mtex-20220315
FALSE000105635800010563582022-03-152022-03-15

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 15, 2022
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,Texas75028
(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 March 15, 2022, Mannatech, Incorporated issued a press release announcing financial and operating results for the fourth quarter ended December 31, 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 NumberDescription
Press Release, dated March 15, 2022 titled ''Mannatech Reports Fourth 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: March 15, 2022
MANNATECH, INCORPORATED
By:/s/ David Johnson
David Johnson
Chief Financial Officer


Document


https://cdn.kscope.io/d6727456e03b8ac59a3e03c19fa89096-logo.jpg
Mannatech Reports Fourth Quarter 2021 Financial Results

(FLOWER MOUND, Texas) March 15, 2022 - 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 fourth quarter of 2021.


Quarter End Results

Fourth quarter net sales for 2021 were $39.5 million, an increase of $0.3 million, or 0.8%, as compared to $39.2 million in the fourth quarter of 2020. During the fourth quarter, our net sales increased 3.6% on a Constant dollar basis (a Non-GAAP financial measure); unfavorable foreign exchange during the fourth quarter caused a decrease of $1.1 million in net sales as compared to the fourth quarter of 2020.

During the fourth quarter, taxes were a $1.7 million benefit. As we expect to utilize our tax asset attributes, we released valuation allowance on U.S. deferred tax assets. During the fourth quarter 2020, the tax provision was $0.2 million, an effective rate of 23%.

Fourth quarter operating income for 2021 was $1.0 million as compared to an operating loss of $11.0 thousand for the fourth quarter of 2020.

Fourth quarter net income was $2.6 million, or $1.25 per diluted share, for the fourth quarter 2021, as compared to net income of $0.7 million, or $0.34 per diluted share, for the fourth quarter 2020.

Gross profit as a percentage of net sales improved to 77.5% for the three months ended December 31, 2021, as compared to 73.3% for the same period in 2020.

Commissions as a percentage of net sales were 38.3% for the three months ended December 31, 2021, as compared to 39.0% for the same period in the prior year. Incentive costs as a percentage of net sales were 1.1% for the three months ended December 31, 2021, as compared to 2.0% for the same period in 2020.

For the three months ended December 31, 2021, overall selling and administrative expenses increased by $0.4 million to $7.6 million, as compared to $7.2 million for the same period in 2020. The increase in selling and administrative expenses consisted primarily of a $0.3 million increase in payroll related costs and a $0.1 million increase in marketing costs.

For the three months ended December 31, 2021, other operating costs increased by $1.1 million to $6.1 million, as compared to $5.0 million for the same period in 2020. The increase in other operating costs was primarily due to a $0.6 million charge to earnings for our expected outcome from a Korea Customs Audit (See Note 11 to our Financial Statements filed with our Annual Report for the year ended December 31, 2021), a $0.3 million increase in research and development costs as we conduct studies of Ambrotose® Complex and Manapol® powder, $0.1 million increase in travel costs and a $0.1 million increase in consulting fees.

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 our packs or products as of December 31, 2021 and 2020 were approximately 163,000 and 183,000, respectively. Recruiting decreased 8.2% in the fourth quarter of 2021 as compared to the fourth quarter of 2020. The number of new independent associate and preferred customer positions in the company’s network for the fourth quarter of 2021 was 18,052 as compared to 19,675 in 2020.





Year End Results

Overall net sales increased $8.4 million, or 5.5%, for 2021, as compared to 2020. During 2021, fluctuations in foreign currency exchange rates had an overall favorable impact on our net sales. During 2021, our net sales increased 3.1% on a Constant dollar basis (a Non-GAAP financial measure); favorable foreign exchange during 2021 caused an increase of $3.7 million in net sales as compared to 2020.

For the years ended December 31, 2021 and 2020, taxes were a benefit of $1.0 million and $0.5 million, respectively. In 2021 we released Valuation Allowance on the US tax asset and during 2020 we received a tax refund from the CARES Act.

Operating income improved $4.6 million to $9.0 million in 2021 as compared to $4.5 million in 2020.

Net income for 2021 was $9.8 million, or $4.71 per diluted share, as compared to net income of $6.3 million, or $2.77 per diluted share, for 2020.

Gross profit as a percentage of net sales improved to 78.6% for 2021, as compared to 76.5% for 2020.

Commissions as a percentage of net sales were 38.5% for the year ending December 31, 2021 and 38.8% for the same period in the prior year.

The costs of incentives, as a percentage of net sales decreased to 1.4% for the year ended December 31, 2021, as compared to 1.8% for the same period in 2020.

For the year ended December 31, 2021, overall selling and administrative expenses increased by $1.6 million, or 5.7%, to $29.4 million, as compared to $27.8 million for the same period in 2020. The increase in selling and administrative expenses consisted of a $1.9 million increase in payroll costs and a $0.1 million increase in distribution costs, which was partially offset by a $0.3 million decrease in contract labor costs and a $0.1 million decrease in stock-based compensation.

