Mannatech Reports Second Quarter End 2022 Financial Results

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 second quarter of 2022.

Second Quarter End Results

Second quarter net sales for 2022 were $35.0 million, a decrease of $7.5 million, or 17.7%, as compared to $42.5 million in the second quarter of 2021. Our net sales declined 11.3% on a constant dollar basis (see Non-GAAP Measures, below) as foreign exchange decreased GAAP net sales by $2.7 million, mostly due to the decline of the Korean Won and Japanese Yen. During the second quarter, logistics in Hong Kong improved, and we were better able to deliver products to our customers. However, during the quarter, supply chain constraints worldwide continued to impact our sales. We have experienced a shortage of an ingredient used in some core products, and we have begun to move forward with our manufacturing partners with an alternative.

Second quarter operating income for 2022 was $0.9 million as compared to $2.0 million for the second quarter of 2021.

Net income was $0.7 million, or $0.34 per diluted share, for the second quarter of 2022, as compared to net income of $2.1 million, or $0.99 per diluted share, for the second quarter of 2021.

For the three months ended June 30, 2022, overall selling and administrative expenses decreased by $0.7 million to $6.9 million, as compared to $7.6 million for the same period in 2021. The decrease in selling and administrative expenses consisted of a $0.4 million decrease in marketing costs, a $0.1 million decrease in contract labor costs, a $0.1 million decrease in warehouse costs and a $0.1 million decrease in payroll costs.

For the three months ended June 30, 2022, other operating costs decreased by $0.6 million to $4.9 million, as compared to $5.4 million for the same period in 2021. The decrease in operating costs was primarily due to a $0.2 million decrease in credit card fees, a $0.2 million decrease in bad debt expense, a $0.1 million decrease in legal and consulting fees, and a $0.1 million decrease in other costs that are variable to revenue.

The approximate number of new and continuing independent associate and preferred customer positions held by individuals in Mannatech’s network and associated with purchases of products as of June 30, 2022 and 2021 were approximately 152,000 and 176,000, respectively. Recruitment of new independent associates and preferred customers decreased by 7.9% to 19,823 in the second quarter of 2022 as compared to 21,527 in the second quarter of 2021.

Year-to-date Second Quarter Results

For the six months ended June 30, 2022, net sales were $67.4 million, a decrease of $13.4 million, or 16.7%, as compared to $80.8 million for the same period in 2021. Our net sales declined 11.3% on a constant dollar basis (see Non-GAAP Measures, below) as foreign exchange decreased GAAP net sales by $4.3 million mostly due to the decline of the Korean Won and Japanese Yen. Income from operations decreased to $0.9 million for the six months ended June 30, 2022, from $4.8 million in the same period in 2021.

Net income was $0.8 million, or $0.40 per diluted share, for the six months ended June 30, 2022, as compared to net income of $4.3 million, or $2.03 per diluted share, for the same period in 2021.

Non-GAAP Measures

In addition to results presented in accordance with GAAP, this press release and related tables include certain non-GAAP financial measures, including a presentation of constant dollar measures. We disclose operating results that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into U.S. dollars, including changes in: Net Sales, Gross Profit, and Income from Operations. We believe that these non-GAAP financial measures provide useful information to investors because they are an indicator of the strength and performance of ongoing business operations. The constant currency figures are financial measures used by management to provide investors an additional perspective on trends. Although we believe the non-GAAP financial measures enhance investors’ understanding of our business and performance, these non-GAAP financial measures should not be considered an exclusive alternative to accompanying GAAP financial measures. Please see the accompanying table entitled "Non-GAAP Financial Measures" for a reconciliation of these non-GAAP financial measures.

Safe Harbor statement

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,” “will,” “should,” “hope,” “could,” “would,” “expects,” “plans,” “intends,” “anticipates,” “believes,” “estimates,” “approximates,” “predicts,” “projects,” “potential,” and “continues” 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, the impact of COVID-19 on Mannatech’s business, the availability and effectiveness of vaccines on a widespread basis, the impact of any mutations of the COVID-19 virus, the current conflict between Russia and Ukraine, which could adversely affect our business in certain regions, the impact of inflation, disruptions in the supply chain, Mannatech's inability to attract and retain associates and preferred customers, 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 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.

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

Non-GAAP Financial Measures (Sales, Gross Profit and Income from Operations in Constant Dollars)

To supplement our financial results presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we disclose operating results that have been adjusted to exclude the impact of changes due to the translation of foreign currencies into U.S. dollars, including changes in: Net Sales, Gross Profit, and Income from Operations. We refer to these adjusted financial measures as constant dollar items, which are non-GAAP financial measures. We believe these measures provide investors an additional perspective on trends. To exclude the impact of changes due to the translation of foreign currencies into U.S. dollars, we calculate current year results and prior year results at a constant exchange rate, which is the prior year’s rate. Currency impact is determined as the difference between actual growth rates and constant currency growth rates.

The table below reconciles second quarter 2022 and year-to-date constant dollar net sales, gross profit and income from operations to our GAAP net sales, gross profit and income from operations.

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