UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 4, 2015
MANNATECH, INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Texas
000-24657
75-2508900
(State or other Jurisdiction of Incorporation or Organization)
(Commission File Number)
(I.R.S. Employer Identification No.)

600 S. Royal Lane, Suite 200
Coppell, Texas 75019
(Address of Principal Executive Offices, including Zip Code)

Registrant’s Telephone Number, including Area Code: (972) 471-7400
 

(Former name or former address, if change since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 


Item 2.02.
Results of Operations and Financial Condition.

On March 4, 2015, Mannatech, Incorporated issued a press release announcing financial and operating results for the fourth quarter and year ended December 31, 2014. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01
Financial Statements and Exhibits.

(d)
Exhibits.

Exhibit Number
 
Exhibit
99.1*
 
Press release, dated March 4, 2015, entitled “Mannatech Reports Fourth Quarter and Year End Results.”

*
Filed herewith.
 

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
 
 
MANNATECH, INCORPORATED
Dated: March 4, 2015
By:
/s/ S. Mark Nicholls
   
S. Mark Nicholls
   
Chief Financial Officer
 

Exhibit Index
 
Exhibit Number
 
Exhibit
 
Press release, dated March 4, 2015, entitled “Mannatech Reports Fourth Quarter and Year End Results.”

*
Filed herewith.
 
 


Exhibit 99.1
 
 
Mannatech Reports Fourth Quarter and Year End Results
 
· 2014 Net Sales increase 7.1%
· 2014 Operating Income increase 167.9%
· 2014 Net Income increase 104.7%

COPPELL, Texas—March 4, 2015Mannatech, Incorporated (NASDAQ: MTEX), the founder of the M5MSM (Mission 5 MillionSM) social entrepreneurial movement, the pioneer of nutritional glycobiology and the global innovator of naturally sourced supplements based on Real Food Technology® solutions, today announced financial results for its fourth quarter and year end 2014.

Fourth Quarter Results

Fourth quarter net sales for 2014 were $45.2 million, a decrease of 2.8% as compared to $46.5 million in the fourth quarter of 2013. Our net sales increased 0.6% in constant dollars, which is a non-GAAP financial measure that excludes the impact of fluctuations in foreign currency exchange rates.

Net income was $1.9 million, or $0.68 per diluted share, for the fourth quarter of 2014, compared to net income of $2.6 million, or $0.94 per diluted share, for the fourth quarter of 2013.

For the three months ended December 31, 2014, our operations outside of North America accounted for approximately 57.5% of our consolidated net sales, whereas in the same period in 2013, our operations outside of North America accounted for approximately 53.3% of our consolidated sales.

For the three months ended December 31, 2014, net sales for Asia/Pacific increased by $0.9 million, or 4.4%, to $21.5 million as compared to $20.6 million for the same period in 2013. The increase in net sales is primarily due to $0.1 million in net deferred revenue being recognized from our loyalty program and $0.6 million in Ūth™ skin care product sales. For the same period in 2013, we deferred $1.2 million in revenue from our loyalty program, and Ūth skin care products had not yet been launched. The increases during the three months ended December 31, 2014 were offset by a $1.2 million unfavorable impact on net sales due to fluctuations in foreign currency exchange rates.

For the three months ended December 31, 2014, net sales for North America decreased by $2.5 million, or 11.5%, to $19.2 million as compared to $21.7 million for the same period in 2013. The decrease in net sales was primarily due to a 10.8% decrease in the number of active associates and members in the region.

For the three months ended December 31, 2014, net sales for Europe, the Middle East and Africa increased by $0.3 million, or 7.1%, to $4.5 million as compared to $4.2 million for the same period in 2013. This increase is primarily due to a $0.3 million increase in Ūth skin care product sales and $0.1 million in revenue being deferred from our loyalty program. For the same period in 2013, $0.3 million in revenue was deferred from our loyalty program and Ūth skin care products had not yet been launched.  These increases were offset by a $0.4 million unfavorable impact on net sales due to fluctuations in foreign currency exchange rates for the region.
 

Year End Results

Annual net sales for the year ended 2014 were $190.1 million, up 7.1% from $177.4 million for the year ended 2013. Our net sales increased by $14.1 million, or 7.9%, in constant dollars which is a non-GAAP financial measure that excludes the impact of fluctuations in foreign currency exchange rates.

We reported net income for 2014 of $6.5 million, compared to $3.2 million in 2013. The net income per diluted share was $2.40 in 2014, as compared to $1.18 in 2013.

For the year ended December 31, 2014, our operations outside of North America accounted for approximately 57.5% of our consolidated net sales, whereas in the same period in 2013, our operations outside of North America accounted for approximately 53.7% of our consolidated sales.

For the year ended December 31, 2014, net sales for Asia/Pacific increased by $12.1 million, or 15.1%, to $92.4 million as compared to $80.3 million in 2013.

For the year ended December 31, 2014, net sales for North America decreased by $1.4 million, or 1.7%, to $80.8 million as compared to $82.2 million in 2013.

