Business Wire | Nov 12, 2021 06:00AM EST

Mannatech Reports Third Quarter End 2021 Financial Results

Nov. 12, 2021

FLOWER MOUND, Texas--(BUSINESS WIRE)--Nov. 12, 2021--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 2021.

Third Quarter End Results

Third quarter net sales for 2021 were $39.4 million, an increase of $1.4 million, or 3.9%, as compared to $38.0 million in the third quarter of 2020. Income from operations increased to $3.3 million for the third quarter of 2021, from $1.4 million in the same period in 2020.

Net income was $2.9 million, or $1.44 per diluted share, for the third quarter of 2021, as compared to net income of $1.6 million, or $0.76 per diluted share, for the third quarter of 2020.

For the three months ended September 30, 2021, overall selling and administrative expenses increased by $0.5 million to $7.1 million, as compared to $6.6 million for the same period in 2020. The increase in selling and administrative expenses consisted of a $0.9 million increase in payroll costs, which was partially offset by a $0.3 million decrease in marketing costs and a $0.1 million decrease in contract labor.

For the three months ended September 30, 2021, other operating costs decreased by $0.1 million, or 2.0%, to $5.0 million, as compared to $5.1 million for the same period in 2020. The decrease in operating costs was primarily due to a $0.3 million increase in consulting fees, which was offset by a $0.2 million decrease in bad debt expense and a $0.2 million decrease in sales tax expenses resulting from less utilization of the loyalty program and a sales tax audit refund.

For the three months ended September 30, 2021, provision for taxes was $0.4 million, or an effective rate of 10.7%, which is different from the federal statutory rate due primarily to the Company taking the IRC 250 deduction and applying foreign tax credits. For the three months ended September 30, 2020, provision for taxes was $22,000, or an effective rate of 1.3%. The effective tax rate for the three months ended September 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 September 30, 2021 and 2020 were approximately 166,000 and 180,000, respectively. Recruitment of new independent associates and preferred customers decreased by 1.4% to 25,036 in the third quarter of 2021 as compared to 25,388 in the third quarter of 2020.

Year-to-date Third Quarter Results

For the nine months ended September 30, 2021, net sales were $120.3 million, an increase of $8.1 million, or 7.2%, as compared to $112.2 million for the same period in 2020. Income from operations increased to $8.1 million for the nine months ended September 30, 2021, from $4.5 million in the same period in 2020.

Net income was $7.3 million, or $3.47 per diluted share, for the nine months ended September 30, 2021, as compared to net income of $5.5 million, or $2.38 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)

September DecemberASSETS 30, 31, 2021 2020 (unaudited)

Cash and cash equivalents $ 27,132 $ 22,207

Restricted cash 944 944

Accounts receivable, net of allowance of $937 and $817 142 186 in 2021 and 2020, respectively

Income tax receivable 327 1,008

Inventories, net 13,853 12,827

Prepaid expenses and other current assets 2,870 2,962

Deferred commissions 2,297 2,343

Total current assets 47,565 42,477

Property and equipment, net 3,097 4,494

Construction in progress 1,356 864

Long-term restricted cash 1,127 4,346

Other assets 9,674 11,977

Long-term deferred tax assets, net 1,055 1,178

Total assets $ 63,874 $ 65,336

LIABILITIES AND SHAREHOLDERS' EQUITY

Current portion of finance leases $ 76 $ 76

Accounts payable 4,731 4,797

Accrued expenses 9,326 8,691

Commissions and incentives payable 10,770 10,998

Taxes payable 2,167 1,400

Current notes payable 211 553

Deferred revenue 5,809 5,472

Total current liabilities 33,090 31,987

Finance leases, excluding current portion 34 129

Deferred tax liabilities 3 3

Long-term notes payable - -

Other long-term liabilities 5,594 7,245

Total liabilities 38,721 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 sharesauthorized, 2,742,857 shares issued and 1,921,761shares outstanding as of September 30, 2021 and - - 2,742,857 shares issued and 2,071,081 sharesoutstanding as of December 31, 2020

Additional paid-in capital 33,449 33,795

Retained earnings 8,419 2,213

Accumulated other comprehensive income 2,612 5,150

Treasury stock, at average cost, 821,096 shares as ofSeptember 30, 2021 and 671,776 shares as of December (19,327 ) (15,186 )31, 2020

Total shareholders' equity 25,153 25,972

Total liabilities and shareholders' equity $ 63,874 $ 65,336

MANNATECH, INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share information)

Three Months Ended Nine Months Ended September 30, September 30,

2021 2020 2021 2020

Net sales $ 39,446 $ 37,966 $ 120,269 $ 112,218

Cost of sales 7,903 9,328 25,251 25,044

Gross profit 31,543 28,638 95,018 87,174

Operating expenses:

Commissions and incentives 15,731 15,089 48,227 45,308

Selling and administrative 7,156 6,639 21,838 20,659 expenses

Depreciation and amortization 408 468 1,360 1,525 expense

Other operating costs 4,962 5,062 15,500 15,180

Total operating expenses 28,257 27,258 86,925 82,672

Income from operations 3,286 1,380 8,093 4,502

Interest income, net 15 10 44 73

Other (expense) income, net (19 ) 248 (149 ) 206

Income before income taxes 3,282 1,638 7,988 4,781

Income tax (provision) benefit (352 ) (22 ) (735 ) 753

Net income $ 2,930 $ 1,616 $ 7,253 $ 5,534

Earnings per common share:

Basic $ 1.54 $ 0.77 $ 3.63 $ 2.42

Diluted $ 1.44 $ 0.76 $ 3.47 $ 2.38

Weighted-average common shares outstanding:

Basic 1,903 2,098 2,010 2,286

Diluted 2,031 2,135 2,095 2,312

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 tables below reconcile third quarter 2021 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 September (in millions, except September 30, 2021 30, percentages) 2020 Constant $ Change

GAAP Non-GAAP GAAP Measure: Measure: Measure: Dollar Percent Total $ Constant Total $ $

Net Sales $ 39.4 $ 38.5 $ 38.0 $ 0.5 1.3 %

Product 36.9 36.1 35.7 0.4 1.1 %

Pack and associate fees 2.4 2.3 2.0 0.3 15.0 %

Other 0.1 0.1 0.3 (0.2 ) (66.7 ) %

Gross profit 31.5 30.8 28.6 2.2 7.7 %

Income from operations 3.3 3.1 1.4 1.7 121.4 %

Nine-month period ended

(in millions, except percentages)

September 30, 2021

September 30, 2020

Constant $ Change

GAAP Measure: Total $

Non-GAAP Measure: Constant $

GAAP Measure: Total $

Dollar

Percent

Net Sales

$

120.3

$

115.4

$

112.2

$

3.2

2.9

%

Product

113.2

108.7

108.7

-

-

%

Pack sales and associate fees

6.5

6.1

2.8

3.3

117.9

%

Other

0.6

0.5

0.7

(0.2

)

(28.6

)

%

Gross Profit

95.0

91.2

87.2

4.0

4.6

%

Income from Operations

8.1

7.0

4.5

2.5

55.6

%

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