COPPELL, Texas--(BUSINESS WIRE)--Mar. 14, 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 fourth quarter and year end
2016.
Quarter End Results
Fourth quarter net sales for 2016 were $42.6 million, a decrease of $2.7
million, or 6.0%, as compared to $45.3 million in the fourth quarter of
2015. Income (loss) from operations decreased to ($0.2) million for the
fourth quarter 2016, from $2.8 million in the same period in 2015. Net
income (loss) was ($1.1) million, or ($0.42) per diluted share, for the
fourth quarter 2016, as compared to $1.5 million, or $0.56 per diluted
share, for the fourth quarter 2015.
For the three months ended December 31, 2016, Mannatech’s operations
outside of North America accounted for approximately 62.0% of
Mannatech’s consolidated net sales.
For the three months ended December 31, 2016, sales for North America
and South America ("the Americas") decreased by $2.4 million, or 12.9%,
to $16.2 million, as compared to $18.6 million for the same period in
2015. In constant dollars (a non-GAAP financial measure), fourth quarter
2016 net sales would have been $0.1 million higher, or $16.3 million.
For the three months ended December 31, 2016, Asia/Pacific net sales
decreased by $0.1 million, or 0.4%, to $23.0 million, as compared to
$23.1 million for the same period in 2015. Net sales comparisons for the
fourth quarter were affected by the impact of fluctuations in foreign
currency exchange rates. In constant dollars (a non-GAAP financial
measure), fourth quarter 2016 net sales would have been $0.6 million
lower, or $22.4 million. The currency impact was primarily due to the
appreciation of the Japanese Yen.
For the three months ended December 31, 2016, net sales for Europe, the
Middle East and Africa (“EMEA”) decreased by $0.2 million, or 5.6%, to
$3.4 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
fourth quarter 2016 would have been the same at $3.4 million.
As a result of fewer sales, gross profit decreased by $2.0 million to
$34.3 million for the three months ended December 31, 2016, as compared
to $36.3 million for the same period in 2015.
Commissions as a percentage of net sales were 39.3% for the three months
ending December 31, 2016 compared to 39.9% for the same period in the
prior year. Incentive costs increased for the three months ended
December 31, 2016 by $0.9 million, to $1.5 million, as compared to $0.6
million for the same period in 2015. These increases are attributed to
operations in the United States and South Korea, where more associates
qualified for incentives.
For the three months ended December 31, 2016, overall selling and
administrative expenses increased by $0.9 million to $9.0 million, as
compared to $8.1 million for the same period in 2015. The increase in
selling and administrative expenses consisted primarily of a $0.2
million increase in contract labor costs, a $0.3 million increase in
marketing costs, and a $0.3 million increase in payroll related costs.
For the three months ended December 31, 2016, other operating costs
increased by $0.6 million to $6.9 million, as compared to $6.3 million
for the same period in 2015. The increase in other operating costs was
primarily due to legal and consulting fees.
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 December 31,
2016 and 2015 were approximately 222,000 and 219,000, respectively.
Recruiting increased 21.0% in the fourth quarter of 2016 as compared to
the fourth quarter of 2015. The number of new independent associate and
member positions in the company’s network for the fourth quarter of 2016
was approximately 25,900 as compared to 21,400 in 2015.
Year End Results
Overall net sales remained the same at $180.3 million for the years
ended December 31, 2016 and December 31, 2015. During 2016, fluctuations
in foreign currency exchange rates had an overall unfavorable impact on
our net sales. In constant dollars (a non-GAAP financial measure), net
sales for the year ending December 31, 2016 grew by $1.7 million,
compared to 2015. Net income (loss) for 2016 was ($0.6) million, or
($0.22) per diluted share, as compared to $5.8 million, or $2.14 per
diluted share, for 2015.
For the year ended December 31, 2016, Mannatech’s operations outside of
North America accounted for approximately 61.1% of Mannatech’s
consolidated net sales, whereas in the same period in 2015, our
operations outside of North America accounted for 59.3% of our
consolidated net sales.
For the year ended December 31, 2016, sales for the Americas decreased
by $3.1 million, or 4.2%, to $70.2 million as compared to $73.3 million
for the same period in 2015. In constant dollars (a non-GAAP financial
measure), net sales for the year would have been $0.3 million higher, or
$70.5 million. The currency impact was primarily due to the depreciation
of the Mexican Peso.
