Core Viewpoint - Natural Health Trends Corp. (NHTC) reported a decline in revenue and net income for the second quarter of 2025, primarily due to ongoing trade tensions affecting consumer confidence in its main market, Hong Kong, while the company is taking steps to realign its supply chain to mitigate these challenges [2][10][12]. Revenue and Earnings Performance - NHTC's second-quarter 2025 revenues were $9.8 million, a decrease of 6.3% from $10.5 million in the same quarter last year [2]. - Net income for the quarter was $15,000, down significantly from $173,000 a year ago, resulting in breakeven earnings per diluted share compared to $0.02 previously [2]. - For the first half of 2025, revenues totaled $20.6 million, a 4.1% decrease from $21.4 million in the first half of 2024 [3]. Sales Performance - Sales in Hong Kong, which accounted for 81.6% of total quarterly sales, declined by 5.5% year over year [4]. - Active members decreased to 29,260 as of June 30, 2025, a decline of 5.9% from 31,110 a year ago [6]. Financial Metrics - Gross profit for the second quarter was $7.3 million, down 6.7% from $7.8 million in the prior-year quarter, with a gross margin of 73.9% compared to 74.2% previously [5]. - Commissions expense rose to 40.9% of sales from 40.1% a year ago, while selling, general, and administrative expenses decreased by 6.2% year over year to $3.6 million [5]. Cash Flow and Operating Activities - Cash used in operating activities increased to $5.2 million in the first half of 2025 from $3 million a year ago [7]. - Total cash, cash equivalents, and marketable securities were $34.2 million at the end of June, down from $43.9 million at the end of 2024 [6]. Management Commentary - Management acknowledged challenges from global trade uncertainties and weak consumer sentiment in core markets, indicating a strategic shift of supply chain operations from the U.S. to Asia to reduce tariff exposure and improve cost efficiency [8][10]. - The company is also focusing on engaging its distributor base through training and incentive programs, with the launch of a new market in Colombia showing positive reception [9]. Strategic Outlook - NHTC did not provide specific forward-looking revenue or earnings guidance but expressed confidence in the strategic realignment of its supply chain and investments in products and programs to support long-term growth [12]. - A significant financial milestone was the full settlement of the company's U.S. Tax Cuts and Jobs Act liability, which impacted operating cash flow but removed a liability from the balance sheet [13].

Financial Data and Key Metrics Changes - Net sales for Q2 2025 were $9.8 million, a 6% decrease compared to $10.5 million in Q2 2024, attributed to heightened economic uncertainty [4][8] - Gross profit margin was 73.9%, consistent with the previous year [8] - Operating loss for the quarter was $333,000, compared to a loss of $238,000 in Q2 2024 [8] - Net income for Q2 2025 was $15,000, or breakeven per diluted share, down from $173,000, or $0.02 per diluted share in Q2 2024 [8] - Net cash used in operating activities was $5.2 million, compared to $3 million in the same period last year [10] - Total cash, cash equivalents, and marketable securities decreased to $34.2 million from $41.9 million at the end of Q1 2025 [10] Business Line Data and Key Metrics Changes - Sales in Hong Kong, which accounted for 82% of total sales, declined by 5% year-over-year due to economic uncertainty [8] Market Data and Key Metrics Changes - The company launched its newest market, Colombia, with a successful grand opening event, indicating strong enthusiasm for growth in South America [6] Company Strategy and Development Direction - The company is transitioning its US-based supply chain to trusted manufacturing partners in Asia to reduce exposure to tariffs and streamline logistics [4][5] - Focus on operational discipline, expense management, and inventory control to mitigate risks associated with economic headwinds [6][11] - Continued investment in brand programs, product innovation, and digital enhancements to drive future growth [7] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging economic environment due to trade tensions affecting consumer sentiment [4] - Despite near-term pressures, long-term fundamentals remain strong, and the company is committed to executing strategic priorities [11] Other Important Information - The Board of Directors declared a cash dividend of $0.20 per share, payable on August 22 to stockholders of record as of August 12 [10] Q&A Session Summary - No specific questions or answers were documented in the provided content.

[PART I - FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the company's unaudited interim consolidated financial statements and management's analysis [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, income statements, cash flows, and comprehensive notes, for the periods ended June 30, 2025 [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) This table presents the company's consolidated balance sheets as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheets (in Thousands) | ASSETS (in Thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------- | :------------------------ | :------------------ | | Cash and cash equivalents | $10,534 | $13,533 | | Marketable securities | $23,711 | $30,407 | | Inventories | $2,769 | $3,272 | | Other current assets | $3,845 | $3,771 | | **Total current assets** | **$40,859** | **$50,983** | | Property and equipment, net | $154 | $190 | | Operating lease right-of-use assets | $2,108 | $2,498 | | Restricted cash | $37 | $34 | | Deferred tax asset | $387 | $382 | | Other assets | $1,617 | $1,272 | | **Total assets** | **$45,162** | **$55,359** | | | | | | LIABILITIES AND STOCKHOLDERS' EQUITY (in Thousands) | June 30, 2025 (Unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------ | :------------------ | | Accounts payable | $962 | $895 | | Income taxes payable | $7 | $4,908 | | Accrued commissions | $1,866 | $2,021 | | Other accrued expenses | $1,337 | $1,425 | | Deferred revenue | $6,078 | $6,428 | | Amounts held in eWallets | $3,089 | $3,286 | | Operating lease liabilities | $1,060 | $1,127 | | Other current liabilities | $549 | $709 | | **Total current liabilities** | **$14,948** | **$20,799** | | Deferred tax liability | $172 | $174 | | Operating lease liabilities | $1,186 | $1,514 | | **Total liabilities** | **$16,306** | **$22,487** | | | | | | Stockholders' equity: | | | | Common stock | $13 | $13 | | Additional paid-in capital | $84,969 | $84,901 | | Accumulated deficit | $(30,813) | $(26,344) | | Accumulated other comprehensive loss | $(916) | $(1,301) | | Treasury stock | $(24,397) | $(24,397) | | **Total stockholders' equity** | **$28,856** | **$32,872** | | **Total liabilities and stockholders' equity** | **$45,162** | **$55,359** | [Consolidated Statements of Operations](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS%20(UNAUDITED)) This table details the company's consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Operations (in Thousands, Except Per Share Data) | (In Thousands, Except Per Share Data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $9,813 | $10,475 | $20,550 | $21,426 | | Cost of sales | $2,558 | $2,699 | $5,390 | $5,611 | | Gross profit | $7,255 | $7,776 | $15,160 | $15,815 | | Operating expenses: | | | | | | Commissions expense | $4,012 | $4,203 | $8,500 | $8,689 | | Selling, general and administrative expenses | $3,576 | $3,811 | $7,338 | $7,729 | | Total operating expenses | $7,588 | $8,014 | $15,838 | $16,418 | | Loss from operations | $(333) | $(238) | $(678) | $(603) | | Other income, net | $348 | $519 | $813 | $1,082 | | Income before income taxes | $15 | $281 | $135 | $479 | | Income tax provision (benefit) | $0 | $108 | $(2) | $118 | | Net income | $15 | $173 | $137 | $361 | | Net income per common share: | | | | | | Basic | $0.00 | $0.02 | $0.01 | $0.03 | | Diluted | $0.00 | $0.02 | $0.01 | $0.03 | [Consolidated Statements of Comprehensive Income](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20(UNAUDITED)) This table presents the company's consolidated statements of comprehensive income for the three and six months ended June 30, 2025 