Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Second-quarter net sales of $10.5 million were flat compared to the second quarter of 2023, reflecting stability in revenue streams.
- Taiwan demonstrated a positive increase in orders, up 51% compared to the prior quarter and up 16% year over year.
- North America orders increased 22% quarter over quarter and 7% compared to Q2 2023.
- Successful implementation of precision health events in Taiwan is starting to take hold.
- Operating loss for the quarter was reduced to $238,000, compared to $743,000 in the second quarter last year.
Negative Points
- Active member base decreased 2% to 36,110 at June 30 from 31,620 at March 31 and was down 15% from 36,730 at June 30 last year.
- Gross profit margin declined slightly to 74.2% from 74.6% in the second quarter of last year.
- Net cash used in operating activities was $3.6 million in the second quarter, compared to $2.6 million in the second quarter last year.
- Total cash, cash equivalents, and marketable securities were down to $48.7 million at June 30 from $54.4 million at March 31.
- Higher costs related to the Premium Noni Juice product impacted gross profit margin.
Q & A Highlights
Q: Can you provide more details on the new BioEssence Wellness Panel product launch in North America?
A: (Christopher Sharng, President) The BioEssence Wellness Panel is an at-home testing kit that measures 17 health biomarkers through a simple blood draw. This product aims to provide customers with actionable insights into their health status, allowing them to make informed decisions about which of our products might best support their wellness journey.
Q: What were the main factors contributing to the flat sales in the second quarter?
A: (Timothy Davidson, CFO) The flat sales of $10.5 million compared to the same quarter last year were primarily due to the ongoing downturn in consumer spending, which continues to be a headwind for our business. However, we have implemented targeted programs to attract and retain customers, which have helped mitigate the impact.
Q: How did the training event in Jeju, South Korea, impact the business?
A: (Christopher Sharng, President) The two-day training event in Jeju was our first since 2021 and welcomed over 500 members. The event focused on business, product, and personal development training, aiming to equip new and existing members with the skills and mindset needed for success with NHT Global. The positive reception indicates strong engagement and commitment from our members.
Q: Can you elaborate on the performance in the Taiwan market?
A: (Christopher Sharng, President) Taiwan saw a 51% increase in orders compared to the prior quarter and a 16% year-over-year increase. This growth is attributed to the successful implementation of precision health events, which integrate personal health testing and provide wellness snapshots to attendees.
Q: What are the key drivers behind the increase in North America orders?
A: (Christopher Sharng, President) North America orders increased by 22% quarter over quarter and 7% compared to Q2 2023. This growth is driven by active engagement through in-store meetings and events at our Healthy Lifestyle Center locations in New Jersey, Los Angeles, and Vancouver. Additionally, the introduction of a Cancun incentive trip qualification has also contributed to the increased orders.
Q: What measures are being taken to manage costs effectively?
A: (Timothy Davidson, CFO) We have seen a slight decline in selling, general, and administrative expenses to $3.8 million from $4.1 million in the same quarter last year. This reduction is part of our ongoing efforts to manage costs effectively while continuing to support our members and business growth.
Q: How is the company addressing the decline in the active member base?
A: (Timothy Davidson, CFO) Our active member base decreased by 2% to 36,110 at the end of June from 31,620 at the end of March and was down 15% from 36,730 at the same time last year. We are addressing this decline by implementing targeted programs and incentives to attract and retain members, as well as enhancing customer engagement through various events and promotions.
Q: What are the future plans for product development and market expansion?
A: (Christopher Sharng, President) We are committed to developing new products and expanding our market presence. For instance, we recently launched the Collagen Supreme product in Peru and conducted multi-city roadshows in India to emphasize product and business sharing. We will continue to focus on initiatives that drive business growth and enhance shareholder value.
Q: Can you provide more details on the financial performance and cash flow management?
A: (Timothy Davidson, CFO) Net cash used in operating activities was $3.6 million in the second quarter, compared to $2.6 million in the same quarter last year. Excluding required annual tax installment payments, cash flows from operations were positive for the second consecutive quarter, improving by $1.3 million over the comparable six-month period last year. Total cash, cash equivalents, and marketable securities were $48.7 million at the end of June, down from $54.4 million at the end of March due to tax payments and quarterly dividend payments.
Q: What is the outlook for the second half of the year?
A: (Christopher Sharng, President) As we move into the second half of the year, our focus remains on executing strategies that drive business growth and enhance shareholder value. We will continue to develop programs, new products, and activities that support our members' success while maintaining effective cost management.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
