NHTC Stock Gains After Q1 Earnings, Operating Loss Narrows

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]