and 2024 Consolidated Statements of Comprehensive Income (in Thousands) | (In Thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $15 | $173 | $137 | $361 | | Other comprehensive income (loss), net of tax: | | | | | | Foreign currency translation adjustment | $229 | $(36) | $377 | $(150) | | Unrealized gains (losses) on available-for-sale securities | $(1) | $8 | $8 | $(30) | | **Comprehensive income** | **$243** | **$145** | **$522** | **$181** | [Consolidated Statements of Stockholders' Equity](index=8&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS'%20EQUITY%20(UNAUDITED)) This table outlines changes in the company's consolidated stockholders' equity for the six months ended June 30, 2025 Consolidated Statements of Stockholders' Equity (in Thousands, Except Share Data) | (In Thousands, Except Share Data) | Common Stock Shares | Common Stock Amount | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Treasury Stock Shares | Treasury Stock Amount | Total Stockholders' Equity | | :-------------------------------- | :------------------ | :------------------ | :------------------------- | :------------------ | :----------------------------------- | :-------------------- | :-------------------- | :------------------------- | | **BALANCE, December 31, 2024** | **12,979,414** | **$13** | **$84,901** | **$(26,344)** | **$(1,301)** | **(1,466,339)** | **$(24,397)** | **$32,872** | | Net income | — | — | — | $122 | — | — | — | $122 | | Share-based compensation | — | — | $34 | — | — | — | — | $34 | | Dividends declared, $0.20/share | — | — | — | $(2,303) | — | — | — | $(2,303) | | Foreign currency translation adjustments | — | — | — | — | $148 | — | — | $148 | | Unrealized gains on available-for-sale securities | — | — | — | — | $9 | — | — | $9 | | **BALANCE, March 31, 2025** | **12,979,414** | **$13** | **$84,935** | **$(28,525)** | **$(1,144)** | **(1,466,339)** | **$(24,397)** | **$30,882** | | Net income | — | — | — | $15 | — | — | — | $15 | | Share-based compensation | — | — | $34 | — | — | — | — | $34 | | Dividends declared, $0.20/share | — | — | — | $(2,303) | — | — | — | $(2,303) | | Foreign currency translation adjustments | — | — | — | — | $229 | — | — | $229 | | Unrealized losses on available-for-sale securities | — | — | — | — | $(1) | — | — | $(1) | | **BALANCE, June 30, 2025** | **12,979,414** | **$13** | **$84,969** | **$(30,813)** | **$(916)** | **(1,466,339)** | **$(24,397)** | **$28,856** | [Consolidated Statements of Cash Flows](index=10&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20(UNAUDITED)) This table presents the company's consolidated statements of cash flows for the six months ended June 30, 2025 and 2024 Consolidated Statements of Cash Flows (in Thousands) | (In Thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :----------------------------- | :----------------------------- | | **CASH FLOWS FROM OPERATING ACTIVITIES:** | | | | Net income | $137 | $361 | | Adjustments to reconcile net income to net cash used in operating activities: | | | | Depreciation and amortization | $59 | $69 | | Net accretion of marketable securities | $(214) | $(215) | | Share-based compensation | $68 | $75 | | Noncash lease expense | $573 | $545 | | Deferred income taxes | $(3) | $16 | | Changes in assets and liabilities: | | | | Inventories | $525 | $6 | | Other current assets | $402 | $(294) | | Other assets | $(334) | $(101) | | Accounts payable | $65 | $(335) | | Income taxes payable | $(4,901) | $(3,817) | | Accrued commissions | $(194) | $106 | | Other accrued expenses | $(110) | $136 | | Deferred revenue | $(311) | $1,432 | | Amounts held in eWallets | $(170) | $(339) | | Operating lease liabilities | $(561) | $(560) | | Other current liabilities | $(182) | $(104) | | **Net cash used in operating activities** | **$(5,151)** | **$(3,019)** | | **CASH FLOWS FROM INVESTING ACTIVITIES:** | | | | Purchases of property and equipment | $(20) | $(30) | | Purchases of marketable securities | $(27,552) | $(36,164) | | Proceeds from maturities of marketable securities | $34,215 | $3,307 | | **Net cash provided by (used in) investing activities** | **$6,643** | **$(32,887)** | | **CASH FLOWS FROM FINANCING ACTIVITIES:** | | | | Dividends paid | $(4,606) | $(4,606) | | **Net cash used in financing activities** | **$(4,606)** | **$(4,606)** | | Effect of exchange rates on cash, cash equivalents and restricted cash | $118 | $(92) | | Net decrease in cash, cash equivalents and restricted cash | $(2,996) | $(40,604) | | CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | $13,567 | $56,217 | | **CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period** | **$10,571** | **$15,613** | [Notes to Consolidated Financial Statements](index=11&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section provides detailed explanations and disclosures for the consolidated financial statements, covering accounting policies, revenue, balance sheet components, and other financial details [1. Nature of Operations and Summary of Significant Accounting Policies](index=11&type=section&id=1.%20NATURE%20OF%20OPERATIONS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section describes the company's business as an international direct-selling and e-commerce entity and outlines its significant accounting policies - Natural Health Trends Corp. is an international direct-selling and e-commerce company, selling personal care, wellness, and "quality of life" products under the "NHT Global" brand[24](index=24&type=chunk) - The Company has an active physical presence in the Americas, Greater China, Southeast Asia, South Korea, Japan, India, and Europe, and operates in Russia and Kazakhstan through a local service provider[25](index=25&type=chunk) - The unaudited interim consolidated financial statements are prepared in accordance with GAAP for interim financial information, with certain disclosures condensed or omitted[26](index=26&type=chunk) - Cash and cash equivalents include **$3.1 million** held in bank accounts in China, subject to foreign currency controls[28](index=28&type=chunk) - The Company is evaluating the impact of new FASB ASUs 2023-09 (Income Taxes) and 2024-03 (Expense Disaggregation Disclosures) on its financial statements[32](index=32&type=chunk)[33](index=33&type=chunk) [2. Revenue](index=13&type=section&id=2.%20REVENUE) This section details the company's revenue recognition policies and provides a breakdown of net sales by category - Revenue is recognized when performance obligations are satisfied, typically upon product shipment and title transfer to independent members (F.O.B. Shipping Point)[35](index=35&type=chunk) - Sales returns were **1% of sales** for both the six months ended June 30, 2025 and 2024[36](index=36&type=chunk) - Deferred revenue from unshipped product orders and unredeemed product vouchers decreased from **$4.9 million** at December 31, 2024, to **$4.6 million** at June 30, 2025[39](index=39&type=chunk) Net Sales by Category (in Thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Product sales | $9,596 | $10,218 | $20,128 | $20,849 | | Administrative fees, freight and other | $262 | $318 | $539 | $719 | | Less: sales returns | $(45) | $(61) | $(117) | $(142) | | **Total net sales** | **$9,813** | **$10,475** | **$20,550** | **$21,426** | - No single market other than Hong Kong had net sales greater than **10% of total net sales**, and no single customer accounted for **10% or more of net sales**[42](index=42&type=chunk) [3. Balance Sheet Components](index=15&type=section&id=3.%20BALANCE%20SHEET%20COMPONENTS) This section provides a detailed breakdown of key balance sheet components, including cash, inventories, and deferred revenue Cash, Cash Equivalents and Restricted Cash (in Thousands) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash | $7,187 | $7,925 | | Cash equivalents | $3,347 | $5,608 | | Restricted cash | $37 | $34 | | **Total Cash, cash equivalents and restricted cash** | **$10,571** | **$13,567** | Inventories (in Thousands) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Finished goods | $2,300 | $2,770 | | Raw materials | $469 | $502 | | **Total Inventories** | **$2,769** | **$3,272** | Deferred Revenue (in Thousands) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Unshipped product and unredeemed product vouchers | $4,603 | $4,940 | | Auto ship advances | $1,475 | $1,488 | | **Total Deferred revenue** | **$6,078** | **$6,428** | [4. Fair Value Measurements](index=15&type=section&id=4.