Mannatech, Incorporated (NASDAQ: MTEX), the pioneer of nutritional glycobiology, leading innovator of naturally-sourced supplements based on Real Food Technology(R) solutions, and creator of the M5M(SM) (Mission 5 Million(SM) ) social entrepreneurial movement, today announced financial results for its first quarter 2014.
First quarter net sales for 2014 were $43.0 million, an increase of 3.1% as compared to $41.7 million in the first quarter of 2013. Our net sales increased 6.0% in constant dollars, which is a non-GAAP financial measure that excludes the impact of fluctuations in foreign currency exchange rates.
The increase in net sales and improved operational efficiencies yielded a 111% increase in Income from Operations for the first quarter 2014 as compared to a year ago, commented Dr. Robert Sinnott, CEO & Chief Science Officer. Income from Operations was $1.4 million, or 3.2% of net sales, in the first quarter 2014 as compared to $655,000, or 1.6% of net sales, in the first quarter 2013.
Net income was $0.2 million, or $0.08 per diluted share, for the first quarter 2014, as compared to net income of $0.6 million, or $0.24 per diluted share, for the first quarter 2013.
During the quarter, we suspended our operations in Ukraine and took charges to earnings of $0.5 million, consisting of $0.2 million related to operations and $0.3 million in inventory reserves due to the reduction in projected demand for Ukraine and European countries.
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. During the first quarter, associates and members applied $0.6 million to loyalty purchases and we deferred net sales of $2.8 million.
For the three months ended March 31, 2014, our operations outside of North America accounted for approximately 52.8% of our consolidated net sales, whereas in the same period in 2013, our operations outside of North America accounted for approximately 50.8% of our consolidated net sales.
For the three months ended March 31, 2014, Asia/Pacific net sales increased by $1.2 million, or 6.7%, to $19.0 million, as compared to $17.8 million for the same period in 2013 due to growth in the number of active associates and members. In constant dollars, net sales would have increased 11.2% to $19.8 million; the currency impact was primarily due to the Yen and the Australian dollar.
For the three months ended March 31, 2014, EMEA net sales increased by $0.3 million, or 8.8%, to $3.7 million, as compared to $3.4 million for the same period in 2013. Increases in active associates and members in South Africa were offset by decreases in active associates and members in Europe. In constant dollars, net sales would have increased 17.6% to $4.0 million; the currency impact was primarily due to the South Africa Rand.
North American net sales decreased by $0.2 million, or 1.0%, to $20.3 million, as compared to $20.5 million for the same period in 2013 due to a 12.1% decline in active associates that was partially offset by a 2.0% increase in active members and a 7.1% increase in revenue per active associate and member.
Recruiting increased 7.1% in the first quarter 2014 as compared to the first quarter of 2013. The number of new independent associates and members for the first quarter of 2014 was approximately 25,600, as compared to 23,900 in 2013. The total number of independent associates and members based on a 12-month trailing period was approximately 246,000 as of March 31, 2014, as compared to 231,000 as of March 31, 2013.
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 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 our business and performance, these non-GAAP financial measures should not be considered an exclusive alternative to accompanying GAAP financial measures.
Mannatech will host a conference call to discuss the quarter's results with investors on Tuesday, May 6, 2014 at 9 a.m. CDT, 10 a.m. EDT. The live call will be webcast and can be accessed on Mannatech's website at https://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 34306923.
Individuals interested in Mannatech's products or in exploring its business opportunity can learn more at Mannatech.com.
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