EX-99.1 2 exhibit_99-1pr11032010.htm PRESS RELEASE DATED 11/03/2010 exhibit_99-1pr11032010.htm

Exhibit 99.1



Mannatech Reports Third Quarter Results
 Company reports improvement in year-over-year quarterly operating results

 
(COPPELL, Texas) November 3, 2010 – Mannatech, Incorporated (NASDAQ: MTEX - News), a global pioneer in the development of high-quality health, weight and fitness and skin care solutions based on nutritional science, today reported a net loss of $1.3 million or $0.05 cents per diluted share for the third quarter ending September 30, 2010, compared to a net loss of $9.2 million or $0.35 cents per diluted share for the third quarter of 2009. The company reported an operating loss of $3.7 million for the third quarter 2010 compared to an operating loss of $8.6 million in the third quarter of 2009.

Third quarter net sales for 2010 were $54.9 million, a decrease of 23.0%, compared to $71.3 million in the third quarter of 2009.  International sales were essentially flat with the second quarter of 2010, while North American sales declined 8% compared to the second quarter of 2010.

For the nine months ended September 30, 2010, net sales were $173.1 million, down 21.2% from $219.6 million for the same period in 2009.  The company reported a net loss for the nine month period of $7.9 million, compared to last year’s nine month net loss of $19.5 million.  The loss per share was $0.30, compared to a loss per share of $0.74 for the nine months ended September 2009.

“Our third quarter new Associate and Member recruiting levels were almost equal to second quarter levels.  Historically, second quarter recruitment levels are bolstered by our annual sales incentive, so this year's third quarter recruiting results are encouraging metrics showing that our Associates are excited again about what Mannatech offers,” said Dr. Robert Sinnott, co-CEO and chief science officer.  “The recruiting performance also contributed to third quarter sales levels down slightly to that of second quarter 2010 sales levels.”  Dr. Sinnott continued, “At our major convention in early September, we commenced our official partnership with the International Sport Karate Association (ISKA), launched our unique Mannatech LIFT skin care line, and delivered exceptional selling tools.  Our Associates are embracing these new products, partnerships and tools with great enthusiasm and excitement.”

“We continue to manage our cost of sales, commission costs and operating expenses at efficient levels,” said Stephen Fenstermacher, Co-CEO and chief financial officer.  “Our balance sheet reflects higher cash and cash equivalents as well as lower outstanding payables compared to the second quarter of 2010, with essentially no long-term debt. Also, Associate excitement continues to build in anticipation of our launch of operations in Mexico on track for the first quarter of 2011.”

New independent Associates and Members totaled 22,296 in the third quarter compared to 22,775 in the second quarter of 2010, and 36,689 in the third quarter of 2009. Total independent Associate and Member count based on a 12-month trailing period was approximately 422,000 as of September 30, 2010, as compared to 534,000 as of September 30, 2009.

Conference Call
Mannatech will hold a conference call and webcast to discuss this announcement with investors on Thursday, November 4, 2010 at 9:00 a.m. Central Daylight Time, 10:00 a.m. Eastern Daylight Time.  Investors may listen to the call by accessing Mannatech’s website at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=62253&eventID=3419590.

Individuals interested in Mannatech’s products or in exploring its business opportunity can learn more at www.mannatech.com.

About Mannatech
Mannatech, Incorporated, develops high-quality health, weight and fitness, and skin care solutions that are based on the solid foundation of nutritional science and development standards. These 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 and the Republic of Korea.

Please Note: 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 “intend”, “indicate”, “believe”, “expect” 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 ability 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 Quarterly Report on Form 10-Q, 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.