%20FAIR%20VALUE%20MEASUREMENTS) This section outlines the company's fair value measurements for marketable securities, categorized by valuation levels - The Company's investments in money market funds, municipal debt securities, and corporate debt securities are classified as available-for-sale and carried at fair value[46](index=46&type=chunk) Fair Value Measurements (in Thousands) | Category | Fair Value Level | June 30, 2025 Fair Value (in Thousands) | December 31, 2024 Fair Value (in Thousands) | | :--- | :--- | :--- | :--- | | Money market funds | Level 1 | $1,951 | $2,092 | | Municipal debt securities | Level 2 | $6,796 | $3,458 | | Corporate debt securities | Level 2 | $18,311 | $30,465 | | **Total investments** | | **$27,058** | **$36,015** | [5. Leases](index=17&type=section&id=5.%20LEASES) This section details the company's lease obligations for office and retail spaces, including lease costs and terms - The Company leases corporate office space in California and Hong Kong, and retail space in Rowland Heights, CA, Richmond, BC, and Metuchen, NJ[51](index=51&type=chunk) - Additional leased office space includes seven branch offices in China, and locations in Peru, Japan, Taiwan, South Korea, Malaysia, India, Colombia, and the Cayman Islands[52](index=52&type=chunk) Lease Cost (in Thousands) | (In Thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Operating leases | $312 | $319 | $620 | $644 | | Short-term leases | $35 | $36 | $68 | $72 | | **Total lease cost** | **$347** | **$355** | **$688** | **$716** | - As of June 30, 2025, the weighted-average remaining lease term for operating leases was **3.4 years**, with a weighted-average discount rate of **4.3%**[54](index=54&type=chunk) [6. Income Taxes](index=18&type=section&id=6.%20INCOME%20TAXES) This section discusses the company's effective income tax rate, net operating loss carryforwards, and significant tax payments - The effective income tax rate for the three and six months ended June 30, 2025, includes estimates for foreign income inclusions like GILTI and Subpart F income, and prior year true-ups[56](index=56&type=chunk) - As of June 30, 2025, the Company has **$390,000** of U.S. federal net operating loss carryforwards and **$457,000** of U.S. state net operating loss carryforwards[57](index=57&type=chunk) - The final installment of **$5.1 million** for the repatriation tax on deemed deferred foreign income was paid in April 2025[58](index=58&type=chunk) [7. Commitments and Contingencies](index=18&type=section&id=7.%20COMMITMENTS%20AND%20CONTINGENCIES) This section outlines the company's commitments and potential contingencies, including employment agreement provisions - The Company has employment agreements with management that include provisions for specified payments in the event of a change in control or termination without cause[61](index=61&type=chunk) [8. Stock-Based Incentive Plans](index=19&type=section&id=8.%20STOCK-BASED%20INCENTIVE%20PLANS) This section details the company's stock-based incentive plans, including available shares, restricted stock activity, and phantom share grants - As of June 30, 2025, **1,129,047 shares** remained available for issuance under the 2016 Equity Incentive Plan[63](index=63&type=chunk) Restricted Stock Activity | Restricted Stock Activity | Shares | Wtd. Avg. Price at Date of Issuance | | :------------------------ | :--- | :--- | | Nonvested at December 31, 2024 | 28,676 | $4.84 | | Vested | (14,356) | $4.84 | | Nonvested at June 30, 2025 | 14,320 | $4.84 | - Share-based compensation expense for restricted stock was **$34,000** for the three months and **$68,000** for the six months ended June 30, 2025[64](index=64&type=chunk) - On April 1, 2025, **223,307 phantom shares** were granted, vesting over two years with both time-based and performance-based conditions, including positive operating profit and stock appreciation[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) - No compensation expense was recognized related to the cash settlement of phantom shares during the six months ended June 30, 2025, compared to **$181,000** in the prior year period[70](index=70&type=chunk) [9. Stockholders' Equity](index=21&type=section&id=9.%20STOCKHOLDERS'%20EQUITY) This section provides information on changes in stockholders' equity, including dividends, stock repurchase programs, and comprehensive income components - The Company declared and paid cash dividends of **$0.20 per common share** during each of the first two quarters of 2025 and 2024, totaling **$4.6 million** in each six-month period[72](index=72&type=chunk) - As of June 30, 2025, **$21.9 million** of the **$70.0 million** stock repurchase program remained available for future purchases[73](index=73&type=chunk) Accumulated Other Comprehensive Loss (in Thousands) | (In Thousands) | Foreign Currency Translation Adjustments | Unrealized Gains (Losses) on Available-For-Sale Investments | Total | | :--- | :--- | :--- | :--- | | Balance, December 31, 2024 | $(1,275) | $(26) | $(1,301) | | Other comprehensive income (Q1 2025) | $148 | $9 | $157 | | Balance, March 31, 2025 | $(1,127) | $(17) | $(1,144) | | Other comprehensive income (loss) (Q2 2025) | $229 | $(1) | $228 | | **Balance, June 30, 2025** | **$(898)** | **$(18)** | **$(916)** | [10. Related Party Transactions](index=21&type=section&id=10.%20RELATED%20PARTY%20TRANSACTIONS) This section discloses transactions with related parties, specifically royalty payments for a product to an entity indirectly owned by a former director - The Company pays royalties to Broady Health Sciences, L.L.C. (BHS) for the product ReStor™, with George K. Broady (former director and >5% owner) being an indirect owner of BHS[75](index=75&type=chunk) - Royalties recognized were **$9,000** for the three months and **$18,000** for the six months ended June 30, 2025[75](index=75&type=chunk) [11. Segment Information](index=22&type=section&id=11.%20SEGMENT%20INFORMATION) This section presents financial information by operating segment and geographic area, highlighting net sales and operating income - The Company aggregates most operating segments (including Hong Kong) into a "Primary Reporting Unit," with China and Russia/Kazakhstan as separate segments due to different operating models[77](index=77&type=chunk) - The President (CODM) reviews financial information geographically, using net sales, gross profit, and operating profit to assess segment performance and allocate resources[78](index=78&type=chunk) Net Sales by Segment (in Thousands) | Segment (in Thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Primary Reporting Unit Net Sales | $9,493 | $10,023 | $19,899 | $20,489 | | China Net Sales | $219 | $336 | $453 | $720 | | Russia and Kazakhstan Net Sales | $101 | $116 | $198 | $217 | | **Total Net Sales** | **$9,813** | **$10,475** | **$20,550** | **$21,426** | Segment Income (Loss) from Operations (in Thousands) | Segment (in Thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Primary Reporting Unit Segment Income (Loss) from Operations | $1,560 | $1,710 | $3,233 | $3,336 | | China Segment Income (Loss) from Operations | $(169) | $(76) | $(315) | $(170) | | Russia and Kazakhstan Segment Income (Loss) from Operations | $(24) | $(17) | $(64) | $(57) | Net Sales by Geographic Area (in Thousands) | Geographic Area (in Thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | United States | $299 | $263 | $585 | $525 | | Canada | $130 | $142 | $231 | $253 | | Peru and Colombia | $320 | $284 | $569 | $504 | | Hong Kong | $8,004 | $8,468 | $17,127 | $17,642 | | China | $219 | $336 | $453 | $720 | | Taiwan | $396 | $486 | $718 | $823 | | Japan | $82 | $55 | $146 | $121 | | Malaysia and Singapore | $82 | $66 | $132 | $119 | | Russia and Kazakhstan | $101 | $116 | $198 | $217 | | Europe | $120 | $157 | $270 | $309 | | Other foreign countries | $60 | $102 | $121 | $193 | | **Total net sales** | **$9,813** | **$10,475** | **$20,550** | **$21,426** | - Substantially all of the Company's Hong Kong revenues are derived from the sale of products delivered to members in China[85](index=85&type=chunk) [12. Subsequent Event](index=24&type=section&id=12.