NH
NATURAL HEALTH TRENDS CORP (NHTC)·Q4 2024 Earnings Summary
Executive Summary
- Q4 2024 revenue was $10.8M (roughly flat YoY), diluted EPS $0.02, and operating loss $(0.42)M; Greater China/Hong Kong net sales rose 7% YoY and 9% sequential, offset by weakness in Taiwan and North America .
- Gross margin was 74.2% (down slightly YoY due to higher freight costs), commissions increased to 41.9% of sales on elevated supplemental incentives; SG&A ticked up on timing of professional services .
- Cash and equivalents were $13.5M, with total cash, cash equivalents, and marketable securities at $43.9M; the Board declared a $0.20 quarterly dividend (consistent with prior quarters) .
- No formal financial guidance was issued; management emphasized product launches, training, incentives, and Greater China stabilization as the near-term narrative; potential stock catalysts include sustained Hong Kong momentum, disciplined promotions, and continued dividend support .
What Went Well and What Went Wrong
-
What Went Well
- Hong Kong/Greater China net sales +7% YoY and +9% QoQ, indicating improving demand despite weak sentiment: “a sign that our programs, trainings, promotions and incentives are resonating” .
- Product innovation and market activation: launches of Collagen Supreme (raspberry lemonade) and Root Revive, six-city roadshow in China, and Asia Forum with 430+ attendees to kick-start 2025 initiatives .
- Operating cash flow positive in Q4 ($88K), and FY 2024 operating cash flow improved ex-2017 Tax Act installments ($602K vs. prior-year use), supporting capital return via the $0.20 dividend .
-
What Went Wrong
- Taiwan and North America softness lingered due to 2023 price adjustments and fewer promotions in 2024, tempering consolidated results and momentum .
- Gross margin declined modestly to 74.2% on higher freight costs, and commissions ratio increased to 41.9%, pressuring operating profitability; SG&A slightly up on timing of professional services .
- Active Members decreased 5% YoY to 30,870, with membership attrition continuing from 32,410 at year-end 2023 and 31,110 at Q2, limiting top-line leverage .
Financial Results
Segment/Geography and KPIs:
-
Geographic Trends
-
KPIs
Notes: “—” indicates not disclosed in documents reviewed.
Guidance Changes
Earnings Call Themes & Trends
Management Commentary
- “Our fourth quarter performance was steady as our business in Greater China achieved a 7% increase in net sales compared to the fourth quarter of 2023 and a 9% increase compared to last quarter, despite ongoing tepid consumer sentiment.”
- “Overall, our results for the fourth quarter and the full year were tempered by the performance of other markets, particularly Taiwan and North America, where we implemented strategic price adjustments in 2023 and offered fewer product promotions throughout 2024.”
- CFO: “Gross profit margin of 74.2% in the fourth quarter declined slightly from 74.5% in the fourth quarter last year, primarily due to higher freight costs… commissions expense… increased to 41.9%… SG&A… $3.9M… operating loss… $421K… net income… $176K or $0.02 per diluted share.”
- Execution focus: “programs, trainings, promotions and incentives are resonating,” product launches and six-city roadshow, Asia Forum to align 2025 programs .
Q&A Highlights
- The transcript comprised prepared remarks only; no live analyst Q&A session was conducted or recorded in the document, and the operator concluded the call following prepared commentary .
Estimates Context
- Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was not retrievable at the time of this analysis due to S&P Global API request limits; as a result, a formal “vs. estimates” comparison is unavailable. We will monitor for updated S&P Global consensus and revise when accessible. (Consensus unavailable via S&P Global)
- Given coverage depth for micro-cap direct selling names, estimate visibility may be limited; near-term revisions likely hinge on Hong Kong momentum and cost discipline highlighted by management .
Key Takeaways for Investors
- Hong Kong/Greater China stabilization is the core driver; continued sequential gains would be a positive stock narrative offsetting weakness in Taiwan/North America .
- Margins are resilient but sensitive to freight and incentive mix; watch freight cost trajectory and commission rates as management balances promotions with discipline .
- Membership trends remain a headwind; reacceleration in Active Members is critical for sustainable top-line growth leverage .
- Strong liquidity with $43.9M in cash, equivalents, and marketable securities supports ongoing $0.20 dividend; capital returns provide downside support while growth initiatives scale .
- 2025 catalysts: new product rollout across regions, digital enhancement project deployment, Colombia market expansion, and continued training/incentive events .
- No formal guidance increases uncertainty; monitor quarterly cadence and management tone for signs of broad-based demand recovery beyond Hong Kong .
- Trading lens: a continuation of sequential Hong Kong improvements and margin control could drive estimate recalibration and multiple support; conversely, persistent North America/Taiwan softness or rising freight costs would pressure profitability .
Additional documents reviewed:
- Q4 2024 press release and 8-K (Item 2.02; Exhibit 99.1; financials and commentary) .
- Q4 call transcripts (prepared remarks) .
- Q3 2024 press release and call (trend analysis) .
- Q2 2024 press release (trend analysis) .