Executive Summary

Q2 2025 revenue declined 6% year over year to $9.8M as evolving trade tensions weighed on consumer sentiment in the company’s largest market; management is shifting production to Asia to reduce tariff exposure and logistics costs .
Gross profit dollars fell to $7.3M with an operating loss of $0.3M, but net income was $15K (breakeven EPS) aided by other income; Hong Kong represented 82% of sales and declined 5% YoY .
Cash, cash equivalents and marketable securities were $34.2M at June 30, 2025 (down from $41.9M at March 31, 2025) as the company made its annual U.S. Tax Act installment; the liability is now fully settled .
The Board maintained its quarterly dividend at $0.20/share; with no formal revenue or margin guidance issued, the supply-chain realignment and China/Hong Kong demand trends are the key near-term stock catalysts .

What Went Well and What Went Wrong

What Went Well

Maintained profitability at the net income line ($15K) despite a $333K operating loss, supported by $348K in other income .
SG&A discipline: SG&A declined by $235K YoY to $3.6M in Q2; commissions expense grew modestly as a percent of sales on higher weekly commissions .
Capital return and balance-sheet strength: Dividend of $0.20/share declared; cash and marketable securities of $34.2M at quarter-end, with Tax Act liability fully paid, improving future cash flow visibility .

What Went Wrong

Top-line pressure: Net sales fell 6% YoY to $9.8M, driven by macro uncertainty and tariff dynamics in the largest market (Hong Kong 82% of sales; down 5% YoY) .
Active Members declined to 29,260 at June 30, 2025 from 31,110 a year ago and 30,870 at December 31, 2024, signaling weaker engagement .
Operating cash flow for the first six months was $(5.2)M due largely to Tax Act installments (excluding tax payments, operating cash use was $97K vs $950K provided in 1H24) .

Financial Results

Consolidated P&L Snapshots (Oldest → Newest)

Metric	Q2 2024	Q1 2025	Q2 2025
Revenue ($USD Millions)	$10.475	$10.737	$9.813
Gross Profit ($USD Millions)	$7.776	$7.905	$7.255
Operating Income ($USD Millions)	$(0.238)	$(0.345)	$(0.333)
Net Income ($USD Millions)	$0.173	$0.122	$0.015
Diluted EPS ($)	$0.02	$0.01	$0.00
Commissions Expense (% of sales)	40.1%	41.8%	40.9%
SG&A ($USD Millions)	$3.811	$3.762	$3.576

Notes: Management cited a Q2 2025 gross margin of 73.9% (vs. relatively consistent YoY), consistent with the gross profit/sales mix .

Liquidity

Metric	Q1 2025 (3/31/25)	Q2 2025 (6/30/25)
Cash, Cash Equivalents & Marketable Securities ($USD Millions)	$41.9	$34.2

Drivers: Decline due to Tax Act installment payment and dividend; Tax Act liability now fully settled .

Segment / Geographic Mix (Q2 2025)

Region	Mix	YoY Trend
Hong Kong	82% of sales	Down 5% YoY
Other Regions	Not disclosed	Not disclosed

KPIs

KPI	6/30/24	12/31/24	3/31/25	6/30/25
Active Members	31,110	30,870	30,180	29,260

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	2025	None provided	None provided	—
Gross/Operating Margins	2025	None provided	None provided	—
OpEx	2025	None provided	None provided	—
Tax Rate	2025	None provided	None provided	—
Dividend	Quarterly	$0.20/share (declared Apr 28, 2025)	$0.20/share (declared Jul 28, 2025)	Maintained
Tax Act Liability	2025	Outstanding balance	Fully settled in Q2 2025	Resolved

