MTEX Mannatech Inc

Q1 2024 EPS of $0.63 vs. $0.32 in Q1 2023

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 2024.

First Quarter Highlights

• Net sales for the quarter ended March 31, 2024 were $29.4 million, as compared to $34.1 million for the same period in 2023, a decrease of $4.7 million, or 13.8%. On a Constant dollar basis (see Non-GAAP Measures, below) our net sales decreased $3.9 million, or 11.3%, and unfavorable foreign exchange caused a $0.8 million decrease in GAAP net sales as compared to the same period in 2023. The decline in revenues was principally in our Asia/Pacific region reflecting reduced recruiting of sales associates and preferred customers along with continued weak economic conditions.^
• Gross profit as a percentage of net sales increased to 78.6% for three months ended March 31, 2024, as compared to 78.3% for the same period in 2023, largely due to reduced costs of freight and shipping and other supply chain initiatives.
• Income from operations was $0.8 million for the three months ended March 31, 2024 as compared to $0.7 million in the same period last year. On a Constant dollar basis (see Non-GAAP Measures, below), income from operations was unfavorably affected by $0.3 million due to foreign exchange. Higher gross profit margins coupled with lower selling and administrative expenses resulting from cost reductions, more than offset the profitability impact from the decline in revenues.
• Net income was $1.2 million for the three months ended March 31, 2024, or $0.63 per diluted share, as compared to $0.6 million, or $0.32 per diluted share for the three months ended March 31, 2023.
• As of March 31, 2024, the company's cash and cash equivalents increased 2.3%, or $0.2 million, to $7.9 million from $7.7 million as of December 31, 2023. Cash provided by operating activities was $1.87 million for the first quarter 2024 as compared to $1.35 million in the same period last year.
• 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 March 31, 2024 and 2023 remained constant at approximately 143,000. Recruiting new associates and preferred customers declined 13.6% in the First quarter of 2024 as compared to the First quarter of 2023.

Landen Fredrick, President and CEO, stated, “Demand remained weak in the first quarter across our world-wide operations but was most pronounced in our Asia/Pacific region where economic conditions did not improve from the fourth quarter last year. We overcame our revenue shortfall with aggressive and effective cost control measures resulting in reducing our SG&A expenses and generating $0.8 million in operating income.”

Mr. Fredrick continued, “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. In the first quarter we had a $0.8 million foreign exchange gain, reflected in “Other Income” in our Statement of Operations. The foreign exchange gain, coupled with our operating income in the period, had a significant contribution to achieving net income of $1.2 million in the first quarter of this year.”

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 and 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 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

March 31, 2024

(unaudited)

 

December 31,

2023

Cash and cash equivalents

$

7,911

 

 

$

7,731

 

Restricted cash

 

938

 

 

 

938

 

Accounts receivable, net of allowance of $1,200 and $1,278

 

320

 

 

 

91

 

Income tax receivable

 

450

 

 

 

465

 

Inventories, net

 

13,679

 

 

 

14,535

 

Prepaid expenses and other current assets

 

3,146

 

 

 

1,774

 

Deferred commissions

 

1,836

 

 

 

2,130

 

Total current assets

 

28,280

 

 

 

27,664

 

Property and equipment, net

 

3,769

 

 

 

4,147

 

Long-term restricted cash

 

693

 

 

 

718

 

Other assets

 

6,711

 

 

 

7,066

 

Deferred tax assets, net

 

1,605

 

 

 

1,611

 

Total assets

$

41,058

 

 

$

41,206

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current portion of finance leases

$

265

 

 

$

269

 

Accounts payable

 

4,882

 

 

 

4,010

 

Accrued expenses

 

5,899

 

 

 

6,779

 

Commissions and incentives payable

 

8,419

 

 

 

8,175

 

Taxes payable

 

1,922

 

 

 

1,521

 

Current notes payable

 

525

 

 

 

240

 

Deferred revenue

 

4,235

 

