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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Mannatech, Incorporated    MTEX

MANNATECH, INCORPORATED

(MTEX)
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Mannatech Incorporated : Reports First Quarter 2020 Financial Results

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05/12/2020 | 07:02am EDT

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

%

 


© Business Wire 2020
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Financials (USD)
Sales 2019 158 M - -
Net income 2019 3,29 M - -
Net cash 2019 16,5 M - -
P/E ratio 2019 11,9x
Yield 2019 3,11%
Capitalization 39,1 M 39,1 M -
EV / Sales 2018 0,14x
EV / Sales 2019 0,14x
Nbr of Employees 215
Free-Float 49,6%
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Alfredo Bala President & Chief Executive Officer
J. Stanley Fredrick Chairman
David A. Johnson Chief Financial Officer
Larry A. Jobe Independent Director
Robert A. Toth Vice Chairman
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