Mannatech Reports Fourth Quarter & Year End Results
Cost of sales and commission costs return to traditional levels generating positive EBITDA
Coppell, TX, March 10, 2010 — Mannatech, Incorporated (NASDAQ - MTEX), a global pioneer in the development of high-quality health, weight and fitness, and skin care solutions based on nutritional science, today reported net income of $2.2 million or $0.08 cents per diluted share for the fourth quarter ending December 31, 2009, compared to net income of $0.6 million or $0.02 cents per diluted share for the fourth quarter of 2008. The company reported an operating loss of $0.3 million compared to operating income of $4.7 million in the fourth quarter of 2008. Results for 2008 were favorably impacted by a reversal of a litigation expense accrual in the fourth quarter.
Fourth quarter net sales for 2009 were $70.1 million, a decrease of 8.4%, compared to $76.5 million in the fourth quarter of 2008. North American sales declined 19.7% to $36.4 million compared to $45.3 million in the fourth quarter of 2008. International sales of $33.7 million increased 8.0% compared to $31.2 million in the fourth quarter of 2008; excluding new country openings international sales increased by 4.2%. International sales showed significant gains in South Africa and Australia compared to sales in the fourth quarter of 2008.
Also in the fourth quarter the company announced Dr. Robert Sinnott, chief science officer, and Stephen Fenstermacher, chief financial officer, were named Co-CEOs of the company. In addition, Randy Bancino was named president, global business operations and expansion.
Dr. Robert Sinnott, Co-CEO & chief science officer, commented, “We are pleased with the progress in the international markets, yet there is much more work to accomplish. To accomplish our goals, I am excited to team with Steve to move Mannatech forward. Our combined 16 years of experience at Mannatech and direct selling experience provides a solid foundation for strengthening our relationship with our loyal Associates. We are seeing renewed excitement from our Associates as we work in tandem with them to drive our business.”
Stephen Fenstermacher, Co-CEO & chief financial officer, said, “Our focus since mid-year of 2009 was to return to traditional cost levels for cost of sales and commissions; we accomplished that goal in the fourth quarter. Equally important, fourth quarter 2009 EBITDA(1) was $2.9 million, evidencing a return to positive operating cash flow.”
Sales for the full year 2009 were $289.7 million, down 12.9% from $332.7 million for the full year 2008. The company reported a net loss for the full year of $17.4 million, compared to the full year 2008 net loss of $12.6 million. The loss per share was $0.66 for the full year 2009, compared to a loss per share of $0.48 for the full year 2008.
New Associates and Members for the full year 2009 were 144,631 up 9.2% compared to 132,447 in the full year 2008. New independent Associates and Members totaled 27,527 in the fourth quarter of 2009, compared to 34,383 in the fourth quarter of 2008. Total independent Associate and Member count based on a 12-month trailing period was approximately 513,000 as of December 31, 2009 as compared to 531,000 as of December 31, 2008.
Conference Call
Mannatech will hold a conference call and webcast to discuss this announcement with investors on Thursday, March 11, 2010 at 9:00 a.m. Central Standard Time, 10:00 a.m. Eastern Standard Time. Investors may listen to the call by accessing Mannatech’s website at www.mannatech.com.
_________________________
(1) To supplement Mannatech’s consolidated financial statements presented in accordance with the generally accepted accounting principles (“GAAP”), in this press release Mannatech uses the non-GAAP financial measure of EBITDA (defined by the company as earnings before interest, taxes, depreciation and amortization). This measure is not in accordance with, or an alternative to, GAAP. Mannatech’s management reviews this non-GAAP measure internally to evaluate its performance and manage its operations. Mannatech believes that the inclusion of EBITDA results provides investors useful and important information regarding Mannatech’s operating results.
The following is a tabular presentation of the non-GAAP financial measure EBITDA, including a reconciliation to GAAP net income, which Mannatech believes to be the most directly comparable GAAP financial measure.
(amounts in thousands) Three months ended December 31, 2009:
|
Net income |
$2,151 |
|
Interest income |
(291) |
|
Income taxes |
(1,922) |
|
Depreciation and amortization |
2,976 |
|
EBITDA |
$2,914 |
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. These 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 and the Republic of Korea.
