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 12, 2021
(Exact Name of Registrant as Specified in its Charter)
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(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):
Securities Registered Pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||
| par value $0.0001 per share | |||||||||||
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).
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 12, 2021 , Mannatech, Incorporated issued a press release announcing financial and operating results for the third quarter ended September 30, 2021. 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 | Description | ||||
99.1* | Press Release, dated November 12, 2021, titled "Mannatech Reports Third Quarter 2021 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 12, 2021
| MANNATECH, INCORPORATED | |||||
| By: | /s/ David Johnson | ||||
| David Johnson | |||||
| Chief Financial Officer | |||||
Mannatech Reports Third Quarter End 2021 Financial Results
(FLOWER MOUND, Texas) November 12, 2021 - 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 2021.
Third Quarter End Results
Third quarter net sales for 2021 were $39.4 million, an increase of $1.4 million, or 3.9%, as compared to $38.0 million in the third quarter of 2020. Income from operations increased to $3.3 million for the third quarter of 2021, from $1.4 million in the same period in 2020.
Net income was $2.9 million, or $1.44 per diluted share, for the third quarter of 2021, as compared to net income of $1.6 million, or $0.76 per diluted share, for the third quarter of 2020.
For the three months ended September 30, 2021, overall selling and administrative expenses increased by $0.5 million to $7.1 million, as compared to $6.6 million for the same period in 2020. The increase in selling and administrative expenses consisted of a $0.9 million increase in payroll costs, which was partially offset by a $0.3 million decrease in marketing costs and a $0.1 million decrease in contract labor.
For the three months ended September 30, 2021, other operating costs decreased by $0.1 million, or 2.0%, to $5.0 million, as compared to $5.1 million for the same period in 2020. The decrease in operating costs was primarily due to a $0.3 million increase in consulting fees, which was offset by a $0.2 million decrease in bad debt expense and a $0.2 million decrease in sales tax expenses resulting from less utilization of the loyalty program and a sales tax audit refund.
For the three months ended September 30, 2021, provision for taxes was $0.4 million, or an effective rate of 10.7%, which is different from the federal statutory rate due primarily to the Company taking the IRC 250 deduction and applying foreign tax credits. For the three months ended September 30, 2020, provision for taxes was $22,000, or an effective rate of 1.3%. The effective tax rate for the three months ended September 30, 2021 and 2020 was determined based on the estimated annual effective income tax rate.
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, 2021 and 2020 were approximately 166,000 and 180,000, respectively. Recruitment of new independent associates and preferred customers decreased by 1.4% to 25,036 in the third quarter of 2021 as compared to 25,388 in the third quarter of 2020.
Year-to-date Third Quarter Results
For the nine months ended September 30, 2021, net sales were $120.3 million, an increase of $8.1 million, or 7.2%, as compared to $112.2 million for the same period in 2020. Income from operations increased to $8.1 million for the nine months ended September 30, 2021, from $4.5 million in the same period in 2020.
Net income was $7.3 million, or $3.47 per diluted share, for the nine months ended September 30, 2021, as compared to net income of $5.5 million, or $2.38 per diluted share, for the same period in 2020.
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, the availability and effectiveness of vaccines on a widespread basis, the impact of any mutations of the COVID-19 virus, 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)
| ASSETS | September 30, 2021 (unaudited) | December 31, 2020 | |||||||||
| Cash and cash equivalents | $ | 27,132 | $ | 22,207 | |||||||
| Restricted cash | 944 | 944 | |||||||||
| Accounts receivable, net of allowance of $937 and $817 in 2021 and 2020, respectively | 142 | 186 | |||||||||
| Income tax receivable | 327 | 1,008 | |||||||||
| Inventories, net | 13,853 | 12,827 | |||||||||
| Prepaid expenses and other current assets | 2,870 | 2,962 | |||||||||
| Deferred commissions | 2,297 | 2,343 | |||||||||
| Total current assets | 47,565 | 42,477 | |||||||||
| Property and equipment, net | 3,097 | 4,494 | |||||||||
| Construction in progress | 1,356 | 864 | |||||||||
| Long-term restricted cash | 1,127 | 4,346 | |||||||||
| Other assets | 9,674 | 11,977 | |||||||||
