our largest market, and our priority in the coming quarters is to execute the restructuring plan outlined by Chris.

By realizing the estimated $1.5 million in annualized savings by mid-2026, we will free resources to drive top line growth, invest in new systems and technologies and implement global programs and incentives that support our members' success.

These necessary actions position the company for sustainable growth. long-term profitability and continued value creation for both shareholders and customers. That completes our prepared remarks. I will now turn the call back over to the operator.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.