Natural Health Trends Corp.

Good day, and welcome to the Natural Health Trends Corps First Quarter 2026 Earnings Conference Call. At this time, I would like to turn the conference over to Michelle Glidewell with Natural Health Trends. Please go ahead.

Thank you, and welcome to Natural Health Trends First Quarter 2026 Earnings Conference Call. During today's call, there may be statements made relating to the future of the company, but a forward-looking statement as defined in the Private Security Politication Reform Act of 1995. Actual results, performance, or achievements could differ materially from those anticipated in such forward-looking statements through the results of certain factors, including those set forth in the company's filings with the Securities and Exchange Commission. It should also be noted that a replay of today's call can be found on the Investor section of the company's corporate website at naturalhealthtransports.com. After this, I'd like to turn the call over to Chris Shawn, President of Natural Health Trends.

Thank you, Michelle. Good morning, and thanks to everyone joining us to discuss our first quarter of 2026 financial results. Scott Iveson, our Senior Vice President and Chief Financial Officer, is also here today. Our business was adversely impacted a year ago when trade war rhetoric between America and China intensified. Since then, despite continued macroeconomic pressure and subdued consumer spending, we have managed to stabilize our top line. Importantly, tangible benefits from the restructuring program implemented in the fourth quarter of last year have begun to materialize. During the first quarter, these efforts contributed to an improvement in gross profit margin and a deduction in operating expenses. totaling approximately $300,000. Meanwhile, we continue to invest in improving our business efficiency. We just launched our enhanced NHGoogle.com website. The new site introduces refreshed branding, more robust product information, and a moderate intuitive customer journey. Also well underway are our new back-office platforms. an AI power member app, and AI agents for logistics and member services. These technologies will support future growth by strengthening member productivity and knowledge, enhancing end-to-end selling and the customer experience, and improving our business insights. Just last week, we introduced our newest product, SuperU3.1, a tropical flavor greens powder for digestion, detox, and immunity. We are also looking forward to our 25th anniversary in Hong Kong later this year. A full calendar of events and brand initiatives is in the works. We look forward to marking this important milestone in our company's history. While external conditions remain challenging, we believe that by reducing costs, streamlining our business, and investing in technologies, we are positioned to navigate the current environment and grow our revenue. Our leaders are experienced, deeply committed, and actively engaged in both our business opportunity and our products as they pursue their personal success and wellness goals. We appreciate your dedication and hard work amid a challenging and complex sales landscape. With that, I'd like to turn the call over to our CFO, Scott Davidson, to discuss our financial results in greater detail. Scott?

Thank you, Chris. Total revenue for the first quarter was $9.2 million, a decrease of 6% from $9.7 million in the fourth quarter of 2025, and a decline of 14% compared to $10.7 million in the first quarter of 2025. Turning to our cost and operating expenses. We are seeing the impact of executing on our previously announced restructuring program with improved margin and reduced operating expenses. Gross profit margin increased to 75% from 73.6% in the first quarter last year as we continue to transition much of our product manufacturing from the United States to East Asia, closer to our main markets. Commission's expense as a percent of total revenue for the first quarter was 41.8%, consistent with the prior year. Selling general and administrative expenses for the quarter were $3.5 million, a decrease of $238,000 compared to a year ago. Operating loss for the quarter was $474,000 compared to $345,000 in the first quarter last year. Net loss for the first quarter was $154,000, or two cents per deleted share, compared to a net income of $122,000, or one cent per deleted share in the first quarter of 2025. Now I'll turn to our balance sheet and cash flow. Net cash used in operating activities was $797,000 during the first three months of 2026. compared to net cash provided by operating activities of $484,000 during the first quarter a year ago. Total cash, cash equivalents, and marketable securities were $21.2 million at March 31st, down from $28.9 million at December 31st, 2025, due to the repurchase of approximately 25.5% of our shares of common stock in February, as well as our quarterly dividend payment and cash used in operations. Returning capital to our stockholders remains a top priority. I am pleased to announce that on April 27th, our board of directors declared another quarterly cash dividend of 10 cents per share. This will be payable on May 22nd to stockholders who record as of May 12th. Referring back to Chris's earlier remarks, we have managed to stabilize our top line over the past four quarters despite a challenging operating environment, reflecting the resilience of our core markets. As a result of the restructuring program and our focus on top line growth, we are on a clear path towards profitability and improved financial performance. We look forward to celebrating our 25th anniversary with our leaders, members, and new customers later this year. The attendees before, during, and after this milestone event are designed to drive engagement and strengthen the NHC Global brand as we build momentum into the next phase of the business. That concludes our prepared remarks. I will now turn the call back over to the operator.

This does conclude today's call. Thank you for your participation. You may now disconnect.