MTEX - Earnings call transcript Q1 2018

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Operator

Greetings, and welcome to the Mannatech Inc., First Quarter 2018 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

Now, I’d like to introduce our moderator for the call today, Mr. David Johnson, Chief Financial Officer. Mr. begin. may you Johnson,

David Johnson

Chief morning First is Today Quarter both President hear Good Al welcome you Johnson to from and Mannatech’s and Mannatech’s XXXX me Officer, everyone. you. Mr. David Bala. This and will Executive Thank Earnings Call.

begin will first the statement. safe read I call, we the harbor Before

make During financial performance. may which involve forward-looking this conference call future can statements we events future or

potential, or should, other identified terminologies can caution as would, and Forward-looking be by believe, the intend, and of only plan may, similar words or other subject the statements statements uncertainties negative project, expects, speak of and as such of estimate, such today. listeners phrases could, terminology. such will, to We factors anticipate, feel, risks, that certain predict, continue, events, generally use are forward-looking hope,

listeners our review to submissions. our refer also We SEC

time, business the to that of accounting of share currencies accepted useful to of or share exclude financial first loss which of for of In adjusted of quarter first have diluted a to the measure or Non-GAAP this in a principles, accompanying the constant heading been GAAP, presented filed available loss million financial At is dollar considered under addition the indicator results. non-GAAP recently quarter with non-GAAP reconciliation Net changes make compared dollars. will in due to few net U.S. per directly impact the I this into sales, exclusive in This measures. Measures. operations. measure the an non-GAAP XX-Q A diluted quarter $X.X XXXX. measure to financial as of million Financial first should will believe is concerning per comparable not discuss strength XXXX $X.X investors, $X.XX that is financial $X.XX information measure, our measure alternative ongoing accordance this as generally on GAAP the our financial translation comments mostly results sales to the I foreign our non-GAAP an it of provides GAAP was performance be to I XXXX operating the

first increased million of million the by X% net sales compared $XX.X sales or for to as The $XX.X XXXX. to first XXXX, of $X.X of quarter net million quarter

three individuals months continuing the XXXX period decreased number XXX,XXX XX, held XXXX XX, associate The to ended of network for and March same For number associates XXXX exchange for XXXX packs The XXXX. the on the the customers in positions net compared of in XX, order our to caused approximately and by as product the the our sales period XX.X% month of three during as three XX,XXX and new Favorable period XXXX. XX, XXXX basis. month period XXXX ending XXX,XXX orders first placed. was active sales XXXX. as affected fees to, sales product and to XX.X% $XXX $XXX of period March to ending foreign were in a increased value orders XX,XXX on the GAAP associate associate by trailing month to XXXX and average also value pack total increase net million by XX based The our period average constant respectively. paid March March XX, comparisons by $X declined of dollar The number compared ending in March a preferred X.X% or fee quarter the during for sold the and net and independent in compared same same

of sales of our first XXXX. to For for for quarter XX.X% compared our consolidated sales the of operations net first of accounted XXXX the quarter of consolidated our the XX.X% Americas net outside approximately

as the compared same in number independent million associate $XX.X associates preferred Asia-Pacific increase active increase or of of period XXXX per XXXX. million was and revenue which by primarily and $X.X in in customer, to XX.X% XX.X% first by with in due active net to decline a customers. the independent XX.X% preferred increased quarter was sales a offset This the partially

months ending March XXXX three decreased by period program same to as loyalty sales compared million the in During XX, the XXXX. the $X.X

exchange primarily Taiwanese effect impact XXXX Kong yen, Australian offset due same dollar. associates partially a the New Singapore Korean increase and by decrease offset preferred due to the months currency and a the in Foreign XX.X% X.X% had of Mid-East $X.X the The and the of currency the of in revenue active to the EMEA to to renminbi, Hong dollar, to $X.X of sales March dollar increasing the number XXXX million Zealand is first dollar, strengthening Africa customer. the quarter by $X.X the Japanese partially customers, revenue independent same increased The per dollar, by won, was for active ending in compared associate period of XX, compared in and net XXXX. independent preferred the period three by XXXX. in Chinese increase million the weakening or primarily as Europe, million as

