Mannatech, Incorporated
(NASDAQ: MTEX), ("Mannatech" or
"Company"), global health and wellness company committed to
transforming lives to make a better world, today announced
financial results for its second quarter of 2024.
Second Quarter
Highlights
- Net sales for the quarter ended June 30, 2024 were $27.7
million, as compared to $32.6 million for the same period in 2023,
a decrease of $4.9 million, or 14.9%. On a Constant dollar basis
(see Non-GAAP Measures, below) our net sales decreased $4.2
million, or 12.9%, and unfavorable foreign exchange caused a $0.7
million decrease in GAAP net sales as compared to the same period
in 2023. The decline in revenues was principally due to supply
chain constraints, items on back order, and some weakening of
economic conditions in Asia.
- Gross profit as a percentage of net sales decreased to 77.1%
for three months ended June 30, 2024, as compared to 78.5% for the
same period in 2023, some of the increase in costs were related to
increased freight costs related to back ordered items and running
some sales promotions on products thereby reducing our margin.
- Commission expenses for the three months ended June 30, 2024
decreased by 12.5%, or $1.6 million, to $11.1 million, as compared
to $12.7 million for the same period in 2023. Commissions are
earned from sales. Commission expenses in dollar terms decreased
during the three months ended June 30, 2024 primarily due to a
decline in our sales. For the three months ended June 30, 2024,
commissions as a percentage of net sales increased to 40.0% from
38.9% for the same period in 2023. The increase in commissions was
due partially to running promotions on our products.
- For the three months ended June 30, 2024, selling and
administrative expenses decreased by $2.2 million, or 17.0%, to
$10.9 million, as compared to $13.1 million for the same period in
2023. The decrease in selling and administrative expenses was the
result of a $0.9 million reduction in payroll costs, a $0.7 million
decrease in legal and consulting fees, a $0.3 million decrease in
travel and entertainment costs, a $0.2 million decrease in
marketing costs and a $0.1 million decrease in office expenses.
Selling and administrative expenses, as a percentage of net sales,
for the three months ended June 30, 2024 decreased to 39.1% from
40.1% for the same period in 2023.
- Loss from operations was $1.1 million for the three months
ended June 30, 2024 as compared to $1.0 million in the same period
last year. On a Constant dollar basis (see Non-GAAP Measures,
below), the loss from operations was unfavorably affected by $0.1
million due to foreign exchange. Weaker than expected economic
conditions in the Asian markets led to reduced recruiting and lower
sales per Associate during the quarter, which caused a reduction to
net sales of $3.4 million. Supply chain challenges in the Americas
drove a $1.1 million decrease in net sales in the Americas during
the quarter.
- Due to the strengthening of the U.S. Dollar and dissolution of
an entity, foreign exchange gains were $1.1 million the three
months ended June 30, 2024. This included a one-time gain of $0.2
million during the quarter ended June 30, 2024 attributable to the
liquidation of the Company’s entity in Sweden.
- Income tax expense was $0.5 million for the three months ended
June 30, 2024 as compared to $0.3 million in the same period last
year.
- Net loss was $0.6 million for the three months ended June 30,
2024, or $0.33 per diluted share, as compared to $1.1 million, or
$0.59 per diluted share for the three months ended June 30,
2023.
- As of June 30, 2024, the company's cash and cash equivalents
increased 18.9%, or $1.5 million, to $9.2 million from $7.7 million
as of December 31, 2023. Cash used in operations was $0.8 million
for the six months ended June 30, 2023 compared to $1.3 million for
the same period in 2023. Acquisition of property and equipment
decreased for the six months ended June 30, 2024, to $0.1 million
compared to $0.4 million for the same period in 2023. Financing
activities provided $3.1 million of cash during the quarter ended
June 30, 2024. This increase consisted of $3.6 million in gross
loan proceeds and use of $0.5 million for the repayment of finance
lease obligations and other long-term liabilities. For the six
months ended June 30, 2023, $1.3 million was used related to
payments for dividends of $0.7 million, repurchase of common stock
of $0.1 million and $0.4 million for the repayment of lease
obligations and other long-term liabilities. Additionally, foreign
exchange effects reduced cash position $0.8 million in the six
months ended June 30, 2024, compared to $1.5 million in the same
period in 2023.
