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 third quarter of 2024.
Third Quarter Highlights
- Net sales for the quarter ended September 30, 2024 were $31.7
million, as compared to $32.6 million for the same period in 2023,
a decrease of $0.9 million, or 2.5%. On a Constant dollar basis
(see Non-GAAP Measures, below) our net sales decreased $0.4
million, or 1.2%, and unfavorable foreign exchange caused a $0.5
million decrease in GAAP net sales as compared to the same period
in 2023. The decline in revenues was principally due to slowing
demand in Asia due to weakened economic conditions, relative to the
prior year.
- Gross profit as a percentage of net sales decreased to 74.5%
for the three months ended September 30, 2024, as compared to 79.6%
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 sales promotions on products thereby reducing our gross
profit margin.
- Commission expenses for the three months ended September 30,
2024 decreased by 2.0%, or $0.2 million, to $12.2 million, as
compared to $12.4 million for the same period in 2023. Commissions
are earned from sales. Commission expenses in dollar terms
decreased during the three months ended September 30, 2024
primarily due to a decline in our sales. For the three months ended
September 30, 2024, commissions as a percentage of net sales
increased to 38.3% from 38.2% for the same period in 2023. The
increase in commissions as a percentage of sales was due to sales
promotions during the period.
- For the three months ended September 30, 2024, selling and
administrative expenses decreased by $2.8 million, or 21.8%, to
$9.8 million, as compared to $12.6 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 $0.6 million
decrease in marketing costs, a $0.6 million decrease to bad debt, a
$0.3 million decrease in professional and consulting fees, a $0.2
million decrease in office expenses, $0.1 million decrease in
depreciation expense and a $0.1 million decrease in travel and
entertainment costs. Selling and administrative expenses, as a
percentage of net sales, for the three months ended September 30,
2024 decreased to 31.0% from 38.6% for the same period in
2023.
- Income from operations was $0.9 million for the three months
ended September 30, 2024 as compared to $0.2 million in the same
period last year. The increase in operating income in 2024, was
primarily a result of decreases in the company’s selling and
administrative expenses as described in the previous
paragraph.
- Income tax benefit was $0.4 million for the three months ended
September 30, 2024 as compared to income tax expense of $0.5
million in the same period last year.
- Net loss was $0.3 million for the three months ended September
30, 2024, or $0.17 per diluted share, as compared to net income of
$18,000, or $0.01 per diluted share for the three months ended
September 30, 2023.
- As of September 30, 2024, the company's cash and cash
equivalents increased 57.2%, or $4.4 million, to $12.2 million from
$7.7 million as of December 31, 2023. Operations provided $2.5
million cash for the nine months ended September 30, 2024 compared
to a use of $1.0 million cash for the same period in 2023.
Acquisition of property and equipment decreased for the nine months
ended September 30, 2024, to $0.4 million as compared to $0.5
million for the same period in 2023. Financing activities provided
$2.9 million of cash during the nine months ended September 30,
2024. This increase consisted of $3.6 million in gross loan
proceeds and use of $0.7 million for the repayment of finance lease
obligations and other long-term liabilities. For the nine months
ended September 30, 2023, $1.6 million was used related to payments
for dividends of $0.7 million, repurchase of common stock of $0.2
million and $0.7 million for the repayment of lease obligations and
other long-term liabilities. Additionally, foreign exchange effects
decreased the Company's cash position by $0.6 million in the nine
months ended September 30, 2024, as compared to a $2.3 million
effect 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 September 30, 2024 was approximately 136,000, as
compared to 146,000 in the same period of 2023. Recruiting new
associates and preferred customers decreased 28.1% in the third
quarter of 2024 as compared to the third quarter of 2023.