Contact Information:
Gary Spinell
Senior Vice President Finance & Administration
972-471-6512
ir@mannatech.com
www.mannatech.com


 
 
 

Net Sales in Dollars and as a Percentage of Consolidated Net Sales – (Unaudited)

 
Three months ended September 30,
  
Country
2010
  
2009
  
 
(in millions, except percentages)
  
United States
$
23.9
  
43.5
%
$
34.0
  
47.7
%
  
Japan
  
8.9
  
16.2
%
  
9.9
  
13.9
%
  
Republic of Korea
  
5.1
  
9.3
%
  
6.9
  
9.7
%
  
Canada
  
4.6
  
8.4
%
  
5.8
  
8.1
%
  
Australia
  
4.7
  
8.6
%
  
5.7
  
8.0
%
  
South Africa
  
3.0
  
5.5
%
  
3.9
  
5.5
%
  
Taiwan
  
1.4
  
2.6
%
  
1.4
  
2.0
%
  
New Zealand
  
0.7
  
1.3
%
  
1.1
  
1.5
%
  
Germany
  
0.6
  
1.1
%
  
0.9
  
1.3
%
  
United Kingdom
  
0.4
  
0.7
%
  
0.8
  
1.0
%
  
Denmark
  
0.1
  
0.2
%
  
0.5
  
0.7
%
  
Singapore
  
0.5
  
0.9
%
  
0.4
  
0.6
%
  
Austria(1)
  
0.2
  
0.3
%
  
—
  
—
    
Norway(1)
  
0.5
  
0.9
%
  
—
  
—
    
The Netherlands(1)
  
0.2
  
0.3
%
  
—
  
—
    
Sweden(1)
  
0.1
  
0.2
%
  
—
  
—
    
Totals
$
54.9
  
100
%
$
71.3
  
100
%
  
_________________________
(1) Austria, Norway, the Netherlands, and Sweden began operations in September 2009, and had a combined total net sales of $0.1 million for the period ended September 30, 2009.
 
 
Nine months ended September 30,
  
Country
2010
  
2009
  
 
(in millions, except percentages)
  
United States
$
77.7
  
44.9
%
$
109.7
  
49.9
%
  
Japan
  
25.8
  
14.9
%
  
31.4
  
14.3
%
  
Republic of Korea
  
16.2
  
9.4
%
  
19.2
  
8.8
%
  
Canada
  
14.0
  
8.1
%
  
17.5
  
8.0
%
  
Australia
  
14.8
  
8.6
%
  
16.7
  
7.6
%
  
South Africa
  
9.0
  
5.2
%
  
9.4
  
4.2
%
  
Taiwan
  
5.0
  
2.9
%
  
4.8
  
2.2
%
  
New Zealand
  
2.5
  
1.4
%
  
3.3
  
1.5
%
  
Germany
  
1.8
  
1.0
%
  
2.6
  
1.2
%
  
United Kingdom
  
1.6
  
0.9
%
  
2.5
  
1.1
%
  
Denmark
  
0.4
  
0.2
%
  
1.5
  
0.7
%
  
Singapore
  
1.5
  
0.9
%
  
1.0
  
0.5
%
  
Austria(1)
  
0.9
  
0.5
%
  
—
  
—
    
Norway(1)
  
1.2
  
0.7
%
  
—
  
—
    
The Netherlands(1)
  
0.4
  
0.2
%
  
—
  
—
    
Sweden(1)
  
0.3
  
0.2
%
  
—
  
—
    
Totals
$
173.1
  
100
%
$
219.6
  
100
%
  
_________________________
(1) Austria, Norway, the Netherlands, and Sweden began operations in September 2009, and had a combined total net sales of $0.1 million for the period ended September 30, 2009.
 
 



 

The number of new and continuing independent associates and members who purchased our packs or products during the twelve months ended September 30, 2010 and 2009 were as follows:

   
2010
  
2009
  
New
  
93,000
  
22.0
%
151,000
  
28.3
%
Continuing
  
329,000
  
78.0
%
383,000
  
71.7
%
Total
  
422,000
  
100
%
534,000
  
100
%



 


 
 
 


 
MANNATECH, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS – (UNAUDITED)
(in thousands, except per share information)


   
Three months ended
September 30,
  
Nine months ended
September 30,
  
   
2010
  
2009
  
2010
  
2009
  
Net sales
  
$
54,866
  
$
71,295
  
$
173,137
  
$
219,640
  
Cost of sales
    
7,924
    
11,923
    
24,640
    
35,944
  
Commissions and incentives
    
23,109
    
35,268
    
74,617
    
115,413
  
     
31,033
    
47,191
    
99,257
    
151,357
  
Gross profit
    
23,833
    
24,104
    
73,880
    
68,283
  
                           
Operating expenses:
                          