%20SUBSEQUENT%20EVENT) This section reports a significant event occurring after the reporting period, specifically a declared quarterly cash dividend - On July 28, 2025, the Board of Directors declared a quarterly cash dividend of **$0.20 per common share**, payable on August 22, 2025, to stockholders of record on August 12, 2025[86](index=86&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses the company's financial condition, operational results, liquidity, and critical accounting estimates, emphasizing foreign operations and geopolitical risks [Business Overview](index=25&type=section&id=Business%20Overview) This section provides an overview of the company's international direct-selling and e-commerce business, active member trends, and exposure to foreign market risks - Natural Health Trends Corp. is an international direct-selling and e-commerce company, selling personal care, wellness, and "quality of life" products under the "NHT Global" brand[87](index=87&type=chunk) - Active members decreased to **29,260** at June 30, 2025, from **30,870** at December 31, 2024, and **31,110** at June 30, 2024[88](index=88&type=chunk) - Approximately **93% of net sales** are from subsidiaries outside the Americas, making operating results susceptible to foreign currency fluctuations, trade policy, inflation, and geopolitical conditions[89](index=89&type=chunk) - Hong Kong's e-commerce platform generated approximately **83% of revenue** in the first six months of 2025, substantially all from sales to members in China[90](index=90&type=chunk) - The company withdrew its direct selling license application in China in 2019 and plans to reapply when circumstances are favorable, expecting potential benefits but also higher fixed costs[90](index=90&type=chunk) - U.S. tariffs on Chinese goods escalated in Q1 2025, with reciprocal tariffs from China, leading to negative consumer sentiment and economic uncertainty in the company's largest market, impacting Q2 sales[93](index=93&type=chunk)[94](index=94&type=chunk) - The company is exploring transitioning product production from the U.S. to other jurisdictions, including Asia, to mitigate tariff effects, which may involve short-term expenses like product reregistration[94](index=94&type=chunk) [Statement of Operations Presentation](index=27&type=section&id=Statement%20of%20Operations%20Presentation) This section explains the components of the consolidated statements of operations, including revenue recognition, cost of sales, and operating expenses - Revenue is primarily from product sales to independent members at wholesale prices, recognized upon shipment and title transfer[96](index=96&type=chunk) - Cost of sales includes product purchases, freight, import duties, packing materials, product royalties, promotional materials, and provisions for slow-moving or obsolete inventories[97](index=97&type=chunk) - Member commissions are the most significant expense, paid weekly based on bonus volume points from down-line network purchases[98](index=98&type=chunk) - Selling, general and administrative expenses include administrative compensation and benefits, travel, credit card fees, professional fees, occupancy costs, and marketing/promotion expenses[101](index=101&type=chunk) - Sales and net earnings are affected by changes in currency exchange rates; a weakening U.S. dollar generally increases sales and earnings, while a strengthening U.S. dollar decreases them[103](index=103&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing changes in net sales, gross profit, operating expenses, and net income Statement of Operations as Percentage of Net Sales | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | **100.0%** | **100.0%** | **100.0%** | **100.0%** | | Cost of sales | **26.1%** | **25.8%** | **26.2%** | **26.2%** | | Gross profit | **73.9%** | **74.2%** | **73.8%** | **73.8%** | | Commissions expense | **40.9%** | **40.1%** | **41.4%** | **40.5%** | | Selling, general and administrative expenses | **36.4%** | **36.4%** | **35.7%** | **36.1%** | | Total operating expenses | **77.3%** | **76.5%** | **77.1%** | **76.6%** | | Loss from operations | **(3.4)%** | **(2.3)%** | **(3.3)%** | **(2.8)%** | | Other income, net | **3.5%** | **5.0%** | **4.0%** | **5.0%** | | Income before income taxes | **0.1%** | **2.7%** | **0.7%** | **2.2%** | | Income tax provision (benefit) | **0.0%** | **1.0%** | **(0.0)%** | **0.5%** | | Net income | **0.1%** | **1.7%** | **0.7%** | **1.7%** | [Net Sales](index=29&type=section&id=Net%20Sales) This section analyzes the changes in net sales for the three and six months ended June 30, 2025, highlighting regional performance Net Sales (in Thousands) | Period | 2025 Net Sales (in Thousands) | 2024 Net Sales (in Thousands) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $9,813 | $10,475 | $(662) | -6% | | Six Months Ended June 30 | $20,550 | $21,426 | $(876) | -4% | - Hong Kong net sales (primarily to China) decreased by **$464,000 (5%)** for Q2 2025 and **$515,000 (3%)** for YTD 2025, mainly due to negative consumer sentiment from tariff threats[108](index=108&type=chunk)[109](index=109&type=chunk) - Net sales outside Hong Kong decreased by **$198,000 (10%)** for Q2 2025 and **$361,000 (10%)** for YTD 2025, primarily due to decreased sales in the Chinese e-commerce retail business[108](index=108&type=chunk)[109](index=109&type=chunk) [Gross Profit](index=29&type=section&id=Gross%20Profit) This section discusses the company's gross profit and its percentage of net sales for the current and prior periods - Gross profit was **73.9% of net sales** for the three months ended June 30, 2025, a slight decrease from **74.2%** in the comparable period a year ago[110](index=110&type=chunk) - Gross profit remained consistent at **73.8% of net sales** for both six-month periods ended June 30, 2025 and 2024[110](index=110&type=chunk) [Commissions Expense](index=29&type=section&id=Commissions%20Expense) This section examines the commissions expense, noting its increase as a percentage of net sales due to higher member earnings - Commissions expense increased as a percentage of net sales to **40.9%** for Q2 2025 (from **40.1%** in Q2 2024) and to **41.4%** for YTD 2025 (from **40.5%** in YTD 2024)[111](index=111&type=chunk) - The increase in commissions as a percentage of net sales was primarily due to higher weekly commissions earned by members during the first six months of 2025[111](index=111&type=chunk) [Selling, General and Administrative Expenses](index=29&type=section&id=Selling,%20General%20and%20Administrative%20Expenses) This section analyzes changes in selling, general and administrative expenses, attributing decreases to lower employee and event costs Selling, General and Administrative Expenses (in Thousands) | Period | 2025 Amount (in Thousands) | 2024 Amount (in Thousands) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $3,576 | $3,811 | $(235) | -6.2% | | Six Months Ended June 30 | $7,338 | $7,729 | $(391) | -5.1% | - The decrease in SG&A expenses was primarily due to lower employee-related expenses and event costs compared to the prior year periods[112](index=112&type=chunk) - Selling, general and administrative expenses as a percentage of net sales were relatively consistent for both the three- and six-month periods[112](index=112&type=chunk) [Other Income, Net](index=30&type=section&id=Other%20income,%20net) This section details the decrease in other income, net, primarily due to lower interest income during the reporting periods Other Income, Net (in Thousands) | Period | 2025 Amount (in Thousands) | 2024 Amount (in Thousands) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $348 | $519 | $(171) | -33.0% | | Six Months Ended June 30 | $813 | $1,082 | $(269) | -24.9% | - The decrease in other income, net, was primarily due to less interest income earned during the current year periods[113](index=113&type=chunk) [Income Taxes](index=31&type=section&id=Income%20Taxes) This section explains the income tax provision, including foreign income inclusions and the evaluation of new tax legislation Income Tax Provision (Benefit) (in Thousands) | Period | 2025 