NATURAL HEALTH TRENDS CORP Q3 FY2024 earnings call

• Revenue was $10.7 million, a 1% increase compared to Q3 2023, though growth pace isn't ideal due to consumer hesitancy.
• Customers and leaders engaged; company adapting by adjusting programs.
• In China/Hong Kong, teams did in-person meetings, trainings, charity, and incentive trip to Turkey; Q4 to roll out new products like Skindulgence serum, collagen supreme, Root Revive.
• Global staff hosting meetings, training, recognition events; Colombia market opened October 1.
• Incentive trips to Peru, Paris; digital enhancement project to roll out early next year to boost productivity.

Total revenue for the third quarter was $10.7 million, a 1% increase compared to $10.6 million in the third quarter of 2023. Gross profit margin declined to 74.1% from 74.7% in the third quarter of last year due to higher costs related to the Premium Noni Juice product. Commissions expense as a percent of total revenue for the third quarter was 40.5% compared to 41.1% a year ago. Selling, general and administrative expenses for the quarter were $3.9 million, flat compared to a year ago. Operating loss for the quarter was $275,000 compared to $292,000 in the third quarter last year. Net income for the third quarter was $35,000 or breakeven per diluted share compared to $172,000 or $0.02 per diluted share in the third quarter of 2023. Net cash used in operating activities was $3.5 million during the first 9 months of 2024 compared to $4.2 million during the comparable period a year ago. Total cash, cash equivalents and marketable securities was $46.3 million at September 30, down from $48.7 million at June 30 due to the quarterly dividend payment.

• Ambitious activity calendar continues in Q4 with new product rollouts in China/Hong Kong.
• Anticipate rolling out digital enhancement project to members and customers early next year.
• Board declared quarterly cash dividend of $0.20 per share, payable November 22.

• Consumer hesitancy in main market affecting business.
• Uncertainty in evolving business landscape impacting performance.