For the year ended December 31, 2016, Asia/Pacific sales increased by
$4.8 million, or 5.3%, to $96.2 million as compared to $91.4 million for
the same period in 2015. In constant dollars (a non-GAAP financial
measure), net sales for the year would have been $0.1 million lower, or
$96.1 million.
For the year ended December 31, 2016, EMEA sales decreased by $1.7
million, or 10.9%, to $13.9 million as compared to $15.6 million for the
same period in 2015. In constant dollars (a non-GAAP financial measure),
net sales for the year would have been $1.5 million higher, or $15.4
million. The currency impact was primarily due to the depreciation of
the South African Rand and British Pound.
For the year ended December 31, 2016, gross profit decreased by $2.4
million, or 1.7%, to $143.7 million, as compared to $146.2 million for
the same period in 2015. The decline in gross profit percentage was
primarily due to promotional discounting, increases in transportation
costs, and negative effects of foreign exchange.
Commissions as a percentage of net sales were 39.1% for the year ending
December 31, 2016 compared to 39.0% for the same period in the prior
year. Incentive costs increased for the year ended December 31, 2016 by
37%, or $1 million, to $3.7 million, as compared to $2.7 million for the
same period in 2015. These increases are attributed to operations in the
United States and South Korea, where more associates qualified for
incentives.
For the year ended December 31, 2016, overall selling and administrative
expenses increased by $2.7 million to $37.2 million, as compared to
$34.5 million for the same period in 2015. The increase in selling and
administrative expenses consisted primarily of a $0.5 million increase
in warehouse costs, a $0.5 million increase in contract labor costs, a
$0.4 million increase in marketing costs, and a $1.2 million increase in
payroll related costs as some non-recurring reductions in payroll costs
were offset by the cost of additional employees.
For the year ended December 31, 2016, other operating costs increased by
$4.9 million to $29.7 million, as compared to $24.8 million for the same
period in 2015. The increase in other operating costs was primarily due
to a $2.5 million increase in legal and consulting fees as we continue
to explore expansion in new markets, transform our supply chain and
defend our patents, a $1.2 million increase in travel and entertainment
costs attributed to events for our independent associates and travel to
Columbia and China for new market launches, a $1.0 million increase in
miscellaneous administrative costs such as research and development,
accounting fees and bad debt, and a $0.4 million abandonment charge of
internally developed back office software, partially offset by a $0.2
million decrease in office expenses.
As of December 31, 2016, our cash and cash equivalents decreased by
10.3%, or $3.3 million, to $28.7 million from $32.0 million as of
December 31, 2015. Cash provided by operating activities decreased by
$4.4 million for the year ended December 31, 2016 compared to the same
period in 2015 as a result of increases in operating expenditures such
as our new brand introduction, exploring expansion into new markets,
support for new market launches, and inventory purchases. For the year
ended December 31, 2016, we invested approximately $1.6 million in
back-office software projects, approximately $0.6 million in leasehold
improvements in various international offices and training centers, and
approximately $0.1 million in office furniture and equipment. For the
year ended December 31, 2016, we repaid $1.6 million in capital lease
obligations, we paid $0.7 million in dividends to shareholders, and we
repurchased $0.3 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.
Conference Call
Mannatech will host a conference call to discuss the quarter’s results
with investors on Wednesday, March 15, 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 79265685.
