Mannatech Reports Financial Results for First Quarter 2024
Mannatech (NASDAQ: MTEX) announced its Q1 2024 financial results, reporting an EPS of $0.63 compared to $0.32 in Q1 2023. Net sales decreased by 13.8% to $29.4 million, primarily due to weak economic conditions in the Asia/Pacific region and reduced recruitment of sales associates and preferred customers. Gross profit margin increased to 78.6%, with operating income rising slightly to $0.8 million. Net income was $1.2 million, up from $0.6 million in Q1 2023. The company saw a 2.3% increase in cash and cash equivalents, reaching $7.9 million. Despite economic challenges, Mannatech aims to boost revenues by expanding its sales network while maintaining cost controls.
- EPS increased to $0.63 in Q1 2024 from $0.32 in Q1 2023.
- Gross profit margin improved to 78.6% from 78.3%.
- Operating income rose to $0.8 million, up from $0.7 million.
- Net income doubled to $1.2 million from $0.6 million.
- Cash and cash equivalents increased by 2.3%, reaching $7.9 million.
- Cash provided by operating activities increased to $1.87 million from $1.35 million.
- Net sales declined by 13.8% to $29.4 million.
- Revenue in the Asia/Pacific region decreased significantly due to weak economic conditions and reduced sales associate recruitment.
- Recruitment of new associates and preferred customers declined by 13.6%.
- Foreign exchange fluctuations negatively affected income from operations by $0.3 million.
Insights
The first quarter financial results for Mannatech, Incorporated reveal a mixed performance in key metrics.
Earnings per share (EPS) increased significantly to
On a positive note, gross profit margin saw a slight improvement to
In summary, while the revenue drop and reduced sales associate recruitment are concerning, the company's ability to increase profitability and manage costs effectively provides a balanced outlook for investors.
Analyzing Mannatech's market dynamics, the drop in net sales by
The constant customer base, with approximately 143,000 independent associates and preferred customers, suggests a stable core customer retention. However, the
Foreign exchange fluctuations also played a role, with a
Looking forward, the company's commitment to increasing revenues through expanding its sales network and maintaining cost discipline will be important to counteract current economic challenges.
The improved gross profit margin largely stems from successful supply chain initiatives, including reduced costs of freight and shipping. These operational efficiencies are indicative of strong internal management and possible technological advancements in logistics and supply chain management.
For retail investors, understanding how these cost-saving measures can sustain or improve further is key. Supply chain efficiencies often result from enhanced logistics software, streamlined operations and possibly automation, which can lead to long-term profitability gains.
Investors should monitor whether these improvements in margin are sustainable and if similar strategies can be applied to other operational areas for continued financial health.
Q1 2024 EPS of
First Quarter Highlights
-
Net sales for the quarter ended March 31, 2024 were
, as compared to$29.4 million for the same period in 2023, a decrease of$34.1 million , or$4.7 million 13.8% . On a Constant dollar basis (see Non-GAAP Measures, below) our net sales decreased , or$3.9 million 11.3% , and unfavorable foreign exchange caused a decrease in GAAP net sales as compared to the same period in 2023. The decline in revenues was principally in our$0.8 million Asia/Pacific region reflecting reduced recruiting of sales associates and preferred customers along with continued weak economic conditions.^ -
Gross profit as a percentage of net sales increased to
78.6% for three months ended March 31, 2024, as compared to78.3% for the same period in 2023, largely due to reduced costs of freight and shipping and other supply chain initiatives. -
Income from operations was
for the three months ended March 31, 2024 as compared to$0.8 million in the same period last year. On a Constant dollar basis (see Non-GAAP Measures, below), income from operations was unfavorably affected by$0.7 million due to foreign exchange. Higher gross profit margins coupled with lower selling and administrative expenses resulting from cost reductions, more than offset the profitability impact from the decline in revenues.$0.3 million -
Net income was
for the three months ended March 31, 2024, or$1.2 million per diluted share, as compared to$0.63 , or$0.6 million per diluted share for the three months ended March 31, 2023.$0.32 -
As of March 31, 2024, the company's cash and cash equivalents increased
2.3% , or , to$0.2 million from$7.9 million as of December 31, 2023. Cash provided by operating activities was$7.7 million for the first quarter 2024 as compared to$1.87 million in the same period last year.$1.35 million -
The approximate number of new and continuing independent associate and preferred customer positions held by individuals in Mannatech’s network and associated with purchases of its packs or products as of March 31, 2024 and 2023 remained constant at approximately 143,000. Recruiting new associates and preferred customers declined
13.6% in the First quarter of 2024 as compared to the First quarter of 2023.
