Mannatech Q3 Sales Down 7.8% To $39.7 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 third quarter of 2019.

Third quarter net sales for 2019 were $39.7 million, a decrease of $3.4 million, or 7.8%, as compared to $43.0 million in the third quarter of 2018.

For the three months ended September 30, 2019, our net sales declined 4.9% on a constant dollar basis (see Non-GAAP Financial Measures, below), as compared to the same period in 2018.

For the nine-month period ending September 30, 2019, net sales were $118.3 million, as compared to $129.5 million for the same period in 2018. For the nine-month period ending September 30, 2019, income from operations was $3.7 million, as compared to $0.4 million for the same period in 2018. For the nine-month period ending September 30, 2019, net income was $1.2 million, as compared to a $2.3 million loss for the same period in 2018.

For the three months ended September 30, 2019, overall selling and administrative expenses increased by $0.8 million to $9.0 million, as compared to $8.1 million for the same period in 2018. The increase in selling and administrative expenses consisted of a $0.8 million increase in payroll costs due to severance costs and a $0.2 million increase in marketing costs, which was partially offset by a $0.1 million decrease in distribution and warehouse costs and contract labor costs.

Other operating costs, decreased by $0.5 million, or 8.0%, for the three months ended September 30, 2019, as compared to the same period in 2018. The decrease in operating costs was primarily due to a $0.6 milliondecrease in legal and consulting fees and a $0.4 million decrease in other operating expenses, which was partially offset by a $0.7 million increase in travel and entertainment costs.

Income from operations was $0.6 million for the three months ended September 30, 2019, as compared to $1.7 million for the same period in 2018.

For the three months ended September 30, 2019, the Company’s tax provision was $1.6 million, an effective tax rate of 1,311.4%, as compared to $3.3 million, an effective tax rate of 167.8%, for the same period during 2018. The effective tax rate for the three months ended September 30, 2019 was different from the federal statutory rate due primarily to the mix of earnings across jurisdictions, valuation allowance recorded on losses in certain jurisdictions and the one-time impact of the shift in the procurement supply chain from Switzerland to the United States effective July 1, 2019.

This shift is to address the impact of global intangible low-tax income (“GILTI”) that resulted from the Tax Cuts and Jobs Act. GILTI was a contributing factor in the effective tax rate being higher than the federal statutory for the three months ended September 30, 2019.

Net loss was $1.5 million, or $0.62 per diluted share, for the three months ended September 30, 2019, as compared to a net loss of $1.7 million, or $0.69 per diluted share, for the same period in 2018.

The approximate number of new and continuing active independent associates and preferred customers who purchased our products or paid associate fees during the twelve months ended September 30, 2019 and 2018 were approximately 176,000 and 202,000, respectively.

Recruitment of new independent associates and preferred customers decreased 13.5% during the three months ended September 30, 2019, as compared to the same period in 2018.

The number of new independent associate and preferred customer positions held by individuals in our network for the three months ended September 30, 2019 was approximately 22,321, as compared to 25,802 for the same period in 2018.

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 25 years of experience and operations in 26 markets^, Mannatech is committed to changing lives.

For more information please visit www.mannatech.com