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Mannatech Q1 Sales $40.6 Million

By Nicole Dunkley

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 2017.

First quarter net sales for 2017 were $40.6 million, a decrease of $0.1 million, or 0.2% as compared to $40.7 million in the first quarter of 2016. Income (loss) from operations was $(2.0) million for the first quarter 2017, as compared to $0.5 million in the same period in 2016.

Net income (loss) was $(1.2) million, or $(0.46) per diluted share, for the first quarter 2016, as compared to $0.6 million, or $0.21 per diluted share, for the first quarter 2016.

For the three months ended March 31, 2017, Mannatech’s operations outside of the Americas accounted for approximately 61.8% of Mannatech’s consolidated net sales.

First quarter 2017 Asia/Pacific net sales increased by $0.5 million, or 2.3%, to $21.9 million, as compared to $21.4 million for the same period in 2016. This increase was primarily due to a 7.9% increase in the number of active independent associates and members partially offset by a 5.1% decrease in revenue per active independent associate and member.

During the three months ended March 31, 2017, the loyalty program increased sales by $0.3 million, as compared to the same period in 2016. Foreign currency exchange had the effect of increasing revenue by $0.7 million for the three months ended March 31, 2017, as compared to the same period in 2016. The currency impact is primarily due to the strengthening of the Korean Won, Australian Dollar, Japanese Yen, Taiwanese Dollar, New Zealand Dollar, and Hong Kong Dollar partially offset by the weakening of the Singapore Dollar and Chinese Yuan (Renminbi).

First quarter 2017 net sales for Europe, the Middle East and Africa (EMEA) decreased by $0.1 million, or 3%, to $3.2 million, as compared to $3.3 million for the same period in 2016. This decrease was primarily due to a 0.2% decrease in the number of active independent associates and members as well as a 2.9% decrease in revenue per active independent associate and member.

During the three months ended March 31, 2017, the loyalty program in EMEA increased net sales by $0.1 million. Foreign currency exchange had the effect of increasing revenue by $0.3 million when the three-month period ending March 31, 2017 is compared to the same period in 2016. The currency impact is primarily due to the strengthening of the South Africa Rand partially offset by the weakening of the British Pound.

For the three months ended March 31, 2017, net sales in the Americas decreased by $0.5 million, or 3.1%, to $15.5 million, as compared to $16.0 million for the same period in 2016. This decrease was primarily due to a 7.7% decline in the number of active independent associates and members partially offset by a 4.9% increase in revenue per active independent associate and member.

For the three-month period ended March 31, 2017, our net sales declined 2.5% on a Constant dollar basis (see Non-GAAP Financial Measures, below) as compared to the same period in 2016, while favorable foreign exchange caused a $0.9 million increase in GAAP net sales as compared to the same period in 2016.

Commission expenses for the three months ended March 31, 2017 increased by 8.6%, or $1.3 million, to $16.5 million, as compared to $15.2 million for the same period in 2016. For the three months ended March 31, 2017, commissions as a percentage of net sales increased to 40.6% from 37.4% for the same period in 2016 due to the commission expense on the pre-launch in certain Asia/Pacific markets of new products available after our annual convention held in April 2017.

Incentive costs for the three months ended March 31, 2017 increased by 50.0%, or $0.2 million, to $0.6 million, as compared to $0.4 million for the same period in 2016 due to new incentives in growth markets. For the three months ended March 31, 2017, incentives as a percentage of net sales increased to 1.4% from 0.9% for the same period in 2016.

The approximate number of new and continuing active independent associates and members who purchased our packs or products during the twelve months ended March 31, 2017 and 2016 were approximately 220,000 and 218,000, respectively. Recruitment of new independent associates and members decreased 3.8% during the three months ended March 31, 2017 as compared to the same period in 2016. The number of new independent associate and member positions held by individuals in our network for the three months ended March 31, 2017 was approximately 22,900, as compared to 23,800 for the same period in 2016.

For the three months ended March 31, 2017, selling and administrative expenses increased by $0.5 million, or 6.3%, to $8.6 million, as compared to $8.1 million for the same period in 2016. The increase in selling and administrative expenses consisted of a $0.3 million increase in marketing related costs and a $0.3 million increase in payroll costs in our headquarters, Korea, Hong Kong, and Colombia offices, offset by $0.1 million decrease in stock based compensation expense.

Other operating costs, which include professional fees, travel and entertainment, bad debt, credit card processing fees, and other miscellaneous operating expenses, increased by $0.1 million, or 1.3% for the three months ended March 31, 2017, as compared to the same period in 2016. Included in this cost is a $0.5 million legal settlement. Partially offsetting increases in legal costs are decreases in travel and entertainment.

As of March 31, 2017, our cash and cash equivalents increased by 2.4%, or $0.7 million, to $29.4 million from $28.7 million as of December 31, 2016. Our inventory balance at March 31, 2017 was $13.4 million, compared to $12.0 million at December 31, 2016. During the quarter, we purchased inventory in advance of introducing new products at MannaFestSM event in April and as part of the introduction of TruHealth to new markets, including inventory purchased for China.

Our accounts payable balance at March 31, 2017 increased to $5.9 million, compared to $5.2 million at December 31, 2016, due to the purchase of inventory. At March 31, 2017, our commissions and incentives payable increased to $9.1 million from $8.8 million at December 31, 2016, due to timing of our commission payments. During the first quarter of 2017, we paid dividends of $0.3 million.

About Mannatech

Mannatech, Incorporated offers a full body wellness experience through its global network of independent associates and members. With more than 20 years of experience and operations in 26 markets, Mannatech is committed to transforming lives.

Source:: https://www.businessforhome.org/2017/05/mannatech-q1-sales-40-6-million/