SOURCE: Mannatech, Inc.

August 09, 2005 17:41 ET

Mannatech, Inc. Announces Record Quarterly Sales

COPPELL, TX -- (MARKET WIRE) -- August 9, 2005 -- Mannatech, Inc. (NASDAQ: MTEX) today announced that net sales for the second quarter ended June 30, 2005 not only achieved a new quarterly record but also exceeded $100 million for the first time in the history of the company. Net sales for the quarter of $102.6 million represented an increase of 38% over the same quarter in 2004, and net income for the quarter was $5.8 million, or $0.21 earnings per share (diluted). Comparable figures for the 2004 quarter were net income of $5.6 million and $0.20 earnings per share (diluted).

Net sales by market are shown in the table below.

                Three months ended June 30,     Six months ended June 30,
                      (in millions)                   (in millions)
                   2004           2005            2004            2005
               ----- -----   ------  -----   ------  -----   ------ -----
United States  $49.5  66.6%  $ 69.5   67.7%  $ 86.3   65.0%  $125.6  66.9%
Canada         $ 5.8   7.8%  $  7.3    7.1%  $ 10.5    7.9%  $ 14.0   7.5%
Australia      $ 7.4  10.0%  $  8.9    8.7%  $ 13.9   10.5%  $ 17.0   9.1%
United Kingdom $ 2.6   3.5%  $  2.4    2.3%  $  5.4    4.1%  $  4.8   2.6%
Japan          $ 5.9   7.9%  $  9.0    8.8%  $ 10.9    8.2%  $ 16.8   8.9%
New Zealand    $ 3.1   4.2%  $  4.1    4.0%  $  5.7    4.3%  $  7.7   4.1%
Republic of
 Korea*        $   -     -%  $  1.0    1.0%  $    -      -%  $  1.4   0.7%
Taiwan**       $   -     -%  $  0.4    0.4%  $    -      -%  $  0.4   0.2%
               ----- -----   ------  -----   ------  -----   ------ -----
Total          $74.3 100.0%  $102.6  100.0%  $132.7  100.0%  $187.7 100.0%
               ===== =====   ======  =====   ======  =====   ====== =====

* Republic of Korea began its operations in September 2004.
** Taiwan began its operations in June 2005.

Net sales for the six months ended June 30, 2005 were $187.7 million, which represented an increase of 41% compared to the same period in 2004, net income for the six month period was $10.5 million, an increase of 21% over 2004, and earnings per share (diluted) of $0.38 was up 19% compared to 2004.

The number of new and continuing independent associates and members who purchased Mannatech's packs or products during the 12 months ended June 30, 2004 and 2005 are as follows:

Independent Associates            For the twelve months ended June 30,
 and Members                           2004                    2005
                                -------    -----        -------    -----
   New                          150,000     47.8%       209,000     47.5%
   Continuing                   164,000     52.2%       231,000     52.5%
                                -------    -----        -------    -----
   Total                        314,000    100.0%       440,000    100.0%
                                =======    =====        =======    =====
Sam Caster, Chairman and Chief Executive Officer of Mannatech, commented on the results. "Our continued sales growth shows the value of our glyconutritional supplements to people in countries around the world. For the first time in our history, our volume for the quarter exceeded $100 million with a strong trend line. Mannatech continues to invest in the future of the company, and our earnings in the quarter reflected the impact of non-capitalizable costs associated with entry into recently opened markets in the Republic of Korea and Taiwan, our ongoing integrated systems implementation, and new product research and development. We view these expenditures as necessary to correctly position the company to take advantage of the tremendous growth potential offered by the global market as well as continued growth in our current countries of operation."

About Mannatech

Based in Coppell, Texas, Mannatech, Incorporated is a 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, and Denmark.

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," "estimates," "projects," "well positioned," "feels," 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 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 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.