Individuals interested in Mannatech’s products or in exploring its
business opportunity can learn more at Mannatech.com.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MANNATECH, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED
BALANCE SHEETS
(in thousands, except share
information)
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
28,687
|
|
|
|
$
|
31,994
|
|
|
Restricted cash
|
|
|
|
1,510
|
|
|
|
|
1,511
|
|
|
Accounts receivable, net of allowance of $463 and $261 in 2016 and
2015, respectively
|
|
|
|
298
|
|
|
|
|
369
|
|
|
Income tax receivable
|
|
|
|
1,587
|
|
|
|
|
4
|
|
|
Inventories, net
|
|
|
|
11,961
|
|
|
|
|
9,199
|
|
|
Prepaid expenses and other current assets
|
|
|
|
3,483
|
|
|
|
|
2,905
|
|
|
Deferred commissions
|
|
|
|
3,229
|
|
|
|
|
3,443
|
|
|
Deferred tax assets, net
|
|
|
|
7
|
|
|
|
|
460
|
|
|
Total current assets
|
|
|
|
50,762
|
|
|
|
|
49,885
|
|
|
Property and equipment, net
|
|
|
|
3,611
|
|
|
|
|
3,848
|
|
|
Construction in progress
|
|
|
|
1,012
|
|
|
|
|
839
|
|
|
Long-term restricted cash
|
|
|
|
6,429
|
|
|
|
|
6,586
|
|
|
Other assets
|
|
|
|
4,013
|
|
|
|
|
3,759
|
|
|
Long-term deferred tax assets, net
|
|
|
|
5,361
|
|
|
|
|
3,725
|
|
|
Total assets
|
|
|
$
|
71,188
|
|
|
|
$
|
68,642
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
Current portion of capital leases
|
|
|
$
|
357
|
|
|
|
$
|
447
|
|
|
Accounts payable
|
|
|
|
5,223
|
|
|
|
|
2,683
|
|
|
Accrued expenses
|
|
|
|
5,605
|
|
|
|
|
6,221
|
|
|
Commissions and incentives payable
|
|
|
|
8,799
|
|
|
|
|
6,818
|
|
|
Taxes payable
|
|
|
|
1,040
|
|
|
|
|
736
|
|
|
Current deferred tax liability
|
|
|
|
—
|
|
|
|
|
84
|
|
|
Current notes payable
|
|
|
|
801
|
|
|
|
|
713
|
|
|
Deferred revenue
|
|
|
|
8,156
|
|
|
|
|
8,677
|
|
|
Total current liabilities
|
|
|
|
29,981
|
|
|
|
|
26,379
|
|
|
Capital leases, excluding current portion
|
|
|
|
261
|
|
|
|
|
612
|
|
|
Long-term deferred tax liabilities
|
|
|
|
29
|
|
|
|
|
24
|
|
|
Long-term notes payable
|
|
|
|
567
|
|
|
|
|
1,069
|
|
|
Other long-term liabilities
|
|
|
|
1,465
|
|
|
|
|
1,994
|
|
|
Total liabilities
|
|
|
|
32,303
|
|
|
|
|
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, $0.0001 par value, 99,000,000 shares authorized,
2,758,275 shares issued and 2,688,790 shares outstanding as of
December 31, 2016 and 2,773,972 shares issued and 2,682,078 shares
outstanding as of December 31, 2015
|
|
|
|
—
|
|
|
|
|
—
|
|
|
Additional paid-in capital
|
|
|
|
38,190
|
|
|
|
|
40,494
|
|
|
Retained earnings
|
|
|
|
7,331
|
|
|
|
|
8,589
|
|
|
Accumulated other comprehensive income
|
|
|
|
1,834
|
|
|
|
|
686
|
|
|
Treasury stock, at average cost, 69,485 shares as of December 31,
2016 and 91,894 shares as of December 31, 2015, respectively
|
|
|
|
(8,470
|
)
|
|
|
|
(11,205
|
)
|
|
Total shareholders’ equity
|
|
|
|
38,885
|
|
|
|
|
38,564
|
|
|
Total liabilities and shareholders’ equity
|
|
|
$
|
71,188
|
|
|
|
$
|
68,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MANNATECH, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per
share information)
|
|
|
|
|
|
|
|
|
|
For the years ended
December 31,
|
|
|
|
|
2016
|
|
|
2015
|
|
Net sales
|
|
|
$
|
180,304
|
|
|
|
$
|
180,267
|
|
|
Cost of sales
|
|
|
|
36,564
|
|
|
|
|
34,102
|
|
|
Gross profit
