Mannatech Reports Financial Results for Fourth Quarter and Full Year 2023
- MTEX reported a decrease in Q4 2023 net sales to $32.7 million, down 4.7% from Q4 2022.
- Operating loss for Q4 2023 improved to $0.9 million compared to $2.7 million in Q4 2022.
- Full-year 2023 net sales were $132.0 million, a 3.8% decrease from 2022.
- Operating loss for 2023 was $1.0 million, compared to $0.4 million in 2022.
- MTEX launched a new affiliate program 'Trulu™' in June 2023.
- Net loss for 2023 was $2.2 million, with cash and cash equivalents decreasing to $7.7 million.
- Shareholder value was returned through dividends and stock repurchases.
- Net sales decreased in both Q4 2023 and full-year 2023 compared to the previous year.
- Operating loss increased for the full-year 2023 compared to 2022.
- Cash and cash equivalents decreased significantly from 2022 to 2023.
- Foreign exchange losses had a significant impact on net loss in both Q4 2023 and 2022.
Insights
The recent financial results from Mannatech reveal a mixed performance with a decline in net sales but an improvement in gross profit margin. The reduction in net sales by 4.7% year-over-year for Q4 and 3.8% for the full year suggests a contraction in demand, which could be a red flag for investors. However, the improved gross profit margin, from 69.0% to 75.4%, indicates better cost management, especially in supply chain operations. This dichotomy warrants a closer look at the company's operational efficiency and market positioning.
Despite the revenue dip, the narrowed operating loss from $2.7 million to $0.9 million in Q4 and the reduction in net loss year-over-year from $6.5 million to $1.8 million indicate that the company is making strides in cost control. The impact of foreign exchange losses, however, highlights a vulnerability to currency fluctuations, which could be of concern to investors with a short-term perspective. For long-term investors, the company's focus on growing its customer and associate base and improving profitability may be more relevant.
Additionally, the launch of the Trulu brand and the associated operating loss of $1.1 million is a strategic move that could either pave the way for future growth or pose a risk if the new venture doesn't gain traction. The consistent number of associates and customers, along with a slight increase in recruiting, could signal stability in the company's network marketing business.
The health and wellness sector has been facing various challenges, including economic downturns and changing consumer behaviors. Mannatech's performance reflects these industry-wide trends, with a slow rate of growth in demand in certain markets. The company's efforts in managing supply chain costs and adjusting prices to improve gross profit margin are commendable and demonstrate agility in response to market conditions.
However, the consistent number of independent associates and preferred customers, despite the company's efforts to grow this base, points to a potential saturation in the market or a need for innovation in their marketing strategies. The 4.4% increase in recruiting suggests some positive momentum, but it remains to be seen if this will translate into significant sales growth.
The investment in back-office software projects indicates a commitment to improving operational efficiency, which could lead to better customer service and streamlined processes. The repurchase of common stock and payment of dividends, even in a year with a net loss, reflect a strategy to maintain shareholder confidence and return value, which is an interesting choice given the financial performance.
The foreign exchange loss of approximately $1.0 million is a critical factor that investors should monitor, as it reflects the company's exposure to international markets and the associated risks. This loss significantly impacts net earnings and could be indicative of broader economic trends, such as currency volatility in the markets where Mannatech operates.
The reduction in cash and cash equivalents from $13.8 million to $7.7 million raises questions about the company's liquidity and its ability to invest in growth or weather further economic downturns. The use of cash for operating the business, software investments and financial obligations, while simultaneously returning value to shareholders, suggests a balancing act between maintaining operational capabilities and fulfilling shareholder expectations.
Looking forward, the company's outlook seems cautiously optimistic, with an expectation of continued challenges in the short term. The focus on improving revenues and profitability in 2024 will likely depend on the company's ability to adapt to market conditions and manage external factors like currency risks effectively.