Amount (in Thousands) | 2024 Amount (in Thousands) | | :--- | :--- | :--- | | Three Months Ended June 30 | $0 | $108 | | Six Months Ended June 30 | $(2) | $118 | - The tax provision primarily resulted from foreign income inclusions (GILTI, Subpart F income) and tax benefits in foreign jurisdictions[114](index=114&type=chunk) - The "One Big Beautiful Bill Act" (OBBBA) was signed into law on July 4, 2025, making permanent key elements of the U.S. Tax Cuts and Jobs Act[115](index=115&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's liquidity and capital resources, including cash, working capital, and cash flow activities - Cash, cash equivalents, and marketable securities totaled **$34.2 million** at June 30, 2025, a decrease of **$9.7 million** from December 31, 2024, primarily due to dividends paid and the final repatriation tax payment[116](index=116&type=chunk) - Working capital was **$25.9 million** at June 30, 2025, with a current asset to current liability ratio of **2.7 to 1.0**, representing a **$4.3 million decrease** from December 31, 2024[117](index=117&type=chunk) - Net cash used in operating activities was **$5.2 million** for the first six months of 2025, compared to **$3.0 million** for the first six months of 2024, largely due to a **$5.1 million** repatriation tax payment in April 2025[118](index=118&type=chunk) - Cash flows provided by investing activities totaled **$6.6 million** during the first six months of 2025, a significant change from **$32.9 million** used in the prior year, driven by proceeds from marketable securities maturities offsetting new purchases[119](index=119&type=chunk) - Cash flows used in financing activities were **$4.6 million** for both H1 2025 and H1 2024, consisting solely of quarterly dividend payments of **$0.20 per common share**[120](index=120&type=chunk) - The company expects to continue paying a quarterly cash dividend of **$0.20 per share** for the foreseeable future, subject to Board discretion[120](index=120&type=chunk) - **$21.9 million** remained available under the **$70.0 million** stock repurchase program as of June 30, 2025[121](index=121&type=chunk) - Management believes existing internal liquidity is adequate to fund normal business operations and financial commitments for the foreseeable future[122](index=122&type=chunk) - The company prioritizes investing resources in Greater China and other promising markets, including establishing China-based manufacturing, increasing brand awareness, and building service infrastructure for a prospective China direct selling license[123](index=123&type=chunk) [Critical Accounting Estimates](index=33&type=section&id=Critical%20Accounting%20Estimates) This section highlights critical accounting estimates and assumptions that significantly impact the company's financial statements - The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures[124](index=124&type=chunk) - Critical accounting estimates involve assumptions about highly uncertain matters where changes could materially impact financial condition or results of operations[125](index=125&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that the company is not required to provide quantitative and qualitative disclosures about market risk under smaller reporting company disclosure rules - Not applicable under smaller reporting company disclosure rules[127](index=127&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details the company's evaluation of its disclosure controls and procedures and reports on any changes in internal control over financial reporting [Disclosure Controls and Procedures](index=33&type=section&id=Disclosure%20Controls%20and%20Procedures) This section confirms management's evaluation of the effectiveness of disclosure controls and procedures as of June 30, 2025 - Management, with the participation of the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of June 30, 2025[128](index=128&type=chunk) - Concluded that the disclosure controls and procedures were effective as of June 30, 2025[128](index=128&type=chunk) [Changes in Internal Control over Financial Reporting](index=33&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) This section reports no material changes in internal control over financial reporting during the fiscal quarter ended June 30, 2025 - No changes in internal control over financial reporting occurred during the fiscal quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[129](index=129&type=chunk) [PART II - OTHER INFORMATION](index=34&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in Part I, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20LEGAL%20PROCEEDINGS) This section states that there are no legal proceedings to report - None[132](index=132&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20RISK%20FACTORS) This section updates previously disclosed risk factors, focusing on government trade policies, tariffs, and geopolitical disputes impacting business - No material changes to risk factors since the 2024 Annual Report on Form 10-K, except as set forth in this section[133](index=133&type=chunk) - Changes in government trade and economic policies, including escalating U.S. tariffs on Chinese goods (up to **125%**, temporarily reduced to **10%** with a pre-existing **20%** tariff), and retaliatory tariffs from China, may negatively affect global economic conditions and the company's business[134](index=134&type=chunk) - The company may incur additional costs for shipments into China, potentially requiring surcharges, and is exploring transitioning product production outside the U.S. to mitigate tariff effects, which could involve transition costs like product reregistration[134](index=134&type=chunk) - Ongoing trade disputes and increased tensions between the U.S. and China (including Hong Kong's governance) could disrupt China/Hong Kong business, affect product distribution, reduce net sales, increase operational costs, or lead to retaliatory actions[135](index=135&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section indicates that there were no unregistered sales of equity securities or use of proceeds to report - None[138](index=138&type=chunk) [Item 3. Defaults Upon Senior Securities](index=35&type=section&id=Item%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) This section states that there were no defaults upon senior securities to report - None[139](index=139&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=Item%204.%20MINE%20SAFETY%20DISCLOSURES) This section indicates that mine safety disclosures are not applicable to the company - Not applicable[140](index=140&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20OTHER%20INFORMATION) This section states that there is no other information to report - None[141](index=141&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20EXHIBITS) This section lists the exhibits filed as part of the Form 10-Q, including certifications, XBRL taxonomy files, and a form of phantom share agreement - Includes certifications of Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1)[143](index=143&type=chunk) - Contains Inline XBRL Taxonomy Extension files (101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE) and Cover Page Interactive Data File (104)[143](index=143&type=chunk) - References Form of Phantom Share Agreement under the Phantom Equity Plan (10.1)[143](index=143&type=chunk) [Signatures](index=37&type=section&id=Signatures) This section contains the required signatures for the Form 10-Q, confirming its submission by the Chief Financial Officer - Report signed by Timothy S. Davidson, Senior Vice President and Chief Financial Officer, on July 30, 2025[147](index=147&type=chunk)

