Full Press Release Details
Mannatech Reports Fourth Quarter and Full Year 2007
Sales and earnings decline; additional accrual
Coppell, TX, March 14, 2008 Mannatech, Incorporated (NASDAQ MTEX) today reported a fourth quarter 2007
loss of $3.6 million or $0.13 cents per diluted share, which included an accrual of $4.7 million for litigation-related expenses. This compares to $0.30 cents earnings per diluted share and $8.2 million of net income for the fourth quarter of
2006. The company reported a pretax loss of $4.7 million compared to $12.2 million for the fourth quarter of 2006.
Fourth quarter net sales for 2007 were
$99.9 million, a decrease of 6.5%, compared to $106.8 million in the fourth quarter of 2006. The sales decline resulted from a 20% decrease in North America sales compared to the fourth quarter of 2006. This was partially offset by a 27% increase in
sales from international markets, primarily in Asia, in the fourth quarter of 2007 compared to the fourth quarter of 2006.
Terry Persinger, President and
CEO commented, Our U.S. market continues to experience softer sales and recruiting impacted by ongoing litigation. The company is continuing discussions with the Texas Attorney General s staff toward a satisfactory resolution. In the
meantime, we continue to invest in vital areas to restore sales and recruiting momentum. The higher fourth quarter expense levels reflected our strategy in the short-term to continue funding for the new research, products, and sales programs that
will grow our business.
Mr. Persinger continued, We are looking for renewed momentum and improved profitability in the latter part of
this year, resulting from the dual emphasis on global business development and cost management. A new sales platform and initiatives will kick off at MannaFest, our annual convention at the end of this month. At the same time, we look to enter new
markets starting with the opening of South Africa in the second quarter.
Total independent Associate and Member count based on a 12-month trailing
period increased to 575,000 for the fourth quarter of 2007 as compared to 544,000 for the fourth quarter of 2006. The 5.7% growth resulted from higher retention of continuing independent Associates and Members which were up 43,000, a 12.6% increase
compared to the same period last year. This increase was partially offset by a 5.9% decline in new independent Associates and Members on a 12-month trailing basis.
Full year 2007 net sales reached $412.7 million, up 0.1% from 2006. Net income for the full year 2007 was $6.6 million, compared to the full year 2006 net income of $32.4 million. Diluted earnings per share were $0.25 cents compared to
$1.19 for the full year 2006.
Mannatech will hold a conference call and webcast to discuss this announcement with investors on Monday, March 17, 2008 at 9:00 a.m. Central Time, 10:00 a.m. Eastern Time. Investors may listen to the call by accessing Mannatech s
website at www.mannatech.com.
Incorporated, is a global wellness solutions provider of innovative, high-quality, proprietary nutritional supplements, topical and skin care products, and weight management products sold through 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 intend 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 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, Vice President
Corporate website: www.mannatech.com