- 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 its packs or
products as of June 30, 2024 and 2023 remained constant at
approximately 142,000 as our Associate attrition rate decreased by
21%. Recruiting new associates and preferred customers decreased
13.6% in the second quarter of 2024 as compared to the second
quarter of 2023.
Landen Fredrick, President and CEO, stated, “We are a
multinational company and therefore we are subject to fluctuations
in the value of the U.S. Dollar versus other currencies in the
countries we operate. Although we recorded a second quarter loss in
2024, we recorded an overall gain in the first six months of 2024.
The gain was, in part, a result of a second quarter $1.1 million
foreign exchange gain, reflected in “Other Income” in our Statement
of Operations. This gain in the second quarter, coupled with our
$0.9 million foreign exchange gain in the first quarter of 2024
contributed to the net income for the six months ended 2024 of $0.6
million.”
Mr. Fredrick continued, “Demand remained weak in the second
quarter across our world-wide operations but was most pronounced in
our Asia/Pacific region where economic conditions have not
improved.”
Mr. Fredrick concluded, “We see continued economic challenges
for the remainder of 2024, however, we remain committed to
increasing our revenues through increasing the number of our sales
associates and preferred customers while maintaining disciplined
cost controls.”
Non-GAAP Financial
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. The
company discloses 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.
The company believes 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 with an additional
perspective on trends. Although management believes the non-GAAP
financial measures enhance investors’ understanding of their
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, 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.
^ Mannatech operates in China under a cross-border e-commerce
platform that is separate from its network marketing model.
Individuals interested in Mannatech's products or in exploring
its business opportunity can learn more at Mannatech.com.
MANNATECH, INCORPORATED AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share
information)
ASSETS
June 30, 2024
(unaudited)
December 31, 2023
Cash and cash equivalents
$
9,196
$
7,731
Restricted cash
938
938
Accounts receivable, net of allowance of
$1,364 and $1,278
99
91
Income tax receivable
416
465
Inventories, net
13,155
14,535
Prepaid expenses and other current
assets
2,214
1,774
Deferred commissions
1,910
2,130
Total current assets
27,928
27,664
Property and equipment, net
3,303
4,147
Operating lease right-of-use assets
2,807
3,315
Other assets
3,511
3,751
Deferred tax assets, net
1,690
1,611
Long-term restricted cash
676
718
Total assets
$
39,915
$
41,206
LIABILITIES AND SHAREHOLDERS’
EQUITY
Commissions and incentives payable
$
8,011
$
8,175
Accrued expenses
5,965
6,779
Deferred revenue
4,152
4,786
Accounts payable
3,454
4,010
Taxes payable
1,743
1,521
Current notes payable
369
240
Current portion of finance lease
liabilities
267
269
Total current liabilities
23,961
25,780
Long-term notes payable
3,600
—
Operating lease liabilities, excluding
current portion
1,975
2,582
Other long-term liabilities
1,360
1,404
Finance lease liabilities, excluding
current portion
820
956
Total liabilities
31,716
30,722
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 1,884,814
shares outstanding as of June 30, 2024 and 2,742,857 shares issued
and 1,860,154 shares outstanding as of December 31, 2023
—
—
Additional paid-in capital
32,982
33,309
Accumulated deficit
(745
)
(1,301
)