Selling and administrative
    
15,811
    
17,748
    
47,579
    
53,403
  
Depreciation and amortization
    
2,772
    
3,085
    
8,691
    
9,357
  
Other operating costs
    
8,911
    
11,842
    
26,292
    
30,831
  
Total operating expenses
    
27,494
    
32,675
    
82,562
    
93,591
  
                           
Loss from operations
    
(3,661
)
  
(8,571
)
  
(8,682
)
  
(25,308
)
Interest income
    
20
    
39
    
1
    
182
  
Other income (expense), net
    
400
    
859
    
(175
)
  
822
  
Loss before income taxes
    
(3,241
)
  
(7,673
)
  
(8,856
)
  
(24,304
)
                           
(Provision) benefit for income taxes
    
1,963
    
(1,534
)
  
982
    
4,785
  
Net loss
  
$
(1,278
)
$
(9,207
)
$
(7,874
)
$
(19,519
)
                           
Net loss per share:
                          
Basic
  
$
(0.05
)
$
(0.35
)
$
(0.30
)
$
(0.74
)
Diluted
  
$
(0.05
)
$
(0.35
)
$
(0.30
)
$
(0.74
)
                           
Weighted-average common shares outstanding:
                          
Basic
    
26,490
    
26,464
    
26,487
    
26,462
  
Diluted
    
26,490
    
26,464
    
26,487
    
26,462
  


 
 
 


 


MANNATECH, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)

   
September 30,
2010
  
December 31,
2009
    
ASSETS
  
(unaudited)
      
Cash and cash equivalents
  
$
21,680
  
$
17,367
  
Restricted cash
    
1,282
    
1,288
  
Accounts receivable, net of allowance of $14 and $17  in 2010 and 2009, respectively
    
163
    
664
  
Income tax receivable
    
999
    
8,075
  
Inventories, net
    
25,389
    
31,290
  
Prepaid expenses and other current assets
    
3,515
    
3,139
  
Deferred tax assets
    
2,823
    
2,662
  
Total current assets
    
55,851
    
64,485
  
Property and equipment, net
    
19,963
    
27,144
  
Construction in progress
    
1,507
    
317
  
Long-term restricted cash
    
5,632
    
7,201
  
Other assets
    
2,162
    
2,503
  
Long-term deferred tax assets
    
693
    
652
  
Total assets
  
$
85,808
  
$
102,302
  
               
LIABILITIES AND SHAREHOLDERS’ EQUITY
              
Current portion of capital leases
  
$
1,197
  
$
847
  
Accounts payable
    
5,309
    
11,319
  
Accrued expenses
    
13,271
    
14,231
  
Commissions and incentives payable
    
7,097
    
10,624
  
Taxes payable
    
3,265
    
2,577
  
Current deferred tax liability
    
423
    
274
  
Deferred revenue
    
2,881
    
2,807
  
Total current liabilities
    
33,443
    
42,679
  
Capital leases, excluding current portion
    
1,402
    
1,068
  
Long-term deferred tax liabilities
    
1,736
    
3,923
  
Other long-term liabilities
    
5,189
    
3,348
  
Total liabilities
    
41,770
    
51,018
  
               
Commitments and contingencies
              
               
Shareholders’ equity:
              
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding
    
—
    
—
  
Common stock, $0.0001 par value, 99,000,000 shares authorized,
27,697,560 shares issued and 26,490,466 shares outstanding in 2010 and 27,687,882 shares issued and 26,480,788 shares outstanding in 2009
    
3
    
3
  
Additional paid-in capital
    
41,934
    
41,442
  
Retained earnings
    
17,869
    
25,743
  
Accumulated other comprehensive loss
    
(977
)
  
(1,113
)
Less treasury stock, at cost, 1,207,094 shares in 2010 and 2009
    
(14,791
)
  
(14,791
)
Total shareholders’ equity
    
44,038
    
51,284
  
Total liabilities and shareholders’ equity
  
$
85,808
  
$
102,302