NEWS RELEASE

COPPELL, Texas--(BUSINESS WIRE)--May 10, 2016-- 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 2016.

First Quarter Results

First quarter net sales for 2016 were $40.7 million, a decrease of $3.7 million or 8.3% as compared to $44.4 million in the first quarter of 2015. Our net sales declined 3.6% on a constant dollar basis (see Non-GAAP Financial Measures, below); unfavorable foreign exchange caused a $2.1 million decline in GAAP net sales as compared to the same period in 2015. Income from operations was $0.5 million for the first quarter 2016, as compared to $2.5 million in the same period in 2015. Net income was $0.6 million, or $0.21 per diluted share, for the first quarter 2016, as compared to $1.1 million, or $0.40 per diluted share, for the first quarter 2015.

For the three months ended March 31, 2016, Mannatech’s operations outside of the Americas accounted for approximately 60.7% of Mannatech’s consolidated net sales.

For the three months ended March 31, 2016, Asia/Pacific net sales decreased by $1.3 million, or 5.7%, to $21.4 million, as compared to $22.7 million for the same period in 2015. Net sales comparisons for the first quarter were affected by the impact of fluctuations in foreign currency exchange rates. In constant dollars (a non-GAAP financial measure), first quarter 2016 net sales would have been $1.3 million higher, or $22.7 million. The currency impact was primarily due to depreciation of the Korean Won, Australian Dollar, and New Zealand Dollar. Active associates and members, who have purchased products and/or packs in the Asia/Pacific region during the last 12 months, have increased 1.9%.

For the three months ended March 31, 2016, net sales for Europe, the Middle East and Africa (“EMEA”) decreased by $0.3 million, or 8.3%, to $3.3 million, as compared to $3.6 million for the same period in 2015. In constant dollars (a non-GAAP financial measure), net sales for the first quarter 2016 would have been $0.7 million higher, or $4.0 million. The currency impact was primarily due to the depreciation of the South African Rand, British Pound and Euro. When first quarter of 2016 is compared to the same period during 2015, recruiting of associates in the EMEA region increased 16.4%, and active associates and members that have purchased products and/or a pack in the EMEA region during the past 12 months increased 6.9%.

For the three months ended March 31, 2016, net sales for the Americas decreased by $2.1 million, or 11.6%, to $16.0 million, as compared to $18.1 million for the same period in 2015. When first quarter of 2016 is compared to the same period during 2015, recruiting of associates in the Americas region increased 13.6%.; however, there was a decrease in active independent associates who have purchased products and/or a pack in the Americas region during the past 12 months.

The approximate number of new and continuing independent associate and member positions held by individuals in Mannatech’s network and associated with purchases of our packs or products as of March 31, 2016 and 2015 were approximately 218,000 and 230,000, respectively. Recruiting decreased 6.7% in the first quarter of 2016 as compared to the first quarter of 2015 as increases in the EMEA and Americas regions were offset by a decrease in the Asia/Pacific region. The number of new independent associate and member positions in the company’s network for the first quarter of 2016 was approximately 23,800, as compared to 25,500 for the same period in 2015.

Mannatech’s cash and cash equivalents increased by approximately $1.6 million to a balance of $33.6 million at March 31, 2016 as compared to $32.0 million at December 31, 2015. Also, total shareholder’s equity increased by $1.4 million to a balance of $40.0 million, as compared to $38.6 million at December 31, 2015.

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 currency 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.

Conference Call

Mannatech will host a conference call to discuss the quarter’s results with investors on Wednesday, May 11, 2016 at 10 a.m. CDT, 11 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 56400213.