Landen Fredrick, President and CEO, noted that, "Although the
third quarter of 2024 provided our highest revenue quarter in 2024,
we continued to battle demand weakness in the third quarter across
our global operations, with the most significant impact in the
Asia/Pacific region due to ongoing economic challenges. Despite
anticipating continued economic difficulties for the rest of 2024,
we are committed to increasing our revenue by growing our team of
sales associates and expanding our base of preferred customers, all
while keeping costs under strict 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 and
per share information)
ASSETS
September 30, 2024
(unaudited)
December 31, 2023
Cash and cash equivalents
$
12,150
$
7,731
Restricted cash
939
938
Accounts receivable, net of allowance of
$932 and $1,278
22
91
Income tax receivable
414
465
Inventories, net
11,660
14,535
Prepaid expenses and other current
assets
2,291
1,774
Deferred commissions
1,224
2,130
Total current assets
28,700
27,664
Property and equipment, net
3,118
4,147
Operating lease right-of-use assets
2,532
3,315
Other assets
3,674
3,751
Deferred tax assets, net
1,913
1,611
Long-term restricted cash
635
718
Total assets
$
40,572
$
41,206
LIABILITIES AND SHAREHOLDERS’
EQUITY
Commissions and incentives payable
$
8,203
$
8,175
Accrued expenses
4,803
5,118
Deferred revenue
3,018
4,786
Accounts payable
3,580
4,010
Taxes payable
1,361
1,521
Current notes payable
208
240
Current portion of finance lease
liabilities
271
269
Deferred tax liabilities, net
—
—
Total current liabilities
22,952
25,780
Long-term notes payable
3,600
—
Operating lease liabilities, excluding
current portion
1,787
2,582
Other long-term liabilities
1,483
1,404
Finance lease liabilities, excluding
current portion
751
956
Total liabilities
30,573
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 September 30, 2024 and 2,742,857 shares
issued and 1,860,154 shares outstanding as of December 31, 2023
—
—
Additional paid-in capital
33,005
33,309
Accumulated deficit
(1,073
)
(1,301
)
Accumulated other comprehensive loss
(1,997
)
(1,015
)
Treasury stock, at average cost, 858,043
shares as of September 30, 2024 and 882,703 shares as of December
31, 2023
(19,936
)
(20,509
)
Total shareholders’ equity
9,999
10,484
Total liabilities and shareholders’
equity
$
40,572
$
41,206
MANNATECH, INCORPORATED AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS - (UNAUDITED)
(in thousands, except per share
information)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Net sales
$
31,725
$
32,553
$
88,858
$
99,261
Cost of sales
8,105
6,625
20,763
21,042
Gross profit
23,620
25,928
68,095
78,219
Operating expenses:
Commissions and incentives
12,893
13,178
36,237
40,200
Selling and administrative expenses
9,840
12,578
31,293
38,088
Total operating expenses
22,733
25,756
67,530
78,288
Income (loss) from operations
887
172
565
(69
)
Interest expense, net
(109
)
(17
)
(196
)
(3
)
Other (expense) income, net
(1,495
)
320
495
803
(Loss) income before income
taxes
(717
)
475
864
731
Income tax benefit (expense)
389
(457
)
(636
)
(1,214
)
Net (loss) income
$
(328
)
$
18
$
228
$
(483
)
(Loss) income per common share:
Basic
$
(0.17
)
$
0.01
$
0.12
$
(0.26
)
Diluted
$
(0.17
)
$
0.01
$
0.12
$
(0.26
)
Weighted-average common shares
outstanding:
Basic
1,885
1,863
1,885
1,868
Diluted
1,885
1,863
1,885
1,868
Net sales by region for the three and nine months ended
September 30, 2024 and 2023 were as follows (in millions, except
percentages):
Three Months Ended
September 30,
Nine Months Ended
September 30,
Region
2024
2023
2024
2023
Americas
$
10.6
33.4
%
$
10.7
32.8
%
$
30.4
34.2
%
$
31.8
32.0
%
Asia/Pacific
18.6
58.7
%
19.6
60.1
%
51.6
58.0
%
60.0
60.4
%
EMEA
2.5
7.9
%
2.3
7.1
%
6.9
7.8
%
7.5
7.6
%
Total sales
$
31.7
100.0
%
$
32.6
100.0
%
$
88.9
100.0
%
$
99.3
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 third 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
September 30, 2024
September 30, 2023
Constant $ Change
GAAP
Measure:
Total $
Translation Adjustment
Non-GAAP
Measure:
Constant $
GAAP
Measure:
Total $
Dollar
Percent
Net sales
$
31.7
$
0.5
$
32.2
$
32.6
$
(0.4
)
(1.2
)%
Gross profit
23.6
0.4
24.0
25.9
(1.9
)
(7.3
)%
Income from operations
0.9
0.1
1.0
0.2
0.8
400.0
%
Nine-month period ended
September 30, 2024
September 30, 2023
Constant $ Change
GAAP
Measure:
Total $
Translation Adjustment
Non-GAAP
Measure:
Constant $
GAAP
Measure:
Total $
Dollar
Percent
Net sales
$
88.9
$
1.9
$
90.8
$
99.3
$
(8.5
)
(8.6
)%
Gross profit
68.1
1.5
69.6
78.2
(8.6
)
(11.0
)%
Income (loss) from operations
0.6
$
0.5
1.1
(0.1
)
1.2
(1,200.0
)%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241112722609/en/
Erin K. Barta General Counsel and Corporate Secretary
214-724-3378 ir@mannatech.com www.mannatech.com
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