Mannatech(US:MTEX)2025-11-12 21:03Financial Performance - Consolidated net sales for Q3 2025 were $29.2 million, a decrease of $2.6 million or 8.1% compared to Q3 2024[133] - Consolidated net sales for the nine months ended September 30, 2025 were $81.4 million, down $7.5 million or 8.4% from the same period in 2024[133] - Net income for Q3 2025 was $1.9 million, or $1.01 per diluted share, compared to a net loss of $0.3 million, or $0.17 per diluted share in Q3 2024[135] - Net loss for the nine months ended September 30, 2025 was $3.9 million, or $2.06 per diluted share, compared to net income of $0.2 million, or $0.12 per diluted share in the same period in 2024[136] - For the nine months ended September 30, 2025, total net sales decreased by $7.5 million, or 8.4%, to $81.4 million compared to $88.9 million for the same period in 2024[151] Cost and Expenses - Cost of sales for Q3 2025 was $6.9 million, representing 23.6% of net sales, down from 25.5% in Q3 2024[137] - Total operating expenses for Q3 2025 were $20.3 million, or 69.5% of net sales, compared to 71.7% in Q3 2024[137] - Commission expense for the three months ended September 30, 2025, decreased by 10.7%, or $1.3 million, to $10.9 million compared to $12.2 million for the same period in 2024[165] - Selling and administrative expenses for the three months ended September 30, 2025 decreased by $0.7 million, or 7.8%, to $9.1 million, while as a percentage of net sales, it increased to 31.1% from 31.0% in 2024[170] - For the nine months ended September 30, 2025, selling and administrative expenses decreased by $1.4 million, or 4.6%, to $29.9 million, with the percentage of net sales increasing to 36.7% from 35.2% in 2024[171] Sales and Market Performance - Operations outside of the Americas accounted for approximately 72.9% of consolidated net sales in Q3 2025, up from 66.6% in Q3 2024[142] - In the Americas, net sales for the three months ended September 30, 2025, decreased by $2.7 million, or 25.5%, to $7.9 million compared to $10.6 million for the same period in 2024[144] - Asia/Pacific net sales for the three months ended September 30, 2025, increased by $0.2 million, or 1.1%, to $18.8 million compared to $18.6 million for the same period in 2024[146] - EMEA net sales remained constant at $2.5 million for the three months ended September 30, 2025, compared to the same period in 2024[148] - Product sales for the three months ended September 30, 2025, decreased by $2.6 million, or 8.3%, compared to the same period in 2024[152] Customer and Associate Metrics - The number of active independent associates and preferred customers decreased by 13.0% for the three months ended September 30, 2025[144] - Recruitment of new independent associates and preferred customers decreased by 21.9% to 13,078 in the third quarter of 2025 compared with 16,741 in the third quarter of 2024[154] Cash Flow and Liquidity - As of September 30, 2025, cash and cash equivalents decreased by 37.3%, or $4.3 million, to $7.1 million from $11.4 million as of December 31, 2024[179] - Working capital at September 30, 2025 was $2.6 million, down from $5.2 million at December 31, 2024[180] - Operating activities used $2.7 million in cash for the nine months ended September 30, 2025, compared to cash provided of $2.5 million for the same period in 2024[182] - The company invested $1.2 million in cash for back-office software projects for the nine months ended September 30, 2025, compared to $0.4 million in 2024[183] Foreign Exchange and Market Risks - The company reported net realized and unrealized foreign currency gains of $0.6 million for Q3 2025, compared to a loss of $1.5 million in Q3 2024[134] - Foreign exchange gains were $0.6 million for the three months ended September 30, 2025, while losses were $2.6 million for the nine months ended September 30, 2025[172] - The company is exposed to currency exchange rate fluctuations, which could positively or negatively affect consolidated financial results[206] - The company closely monitors exposure to currency fluctuations to mitigate market risks[208] Return Policies - Sales returns have historically averaged 0.5% or less of gross sales, indicating stable return rates[203] - Retail customers in the U.S. and Canada can return products for a full cash refund within 180 days, while other countries allow returns within 90 days[204] - Associates and preferred customers can return unopened products within one year for a full refund minus a 10% restocking fee[204] - Historical estimates of sales returns have not materially deviated from actual returns, supporting the reliability of the company's return policies[203]