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”, “believe”, “expect” 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 ability 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:
Gary Spinell
Senior Vice President Finance & Administration
972-471-6512
ir@mannatech.com
www.mannatech.com
https://new.mannatech.com
www.allaboutmannatech.com
Net Sales in Dollars and as a Percentage of Consolidated Net Sales
(In millions, except percentages)
|
|
|
For the three months ended December 31, | ||||||||||||||
|
|
|
2009 |
|
2008 |
|
Dollar |
|
Percentage |
| |||||||
|
United States |
|
$ |
31.0 |
|
44.2 |
% |
$ |
39.5 |
|
51.7 |
% |
$ |
(8.5 |
) |
(21.5 |
)% |
|
Japan |
|
|
10.6 |
|
15.1 |
% |
|
10.9 |
|
14.2 |
% |
|
(0.3 |
) |
(2.8 |
) % |
|
Republic of Korea |
|
|
7.2 |
|
10.3 |
% |
|
8.2 |
|
10.7 |
% |
|
(1.0 |
) |
(12.2 |
) % |
|
Canada |
|
|
5.4 |
|
7.8 |
% |
|
5.8 |
|
7.6 |
% |
|
(0.4 |
) |
(6.9 |
) % |
|
Australia |
|
|
6.2 |
|
8.8 |
% |
|
5.3 |
|
6.9 |
% |
|
0.9 |
|
17.0 |
% |
|
South Africa(1) |
|
|
3.8 |
|
5.4 |
% |
|
2.2 |
|
2.9 |
% |
|
1.6 |
|
72.7 |
% |
|
Taiwan |
|
|
1.8 |
|
2.6 |
% |
|
1.5 |
|
2.0 |
% |
|
0.3 |
|
20.0 |
% |
|
New Zealand |
|
|
1.1 |
|
1.6 |
% |
|
1.1 |
|
1.4 |
% |
|
0.0 |
|
0.0 |
% |
|
United Kingdom |
|
|
0.9 |
|
1.3 |
% |
|
0.9 |
|
1.2 |
% |
|
0.0 |
|
0.0 |
% |
|
Germany |
|
|
0.7 |
|
1.0 |
% |
|
0.8 |
|
1.0 |
% |
|
(0.1 |
) |
(12.5 |
) % |
|
Denmark |
|
|
0.2 |
|
0.3 |
% |
|
0.3 |
|
0.4 |
% |
|
(0.1 |
) |
(33.3 |
) % |
|
Singapore(2) |
|
|
0.5 |
|
0.7 |
% |
|
— |
|
— |
|
|
0.5 |
|
— |
|
|
Austria(3) |
|
|
0.2 |
|
0.3 |
% |
|
— |
|
— |
|
|
0.2 |
|
— |
|
|
Norway(3) |
|
|
0.3 |
|
0.4 |
% |
|
— |
|
— |
|
|
0.3 |
|
— |
|
|
The Netherlands(3) |
|
|
0.1 |
|
0.1 |
% |
|
— |
|
— |
|
|
0.1 |
|
— |
|
|
Sweden(3) |
|
|
0.1 |
|
0.1 |
% |
|
— |
|
— |
|
|
0.1 |
|
— |
|
|
Totals |
|
$ |
70.1 |
|
100 |
% |
$ |
76.5 |
|
100 |
% |
$ |
(6.4 |
) |
(8.4 |
)% |
(1) South Africa began operations in May 2008.
(2) Singapore began operations in November 2008.
(3) Austria, the Netherlands, Norway, and Sweden began operations in September 2009.
