Full Press Release Details
MANNATECH, INC. REPORTS RECORD SECOND QUARTER EARNINGS
DILUTED E.P.S. OF $0.31 INCREASED 48
PERCENT ON MODEST SALES GROWTH.
Coppell, TX August 9, 2006 Mannatech, Inc. (NASDAQ MTEX) today reported record earnings for second
quarter 2006 of $0.31 per diluted share, up 48% from second quarter 2005 earnings of $0.21 per diluted share. Pretax profit reached $13.4 million for the quarter, up 41% over prior year, reflecting favorable costs relative to sales. Net income for
the quarter reached a record $8.6 million with a net profit ratio of 8.2%, a rate improvement of 2.5 points versus 2005, partially due to a lower effective tax rate in the quarter.
Total second quarter revenue was $104.8 million, up 2.1 percent versus prior year. Total current Mannatech independent associates and members grew to 526,000 as of June 30, 2006, an increase of 19.5% compared
with the same time prior year. The record current independent associate and member count resulted primarily from the increase in continuing current independent associates and members. The number of new and continuing independent associates and
members during the last 12-months ended June 30, 2005 and 2006 were as follows:
| For the twelve months ended June 30, | |||||||||||||||
| Current Independent Associates and Members | (revised*) 2005 | 2006 | Number and percentage change | ||||||||||||
| New | 216,000 | 49.1 | % | 217,000 | 41.3 | % | 1,000 | 0.5 | % | ||||||
| Continuing | 224,000 | 50.9 | % | 309,000 | 58.7 | % | 85,000 | 38.0 | % | ||||||
| Total | 440,000 | 100 | % | 526,000 | 100 | % | 86,000 | 19.5 | % |
Sam Caster, Board Chairman and CEO, commented, Our record
earnings for the quarter reflect significant ongoing efforts to improve profitability in all operational areas. While we were not pleased with the sales and recruitment performance in the second quarter, we feel we are well positioned for new growth
in the coming months with planned new product introductions, and new country openings following the completion of our ERP system installation early next year.
Mr. Caster continued, We are working to strengthen our growth trend in the second half of 2006 based on significant new product introduction. This will include the launch in the fourth quarter of a
revolutionary new product, called PhytoMatrix, the nutrition industry s first supplement containing completely standardized levels of all natural vitamin complexes and 100% plant sourced minerals and phytochemicals. This important product
development fills the needs of health-conscious consumers who prefer natural plant-based wellness products over synthetic ingredients. In addition, we are preparing to expand Optimal our proprietary new preservative-free skin care
system, into several more of our current markets. Optimal was successfully introduced in Japan in mid-May, where it generated more than $1.2 million in sales by the end of June. Skin care alone for the quarter accounted for sales
growth of 14% against 2005 in Japan, while quarterly total sales increased 21% in that market.
Year-to-date sales through June reached $203.7 million, up 8.5%from 2005. Net income grew to $14.5 million, an increase
of over 38%, and diluted earnings per share grew to $0.53, up 39% in the first half of 2006 versus the prior year. Mannatech also expended $4.0 million to repurchase approximately 327,000 shares of stock in the second quarter.
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
| 2005 | 2006 | 2005 | 2006 | |||||||||||||||||||||
| (in millions) | (in millions) | |||||||||||||||||||||||
| United States | $ | 69.5 | 67.7 | % | $ | 70.0 | 66.8 | % | $ | 125.6 | 66.9 | % | $ | 137.1 | 67.3 | % | ||||||||
| Canada | 7.3 | 7.1 | % | 7.6 | 7.3 | % | 14.0 | 7.5 | % | 14.9 | 7.3 | % | ||||||||||||
| Australia | 8.9 | 8.7 | % | 8.9 | 8.5 | % | 17.0 | 9.1 | % | 16.8 | 8.2 | % | ||||||||||||
| United Kingdom | 2.4 | 2.3 | % | 1.9 | 1.8 | % | 4.8 | 2.6 | % | 3.8 | 1.9 | % | ||||||||||||
| Japan | 9.0 | 8.8 | % | 10.9 | 10.4 | % | 16.8 | 8.9 | % | 20.1 | 9.9 | % | ||||||||||||
| New Zealand | 4.1 | 4.0 | % | 0.8 | 0.7 | % | 7.7 | 4.1 | % | 3.3 | 1.6 | % | ||||||||||||
| Republic of Korea | 1.0 | 1.0 | % | 2.3 | 2.2 | % | 1.4 | 0.7 | % | 3.9 | 1.9 | % | ||||||||||||
| Taiwan* | 0.4 | 0.4 | % | 1.0 | 1.0 | % | 0.4 | 0.2 | % | 1.8 | 0.9 | % | ||||||||||||
| Denmark** | % | 0.9 | 0.9 | % | % | 1.4 | 0.7 | % | ||||||||||||||||
| Germany*** | % | 0.5 | 0.4 | % | % | 0.6 | 0.3 | % | ||||||||||||||||
| Totals | $ | 102.6 | 100 | % | $ | 104.8 | 100 | % | $ | 187.7 | 100 | % | $ | 203.7 | 100 | % |
Mannatech, Incorporated is a global wellness solutions provider that develops innovative, high-quality, proprietary
nutritional supplements, topical and skin care products, and weight management products that are sold through approximately 526,0000 independent associates and members located in the United States and the international markets of Canada, Australia,
the United Kingdom, Japan, New Zealand, the Republic of Korea, Taiwan, Denmark, and Germany.