|
|
|
|
143,740
|
|
|
|
|
146,165
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Commissions and incentives
|
|
|
|
74,215
|
|
|
|
|
72,956
|
|
|
Selling and administrative expenses
|
|
|
|
37,180
|
|
|
|
|
34,458
|
|
|
Depreciation and amortization
|
|
|
|
1,898
|
|
|
|
|
1,793
|
|
|
Other operating costs
|
|
|
|
29,749
|
|
|
|
|
24,814
|
|
|
Total operating expenses
|
|
|
|
143,042
|
|
|
|
|
134,021
|
|
|
Income from operations
|
|
|
|
698
|
|
|
|
|
12,144
|
|
|
Interest income
|
|
|
|
174
|
|
|
|
|
210
|
|
|
Other expense, net
|
|
|
|
(1,827
|
)
|
|
|
|
(4,155
|
)
|
|
Income (Loss) before income taxes
|
|
|
|
(955
|
)
|
|
|
|
8,199
|
|
|
Income tax benefit (provision)
|
|
|
|
369
|
|
|
|
|
(2,360
|
)
|
|
Net income (loss)
|
|
|
$
|
(586
|
)
|
|
|
$
|
5,839
|
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(0.22
|
)
|
|
|
$
|
2.18
|
|
|
Diluted
|
|
|
$
|
(0.22
|
)
|
|
|
$
|
2.14
|
|
|
Weighted-average common shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
|
|
|
2,688
|
|
|
|
|
2,680
|
|
|
Diluted
|
|
|
|
2,688
|
|
|
|
|
2,728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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:
|
|
|
12/31/2016
|
|
|
12/31/2015
|
|
|
Constant $ Change
|
|
|
|
|
GAAP
Measure:
Total $
|
|
|
Non-GAAP
Measure:
Constant $
|
|
|
GAAP
Measure:
Total $
|
|
|
Dollar
|
|
|
Percent
|
|
Net sales
|
|
|
$
|
42.6
|
|
|
|
$
|
42.2
|
|
|
|
$
|
45.3
|
|
|
$
|
(3.1
|
)
|
|
|
(6.8
|
)%
|
|
Product
|
|
|
|
35.0
|
|
|
|
|
34.6
|
|
|
|
|
37.2
|
|
|
|
(2.6
|
)
|
|
|
(7.0
|
)%
|
|
Pack
|
|
|
|
6.5
|
|
|
|
|
6.4
|
|
|
|
|
6.8
|
|
|
|
(0.4
|
)
|
|
|
(5.9
|
)%
|
|
Other
|
|
|
|
1.1
|
|
|
|
|
1.2
|
|
|
|
|
1.3
|
|
|
|
(0.1
|
)
|
|
|
(7.7
|
)%
|
|
Gross profit
|
|
|
|
34.3
|
|
|
|
|
33.9
|
|
|
|
|
36.3
|
|
|
|
(2.4
|
)
|
|
|
(6.6
|
)%
|
|
Income from operations
|
|
|
$
|
(0.2
|
)
|
|
|
$
|
(0.4
|
)
|
|
|
$
|
2.8
|
|
|
$
|
(3.2
|
)
|
|
|
(114.3
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Month Period:
|
|
|
12/31/2016
|
|
|
12/31/2015
|
|
|
Constant $ Change
|
|
|
|
|
GAAP
Measure:
Total $
|
|
|
Non-GAAP
Measure:
Constant $
|
|
|
GAAP
Measure:
Total $
|
|
|
Dollar
|
|
|
Percent
|
|
Net sales
|
|
|
$
|
180.3
|
|
|
$
|
182.0
|
|
|
$
|
180.3
|
|
|
$
|
1.7
|
|
|
|
0.9
|
%
|
|
Product
|
|
|
|
148.6
|
|
|
|
149.9
|
|
|
|
143.1
|
|
|
|
6.8
|
|
|
|
4.8
|
%
|
|
Pack
|
|
|
|
26.7
|
|
|
|
27.1
|
|
|
|
31.7
|
|
|
|
(4.6
|
)
|
|
|
(14.5
|
)%
|
|
Other
|
|
|
|
5.0
|
|
|
|
5.1
|
|
|
|
5.5
|
|
|
|
(0.4
|
)
|
|
|
(7.3
|
)%
|
|
Gross profit
|
|
|
|
143.7
|
|
|
|
144.8
|
|
|
|
146.2
|
|
|
|
(1.4
|
)
|
|
|
(1.0
|
)%
|
|
Income from operations
|
|
|
$
|
0.7
|
|
|
$
|
0.6
|
|
|
$
|
12.1
|
|
|
$
|
(11.5
|
)
|
|
|
(95.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 December 31 was as follows:
|
|
|
|
2016
|
|
|
|
2015
|
|
New
|
|
|
103,000
|
|
|
46.4
|
%
|
|
|
|
96,000
|
|
|
43.8
|
%
|
|
Continuing
|
|
|
119,000
|
|
|
53.6
|
%
|
|
|
|
123,000
|
|
|
56.2
|
%
|
|
Total
|
|
|
222,000
|
|
|
100.0
|
%
|
|
|
|
219,000
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 more than 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/20170314005505/en/
Source: Mannatech, Incorporated
Mannatech, Incorporated
Donna Giordano, 972-471-6512
Manager,
Executive Office Administration
ir@mannatech.com
www.mannatech.com