For geographical purposes,
consolidated net sales primarily shipped to customers in these locations were as follows:
Net Sales in Dollars and as a Percentage of
Consolidated Net Sales
(In millions, except percentages)
| For the three months ended December 31, | |||||||||||||||||||
| 2007 | 2006 | Dollar change | Percentage change | ||||||||||||||||
| United States | $ | 53.5 | 53.6 | % | $ | 68.6 | 64.2 | % | ($ | 15.1 | ) | (22.0 | %) | ||||||
| Canada | 6.7 | 6.7 | % | 7.0 | 6.6 | % | (0.3 | ) | (4.3 | %) | |||||||||
| Australia | 7.4 | 7.4 | % | 7.7 | 7.2 | % | (0.3 | ) | (3.9 | %) | |||||||||
| United Kingdom | 1.7 | 1.7 | % | 1.8 | 1.7 | % | (0.1 | ) | (5.6 | %) | |||||||||
| Japan | 10.9 | 10.9 | % | 11.3 | 10.6 | % | (0.4 | ) | (3.5 | %) | |||||||||
| New Zealand | 1.5 | 1.5 | % | 2.1 | 2.0 | % | (0.6 | ) | (28.6 | %) | |||||||||
| Republic of Korea | 15.3 | 15.3 | % | 5.2 | 4.9 | % | 10.1 | 194.2 | % | ||||||||||
| Taiwan | 1.4 | 1.4 | % | 1.1 | 1.0 | % | 0.3 | 27.3 | % | ||||||||||
| Denmark | 0.3 | 0.3 | % | 1.0 | 0.9 | % | (0.7 | ) | (70.0 | %) | |||||||||
| Germany | 1.2 | 1.2 | % | 1.0 | 0.9 | % | 0.2 | 20.0 | % | ||||||||||
| Totals | $ | 99.9 | 100 | % | $ | 106.8 | 100 | % | ($ | 6.9 | ) | (6.5 | %) |
| For the year ended December 31, | |||||||||||||||||||
| 2007 | 2006 | Dollar change | Percentage change | ||||||||||||||||
| United States | $ | 244.5 | 59.2 | % | $ | 271.4 | 66.2 | % | ($ | 26.9 | ) | (9.9 | %) | ||||||
| Canada | 27.4 | 6.6 | % | 28.6 | 7.0 | % | (1.2 | ) | (4.2 | %) | |||||||||
| Australia | 29.4 | 7.1 | % | 30.5 | 7.4 | % | (1.1 | ) | (3.6 | %) | |||||||||
| United Kingdom | 6.7 | 1.6 | % | 7.5 | 1.8 | % | (0.8 | ) | (10.7 | %) | |||||||||
| Japan | 42.3 | 10.3 | % | 41.4 | 10.1 | % | 0.9 | 2.2 | % | ||||||||||
| New Zealand | 6.9 | 1.7 | % | 8.9 | 2.2 | % | (2.0 | ) | (22.5 | %) | |||||||||
| Republic of Korea | 44.0 | 10.7 | % | 12.4 | 3.0 | % | 31.6 | 254.8 | % | ||||||||||
| Taiwan | 5.4 | 1.3 | % | 3.7 | 0.9 | % | 1.7 | 45.9 | % | ||||||||||
| Denmark | 1.5 | 0.4 | % | 3.4 | 0.8 | % | (1.9 | ) | (55.9 | %) | |||||||||
| Germany | 4.6 | 1.1 | % | 2.3 | 0.6 | % | 2.3 | 100.0 | % | ||||||||||
| Totals | $ | 412.7 | 100 | % | $ | 410.1 | 100 | % | $ | 2.6 | 0.6 | % |
The number of new and continuing independent Associates and Members who purchased packs during the 12-months ended
December 31, 2007 and 2006 were as follows:
| December 31, 2007 | December 31, 2006 | Number and percentage change | ||||||||||||||
| New | 191,000 | 33.2 | % | 203,000 | 37.4 | % | (12,000 | ) | (5.9 | %) | ||||||
| Continuing | 384,000 | 66.8 | % | 341,000 | 62.6 | % | 43,000 | 12.6 | % | |||||||
| Total | 575,000 | 100.0 | % | 544,000 | 100.0 | % | 31,000 | 5.7 | % |
MANNATECH INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share
| December 31, | ||||||||
| 2007 | 2006 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 47,103 | $ | 45,701 | ||||
| Restricted cash | 340 | 2,251 | ||||||
| Accounts receivable, net of allowance of $877 and $0 in 2007 and 2006, respectively | 618 | 999 | ||||||
| Income tax receivable | 2,136 | 2,155 | ||||||
| Inventories, net | 23,706 | 23,923 | ||||||
| Prepaid expenses and other current assets | 6,053 | 4,323 | ||||||
| Deferred tax assets | 1,789 | 1,478 | ||||||
| Total current assets | 81,745 | 80,830 | ||||||
| Long-term investments | 12,950 | 25,375 | ||||||