[Report Overview](index=1&type=section&id=Report%20Overview) Natural Health Trends Corp. announced Q2 2025 financial results, reporting sales decreases due to economic uncertainty and trade tensions, prompting supply chain realignment to Asia for resilience [Introduction](index=1&type=section&id=Introduction) Natural Health Trends Corp. announced its financial results for the second quarter ended June 30, 2025, highlighting its position as a direct-selling and e-commerce company specializing in personal care, wellness, and 'quality of life' products under the NHT Global brand - Natural Health Trends Corp. (NASDAQ: NHTC) is a leading direct-selling and e-commerce company[2](index=2&type=chunk) - The company markets premium quality personal care, wellness, and 'quality of life' products under the NHT Global brand[2](index=2&type=chunk) - The report announces financial results for the quarter ended **June 30, 2025**[2](index=2&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management attributed the Q2 sales decrease to heightened economic uncertainty and evolving trade tensions, particularly impacting their largest market. To mitigate tariff-related risks and enhance long-term resilience, the company is realigning its supply chain by shifting production to manufacturing partners in Asia, closer to core markets - Second quarter sales decreased due to heightened economic uncertainty caused by evolving trade tensions, which are expected to continue impacting consumer sentiment in the largest market[5](index=5&type=chunk) - To mitigate tariff-related risks, the company is realigning its supply chain by transitioning production to trusted manufacturing partners in Asia[6](index=6&type=chunk) - The supply chain realignment aims to bring operations closer to core markets and enhance long-term resilience[6](index=6&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) The company reported revenue declines, increased operating losses, and reduced net income for Q2 and year-to-date 2025, alongside increased cash usage from operations and a dividend declaration [Second Quarter 2025 Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) For the second quarter of 2025, Natural Health Trends Corp. reported a 6% decrease in revenue, an increased operating loss, and a significant drop in net income compared to the prior year, alongside a reduction in active members Second Quarter 2025 Financial Performance | Metric | Q2 2025 | Q2 2024 | Change (%) | | :----------------------- | :------ | :------ | :--------- | | Revenue | $9.8M | $10.5M | -6% | | Operating Loss | ($333K) | ($238K) | -39.9% | | Net Income | $15K | $173K | -91.3% | | Diluted EPS | $0.00 | $0.02 | -100% | - The number of **Active Members** decreased to **29,260** at **June 30, 2025**, from **31,110** at **June 30, 2024**[6](index=6&type=chunk) [Year-to-Date 2025 Highlights](index=1&type=section&id=Year-to-Date%202025%20Highlights) For the first six months of 2025, the company experienced a 4% decline in revenue, an increased operating loss, and a substantial decrease in net income compared to the same period in 2024 Year-to-Date 2025 Financial Performance | Metric | YTD 2025 | YTD 2024 | Change (%) | | :----------------------- | :------- | :------- | :--------- | | Revenue | $20.6M | $21.4M | -4% | | Operating Loss | ($678K) | ($603K) | -12.4% | | Net Income | $137K | $361K | -62% | | Diluted EPS | $0.01 | $0.03 | -66.7% | [Balance Sheet and Cash Flow Summary](index=2&type=section&id=Balance%20Sheet%20and%20Cash%20Flow%20Summary) In the first six months of 2025, net cash used in operating activities increased significantly, and total cash, cash equivalents, and marketable securities decreased. The company fully settled its U.S. Tax Cuts and Jobs Act liability and declared a quarterly cash dividend of $0.20 per share Key Cash Flow and Balance Sheet Metrics | Metric | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | ($5.2M) | ($3.0M) | | Cash, cash equivalents & marketable securities (as of June 30, 2025) | $34.2M (down from $43.9M at Dec 31, 2024) | N/A | - The **liability** from the **2017** U.S. Tax Cuts and Jobs Act was fully settled during the second quarter of **2025**[6](index=6&type=chunk)[11](index=11&type=chunk) - A quarterly **cash dividend** of **$0.20** per share was declared on **July 28, 2025**, payable on **August 22, 2025**, to stockholders of record as of **August 12, 2025**[6](index=6&type=chunk)[11](index=11&type=chunk) [Consolidated Financial Statements](index=4&type=section&id=Consolidated%20Financial%20Statements) Consolidated financial statements reveal decreased assets and liabilities, declining net sales, increased operating losses, and higher cash usage from operations for the first half of 2025 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheet shows a decrease in total assets and total liabilities from December 31, 2024, to June 30, 2025, primarily driven by reductions in cash, marketable securities, and income taxes payable Consolidated Balance Sheet Summary (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Total assets | $45,162 | $55,359 | | Total liabilities | $16,306 | $22,487 | | Total stockholders' equity | $28,856 | $32,872 | | Cash and cash equivalents | $10,534 | $13,533 | | Marketable securities | $23,711 | $30,407 | [Consolidated Statements of Operations](index=5&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations reflect a decline in net sales for both the three and six months ended June 30, 2025, leading to increased operating losses and significantly lower net income compared to the prior year periods Consolidated Statements of Operations Summary (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $9,813 | $10,475 | $20,550 | $21,426 | | Gross profit | $7,255 | $7,776 | $15,160 | $15,815 | | Total operating expenses | $7,588 | $8,014 | $15,838 | $16,418 | | Loss from operations | ($333) | ($238) | ($678) | ($603) | | Net income | $15 | $173 | $137 | $361 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first six months of 2025, the company reported increased net cash used in operating activities, a shift to net cash provided by investing activities due to marketable securities maturities, and consistent cash used in financing activities for dividends Consolidated Statements of Cash Flows Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | ($5,151) | ($3,019) | | Net cash provided by (used in) investing activities | $6,643 | ($32,887) | | Net cash used in financing activities | ($4,606) | ($4,606) | | Net decrease in cash, cash equivalents and restricted cash | ($2,996) | ($40,604) | | Cash, cash equivalents and restricted cash, end of period | $10,571 | $15,613 | [Company and Investor Information](index=2&type=section&id=Company%20and%20Investor%20Information) This section provides an overview of Natural Health Trends Corp., details for the Q2 2025 earnings call, a forward-looking statements disclaimer, and investor contact information [About Natural Health Trends Corp.](index=2&type=section&id=About%20Natural%20Health%20Trends%20Corp.) Natural Health Trends Corp. is an international direct-selling and e-commerce company that operates globally through its subsidiaries, marketing premium personal care products under the NHT Global brand - Natural Health Trends Corp. (NASDAQ: NHTC) is an international direct-selling and e-commerce company[9](index=9&type=chunk) - The company operates through subsidiaries across Asia, the Americas, and Europe[9](index=9&type=chunk) - It markets premium quality personal care products under the NHT Global brand[9](index=9&type=chunk) [Second Quarter 2025 Financial Results Conference Call](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Results%20Conference%20Call) Management hosted a conference call on July 30, 2025, to discuss the second quarter 2025 financial results, with details provided for live participation and replay access Conference Call Details | Item | Detail | | :------------ | :------------------------------------------------ | | Date | Wednesday, July 30, 2025 | | Time | 11:30 a.m. Eastern Time / 8:30 a.m. Pacific Time | | Domestic Dial-in | 1-877-407-0789 | | International Dial-in | 1-201-689-8562 | | Conference ID | 13754794 | | Webcast | https://viavid.webcasts.com/starthere.jsp?ei=1726889&tp_key=778e0e5b56 | | Replay Availability | July 30, 2025 (2:30 p.m. ET) - August 13, 2025 (11:59 p.m. ET) | [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section includes a standard safe harbor statement, indicating that forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties detailed in the company's SEC filings, with no obligation to update such information - Forward-looking statements in the press release do not constitute guarantees of future performance[10](index=10&type=chunk) - Such statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated[10](index=10&type=chunk) - Risks and uncertainties are detailed under 'Risk Factors' in the company's Annual Report on Form **10-K** filed with the SEC[10](index=10&type=chunk) [Contact Information](index=3&type=section&id=Contact%20Information) Investor relations inquiries can be directed to Scott Davidson, Senior Vice President and Chief Financial Officer of Natural Health Trends Corp - Contact for investor relations: **Scott Davidson**, Senior Vice President and Chief Financial Officer[12](index=12&type=chunk) - Contact details: Tel (U.S.): **310-541-0888**, Email: investor.relations@nhtglobal.com[12](index=12&type=chunk)

