Natural Health Trends Corp. (NHTC) Q4 2025 Earnings Call Prepared Remarks Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlighted several financial challenges, including a revenue decline, increased operating and net losses, and cash flow issues. Although there are restructuring efforts and cost-saving measures, the dividend reduction and dependency on specific markets pose additional risks. The Q&A session did not provide clear management responses to alleviate these concerns. Given the negative financial metrics and market uncertainties, the stock is likely to experience a negative reaction in the short term.
Key Financial Performance
Fourth Quarter Revenue $9.7 million, increased 3% compared to $9.5 million in the third quarter of 2025, but declined 10% compared to $10.8 million in the fourth quarter of 2024. The decline was due to lower sales in some markets, though there was improvement in Taiwan and Peru.
Gross Profit Margin 73.9% in the fourth quarter, compared to 74.2% in the fourth quarter of 2024. The slight decline was due to the write-off of components inventory related to discontinued products and products whose manufacturing has transitioned outside the United States.
Commissions Expense as a Percent of Net Sales 40.3% in the fourth quarter, compared to 41.9% a year ago. The decrease reflects improved cost management.
Selling, General and Administrative (SG&A) Expenses $3.8 million for the fourth quarter, compared to $3.9 million a year ago. SG&A would have declined by $309,000 or 8% year-over-year, if not for $208,000 of restructuring-related charges recognized during the quarter.
Operating Loss $635,000 for the quarter, compared to $421,000 in the fourth quarter of 2024. Excluding $283,000 of restructuring-related charges, operating loss would have been $352,000.
Net Loss $588,000 or $0.05 per diluted share for the fourth quarter, compared to net income of $176,000 or $0.02 per diluted share in the fourth quarter of 2024. The loss was influenced by restructuring-related charges and an increase in foreign tax expense.
Net Cash Used in Operating Activities $959,000 during the fourth quarter, primarily due to restructuring-related activities and payments for a new back office system implementation. For the full year, net cash used was $6 million, compared to $3.4 million in 2024.
Total Cash, Cash Equivalents, and Marketable Securities $28.9 million as of December 31, 2025, down from $32 million at September 30, 2025. The decrease was due to quarterly dividend payments and cash used in operations.
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Operating Highlights
Curated Product Bundles: Sales of curated product bundles rose 10% for the full year, reflecting continued member engagement and demand for core products.
Signature Products for 25th Anniversary: Special signature products are being prepared for the company's 25th anniversary celebrations to act as a catalyst for renewed momentum.
Market Growth in Taiwan and Peru: Encouraging growth observed in Taiwan and Peru during the fourth quarter.
Strong Increases in Japan and Colombia: Japan and Colombia achieved strong increases throughout the year.
Restructuring Initiatives: Relocation of 40% of product sourcing from America to East Asia to reduce tariff uncertainty and streamline logistics. Workforce optimization and office downsizing were also implemented, with expected annualized cost savings of $1.5 million in 2026.
Cost Savings: A significant portion of the $1.5 million annualized cost savings from restructuring is expected to be realized in 2026.
25th Anniversary Programs: Programs include a celebration event in Hong Kong with 1,500 attendees, signature products, and incentives to leverage the anniversary for business momentum.
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Risk or Challenges
Revenue Decline: Fourth quarter revenue declined 10% compared to the same quarter last year, indicating challenges in maintaining or growing sales.
Gross Profit Margin Decrease: Gross profit margin decreased slightly to 73.9% from 74.2% due to write-offs of inventory related to discontinued products and manufacturing transitions.
Operating Loss: The company reported an operating loss of $635,000 for the quarter, which is higher than the $421,000 loss in the same quarter last year.
Net Loss: Net loss for the fourth quarter was $588,000 compared to a net income of $176,000 in the same quarter last year, reflecting financial challenges.
Cash Flow Challenges: Net cash used in operating activities was $959,000 during the fourth quarter, and $6 million for the full year, indicating strain on operational cash flow.