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

CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
			March 31, 2016 (unaudited)					December 31, 2015
ASSETS
Cash and cash equivalents			$	33,581				$	31,994
Restricted cash				1,513					1,511
Accounts receivable, net				219					369
Income tax receivable				8					4
Inventories, net				11,228					9,199
Prepaid expenses and other current assets				3,998					2,905
Deferred commissions				3,969					3,443
Deferred tax assets, net				430					460
Total current assets				54,946					49,885
Property and equipment, net				3,617					3,848
Construction in progress				1,362					839
Long-term restricted cash				6,741					6,586
Other assets				3,878					3,759
Long-term deferred tax assets, net				3,766					3,725
Total assets			$	74,310				$	68,642
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current portion of capital leases			$	418				$	447
Accounts payable				5,617					2,683
Accrued expenses				4,698					6,221
Commissions and incentives payable				7,628					6,818
Taxes payable				1,489					736
Current deferred tax liability				85					84
Current notes payable				971					713
Deferred revenue				9,926					8,677
Total current liabilities				30,832					26,379
Capital leases, excluding current portion				518					612
Long-term deferred tax liabilities				6					24
Long-term notes payable				979					1,069
Other long-term liabilities				2,003					1,994
Total liabilities				34,338					30,078
Commitments and contingencies
Shareholders’ equity:
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding				—					—
Common stock				—					—
Additional paid-in capital				38,904					40,494
Retained earnings				9,180					8,589
Accumulated other comprehensive income				1,273					686
Treasury stock, at average cost, 76,986 shares as of March 31, 2016 and 91,894 shares as of December 31, 2015, respectively				(9,385	)				(11,205	)
Total shareholders’ equity				39,972					38,564
Total liabilities and shareholders’ equity			$	74,310				$	68,642
See accompanying notes to unaudited consolidated financial statements.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information)
			Three months ended March 31,
			2016					2015
Net sales			$	40,708				$	44,370
Cost of sales				8,389					8,553
Gross profit				32,319					35,817
Operating expenses:
Commissions and incentives				15,618					17,542
Selling and administrative expenses				8,142					8,813
Depreciation and amortization				443					396
Other operating costs				7,580					6,555
Total operating expenses				31,783					33,306
Income from operations				536					2,511
Interest income (expense)				(13	)				30
Other income (expense), net				334					(932	)
Income before income taxes				857					1,609
Provision for income taxes				266					510
Net income			$	591				$	1,099
Earnings per common share:
Basic			$	0.22				$	0.41
Diluted			$	0.21				$	0.40
Weighted-average common shares outstanding:
Basic				2,696					2,677
Diluted				2,780					2,730

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 months ended			March 31, 2016								March 31, 2015				Reconciliation – Constant $
			GAAP Measure: Total $				Non-GAAP Measure: Constant $				GAAP Measure: Total $				Dollar					Percent
Net sales			$	40.7			$	42.8			$	44.4			$	(1.6	)			(3.6	)%
Product				33.7				35.3				34.2				1.1				3.2	%
Pack				5.8				6.2				8.9				(2.7	)			(30.3	)%
Other				1.2				1.2				1.3				(0.1	)			(7.7	)%
Gross profit				32.3				33.8				35.8				(2.0	)			(5.6	)%
Income from operations				0.5				0.8				2.5				(1.7	)			(68.0	)%

The approximate number of new and continuing positions held by independent associates and members who purchased our packs or products during the twelve months ended March 31, 2016 and 2015 were as follows:

			2016							2015
New			94,000			43.1	%			108,000			47.0	%
Continuing			124,000			56.9	%			122,000			53.0	%
Total Active			218,000			100.0	%			230,000			100.0	%

About Mannatech

Mannatech, Incorporated, offers a profound wellness experience through a financially rewarding opportunity that makes a difference in the lives of people across the world. Through its innovative glyconutrition products, Mannatech transforms lives, providing an unprecedented level of natural wellness, freedom and purpose. With more than 20 years of experience and operations in more than 25 countries, 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. 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 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.

 

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Source: Mannatech, Incorporated

Mannatech, Incorporated
Donna Giordano, 972-471-6512
Manager, Executive Office Administration
ir@mannatech.com
www.mannatech.com