of by quarter of $XX.X in XX.X% period pound partially first decline of exchange by impact British in is Americas and the XXXX associate X.X% customers. preferred $X.X African in due XXXX. euro. $XX.X the currency active to XXXX. was as the revenue the increase due the to million in independent effect to increasing primarily Foreign number decreased and net million XX, South of same ending associates as rand, preferred per to independent period three compared revenue in the by million the customer, compared the the period sales primarily The XXXX March in offset to strengthening month a in decrease had same active This currency $X.X and million

of $X XXXX. an Our to first of in $X.X was loss XXXX operating income quarter the as quarter million for first operating the million compared of

in expenses quarter consisted costs. compared as during by $X.X selling increase to first and Japan first a million During $X.X $X.X and million administrative million million decrease the administrative quarter offset a costs in payroll to $X the XXXX, selling and marketing-related The European of headquarters decrease offices, in XXXX. in of decreased our expenses of

For the XX, to increased in for months operating million compared period XX.X% $X.X $X.X $X.X costs the three as same other March million XXXX. XXXX, or million to ending by

the same three move, March XXXX in $X.X expenses which increase March million XX, The non-recurring in was increased office million December reviewing at our was ending incurred consulting and decrease fees. For a million XX.X% months and net to costs $X.X as cash in from equivalents due XXXX, other in XX, $X.X operating costs XX.X% corporate $XX.X of legal our a to million million the cash office the primarily operating increase In XXXX. increased sales offset percentage for with a from partially to by sheet at XX, by $XX.X XXXX. period balance

$X.X software the During projects. in approximately March back-office three invested months we million XX, XXXX ending

million in acquired also $X.X new office additional an the improvements leasehold corporate financing through We acquired for arrangements.

and For the three tax and benefit ending a of March company’s were XXXX XXXX to XX.X% rates at the months XX.X% XX, the rates operating losses. due effective respectively

compared March $XX as December current XXXX. at at defined liabilities total was million capital working assets less $XX.X XX, to million XXXX current XX, total Our

to million December million Our $X net $X.X by XXXX. at $X.X XX, XXXX compared balance decreased to March million inventory XX, at

compared March to Also quarter $X.X period for dividends. the during during X.XX During I months to CEO, Mr. paid goods the time, X.XX At Bala. the million we XXXX. inventory Al call ending XXXX turns the first finished this will three XX, over same as turn in increased to Mannatech’s

Al Bala

to of call quarter thank earning Thank President, we first joining us for X% the on quarter-to-quarter million quarter the sales, XXXX. or XXXX. first discuss our sales, flattening quarter. of a and you, to On quarter net net David. QX with XXXX would decreased first first compared increase we for of negative Mannatech’s $X like In XX.X% and XXXX. experienced CEO I in a a to slight company’s you Hello I am compared by everyone, of the million and $X.X QX or

normal celebration was sales first our and line, Hong we much by sales. Kong Australia trip net pattern incentive with week-long leaders. and of were the Coast XXXX lengthy in Canadian, top XXX very Hong Asian quarter of the in our While first the Gold seasonal Year New to Chinese for had quarter impacted Kong It of

Officer a promoted Joel sales and impacted Global was Canada Bikman. Mound, Marketing Chief our on with on declining of all of responsibility streamline Americas. activities processes sales Mr. to USA the million the middle and North move. to Operation, direct added and in primarily Landen QX, and rest Global Americas we and move and Fredrick logistics President to world. and responsibilities senior the team, members research Vice was Senior Mr. Mr. and Fredrick, the Operating for company’s Joel March, of promoted Officer. the pair quarter increase chain, Senior around given Landen was of previously over lead additional in development Texas and and Chief of President costs strategic Sales sales new which worldwide sale America. continue due Marketing the $X.X part In move with the new was facility Landen of to a of and also to Bikman, Flower and activities. will the to previously and in created the our January XXXX promoted focus and sales Sales P&L executive an continue He interruptions expense have will President to the Vice operating nonrecurring incurred affecting was new headquarters in the the first to The responsibility business the office activities to marketing This coordinate in for supply some

in world. of continue and were close-up January chain this of move leaders our our They of also In leadership held introductions of event and where global pipeline summit we the take operational supply to bottom new products opportunity into top product new a annual from through MannaFest, we transformation line. the called had expenses our to role, and our innovation reduction the our two will rapid together newest administrative which occurred and current Our ability the In the our look increased around and our for to quickly. of ideas process worked get unveiled efficiencies April selling which end XXXX more the during global of at XXXX oversee released improve the to at vision our Hawaii, markets to beyond have our them and annual unique to Joel trends XXXX. maximize