For the year ended December 31, 2021, other operating costs increased by $1.4 million, or 7%, to $21.6 million, as compared to $20.2 million for the same period in 2020. For the year ended December 31, 2021, other operating costs, as a percentage of net sales, were 13.5%, as compared to 13.4% for the same period in 2020. The increase was due to a $0.4 million increase in consulting fees, a $0.1 million increase in travel, a $0.3 million increase in research and development costs as we conduct studies of Ambrotose® Complex and Manapol® powder, and the $0.6 million charge to earnings for our expected outcome from the Korea Customs Audit.

As of December 31, 2021, our cash and cash equivalents increased by 8.9%, or $2.0 million, to $24.2 million from $22.2 million as of December 31, 2020. We operated our business to generate $10.8 million in cash and we invested $0.7 million in computer hardware and software. We used $0.4 million to pay long-term liabilities and finance lease obligations. Finally, we are proud that we have returned shareholder value with $4.3 million for dividends to shareholders and we repurchased $5.1 million in common stock.


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 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.

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)



 December 31, 2021December 31, 2020
ASSETS  
Cash and cash equivalents$24,185 $22,207 
Restricted cash944 944 
Accounts receivable, net of allowance of $987 and $817 in 2021 and 2020, respectively
90 186 
Income tax receivable342 1,008 
Inventories, net12,020 12,827 
Prepaid expenses and other current assets2,888 2,962 
Deferred commissions2,369 2,343 
Total current assets42,838 42,477 
Property and equipment, net2,882 4,494 
Construction in progress1,357 864 
Long-term restricted cash503 4,346 
Other assets9,220 11,977 
Deferred tax assets, net2,825 1,175 
Total assets$59,625 $65,333 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current portion of finance leases$68 $76 
Accounts payable3,969 4,797 
Accrued expenses9,224 8,691 
Commissions and incentives payable9,611 10,998 
Taxes payable2,154 1,400 
Current notes payable205 553 
Deferred revenue4,867 5,472 
Total current liabilities30,098 31,987 
Finance leases, excluding current portion66 129 
Deferred tax liabilities— — 
Long-term notes payable— — 
Other long-term liabilities5,049 7,245 
Total liabilities35,213 39,361 
Commitments and contingencies (Note 11)
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 1,940,687 shares outstanding as of December 31, 2021 and 2,742,857 shares issued and 2,071,081 shares outstanding as of December 31, 2020
— — 
Additional paid-in capital33,277 33,795 
Retained earnings7,708 2,213 
Accumulated other comprehensive income 2,342 5,150 
Treasury stock, at average cost, 802,170 shares as of December 31, 2021 and 671,776 shares as of December 31, 2020(18,915)(15,186)
Total shareholders’ equity24,412 25,972 
Total liabilities and shareholders’ equity$59,625 $65,333 




MANNATECH, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information)
 For the three months ended December 31,For the years ended December 31,
 2021202020212020
Net sales$39,493 $39,189 $159,762 $151,407 
Cost of sales8,898 10,461 34,149 35,505 
Gross profit30,595 28,728 125,613 115,902 
Operating expenses:    
Commissions and incentives15,557 16,041 63,784 61,349 
Selling and administrative expenses7,589 7,186 29,427 27,845 
Depreciation and amortization359 465 1,719 1,990 
Other operating costs6,134 5,047 21,634 20,227 
Total operating expenses29,639 28,362 116,564 111,411 
Income (loss) from operations956 (11)9,049 4,491 
Interest income22 10 66 83 
Other (expense) income, net(74)945 (223)1,151 
Income before income taxes904 944 8,892 5,725 
Income tax (provision) benefit1,685 (217)950 536 
Net income $2,589 $727 $9,842 $6,261 
Income per common share:    
Basic$1.34 $0.35 $4.95 $2.80 
Diluted$1.25 $0.34 $4.71 $2.77 
Weighted-average common shares outstanding:    
Basic1,929 2,085 1,990 2,235 
Diluted2,068 2,121 2,088 2,264 




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 fourth quarter 2021 constant dollar sales to GAAP sales.
 Sales - Q4 2021
 GAAP
Measure:
Total $
Non-GAAP Measure:
Constant $
Constant $ Change
Americas $12.3 $12.3 $— 
Asia Pacific$23.7 $24.8 1.1 
EMEA$3.5 $3.5 — 
Total$39.5 $40.6 $1.1 

The table below reconciles fiscal year 2021 and 2020 constant dollar net sales, gross profit and income from operations to GAAP net sales, gross profit and income from operations.
 20212020Constant Dollar Change
 GAAP
Measure:
Total $
Non-GAAP Measure:
Constant $
GAAP
Measure:
Total $
DollarPercent
Net sales159.8 156.1 $151.4 4.7 3.1 %
Product151.0 147.6 146.2 1.4 1.0 %
Pack and associate fees8.0 7.7 4.2 3.5 83.3 %
Other0.8 0.7 1.0 (0.3)(30.0)%
Gross profit125.6 122.8 115.9 6.9 6.0 %
Income from operations9.0 8.3 4.5 3.8 84.4 %