Foreign Tax Expense: Despite a loss before income taxes, the company incurred $175,000 in foreign tax expenses, adding to financial pressures.
Restructuring Costs: Restructuring-related charges of $283,000 impacted cost of sales and SG&A, contributing to financial losses.
Market Dependency: Revenue growth is heavily dependent on specific markets like Greater China, Taiwan, and Peru, which poses risks if these markets underperform.
Dividend Payments: The company paid $9.2 million in dividends for the full year, which could strain financial resources given the operational losses.
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Guidance & Outlook
Cost Savings: The company expects to realize a significant portion of the approximately $1.5 million in annualized cost savings during 2026 as a result of restructuring initiatives, including relocating product sourcing to East Asia and optimizing workforce and office sizes.
25th Anniversary Programs: 2026 marks the company's 25th anniversary, and the company has planned celebratory events, including a major event in Hong Kong with 1,500 attendees, signature product launches, and incentives aimed at driving renewed momentum across its products and business.
Profitability and Performance: The company anticipates that the cost savings and restructuring efforts will position the business on a clear path towards profitability and improved performance in 2026.
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Shareholder Return Plan
Quarterly Dividend Payment: The company announced a quarterly cash dividend of $0.10 per share, payable on February 27 to stockholders of record as of February 17.
Annual Dividend Payment: For the full year 2025, the company paid out $9.2 million in dividends.
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Key Q&A
Q:Review of Unclear Management Responses
A:
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
America East
Asia order
CFO Secretary
CFO review
Colombia increase
Conference conference
Corp Glidewell
EST day
East Asia
Full Conference
Japan Colombia
Kong attendee
Manager Corp
SGA loss
Senior Manager
Sharng President
Taiwan Peru
VP CFO
action
anniversary
celebration
cost saving
health
margin write
milestone
office
portion cost
restructuring charge
sale
success
tax expense
NHTC Transcript
Natural Health Trends Corp. (NHTC) Q4 2025 Earnings Call Prepared Remarks Transcript
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The earnings call highlighted several financial challenges, including a revenue decline, increased operating and net losses, and cash flow issues. Although there are restructuring efforts and cost-saving measures, the dividend reduction and dependency on specific markets pose additional risks. The Q&A session did not provide clear management responses to alleviate these concerns. Given the negative financial metrics and market uncertainties, the stock is likely to experience a negative reaction in the short term.
Natural Health Trends Corp. (NHTC) Q3 2025 Earnings Call Prepared Remarks Transcript
Unknown11-5
The earnings call reflects several negative factors: a decline in net sales, economic challenges in key markets, increased operating loss, and a reduction in dividends. Although there are positive developments like new product launches and investments, the overall financial health and shareholder return plans are concerning. The Q&A section did not provide clarity or reassurance, further impacting sentiment. The negative sentiment is compounded by cash flow issues and a planned dividend reduction, suggesting a potential stock price decline in the near term.
Earnings call transcript: Natural Health Trends sees slight revenue dip in Q1 2025
Unknown4-30
The earnings call reflects several concerning factors: a 2% revenue decline, a 5% drop in active members, and increased commissions expense. Despite a slight improvement in operating loss and gross profit margin, the overall financial performance is weak. The Q&A highlights uncertainty in addressing tariffs and logistics, which adds to investor concerns. While new product launches and a cash dividend are positive, they are overshadowed by the negative trends and lack of clear strategic responses. These factors suggest a negative stock price reaction.
Natural Health Trends Corp (NHTC) Q1 2025 Earnings Call Transcript
Unknown4-30
The earnings call presents mixed signals: stable financial performance with a slight revenue decline and improved margins, but concerns over declining active members and supply chain challenges. The dividend declaration supports shareholder confidence, but the lack of specific guidance and unclear management responses during the Q&A indicate uncertainty. The market expansion and new product launches could provide future growth, yet the immediate impact remains limited. Overall, the sentiment is neutral, suggesting minimal stock price movement in the short term.
NHTC Report
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