Natural Health Trends Corp.

Greetings and welcome to the Natural Health Trends Corporation Third Quarter 2021 Earnings Conference 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. It is now my pleasure to introduce your host, Arielle Papermaster. Thank you, Arielle. You may begin.

Thank you and welcome to Natural Health Trends Third Quarter 2021 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 was issued at approximately 9 a.m. Eastern time. At this time, I'd like to turn the call over to Chris Sharng, President of Natural Health Trends.

Thank you, Ari, and thanks to everyone for joining us this morning to discuss our third quarter 2021 financial results. With me today is Scott Davidson, our Senior Vice President and Chief Financial Officer. Our third quarter performance continued to reflect the challenging macroeconomic environment experienced during the first and second quarters of 2021. as the ongoing COVID-19 pandemic continued to cause disruptions and lockdowns in many of our core markets. Despite the persistence of these difficult operating conditions, we are reporting our sixth consecutive quarter of positive operating income and net income. We generated revenue of $14.3 million, a decrease of 12% compared to $16.2 million in the second quarter of 2021. and an increase of 1% compared to $14.1 million in the third quarter of 2020. Our third quarter results in comparison to the prior quarter reflect the increased frequency and severity of coronavirus outbreaks and the reinstatement of government mandated restrictions in several key markets, which adversely impacted our members' abilities to hold in-person meetings and events. Revenue increased 1% from the third quarter of 2020 due to improvements in certain markets with net sales increasing 3% year over year outside Hong Kong. As we continue to navigate the evolving operating environment resulting from the COVID-19 pandemic, our members continue to face challenges as they work to conduct their business in the face of renewed government-mandated restrictions and lockdowns. To this point, the third quarter of 2021 marked the first quarter since the beginning of the pandemic. We were unable to sponsor any in-person member events in China, Macau or Hong Kong. In fact, we had to abruptly cancel a previously scheduled event in September. However, due to the hard work and dedication of our employees, leaders and members, we were able to quickly adapt our marketing activities in the quarter. We held multiple virtual events and training sessions in place of the previously planned in-person events. Importantly, these virtual events helped contribute to a 2% increase in order volume from the prior year period. On a sequential basis, order volume declined 18% from the second quarter, primarily due to the effect of our major in-person event held in Macau in June. Given the ever-changing restrictions in many of our markets, We remain focused on managing the elements of our business within our control and made positive strides in executing our strategy and improving our operational performance. We made progress in expanding our business into emerging markets, introducing new products, and implementing operational enhancements to better incentivize and engage our members. Additionally, we continue our efforts to prudently manage our product promotions and expense base to preserve our margins, which in turn deliver our sixth consecutive quarter of positive operating income and net income. In September, we also successfully launched a new product, SkinDulgence Probiotic Ampoule, a daily facial serum infused with probiotics and prebiotics. to support healthy skin through our virtual training event. Moreover, in regards to new products, we have two new exciting high-quality wellness products we intend to launch later this year. Turning to our geographical expansion priorities, we are working to further diversify our operations into new markets. Despite the challenging environment, a number of our emerging markets still achieved positive performance, with Peru, Japan, CIS, and India all experiencing growth year over year. We are particularly optimistic about the economic recovery and sales growth in both Peru and India, and we believe these markets represent a significant opportunity. Additionally, with the help of our Peruvian leadership team, we have resumed our efforts to establish a presence in both Bolivia and Columbia, given the strong reception and traction we managed to achieve in the Peruvian market and the contacts that our existing members have in these countries. With respect to technology updates, we introduced two new payment solutions during the quarter to streamline the ordering process. We rolled out a single order multiple payments feature in Hong Kong in September that allows members to pay for orders using a combination of eWallet, Credit Card, and various other payment options. In July, we launched Carnot Installment Payment Solution, which provides members flexible payment options in the United States and Europe. We have seen a particularly strong rate of adoption in Europe with 18% of orders placed through Carnot since rollout. Additionally, I would like to reiterate that the SEC has closed its investigation initiated in August 2016 and the IRS has completed its tax audit that started in October 2018. We fully cooperated with the SEC and the IRS throughout their respective review processes. The SEC did not recommend any further action and the IRS agreed with our tax returns. In conclusion, we are hopeful The more severe restrictions implemented during the quarter have helped control the spread of additional COVID-19 outbreaks, and we are cautiously optimistic we will be able to gradually resume in-person member events and activities. Despite ongoing macroeconomic challenges, our third quarter financial performance delivered revenue and order volume growth year-over-year and our sixth consecutive quarter of positive operating income and net income profitability. While we continue to execute through this difficult operating environment, we remain highly focused on the fundamentals of our business, including supporting our members, maintaining our strong financial discipline, and operating our business efficiently to maximize value for our stockholders. I would also like to thank all of our loyal members preferred customers, employees, and stockholders for their dedication to NHG Global. With that, I'd like to turn the call over to our CFO, Scott Davidson, to discuss our financial results in greater detail. Scott?