COPPELL, Texas--(BUSINESS WIRE)--May 9, 2017--
Mannatech,
Incorporated(NASDAQ: MTEX),
a global health and wellness company committed to transforming lives to
make a better world, today announced financial results for its first
quarter of 2017.
First Quarter Results
First quarter net sales for 2017 were $40.6 million, a decrease of $0.1
million, or 0.2% as compared to $40.7 million in the first quarter of
2016. Income (loss) from operations was $(2.0) million for the first
quarter 2017, as compared to $0.5 million in the same period in 2016.
Net income (loss) was $(1.2) million, or $(0.46) per diluted share, for
the first quarter 2016, as compared to $0.6 million, or $0.21 per
diluted share, for the first quarter 2016.
For the three months ended March 31, 2017, Mannatech’s operations
outside of the Americas accounted for approximately 61.8% of Mannatech’s
consolidated net sales.
First quarter 2017 Asia/Pacific net sales increased by $0.5 million, or
2.3%, to $21.9 million, as compared to $21.4 million for the same period
in 2016. This increase was primarily due to a 7.9% increase in the
number of active independent associates and members partially offset by
a 5.1% decrease in revenue per active independent associate and member.
During the three months ended March 31, 2017, the loyalty program
increased sales by $0.3 million, as compared to the same period in 2016.
Foreign currency exchange had the effect of increasing revenue by $0.7
million for the three months ended March 31, 2017, as compared to the
same period in 2016. The currency impact is primarily due to the
strengthening of the Korean Won, Australian Dollar, Japanese Yen,
Taiwanese Dollar, New Zealand Dollar, and Hong Kong Dollar partially
offset by the weakening of the Singapore Dollar and Chinese Yuan
(Renminbi).
First quarter 2017 net sales for Europe, the Middle East and Africa
(EMEA) decreased by $0.1 million, or 3%, to $3.2 million, as compared to
$3.3 million for the same period in 2016. This decrease was primarily
due to a 0.2% decrease in the number of active independent associates
and members as well as a 2.9% decrease in revenue per active independent
associate and member. During the three months ended March 31, 2017, the
loyalty program in EMEA increased net sales by $0.1 million. Foreign
currency exchange had the effect of increasing revenue by $0.3 million
when the three-month period ending March 31, 2017 is compared to the
same period in 2016. The currency impact is primarily due to the
strengthening of the South Africa Rand partially offset by the weakening
of the British Pound.
For the three months ended March 31, 2017, net sales in the Americas
decreased by $0.5 million, or 3.1%, to $15.5 million, as compared to
$16.0 million for the same period in 2016. This decrease was primarily
due to a 7.7% decline in the number of active independent associates and
members partially offset by a 4.9% increase in revenue per active
independent associate and member.
For the three-month period ended March 31, 2017, our net sales declined
2.5% on a Constant dollar basis (see Non-GAAP Financial Measures,
below) as compared to the same period in 2016, while favorable foreign
exchange caused a $0.9 million increase in GAAP net sales as compared to
the same period in 2016.
Commission expenses for the three months ended March 31, 2017 increased
by 8.6%, or $1.3 million, to $16.5 million, as compared to $15.2 million
for the same period in 2016. For the three months ended March 31, 2017,
commissions as a percentage of net sales increased to 40.6% from 37.4%
for the same period in 2016 due to the commission expense on the
pre-launch in certain Asia/Pacific markets of new products available
after our annual convention held in April 2017.
Incentive costs for the three months ended March 31, 2017 increased by
50.0%, or $0.2 million, to $0.6 million, as compared to $0.4 million for
the same period in 2016 due to new incentives in growth markets. For the
three months ended March 31, 2017, incentives as a percentage of net
sales increased to 1.4% from 0.9% for the same period in 2016.
The approximate number of new and continuing active independent
associates and members who purchased our packs or products during the
twelve months ended March 31, 2017 and 2016 were approximately 220,000
and 218,000, respectively. Recruitment of new independent associates and
members decreased 3.8% during the three months ended March 31, 2017 as
compared to the same period in 2016. The number of new independent
associate and member positions held by individuals in our network for
the three months ended March 31, 2017 was approximately 22,900, as
compared to 23,800 for the same period in 2016.
For the three months ended March 31, 2017, selling and administrative
expenses increased by $0.5 million, or 6.3%, to $8.6 million, as
compared to $8.1 million for the same period in 2016. The increase in
selling and administrative expenses consisted of a $0.3 million increase
in marketing related costs and a $0.3 million increase in payroll costs
in our headquarters, Korea, Hong Kong, and Colombia offices, offset by
$0.1 million decrease in stock based compensation expense.
Other operating costs, which include professional fees, travel and
entertainment, bad debt, credit card processing fees, and other
miscellaneous operating expenses, increased by $0.1 million, or 1.3% for
the three months ended March 31, 2017, as compared to the same period in
2016. Included in this cost is a $0.5 million legal settlement.
Partially offsetting increases in legal costs are decreases in travel
and entertainment.
