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 third quarter of 2020.

Third Quarter End Results

Third quarter net sales for 2020 were $38.0 million, a decrease of $1.7 million, or 4.3%, as compared to $39.7 million in the third quarter of 2019. Income from operations increased to $1.4 million for the third quarter of 2020, from $0.6 million in the same period in 2019.

Net income was $1.6 million, or $0.76 per diluted share, for the third quarter of 2020, as compared to a net loss of $1.5 million, or $0.62 per diluted share, for the third quarter of 2019.

Gross profit as a percentage of sales declined to 75.4% for the three months ended September 30, 2020, as compared to 80.6% for the same period in 2019.

Commission and incentives as a percentage of net sales was 39.7% for the three months ended September 30, 2020, as compared to 42.1% for the same period in the prior year.

For the three months ended September 30, 2020, overall selling and administrative expenses decreased by $2.3 million to $6.6 million, as compared to $9.0 million for the same period in 2019. The decrease in selling and administrative expenses was due to a $1.8 million decrease in payroll costs, a $0.4 million decrease in marketing costs and a $0.1 million decrease in stock-based compensation.

For the three months ended September 30, 2020, other operating costs decreased by $0.1 million, or 2.9%, to $5.1 million, as compared to $5.2 million for the same period in 2019. The decrease in operating costs was primarily due to a $0.4 million decrease in travel and entertainment, which was offset by a $0.3 million increase in consulting fees.

For the three months ended September 30, 2020, provision for taxes was $22,000, compared to the same period in the prior year, which had a $1.6 million provision.

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 September 30, 2020 and 2019 were approximately 180,000 and 176,000, respectively. Recruitment increased 13.7% in the third quarter of 2020 as compared to the third quarter of 2019. The number of new independent associate and preferred customer positions in the company’s network for the third quarter of 2020 was approximately 25,388 as compared to 22,321 in 2019.

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, 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 third quarter 2020 constant dollar net sales, gross profit and income from operations to GAAP net sales, gross profit and income from operations.

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