No formal revenue, margin, OpEx, or segment-specific quantitative guidance was provided this quarter .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Trade/tariffs & supply chain	Q4: HK growth despite soft sentiment; price discipline in other markets . Q1: Began aligning manufacturing closer to Asia; logistics simplification planned .	Actively transitioning U.S.-based supply chain to Asia to mitigate tariffs, streamline logistics, and access specialized R&D; key strategic priority .	Intensifying focus on de-risking tariffs and improving cost efficiency.
Regional demand (Hong Kong/Greater China)	Q4: HK up 7% YoY and 9% QoQ . Q1: Continued engagement and roadshows; sequential order improvement vs Q4 .	HK 82% of Q2 sales; HK down 5% YoY, macro uncertainty weighing on sentiment .	Softening in Q2 amid macro uncertainty.
Cost discipline	Q4: Operating loss influenced by expense timing . Q1: SG&A reduced YoY .	SG&A down $235K YoY to $3.6M; commissions mix up slightly on higher weekly commissions .	Continued OpEx control; incentive compensation elevated.
Member engagement & promotions	Q4: Market discipline with fewer promotions . Q1: 9-city roadshow; new products; Paris incentive trip .	Incentive trips (Maldives, Paris) and training to support acquisition/retention .	Ongoing multi-market engagement despite macro headwinds.
Capital returns / balance sheet	Q4: $0.20 dividend; $43.9M cash+securities YE . Q1: $0.20 dividend; $41.9M cash+securities .	$0.20 dividend maintained; $34.2M cash+securities; Tax Act liability fully paid .	Dividends maintained; cash lower due to tax settlement.

Management Commentary

“Our second quarter sales reflected the heightened economic uncertainty caused by evolving trade tensions, which we expect will continue to heavily weigh on consumer sentiment in our biggest market.” — Chris Sharng, President .
“We are realigning our supply chain by transitioning production to trusted manufacturing partners in Asia…bringing operations closer to our core markets and enhancing long-term resilience.” — Chris Sharng .
“Total cash, cash equivalents and marketable securities were $34.2 million at June 30…our tax liability related to the Tax Cuts and Jobs Act is now fully settled.” — Scott Davidson, CFO .
“In regards to our quarterly dividend…our Board of Directors declared another cash dividend of $0.20 per share.” — Scott Davidson .

Q&A Highlights

The call consisted of prepared remarks; no analyst Q&A was included in the published transcript .
Management reiterated: (1) supply chain transition to Asia to mitigate tariff risk, (2) HK concentration (82% of sales) and softness, and (3) continued dividend and expense discipline .

Estimates Context

S&P Global consensus estimates for Q2 2025 EPS and revenue were not available (no data returned via GetEstimates). As a result, we cannot quantify beats/misses versus Wall Street consensus this quarter. Values retrieved from S&P Global.
Given a 6% YoY revenue decline and breakeven EPS, estimate revisions (where applicable) may bias slightly lower on top-line assumptions for HK, with partial offset from OpEx control and supply-chain efficiency benefits over time .

Key Takeaways for Investors

Concentration risk in Hong Kong (82% of Q2 sales) coupled with tariff uncertainty is the primary headwind; management is proactively moving manufacturing to Asia to reduce tariff exposure and logistics costs .
Near-term growth trajectory is pressured (revenue -6% YoY; Active Members trending down), but cost control kept SG&A lower YoY and net income slightly positive despite an operating loss .
Balance sheet remains solid at $34.2M cash and marketable securities; the annual Tax Act liability is fully settled, improving future cash flow clarity .
Dividend maintained at $0.20/share, signaling continued commitment to capital returns despite macro headwinds .
Absent formal guidance and with no consensus estimates available, the narrative that will move the stock is progress on supply-chain transition timing/cost savings, HK demand stabilization, and Active Member trends .
Watch for sequential sales stabilization in Q3/Q4 and any commentary on tariff impacts; management’s emphasis on Asia production and logistics consolidation could support margins over the medium term if volumes hold .

Appendix: Additional Quantitative Details

Year-to-Date (1H 2025) vs 1H 2024

Metric	1H 2024	1H 2025
Revenue ($USD Millions)	$21.426	$20.550
Operating Income ($USD Millions)	$(0.603)	$(0.678)
Net Income ($USD Millions)	$0.361	$0.137
Operating Cash Flow ($USD Millions)	$(3.019)	$(5.151)

Drivers: Operating cash flow pressure reflects Tax Act installments in 1H25; excluding tax payments, operating cash use was $0.097M in 1H25 vs $0.950M provided in 1H24 .

NATURAL HEALTH TRENDS CORP (NHTC)·Q2 2025 Earnings Summary