MTEX - Mannatech Reports First Quarter End 2022 Financial Results

May, 13 2022 06:00 AM Mannatech Incorporated

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 2022.

First Quarter End Results

First quarter net sales for 2022 were $32.4 million, a decrease of $5.9 million, or 15.5%, as compared to $38.3 million in the first quarter of 2021. Our net sales declined 11.5% on a constant dollar basis (see Non-GAAP Measures, below) and foreign exchange decreased GAAP net sales by $1.5 million, mostly due to the decline of the Korean Won and Japanese Yen. During the quarter, supply chain constraints impacted our sales. As a result, we had to postpone planned promotions as we were sourcing and shipping product. We deferred revenue of orders shipped but not received by customers, in particular in our Asia Pacific market. In Hong Kong, we have deferred $0.9 million revenue for orders shipped but not received by customers. The number of product fulfilled orders decreased by 6.0% to 189,700 for the three months ended March 31, 2022, as compared to 201,729 during the same period in 2021.

First quarter operating income for 2022 was less than $0.1 million as compared to $2.8 million for the first quarter of 2021.

Net income was $0.1 million, or $0.06 per diluted share, for the first quarter of 2022, as compared to net income of $2.2 million, or $1.04 per diluted share, for the first quarter of 2021.

For the three months ended March 31, 2022, overall selling and administrative expenses decreased by $0.2 million to $6.9 million, as compared to $7.1 million for the same period in 2021. The decrease in selling and administrative expenses consisted of a $0.1 million decrease in marketing costs and a $0.1 million decrease in contract labor costs.

For the three months ended March 31, 2022, other operating costs decreased by $0.2 million to $4.9 million, as compared to $5.1 million for the same period in 2021. The decrease in operating costs was primarily due to a $0.2 million decrease in legal and 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 products as of March 31, 2022 and 2021 were approximately 157,000 and 187,000, respectively. Recruitment of new independent associates and preferred customers decreased by 5.1% to 18,542 in the first quarter of 2022 as compared to 19,538 in the first quarter of 2021.

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, the availability and effectiveness of vaccines on a widespread basis, the impact of any mutations of the COVID-19 virus, the current conflict between Russia and Ukraine, which could adversely affect our business in certain regions, the impact of inflation, disruptions in the supply chain, 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)







March 31, 2022

December 31,
ASSETS

(unaudited)

2021
Cash and cash equivalents

$
23,359


$
24,185

Restricted cash


944



944

Accounts receivable, net of allowance of $991 and $987 in 2022 and 2021, respectively


91



90

Income tax receivable


385



342

Inventories, net


12,591



12,020

Prepaid expenses and other current assets


3,798



2,888

Deferred commissions


3,103



2,369

Total current assets


44,271



42,838

Property and equipment, net


2,591



2,882

Construction in progress


1,507



1,357

Long-term restricted cash


503



503

Other assets


9,528



9,220

Deferred tax assets, net


2,740



2,825

Total assets

$
61,140


$
59,625

LIABILITIES AND SHAREHOLDERS’ EQUITY













Current portion of finance leases

$
60


$
68

Accounts payable


5,122



3,969

Accrued expenses


8,407



9,224

Commissions and incentives payable


9,629



9,611

Taxes payable


1,756



2,154

Current notes payable


608



205

Deferred revenue


6,617



4,867

Total current liabilities


32,199



30,098

Finance leases, excluding current portion


69



66

Deferred tax liabilities


—



—

Long-term notes payable


—



—

Other long-term liabilities


5,142



5,049

Total liabilities


37,410



35,213






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 1,949,716 shares outstanding as of March 31, 2022 and 2,742,857 shares issued and 1,940,687 shares outstanding as of December 31, 2021


—



—

Additional paid-in capital


33,359



33,277

Retained earnings


7,452



7,708

Accumulated other comprehensive income


1,669



2,342

Treasury stock, at average cost, 793,141 shares as of March 31, 2022 and 802,170 shares as of December 31, 2021


(18,750
)


(18,915
)
Total shareholders’ equity


23,730



24,412

Total liabilities and shareholders’ equity

$
61,140


$
59,625

MANNATECH, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share information)





Three Months Ended


March 31,


2022

2021
Net sales

$
32,384


$
38,319

Cost of sales


7,091



7,222

Gross profit


25,293



31,097

Operating expenses:




Commissions and incentives


13,108



15,598

Selling and administrative expenses


6,909



7,111

Depreciation and amortization expense


332



510

Other operating costs


4,909



5,089

Total operating expenses


25,258



28,308

Income from operations


35



2,789

Interest income, net


15



22

Other income (expense), net


85



(282
)
Income before income taxes


135



2,529

Income tax (provision)


(1
)


(335
)
Net income

$
134


$
2,194

Earnings per common share:




Basic

$
0.07


$
1.06

Diluted

$
0.06


$
1.04

Weighted-average common shares outstanding:




Basic


1,947



2,071

Diluted


2,074



2,116

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 2022 constant dollar net sales, gross profit and income from operations to our GAAP net sales, gross profit and income from operations.





March 31,


Three-month period ended ( in millions, except percentages)

March 31, 2022

2021

Constant $ Change


GAAP

Non-GAAP

GAAP






Measure:

Measure:

Measure:






Total $

Constant $

Total $

Dollar

Percent
Net Sales

$
32.4

$
33.9

$
38.3

$
(4.4
)

(11.5
)%
Product


30.8


32.2


35.9


(3.7
)

(10.3
)%
Pack and associate fees


1.3


1.4


2.2


(0.8
)

(36.4
)%
Other


0.3


0.3


0.2


0.1


50.0
%
Gross profit


25.3


26.4


31.1


(4.7
)

(15.1
)%
Income from operations


—


0.2


2.8


(2.6
)

(92.9
)%

View source version on businesswire.com: https://www.businesswire.com/news/home/20220512006112/en/

Donna Giordano
Manager, Executive Office Administration
972-471-6512
ir@mannatech.com
www.mannatech.com

Company Name:	Mannatech Incorporated
Stock Symbol:	MTEX
Market:	NASDAQ
Website:	mannatech.com

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