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Mannatech Reports Third Quarter End 2022 Financial Results

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 third quarter of 2022.

Third Quarter End Results

Third quarter net sales for 2022 were $35.5 million, a decrease of $3.9 million, or 10.0%, as compared to $39.4 million in the third quarter of 2021. Our net sales declined 1.3% on a constant dollar basis (see Non-GAAP Measures, below) as foreign exchange decreased GAAP net sales by $3.4 million, mostly due to the decline of the Korean Won and Japanese Yen.

Third quarter operating income for 2022 was $1.4 million as compared to $3.3 million for the third quarter of 2021.

Net income was $1.2 million, or $0.61 per diluted share, for the third quarter of 2022, as compared to net income of $2.9 million, or $1.44 per diluted share, for the third quarter of 2021.

For the three months ended September 30, 2022, overall selling and administrative expenses decreased by $0.5 million to $6.7 million, as compared to $7.2 million for the same period in 2021. The decrease in selling and administrative expenses consisted of a $0.7 million decrease in payroll costs, and a $0.1 million decrease in warehouse costs, which was partially offset by a $0.3 million increase in marketing costs.

For the three months ended September 30, 2022, other operating costs increased by $0.1 million to $5.1 million, as compared to $5.0 million for the same period in 2021. The increase in operating costs was primarily due to a $0.1 million increase in travel and entertainment.

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 September 30, 2022 and 2021 were approximately 150,000 and 166,000, respectively. Recruitment of new independent associates and preferred customers decreased by 23.0% to 19,273 in the third quarter of 2022 as compared to 25,036 in the third quarter of 2021.

Year-to-date Third Quarter Results

For the nine months ended September 30, 2022, net sales were $102.9 million, a decrease of $17.4 million, or 14.5%, as compared to $120.3 million for the same period in 2021. Our net sales declined 8.2% on a constant dollar basis (see Non-GAAP Measures, below) as foreign exchange decreased GAAP net sales by $7.5 million mostly due to the decline of the Korean Won and Japanese Yen. Income from operations decreased to $2.2 million for the nine months ended September 30, 2022, from $8.1 million in the same period in 2021.

Net income was $2.0 million, or $1.01 per diluted share, for the nine months ended September 30, 2022, as compared to net income of $7.3 million, or $3.47 per diluted share, for the same period in 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)

 

ASSETS

September 30,

2022

(unaudited)

 

December 31,

2021

Cash and cash equivalents

$

15,092

 

 

$

24,185

 

Restricted cash

 

944

 

 

 

944

 

Accounts receivable, net of allowance of $899 and $987 in 2022 and 2021, respectively

 

270

 

 

 

90

 

Income tax receivable

 

368

 

 

 

342

 

Inventories, net

 

15,251

 

 

 

12,020

 

Prepaid expenses and other current assets

 

1,943

 

 

 

2,888

 

Deferred commissions

 

2,574

 

 

 

2,369

 

Total current assets

 

36,442

 

 

 

42,838

 

Property and equipment, net

 

3,613

 

 

 

2,882

 

Construction in progress

 

283

 

 

 

1,357

 

Long-term restricted cash

 

435

 

 

 

503

 

Other assets

 

8,757

 

 

 

9,220

 

Deferred tax assets, net

 

2,970

 

 

 

2,825

 

Total assets

$

52,500

 

 

$

59,625

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current portion of finance leases

$

65

 

 

$

68

 

Accounts payable

 

4,581

 

 

 

3,969

 

Accrued expenses

 

7,504

 

 

 

9,224

 

Commissions and incentives payable

 

8,402

 

 

 

9,611

 

Taxes payable

 

1,908

 

 

 

2,154

 

Current notes payable

 

323

 

 

 

205

 

Deferred revenue

 

5,952

 

 

 

4,867

 

Total current liabilities

 

28,735

 

 

 

30,098

 

Finance leases, excluding current portion

 

102

 

 

 

66

 

Deferred tax liabilities

 

 

 

 

 

Long-term notes payable

 

 

 

 

 

Other long-term liabilities

 

5,052

 

 

 

5,049

 

Total liabilities

 

33,889

 

 

 

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 1,874,930 shares outstanding as of September 30, 2022 and 2,742,857 shares issued and 1,940,687 shares outstanding as of December 31, 2021

 

 

 

 

 

Additional paid-in capital

 

33,418

 

 

 

33,277

 

Retained earnings

 

8,567

 

 

 

7,708

 

Accumulated other comprehensive (loss) income

 

(3,053

)

 

 

2,342

 

