NHTC Stock Up Despite Q3 Earnings Decline, Lower Gross Margin
Natural Health Trends Corp. NHTC reported third-quarter 2024 breakeven earnings per share (EPS) compared with the year-ago EPS of 2 cents.
NHTC’s Revenues in Detail
Natural Health registered revenues of $10.7 million in the third quarter, up 0.7% year over year.
Lower revenues from the Primary Reporting Segment dampened the top line.
Shares of this company gained nearly 0.7% in yesterday’s after-hours trading.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Natural Health Segment Details
Natural Health derives revenues from three segments — Primary Reporting Segment, China, and Russia and Kazakhstan.
For the quarter under review, Primary Reporting Segment revenues were $9.9 million, down 2.9% from the year-ago quarter.
Revenues in the China region totaled $0.6 million, up 136.6% year over year.
The Russia and Kazakhstan region generated revenues of $0.1 million, up 24.1% from the year-ago quarter.
Natural Health Trends Corp. Price, Consensus and EPS Surprise
Natural Health Trends Corp. price-consensus-eps-surprise-chart | Natural Health Trends Corp. Quote
NHTC’s Gross Margin
In the quarter under review, Natural Health’s gross profit margin was 74.1% compared with 74.7% in the year-ago period.
The decline in gross profit margin for the three-month period ended Sept. 30, 2024, was primarily attributable to higher costs related to the company’s Premium Noni Juice product.
Natural Health’s Operating Expenses Analysis
Selling, general and administrative expenses increased 0.3% to $3.9 million.
NHTC’s Profitability
The operating loss totaled $0.28 million in the third quarter of 2024 compared with the prior-year quarter’s operating loss of $0.29 million.
In the third quarter, Natural Health’s net income was $0.04 million compared with the year-ago quarter’s $0.2 million. The decrease was attributable to lower interest income and higher effective tax rates than the third quarter of 2023.
Natural Health’s Liquidity & Debt Management
Natural Health exited third-quarter 2024 with cash and cash equivalents of $22.9 million compared with $15.6 million at the second-quarter end.
Cumulative net cash used in operating activities at the end of the third quarter was $3.5 million compared with $4.2 million a year ago.
Our Take
Natural Health exited the third quarter with encouraging top-line results. The uptick in revenues in the China and Russia and Kazakhstan regions were also promising. On the earning call, management shared its plans of rolling out new products in Turkey through the fourth quarter, including its Skindulgence revitalizing serum and eye cream, along with the new flavor collagen supreme supplement and Root Revive a new hair growth serum to promote a healthier, stronger looking hair. These raise our optimism about the stock.
Also, the company’s efforts to expand its market presence and bring in new customers look promising.
However, NHTC’s bottom-line results and lower revenues from the Primary Reporting Segment were discouraging. During the reported quarter, the gross margin contracted, which did not bode well. Per management, consumer spending in Natural Health’s main market continued to be weak, which does not look promising.
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