Natural Health Trends Corp. Q3 FY2025 earnings call

• Third quarter net sales decreased 11% to $9.5 million compared to the third quarter of 2024, orders declined 5% year-over-year. - Decrease in net sales due to timing of product promotion and presale of new skin care line in Hong Kong at end of September 2025. - Executing targeted major restructuring plan expected to result in $1.5 million annualized savings by mid-2026, including optimizing workforce by ~10%, reducing operating costs, cutting back or exiting certain facility leases. - Incur one-time charge of approximately $250,000 in fourth quarter and anticipate reducing quarterly cash dividend to $0.10 per share in first quarter next year. - Hosted 4-day cruise to Kagoshima Japan in mid-September to recognize top-performing and up-and-coming members. - Greater China market focused on continuous training and leadership development. - Prelaunched new Korean formulated moisturizing skin care series called Soo:vea in Hong Kong in September. - Hosted celebratory in-person event in September in Sweden to honor 10 successful years, unveiling limited edition anti-aging cream. - Preparing year-long celebration for 25th anniversary next year.

Third quarter net sales decreased 11% to $9.5 million compared to the third quarter of 2024, while orders declined 5% year-over-year. Hong Kong, which made up 82% of sales during the quarter, declined 8% over a year ago or 4% excluding the impact of the product promotion and the presale of the new skin care line at the end of September 2025. Gross profit margin was 73.7% for the third quarter compared with 74.1% last year due to the write-off of components inventory related to discontinued products. Commissions expense as a percent of total sales for the third quarter was 40.9% compared with 40.5% a year ago. Selling, general and administrative expenses declined $262,000 to $3.6 million for the quarter from $3.9 million in the third quarter a year ago. Operating loss for the quarter was $495,000 compared to $275,000 in the third quarter of last year. Net loss for the third quarter was $431,000 or $0.04 per diluted share compared to net income of $35,000 or breakeven per diluted share in the third quarter of 2024. Net cash used in operating activities was $5 million during the first 9 months of 2025 compared to $3.5 million during the comparable period a year ago. Total cash, cash equivalents and marketable securities were $32 million at September 30, down from $43.9 million at December 31, 2024.

• Expect restructuring plan to result in $1.5 million annualized savings by mid-2026. - Anticipate one-time charge of approximately $250,000 in fourth quarter. - Anticipate reducing quarterly cash dividend to $0.10 per share in first quarter next year. - On November 3, Board of Directors declared cash dividend of $0.20 per share, payable on November 28.

• Economic outlook in largest market remains challenging in the near term. - Timing of product promotion and presale of new skin care line impacts net sales. - Uncertainties related to restructuring initiatives. - Tariff uncertainty, logistics issues related to manufacturing transition pose risks. - Dividend reduction may have implications.

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