 

 

4,786

 

Total current liabilities

 

26,147

 

 

 

25,780

 

Finance leases, excluding current portion

 

888

 

 

 

956

 

Other long-term liabilities

 

3,578

 

 

 

3,986

 

Total liabilities

 

30,613

 

 

 

30,722

 

 

 

 

 

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 1,884,814 shares outstanding as of March 31, 2024 and 2,742,857 shares issued and 1,860,154 shares outstanding as of December 31, 2023

 

—

 

 

 

—

 

Additional paid-in capital

 

32,948

 

 

 

33,309

 

Accumulated deficit

 

(121

)

 

 

(1,301

)

Accumulated other comprehensive loss

 

(2,446

)

 

 

(1,015

)

Treasury stock, at average cost, 858,043 shares as of March 31, 2024 and 882,703 shares as of December 31, 2023

 

(19,936

)

 

 

(20,509

)

Total shareholders’ equity

 

10,445

 

 

 

10,484

 

Total liabilities and shareholders’ equity

$

41,058

 

 

$

41,206

 

 

MANNATECH, INCORPORATED AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share information)

 

 

Three Months Ended

March 31,

 

 

2024

 

 

 

2023

 

Net sales

$

29,393

 

 

$

34,114

 

Cost of sales

 

6,296

 

 

 

7,413

 

Gross profit

 

23,097

 

 

 

26,701

 

Operating expenses:

 

 

 

Commissions and incentives

 

11,685

 

 

 

13,558

 

Selling and administrative expenses

 

10,176

 

 

 

12,043

 

Depreciation and amortization expense

 

416

 

 

 

387

 

Total operating expenses

 

22,277

 

 

 

25,988

 

Income from operations

 

820

 

 

 

713

 

Interest income, net

 

18

 

 

 

24

 

Other income, net

 

871

 

 

 

333

 

Income before income taxes

 

1,709

 

 

 

1,070

 

Income tax (provision)

 

(529

)

 

 

(466

)

Net income

$

1,180

 

 

$

604

 

Income per common share:

 

 

 

Basic

$

0.63

 

 

$

0.32

 

Diluted

$

0.63

 

 

$

0.32

 

Weighted-average common shares outstanding:

 

 

 

Basic

 

1,884

 

 

 

1,872

 

Diluted

 

1,884

 

 

 

1,891

 

Net sales by region for the three months ended March 31, 2024 and 2023 were as follows (in millions, except percentages):

Region

Three Months Ended

March 31, 2024

 

Three Months Ended

March 31, 2023

Americas

$

10.2

 

34.7

%

 

$

10.5

 

30.8

%

Asia/Pacific

 

17.1

 

58.2

%

 

 

21.1

 

61.9

%

EMEA

 

2.1

 

7.1

%

 

 

2.5

 

7.3

%

Total

$

29.4

 

100.0

%

 

$

34.1

 

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 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 table below reconciles fiscal year 2024 and 2023 Constant dollar net sales, gross profit and income from operations to GAAP net sales, gross profit and income from operations.

Three-month period ended

March 31, 2024

 

March 31,

2023

 

Constant $ Change

 

(in millions, except percentages)

GAAP

Measure:

Total $

 

Translation

Adjustment

 

Non-GAAP

Measure:

Constant $

 

GAAP

Measure:

Total $

 

Dollar

 

Percent

 

Net sales

$

29.4

 

$

0.8

 

$

30.2

 

$

34.1

 

$

(3.9

)

 

(11.4

)%

 

Gross profit

 

23.1

 

 

0.7

 

 

23.8

 

 

26.7

 

 

(2.9

)

 

(10.9

)%

 

Income from operations

 

0.8

 

 

0.3

 

 

1.1

 

 

0.7

 

 

0.4

 

 

57.1

%

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240514482645/en/

Erin K. Barta General Counsel and Corporate Secretary 972-471-7742 ir@mannatech.com www.mannatech.com