Fourth Quarter Highlights
-
Fourth quarter 2023 net sales were
$32.7 million $1.6 million 4.7% , as compared to$34.3 million -
Gross profit as a percentage of net sales improved to
75.4% as compared to69.0% for the same period in 2022. Reduced supply chain shipping costs more than offset price increases in certain raw materials. -
Operating loss in the fourth quarter was
$0.9 million $2.7 million -
Net loss was
$1.8 million $0.94 $6.5 million $3.50
J. Stanley Fredrick, Chairman of the Board of Mannatech, stated, “Demand remained weak in the fourth quarter as reflected in our sales decline from last year's fourth quarter. However, our revenues were essentially flat to our third quarter this year. Although we incurred an operating loss in the current quarter, we mitigated our loss through active supply chain management and reduction of selling and administrative expenses.”
“We incurred a foreign exchange loss of approximately
Total Year 2023 Highlights
-
Net sales for the year ended December 31, 2023 was
$132.0 million $137.2 million $5.2 million 3.8% , for 2023, as compared to 2022. Our 2023 net sales were unfavorably affected by$2.3 million $2.9 million 2.1% , as compared to 2022 GAAP net sales. -
Operating loss was
$1.0 million $0.4 million $0.4 million -
In June 2023, the Company launched a tiered affiliate program in
the United States under the brand name, “Trulu™.” The Trulu brand is operated by our wholly owned subsidiary, “NEMO”, and is separate from our network marketing business. For the year ended December 31, 2023, we incurred an operating loss of$1.1 million NEMO business.
Excluding the startup loss of
-
Net loss for 2023 was
$2.2 million $1.20 $4.5 million $2.35 -
As of December 31, 2023, the company's cash and cash equivalents decreased to
$7.7 million $13.8 million $2.4 million $0.7 million $1.0 million $0.7 million $0.2 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 December 31, 2023 and 2022 remained constant at approximately 145,000. Recruiting increased
4.4% in the fourth quarter of 2023 as compared to the fourth quarter of 2022. The number of new independent associate and preferred customer positions in the company’s network for the fourth quarter of 2023 was 18,156 as compared to 17,398 in 2022.
“Careful supply chain cost controls, price adjustments and favorable product mix contributed to a 210 basis point improvement in gross profit margin in the current year as compared to last year,” said Mr. Fredrick.
Mr. Fredrick continued, “We overcame economic challenges throughout our world-wide footprint in 2023, as well as issues and significant start-up costs related to a new product launch. We believe we are emerging from the severe economic decline of the past few years and the long-term outlook for our business is favorable. In the short term, we expect that we will continue to face challenges of a slow rate of growth in demand in certain markets we operate while other regions will recover at a faster rate. However, we are resolved to continue to focus on growing our customer and associate base, as well as improving our revenues and profitability in 2024.”
Non-GAAP 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 it 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, the impact of COVID-19 on Mannatech's business, 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.
Individuals interested in Mannatech's products or in exploring its business opportunity can learn more at Mannatech.com.
