Mannatech, Incorporated (NASDAQ: MTEX), a global health and wellness company committed to transforming lives to make a better world, announced financial results for its third quarter 2016.
Third quarter net sales for 2016 were $48.1 million, an increase of $4.2 million or 9.8% as compared to $43.9 million in the third quarter of 2015.
Our net sales increased 6.8% on a constant dollar basis (see Non-GAAP Financial Measure disclosures below). Income from operations was $0.5 million for the third quarter 2016, as compared to $2.2 million income in the same period in 2015.
Net income was $1.3 million, or $0.46 per diluted share, for the third quarter of 2016, as compared to $0.1 million net income, or $0.03 per diluted share, for the third quarter of 2015. During the third quarter, our operations outside of the Americas accounted for approximately 60.5% of our consolidated net sales.
Third quarter 2016 Asia/Pacific net sales increased by $3.5 million, or 15.9%, to $25.5 million. During this period, the launch of new products and promotions in Asia/Pacific increased net sales by $2.9 million and the loyalty program increased net sales by $0.4 million, as compared to the same period in 2015.
Foreign currency exchange had a $1.6 million positive impact on revenue during the period, as compared to the same period in 2015. The currency impact is primarily due to the strengthening of the Korean Won, Australian Dollar, New Zealand Dollar, Singapore Dollar, Taiwanese Dollar, and Japanese Yen partially offset by the weakening of the Hong Kong Dollar. Revenue per active independent associate and member increased by 11.4% during the third quarter, as compared to the same period in 2015.
Third quarter 2016 net sales for Europe, the Middle East and Africa, or EMEA, decreased by $0.5 million to $3.6 million, as compared to the same period in 2015; foreign currency exchange had the effect of decreasing our EMEA revenue by $0.3 million during this period. The currency impact is primarily due to the weakening of the South Africa Rand and British Pound. Active associates and members increased 7.2% as compared to the same period in 2015. The launch of new products and promotions in EMEA increased net sales by $0.2 million, as compared to the same period in 2015.
For the three months ended September 30, 2016, net sales in the Americas increased by $1.2 million, or 6.7%, to $19.0 million, as compared to the same period in 2015. During the third quarter 2016, the launch of new products and promotions increased net sales by $1.0 million and the loyalty program increased net sales by $0.1 million, as compared to the same period in 2015.
The approximate number of new and continuing independent associate and member positions held by individuals in Mannatech’s network and associated with purchases of our packs or products during the 12-month period ended September 30, 2016 and 2015 were approximately 221,000.
Selling and administrative expenses for the third quarter of 2016 increased by $0.9 million, as compared to the same period in 2015. The increase is attributed to payroll costs, warehousing, and marketing costs. Human resource (HR) costs increased $0.1 million due to hiring for our potential entry into the China market. Also impacting HR costs in the third quarter 2016 is $0.4 million of severance costs, as compared to a $0.7 million of severance costs in the third quarter of 2015. Selling and administrative expenses were also impacted by a $0.4 million increase in marketing related costs, and a $0.2 million increase in warehouse charges.
Other operating costs, which include professional fees, travel and entertainment, bad debt, credit card processing fees, and other miscellaneous operating expenses, increased by $1.4 million for the three months ended September 30, 2016, as compared to the same period in 2015. The increase in other operating costs was due to a $0.7 million increase in legal and consulting fees as we continue to explore expansion into new markets, transform our supply chain and defend our patents, a $0.1 million increase in research and development costs, a $0.1 million increase in credit card fees, a $0.1 million increase in travel and entertainment costs, and a $0.4 million charge from a partial write-down of the value of internally developed back office software.
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 childhood nutrition where it is needed most around the world.
Mannatech’s proprietary products are available through independent sales associates around the globe including the United States, Canada, South Africa, Australia, New Zealand, Austria, Denmark, Germany, Norway, Sweden, the Netherlands, the United Kingdom, Japan, Taiwan, Singapore, Estonia, Finland, the Republic of Ireland, Czech Republic, the Republic of Korea, Mexico, Namibia, Spain and Hong Kong.
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