For the year ended December 31, 2014, net sales for Europe, the Middle East and Africa increased by $2.0 million, or 13.4%, to $16.9 million as compared to $14.9 million in 2013.

In connection with our loyalty program, we recognize the dollar equivalent in revenue of loyalty points as the points are applied or forfeited. During 2014, we recognized $17.0 million revenue and deferred $21.2 million, resulting in a net deferral of $4.2 million. This is a reduction of $1.2 million in net deferred revenue as compared to 2013.

The total number of active new and continuing independent associates and members who purchased our packs or products during the twelve months ended December 31, 2014 and 2013 was approximately 230,000 and 245,000, respectively.  The number of new independent associates and members for 2014 was 108,000, compared to 116,000 in 2013.

Dr. Robert Sinnott, Mannatech’s CEO and Chief Science Officer, said, “Our independent associates, particularly in the Asia/Pacific region, have embraced Mannatech’s offer of products and opportunities to expand their sales base.  During 2014, we launched the Ūth skin care product in our foreign markets that accounted for $11.3 million in additional sales as compared to 2013. We continue to be optimistic about our business offering and the revenue growth across the globe.”
 

Non-GAAP Measures

In addition to results presented in accordance with GAAP, this press release and related tables include certain non-GAAP financial measures, including a presentation of constant currency measures. We disclose operating results that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into U.S. dollars, including changes in: Net Sales, Deferred Revenue, Gross Profit, and Income/(Loss) from Operations. The following tables include a full reconciliation of actual non-GAAP financial measures to the related GAAP financial measures.

We believe that these non-GAAP financial measures provide useful information to investors because they are an indicator of the strength and performance of ongoing business operations. The constant currency figures are financial measures used by management to provide investors an additional perspective on trends. Although we believe the above non-GAAP financial measures enhance investors' understanding of its business and performance, these non-GAAP financial measures should not be considered an exclusive alternative to accompanying GAAP financial measures.

Conference Call

Mannatech will host a conference call to discuss the quarter’s results with investors on Wednesday, March 11, 2015 at 9 a.m. CDT, 10 a.m. EDT.  The live call will be webcast and can be accessed on Mannatech’s website at http://ir.mannatech.com.

For those unable to listen to the live broadcast, a replay will be available shortly after the call.  The toll-free replay number is (855) 859-2056 (International (404) 537-3406); the Conference ID to access the call is 97308883.
 

About Mannatech
Mannatech, Incorporated, develops high-quality health, weight and fitness, and skin care products that are based on the solid foundation of nutritional science and development standards. Mannatech is dedicated to its platform of Social Entrepreneurship based on the foundation of promoting, aiding and optimizing childhood nutrition where it is needed most around the world. Mannatech’s proprietary products are available through independent sales associates around the globe including the United States, Canada, South Africa, Australia, New Zealand, Austria, Denmark, Germany, Norway, Sweden, the Netherlands, the United Kingdom, Japan, Taiwan, Singapore, Estonia, Finland, the Republic of Ireland, Czech Republic, the Republic of Korea, Mexico, Namibia, Spain and Hong Kong. For more information, visit Mannatech.com.
 
Please note: This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by use of phrases or terminology such as “intend” or other similar words or the negative of such terminology. Similarly, descriptions of Mannatech’s objectives, strategies, plans, goals or targets contained herein are also considered forward-looking statements. Mannatech believes this release should be read in conjunction with all of its filings with the United States Securities and Exchange Commission and cautions its readers that these forward-looking statements are subject to certain events, risks, uncertainties and other factors. Some of these factors include, among others, Mannatech’s inability to attract and retain associates and members, increases in competition, litigation, regulatory changes and its planned growth into new international markets. Although Mannatech believes that the expectations, statements and assumptions reflected in these forward-looking statements are reasonable, it cautions readers to always consider all of the risk factors and any other cautionary statements carefully in evaluating each forward-looking statement in this release, as well as those set forth in its latest Annual Report on Form 10-K and Quarterly Report on Form 10-Q, and other filings filed with the United States Securities and Exchange Commission, including its current reports on Form 8-K. All of the forward-looking statements contained herein speak only as of the date of this release.
 
