Mannatech Reports Third Quarter 2013 Financial Results

  Mannatech Reports Third Quarter 2013 Financial Results

Business Wire

COPPELL, Texas -- November 13, 2013

Mannatech®, Incorporated (NASDAQ: MTEX) a pioneer of nutritional glycobiology
and leading innovator of naturally-sourced supplements based on Real Food
Technology^® solutions, today reported net sales for the third quarter of 2013
were $44.4 million, an increase of 3.3% as compared to $43.0 million in the
third quarter of 2012 and a net loss of $0.8 million, or $0.30 per diluted
share, for the third quarter ending September 30, 2013, as compared to a net
income of $2.2 million, or $0.83 per diluted share, for the third quarter of
2012.

During the third quarter of 2013, we implemented a global loyalty program for
our associates and members who purchase products using a qualified automatic
order. Participating associates and members earn loyalty points, which can be
applied to future purchases. The company defers the dollar equivalent in
revenue for these loyalty points until the points are applied or forfeited.
During the third quarter of 2013, the company deferred net sales of $2.5
million due to the loyalty program.

Net sales for Asia/Pacific increased 23.6% to $22.0 million as compared to
$17.8 million in the third quarter 2012 due to an increase in the number of
active associates and an increase in the revenue generated per active
associate and member. The increases were offset by a net sales deferral of
$1.2 million for the loyalty program and a $1.2 million unfavorable impact on
net sales due to fluctuations in foreign currency exchange rates.

Net sales for North America declined 9.7% to $18.7 million as compared to
$20.7 million in the third quarter of 2012. The decline in revenue is due to
the net sales deferral of $1.2 million for the loyalty program in the third
quarter of 2013 and a net reduction in active members and associates.

Net sales for Europe, the Middle East and Africa declined 17.8% to $3.7
million as compared to $4.5 million in the third quarter of 2012. This decline
was primarily due to a decrease in the average revenue per associate and
member. Additionally, the company experienced a $0.4 million unfavorable
impact on net sales due to fluctuations in foreign currency exchange rates.

Recruiting increased 4.4% in the third quarter of 2013 as compared to the
third quarter of 2012. The number of new independent associates and members
for the third quarter of 2013 was approximately 28,800, as compared to 27,600
during the same period in 2012. The total number of independent associates and
members based on a 12-month trailing period was approximately 239,000 as of
September 30, 2013, as compared to 233,000 as of September 30, 2012.

Dr. Robert Sinnott, CEO & Chief Science Officer, commented, “We launched a
global loyalty program and completed the global launch of our enhanced
associate compensation plan in July. These activities, plus the continued net
increase in active associates and members, appear to be driving organic growth
in markets open for at least a year.”

Mannatech will host a conference call to discuss the quarter’s results with
investors on Thursday, November 14, 2013 at 9a.m. CST, 10 a.m. EST. 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
93542097.

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

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 in
regions around the globe including North America, Asia/Pacific, and Europe,
the Middle East and Africa. 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.



MANNATECH, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – (UNAUDITED)
(in thousands, except share and per share amounts)
PART I – FINANCIAL INFORMATION

                                              September 30,   December 31,
                                                  2013            2012    
ASSETS                                          (unaudited)
Cash and cash equivalents                       $  19,441         $  14,377
Restricted cash                                    1,527             1,515
Accounts receivable, net of allowance of           402               324
$40 and $20 in 2013 and 2012, respectively
Income tax receivable                              188               884
Inventories, net                                   14,733            15,154
Prepaid expenses and other current assets          3,614             2,487
Deferred commissions                               2,240             562
Deferred tax assets                               647             561     
Total current assets                               42,792            35,864
Property and equipment, net                        3,614             4,825
Construction in progress                           30                8
Long-term restricted cash                          5,035             3,736
Other assets                                       2,938             3,187
Long-term deferred tax assets                     633             502     
Total assets                                    $  55,042        $  48,122  
                                                                  
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current portion of capital leases               $  653            $  780
Accounts payable                                   6,784             4,154
Accrued expenses                                   7,598             6,348
Commissions and incentives payable                 9,195             7,935
Taxes payable                                      1,972             3,901
Current deferred tax liability                     291               179
Deferred revenue                                  5,284           1,486   
Total current liabilities                          31,777            24,783
Capital leases, excluding current portion          583               938
Long-term deferred tax liabilities                 10                2
Other long-term liabilities                       1,706           2,178   
Total liabilities                                  34,076            27,901
                                                                  
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, 2,773,972 shares issued
and 2,653,913 shares outstanding as of             —                 —
September 30, 2012 and 2,768,972 shares
issued and 2,647,735 shares outstanding as
of December 31, 2012
Additional paid-in capital                         42,556            42,614
Accumulated deficit                                (6,293   )        (6,920  )
Accumulated other comprehensive loss               (646     )        (677    )
Less treasury stock, at cost, 120,059 and
121,237 shares in 2013 and 2012,                  (14,651  )       (14,796 )
respectively
Total shareholders’ equity                        20,966          20,221  
Total liabilities and shareholders’ equity      $  55,042        $  48,122  



MANNATECH, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS – (UNAUDITED)
(in thousands, except per share information)

                     Three months ended        Nine months ended
                       September 30,               September 30,
                        2013       2012        2013        2012    
Net sales              $ 44,432       $ 43,049     $ 130,899       $ 131,162
Cost of sales           9,225        8,698       25,616        25,824  
Gross profit             35,207         34,351       105,283         105,338
                                                                   
Operating
expenses:
Commissions and          19,640         18,658       56,362          56,280
incentives
Selling and              8,497          8,640        25,669          28,240
administrative
Depreciation and         474            703          1,699           4,082
amortization
Other operating         6,167        5,261       18,919        19,109  
costs
Total operating         34,778       33,262      102,649       107,711 
expenses
                                                                   
Income (loss) from       429            1,089        2,634           (2,373  )
operations
Interest income          25             6            29              (26     )
(expense)
Other income            (275   )      455         (1,278  )      542     
(expense), net
Income (loss)
before income            179            1,550        1,385           (1,857  )
taxes
                                                                   
(Provision for)
benefit from            (980   )      663         (758    )      215     
income taxes
Net income (loss)      $ (801   )     $ 2,213      $ 627          $ (1,642  )
                                                                   
Income (loss) per
share:
Basic                  $ (0.30  )     $ 0.84       $ 0.24         $ (0.62   )
Diluted                $ (0.30  )     $ 0.83       $ 0.23         $ (0.62   )
                                                                   
Weighted-average
common shares
outstanding:
Basic                   2,650        2,648       2,649         2,648   
Diluted                 2,650        2,681       2,717         2,648   
                                                                             
                                                                             

The approximate number of new and continuing associates and members who
purchased our packs or products during the twelve months ended September 30,
2013 and 2012 were as follows:

              2013                  2012
New              109,000   46.0  %     95,000    41.0  %
Continuing       130,000     54.0  %     138,000     59.0  %
Total            239,000     100.0 %     233,000     100.0 %

Contact:

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