MANNATECH, INCORPORATED AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share information) |
|||||||
|
December 31,
|
|
December 31,
|
||||
ASSETS |
|
|
|
||||
Cash and cash equivalents |
$ |
7,731 |
|
|
$ |
13,777 |
|
Restricted cash |
|
938 |
|
|
|
944 |
|
Accounts receivable, net of allowance of |
|
91 |
|
|
|
218 |
|
Income tax receivable |
|
465 |
|
|
|
423 |
|
Inventories, net |
|
14,535 |
|
|
|
14,726 |
|
Prepaid expenses and other current assets |
|
1,774 |
|
|
|
2,389 |
|
Deferred commissions |
|
2,130 |
|
|
|
2,476 |
|
Total current assets |
|
27,664 |
|
|
|
34,953 |
|
Property and equipment, net |
|
4,147 |
|
|
|
3,759 |
|
Long-term restricted cash |
|
718 |
|
|
|
476 |
|
Other assets |
|
7,066 |
|
|
|
8,439 |
|
Deferred tax assets, net |
|
1,611 |
|
|
|
1,501 |
|
Total assets |
$ |
41,206 |
|
|
$ |
49,128 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
||||
Current portion of finance leases |
$ |
269 |
|
|
$ |
61 |
|
Accounts payable |
|
4,010 |
|
|
|
4,361 |
|
Accrued expenses |
|
6,779 |
|
|
|
7,510 |
|
Commissions and incentives payable |
|
8,175 |
|
|
|
9,256 |
|
Taxes payable |
|
1,521 |
|
|
|
3,281 |
|
Current notes payable |
|
240 |
|
|
|
263 |
|
Deferred revenue |
|
4,786 |
|
|
|
5,106 |
|
Total current liabilities |
|
25,780 |
|
|
|
29,838 |
|
Finance leases, excluding current portion |
|
956 |
|
|
|
88 |
|
Other long-term liabilities |
|
3,986 |
|
|
|
5,026 |
|
Total liabilities |
|
30,722 |
|
|
|
34,952 |
|
Commitments and contingencies (Note 11) |
|
|
|
||||
Shareholders’ equity: |
|
|
|
||||
Preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
33,309 |
|
|
|
33,377 |
|
Retained earnings (accumulated deficit) |
|
(1,301 |
) |
|
|
1,686 |
|
Accumulated other comprehensive (loss) |
|
(1,015 |
) |
|
|
(208 |
) |
Treasury stock, at average cost, 882,703 shares as of December 31, 2023 and 884,057 shares as of December 31, 2022 |
|
(20,509 |
) |
|
|
(20,679 |
) |
Total shareholders’ equity |
|
10,484 |
|
|
|
14,176 |
|
Total liabilities and shareholders’ equity |
$ |
41,206 |
|
|
$ |
49,128 |
|
MANNATECH, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share information) |
|||||||||||||||||||||||
|
For the three months ended December 31 |
|
For the years ended December 31 |
||||||||||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
||||||||||||||||
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
||||||||
Net sales |
$ |
32,694 |
|
100.0 |
% |
|
$ |
34,335 |
|
100.0 |
% |
|
$ |
131,955 |
|
100.0 |
% |
|
$ |
137,208 |
|
100.0 |
% |
Cost of sales |
|
8,048 |
|
24.6 |
|
|
|
10,633 |
|
31.0 |
|
|
|
29,090 |
|
22.0 |
|
|
|
33,060 |
|
24.1 |
|
Gross profit |
|
24,646 |
|
75.4 |
|
|
|
23,702 |
|
69.0 |
|
|
|
102,865 |
|
78.0 |
|
|
|
104,148 |
|
75.9 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commissions and incentives |
|
13,389 |
|
41.0 |
|
|
|
13,996 |
|
40.8 |
|
|
|
53,588 |
|
40.6 |
|
|
|
55,483 |
|
40.4 |
|
Selling and administrative expenses |
|
11,748 |
|
35.9 |
|
|
|
12,078 |
|
35.2 |
|
|
|
48,613 |
|
36.8 |
|
|
|
47,443 |
|
34.6 |
|
Depreciation and amortization |
|
404 |
|
1.2 |
|
|
|
278 |
|
0.8 |
|
|
|
1,628 |