Contact Information:
Donna Giordano
Manager, Executive Office Administration
972-471-6512
ir@mannatech.com
www.mannatech.com
 

CONSOLIDATED BALANCE SHEETS – (UNAUDITED)
(in thousands)

   
December 31,
2014
   
December 31,
2013
 
ASSETS
       
Cash and cash equivalents
 
$
27,999
   
$
20,395
 
Restricted cash
   
1,511
     
1,519
 
Accounts receivable, net of allowance
   
504
     
423
 
Income tax receivable
   
4
     
4
 
Inventories, net
   
10,591
     
13,988
 
Prepaid expenses and other current assets
   
3,069
     
3,061
 
Deferred commissions
   
4,544
     
2,706
 
Deferred tax assets, net
   
1,141
     
1,578
 
Total current assets
   
49,363
     
43,674
 
Property and equipment, net
   
2,481
     
3,170
 
Construction in progress
   
1,622
     
69
 
Long-term restricted cash
   
7,045
     
4,254
 
Other assets
   
3,567
     
3,591
 
Long-term deferred tax assets, net
   
3,320
     
1,303
 
Total assets
 
$
67,398
   
$
56,061
 
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY
               
Current portion of capital leases
 
$
901
   
$
704
 
Accounts payable
   
4,252
     
4,996
 
Accrued expenses
   
6,356
     
5,796
 
Commissions and incentives payable
   
7,908
     
10,210
 
Taxes payable
   
2,578
     
1,858
 
Current deferred tax liability
   
123
     
114
 
Deferred revenue
   
10,890
     
6,380
 
Total current liabilities
   
33,008
     
30,058
 
Capital leases, excluding current portion
   
852
     
450
 
Long-term deferred tax liabilities
   
26
     
9
 
Other long-term liabilities
   
2,136
     
2,092
 
Total liabilities
   
36,022
     
32,609
 
                 
Shareholders’ equity:
               
Preferred stock
   
     
 
Common stock
   
     
 
Additional paid-in capital
   
40,672
     
42,592
 
Retained earnings (deficit)
   
2,750
     
(3,746
)
Accumulated other comprehensive loss
   
(109
)
   
(743
)
Treasury stock
   
(11,937
)
   
(14,651
)
Total shareholders’ equity
   
31,376
     
23,452
 
Total liabilities and shareholders’ equity
 
$
67,398
   
$
56,061
 
 

CONSOLIDATED STATEMENTS OF OPERATIONS – (UNAUDITED)
(in thousands, except per share information)

   
For the years ended December 31,
 
   
2014
   
2013
 
Net sales
 
$
190,081
   
$
177,423
 
Cost of sales
   
38,350
     
36,097
 
Gross profit
   
151,731
     
141,326
 
                 
Operating expenses:
               
Commissions and incentives
   
75,240
     
75,633
 
Selling and administrative expenses
   
36,193
     
33,758
 
Depreciation and amortization
   
1,608
     
2,120
 
Other operating costs
   
25,948
     
25,059
 
Total operating expenses
   
138,989
     
136,570
 
                 
Income from operations
   
12,742
     
4,756
 
Interest income
   
121
     
22
 
Other expense, net
   
(3,042
)
   
(1,969
)
Income before income taxes
   
9,821
     
2,809
 
                 
Income tax benefit (provision)
   
(3,325
)
   
365
 
Net income
 
$
6,496
   
$
3,174
 
                 
Earnings per common share:
               
Basic
 
$
2.44
   
$
1.20
 
Diluted
 
$
2.40
   
$
1.18
 
                 
Weighted-average common shares outstanding:
               
Basic
   
2,663
     
2,650
 
Diluted
   
2,706
     
2,683
 
 

Non-GAAP Financial Measures

To supplement our financial results presented in accordance with generally accepted accounting principles in the United States ("GAAP"), we disclose operating results that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into U.S. dollars, including changes in: Net Sales, Deferred Revenue, Gross Profit, and Income/(Loss) from Operations. We refer to these adjusted financial measures as constant dollar items, which are Non-GAAP financial measures. We believe these measures provide investors an additional perspective on trends. To exclude the impact of changes due to the translation of foreign currencies into U.S. dollars, we calculate current year results and prior year results at a constant exchange rate, which is the prior year’s rate. Currency impact is determined as the difference between actual growth rates and constant currency growth rates.

   
2014
   
2013
   
Reconciliation – Constant $
 
   
GAAP
Measure:
Total $
   
Non-GAAP
Measure:
Constant $
   
GAAP
Measure:
Total $
   
 
 
Dollar
   
 
 
Percent
 
Net Sales
 
$
190.1
   
$
191.5
   
$
177.4
     
14.1
     
7.9
%
Product
   
155.3
     
156.7
     
143.5
     
13.2
     
9.2
%
Pack
   
27.8
     
27.7
     
26.2
     
1.5
     
5.7
%
Other
   
7.0
     
7.1
     
7.7
     
(0.6
)
   
(7.8
)%
Deferred Revenue
   
10.9
     
11.0
     
6.4
     
4.6
     
71.9
%
Gross Profit
   
151.7
     
152.5
     
141.3
     
11.2
     
7.9
%
Income/(Loss) from Operations
   
12.7
     
12.0
     
4.8
     
7.2
     
150.0
%

The approximate number of new and continuing independent associates and members who purchased our packs or products during the twelve months ended December 31 was as follows:

   
2014
   
2013
 
New
   
108,000
     
47.0
%
   
116,000
     
47.3
%
Continuing
   
122,000
     
53.0
%
   
129,000
     
52.7
%
Total
   
230,000
     
100.0
%
   
245,000
     
100.0
%