Core Insights - Natural Health Trends Corp. reported a decrease in revenue and net income for the second quarter of 2025, reflecting challenges from economic uncertainty and trade tensions [4][6][7] Financial Highlights - Revenue for Q2 2025 was $9.8 million, down 6% from $10.5 million in Q2 2024 [7] - Operating loss for Q2 2025 was $333,000 compared to a loss of $238,000 in Q2 2024 [7] - Net income for Q2 2025 was $15,000, or breakeven per diluted share, down from $173,000, or $0.02 per diluted share, in Q2 2024 [7] - Year-to-date revenue for the first six months of 2025 was $20.6 million, a decrease of 4% from $21.4 million in the same period of 2024 [7] - Operating loss for the first six months of 2025 was $678,000 compared to $603,000 in the first half of 2024 [7] Member Metrics - The number of Active Members decreased to 29,260 as of June 30, 2025, down from 30,870 at the end of 2024 and 31,110 a year earlier [7] Cash Flow and Balance Sheet - Net cash used in operating activities was $5.2 million in the first half of 2025, compared to $3.0 million in the same period of 2024 [8] - Total cash, cash equivalents, and marketable securities were $34.2 million at June 30, 2025, down from $43.9 million at December 31, 2024 [8] - The company declared a quarterly cash dividend of $0.20 per share, payable on August 22, 2025 [8] Management Commentary - The President of Natural Health Trends Corp. noted that the company is realigning its supply chain to mitigate tariff-related risks and enhance long-term resilience [4][5]

Core Viewpoint - Natural Health Trends Corp. will report its financial results for the second quarter of 2025 on July 30, 2025, at 9:00 a.m. Eastern Time, followed by a conference call at 11:30 a.m. Eastern Time to discuss the results [1]. Group 1: Financial Results Announcement - The financial results for the second quarter ended June 30, 2025, will be announced on July 30, 2025 [1]. - A conference call will be hosted by President Chris Sharng and CFO Scott Davidson on the same day at 11:30 a.m. Eastern Time [1]. Group 2: Conference Call Details - The conference call will be accessible via dial-in numbers: 1-877-407-0789 for domestic calls and 1-201-689-8562 for international calls [2]. - A webcast of the conference call will be available at the provided link [2]. - A replay of the call will be available from 2:30 p.m. Eastern Time on July 30, 2025, until 11:59 p.m. Eastern Time on August 13, 2025 [2]. Group 3: Company Overview - Natural Health Trends Corp. is an international direct-selling and e-commerce company operating in Asia, the Americas, and Europe [3]. - The company markets premium quality personal care products under the NHT Global brand [3].

Core Viewpoint - Natural Health Trends Corp. (NHTC) reported a decline in revenue and net income for Q1 2025, but showed signs of healthy demand through increased order volume, while facing challenges from trade uncertainties and a strategic focus on regional manufacturing [2][3][8]. Revenue and Earnings Snapshot - NHTC reported revenues of $10.7 million for Q1 2025, a 1.9% decline from $10.9 million in the same period last year [2] - Net income decreased by 35.1% to $122,000 from $188,000 year-over-year, with earnings per diluted share falling to $0.01 from $0.02 [3] - Operating loss narrowed to $0.3 million from $0.4 million a year earlier, while selling, general, and administrative expenses declined by 3.9% to $3.8 million [3] - Gross margin increased to 73.6% from 73.4%, indicating stable cost management [3] Other Key Business Metrics - NHTC ended the quarter with 30,180 active members, down 4.6% year-over-year [4] - Commissions expense as a percentage of revenues increased to 41.8% from 41% due to higher commission payouts [4] - Cash provided by operating activities was $484,000, down from $549,000 in the prior-year quarter [4] Cash Position and Dividends - As of March 31, 2025, NHTC held $41.9 million in cash and marketable securities, down from $43.9 million at the end of 2024, primarily due to dividend payouts [5] - The company declared a quarterly cash dividend of $0.20 per share, payable on May 23 to shareholders of record as of May 13 [5] Management Commentary - President Chris Sharng described Q1 as an extension of positive momentum from the second half of 2024, highlighting engagement from a product roadshow in China and Hong Kong [6] - The launch of new products, Twin Slim Coffee and Tomato Soup, was well-received [6] - The opening of a new office in Bogotá, Colombia, is seen as strategically significant for the Latin American market [7] Factors Influencing the Results - Revenue decline was attributed to timing differences in incentive campaigns rather than weakening demand, with a sequential uptick in order intake noted [8] - The company is working to regionalize manufacturing closer to Asian markets to improve cost efficiency and reduce logistics volatility [8] Guidance and Strategic Outlook - Management did not provide explicit financial guidance but emphasized the importance of navigating evolving trade barriers [9] - NHTC aims to streamline its supply chain and adjust logistics to mitigate adverse impacts while focusing on product innovation and member support [10] Other Developments - NHTC expanded its geographical footprint with the launch of a new regional office in Bogotá, reinforcing its commitment to long-term international expansion [11]

Financial Data and Key Metrics Changes - Total revenue for the first quarter was $10,700,000, a 2% decrease compared to $11,000,000 in the first quarter of 2024, attributed to the timing of incentive calendars [5][8] - Gross profit margin increased slightly to 73.6% from 73.4% in the first quarter last year [9] - Net income for the first quarter was $122,000 or $0.01 per diluted share, compared to $188,000 or $0.02 per diluted share in the first quarter of 2024 [10] Business Line Data and Key Metrics Changes - Active member base decreased slightly to 30,180 at March 31 from 30,870 at December 31, down 5% from 31,620 at March [8] - Commissions expense as a percent of total revenue for the first quarter was 41.8% compared with 41% a year ago, primarily due to higher weekly commissions earned by members [10] Market Data and Key Metrics Changes - In China and Hong Kong, a Night City Roadshow was completed, marketing wellness products with expert insights, and new products in the Twin Slim weight management line received strong feedback [6] Company Strategy and Development Direction - The company is actively working to streamline its supply chain and bring manufacturing closer to primary markets in Asia to weather international trade uncertainties and improve long-term efficiency [7][11] - The opening of a new office in Bogota, Colombia, will serve as a central hub for customer services and showcasing brands and products [6] Management's Comments on Operating Environment and Future Outlook - Management highlighted the need to assess the potential impact of tariffs on operations and respond with strategic actions to optimize the supply chain [11] - The focus remains on executing strategic initiatives and providing exceptional support to members [11] Other Important Information - Total cash, cash equivalents, and marketable securities were $41,900,000 at March 31, down from $43,900,000 at December 31, 2024, due to quarterly dividend payments [11] - A quarterly cash dividend of $0.20 per share was declared, payable on May 23 to stockholders of record as of May 13 [11] Q&A Session Summary - No specific questions or answers were recorded in the provided content.

