Document

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): November 10, 2020
MANNATECH, INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Texas000-2465775-2508900
(State or other jurisdiction of incorporation)(Commission File Number)(IRS Employer Identification No.)
1410 Lakeside Parkway, Suite 200
 Flower Mound, Texas 75028
(Address of Principal Executive Offices, including Zip Code)
Registrant’s Telephone Number, including Area Code: (972) 471-7400
(Former name or former address, if changed 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 (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 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))

Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareMTEXThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging Growth Company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o




Item 2.02 Results of Operations and Financial Condition.
On November 10, 2020, Mannatech, Incorporated issued a press release announcing financial and operating results for the third quarter ended September 30, 2020. 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 NumberDescription
Press Release, dated November 10, 2020, titled "Mannatech Reports Third Quarter 2020 Financial Results."
*Furnished herewith.
SIGNATURES

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.

Date: November 10, 2020
MANNATECH, INCORPORATED
By:/s/ David Johnson
David Johnson
Chief Financial Officer


Document


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Mannatech Reports Third Quarter End 2020 Financial Results

(FLOWER MOUND, Texas) November 10, 2020 - 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 third quarter of 2020.

Third Quarter End Results

Third quarter net sales for 2020 were $38.0 million, a decrease of $1.7 million, or 4.3%, as compared to $39.7 million in the third quarter of 2019. Income from operations increased to $1.4 million for the third quarter of 2020, from $0.6 million in the same period in 2019.

Net income was $1.6 million, or $0.76 per diluted share, for the third quarter of 2020, as compared to a net loss of $1.5 million, or $0.62 per diluted share, for the third quarter of 2019.

Gross profit as a percentage of sales declined to 75.4% for the three months ended September 30, 2020, as compared to 80.6% for the same period in 2019.

Commission and incentives as a percentage of net sales was 39.7% for the three months ended September 30, 2020, as compared to 42.1% for the same period in the prior year.

For the three months ended September 30, 2020, overall selling and administrative expenses decreased by $2.3 million to $6.6 million, as compared to $9.0 million for the same period in 2019. The decrease in selling and administrative expenses was due to a $1.8 million decrease in payroll costs, a $0.4 million decrease in marketing costs and a $0.1 million decrease in stock-based compensation.

For the three months ended September 30, 2020, other operating costs decreased by $0.1 million, or 2.9%, to $5.1 million, as compared to $5.2 million for the same period in 2019. The decrease in operating costs was primarily due to a $0.4 million decrease in travel and entertainment, which was offset by a $0.3 million increase in consulting fees.

For the three months ended September 30, 2020, provision for taxes was $22,000, compared to the same period in the prior year, which had a $1.6 million provision.

The approximate number of new and continuing independent associate and preferred customer positions held by individuals in Mannatech’s network and associated with purchases of products as of September 30, 2020 and 2019 were approximately 180,000 and 176,000, respectively. Recruitment increased 13.7% in the third quarter of 2020 as compared to the third quarter of 2019. The number of new independent associate and preferred customer positions in the company’s network for the third quarter of 2020 was approximately 25,388 as compared to 22,321 in 2019.


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.



Safe Harbor statement

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,” “hope,” “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. 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, the impact of COVID-19 on Mannatech’s business, Mannatech's inability to attract and retain associates and preferred customers, 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.

Individuals interested in Mannatech's products or in exploring its business opportunity can learn more at Mannatech.com


Contact Information:
Donna Giordano
Manager, Executive Office Administration
972-471-6512
ir@mannatech.com
www.mannatech.com




MANNATECH, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share information)
ASSETSSeptember 30, 2020 (unaudited)December 31, 2019
Cash and cash equivalents$21,234 $24,762 
Restricted cash943 943 
Accounts receivable, net of allowance of $787 and $708 in 2020 and 2019, respectively144 955 
Income tax receivable825 220 
Inventories, net13,512 10,152 
Prepaid expenses and other current assets2,516 2,239 
Deferred commissions1,729 1,758 
Total current assets40,903 41,029 
Property and equipment, net4,007 5,261 
Construction in progress1,411 865 
Long-term restricted cash4,049 5,295 
Other assets11,712 9,592 
Long-term deferred tax assets, net963 881 
Total assets$63,045 $62,923 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current portion of finance leases$77 $87 
Accounts payable4,763 3,526 
Accrued expenses7,823 8,209 
Commissions and incentives payable9,807 9,728 
Taxes payable1,080 2,187 
Current notes payable689 739 
Deferred revenue5,034 4,416 
Total current liabilities29,273 28,892 
Finance leases, excluding current portion152 176 
Deferred tax liabilities
Long-term notes payable— 363 
Other long-term liabilities7,373 6,214 
Total liabilities36,801 35,648 
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, 2,742,857 shares issued and 2,089,002 shares outstanding as of September 30, 2020 and 2,742,857 shares issued and 2,381,131 shares outstanding as of December 31, 2019— — 
Additional paid-in capital33,765 34,143 
Retained earnings (accumulated deficit)3,908 (690)
Accumulated other comprehensive income3,350 3,757 
Treasury stock, at average cost, 653,855 shares as of September 30, 2020 and 361,726 shares as of December 31, 2019(14,779)(9,935)
Total shareholders’ equity26,244 27,275 
Total liabilities and shareholders’ equity$63,045 $62,923 




MANNATECH, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information)
 Three Months Ended
September 30,
Nine Months Ended
September 30,
 2020201920202019
Net sales$37,966 $39,656 $112,218 $118,340 
Cost of sales9,328 7,711 25,044 23,253 
Gross profit28,638 31,945 87,174 95,087 
Operating expenses:    
Commissions and incentives15,089 16,696 45,308 48,190 
Selling and administrative expenses6,639 8,951 20,659 24,908 
Depreciation and amortization expense468 519 1,525 1,564 
Other operating costs5,062 5,214 15,180 16,721 
Total operating expenses27,258 31,380 82,672 91,383 
Income from operations1,380 565 4,502 3,704 
Interest income (expense), net10 (12)73 (83)
Other income (expense), net248 (430)206 554 
Income before income taxes1,638 123 4,781 4,175 
Income tax (provision) benefit(22)(1,613)753 (2,991)
Net income (loss)$1,616 $(1,490)$5,534 $1,184 
Earnings per common share:    
Basic$0.77 $(0.62)$2.42 $0.50 
Diluted$0.76 $(0.62)$2.38 $0.47 
Weighted-average common shares outstanding:    
Basic2,098 2,391 2,286 2,393 
Diluted2,135 2,391 2,312 2,450 




Non-GAAP Financial Measures (Sales, Gross Profit and Income from Operations in Constant Dollars)

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.
The table below reconciles third quarter 2020 constant dollar net sales, gross profit and income from operations to GAAP net sales, gross profit and income from operations.
 September 30, 2020September 30, 2019
Constant $ Change
 GAAP
Measure:
Total $
Non-GAAP Measure:
Constant $
GAAP
Measure:
Total $
DollarPercent
Net Sales$38.0 $38.2 $39.7 $(1.5)(3.8)%
Product35.7 36.0 38.7 (2.7)(7.0)%
Pack and associate fees2.0 1.9 0.7 1.2 171.4 %
Other0.3 0.3 0.3 — — %
Gross profit28.6 28.8 31.9 (3.1)(9.7)%
Income from operations1.4 1.4 0.6 0.8 133.3 %