|
|
|
For the year ended December 31, | ||||||||||||||
|
|
|
2009 |
|
2008 |
|
Dollar |
|
Percentage |
| |||||||
|
United States |
|
$ |
140.7 |
|
48.6 |
% |
$ |
176.9 |
|
53.1 |
% |
$ |
(36.2 |
) |
(20.5 |
)% |
|
Japan |
|
|
42.0 |
|
14.5 |
% |
|
44.8 |
|
13.5 |
% |
|
(2.8 |
) |
(6.2 |
) % |
|
Republic of Korea |
|
|
26.4 |
|
9.1 |
% |
|
35.7 |
|
10.7 |
% |
|
(9.3 |
) |
(26.1 |
) % |
|
Canada |
|
|
23.0 |
|
7.9 |
% |
|
23.6 |
|
7.1 |
% |
|
(0.6 |
) |
(2.5 |
) % |
|
Australia |
|
|
22.9 |
|
7.9 |
% |
|
26.1 |
|
7.8 |
% |
|
(3.2 |
) |
(12.3 |
) % |
|
South Africa(1) |
|
|
13.2 |
|
4.6 |
% |
|
5.5 |
|
1.7 |
% |
|
7.7 |
|
140.0 |
% |
|
Taiwan |
|
|
6.6 |
|
2.3 |
% |
|
5.2 |
|
1.6 |
% |
|
1.4 |
|
26.9 |
% |
|
New Zealand |
|
|
4.3 |
|
1.5 |
% |
|
5.2 |
|
1.6 |
% |
|
(0.9 |
) |
(17.3 |
) % |
|
United Kingdom |
|
|
3.3 |
|
1.0 |
% |
|
4.7 |
|
1.4 |
% |
|
(1.4 |
) |
(29.8 |
) % |
|
Germany |
|
|
3.2 |
|
1.1 |
% |
|
3.8 |
|
1.1 |
% |
|
(0.6 |
) |
(15.8 |
) % |
|
Denmark |
|
|
1.6 |
|
0.6 |
% |
|
1.2 |
|
0.4 |
% |
|
0.4 |
|
33.3 |
% |
|
Singapore(2) |
|
|
1.5 |
|
0.5 |
% |
|
— |
|
— |
|
|
1.5 |
|
— |
|
|
Austria(3) |
|
|
0.3 |
|
0.1 |
% |
|
— |
|
— |
|
|
0.3 |
|
— |
|
|
Norway(3) |
|
|
0.3 |
|
0.1 |
% |
|
— |
|
— |
|
|
0.3 |
|
— |
|
|
The Netherlands(3) |
|
|
0.2 |
|
0.1 |
% |
|
— |
|
— |
|
|
0.2 |
|
— |
|
|
Sweden(3) |
|
|
0.2 |
|
0.1 |
% |
|
— |
|
— |
|
|
0.2 |
|
— |
|
|
Totals |
|
$ |
289.7 |
|
100 |
% |
$ |
332.7 |
|
100 |
% |
$ |
(43.0 |
) |
(12.9 |
)% |
_________________________
(1) South Africa began operations in May 2008.
(2) Singapore began operations in November 2008.
(3) Austria, the Netherlands, Norway, and Sweden began operations in September 2009.
MANNATECH, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share information)
|
|
|
December 31, |
| ||||
|
|
|
2009 |
|
2008 |
| ||
|
ASSETS |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
17,367 |
|
$ |
30,945 |
|
|
Restricted cash |
|
|
1,288 |
|
|
1,864 |
|
|
Accounts receivable, net of allowance of $16.5 and $23 in 2009 and 2008, respectively |
|
|
664 |
|
|
291 |
|
|
Income tax receivable |
|
|
8,075 |
|
|
3,531 |
|
|
Inventories, net |
|
|
31,290 |
|
|
31,313 |
|
|
Prepaid expenses and other current assets |
|
|
3,139 |
|
|
3,946 |
|
|
Deferred tax assets |
|
|
2,662 |
|
|
5,632 |
|
|
Total current assets |
|
|
64,485 |
|
|
77,522 |
|
|
Property and equipment, net |
|
|
27,144 |
|
|
36,202 |
|
|
Construction in progress |
|
|
317 |
|
|
840 |
|
|
Long-term restricted cash |
|
|
7,201 |
|
|
7,579 |
|
|
Other assets |
|
|
2,503 |
|
|
1,456 |
|
|
Long-term deferred tax assets |
|
|
652 |
|
|
459 |
|
|
Total assets |
|
$ |
102,302 |
|
$ |
124,058 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current portion of capital leases |
|
$ |
847 |
|
$ |
131 |
|
|
Accounts payable |
|
|
11,319 |
|
|
5,067 |
|
|
Accrued expenses |
|
|
14,231 |
|
|
24,324 |
|
|
Commissions and incentives payable |
|
|
10,624 |
|
|
11,453 |
|
|
Taxes payable |
|
|
2,577 |
|
|
873 |
|
|
Current deferred tax liability |
|
|
274 |
|
|
192 |
|
|
Deferred revenue |
|
|
2,807 |
|
|
3,476 |
|
|
Total current liabilities |
|
|
