Natural Health Trends (NHTC) Q2 2024 earnings summary

Executive summary

• Net sales for Q2 2024 were $10.5 million, flat year-over-year, with Hong Kong net sales increasing for the first time since Q1 2023; six-month net sales declined 4% to $21.4 million.

• Net income for Q2 2024 was $173,000 ($0.02 per diluted share), reversing a net loss of $219,000 in Q2 2023; six-month net income rose to $361,000 from $38,000.

• Active members declined 2% sequentially and 15% year-over-year to 31,110 as of June 30, 2024.

• Hong Kong accounted for 81% of Q2 net sales, with most revenue ultimately derived from members in China.

• Management highlighted effective cost management and ongoing strategic initiatives despite a challenging environment.

Financial highlights

• Gross profit margin was 74.2% in Q2 2024, slightly down from 74.6% in Q2 2023, mainly due to higher costs for Premium Noni Juice.

• Operating loss narrowed to $238,000 from $743,000 in Q2 2023; year-to-date operating loss was $603,000, down from $1.1 million.

• Selling, general, and administrative expenses decreased to $3.8 million from $4.1 million year-over-year.

• Commissions and expense as a percent of sales declined to 40.1% from 42.9% year-over-year.

• Cash, cash equivalents, and marketable securities totaled $48.7 million at June 30, 2024, down from $54.4 million at March 31, 2024.

Outlook and guidance

• Focus remains on executing strategies to drive business growth, enhance shareholder value, and invest in key markets in the second half of the year.

• The company expects to continue paying a quarterly cash dividend of $0.20 per share, subject to Board discretion.

• Plans to reapply for a direct selling license in China when conditions are favorable, but timing and impact remain uncertain.

• Continued development of programs, new products, and activities to support member and business success.

• Management plans to focus on training, collaboration, and brand building to capture market opportunities.