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $10.7 million, a 2% decrease from $11 million in Q1 2024, attributed to the timing of incentive calendars [4][7] - Active member base decreased to 30,180 as of March 31, down from 30,870 at December 31, and down 5% from 31,620 in March 2024 [7] - Gross profit margin increased slightly to 73.6% from 73.4% in the same quarter last year [7] - Net income for Q1 2025 was $122,000 or $0.01 per diluted share, compared to $188,000 or $0.02 per diluted share in Q1 2024 [9] Business Line Data and Key Metrics Changes - Orders taken increased by 9% sequentially over Q4 2024, indicating sustained interest in products [4] - New products introduced in the Twin Slim weight management line received strong customer feedback [5] Market Data and Key Metrics Changes - The company completed a Night City Roadshow in China and Hong Kong, promoting wellness products [5] - A new office was opened in Bogota, Colombia, serving as a central hub for customer services and brand showcasing [6] Company Strategy and Development Direction - The company is actively working to streamline its supply chain and bring manufacturing closer to primary markets in Asia to improve long-term efficiency [6][10] - Immediate priorities include assessing the potential impact of tariffs on operations and optimizing logistics [10] Management's Comments on Operating Environment and Future Outlook - Management noted that the international trade environment changed significantly after Q1, making it difficult to gauge impacts [6] - The focus remains on executing strategic initiatives and providing exceptional support to members [10] Other Important Information - Commissions expense as a percentage of total revenue increased to 41.8% from 41% a year ago due to higher weekly commissions [8] - Total cash, cash equivalents, and marketable securities were $41.9 million at March 31, down from $43.9 million at December 31, 2024, due to quarterly dividend payments [10] - A quarterly cash dividend of $0.20 per share was declared, payable on May 23 to stockholders of record as of May 13 [10] Q&A Session Summary - No specific Q&A session content was provided in the transcript.

Financial Performance - Net sales for Q1 2025 were $10,737,000, a decrease of 1.95% compared to $10,951,000 in Q1 2024[17] - Gross profit for Q1 2025 was $7,905,000, down from $8,039,000 in Q1 2024, reflecting a gross margin of approximately 73.6%[17] - Net income for Q1 2025 was $122,000, a decline of 35% from $188,000 in Q1 2024[19] - Total net sales for the three months ended March 31, 2025, were $10.7 million, a decrease of 2% from $10.9 million in the same period of 2024[41] - Product sales for the three months ended March 31, 2025, were $10.5 million, compared to $10.6 million in the same period of 2024[41] - The Company’s diluted net income per common share for the three months ended March 31, 2025, was $0.01, down from $0.02 in the same period of 2024[30] - Gross profit for the three months ended March 31, 2025, was $7,905,000, compared to $8,039,000 for the same period in 2024, reflecting a decrease of 1.7%[75] - Commissions expense increased to 41.8% of net sales in Q1 2025, up from 41.0% in Q1 2024, due to higher weekly commissions[107] Assets and Liabilities - Total current assets decreased to $48,806,000 as of March 31, 2025, compared to $50,983,000 at the end of 2024[15] - Total liabilities slightly decreased to $22,297,000 from $22,487,000 at the end of 2024[15] - The total stockholders' equity decreased to $30,882,000 as of March 31, 2025, from $32,872,000 at the end of 2024[15] - Total assets as of March 31, 2025, were $53,179,000, a decrease from $55,359,000 as of December 31, 2024[78] - The Company had contract liabilities of $5.4 million as of March 31, 2025, up from $4.9 million at the end of 2024, primarily due to $3.5 million received for unshipped product orders[39] - Deferred revenue as of March 31, 2025, was $6.9 million, consisting of $5.4 million in unshipped product orders and $1.5 million in auto ship advances[105] Cash Flow and Investments - Cash and cash equivalents increased to $21,688,000 from $13,533,000 at the end of 2024, marking a significant improvement[15] - The Company reported a net cash provided by operating activities of $484,000 for Q1 2025, down from $549,000 in Q1 2024[23] - Cash provided by operations for the first three months of 2025 was $484,000, down from $549,000 in the same period of 2024[112] - Cash flows from investing activities totaled $10.0 million in Q1 2025, compared to cash used of $28.5 million in Q1 2024, with $17.4 million spent on marketable securities[113] - As of March 31, 2025, cash, cash equivalents, and marketable securities totaled $41.9 million, a decrease of $2.0 million from December 31, 2024[111] - The Company recognized share-based compensation expense of $34,000 for the three months ended March 31, 2025, compared to $37,000 in the same period of 2024[64] Dividends and Stock Repurchase - The company declared dividends of $0.20 per share, totaling $2,303,000 for the quarter[20] - Cash dividends of $0.20 per common share were declared and paid, totaling $2.3 million for each quarter in 2025 and 2024[68] - The Company declared a quarterly cash dividend of $0.20 per share, payable on May 23, 2025, to stockholders of record on May 13, 2025[84] - The stock repurchase program has $21.9 million remaining from the authorized $70.0 million as of March 31, 2025[115] Market and Operational Insights - The Company operates in multiple markets, including the Americas, Greater China, Southeast Asia, and Europe, with no single market other than Hong Kong exceeding 10% of total net sales[42] - Approximately 94% of the Company's net sales were generated from subsidiaries located outside the Americas, with the Hong Kong subsidiary accounting for 85% of net sales in the latest fiscal quarter[87] - In Q1 2025, the company generated approximately 85% of its revenue from its e-commerce direct selling platform in Hong Kong, primarily from sales to members in China[88] - The Company operates in various markets, including the Americas, Greater China, Southeast Asia, and Europe, with a focus on expanding in promising markets[85] - The ongoing U.S.-China trade tensions have resulted in significant tariffs, including a 125% reciprocal tariff on Chinese imports, which may adversely affect the company's operations and costs[129] Corporate Changes and Future Outlook - The company relocated its corporate headquarters from Hong Kong to California in February 2025 due to changes in the political and economic landscape[90] - The political and economic environment in Hong Kong may adversely affect the company's future business and financial condition[90] - The company is exploring sourcing products from other jurisdictions to mitigate the impact of U.S. tariffs on Chinese imports[91] - The Company expects to recognize revenue from remaining performance obligations within the next twelve months[39] - The Company plans to focus investments in Greater China and other strategic markets, including Southeast Asia, India, South America, and Europe[118] Risk Management - The company maintains that its existing liquidity is adequate to fund normal operations and financial commitments for the foreseeable future[116] - There were no changes in internal control over financial reporting that materially affected the company during the fiscal quarter ended March 31, 2025[124] - The company has not identified any material changes to its risk factors since the last annual report[128]