Landen Fredrick, President and CEO, stated, “Demand remained weak in the first quarter across our world-wide operations but was most pronounced in our
Mr. Fredrick continued, “We are a multinational company and therefore we are subject to fluctuations in the value of the
Mr. Fredrick concluded, “We see continued economic challenges for the remainder of 2024, however, we remain committed to increasing our revenues through increasing the number of our sales associates and preferred customers and while maintaining disciplined cost controls.”
Non-GAAP Financial 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 dollar measures. The company discloses operating results that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into
The company believes 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 management believes the non-GAAP financial measures enhance investors’ understanding of their business and performance, these non-GAAP financial measures should not be considered an exclusive alternative to accompanying GAAP financial measures. Please see the accompanying table entitled "Non-GAAP Financial Measures" for a reconciliation of these non-GAAP financial measures.
Safe Harbor statement
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 “may,” “will,” “should,” "hope," “could,” “would,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “approximates,” “predicts,” “projects,” “potential,” and “continues” 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 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.
^ Mannatech operates in
Individuals interested in Mannatech's products or in exploring its business opportunity can learn more at Mannatech.com
MANNATECH, INCORPORATED AND SUBSIDIARIES |
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(in thousands, except share information) |
|||||||
|
|||||||
ASSETS |
March 31, 2024 (unaudited) |
|
December 31, 2023 |
||||
Cash and cash equivalents |
$ |
7,911 |
|
|
$ |
7,731 |
|
Restricted cash |
|
938 |
|
|
|
938 |
|
Accounts receivable, net of allowance of |
|
320 |
|
|
|
91 |
|
Income tax receivable |
|
450 |
|
|
|
465 |
|
Inventories, net |
|
13,679 |
|
|
|
14,535 |
|
Prepaid expenses and other current assets |
|
3,146 |
|
|
|
1,774 |
|
Deferred commissions |
|
1,836 |
|
|
|
2,130 |
|
Total current assets |
|
28,280 |
|
|
|
27,664 |
|
Property and equipment, net |
|
3,769 |
|
|
|
4,147 |
|
Long-term restricted cash |
|
693 |
|
|
|
718 |
|
Other assets |
|
6,711 |
|
|
|
7,066 |
|
Deferred tax assets, net |
|
1,605 |
|
|
|
1,611 |
|
Total assets |
$ |
41,058 |
|
|
$ |
41,206 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
||||
Current portion of finance leases |
$ |
265 |
|
|
$ |
269 |
|
Accounts payable |
|
4,882 |
|
|
|
4,010 |
|
Accrued expenses |
|
5,899 |
|
|
|
6,779 |
|
Commissions and incentives payable |
|
8,419 |
|
|
|
8,175 |
|
Taxes payable |
|
1,922 |
|
|
|
1,521 |
|
Current notes payable |
|
525 |
|
|
|
240 |
|
Deferred revenue |
|
4,235 |
|
|
|
4,786 |
|
Total current liabilities |
|
26,147 |
|
|
|
25,780 |
|
Finance leases, excluding current portion |
|
888 |
|
|
|
956 |
|
Other long-term liabilities |
|
3,578 |
|
|
|
3,986 |
|
Total liabilities |
|
30,613 |
|
|
|
30,722 |
|
|
|
|
|
||||
Commitments and contingencies |
|
|
|
||||
|
|
|
|
||||