As of March 31, 2017, our cash and cash equivalents increased by 2.4%,
or $0.7 million, to $29.4 million from $28.7 million as of December 31,
2016. Our inventory balance at March 31, 2017 was $13.4 million,
compared to $12.0 million at December 31, 2016. During the quarter, we
purchased inventory in advance of introducing new products at MannaFestSM
event in April and as part of the introduction of TruHealth to new
markets, including inventory purchased for China. Our accounts payable
balance at March 31, 2017 increased to $5.9 million, compared to $5.2
million at December 31, 2016, due to the purchase of inventory. At
March 31, 2017, our commissions and incentives payable increased to $9.1
million from $8.8 million at December 31, 2016, due to timing of our
commission payments. During the first quarter of 2017, we paid dividends
of $0.3 million.
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 dollar 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, Gross Profit, and Income from
Operations.
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 non-GAAP
financial measures enhance investors’ understanding of our business and
performance, these non-GAAP financial measures should not be considered
an exclusive alternative to accompanying GAAP financial measures. Please
see the accompanying table entitled "Non-GAAP Financial Measures" for a
reconciliation of these non-GAAP financial measures.
Conference Call
Mannatech will host a conference call to discuss the quarter’s results
with investors on Wednesday, May 10, 2017 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 14269069.
Individuals interested in Mannatech’s products or in exploring its
business opportunity can learn more at Mannatech.com.
|
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|
|
|
| MANNATECH, INCORPORATED AND SUBSIDIARIES |
| CONSOLIDATED BALANCE SHEETS |
|
(in thousands, except share and per share amounts)
|
|
|
|
|
|
| ASSETS |
|
March 31, 2017
(unaudited)
|
|
December 31, 2016 |
|
Cash and cash equivalents
|
|
$
|
29,447
|
|
|
$
|
28,687
|
|
|
Restricted cash
|
|
|
1,511
|
|
|
|
1,510
|
|
|
Accounts receivable, net of allowance of $486 and $463 in 2017 and
2016, respectively
|
|
|
178
|
|
|
|
298
|
|
|
Income tax receivable
|
|
|
163
|
|
|
|
1,587
|
|
|
Inventories, net
|
|
|
13,416
|
|
|
|
11,961
|
|
|
Prepaid expenses and other current assets
|
|
|
3,625
|
|
|
|
3,483
|
|
|
Deferred commissions
|
|
|
3,214
|
|
|
|
3,229
|
|
| Total current assets |
|
|
51,554 |
|
|
|
50,755 |
|
|
Property and equipment, net
|
|
|
3,631
|
|
|
|
3,611
|
|
|
Construction in progress
|
|
|
1,050
|
|
|
|
1,012
|
|
|
Long-term restricted cash
|
|
|
6,936
|
|
|
|
6,429
|
|
|
Other assets
|
|
|
3,914
|
|
|
|
4,013
|
|
|
Long-term deferred tax assets, net
|
|
|
5,603
|
|
|
|
5,368
|
|
| Total assets |
|
$ |
72,688 |
|
|
$ |
71,188 |
|
| LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
Current portion of capital leases
|
|
$
|
367
|
|
|
$
|
357
|
|
|
Accounts payable
|
|
|
5,912
|
|
|
|
5,223
|
|
|
Accrued expenses
|
|
|
4,991
|
|
|
|
5,605
|
|
|
Commissions and incentives payable
|
|
|
9,116
|
|
|
|
8,799
|
|
|
Taxes payable
|
|
|
711
|
|
|
|
1,040
|
|
|
Current notes payable
|
|
|
999
|
|
|
|
801
|
|
|
Deferred revenue
|
|
|
8,355
|
|
|
|
8,156
|
|
| Total current liabilities |
|
|
30,451 |
|
|
|
29,981 |
|
|
Capital leases, excluding current portion
|
|
|
276
|
|
|
|
261
|
|
|
Long-term deferred tax liabilities
|
|
|
30
|
|
|
|
29
|
|
|
Long-term notes payable
|
|
|
427
|
|
|
|
567
|
|
|
Other long-term liabilities
|
|
|
1,448
|
|
|
|
1,465
|
|
| Total liabilities |
|
|
32,632 |
|
|
|
32,303 |
|
|
|
|
|
|
|
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,
2,758,275 shares issued and 2,710,858 shares outstanding as of March
31, 2017 and 2,758,275 shares issued and 2,688,790 shares
