Greetings. Welcome to Natural Health Trends Corp's third quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. Please note this conference is being recorded. I will now turn the conference over to Michelle Glidewell with Natural Health Trends Corp. Thank you. You may begin.
Thank you, and welcome to Natural Health Trends third quarter 2025 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 a replay of today's call can be found on the investor section of the company's corporate website at naturalhealthtrendscorp.com. At this time, I'd like to turn the call over to Chris Sharng, President of Natural Health Trends.
Thank you, Michelle, and thanks to everyone for joining us this morning to discuss our third quarter 2025 financial results. With me today is Scott Davidson, our Senior Vice President and Chief Financial Officer. Third quarter net sales decreased 11% to $9.5 million compared to the third quarter of 2024, while orders declined 5% year- over- year. The decrease in net sales is in part due to the timing of product promotion and the pre-sale of our new skincare line at the end of September 2025 in Hong Kong. The economic outlook in our largest market remains challenging in the near term. In response, we're executing a targeted major restructuring plan, which we expect will result in $1.5 million annualized savings by mid-2026. Our ongoing measures include optimizing our workforce by approximately 10%, reducing operating costs, and cutting back or exiting certain facility leases.
Also, as reported last quarter, we'd already begun the process of transitioning U.S.-based product manufacturing to be closer to Asia to mitigate tariff uncertainty, streamline logistics, and reduce costs. As part of these restructuring initiatives, we expect to incur a one-time charge of approximately $250,000 in the fourth quarter and anticipate a reduction in our quarterly cash dividend to $0.10 per share in the first quarter of next year. These actions will enable investments in new systems and technologies, including an AI-enabled marketing app and a member-interface business suite, as well as new marketing initiatives designed to drive growth and engagement. By aligning costs with global sales performance, we are positioning the company for sustainable growth, profitability, and long-term value creation.
In mid-September, we hosted a four-day cruise to Kagoshima, Japan, recognizing our top-performing and up-and-coming members and qualifiers with immersive training and team-building experiences designed to strengthen collaboration and performance. Our Greater China market remains focused on continuous training and leadership development to deepen product expertise and reinforce the strong foundation needed for sustained business growth. In Hong Kong, we pre-launched a new Korean-formulated moisturizing skincare series called Su Via in September. The four-step line features a cleanser, toner, probiotic-infused booster serum, and cream designed to support skin barrier repair and deliver lasting hydration. Our markets and product team are working to roll out these new products to the global markets in the near future. To honor 10 successful years in Sweden, we also hosted a celebratory in-person event in September. Unveiling. Balenae's limited edition anti-aging cream formulated to hydrate, restore, and diminish the signs of aging.
Next year marks 25 years of our company's journey, a legacy built on meaningful relationships, shared wellness traditions, and providing opportunity to all to achieve their health and wellness goals. We are thoughtfully preparing a year-long celebration designed to deepen member engagement, strengthen our brand, and create new opportunities for growth. We're excited about this opportunity to showcase our 25-year history while setting the groundwork for our future. Together, we will honor our past, celebrate our present, and embrace the promise of the future. 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. Net sales in the third quarter were $9.5 million, a decline of 11% compared to $10.7 million in the third quarter a year ago. Our sales in Hong Kong, which made up 82% of our sales during the quarter, declined 8% over a year ago, or 4% excluding the impact of the product promotion and the pre-sale of our new skincare line at the end of September that Chris mentioned. Gross profit margin was 73.7% for the third quarter, compared with 74.1% last year due to the write-off of components inventory related to discontinued products. Commissions expense as a percent of total sales for the third quarter was 40.9%, compared with 40.5% a year ago. Commissions expense as a percent of net sales increased primarily due to higher weekly commissions earned by our members during the third quarter of this year.
Selling, general and administrative expenses declined $262,000- $3.6 million for the quarter, from $3.9 million in the third quarter a year ago. As a result, operating loss for the quarter was $495,000 compared to $275,000 in the third quarter last year, partially due to, as I mentioned previously, the timing of product promotions. New product pre-sales in Hong Kong during the quarter, as well as the write-off of components inventory related to discontinued products during the third quarter. Net loss for the third quarter was $431,000, or 4 cents per diluted share, compared to net income of $35,000, or break-even per diluted share in the third quarter of 2024. Despite the loss before income taxes in the third quarter of this year, tax expense of $142,000 was recognized during the quarter due to the fluctuation in our annual effective tax rate quarter-over-quarter.
I'll now turn to our cash flows and balance sheet. Net cash used in operating activities was $5 million during the first nine months of 2025, compared to $3.5 million during the comparable period a year ago. Excluding our required annual tax installment payments related to the 2017 U.S. Tax Cuts and Jobs Act, cash provided by operating activities was $16,000 in the first nine months of 2025, compared to $514,000 during the same period a year ago. Total cash, cash equivalents, and marketable securities were $32 million at September 30th, down from $43.9 million at December 31st, 2024. In regard to our quarterly dividend, I am pleased to announce that on November 3rd, our board of directors declared another cash dividend of $0.20 per share, which will be payable on November 28th to stockholders of record as of November 18th.
In closing, we continue to navigate near-term challenges in our largest market, and our priority in the coming quarters is to execute the restructuring plan outlined by Chris. By realizing the estimated $1.5 million in annualized savings by mid-2026, we will free resources to drive top-line growth, invest in new systems and technologies, and implement global programs and incentives that support our members' success. These necessary actions position the company for sustainable growth, long-term profitability, and continued value creation for both shareholders and customers. That completes our prepared remarks. I will now turn the call back over to the operator.
Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. Please disconnect your lines at this time and have a wonderful day.