Mannatech Reports Fourth Quarter and Year End Results

  Mannatech Reports Fourth Quarter and Year End Results

Business Wire

COPPELL, Texas -- March 12, 2014

Mannatech, Incorporated  (NASDAQ: MTEX), a leading developer and provider of
nutritional supplements and skin care products based on Real Food Technology^®
solutions, today announced financial results for its fourth quarter and year
end 2013.

Fourth Quarter Results

Fourth quarter net sales for 2013 were $46.5 million, an increase of 9.9% as
compared to $42.3 million in the fourth quarter of 2012. Our net sales
increased 13.5% in constant dollars, which is a non-GAAP financial measure
that excludes the impact of fluctuations in foreign currency exchange rates.

Net sales for Asia/Pacific increased 16.4% to $20.6 million as compared to
$17.7 million in the fourth quarter 2012 due to a 21.8% increase in the number
of active associates and members in the region. The increases were offset by a
$1.1 million unfavorable impact on net sales due to fluctuations in foreign
currency exchange rates.

Net sales for North America increased 5.9% to $21.7 million as compared to
$20.5 million in the fourth quarter of 2012. The increase in revenue was due
to a 13.7% increase in the revenue generated per active associate and member,
which was offset by a decline in the number of active associates and members
in the region.

Net sales for Europe, the Middle East and Africa increased 2.4% to $4.2
million as compared to $4.1 million in the fourth quarter of 2012. This
increase was primarily due to a 13.9% increase in the number of active
associates and members, which was offset by a $0.4 million unfavorable impact
on net sales due to fluctuations in foreign currency exchange rates for the
region.

Net income was $2.6 million, or $0.94 per diluted share, for the fourth
quarter of 2013, compared to net income of $0.3 million, or $0.10 per diluted
share, for the fourth quarter of 2012.

Dr. Robert A. Sinnott, CEO & Chief Science Officer, commented, “Our net sales
growth acceleration in the fourth quarter was primarily due to the
introduction of our newest skin care product, U^th, in the U.S. and Canadian
markets.”

Year End Results

Annual net sales for 2013 were $177.4 million, up 2.3% from $173.4 million for
2012. Our net sales increased 5.2% in constant dollars which is a non-GAAP
financial measure that excludes the impact of fluctuations in foreign currency
exchange rates.

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 can earn loyalty points, which can
be applied to future purchases. We defer the dollar equivalent in revenue for
these loyalty points until the points are applied or forfeited. At December
31, 2013, we deferred net sales of $5.5 million due to the loyalty program.

Net sales for Asia/Pacific increased 13.7% to $80.3 million as compared to
$70.6 million in 2012. This increase was due to an increase in the number of
active associates and members in the region, which was offset by a decrease in
the revenue generated per active associate and member that was partially
attributed to the net sales deferral of $2.4 million for the loyalty program
and a $3.7 million unfavorable impact on net sales due to fluctuations in
foreign currency exchange rates.

Net sales for North America decreased 5.0% to $82.2 million as compared to
$86.5 million in 2012. This decrease in revenue is due to the net sales
deferral of $2.6 million for the loyalty program and a net reduction in active
associates and members, which was offset by an increase in the revenue per
active associate and member for the region.

Net sales for Europe, the Middle East and Africa decreased 8.6% to $14.9
million as compared to $16.3 million in 2012. While the number of our active
associates and members increased in this region, this was offset by a decrease
in average revenue per associate and member. We experienced a $1.3 million
unfavorable impact on net sales due to fluctuations in foreign currency
exchange rates.

We reported net income for 2013 of $3.2 million, compared to net loss of $1.4
million in 2012. The net income per diluted share was $1.18 in 2013, as
compared to the net loss per diluted share of $0.52 in 2012.

The total number of independent associates and members based on a 12-month
trailing period was approximately 245,000 and 229,000 as of each of December
31, 2013 and 2012, respectively. The number of new independent associates and
members for 2013 was 116,000, compared to 97,000 in 2012, which was an
increase of 19,000 over the previous year.

Dr. Robert Sinnott further commented, “During 2013, we implemented changes in
our independent associate compensation plan and launched a customer loyalty
program, both of which were positively adopted by our independent business
building associates. We believe these changes as well as the launch of Uth
skin cream were primary drivers for the increase in net sales as compared to
2012. Mannatech has much to offer our independent associates and customers. A
strong business with long-term, organic revenue growth across the globe
remains the primary objective of our management team.”