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 may, believes, enthusiastic, demonstrates, intends, optimistic, and plans 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 its expectations, statements, and assumptions reflected in these forward-looking statements are reasonable, it cautions its 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.
Contact Information:
Steve Fenstermacher, CFO
Corporate web site: www.mannatech.com
(Complete quarterly report filed on its Form 10-Q, which is expected to be filed
with the United States Securities & Exchange Commission and published on its corporate website www.mannatech.com on or about August 9, 2006. Unaudited Consolidated Financial Statements to follow)
MANNATECH, INCORPORATED
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share
| December 31, 2005 | June 30, 2006 | |||||||
| ASSETS | (unaudited) | |||||||
| Cash and cash equivalents | $ | 56,207 | $ | 51,276 | ||||
| Short-term investments | 1,974 | 7,012 | ||||||
| Restricted cash | 2,777 | 1,109 | ||||||
| Accounts receivable | 548 | 1,468 | ||||||
| Income tax receivable | 114 | |||||||
| Inventories, net | 19,811 | 19,036 | ||||||
| Prepaid expenses and other current assets | 3,471 | 3,381 | ||||||
| Deferred tax assets | 671 | 932 | ||||||
| Note receivable from affiliate | 153 | 157 | ||||||
| Total current assets | 85,612 | 84,485 | ||||||
| Long-term investments | 15,375 | 20,375 | ||||||
| Property and equipment, net | 10,951 | 13,887 | ||||||
| Construction in progress | 8,157 | 16,516 | ||||||
| Long-term restricted cash | 1,476 | 1,631 | ||||||
| Other assets | 1,121 | 1,435 | ||||||
| Long-term deferred tax assets | 103 | 126 | ||||||
| Total assets | $ | 122,795 | $ | 138,455 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current portion of capital lease | $ | 23 | $ | 93 | ||||
| Accounts payable | 5,476 | 3,294 | ||||||
| Accrued expenses | 16,941 | 20,395 | ||||||
| Commissions and incentives payable | 15,588 | 18,188 | ||||||
| Taxes payable | 5,773 | 4,035 | ||||||
| Deferred revenue | 3,712 | 5,434 | ||||||
| Total current liabilities | 47,513 | 51,439 | ||||||
| Capital lease, excluding current portion | 322 | |||||||
| Long-term royalties due to an affiliate | 3,341 | 3,107 | ||||||
| Long-term deferred tax liabilities | 1,086 | 4,571 | ||||||
| Long-term liabilities | 537 | 602 | ||||||
| Total liabilities | 52,477 | 60,041 | ||||||
| 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, 27,404,513 shares issued and 26,738,364 shares outstanding in 2005 and 27,584,548 shares issued and 26,591,155 shares outstanding in 2006 | 3 | 3 | ||||||
| Additional paid-in capital | 36,699 | 38,251 | ||||||
| Retained earnings | 42,505 | 52,771 | ||||||
| Accumulated other comprehensive loss | (1,098 | ) | (820 | ) | ||||
| 78,109 | 90,205 | |||||||
| Less treasury stock, at cost, 666,149 shares in 2005 and 993,393 in 2006 | (7,791 | ) | (11,791 | ) | ||||
| Total shareholders equity | 70,318 | 78,414 | ||||||
| Total liabilities and shareholders equity | $ | 122,795 | $ | 138,455 |
MANNATECH, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per share information)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2005 | 2006 | 2005 | 2006 | |||||||||||||
| Net sales | $ | 102,599 | $ | 104,771 | $ | 187,744 | $ | 203,742 | ||||||||
| Cost of sales | 15,778 | 14,719 | 28,708 | 29,280 | ||||||||||||
| Commissions and incentives | 47,360 | 45,998 | 84,924 | 91,372 | ||||||||||||
| 63,138 | 60,717 | 113,632 | 120,652 | |||||||||||||
| Gross profit | 39,461 | 44,054 | 74,112 | 83,090 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and administrative expenses | 16,340 | 18,230 | 32,460 | 36,007 | ||||||||||||
| Other operating costs | 13,250 | 13,669 | 24,170 | 25,673 | ||||||||||||
| Total operating expenses | 29,590 | 31,899 | 56,630 | 61,680 | ||||||||||||
| Income from operations | 9,871 | 12,155 | 17,482 | 21,410 | ||||||||||||
| Interest income | 453 | 592 | 785 | 1,164 | ||||||||||||
| Other income (expense), net | (808 | ) | 649 | (900 | ) | 135 | ||||||||||
| Income before income taxes | 9,516 | 13,396 | 17,367 | 22,709 | ||||||||||||
| Provision for income taxes | (3,699 | ) | (4,784 | ) | (6,888 | ) | (8,189 | ) | ||||||||
| Net income | $ | 5,817 | $ | 8,612 | $ | 10,479 | $ | 14,520 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.22 | $ | 0.32 | $ | 0.39 | $ | 0.54 | ||||||||
| Diluted | $ | 0.21 | $ | 0.31 | $ | 0.38 | $ | 0.53 | ||||||||
| Weighted-average common shares outstanding: | ||||||||||||||||
| Basic | 27,073 | 26,782 | 27,085 | 26,773 | ||||||||||||
| Diluted | 27,918 | 27,408 | 27,963 | 27,400 |