outstanding as of December 31, 2016
|
|
|
—
|
|
|
|
—
|
|
|
Additional paid-in capital
|
|
|
35,873
|
|
|
|
38,190
|
|
|
Retained earnings
|
|
|
5,747
|
|
|
|
7,331
|
|
|
Accumulated other comprehensive income
|
|
|
4,213
|
|
|
|
1,834
|
|
|
Treasury stock, at average cost, 47,417 shares as of March 31, 2017
and 69,485 shares as of December 31, 2016, respectively
|
|
|
(5,777
|
)
|
|
|
(8,470
|
)
|
| Total shareholders’ equity |
|
|
40,056 |
|
|
|
38,885 |
|
| Total liabilities and shareholders’ equity |
|
$ |
72,688 |
|
|
$ |
71,188 |
|
|
|
|
| MANNATECH, INCORPORATED AND SUBSIDIARIES |
| CONSOLIDATED STATEMENTS OF OPERATIONS – (UNAUDITED) |
|
(in thousands, except per share information)
|
|
|
|
|
|
Three Months Ended
March 31, |
|
|
|
2017 |
|
|
|
2016 |
|
| Net sales |
|
$ |
40,641 |
|
|
$ |
40,708 |
|
|
Cost of sales
|
|
|
8,762
|
|
|
|
8,389
|
|
| Gross profit |
|
|
31,879 |
|
|
|
32,319 |
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
Commissions and incentives
|
|
|
17,081
|
|
|
|
15,618
|
|
|
Selling and administrative expenses
|
|
|
8,654
|
|
|
|
8,142
|
|
|
Depreciation and amortization expense
|
|
|
502
|
|
|
|
443
|
|
|
Other operating costs
|
|
|
7,676
|
|
|
|
7,580
|
|
|
Total operating expenses
|
|
|
33,913
|
|
|
|
31,783
|
|
|
|
|
|
|
| Income (loss) from operations |
|
|
(2,034 |
) |
|
|
536 |
|
|
Interest income (expense)
|
|
|
29
|
|
|
|
(13
|
)
|
|
Other income, net
|
|
|
41
|
|
|
|
334
|
|
| Income (loss) before income taxes |
|
|
(1,964 |
) |
|
|
857 |
|
|
|
|
|
|
|
Income tax provision (benefit)
|
|
|
(717
|
)
|
|
|
266
|
|
| Net income (loss) |
|
$ |
(1,247 |
) |
|
$ |
591 |
|
|
|
|
|
|
| Earnings (loss) per common share: |
|
|
|
|
|
Basic
|
|
$ |
(0.46 |
) |
|
$ |
0.22 |
|
|
Diluted
|
|
$ |
(0.46 |
) |
|
$ |
0.21 |
|
|
|
|
|
|
| Weighted-average common shares outstanding: |
|
|
|
|
|
Basic
|
|
|
2,701 |
|
|
|
2,696 |
|
|
Diluted
|
|
|
2,701 |
|
|
|
2,780 |
|
|
|
|
|
|
|
|
|
|
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, Gross Profit, and Income 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.
|
|
|
|
|
|
|
| Three-month period ended (in millions, except percentages)
|
|
March 31, 2017 |
|
March 31, 2016 |
|
Constant $ Change |
|
|
GAAP
Measure:
Total $
|
|
Non-GAAP
Measure:
Constant $
|
|
GAAP
Measure:
Total $
|
|
Dollar |
|
Percent |
|
Net Sales
|
|
$
|
40.6
|
|
|
$
|
39.7
|
|
|
$
|
40.7
|
|
$
|
(1.0
|
)
|
|
(2.5
|
)%
|
|
Product
|
|
|
33.8
|
|
|
|
33.1
|
|
|
|
33.7
|
|
|
(0.6
|
)
|
|
(1.8
|
)%
|
|
Pack
|
|
|
5.7
|
|
|
|
5.5
|
|
|
|
5.8
|
|
|
(0.3
|
)
|
|
(5.2
|
)%
|
|
Other
|
|
|
1.1
|
|
|
|
1.1
|
|
|
|
1.2
|
|
|
(0.1
|
)
|
|
(8.3
|
)%
|
|
Gross Profit
|
|
|
31.9
|
|
|
|
31.2
|
|
|
|
32.3
|
|
|
(1.1
|
)
|
|
(3.4
|
)%
|
|
Income (Loss) from Operations
|
|
|
(2.0
|
)
|
|
|
(2.3
|
)
|
|
|
0.6
|
|
|
(2.9
|
)
|
|
(483.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
About Mannatech
Mannatech, Incorporated offers a full body wellness experience through
its global network of independent associates and members. With more than
20 years of experience and operations in 26 markets, Mannatech is
committed to transforming lives. 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 “may,” “will,” “should,” “could,” “would,”
“expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,”
“approximates,” “predicts,” “projects,” “potential,” and “continues” 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.
This release should be read in conjunction with all of its filings with
the United States Securities and Exchange Commission and Mannatech
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 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170509005256/en/
Source: Mannatech, Incorporated
Mannatech, Incorporated
Donna Giordano, 972-471-6512
Manager,
Executive Office Administration
ir@mannatech.com
www.mannatech.com