Mannatech Reports Fourth Quarter 2015 Financial Results

COPPELL, Texas--()--Mannatech, Incorporated (NASDAQ: MTEX), the pioneer of glyconutrition, leading innovator of naturally-sourced supplements based on Real Food Technology® solutions, and creator of the M5MSM (Mission 5 MillionSM) social entrepreneurial movement, today announced financial results for its fourth quarter 2015.

Fourth Quarter Results

Fourth quarter net sales for 2015 were $45.3 million, an increase of 0.2% as compared to $45.2 million in the fourth quarter of 2014. The net sales comparison for the quarter was affected by foreign exchange rates and new product launches.

Income from operations increased 7.7% to $2.8 million for the fourth quarter 2015, from $2.6 million in the same period in 2014. Net income was $1.5 million, or $0.56 per diluted share, for the fourth quarter 2015, as compared to $1.9 million, or $0.68 per diluted share, for the fourth quarter 2014.

For the three months ended December 31, 2015, Mannatech’s operations outside of North America accounted for approximately 58.9% of Mannatech’s consolidated net sales.

For the three months ended December 31, 2015, Asia/Pacific net sales increased by $1.6 million, or 7.4%, to $23.1 million, as compared to $21.5 million for the same period in 2014. Net sales comparisons for the fourth quarter were affected by the impact of fluctuations in foreign currency exchange rates. In constant dollars (a non-GAAP financial measure), fourth quarter 2015 net sales would have been $1.8 million higher, or $24.9 million. The currency impact was primarily due to depreciation of the Korean Won, the Japanese Yen and the Australian Dollar.

For the three months ended December 31, 2015, net sales for Europe, the Middle East and Africa (“EMEA”) decreased by $0.9 million, or 20.0%, to $3.6 million, as compared to $4.5 million for the same period in 2014. In constant dollars (a non-GAAP financial measure), net sales for the fourth quarter 2015 would have been $4.4 million. The currency impact was primarily due to the depreciation of the South African Rand and Euro.

North American net sales decreased by $0.6 million, or 3.1%, to $18.6 million, as compared to $19.2 million for the same period in 2014. The decreases were due to declines in associates and members holding active positions in our network.

The approximate number of new and continuing independent associate and member positions held by individuals in Mannatech’s network and associated with purchases of our packs or products as of December 31, 2015 and 2014 were approximately 219,000 and 230,000, respectively. Recruiting decreased 2.0% in the fourth quarter of 2015 as compared to the fourth quarter of 2014. The number of new independent associate and member positions in the company’s network for the fourth quarter of 2015 was approximately 21,400, as compared to 21,900 in 2014.

Year End Results

Overall net sales for the year ended December 31, 2015 decreased $9.8 million, or 5.2%, compared to 2014. During 2015, fluctuations in foreign currency exchange rates had an overall $11.8 million unfavorable impact on our net sales. Net income for 2015 was $5.8 million, or $2.14 per diluted share, as compared to $6.5 million, or $2.40 per diluted share, for 2014.

For the year ended December 31, 2015, Mannatech’s operations outside of North America accounted for approximately 59.3% of Mannatech’s consolidated net sales whereas in the same period in 2014, our operations outside of North America accounted for 57.5% of our consolidated net sales.

For the year ended December 31, 2015, Asia/Pacific net sales decreased by $1.0 million, or 1.1%, to $91.4 million, as compared to $92.4 million in 2014. Net sales comparisons for the year were affected by the impact of fluctuations in foreign currency exchange rates. In constant dollars (a non-GAAP financial measure), sales would have been $8.9 million higher, or $100.3 million. The currency impact was primarily due to depreciation of the Korean Won, the Japanese Yen and the Australian Dollar.

For the year ended December 31, 2015, EMEA net sales decreased by $1.3 million, or 7.7%, to $15.6 million, as compared to $16.9 million, for the same period in 2014. In constant dollars (a non-GAAP financial measure), net sales for the year would have been $2.7 million higher, or $18.3 million. The currency impact was primarily due to the depreciation of the South African Rand and Euro.

For the year ended December 31, 2015, North American net sales decreased by $7.5 million, or 9.3%, to $73.3 million, as compared to $80.8 million in 2014. The decreases were due to declines in associates and members holding active positions in our network.

Mannatech’s cash and cash equivalents increased by approximately $4.0 million to a balance of $32.0 million at December 31, 2015, as compared to $28.0 million at December 31, 2014. Also, total shareholders’ equity increased by $7.2 million to a balance of $38.6 million, as compared to $31.4 million at December 31, 2014.

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 currency 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.

Conference Call

Mannatech will host a conference call to discuss the quarter’s results with investors on Wednesday, March 16, 2016 at 9 a.m. CT, 10 a.m. ET. The live call will be webcast and can be accessed on Mannatech’s website at http://ir.mannatech.com.

For those unable to listen to the live broadcast, a replay will be available shortly after the call. The toll-free replay number is (855) 859-2056 (International (404) 537-3406); the Conference ID to access the call is 56400213.

Individuals interested in Mannatech’s products or in exploring its business opportunity can learn more at Mannatech.com.

