Full Press Release Details
Mannatech Reports First Quarter EPS Increase of 29%
Coppell, Texas May 10, 2006 Mannatech,
Incorporated (NASDAQ: MTEX) today announced record first quarter earnings for the three months ended March 31, 2006 as compared to the prior year s comparable quarter. Highlights from the quarter included:
Chairman of the Board and Chief Executive Officer Samuel Caster stated, We are pleased with our results as solid sales and profit growth continued in the first quarter. We began our annual travel incentive
qualifying period in January this year instead of March, which has been the traditional kick-off for the incentive. This timing shift added approximately $1.7 million in travel cost accrual to the 2006 quarter, seen in our higher rate of commission
and incentive expense this year. However, we reduced our total operating expense rate by 1.7 points, and our operating profit increased by $1.5 million. Our current associate and member count grew 27% against last year and topped the half-million
mark for the first time. These successes clearly demonstrate the viability of our products as well as that of our business model.
first three months of 2006, we maintained a debt-free balance sheet, improved our working capital, reduced our inventory levels, and preserved a strong cash position of over $71 million. We increased our quarterly declared dividends to $0.08 per
share as compared to $0.07 per share last year. Our Board intends to share the growth in the value of Mannatech by continuing our quarterly dividend payments to our shareholders as a reward for their long-term stock ownership, said
Sales by location for the three months ended March 31, in millions, were:
| March 31, 2006 | March 31, 2005 | |||||||||||
| United States | $ | 67.1 | 67.8 | % | $ | 56.1 | 65.9 | % | ||||
| Canada | 7.3 | 7.4 | % | 6.7 | 7.9 | % | ||||||
| Australia | 7.9 | 8.0 | % | 8.1 | 9.5 | % | ||||||
| United Kingdom | 2.0 | 2.0 | % | 2.4 | 2.8 | % | ||||||
| Japan | 9.2 | 9.3 | % | 7.8 | 9.2 | % | ||||||
| New Zealand | 2.5 | 2.5 | % | 3.6 | 4.2 | % | ||||||
| Republic of Korea | 1.6 | 1.6 | % | 0.4 | 0.5 | % | ||||||
| Taiwan* | 0.8 | 0.8 | % | % | ||||||||
| Denmark** | 0.6 | 0.6 | % | % | ||||||||
| Germany*** | % | % | ||||||||||
| Total | $ | 99.0 | 100 | % | $ | 85.1 | 100 | % |
* Taiwan began its operations in June 2005.
began selling products in Denmark in August 2005.
*** United Kingdom began selling products in Germany in March 2006.
The number of independent associates and members who purchased our products and packs within the last 12 months is as follows:
| For the twelve months ended March 31, | ||||||||||
| 2006 | 2005 | |||||||||
| Current Independent Associates and Members | ||||||||||
| New | 228,000 | 45 | % | 192,000 | 48 | % | ||||
| Continuing | 282,000 | 55 | % | 209,000 | 52 | % | ||||
| Total | 510,000 | 100 | % | 401,000 | 100 | % |
Mannatech, Incorporated is a global wellness solutions provider that develops innovative, high-quality, proprietary nutritional supplements, topical products, and weight management products, which are sold through a global network-marketing
system operating throughout 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
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
Securities & Exchange Commission and published on its corporate website
www.mannatech.com on or about May 10, 2006. Unaudited Consolidated Financial
Statements to follow)
MANNATECH, INCORPORATED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share
information and per share amounts)
| December 31, 2005 | March 31, 2006 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 56,207 | $ | 54,262 | ||||
| Short-term investments | 1,974 | 1,984 | ||||||
| Restricted cash | 2,777 | 2,838 | ||||||
| Accounts receivable | 548 | 921 | ||||||
| Income tax receivable | 2,389 | |||||||
| Inventories, net | 19,811 | 17,051 | ||||||
| Prepaid expenses and other current assets | 3,471 | 6,393 | ||||||
| Deferred tax assets | 671 | 424 | ||||||
| Note receivable from affiliate | 153 | 155 | ||||||
| Total current assets | 85,612 | 86,417 | ||||||
| Long-term investments | 15,375 | 15,375 | ||||||
| Property and equipment, net | 10,951 | 11,174 | ||||||
| Construction in progress | 8,157 | 12,813 | ||||||
| Long-term restricted cash | 1,476 | 1,479 | ||||||
| Other assets | 1,121 | 1,176 | ||||||
| Long-term deferred tax assets | 103 | 114 | ||||||
| Total assets | $ | 122,795 | $ | 128,548 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current portion of capital lease | $ | 23 | $ | 21 | ||||
| Accounts payable | 5,476 | 3,499 | ||||||
| Accrued expenses | 16,941 | 17,535 | ||||||
| Commissions and incentives payable | 15,588 | 18,338 | ||||||
| Taxes payable | 5,773 | 3,427 | ||||||
| Deferred revenue | 3,712 | 4,530 | ||||||
| Total current liabilities | 47,513 | 47,350 | ||||||
| Long-term royalties due to an affiliate | 3,341 | 3,224 | ||||||
| Long-term deferred tax liabilities | 1,086 | 2,075 | ||||||
| Long-term liabilities | 537 | 565 | ||||||
| Total liabilities | 52,477 | 53,214 | ||||||
| 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 27,507,048 shares issued and 26,840,899 shares outstanding in 2006 | 3 | 3 | ||||||
| Additional paid-in capital | 36,699 | 37,848 | ||||||
| Retained earnings | 42,505 | 46,266 | ||||||
| Accumulated other comprehensive loss | (1,098 | ) | (992 | ) | ||||
| 78,109 | 83,125 | |||||||
| Less treasury stock, at cost, 666,149 shares in 2005 and 2006 | (7,791 | ) | (7,791 | ) | ||||
| Total shareholders equity | 70,318 | 75,334 | ||||||
| Total liabilities and shareholders equity | $ | 122,795 | $ | 128,548 |
MANNATECH, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except share and per share information)
| For the three months ended March 31, | ||||||||
| 2005 | 2006 | |||||||
| Net sales | $ | 85,145 | $ | 98,971 | ||||
| Cost of sales | 12,930 | 14,561 | ||||||
| Commissions and incentives | 37,563 | 45,374 | ||||||
| 50,493 | 59,935 | |||||||
| Gross profit | 34,652 | 39,036 | ||||||
| Operating expenses: | ||||||||
| Selling and administrative expenses | 16,120 | 17,777 | ||||||
| Other operating costs | 10,921 | 12,004 | ||||||
| Total operating expenses | 27,041 | 29,781 | ||||||
| Income from operations | 7,611 | 9,255 | ||||||
| Interest income | 332 | 572 | ||||||
| Other expense, net | (92 | ) | (514 | ) | ||||
| Income before income taxes | 7,851 | 9,313 | ||||||
| Provisions for income taxes | (3,189 | ) | (3,405 | ) | ||||
| Net income | $ | 4,662 | $ | 5,908 | ||||
| Earnings per share: | ||||||||
| Basic | $ | 0.17 | $ | 0.22 | ||||
| Diluted | $ | 0.17 | $ | 0.22 | ||||
| Weighted-average common shares outstanding: | ||||||||
| Basic | 27,098 | 26,764 | ||||||
| Diluted | 28,035 | 27,392 |