Accumulated other comprehensive loss
(4,102
)
(1,015
)
Treasury stock, at average cost, 858,043
shares as of June 30, 2024 and 882,703 shares as of December 31,
2023
(19,936
)
(20,509
)
Total shareholders’ equity
8,199
10,484
Total liabilities and shareholders’
equity
$
39,915
$
41,206
MANNATECH, INCORPORATED AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(in thousands, except per share
information)
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
2024
2023
Net sales
$
27,740
$
32,594
$
57,133
$
66,708
Cost of sales
6,363
7,004
12,658
14,417
Gross profit
21,377
25,590
44,475
52,291
Operating expenses:
Commissions and incentives
11,660
13,465
23,345
27,022
Selling and administrative expenses
10,860
13,079
21,452
25,510
Total operating expenses
22,520
26,544
44,797
52,532
Loss from operations
(1,143
)
(954
)
(322
)
(241
)
Interest (expense) income, net
(105
)
(10
)
(87
)
14
Other income, net
1,120
150
1,990
483
(Loss) income before income
taxes
(128
)
(814
)
1,581
256
Income tax provision
(496
)
(291
)
(1,025
)
(757
)
Net (loss) income
$
(624
)
$
(1,105
)
$
556
$
(501
)
(Loss) income per common share:
Basic
$
(0.33
)
$
(0.59
)
$
0.30
$
(0.27
)
Diluted
$
(0.33
)
$
(0.59
)
$
0.30
$
(0.27
)
Weighted-average common shares
outstanding:
Basic
1,885
1,870
1,885
1,871
Diluted
1,885
1,870
1,885
1,871
Net sales by region for the three and six
months ended June 30, 2024 and 2023 were as follows (in millions,
except percentages):
Three Months Ended
June 30,
Six Months Ended
June 30,
Region
2024
2023
2024
2023
Americas
$
9.5
34.3
%
$
10.6
32.5
%
$
19.7
34.5
%
$
21.1
31.6
%
Asia/Pacific
15.9
57.4
%
19.3
59.2
%
33.0
57.8
%
40.4
60.6
%
EMEA
2.3
8.3
%
2.7
8.3
%
4.4
7.7
%
5.2
7.8
%
Total sales
$
27.7
100.0
%
$
32.6
100.0
%
$
57.1
100.0
%
$
66.7
100.0
%
Non-GAAP Financial Measures (Sales, Gross Profit and Income
from Operations in Constant Dollars)
To supplement its financial results presented in accordance with
generally accepted accounting principles in the United States
(“GAAP”), Mannatech discloses 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. It refers to these
adjusted financial measures as Constant dollar items, which are
non-GAAP financial measures. The company believes these measures
provide investors with an additional perspective on trends. To
exclude the impact of changes due to the translation of foreign
currencies into U.S. dollars, it calculates 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 the actual GAAP results and the recalculated results for
the current year at the Constant dollar rates.
The tables below reconcile second quarter 2024 and year-to-date
Constant dollar net sales, gross profit and income from operations
to GAAP net sales, gross profit and income from operations. (in
millions, except percentages):
Three-month period ended
June 30, 2024
June 30, 2023
Constant $ Change
GAAP Measure: Total $
Translation Adjustment
Non-GAAP Measure: Constant $
GAAP Measure: Total $
Dollar
Percent
Net sales
$
27.7
$
0.7
$
28.4
$
32.6
$
(4.2
)
(12.9
)%
Gross profit
21.4
0.5
21.9
25.6
(3.7
)
(14.5
)%
Loss from operations
(1.1
)
0.1
(1.0
)
(1.0
)
—
—
%
Six-month period ended
June 30, 2024
June 30, 2023
Constant $ Change
GAAP Measure:
Total $
Translation Adjustment
Non-GAAP Measure:
Constant $
GAAP Measure:
Total $
Dollar
Percent
Net sales
$
57.1
$
1.5
$
58.6
$
66.7
$
(8.1
)
(12.1
)%
Gross profit
44.5
1.2
45.7
52.3
(6.6
)
(12.6
)%
(Loss) income from operations
(0.3
)
$
0.4
0.1
(0.2
)
0.3
(150.0
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240813554364/en/
Erin K. Barta General Counsel and Corporate Secretary
214-724-3378 ir@mannatech.com www.mannatech.com
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