|
1.2 |
|
|
|
1,627 |
|
1.2 |
|
Total operating expenses |
|
25,541 |
|
78.1 |
|
|
|
26,352 |
|
76.8 |
|
|
|
103,829 |
|
78.7 |
|
|
|
104,553 |
|
76.2 |
|
Income (loss) from operations |
|
(895 |
) |
(2.7 |
) |
|
|
(2,650 |
) |
(7.7 |
) |
|
|
(964 |
) |
(0.7 |
) |
|
|
(405 |
) |
(0.3 |
) |
Interest income |
|
7 |
|
— |
|
|
|
31 |
|
0.1 |
|
|
|
4 |
|
— |
|
|
|
88 |
|
0.1 |
|
Other expense, net |
|
(973 |
) |
(3.0 |
) |
|
|
(450 |
) |
(1.3 |
) |
|
|
(170 |
) |
(0.1 |
) |
|
|
(162 |
) |
(0.1 |
) |
Income before income taxes |
|
(1,861 |
) |
(5.7 |
) |
|
|
(3,069 |
) |
(8.9 |
) |
|
|
(1,130 |
) |
(0.9 |
) |
|
|
(479 |
) |
(0.3 |
) |
Income tax (provision) benefit |
|
105 |
|
0.3 |
|
|
|
(3,440 |
) |
(10.0 |
) |
|
|
(1,109 |
) |
(0.8 |
) |
|
|
(4,011 |
) |
(2.9 |
) |
Net loss |
$ |
(1,756 |
) |
(5.4 |
)% |
|
$ |
(6,509 |
) |
(19.0 |
)% |
|
$ |
(2,239 |
) |
(1.7 |
)% |
|
$ |
(4,490 |
) |
(3.3 |
)% |
(Loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic |
$ |
(0.94 |
) |
|
|
$ |
3.50 |
|
|
|
$ |
(1.20 |
) |
|
|
$ |
(2.35 |
) |
|
||||
Diluted |
$ |
(0.94 |
) |
|
|
$ |
3.50 |
|
|
|
$ |
(1.20 |
) |
|
|
$ |
(2.35 |
) |
|
||||
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
||||||||||||||
Basic |
|
1,860 |
|
|
|
|
1,859 |
|
|
|
|
1,866 |
|
|
|
|
1,913 |
|
|
||||
Diluted |
|
1,860 |
|
|
|
|
1,859 |
|
|
|
|
1,866 |
|
|
|
|
1,913 |
|
|
||||
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 fourth quarter 2023 constant dollar sales to GAAP sales.
|
Sales - Q4 2023 |
||||||||
|
GAAP Measure: Total $ |
|
Non-GAAP Measure: Constant $ |
|
Constant $ Change |
||||
|
$ |
11.0 |
|
$ |
10.8 |
|
$ |
(0.2 |
) |
|
$ |
19.4 |
|
$ |
19.3 |
|
$ |
(0.1 |
) |
EMEA |
$ |
2.3 |
|
$ |
2.4 |
|
$ |
0.1 |
|
Total |
$ |
32.7 |
|
$ |
32.5 |
|
$ |
(0.2 |
) |
The table below reconciles fiscal year 2023 and 2022 constant dollar net sales, gross profit and income from operations to GAAP net sales, gross profit and income from operations.
|
2023 |
|
2022 |
|
Constant Dollar Change |
||||||||||||||||
|
GAAP Measure: Total $ |
|
Non-GAAP Translation Adjustment |
|
Non-GAAP Measure: Constant $ |
|
GAAP Measure: Total $ |
|
Dollar |
|
Percent |
||||||||||
Net sales |
$ |
132.0 |
|
|
$ |
2.3 |
|
$ |
134.3 |
|
|
$ |
137.2 |
|
|
$ |
(2.9 |
) |
|
(2.1 |
)% |
Gross profit |
$ |
102.9 |
|
|
$ |
1.7 |
|
$ |
104.6 |
|
|
$ |
104.1 |
|
|
$ |
0.5 |
|
|
0.5 |
% |
Loss from operations |
$ |
(1.0 |
) |
|
$ |
0.6 |
|
$ |
(0.4 |
) |
|
$ |
(0.4 |
) |
|
$ |
— |
|
|
— |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240327903891/en/
Erin K. Barta
General Counsel and Corporate Secretary
972-471-7742
ir@mannatech.com
www.mannatech.com
Source: Mannatech, Incorporated
FAQ
What were Mannatech's (MTEX) net sales for Q4 2023?
How did Mannatech's (MTEX) operating loss change in Q4 2023 compared to Q4 2022?
What was Mannatech's (MTEX) full-year 2023 net sales?
What new program did Mannatech (MTEX) launch in June 2023?
How did Mannatech's (MTEX) net loss change in 2023 compared to 2022?
What was the change in Mannatech's (MTEX) cash and cash equivalents from 2022 to 2023?
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