ever Ambrotose were LIFE Ambrotose benefits. tested adding mood most scientific the in top in its to powerful Mannatech, to Our formula Mannatech improved research, ingredient boost at clinically gastrointestinal advancement leaders and and Leveraging ingredients Ambrotose the introduced new products powder. created immune, cognitive, by

any polysaccharide powder contains LIFE and other product, of of its powder Manapol more of Advanced the product Ambrotose amount Mannatech’s Manapol Additionally, highest than concentration the potent of has the Manapol top-selling powder. in the double gives body. Ambrotose is the in aloe a is in what found communication support acemannan inner ability Acemannan leaf. found It anywhere. its aloe to vera gel cell-to-cell

Ambrotose been immune nutritional For the that powerful function more gastrointestinal XX of supports the cognitive improves most recognized years as world, one than health. your supports supplements one and has in system,

billion that that more of more worth for Ambrotose health Mannatech. will X of LIFE have ever We than any during do combination we Ambrotose other and by believe than sold time, product developed your

technologies will XXXX North forms, in Mannatech’s by America been Ambrotose two be powder a called Ambrotose and different powder of world will different slim a provide sales sticks. LIFE in parts in then XX Ambrotose ingredients powder core on LIFE made natural and Ambrotose be clinical available in convenient to Our associate and powder independent single-serving other third-party in the important validated first studies fully compounds in thereafter. LIFE available the canister citrus-flavored unflavored X, available June have glyconutrients. available

with introduced major fueling, anyone all-in-one of EMPACT+ designed drink at a sweeteners. drink and endurance, countries to product call a and/or were is X, in XXXX sports introduced leaders combine athletes. stage shorten active also fitness new hydration recovery and also recovery the elite This colors is energy the artificial another XXXX alternative to drinks increase ever time in fitness artificial blockbuster the stimulants, drink new available on the This later drink in other and category; to an EMPACT+. first into contain and It also The in drink and year. top will U.S. fitness new on natural single was Our drink. be is Mannatech lifestyle. to fitness we supports the that June EMPACT+ it sports elements sport

please products, more press For previously details our to new these released related refer to release.

XX, part account decline change months increase This continued XX.X% was and our our order of maturing some experience continued the associates by ended new intentionally associate, new the reduction continuing attributable This in individuals has position strategically in in in clearly largely to XXXX. X.X% business-building recruiting, to XXXX been the of customers compensation XXX,XXX, our from product same consolidation members’ to designed XXX,XXX of effect multiple experienced with held compared associate plan and of number is to consolidation a while the company. continued by average plan new independent in Mannatech, responsible in an we to largely that In March the as to we speaks $XXX designed order trend from the QX favoring the and compensation to delineate associates, new customer customer acquisition. size With reduction. to among which for position for the incentivize a period for $XXX three acquisition the increase in average in continued sales,

fee clearly joined associates to Mannatech be a modest New associates those on get separating through who choose to previously as better business-building products. a from associates, registration discount just them

phenomenon better industry-wide this align until quarters with through help business-building These plan the compensation a process expect our new renewal us for strategies associates. few have continue We completely directives. for system paid we to more annual purged

for in of to sales gain initiatives, We recruit we our invest tools market create and we business business-building e-commerce will to rise steady in and work technologies continue online human continue QX infrastructure opportunities a and China, further experience cross-border in to e-commerce from that while In attract China. share associates. funnels digital on also associates continue sales new to more to our

by line and and future. quarter demonstrate results accelerate direct market profit selling to top in institutional and continued our categories and sales the growth, global that continued as we growth first of continued industries. shareholder product very through share you Thank wellness our session products in globally new will will Mannatech’s on No With the while joining demonstrated line line expansion this dynamic strong and for bottom a management us and today. cost value growth here focus cost for commitment opportunities the ensure expense, improvements, control, lowering Our administration into vibrant top investing Q&A new event.

Operator

Thank listening to Mannatech’s Earnings First Call. XXXX for Quarter you

company company’s reminder, reviewing and As concludes be information the or can call. website, a Relations filings by at Investor submissions. SEC This ir.mannatech.com today’s found

Mannatech (MTEX) 12 May 182018 Q1 Earnings call transcript