| Property and equipment, net | 42,818 | 16,523 | ||||||
| Construction in progress | 1,594 | 24,725 | ||||||
| Long-term restricted cash | 11,726 | 3,132 | ||||||
| Other assets | 1,470 | 1,372 | ||||||
| Long-term deferred tax assets | 151 | 278 | ||||||
| Total assets | $ | 152,454 | $ | 152,235 | ||||
| LIABILITIES AND SHAREHOLDERS EQUITY | ||||||||
| Current portion of capital leases | $ | 110 | $ | 92 | ||||
| Accounts payable | 3,637 | 3,339 | ||||||
| Accrued expenses | 30,315 | 26,841 | ||||||
| Commissions and incentives payable | 11,139 | 15,511 | ||||||
| Taxes payable | 6,198 | 3,556 | ||||||
| Deferred revenue | 4,769 | 2,697 | ||||||
| Total current liabilities | 56,168 | 52,036 | ||||||
| Capital leases, excluding current portion | 261 | 349 | ||||||
| Long-term royalties due to an affiliate | 2,440 | 2,879 | ||||||
| Long-term deferred tax liabilities | 5,165 | 7,444 | ||||||
| Other long-term liabilities | 1,565 | 730 | ||||||
| Total liabilities | 65,599 | 63,438 | ||||||
| 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, 27,667,882 shares issued and 26,460,788 shares outstanding in 2007 and 27,617,081 shares issued and 26,409,987 shares outstanding in 2006 | 3 | 3 | ||||||
| Additional paid-in capital | 40,146 | 38,941 | ||||||
| Retained earnings | 62,620 | 66,393 | ||||||
| Accumulated other comprehensive loss | (1,123 | ) | (1,749 | ) | ||||
| 101,646 | 103,588 | |||||||
| Less treasury stock, at cost, 1,207,094 shares in 2007 and 2006 | (14,791 | ) | (14,791 | ) | ||||
| Total shareholders equity | 86,855 | 88,797 | ||||||
| Total liabilities and shareholders equity | $ | 152,454 | $ | 152,235 |
MANNATECH, INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share
| Three months ended December 31, | Years ended December 31, | |||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Net sales | $ | 99,910 | $ | 106,769 | $ | 412,678 | $ | 410,069 | ||||||||
| Cost of sales | 14,201 | 15,684 | 59,765 | 58,461 | ||||||||||||
| Commissions and incentives | 46,611 | 46,866 | 189,067 | 182,215 | ||||||||||||
| 60,812 | 62,550 | 248,832 | 240,676 | |||||||||||||
| Gross profit | 39,098 | 44,219 | 163,846 | 169,393 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling and administrative expenses | 20,967 | 19,324 | 84,298 | 71,892 | ||||||||||||
| Depreciation and amortization | 2,953 | 1,417 | 10,236 | 4,960 | ||||||||||||
| Other operating costs | 20,956 | 12,286 | 61,703 | 48,467 | ||||||||||||
| Total operating expenses | 44,876 | 33,027 | 156,237 | 125,319 | ||||||||||||
| Income (loss) from operations | (5,778 | ) | 11,192 | 7,609 | 44,074 | |||||||||||
| Interest income | 798 | 750 | 2,700 | 2,513 | ||||||||||||
| Other income, net | 271 | 297 | 180 | 1,101 | ||||||||||||
| Income (loss) before income taxes | (4,709 | ) | 12,239 | 10,489 | 47,688 | |||||||||||
| (Provision) benefit from income taxes | 1,141 | (4,057 | ) | (3,895 | ) | (15,298 | ) | |||||||||
| Net income (loss) | $ | (3,568 | ) | $ | 8,182 | $ | 6,594 | $ | 32,390 | |||||||
| Earnings (loss) per share : | ||||||||||||||||
| Basic | $ | (0.13 | ) | $ | 0.31 | $ | 0.25 | $ | 1.22 | |||||||
| Diluted | $ | (0.13 | ) | $ | 0.30 | $ | 0.25 | $ | 1.19 | |||||||
| Weighted-average common shares outstanding : | ||||||||||||||||
| Basic | 26,461 | 26,405 | 26,443 | 26,598 | ||||||||||||
| Diluted | 26,461 | 27,040 | 26,893 | 27,219 |