| Long-term deferred tax assets, net | 1,055 | 1,178 | |||||||||
| Total assets | $ | 63,874 | $ | 65,336 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current portion of finance leases | $ | 76 | $ | 76 | |||||||
| Accounts payable | 4,731 | 4,797 | |||||||||
| Accrued expenses | 9,326 | 8,691 | |||||||||
| Commissions and incentives payable | 10,770 | 10,998 | |||||||||
| Taxes payable | 2,167 | 1,400 | |||||||||
| Current notes payable | 211 | 553 | |||||||||
| Deferred revenue | 5,809 | 5,472 | |||||||||
| Total current liabilities | 33,090 | 31,987 | |||||||||
| Finance leases, excluding current portion | 34 | 129 | |||||||||
| Deferred tax liabilities | 3 | 3 | |||||||||
| Long-term notes payable | — | — | |||||||||
| Other long-term liabilities | 5,594 | 7,245 | |||||||||
| Total liabilities | 38,721 | 39,364 | |||||||||
| 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 1,921,761 shares outstanding as of September 30, 2021 and 2,742,857 shares issued and 2,071,081 shares outstanding as of December 31, 2020 | — | — | |||||||||
| Additional paid-in capital | 33,449 | 33,795 | |||||||||
| Retained earnings | 8,419 | 2,213 | |||||||||
| Accumulated other comprehensive income | 2,612 | 5,150 | |||||||||
| Treasury stock, at average cost, 821,096 shares as of September 30, 2021 and 671,776 shares as of December 31, 2020 | (19,327) | (15,186) | |||||||||
| Total shareholders’ equity | 25,153 | 25,972 | |||||||||
| Total liabilities and shareholders’ equity | $ | 63,874 | $ | 65,336 | |||||||
MANNATECH, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| Net sales | $ | 39,446 | $ | 37,966 | $ | 120,269 | $ | 112,218 | |||||||||||||||
| Cost of sales | 7,903 | 9,328 | 25,251 | 25,044 | |||||||||||||||||||
| Gross profit | 31,543 | 28,638 | 95,018 | 87,174 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Commissions and incentives | 15,731 | 15,089 | 48,227 | 45,308 | |||||||||||||||||||
| Selling and administrative expenses | 7,156 | 6,639 | 21,838 | 20,659 | |||||||||||||||||||
| Depreciation and amortization expense | 408 | 468 | 1,360 | 1,525 | |||||||||||||||||||
| Other operating costs | 4,962 | 5,062 | 15,500 | 15,180 | |||||||||||||||||||
| Total operating expenses | 28,257 | 27,258 | 86,925 | 82,672 | |||||||||||||||||||
| Income from operations | 3,286 | 1,380 | 8,093 | 4,502 | |||||||||||||||||||
| Interest income, net | 15 | 10 | 44 | 73 | |||||||||||||||||||
| Other (expense) income, net | (19) | 248 | (149) | 206 | |||||||||||||||||||
| Income before income taxes | 3,282 | 1,638 | 7,988 | 4,781 | |||||||||||||||||||
| Income tax (provision) benefit | (352) | (22) | (735) | 753 | |||||||||||||||||||
| Net income | $ | 2,930 | $ | 1,616 | $ | 7,253 | $ | 5,534 | |||||||||||||||
| Earnings per common share: | |||||||||||||||||||||||
| Basic | $ | 1.54 | $ | 0.77 | $ | 3.63 | $ | 2.42 | |||||||||||||||
| Diluted | $ | 1.44 | $ | 0.76 | $ | 3.47 | $ | 2.38 | |||||||||||||||
| Weighted-average common shares outstanding: | |||||||||||||||||||||||
| Basic | 1,903 | 2,098 | 2,010 | 2,286 | |||||||||||||||||||
| Diluted | 2,031 | 2,135 | 2,095 | 2,312 | |||||||||||||||||||
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 tables below reconcile third quarter 2021 and year-to-date constant dollar net sales, gross profit and income from operations to our GAAP net sales, gross profit and income from operations.
Three-month period ended (in millions, except percentages) | September 30, 2021 | September 30, 2020 | Constant $ Change | ||||||||||||||||||||||||||
| GAAP Measure: Total $ | Non-GAAP Measure: Constant $ | GAAP Measure: Total $ | Dollar | Percent | |||||||||||||||||||||||||
| Net Sales | $ | 39.4 | $ | 38.5 | $ | 38.0 | $ | 0.5 | 1.3 | % | |||||||||||||||||||
| Product | 36.9 | 36.1 | 35.7 | 0.4 | 1.1 | % | |||||||||||||||||||||||
| Pack and associate fees | 2.4 | 2.3 | 2.0 | 0.3 | 15.0 | % | |||||||||||||||||||||||
| Other | 0.1 | 0.1 | 0.3 | (0.2) | (66.7) | % | |||||||||||||||||||||||
| Gross profit | 31.5 | 30.8 | 28.6 | 2.2 | 7.7 | % | |||||||||||||||||||||||
| Income from operations | 3.3 | 3.1 | 1.4 | 1.7 | 121.4 | % | |||||||||||||||||||||||
Nine-month period ended (in millions, except percentages) | September 30, 2021 | September 30, 2020 | Constant $ Change | ||||||||||||||||||||||||||
| GAAP Measure: Total $ | Non-GAAP Measure: Constant $ | GAAP Measure: Total $ | Dollar | Percent | |||||||||||||||||||||||||
| Net Sales | $ | 120.3 | $ | 115.4 | $ | 112.2 | $ | 3.2 | 2.9 | % | |||||||||||||||||||
| Product | 113.2 | 108.7 | 108.7 | — | — | % | |||||||||||||||||||||||
| Pack sales and associate fees | 6.5 | 6.1 | 2.8 | 3.3 | 117.9 | % | |||||||||||||||||||||||
| Other | 0.6 | 0.5 | 0.7 | (0.2) | (28.6) | % | |||||||||||||||||||||||
| Gross Profit | 95.0 | 91.2 | 87.2 | 4.0 | 4.6 | % | |||||||||||||||||||||||
| Income from Operations | 8.1 | 7.0 | 4.5 | 2.5 | 55.6 | % | |||||||||||||||||||||||