                           MANNATECH, INCORPORATED
                    CONSOLIDATED BALANCE SHEETS - (UNAUDITED)
                      (in thousands, except share amounts)

                                                 December 31,    June 30,
                                                    2004           2005
                                                  --------       --------
                 ASSETS
Cash and cash equivalents                         $ 44,198       $ 55,328
Short-term investments                                   -          2,377
Restricted cash                                        393            287
Income tax receivable                                4,161              -
Accounts receivable                                    392          1,136
Inventories, net                                    13,157         18,538
Prepaid expenses and other current assets            3,188          2,488
Deferred tax assets                                  1,850          1,718
Notes receivable from affiliate                        144            148
                                                  --------       --------
   Total current assets                             67,483         82,020
Long-term investments                               17,073         14,942
Property and equipment, net                         10,013         14,165
Restricted cash                                      1,571            930
Other assets                                         1,203          1,134
Deferred tax assets                                  1,003          1,001
                                                  --------       --------
   Total assets                                   $ 98,346       $114,192
                                                  ========       ========

   LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable                                  $  2,227       $  1,236
Accrued expenses                                    20,389         19,039
Commissions payable                                 12,718         19,699
Taxes payable                                        1,930          4,354
Deferred revenue                                     2,256          5,575
Accrued severance related to former executives         375            292
Current portion of capital leases                        8              9
                                                  --------       --------
   Total current liabilities                        39,903         50,204
Long-term royalties due to an affiliate              1,658          3,588
Long-term liabilities                                  530            515
Capital leases, excluding current portion               26             20
Deferred tax liabilities                                 4              4
                                                  --------       --------
   Total liabilities                                42,121         54,331

Commitments and contingencies

Shareholders' equity:

Preferred stock, $0.01 par value,
 1,000,000 shares authorized, no shares
 issued and outstanding                                  -              -
Common stock, $0.0001 par value, 99,000,000
 shares authorized, 27,115,440 shares issued
 and 27,041,125 outstanding in 2004 and
 27,260,172 shares issued and 26,983,672
 outstanding in 2005                                     3              3
Additional paid-in capital                          34,917         35,774
Retained earnings                                   21,672         28,363
Accumulated other comprehensive income (loss)          195           (489)
                                                  --------       --------
                                                    56,787         63,651
Less treasury stock, at cost, 74,315 shares in
 2004 and 276,500 shares in 2005                      (562)        (3,790)
                                                  --------       --------
   Total shareholders' equity                       56,225         59,861
                                                  --------       --------
   Total liabilities and shareholders' equity     $ 98,346       $114,192
                                                  ========       ========


                         MANNATECH, INCORPORATED
            CONSOLIDATED STATEMENTS OF OPERATIONS - (UNAUDITED)
               (in thousands, except per share information)

                               Three months ended       Six months ended
                                    June 30,                June 30,
                                2004        2005        2004        2005
                             ---------   ---------   ---------   ---------
Net sales                    $  74,318   $ 102,599   $ 132,705   $ 187,744
  Cost of sales                 11,283      15,778      19,940      28,708
  Commissions and incentives    34,139      47,360      60,005      84,924
                             ---------   ---------   ---------   ---------
                                45,422      63,138      79,945     113,632
                             ---------   ---------   ---------   ---------
Gross profit                    28,896      39,461      52,760      74,112
Operating expenses:
  Selling and administrative
   expenses                     11,526      16,340      23,831      32,460
  Other operating costs          8,342      13,250      15,326      24,170
                             ---------   ---------   ---------   ---------
    Total operating expenses    19,868      29,590      39,157      56,630
                             ---------   ---------   ---------   ---------
Income from operations           9,028       9,871      13,603      17,482

  Interest income                  155         453         293         785
  Interest expense                 (15)          -         (16)          -
  Other expense, net              (755)       (808)       (847)       (900)
                             ---------   ---------   ---------   ---------
Income before income taxes       8,413       9,516      13,033      17,367
  Income taxes                  (2,839)     (3,699)     (4,354)     (6,888)
                             ---------   ---------   ---------   ---------
Net income                   $   5,574   $   5,817   $   8,679   $  10,479
                             =========   =========   =========   =========


Earnings per common share:
  Basic                      $    0.21   $    0.22   $    0.33   $    0.39
  Diluted                    $    0.20   $    0.21   $    0.32   $    0.38

Weighted average common
 shares outstanding:
  Basic                         26,343      27,073      26,289      27,085
  Diluted                       27,389      27,918      27,380      27,963

Contact Information

  • Contact Information:
    Steve Fenstermacher
    CFO
    Investor Relations
    972-471-6512
    ir@mannatech.com