42,679 |
|
|
45,516 |
|
|
Capital leases, excluding current portion |
|
|
1,068 |
|
|
155 |
|
|
Long-term deferred tax liabilities |
|
|
3,923 |
|
|
6,075 |
|
|
Other long-term liabilities |
|
|
3,348 |
|
|
3,583 |
|
|
Total liabilities |
|
|
51,018 |
|
|
55,329 |
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
|
|
|
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding |
|
|
— |
|
|
— |
|
|
Common stock, $0.0001 par value, 99,000,000 shares authorized, 27,687,882 shares issued and 26,480,788 |
|
|
3 |
|
|
3 |
|
|
Additional paid-in capital |
|
|
41,442 |
|
|
40,753 |
|
|
Retained earnings |
|
|
25,743 |
|
|
44,170 |
|
|
Accumulated other comprehensive loss |
|
|
(1,113 |
) |
|
(1,406 |
) |
|
Less treasury stock, at cost, 1,207,094 shares in 2009 and 2008 |
|
|
(14,791 |
) |
|
(14,791 |
) |
|
Total shareholders’ equity |
|
|
51,284 |
|
|
68,729 |
|
|
Total liabilities and shareholders’ equity |
|
$ |
102,302 |
|
$ |
124,058 |
|
MANNATECH, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS – (UNAUDITED)
(in thousands, except per share information)
|
|
|
Three months ended |
|
Twelve months ended |
| ||||||||
|
|
|
2009 |
|
2008 |
|
2009 |
|
2008 |
| ||||
|
Net sales |
|
$ |
70,065 |
|
$ |
76,479 |
|
$ |
289,705 |
|
$ |
332,703 |
|
|
Cost of sales |
|
|
10,869 |
|
|
11,551 |
|
|
46,813 |
|
|
48,564 |
|
|
Commissions and incentives |
|
|
31,002 |
|
|
33,338 |
|
|
146,415 |
|
|
149,595 |
|
|
|
|
|
41,871 |
|
|
44,889 |
|
|
193,228 |
|
|
198,159 |
|
|
Gross profit |
|
|
28,194 |
|
|
31,590 |
|
|
96,477 |
|
|
134,544 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling and administrative |
|
|
16,594 |
|
|
17,728 |
|
|
69,997 |
|
|
81,077 |
|
|
Depreciation and amortization |
|
|
2,976 |
|
|
3,084 |
|
|
12,333 |
|
|
12,310 |
|
|
Other operating |
|
|
8,910 |
|
|
6,126 |
|
|
39,741 |
|
|
55,656 |
|
|
Total operating expenses |
|
|
28,480 |
|
|
26,938 |
|
|
122,071 |
|
|
149,043 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(286 |
) |
|
4,652 |
|
|
(25,594 |
) |
|
(14,499 |
) | |
|
Interest income |
|
|
291 |
|
|
385 |
|
|
473 |
|
|
1,604 |
|
|
Other income (expense), net |
|
|
224 |
|
|
(2,853 |
) |
|
1,046 |
|
|
(5,303 |
) |
|
|
|
229 |
|
|
2,184 |
|
|
(24,075 |
) |
|
(18,198 |
) | |
|
(Provision) benefit for income taxes |
|
|
1,922 |
|
|
(1,564 |
) |
|
6,707 |
|
|
5,570 |
|
|
Net income (loss) |
|
$ |
2,151 |
|
$ |
620 |
|
$ |
(17,368 |
) |
$ |
(12,628 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.08 |
|
$ |
0.02 |
|
$ |
(0.66 |
) |
$ |
(0.48 |
) |
|
Diluted |
|
$ |
0.08 |
|
$ |
0.02 |
|
$ |
(0.66 |
) |
$ |
(0.48 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
26,481 |
|
|
26,461 |
|
|
26,467 |
|
|
26,461 |
|
|
Diluted |
|
|
26,530 |
|
|
26,516 |
|
|
26,467 |
|
|
26,461 |
|
The number of new and continuing independent Associates and Members who purchased our packs or products during the twelve months ended December 31, were as follows:
|
|
|
2009 |
|
2008 | ||||||
|
New |
|
145,000 |
|
28 |
% |
|
133,000 |
|
25 |
% |
|
Continuing |
|
368,000 |
|
72 |
% |
|
398,000 |
|
75 |
% |
|
Total |
|
513,000 |
|
100 |
% |
|
531,000 |
|
100 |
% |