Shareholders’ equity: |
|
|
|
||||
Preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
32,948 |
|
|
|
33,309 |
|
Accumulated deficit |
|
(121 |
) |
|
|
(1,301 |
) |
Accumulated other comprehensive loss |
|
(2,446 |
) |
|
|
(1,015 |
) |
Treasury stock, at average cost, 858,043 shares as of March 31, 2024 and 882,703 shares as of December 31, 2023 |
|
(19,936 |
) |
|
|
(20,509 |
) |
Total shareholders’ equity |
|
10,445 |
|
|
|
10,484 |
|
Total liabilities and shareholders’ equity |
$ |
41,058 |
|
|
$ |
41,206 |
|
MANNATECH, INCORPORATED AND SUBSIDIARIES |
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
|||||||
(in thousands, except per share information) |
|||||||
|
|||||||
|
Three Months Ended March 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
Net sales |
$ |
29,393 |
|
|
$ |
34,114 |
|
Cost of sales |
|
6,296 |
|
|
|
7,413 |
|
Gross profit |
|
23,097 |
|
|
|
26,701 |
|
Operating expenses: |
|
|
|
||||
Commissions and incentives |
|
11,685 |
|
|
|
13,558 |
|
Selling and administrative expenses |
|
10,176 |
|
|
|
12,043 |
|
Depreciation and amortization expense |
|
416 |
|
|
|
387 |
|
Total operating expenses |
|
22,277 |
|
|
|
25,988 |
|
Income from operations |
|
820 |
|
|
|
713 |
|
Interest income, net |
|
18 |
|
|
|
24 |
|
Other income, net |
|
871 |
|
|
|
333 |
|
Income before income taxes |
|
1,709 |
|
|
|
1,070 |
|
Income tax (provision) |
|
(529 |
) |
|
|
(466 |
) |
Net income |
$ |
1,180 |
|
|
$ |
604 |
|
Income per common share: |
|
|
|
||||
Basic |
$ |
0.63 |
|
|
$ |
0.32 |
|
Diluted |
$ |
0.63 |
|
|
$ |
0.32 |
|
Weighted-average common shares outstanding: |
|
|
|
||||
Basic |
|
1,884 |
|
|
|
1,872 |
|
Diluted |
|
1,884 |
|
|
|
1,891 |
|
Net sales by region for the three months ended March 31, 2024 and 2023 were as follows (in millions, except percentages):
Region |
Three Months Ended March 31, 2024 |
|
Three Months Ended March 31, 2023 |
||||||||
|
$ |
10.2 |
|
34.7 |
% |
|
$ |
10.5 |
|
30.8 |
% |
|
|
17.1 |
|
58.2 |
% |
|
|
21.1 |
|
61.9 |
% |
EMEA |
|
2.1 |
|
7.1 |
% |
|
|
2.5 |
|
7.3 |
% |
Total |
$ |
29.4 |
|
100.0 |
% |
|
$ |
34.1 |
|
100.0 |
% |
Non-GAAP Financial Measures (Sales, Gross Profit and Income from Operations in Constant Dollars)
To supplement its financial results presented in accordance with generally accepted accounting principles in
The table below reconciles fiscal year 2024 and 2023 Constant dollar net sales, gross profit and income from operations to GAAP net sales, gross profit and income from operations.
Three-month period ended |
March 31, 2024 |
March 31, 2023 |
Constant $ Change |
||||||||||||||||
(in millions, except percentages) |
GAAP Measure: Total $ |
Translation Adjustment |
Non-GAAP Measure: Constant $ |
GAAP Measure: Total $ |
Dollar |
Percent |
|||||||||||||
Net sales |
$ |
29.4 |
$ |
0.8 |
$ |
30.2 |
$ |
34.1 |
$ |
(3.9 |
) |
(11.4 |
)% |
||||||
Gross profit |
|
23.1 |
|
0.7 |
|
23.8 |
|
26.7 |
|
(2.9 |
) |
(10.9 |
)% |
||||||
Income from operations |
|
0.8 |
|
0.3 |
|
1.1 |
|
0.7 |
|
0.4 |
|
57.1 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240514482645/en/
Erin K. Barta
General Counsel and Corporate Secretary
972-471-7742
ir@mannatech.com
www.mannatech.com
Source: Mannatech, Incorporated
FAQ
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