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,
Deferred Revenue, Gross Profit, and Income/(Loss) from Operations. The
following tables include a full reconciliation of actual non-GAAP financial
measures to the related GAAP financial measures.

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 above non-GAAP financial measures enhance
investors' understanding of its 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 19, 2014 at 9a.m. CDT, 10 a.m. EDT. 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
9008669.

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” 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 Quarterly Report on
Form 10-Q, 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.

CONSOLIDATED BALANCE SHEETS – (UNAUDITED)
(in thousands, except share and per share information)
                                                             
                                                 December 31,   December 31,
                                                    2013            2012
ASSETS
Cash and cash equivalents                        $  20,395      $   14,377
Restricted cash                                     1,519           1,515
Accounts receivable, net of allowance of $142       423             324
and $20 in 2013 and 2012, respectively
Income tax receivable                               4               884
Inventories, net                                    13,988          15,154
Prepaid expenses and other current assets           3,061           2,487
Deferred commissions                                2,706           562
Deferred tax assets, net                           1,578         561      
Total current assets                                43,674          35,864
Property and equipment, net                         3,239           4,833
Long-term restricted cash                           4,254           3,736
Other assets                                        3,591           3,187
Long-term deferred tax assets, net                 1,303         502
Total assets                                     $  56,061     $   48,122   
                                                                             
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current portion of capital leases                $  704         $   780
Accounts payable                                    4,996           4,154
Accrued expenses                                    5,796           6,348
Commissions and incentives payable                  10,210          7,935
Taxes payable                                       1,858           3,901
Current deferred tax liability                      114             179
Deferred revenue                                   6,380         1,486    
Total current liabilities                           30,058          24,783
Capital leases, excluding current portion           450             938
Other long-term liabilities                        2,101         2,180    
Total liabilities                                   32,609          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 December         —               —
31, 2013 and 2,768,972 shares issued and
2,647,735 shares outstanding as of December
31, 2012
Additional paid-in capital                          42,592          42,614
Accumulated deficit                                 (3,746  )       (6,920   )
Accumulated other comprehensive loss                (743    )       (677     )
Less treasury stock, at cost, 120,059 and          (14,651 )      (14,796  )
121,237 shares in 2013 and 2012, respectively
Total shareholders’ equity                         23,452       20,221   
Total liabilities and shareholders’ equity       $  56,061    $   48,122   

                                                         
CONSOLIDATED STATEMENTS OF OPERATIONS – (UNAUDITED)
(in thousands, except per share information)
                                                                             
                                            For the years ended December 31, 
                                            2013                2012         
Net sales                                   $177,423            $173,447
Cost of sales                               36,097              34,641
Gross profit                                141,326             138,806
                                                                             
Operating expenses:
Commissions and incentives                  75,633              73,823
Selling and administrative expenses         33,758              37,176
Depreciation and amortization               2,120               4,755
Other operating costs                       25,059              24,032
Total operating expenses                    136,570             139,786
                                                                             
Income from operations                      4,756               (980         )
Interest income                             22                  50
Other income (expense), net                 (1,969)             630
Income (loss) before income taxes           2,809               (300         )
                                                                             
Income tax benefit (provision)              365                 (1,088       )
Net income (loss)                           $3,174              $(1,388      )
                                                                             
Income / (loss) per common share:
Basic                                       $1.20               $(0.52       )
Diluted                                     $1.18               $(0.52       )
                                                                             
Weighted-average common shares
outstanding:
Basic                                       2,650               2,648
Diluted                                     2,683               2,648

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, Deferred Revenue, Gross Profit, and Income/(Loss) 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.

                       2013                    2012     Reconciliation –
                                                           Constant $
                        Total $  Constant $    Total $   Dollar    Percent
Net Sales               $ 177.4   $   182.4    $ 173.4     9.0        5.2   %
Product                   143.5       147.9      155.8     (7.9)      (5.1) %
Pack                      26.2        26.5       11.4      15.1       132.5 %
Other                     7.7         8.0        6.2       1.8        29.0  %
Deferred Revenue          6.4         6.6        1.5       5.1        340.0 %
Gross Profit              141.3       145.2      138.8     6.4        4.6   %
Income/(Loss) from        4.8         4.9        (1.0)     5.9        590.0 %
Operations

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

            2013               2012            
New          116,000  47.0  %     97,000   42.0  %
Continuing   129,000   53.0  %    132,000   58.0  %
Total        245,000   100.0 %    229,000   100.0 %

Contact:

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