Treasury stock, at average cost, 867,927 shares as of September 30, 2022 and 802,170 shares as of December 31, 2021

 

(20,321

)

 

 

(18,915

)

Total shareholders’ equity

 

18,611

 

 

 

24,412

 

Total liabilities and shareholders’ equity

$

52,500

 

 

$

59,625

 

MANNATECH, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share information)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Net sales

$

35,513

 

 

$

39,446

 

 

$

102,873

 

 

$

120,269

 

Cost of sales

 

7,416

 

 

 

7,903

 

 

 

22,427

 

 

 

25,251

 

Gross profit

 

28,097

 

 

 

31,543

 

 

 

80,446

 

 

 

95,018

 

Operating expenses:

 

 

 

 

 

 

 

Commissions and incentives

 

14,242

 

 

 

15,731

 

 

 

41,487

 

 

 

48,227

 

Selling and administrative expenses

 

6,656

 

 

 

7,156

 

 

 

20,479

 

 

 

21,838

 

Depreciation and amortization expense

 

716

 

 

 

408

 

 

 

1,349

 

 

 

1,360

 

Other operating costs

 

5,126

 

 

 

4,962

 

 

 

14,886

 

 

 

15,500

 

Total operating expenses

 

26,740

 

 

 

28,257

 

 

 

78,201

 

 

 

86,925

 

Income from operations

 

1,357

 

 

 

3,286

 

 

 

2,245

 

 

 

8,093

 

Interest income, net

 

19

 

 

 

15

 

 

 

57

 

 

 

44

 

Other income (expense), net

 

287

 

 

 

(19

)

 

 

288

 

 

 

(149

)

Income before income taxes

 

1,663

 

 

 

3,282

 

 

 

2,590

 

 

 

7,988

 

Income tax (provision)

 

(472

)

 

 

(352

)

 

 

(571

)

 

 

(735

)

Net income

$

1,191

 

 

$

2,930

 

 

$

2,019

 

 

$

7,253

 

Earnings per common share:

 

 

 

 

 

 

 

Basic

$

0.62

 

 

$

1.54

 

 

$

1.05

 

 

$

3.63

 

Diluted

$

0.61

 

 

$

1.44

 

 

$

1.01

 

 

$

3.47

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

1,906

 

 

 

1,903

 

 

 

1,932

 

 

 

2,010

 

Diluted

 

1,949

 

 

 

2,031

 

 

 

2,017

 

 

 

2,095

 

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 third quarter 2022 and year-to-date constant dollar net sales, gross profit and income from operations to our GAAP net sales, gross profit and income from operations.

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

September 30, 2022

 

September 30,

2021

 

 

Constant $ Change

 

GAAP

Measure:

Total $

 

Non-GAAP

Measure:

Constant $

 

GAAP

Measure:

Total $

 

Dollar

 

Percent

Net sales

$

35.5

 

$

38.9

 

$

39.4

 

$

(0.5

)

 

(1.3

)%

Product

 

33.6

 

 

36.8

 

 

36.9

 

 

(0.1

)

 

(0.3

)%

Pack sales and associate fees

 

1.7

 

 

1.9

 

 

2.4

 

 

(0.5

)

 

(20.8

)%

Other

 

0.2

 

 

0.2

 

 

0.1

 

 

0.1

 

 

100.0

%

Gross profit

 

28.1

 

 

30.9

 

 

31.5

 

 

(0.6

)

 

(1.9

)%

Income from operations

 

1.4

 

 

2.2

 

 

3.3

 

 

(1.1

)

 

(33.3

)%

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

September 30, 2022

 

September 30,

2021

 

Constant $ Change

 

GAAP

Measure:

Total $

 

Non-GAAP

Measure:

Constant $

 

GAAP

Measure:

Total $

 

Dollar

 

Percent

Net sales

$

102.9

 

$

110.4

 

$

120.3

 

$

(9.9

)

 

(8.2

)%

Product

 

97.5

 

 

104.5

 

 

113.2

 

 

(8.7

)

 

(7.7

)%

Pack sales and associate fees

 

4.8

 

 

5.3

 

 

6.5

 

 

(1.2

)

 

(18.5

)%

Other

 

0.6

 

 

0.7

 

 

0.6

 

 

0.1

 

 

16.7

%

Gross profit

 

80.4

 

 

86.7

 

 

95.0

 

 

(8.3

)

 

(8.7

)%

Income from operations

 

2.2

 

 

4.1

 

 

8.1

 

 

(4.0

)

 

(49.4

)%

 

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