Mannatech Q1 Revenue Up 2% To $41.4 Million

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 first quarter of 2018.

First Quarter Results

First quarter net sales for 2018 were $41.4 million, an increase of $0.8 million, or 2.0%, as compared to $40.6 million in the first quarter of 2017.

For the three-month period ended March 31, 2018, our net sales declined 2.5% on a constant dollar basis (see Non-GAAP Financial Measures, below) as compared to the same period in 2017, while favorable foreign exchange caused a $1.0 million increase in GAAP net sales as compared to the same period in 2017.

Loss from operations was $0.9 million for the first quarter 2018, as compared to a loss of $2.0 million in the same period in 2017. Net loss was $0.3 million, or $0.10 per diluted share, for the first quarter 2018, as compared to a net loss of $1.2 million, or $0.46 per diluted share, for the first quarter 2017. Loss from operations included approximately $1.1 million in non-recurring costs related to the corporate office move.

For the three months ended March 31, 2018, Mannatechs operations outside of the Americas accounted for approximately 66.9% of Mannatechs consolidated net sales.

First quarter 2018 Asia/Pacific net sales increased by $2.3 million, or 10.5%, to $24.2 million, as compared to $21.9 million for the same period in 2017. This increase was primarily due to a 29.2% increase in revenue per active independent associate and preferred customer, which was partially offset by a 14.5% decline in the number of active independent associates and preferred customers.

During the three months ended March 31, 2018, the loyalty program decreased sales by $0.1 million, as compared to the same period in 2017. Foreign currency exchange had the effect of increasing revenue by $1.4 million for the three months ended March 31, 2018, as compared to the same period in 2017. The currency impact is primarily due to the strengthening of the Korean Won, Japanese Yen, Australian Dollar, Chinese Yuan (Renminbi), Taiwanese Dollar, New Zealand Dollar, and Singapore Dollar partially offset by the weakening of the Hong Kong Dollar.

First quarter 2018 net sales for Europe, the Middle East and Africa (“EMEA”) increased by $0.3 million, or 9.4%, to $3.5 million, as compared to $3.2 million for the same period in 2017. This increase was primarily due to a 20.3% increase in the number of active independent associates and preferred customers partially offset by a 9.1% decrease in revenue per active independent associate and preferred customer.

Foreign currency exchange had the effect of increasing revenue by $0.4 million when the three-month period ending March 31, 2018 is compared to the same period in 2017. The currency impact is primarily due to the strengthening of the South Africa Rand, the British Pound, and the Euro.

For the three months ended March 31, 2018, net sales in the Americas decreased by $1.8 million, or 11.6%, to $13.7 million, as compared to $15.5 million for the same period in 2017. This decrease was primarily due to an 11.7% decline in revenue per active independent associate and preferred customer partially offset by a 0.1% increase in the number of active independent associates and preferred customers.

Commission expenses for the three months ended March 31, 2018 decreased by 1.8%, or $0.3 million, to $16.2 million, as compared to $16.5 million for the same period in 2017. For the three months ended March 31, 2018, commissions as a percentage of net sales decreased to 39.2% from 40.6% for the same period in 2017 due to the structure of the 2017 Associate Compensation Plan, which was implemented on July 1, 2017.

Incentive costs for the three months ended March 31, 2018 increased by 34.5%, or $0.2 million, to $0.8 million, as compared to $0.6 million for the same period in 2017 due to new incentives in growth markets. For the three months ended March 31, 2018, incentives as a percentage of net sales increased to 1.9% from 1.4% for the same period in 2017.

The approximate number of new and continuing active independent associates and preferred customers who purchased our packs or products or paid associate fees during the twelve months ended March 31, 2018 and 2017 were approximately 210,000 and 220,000, respectively.

Recruitment of new independent associates and preferred customers decreased 20.5% during the three months ended March 31, 2018 as compared to the same period in 2017. The number of new independent associate and preferred customer positions held by individuals in our network for the three months ended March 31, 2018 was approximately 18,200, as compared to 22,900 for the same period in 2017.

For the three months ended March 31, 2018, selling and administrative expenses decreased by $0.7 million, or 7.8%, to $8.0 million, as compared to $8.7 million for the same period in 2017. The decrease in selling and administrative expenses consisted of a $0.9 million decrease in payroll costs in our headquarters, Japan, and Europe offices, offset by $0.2 million increase in marketing related costs.

Other operating costs, which include professional fees, travel and entertainment, bad debt, credit card processing fees, and other miscellaneous operating expenses, increased by $0.8 million, or 11.3% for the three months ended March 31, 2018, as compared to the same period in 2017. The increase in operating costs was primarily due to a $1.1 million increase in non-recurring office expenses incurred with the corporate office move, which was partially offset by a $0.3 million decrease in legal and consulting fees.

As of March 31, 2018, our cash and cash equivalents increased by 0.5%, or $0.2 million, to $37.9 million from $37.7 million as of December 31, 2017. Our inventory balance at March 31, 2018 was $9.0 million, compared to $9.4 million at December 31, 2017.

At March 31, 2018, our commissions and incentives payable increased to $10.7 million from $9.7 million at December 31, 2017, due to timing of our commission payments. Our accounts payable balance at March 31, 2018 decreased to $5.5 million, compared to $6.0 million at December 31, 2017. During the first quarter of 2018, we paid dividends of $0.3 million.

About Mannatech

Mannatech, Incorporated, offers a profound wellness experience that makes a difference in the lives of people across the world. Through its innovative Glyconutrition products, Mannatech changes lives, providing an unprecedented level of natural wellness, freedom and purpose.

With more than 20 years of experience and operations in 26 markets^, Mannatech is committed to changing lives. For more information, visit Mannatech.com.