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 of
2020.
Quarter End Results
First quarter net sales for 2020 were $36.6 million, a decrease
of $1.4 million, or 3.6%, as compared to $38.0 million in the first
quarter of 2019. Income from operations increased to $2.0 million
for the first quarter 2020, from $1.1 million in the same period in
2019.
Net income was $2.8 million, or $1.15 per diluted share, for the
first quarter 2020, as compared to a net income of $0.7 million, or
$0.28 per diluted share, for the first quarter 2019.
Gross profit as a percentage of sales improved to 80.9% for the
three months ended March 31, 2020, as compared to 80.4% for the
same period in 2019.
Commission and incentives as a percentage of net sales was 40.7%
for the three months ended March 31, 2020, as compared to 40.0% for
the same period in the prior year.
For the three months ended March 31, 2020, overall selling and
administrative expenses decreased by $0.7 million to $6.9 million,
as compared to $7.6 million for the same period in 2019. The
decrease in selling and administrative expenses were due to a $0.7
million decrease in payroll costs.
For the three months ended March 31, 2020, other operating costs
decreased by $0.8 million to $5.3 million, as compared to $6.1
million for the same period in 2019 primarily due to a $0.3 million
decrease in office expenses, a $0.3 million decrease in legal and
consulting fees and a $0.2 million decrease in travel and
entertainment.
For the three months ended March 31, 2020, taxes were a $0.9
million benefit, compared to the same period in the prior year,
which had a $0.3 million provision. The effective tax rate for the
three months ended March 31, 2020 was different from the federal
statutory rate due primarily to the $1.2 million benefit recorded
in connection with the carryback of U.S. net operating losses as
allowed by the Coronavirus Aid, Relief, and Economic Security Act
(the “CARES Act”), enacted March 27, 2020. The effective tax rate
for the three months ended March 31, 2019 was different from the
federal statutory rate due primarily to the associated valuation
allowance recorded on losses in certain jurisdictions.
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
March 31, 2020 and 2019 were approximately 166,000 and 203,000,
respectively. As the novel coronavirus ("COVID-19") spread into our
markets, recruiting decreased 8.2% in the first quarter of 2020 as
compared to the first quarter of 2019. The number of new
independent associate and preferred customer positions in the
company’s network for the first quarter of 2020 was approximately
18,687 as compared to 20,363 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
MANNATECH, INCORPORATED AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
information)
ASSETS
March 31, 2020
(unaudited)
December 31, 2019
Cash and cash equivalents
$
24,489
$
24,762
Restricted cash
943
943
Accounts receivable, net of allowance of
$717 and $708 in 2020 and 2019, respectively
271
955
Income tax receivable
1,243
220
Inventories, net
11,545
10,152
Prepaid expenses and other current
assets
2,947
2,239
Deferred commissions
1,789
1,758
Total current assets
43,227
41,029
Property and equipment, net
4,871
5,261
Construction in progress
973
865
Long-term restricted cash
4,993
5,295
Other assets
9,634
9,592
Long-term deferred tax assets, net
1,013
881
Total assets
$
64,711
$
62,923
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current portion of finance leases
$
80
$
87
Accounts payable
4,929
3,526
Accrued expenses
6,573
8,209
Commissions and incentives payable
10,233
9,728
Taxes payable
1,944
2,187
Current notes payable
1,039
739
Deferred revenue
5,223
4,416
Total current liabilities
30,021
28,892
Finance leases, excluding current
portion
187
176
Deferred tax liabilities
3
3
Long-term notes payable
228
363
Other long-term liabilities
5,937
6,214
Total liabilities
36,376
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 2,389,206
shares outstanding as of March 31, 2020 and 2,742,857 shares issued
and 2,381,131 shares outstanding as of December 31, 2019
—
—
Additional paid-in capital
34,063
34,143
Retained earnings (accumulated
deficit)
1,797
(690
)
Accumulated other comprehensive income
2,123
3,757
Treasury stock, at average cost, 353,651
shares as of March 31, 2020 and 361,726 shares as of December 31,
2019
(9,648
)
(9,935
)
Total shareholders’ equity
28,335
27,275
Total liabilities and shareholders’
equity
$
64,711
$
62,923
MANNATECH, INCORPORATED AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except per share
information)
For the three months ended
March 31,
2020
2019
Net sales
$
36,605
$
37,973
Cost of sales
7,008
7,427
Gross profit
29,597
30,546
Operating expenses:
Commissions and incentives
14,889
15,199
Selling and administrative expenses
6,855
7,576
Depreciation and amortization expense
520
528
Other operating costs
5,322
6,123
Total operating expenses
27,586
29,426
Income from operations
2,011
1,120
Interest income (expense), net
50
(95
)
Other (expense) income, net
(208
)
4
Income before income taxes
1,853
1,029
Income tax (provision) benefit
934
(341
)
Net income
$
2,787
$
688
Earnings per common share:
Basic
$
1.17
$
0.29
Diluted
$
1.15
$
0.28
Weighted-average common shares
outstanding:
Basic
2,391
2,396
Diluted
2,415
2,462
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 first quarter 2020 constant dollar
sales to GAAP sales.
Sales - Q1 2020
GAAP Measure: Total $
Non-GAAP Measure: Constant
$
Constant $ Change
Americas
$
11.7
$
11.9
$
0.2
Asia Pacific
21.4
22.8
1.4
EMEA
3.5
3.3
(0.2
)
Total
$
36.6
$
38.0
$
1.4
The table below reconciles first quarter 2020 constant dollar
net sales, gross profit and income from operations to GAAP net
sales, gross profit and income from operations.
March 31, 2020
March 31, 2019
Constant $ Change
GAAP Measure: Total $
Non-GAAP Measure: Constant
$
GAAP Measure: Total $
Dollar
Percent
Net Sales
$
36.6
$
37.8
$
38.0
$
(0.2
)
(0.5
)%
Product
35.9
37.0
37.2
(0.2
)
(0.5
)%
Pack and associate fees
0.5
0.5
0.6
(0.1
)
(16.7
)%
Other
0.2
0.2
0.2
—
—
%
Gross profit
29.6
30.5
30.5
—
—
%
Income from operations
2.0
2.3
1.1
1.2
109.1
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200512005186/en/
Donna Giordano Manager, Executive Office Administration
972-471-6512 ir@mannatech.com www.mannatech.com
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