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.
MANNATECH, INCORPORATED AND
SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
information)
December 31, 2021
December 31, 2020
ASSETS
Cash and cash equivalents
$
24,185
$
22,207
Restricted cash
944
944
Accounts receivable, net of allowance of
$987 and $817 in 2021 and 2020, respectively
90
186
Income tax receivable
342
1,008
Inventories, net
12,020
12,827
Prepaid expenses and other current
assets
2,888
2,962
Deferred commissions
2,369
2,343
Total current assets
42,838
42,477
Property and equipment, net
2,882
4,494
Construction in progress
1,357
864
Long-term restricted cash
503
4,346
Other assets
9,220
11,977
Deferred tax assets, net
2,825
1,175
Total assets
$
59,625
$
65,333
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current portion of finance leases
$
68
$
76
Accounts payable
3,969
4,797
Accrued expenses
9,224
8,691
Commissions and incentives payable
9,611
10,998
Taxes payable
2,154
1,400
Current notes payable
205
553
Deferred revenue
4,867
5,472
Total current liabilities
30,098
31,987
Finance leases, excluding current
portion
66
129
Deferred tax liabilities
—
—
Long-term notes payable
—
—
Other long-term liabilities
5,049
7,245
Total liabilities
35,213
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 capital
33,277
33,795
Retained earnings
7,708
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’ equity
24,412
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,
2021
2020
2021
2020
Net sales
$
39,493
$
39,189
$
159,762
$
151,407
Cost of sales
8,898
10,461
34,149
35,505
Gross profit
30,595
28,728
125,613
115,902
Operating expenses:
Commissions and incentives
15,557
16,041
63,784
61,349
Selling and administrative expenses
7,589
7,186
29,427
27,845
Depreciation and amortization
359
465
1,719
1,990
Other operating costs
6,134
5,047
21,634
20,227
Total operating expenses
29,639
28,362
116,564
111,411
Income (loss) from operations
956
(11
)
9,049
4,491
Interest income
22
10
66
83
Other (expense) income, net
(74
)
945
(223
)
1,151
Income before income taxes
904
944
8,892
5,725
Income tax (provision) benefit
1,685
(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:
Basic
1,929
2,085
1,990
2,235
Diluted
2,068
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.
2021
2020
Constant Dollar Change
GAAP Measure: Total $
Non-GAAP Measure: Constant
$
GAAP Measure: Total $
Dollar
Percent
Net sales
159.8
156.1
$
151.4
4.7
3.1
%
Product
151.0
147.6
146.2
1.4
1.0
%
Pack and associate fees
8.0
7.7
4.2
3.5
83.3
%
Other
0.8
0.7
1.0
(0.3
)
(30.0
) %
Gross profit
125.6
122.8
115.9
6.9
6.0
%
Income from operations
9.0
8.3
4.5
3.8
84.4
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220315005285/en/
Donna Giordano Manager, Executive Office Administration
972-471-6512 ir@mannatech.com www.mannatech.com
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