Natural Health Trends Corp.

Greetings and welcome to the Natural Health Trends Corp fourth quarter and full year 2020 earnings call. At this time, all participants are in a listen only mode. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. If anyone should, I'm sorry. I would now like to turn the conference over to your host, Ms. Kim Orlando, Investor Relations for Natural Health Trends. Thank you. You may begin.

Thank you, and welcome to Natural Health Trends' fourth quarter and full year 2020 earnings conference call. During today's call, there may be statements made relating to the future results of the company that are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Actual results, performance, or achievements could differ materially from those anticipated in such forward-looking statements through the result of certain factors, including those set forth in the company's filings with the Securities and Exchange Commission. It should also be noted that today's call will be webcast live and can be found on the investor section of the company's corporate website at naturalhealthtrendscorp.com. Instructions can be found for accessing the archived version of the conference call in today's financial results press release which is issued at approximately 9 a.m. Eastern Time. At this time, I'd like to turn the call over to Chris Scharn, President of Natural Health Trends.

Thank you, Kim, and thanks to everyone for joining us this morning to discuss our fourth quarter and full year 2020 financial results. With me today is Scott Davidson, our Senior Vice President and Chief Financial Officer. I'll begin with a review of our full year financial performance. which reflected the significant impact the ongoing pandemic had on our operations in 2020. Revenue of $62.1 million decreased 20 percent, compared to $77.6 million in 2019. As elements outside of our control, such as government-mandated travel restrictions, shutdowns, and limitations surrounding in-person events and activities, hinder our leaders' ability to conduct business, As such, we have been focused on elements within our control, such as number one, further reducing our cost structure, number two, ensuring our incentives remain attractive to our leaders and member base, and number three, expanding our operations in emerging markets. The cost savings initiatives we implemented starting in the second half of 2019 have resulted in substantial 2020 cost reductions. As a result, We reported full-year operating income of $669,000, a significant improvement compared to an operating loss of $7 million in 2019. These expense reduction measures were enacted without reducing headcount and were focused on structural decreases, much of which is not expected to return to previous levels, even as company sponsor activities slowly resume in 2021 and beyond. Importantly, for the fourth quarter of 2020, total revenue of $16.6 million increased 17% over the third quarter of 2020, with total fourth quarter orders improving 14% worldwide versus Q3. In addition, we achieved our third consecutive quarter of positive operating income. Beginning in the August-September timeframe, certain COVID-19-related restrictions began to ease in our key markets, which enabled us to sponsor some smaller events and therefore reinvigorate order activity. In November, we held our first in-person company-sponsored domestic event in 2020, a fly-high training, which was well attended despite ongoing fears surrounding the pandemic. We also continued to host multiple virtual events and training sessions, including our Fly High online training webinar every Saturday. In addition, we are in the early phases of beginning the implementation of social selling in select key markets outside of China to further facilitate awareness and knowledge of our product lines and business opportunity. We look forward to expanding on this endeavor and providing additional details in the coming quarters. Moreover, We successfully launched several new products in 2020, including our new water purifier in June on our Chinese e-commerce platform, along with twin slim probiotics during the third quarter in Hong Kong, both through smaller scale product ratios. Given the challenging operating environment over the course of the past year, this was the first time ever that we launched new products outside of an arena or larger forum to help promote them. However, we were pleased to learn that the order volume of these new products was comparable to previous orders we would have received if we were to have launched these products at a major event. A second key element of our strategy involves making sure our incentives remain attractive to motivate our leaders and members who are crucial to our success. we have extended qualification periods for certain incentive trips due to COVID-19 from the first half of 2020 into the second half of 2020 and further into 2021 and 2022. Most recently, we held a second in-person flight height training in early January and plan to hold a third in April. As previously announced, we canceled both of our major member events planned for 2020 as the health and safety of our members, employees, and customers remains our top priority. We are currently hopeful we will be able to hold larger in-person member events sometime next summer or fall, including one to celebrate the 20th anniversary of NHG Global. Next, I'll turn to a discussion on our emerging market initiatives, which have remained a priority despite some headwinds associated with COVID-19. We remain very optimistic about India, which surpassed our expectations in 2020, with annual sales increasing nearly 50 percent year over year. The bulk of the progress was made during the fourth quarter of 2020, with order volume far exceeding that of pre-pandemic levels. We also saw positive performance in the markets of Japan, Malaysia, and Singapore, which all experienced strong top-line growth in 2020. Likewise, our preferred customer program for those solely interested in product consumption has been gaining traction in several markets. This feature is now available in the U.S., Europe, India, Russia, Peru, and Mexico. In summary, we are very pleased with our fourth quarter results, which began to demonstrate a reversal of the trend the pandemic has had on our business in 2020. We achieved double-digit revenue growth over the third quarter of 2020 along with our third consecutive quarter of positive operating income and net income profitability. If the slow resumption of events and other member activities be allowed to continue in a safe manner and in line with public health guidelines, We believe our business should benefit from the trend. Before I conclude, I would like to extend my sincerest gratitude to our strong leader base who have worked tirelessly to maintain momentum even in the most challenging times. I am pleased to report that we have retained all of our top leaders through the economic slowdown. I'd like to also thank all of our loyal members, preferred customers, employees, and stockholders for their dedication to NHG Global. We look forward to continuing to improve health and quality of life on a global scale through our high-quality, specialized products and unique business opportunities. With that, I'd like to turn the call over to our CFO, Scott Davidson, to discuss our financial results in greater detail. Scott?