Natural Health Trends Corp (NHTC) 2014 Q1 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Natural Health Trends Corporation first-quarter 2014 financial results conference call. (Operator Instructions)

I would now like to turn the conference over to Jeff Stanlis with Hayden IR. Please go ahead.

Thank you. I would like to point out that during the course of this conference call, there may be statements made relating to future results of the Company that are forward-looking statements as defined by 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 the webcast of today's conference call may be found on the Internet by visiting the investor section of the Company's corporate website at www.naturalhealthtrendscorp.com or in the press release announcing the conference call.

In addition, in the press release announcing the financial results, there are instructions for accessing the archived version of the conference call via telephone and the Internet.

At this time, I would like to introduce Chris Sharng, President of Natural Health Trends, for opening comments. Mr. Sharng, the floor is yours.

Thank you, Jeff. And thanks to everyone for joining us today. With me is Scott Davidson, our CFO.

The first quarter represented a tremendous start to 2014. We more than doubled revenue and in fact, the $23.2 million for the first quarter exceeded the total revenue reported for the first half of last year.

We drive a larger and larger portion of our incremental sales to the bottom line as we deliver a nearly tenfold increase in net income compared to the first quarter of last year. As a result, yesterday, the Board authorized our second ever quarterly dividend.

This success is due to the strength, quality, and hard work of our members, management, and field leaders. I remain excited about our progress and increasingly confident about our future. A big part of our current success can be attributed to the effectiveness of our international recognition program and the year-long Supreme Bonus Program we designed to support our members.

We also benefited from new product launches. In Hong Kong, we introduced Twin Slim's diet jelly, an innovative weight management ancillary, in January. Furthermore, we launched the ReStor Silver and ReStor Vital products in North America.

In addition, we focused on improvements in our training and promotional programs around the world. We conducted a multi-city road show in China to support Twin Slim and educate members on product benefits.

On the event side, we held our Macau success forum to recognize the tremendous efforts of our members for their 2013 performance as well as to kickoff our 2014 campaign. We also conducted events in Taiwan, Seoul, and California.

Finally, we introduced the 2014 Supreme Bonus Program in the Hong Kong and Taiwan markets during the Macau success forum, and we have ongoing incentive trip qualifications underway to Italy for our Russian, European, and North American markets. Next week, we will be rewarding 180 Hong Kong and Taiwan qualified members on a weeklong incentive trip to Spain.

In summary, I am very excited about our start to 2014 and believe that we are on a path of profitable, sustainable growth. We remain focused on executing our plan, growing our organization, and then giving our members more quality products, more effective promotional events, and more specifically designed training. We are confident it will drive continued success throughout the rest of 2014 and beyond.

I would like to now turn the call over to Scott Davidson, our CFO, to discuss the financial details. Scott?

Thank you, Chris, and thank you to all who joined our call today. Total revenues were $23.2 million, an increase of 168% compared to $8.7 million in the first quarter last year. This was also a 21% sequential increase compared to $19.1 million in the fourth quarter last year.

Gross profit margin for the first quarter was 77.3% compared to 74.2% in the same period last year. Net income was $3.1 million, or $0.26 per diluted share, compared to $283,000 or $0.03 per diluted share in the first quarter last year and $1.6 million or $0.14 per diluted share in the fourth quarter last year.

On the balance sheet, cash increased to $23.3 million as of March 31 from $14.6 million at December 31. As Chris mentioned, the Board of Directors announced the second consecutive quarterly dividend. The declared dividend included a cash dividend of $0.0196 on outstanding Series A preferred stock.

And a cash dividend of $0.005 per share on common stock outstanding, representing an aggregate dividend of $60,000. This dividend is payable in cash on June 4, 2014, for stockholders of record on May 27, 2014.

With that, I will conclude our prepared remarks and turn the call over to the operator to begin the question-and-answer period. Operator?

(Operator Instructions) Alec Jaslow, Midtown Partners.

I was just wondering, we were looking through the 10-K and we saw distributor growth and would just be interested to hear little bit about the trends in distributor growth in each region and how they did so far through the year -- the first quarter.

Well, Alec, we see a high correlation between the distributor [growth] and our overall revenue. In general, they increased by the same proportions and so we have seen increases in all of our markets. And our distributor accounts in the Commonwealth markets of the Independent States -- that's Russia, Kazakhstan, and Ukraine -- have been flat or slightly down, partly because of the unrest in that region.

Okay. And how well is Taiwan doing, relative to the growth rate last year in distributors?

We have a double-digit increase in Taiwan as well.

Okay. And I'd just be interested to hear a little bit more about what products are driving distributor growth or distributor sales, so -- I'm pretty new to the Company and be interested to know what are the big products that are helping in each region.

I appreciate the question. We see, in general, all of our product categories are increasing. We see especially stronger sale in the nutritional lines, but our personal care line, and cosmetics, and skincare are also going up.

Okay. And is there any correlation for any products in a specific region or are you just seeing a general increase across the board?

No, I think it's across the board. And in general, they're all going up.

Okay. Okay, that's helpful.

Thank you, sir.

Thank you.

(Operator Instructions) I'm showing we have no further questions in the queue at this time.

Well, thank you, everyone, for calling in and I look forward to talking to you about our next quarter's results very soon. Thank you again. Have a good day.

Chris, Chris, we did get two questions that just prompted up. We want to take them real quick?

Sure. Go ahead.

[Ameno Amord], private investor.

Hi and congratulations on the strong quarter performance.

Thank you, sir.

I just had a question regards to -- are there any plans to return to NASDAQ markets?

Oh, we evaluate that from time to time. We have not given it serious thought at this moment. I think we have a lot of very good opportunities in the market, so we would like to focus on our priorities -- that is to continue to provide growth in our business. But thank you for the question.

Okay, thank you.

Marshall Swartwood, Swartwood Hesse Incorporated.

My question was the same thing relative to the trading and the stock. And you are on the bulletin board and that certainly limits your appeal to a lot of investors out there and I was wondering, with this big improvement in your financials, if you are giving a serious thought or not and -- I guess when you answered the other question, it's not high on your priority list.

Yes, that's correct, but I appreciate the question. We will keep that in mind.

Thank you.

Thank you. There are no further questions.

Thank you, everyone, for calling in and again, I look forward to speaking to you very soon about our next quarter's results.

Ladies and gentlemen, this does conclude our conference for today. We thank you for your participation and you may now disconnect.