Mannatech Reports Second Quarter End 2021 Financial Results

FLOWER MOUND, Texas--()--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 second quarter of 2021.

Second Quarter End Results

Second quarter net sales for 2021 were $42.5 million, an increase of $4.9 million, or 12.9%, as compared to $37.6 million in the second quarter of 2020. Income from operations increased to $2.0 million for the second quarter of 2021, from $1.1 million in the same period in 2020.

Net income was $2.1 million, or $0.99 per diluted share, for the second quarter of 2021, as compared to net income of $1.1 million, or $0.47 per diluted share, for the second quarter of 2020.

For the three months ended June 30, 2021, overall selling and administrative expenses increased by $0.4 million to $7.6 million, as compared to $7.2 million for the same period in 2020. The increase in selling and administrative expenses consisted of a $0.3 million increase in payroll costs and a $0.1 million increase in distribution and warehouse costs.

For the three months ended June 30, 2021, other operating costs increased by $0.6 million, or 13.6%, to $5.4 million, as compared to $4.8 million for the same period in 2020. The increase in operating costs was primarily due to a $0.2 million increase in consulting fees, a $0.2 million increase in credit card fees, a $0.1 million increase in travel and entertainment costs and a $0.1 million increase in office expenses.

For the three months ended June 30, 2021, provision for taxes was $48,000, or an effective rate of 2.2%. For the three months ended June 30, 2020, provision for taxes was $0.2 million, or an effective rate of 12.3%. The effective tax rate for the three months ended June 30, 2021 and 2020 was determined based on the estimated annual effective income tax rate.

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 June 30, 2021 and 2020 were approximately 176,000 and 172,000, respectively. Recruitment of new independent associates and preferred customers increased by 13.0% to 21,527 in the second quarter of 2021 as compared to 19,047 in the second quarter of 2020.

Year-to-date Second Quarter Results

For the six months ended June 30, 2021, net sales were $80.8 million, an increase of $6.5 million, or 8.8%, as compared to $74.3 million for the same period in 2020. Income from operations increased to $4.8 million for the six months ended June 30, 2021, from $3.1 million in the same period in 2020.

Net income was $4.3 million, or $2.03 per diluted share, for the six months ended June 30, 2021, as compared to net income of $3.9 million, or $1.62 per diluted share, for the same period in 2020.

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, 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

June 30, 2021 (unaudited)

 

December 31, 2020

Cash and cash equivalents

$

25,967

 

 

$

22,207

 

Restricted cash

944

 

 

944

 

Accounts receivable, net of allowance of $980 and $817 in 2021 and 2020, respectively

231

 

 

186

 

Income tax receivable

302

 

 

1,008

 

Inventories, net

13,492

 

 

12,827

 

Prepaid expenses and other current assets

3,288

 

 

2,962

 

Deferred commissions

2,338

 

 

2,343

 

Total current assets

46,562

 

 

42,477

 

Property and equipment, net

3,512

 

 

4,494

 

Construction in progress

1,117

 

 

864

 

Long-term restricted cash

1,179

 

 

4,346

 

Other assets

10,393

 

 

11,977

 

Long-term deferred tax assets, net

1,091

 

 

1,178

 

Total assets

$

63,854

 

 

$

65,336

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current portion of finance leases

$

77

 

 

$

76

 

Accounts payable

5,108

 

 

4,797

 

Accrued expenses

8,651

 

 

8,691

 

Commissions and incentives payable

11,657

 

 

10,998

 

Taxes payable

1,906

 

 

1,400

 

Current notes payable

455

 

 

553

 

Deferred revenue

6,080

 

 

5,472

 

Total current liabilities

33,934

 

 

31,987

 

Finance leases, excluding current portion

95

 

 

129

 

Deferred tax liabilities

3

 

 

3

 

Long-term notes payable

 

 

 

Other long-term liabilities

6,090

 

 

7,245

 

Total liabilities

40,122

 

 

39,364

 

 

 

 

 

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 1,892,646 shares outstanding as of June 30, 2021 and 2,742,857 shares issued and 2,071,081 shares outstanding as of December 31, 2020

 

 

 

Additional paid-in capital

33,758

 

 

33,795

 

Retained earnings

5,873

 

 

2,213

 

Accumulated other comprehensive income

3,866

 

 

5,150

 

Treasury stock, at average cost, 850,211 shares as of June 30, 2021 and 671,776 shares as of December 31, 2020

(19,765

)

 

(15,186

)

Total shareholders’ equity

23,732

 

 

25,972

 

Total liabilities and shareholders’ equity

$

63,854

 

 

$

65,336

 

 

MANNATECH, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share information)

 

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

2021

 

2020

 

2021

 

2020

Net sales

$

42,504

 

 

$

37,647

 

 

$

80,823

 

 

$

74,252

 

Cost of sales

10,126

 

 

8,708

 

 

17,348

 

 

15,716

 

Gross profit

32,378

 

 

28,939

 

 

63,475

 

 

58,536

 

Operating expenses:

 

 

 

 

 

 

 

Commissions and incentives

16,898

 

 

15,330

 

 

32,496

 

 

30,219

 

Selling and administrative expenses

7,571

 

 

7,165

 

 

14,682

 

 

14,020

 

Depreciation and amortization expense

442

 

 

537

 

 

952

 

 

1,057

 

Other operating costs

5,449

 

 

4,797

 

 

10,538

 

 

10,118

 

Total operating expenses

30,360

 

 

27,829

 

 

58,668

 

 

55,414

 

Income from operations

2,018

 

 

1,110

 

 

4,807

 

 

3,122

 

Interest income, net

7

 

 

13

 

 

29

 

 

63

 

Other income (expense), net

152

 

 

166

 

 

(130

)

 

(42

)

Income before income taxes

2,177

 

 

1,289

 

 

4,706

 

 

3,143

 

Income tax (provision) benefit

(48

)

 

(159

)

 

(383

)

 

775

 

Net income

$

2,129

 

 

$

1,130

 

 

$

4,323

 

 

$

3,918

 

Earnings per common share:

 

 

 

 

 

 

 

Basic

$

1.03

 

 

$

0.48

 

 

$

2.09

 

 

$

1.65

 

Diluted

$

0.99

 

 

$

0.47

 

 

$

2.03

 

 

$

1.62

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

2,060

 

 

2,370

 

 

2,065

 

 

2,380

 

Diluted

2,139

 

 

2,388

 

 

2,128

 

 

2,402

 

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 second quarter 2021 constant dollar net sales, gross profit and income from operations to our GAAP net sales, gross profit and income from operations.

 

June 30, 2021

 

June 30, 2020

 

 

Constant $ Change

 

GAAP
Measure:
Total $

 

Non-GAAP
Measure:
Constant $

 

GAAP
Measure:
Total $

 

Dollar

 

Percent

Net Sales

$

42.5

 

 

$

40.0

 

 

$

37.6

 

 

$

2.4

 

 

6.4

%

Product

40.4

 

 

38.0

 

 

37.0

 

 

1.0

 

 

2.7

%

Pack and associate fees

1.9

 

 

1.8

 

 

0.4

 

 

1.4

 

 

350.0

%

Other

0.2

 

 

0.2

 

 

0.2

 

 

 

 

%

Gross profit

32.4

 

 

30.5

 

 

28.9

 

 

1.6

 

 

5.5

%

Income from operations

2.0

 

 

1.6

 

 

1.1

 

 

0.5

 

 

45.5

%

 

Contacts

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

Release Summary

Mannatech Reports Second Quarter End 2021 Financial Results

Contacts

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