       
 
CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

 

December 31,
2015

December 31,
2014

ASSETS
Cash and cash equivalents $ 31,994 $ 27,999
Restricted cash 1,511 1,511
Accounts receivable, net 369 504
Income tax receivable 4 4
Inventories, net 9,199 10,591
Prepaid expenses and other current assets 2,905 3,069
Deferred commissions 3,443 4,544
Deferred tax assets, net   460     1,141  
Total current assets 49,885 49,363
Property and equipment, net 3,848 2,481
Construction in progress 839 1,622
Long-term restricted cash 6,586 7,045
Other assets 3,759 3,567
Long-term deferred tax assets, net   3,725     3,320  
Total assets $ 68,642   $ 67,398  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current portion of capital leases $ 447 $ 901
Accounts payable 2,683 4,252
Accrued expenses 6,221 6,356
Commissions and incentives payable 6,818 7,908
Taxes payable 736 2,578
Current deferred tax liability 84 123
Current notes payable 713
Deferred revenue   8,677     10,890  
Total current liabilities 26,379 33,008
Capital leases, excluding current portion 612 852
Long-term deferred tax liabilities 24 26
Long-term notes payable 1,069
Other long-term liabilities   1,994     2,136  
Total liabilities 30,078 36,022
 
Commitments and contingencies
 
Shareholders’ equity:
Preferred stock
Common stock
Additional paid-in capital 40,494 40,672
Retained earnings 8,589 2,750
Accumulated other comprehensive income (loss) 686 (109 )
Treasury stock, at average cost, 91,894 shares as of December 31, 2015 and 97,895 shares as of December 31, 2014, respectively   (11,205 )   (11,937 )
Total shareholders’ equity   38,564     31,376  
Total liabilities and shareholders’ equity $ 68,642   $ 67,398  
   
 
CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share information)

 
For the years ended December 31,
2015     2014
Net sales $ 180,267 $ 190,081
Cost of sales   34,102     38,350  
Gross profit 146,165 151,731
 
Operating expenses:
Commissions and incentives 72,956 75,240
Selling and administrative expenses 34,458 36,193
Depreciation and amortization 1,793 1,608
Other operating costs   24,814     25,948  
Total operating expenses 134,021 138,989
 
Income from operations 12,144 12,742
Interest income 210 121
Other expense, net   (4,155 )   (3,042 )
Income before income taxes 8,199 9,821
 
Income tax provision   (2,360 )   (3,325 )
Net income $ 5,839   $ 6,496  
 

Earnings per common share:

Basic $ 2.18   $ 2.44  
Diluted $ 2.14   $ 2.40  
 

Weighted-average common shares outstanding:

Basic   2,680     2,663  
Diluted   2,728     2,706  
 

Non-GAAP Financial Measures

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.

           
Three month period ended

December 31,
2015

   

December 31,
2014

 

 

Change

GAAP
Measure:
Total $

   

Non-GAAP
Measure:
Constant $

   

GAAP
Measure:
Total $

 

 

 

Dollar

   

 

Percent

Net Sales $ 45.3     $ 47.9 $ 45.2 $ 2.7     6.0 %
Product 37.2 39.3 37.6 1.7 4.5 %
Pack 6.8 7.3 6.0 1.3 21.7 %
Other 1.3 1.4 1.5 (0.1 ) (6.7 )%
Gross Profit 36.3 38.2 36.3 1.9 5.2 %
Income from Operations 2.8 3.0 2.6 0.4 15.4 %
 
Twelve month period ended

December 31,
2015

   

December 31,
2014

 

 

Change

GAAP
Measure:
Total $

   

Non-GAAP
Measure:
Constant $

   

GAAP
Measure:
Total $

 

 

 

Dollar

   

 

Percent

Net Sales $ 180.3 $ 192.1 $ 190.1 $ 2.0 1.1 %
Product 143.1 152.2 155.3 (3.1 ) (2.0 )%
Pack 31.7 34.1 27.8 6.3 22.7 %
Other 5.5 5.8 7.0 (1.2 ) (17.1 )%
Gross Profit 146.2 155.5 151.7 3.8 2.5 %
Income from Operations 12.1 13.6 12.7 0.9 7.1 %
 

The approximate number of new and continuing positions held by independent associates and members who purchased our packs or products during the twelve months ended December 31 was as follows:

    2015     2014
New 96,000     43.8 % 108,000     47.0 %
Continuing 123,000 56.2 % 122,000 53.0 %
Total 219,000 100.0 % 230,000 100.0 %
 

About Mannatech

Mannatech, Incorporated, develops high-quality health, weight and fitness, and skin care products that are based on the solid foundation of nutritional science and development standards. Mannatech is dedicated to its platform of Social Entrepreneurship based on the foundation of promoting, aiding and optimizing nutrition where it is needed most around the world. Mannatech’s proprietary products are available through independent sales associates around the globe including North America/South America (United States, Canada, Colombia and Mexico), Asia/Pacific (Australia, New Zealand, Japan, Taiwan, Singapore, the Republic of Korea, and Hong Kong), and EMEA (Austria, Denmark, Germany, Norway, Sweden, the Netherlands, the United Kingdom, Estonia, Finland, the Republic of Ireland, Czech Republic, South Africa, and the Republic of Namibia). For more information, visit Mannatech.com.

Please Note: 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 “anticipate,” “believe,” “will,” “intend” 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.

Contacts

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

Release Summary

Mannatech Reports Its Fourth Quarter and Year-End Results

Contacts

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